Slc Agricola Sa S/Adr

Good morning, everyone. Welcome to the first quarter 2024 earnings video conference of SLC Agricola. My name is Alessandra Reis. I am the investor relations coordinator. Present here with me, we have our CEO, Mr. Aurélio Pavinado, and our CFO and IRO, Ivo Brum. It is a privilege to be with you this morning. We would like to inform you that this video conference is being recorded and will be available from the company's IR website, where you will also find the respective presentation. Please note that if you wish to listen to the simultaneous translation, we have this tool available on Zoom under the icon Interpretation, a globe located at the bottom of your screen. when selecting it choose your preferred language portuguese or english for those listening to the video conference in english there is the option to mute the original portuguese audio by clicking on mute original audio as for the q a session Please submit your questions using the Q&A icon at the bottom of your screen. Your names will be announced so that you can ask your question live. And at that moment, a prompt to activate your microphone and camera will appear on the screen. If you do not want to activate your microphone and camera, please write no microphone at the end of the question so that I can read it aloud. We emphasize that the information contained in this presentation and any statements that may be made during the conference regarding the business outlook, projections, and operational and financial goals of SLC Agricola constitute the beliefs and assumptions of the company's management and are based on information that is currently available. future considerations are not performance guarantees they involve risks uncertainties and assumptions as they refer to future events and, as such, depend on circumstances that may or may not occur. Investors should understand that general economic conditions, market conditions and other operational factors may affect the future performance of the company and lead to results that differ materially from those expressed in such future considerations. Now I would like to turn the floor over to our CEO, Mr. Aurelio Pavinato, to start the presentation. Pavinato, you may proceed. Good morning. We thank everyone for participating in the first Porter 2024 earnings video conference of SLC Agricola. Please, let's turn to slide four, where I would like to discuss the cotton market scenario. cotton has been backed by consistent data coming from the demand side such as the level of sales and clothing and textile accessories in the United States which in in 2023 exceeded I'm sorry I'm sorry I'm just checking on this number because I believe it's mistaken let me update it year to date in the first three years of the month of 2024 reached 66 billion dollars as compared to the previous year it was 64 billion so therefore demand is consistent in addition chinese cotton imports remains strong recording successive increases in import volumes at levels that surpass those recorded over the last five years, according to USDA data. Still on the cotton consumption side, the textile industry in Asia has been showing resilience. In March, higher than average rates were attained, according to CCF group data. The expected global cotton consumption according to USDA data is 112.9 million bales compared to a production scenario of 112.8 million bales resulting in almost zero balance for the 23-24 crop year. For the 24-25 crop year, the cotton area in the United States is expected to expand by four percent according to the planted acreage in the outlook report released in march 2024 by the usda please let's turn to slide five now to talk about soybeans in the united states the 23 24 crop season closed with a production of 113.3 million tons resulting in a net loss of approximately 9.4 million tons compared to the initially estimates, according to the USDA. In Brazil, less favorable weather, especially in Mato Grosso, caused CONAB to devise its production estimate by 9% from an original estimate of 160 million tons to the current 146 million tons. In Argentina, planting is going well and production is expected to reach 50 million tons according to the USDA. In summary, the 2023-2024 crop year should show production exceeding consumption by approximately 15.6 million tons. The initial acreage expectations for the 24-25 crop season in the United States points to an increase of 3% according to the outlook report released in March 2024 by the USDA. Moving on now to slide six, let's talk a little about corn. The global balance is expected to show production volume exceeding consumption by approximately 29.2 million tons. The 23-24 crop in the United States has already been completed. However, in Brazil, Conab estimates a total corn production of 113.2 million tons in comparison with the U.S. DA estimates of 124 million tons. In Argentina, according to estimates from the Buenos Aires Grain Exchange, corn production fell by approximately 18% compared to initial estimates due to pests in the crop, cicadela. The initial estimate was 56.5 million tons, and it's currently at 46. 6.5 million tons. This adjustment in the Argentina corn production is important for the global adjustment of exports, since Argentina is among the largest global producers of corn, standing only behind the United States and Brazil. Regarding the initial estimates of acreage for the 24-25 crop in the United States, according to the outlook report released in March 2024 by the USDA. The initial expectation is of a reduction of around 5% regarding the corn acreage in the country. Let's go now to slide eight to talk about our operational performance in the 23-24 crop year. This crop year was characterized by the El Niño phenomenon, which mainly hit the west of Mato Grosso region, where a significant reduction in rainfall was observed in October, November, and December last year, which harmed the yield potential of soybeans. This soybean crop was fully harvested. We've reached 3,276 kilos per hectare, 17% lower than budget and 1% higher than the national average. The cotton crop and second crop cotton and also corn double crop show promising