Brasilagro Brazilian Agric Real Estate Co Sponsored ADR (Brazil)

Good morning, everyone. We are here for another earnings call at Brazil Agro to disclose our second quarter of our harvest year 25-26, which represents the first half of the year. If you're new around here, it's important to highlight that the Brazil Agro year goes from July to June, and that's why we're reporting the second quarter now. Have a great call, everyone, and I will pass on the floor to André. Thank you so much, Ana. Good morning, everyone, and to be with you all once again. I want to bring in some important news here. We're going to talk about the harvest, the climate, commodities, and also major dollar variations in this quarter, which is super important to demonstrate here. And you all know that due to accounting reasons and considering the value of our stocks and assets, these variations were very important within a quarter. But overall, I'd like to once again thank you for your participation and share a bit of what the company has been doing very well in the first six months of the year. So we would end the first six months with a net revenue of $644 million. And then... an adjusted EBITDA of about 78 million Yais. So these are the main numbers, and we'll see that most of the net income was affected by this main variation I mentioned. And then Gustavo would just mention that this is like occasional within our balance sheet. So on the next slide, on the next page, we can see major stability for some products. And I want to highlight some products also that have been really standing out from January all the way here. So we saw a reduction in soy. And once again, it's very important to highlight that the company is really focusing on closing the contribution margin, not only the price itself, but the exchange ratio and our contribution margins that we saw. the soy reality in the first year from January 24 to January 25, dropping about 9%. And so we've also seen some important reasons for this, right? So plantation this year was really good overall in all of the central Brazilian region, but the beginning was a little later. And this year, we can see that this off-season harvest would move along a bit. Now, that has really been leveraging the prices of it. Now, what's also influencing prices a lot is the loss in value, and that makes our meat basket become cheaper, and that no doubt increases the demand. uh for the need of uh corn internally be able to handle this possible increase in exports in cotton we've seen a year with major reductions and this is really connected to economic factors and so we've also seen an inversion in this cycle. This cycle has been inverted in the second semester and we've never seen such a high peak in 60 days so this cycle is reversed a lot and this is important to mention that we have a cattle stock that also affects the company's results and there was an important increment in the stock value. Then for ethanol, we had the first semester last year pretty weak. Second semester was... an important recovery trend and basically here i think this is levered by two important effects one is the modification in the shift in the ethanol percentage in gasoline this volume went from 27 to 30 would generate additional demand of 1.5 1.6 billion liters of ethanol and so that really made the market react positively and in parallel the main competitor for sugarcane has been corn ethanol as i mentioned this peak in the corn costs also creates this effect And so in sugarcane, we had some higher prices. We reached historical levels last year, and we saw a major reduction, but still really attractive prices in sugarcane. And more recently, in the last few days, we've seen a significant reduction in the production in India, which will impact us with the market having a bit more volatility in the next few months. because it's almost like 1.4 million reais of sugarcane tons. So that would have been produced in India. So they're dropping to about 28 million tons of sugarcane produced there. But Brazil is still strong with its numbers at about 42 million tons. Now, in the next page, it's important to highlight, right? And I believe the company's been very disciplined in this. There's a learning curve, of course, but whoever was looking at the pizza graph before on the left side for a few years, you can see it was a graph that was really focused on two crops, sugar cane and soy. And then we've seen a diversification in the planted area in the company where there's less learning curve process, but also all of the agriculture projects, which bring in more diversity to the product basket. And once again, I always say diversifying is fundamental. We're in this production, which is an open-air industry, and you can reduce the climate change risks. And so that also affects the real estate risks, right? We see demand for markets that, from a real estate perspective, are really connected to diversified crops, right? So on the right-side map, you can see a bit of how we – see the rain volume this year. And so when we started the year, we had all of the discussion in the intensity of the La Nina. So it was a La Nina that was not too strong, pretty moderate or neutral. But we've seen this move increase. with this La Niña phenomenon throughout the year. And that brought in important stability. So as I mentioned, it took a little longer to start with the rain period, but ever since they began, it was a really good year from a productive perspective. So it's important to mention also, and I love using this example, which is last year in the company we had replanting that was about 8,000 hectares and this year less than 600 so it just demonstrates that we were able to plant with the ideal humidity periods and not too many disturbances. And everyone knows that for a good harvest, we need to have stability. So everything we do after the plantation is just to keep the productive potential. So that's where we consider the use of the seeds and the soil management as well, as well as the quality of the plantation. Okay. And so then all of the other processes are factors that help avoid the potential dropping. So that's a summary in the beginning of this. And then rains were kind of accompanying this. So December was really rainy and rainy. like Maranhão, Piauí, and Bahia, which is always an important caution point, especially Bahia with more climate volatility with January going above average, and that's where January even gets in the way a bit. So then soon after we'll highlight this a bit. then we can already start the plantation of the cotton. And so the rain in January kind of gets in the way, but no one can complain about the lack of rain. We have to try to be more efficient, right? So that's just an overall panorama. From then on, we've had pretty good rain, and we're still having – rain conditions and soil conditions that are pretty good. And we start off with February with soil humidity that's really interesting and pretty stable. That allows us to also start having some conclusions about how soil in the first cycle It has already pretty moved along accordingly. Then soon after, here we have more of an educational approach of where we're at at this moment. So our plantation is a little more extensive. We also consider Paraguay as well, and that's a little different. So Paraguay starts this in the beginning of summer, goes to mid-January, and then, as you mentioned, you have the plantations of cotton. with the off-season harvest as well. And we were able to plant all of the cotton in the off-season harvest before the 30th of January, which really gives this cotton a very good level of productivity. And so from the productive perspective, the summary is pretty good. with crops performing very well, very low rates of replantations, which means we have good levels of productivity and good crop installation rates. And Paraguay also, we've finished this, and we had rains following this until January. So the critical period for us is the month of March. Just as in Bahia Maranhão, Piauí is February and March. For Paraguay, it's more about March. But we have good expectations. And the expectations for February in Brazil was a possibility of some impacts in the Mapitoba region. But we'll have February a little drier, which is actually pretty good because the crops also need some sun and light. But that won't in any way impact at this moment the state of these crops and harvests. So here you can see the... amount of what was estimated versus what was actual. And that's due to the births that start happening in December, normally around January and February. So this number is going to be recovering considering the amounts of animals and the amounts of cattle, and we're estimating about 510 grams of Jim Dee, and we already have 310. So here you can see that there's a bit of influence from the delay of this beginning of the riparian period, and that also delayed a bit of the scenario with the... pastures and we think we'll be able to really achieve our 510 kilos of beef that's budgeted so just about sugarcane which is so important the company ended the harvest with approximately 2.6 million of sugarcane, an increment of 4.3%. And what's important to highlight here is a growth of 3% in sugarcane and the productivity. And there was also, due to everything you guys have seen, we had a pretty dry uh winter and that makes a sugarcane accumulate a bit more uh sugar which also helps us with important gains right so when you increase the tch and the tr rates that means that that's just pure ebita because the sugarcane was already going to be transported and you're transporting sugarcane that's a lot richer in saccharosis So it's not only about the 3% of ATR gains, but you also reduce some costs in the CCT phase. So this is a photograph of sugarcane and how it looks. then we'll show you a bit of volatility and how we've been positioning ourselves. So Anna provided us with this briefing. It starts off on the 1st of July, and we worked on this budget in the end of the month of May and beginning of June. And the expectation we had was that when you look at the FACO budget, estimates were considering a dollar at $5.30. And now we considered this, of course, for our budget, and so it was a little higher as well. So that's a photograph of soy at the company now. Soy has already been lower now. We're talking about soy at about $10.70, $10.80. And the company has practically 50%. And we have currency at about $5.33. So what's... And so a currency at about 5.30. Then we also had an important recovery, which is maybe a little different than what we expected, and we're going to show you this later on. This is a photograph of the salt we're going to be harvesting. So you remember in the last earnings call, we were saying we were going to insure part of the harvest in the campaign, in the past campaign to sell in the second semester?

