Earnings Release
3Q24 | 9M24
Conference Call | |
May 09, 2024 | Portuguese |
(with simultaneous translation into English) | |
10 a.m (Brasília Time) | |
09 a.m (NY Time) | Click here to participate |
EARNINGS RELEASE
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São Paulo, May 8, 2024 - BrasilAgro (B3: AGRO3) (NYSE: LND) announces its consolidated results for the quarter and nine-monthperiods ended March 31, 2024 ("3Q24") and ("9M24"). The consolidated information is prepared in accordance with the International Financial Reporting Standards (IFRS).
Financial Highlights
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(R$ thousand) | 3Q24 | 3Q23 | Change | 9M24 | 9M23 | Change |
Revenues from Operations | 121.781 | 190.690 | -36% | 540.762 | 645.714 | -16% |
Revenues from Farm Sales | - | - | n.a. | 4.724 | 17.500 | -73% |
Net Sales Revenue | 121.781 | 190.690 | -36% | 545.486 | 663.214 | -18% |
Variation in the fair value of biological assets | 11.186 | 58.507 | -81% | 7.380 | 72.467 | -90% |
Net Revenue¹ | 132.967 | 249.197 | -47% | 552.866 | 735.681 | -25% |
Adjusted EBITDA from Operations | 5.609 | 44.175 | -87% | 11.694 | 150.947 | -92% |
Adjusted EBITDA Margin from Operations (%) | 5% | 23% | -18 p.p. | 2% | 23% | -21 p.p. |
Adjusted EBITDA² | 5.609 | 44.175 | -87% | 16.418 | 168.447 | -90% |
Adjusted EBITDA Margin (%) | 4% | 18% | -14 p.p. | 3% | 23% | -20 p.p. |
Net Income from Operations | (30.147) | (3.293) | n.a | (10.708) | 8.328 | n.a. |
Net Operating Margin (%) | -25% | -2% | -23 p.p. | -2% | 1% | -3 p.p. |
Net Income | (30.147) | (3.293) | n.a. | (5.984) | 25.828 | n.a. |
Net Income Margin (%) | -23% | -1% | -22 p.p. | -1% | 4% | -5 p.p. |
- Net Revenue: Considers the change in fair value of biological assets and agricultural product and Impairment.
- Adjusted EBITDA was calculated by excluding biological assets in progress (sugarcane and grains planted) and adjusted for the harvest's derivative results and depreciation expenses, including depreciation of fixed assets of the farms, developed areas and permanent crops.
Operational Highlights
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Planted Area (ha) | 23/24 Harvest | 23/24 Harvest | Chg. |
estimated | projected | (%) | |
Soybean | 74.996 | 70.612 | -6% |
Corn | 8.911 | 3.592 | -60% |
Corn - 2nd Crop | 17.712 | 9.425 | -47% |
Beans | 4.692 | 7.315 | 56% |
Beans - 2nd Crop | 1.889 | 4.247 | n.a. |
Cotton | 3.584 | 4.238 | 18% |
Cotton - 2nd Crop | 3.490 | 2.891 | -17% |
Ratoon Cane | 22.856 | 24.801 | 9% |
Plant Cane | 2.902 | 4.542 | 57% |
Pasture | 15.374 | 15.374 | 0% |
Others | 29.284 | 24.281 | -17% |
Total | 185.691 | 171.320 | -8% |
Production per product (tons) | 23/24 Harvest | 23/24 Harvest | Chg. |
estimated | projected | (%) | |
Soybean | 248.471 | 202.793 | -18% |
Corn | 60.853 | 19.601 | -68% |
Corn - 2nd Crop | 102.566 | 61.180 | -40% |
Beans | 5.631 | 8.264 | 47% |
Beans - 2nd Crop | 2.221 | 5.023 | n.a. |
Cotton | 13.546 | 14.069 | 4% |
Cotton - 2nd Crop | 12.740 | 12.740 | 0% |
Total | 446.028 | 323.669 | -27% |
1
3Q24
Hedge Position
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Hedge Position - FX | 1Q24 | 2Q24 | 3Q24 | Change | 3Q24 |
2Q24x3Q24 | |||||
Soybeans | 23/24 | 23/24 | 23/24 | 23/24 | 24/25 |
% | 41% | 65% | 83% | 18 p.p. | 25% |
R$/USD | 5,33 | 5,33 | 5,31 | -0,38% | 5,45 |
Cotton | |||||
% | 100% | 100% | 100% | 0 p.p. | 30% |
c/lb | 5,53 | 5,58 | 5,61 | 0,54% | 5,41 |
Farm Sale Receivables | |||||
% | 55% | 55% | 91% | 36 p.p. | 37% |
R$/USD | 5,44 | 5,39 | 5,43 | 0,74% | 5,36 |
Hedge Position - Commodity | 1Q24 | 2Q24 | 3Q24 | Change | 3Q24 |
2Q24x3Q24 | |||||
Soybeans | 23/24 | 23/24 | 23/24 | 23/24 | 24/25 |
% | 49% | 58% | 80% | 22 p.p. | 17% |
USD/bu | 13,12 | 13,19 | 13,05 | -1% | 12,48 |
Cotton | |||||
% | 72% | 72% | 87% | 15 p.p. | 1% |