yield potential, providing excellent conditions for our forecast to be met. On slide nine, we demonstrate soybean costs and hedging. The budgeted costs per hectare for the 23-24 crop show an average reduction in BRL of 10% compared to the budgeted crop year of 22-23. This reduction mainly reflects the decrease in prices of our main inputs. We have advanced to the 23-24 hedging position in soybeans, adding up the commitments. We have locked 75% of the production. In corn, we are at 38% of production locked. In cotton, we have reached 51% in currency protection. I now turn the floor over to my colleague, Ivo Broom, to comment on our financial performance. Ivo, please proceed. Ivo, I think you're on mute. Would you please unmute yourself? Okay, very well. Let me do it again. You know, this is very common. Okay, thank you very much, Papina. So can we please go to slide 11, where I would like to discuss some highlights in our income statements. In the impacts of El Nino in the 23-24 crop season affecting mainly soybeans are reflected in our income statement. Our net revenue ended the first quarter at almost 2 billion BRL. Net income of almost 229 million BRL was unfortunately 60% lower than 1Q23 and adjusted EBITDA reached 700 million BRL with an adjusted EBITDA margin of 36%. Let's go now to slide 12 to talk about cash generation. Cash generation in the quarter was negative 196 million BRL. Soybean revenue was lower owing to volume and prices, and also because the crop inputs were being paid. Now let's go to slide 13, where we showed the company's debt. Adjusted net debt ended the quarter at 2.4 billion BRL. Despite the negative cash generation, the net debt adjusted a bit of ratio and the period at 1.31 times. now let's move to slide 14 to talk about the distribution of the parent company's net income our ordinary and extraordinary general meeting were held on april 29 2024. their shareholders approved the distribution of three hundred and eighty nine million BRL representing fifty percent of the adjusted net income of the parent company. Twenty four million as interest on equity paid in January twenty twenty four and three hundred and sixty five million as dividends, which will be paid out on May fifteen twenty twenty four. Based on the closing of twenty twenty three, The dividend yield reached 4.7%. I turn the floor back to Favinato, who will talk about the industry and prospects for the 2024-2025 crop year. Thank you very much, Ivo. Can we please move to slide 16, where we present the prospects for the 2024-2025 crop year? As disclosed in a relevant fact released on April 29, we expanded our joint venture with AgroPenido, the pioneer farm, adding 18,700 physical hectares with planting potential, considering the double crop of 30,734 hectares. The current agreement with the Pioneer Farm has a validity until 2728 crop. But with the expansion of the joint venture, the term of the two combined areas will be extended until the 4344 crop season. With the expansion of the partnership, the new potential acreage of pioneer farm becomes 64 000 hectares including the two crops now let's please go to slide 17 where i would like to discuss the purchasing of inputs inputs for the 24 25 crop year for the 24 25 crop whose planting will begin in september 2024 we continue purchasing inputs we acquired 91 of phosphated fertilizers 75 of potassium chloride and 53 of our nitrogenated inputs together with 18 of prop protection inputs we have taken advantages of opportunities that emerged in the market We can now move to slide 14, where we present the current charging position that has been fixed by the company. We started selling soybean for the 24-25 crop year. Once we add up the commitments, we've reached almost 40% of the estimated production. For the other crops, we have not yet made any fixations. Additionally, we took advantage of peak moments in Forex to start fixing the exchange rate of our crops. Now, moving to slide 20, we will comment on our new sales senior executive. As communicated on May 8, 2024, at the board of directors meeting held on the same date, The following were appointed as statutory director, Mr. Álvaro Luiz Dili Gonçalves, Head of Human Resources, Sustainability and IT. Mr. Gonçalves has been working for SLC Agricola for 37 years and as Head of Sales and New Business, Mr. Roberto Acauã Jr. that up to then had been the legal and compliance manager. Mr. Akawa has worked for SLC Agricola for 15 years. Now, to conclude, please let's move to slide 21, in which we would like to express our deep solidarity with the citizens affected by the floods that have been plaguing Rio Grande do Sul State since last year. we have established a crisis committee focusing on assistance to our employees their families and their communities the slc institute has been making donations and encouraging support to the state food bank for all of those who wish to contribute we are convinced that it's the union of all that will make it possible to rebuild the state the state that we are so proud of belonging to thank you very much and now let's open the q a session now we'll start the q a Please kindly ask your questions in writing all at once and wait for the company's reply. Remember that to ask questions, you have to use the Q&A icon that you'll find at the bottom of your screen. Your names will be announced so that you can ask your questions live. And at that moment, prompt to activate your microphone and camera. will appear on the screen if you prefer not to use your microphone or camera please write without microphone no camera at the end of the question and then i'll read it aloud our first question comes from mr matheus the analyst at UBS. Mateus, you can use your microphone and activate your camera to ask a question. Please go ahead, sir.

Good morning, people of Pabinapo and Ali are taking my question. I would like to discuss CAPEX for the year that's a little below last year, perhaps.

I would like to know whether CAPEX will be lower this year, or if it's just a quarterly issue, and if we should consider recurring CAPEX similar to last year, including, of course, land purchases. And also growth expected for 2024 and 2025.