Yes.

Because we believed in the recovery of these, and this was assertive, generated an important impact. And now we can also see a trend with the recovery of this due to this turbulent scenario, right? We have that at $51.80. And ethanol here on these two columns, you can see the column with the closing in the last harvest and this harvest. Today, the levels of pricing are about $2,750, $220. And we're also increasing this position of what's sold. And this is the hedge position at February 7th, and we've already advanced a little more. With our ethanol sales, prices are a little higher, $2,750 to $2,720. And in cotton, we just bring in the two harvests still because that's where we really consider CTZ December and the harvest in 23, 24. We ended at 527. And so now... We have 41% of our cotton closed, and we were able to really block this pretty well. It was positive, but as you all know, we have a mismatch policy. We also had to block the dollar there, and that was at $5.27. But this combination... of cents, pounds, and dollars are still providing cotton at 136 reais per bundle, and that's a bit higher than what was budgeted. Then we have the receivables, which is also in our P&L, and the farms, where we can see soy closed at 10.53, and we've also started off with this volatility. in the dollar rates, and we started selling soy at $26 also for receivables. Sorry, we sold dollar for the receivable at $26 and the blocked rate at $5.26. And so that's an overview of how our commodities are, and we'll be able to have major insights as well. In the next slide. So on the next page, we also bring in a bit of the vision in regards to costs. So you'll see a reduction in our costs. That's maybe not that significant, but a reduction that we also consider impacted the results of the company very well. We saw the map stability in prices. And we also had an opportunity to have prices that are even a little better in certain inputs. We were also able to confirm some chloride for the harvest of 25 and 26 with chloride. And we've seen petroleum kind of moving sideways. But what we can see in the urea is that it's pretty stable. And so the exchange ratios are a little better. They were better in the past, actually, but they're pretty stable. And we're talking about chloride at about 13, 13.5. So the position upon the cost is already pretty much a block to all of the fertilizers in this current harvest and also for the defenses. So now I'll pass the phone to Gustavo after providing this overview, and we'll look at the numbers in this quarter and semester. Thank you, André. Thank you. Good morning, everyone, and thank you for keeping up with our earnings call for the first half of the year. We're going to start talking about the 31st of December, 2024, where the company has been disclosing this total net income, 77.8 million reais, where in the same period last year, in the previous year, the net income was 24 million reais. So these main variations are... represented here on the graph above on the right upper side and you can see that all of the expressions of soy corn and sugarcane as well as the volume in soy and sugarcane and so And so you can see how this reflected in the net revenue and 470 million reais in 2025. And we've also seen revenue from the accounting of the sale. We had the real estate sale of a total amount in the farm in Taqueria. And we also had some hectares, like 200 hectares, I think, that would add up in by year. And we had also registered a revenue from these sales of 129 million reais when we discounted the taxes and other acquisition costs, et cetera. We had an EBITDA of 107 million reais. In the previous year, in the same period, we also had a small sale performed, which was about approximately 5 million reais, and that was in this segment.