c/lb | 82,50 | 82,50 | 82,28 | -0,27% | 82,5 |
Farm Sale Receivables | |||||
% | 60% | 56% | 90% | 34 p.p. | 20% |
USD/bu | 13,51 | 13,39 | 12,93 | -3% | 12,37 |
Corn | |||||
% | 45% | 26% | 55% | -29 p.p. | - |
R$/sc | 47,02 | 42,53 | 42,99 | 1% | - |
Ethanol | |||||
% | 4% | 3% | 3% | 0 p.p. | 8% |
R$/m3 | 2.800 | 2.800 | 2.800 | n.a | 2.457 |
Total recoverable sugars | |||||
% | 10% | 10% | 10% | 0 p.p. | - |
R$/kg ATR | 1,08 | 1,08 | 1,08 | n.a | - |
Status of Input Acquisitions
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Input - 2023/24 Harvest | 1Q24 | 2Q24 | 3Q24 | apr/24 |
% Purchased | ||||
Nitrogenous | 3% | 80% | 95% | 100% |
Potassium chloride | 88% | 88% | 98% | 100% |
Phosphates | 85% | 85% | 98% | 100% |
NPK - Formulated | 37% | 98% | 100% | 100% |
Defensives | 60% | 70% | 90% | 95% |
Input - 2024/25 Harvest | 1Q24 | 2Q24 | 3Q24 | apr/24 |
% Purchased | ||||
Potassium chloride | - | - | - | 85% |
Defensives | - | - | - | 10% |
2
3Q24
MESSAGE FROM MANAGEMENT
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The third quarter of the 2023/24 crop year (January to March 2024) is characterized by the harvest of Brazilian grains, especially soybean. According to a report by Conab published on April 12, a decrease in Brazil's total grain production is already noticeable due to adverse weather conditions, which resulted in low rainfall and above-average temperatures in the main producing regions, causing planting delays and productivity losses.
We ended the first nine months of the 2023/2024 crop year with Net Loss of R$6.0 million and Adjusted EBITDA of R$16.4 million, reflecting Net Revenue of R$545.5 million, which includes R$4.7 million from the sale of farms and R$540.8 million from the sale of agricultural products.
Regarding operational performance, we felt a significant impact compared to initial estimates, primarily explained by: (i) the reduction in planted area, reflecting the decrease in the planted area of corn due to a decrease in corn prices and adverse weather conditions during the planting window in some regions; and (ii) the drop in prices of major commodities, resulting in reduced margins across all crops.
This impact was mitigated by the result from derivatives, where we captured an average price above the market, as demonstrated in the current hedge position, and by our commercial strategy of delaying the sale of soybean production in the face of negative premium prices at the beginning of the harvest. This strategy proved to be successful with the recent increase in premium prices.
On March 26, we announced the sale of 12,335 hectares (8,796 arable hectares) of the Chaparral Farm in Bahia. This transaction marks the first sale of a fraction of the farm, which was acquired in 2007. So far, R$125.0 million have been invested in acquiring and developing the property. The nominal value of the sale was R$364.5 million (~R$41,435/arable ha), with an expected Internal Rate of Return (IRR) in Brazilian real of 15.0%. The gain from the sale will be booked next quarter.
Still on the real estate strategy, we announced the lease of a little over 7,000 hectares for producing sugarcane in the state of São Paulo, one of the main sugarcane energy hubs in the country. As part of a revenue diversification move, this operation will enable the Company to enter the sugar production market.
Despite the challenges faced throughout the year, such as adverse weather conditions and fluctuations in commodity prices, our combined operational and real estate business strategy resulted in strong value generation. We remain focused on maximizing returns for our shareholders by operating efficiently in both business fronts.
André Guillaumon, BrasilAgro CEO
3
3Q24
REAL ESTATE PERFORMANCE
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Subsequent events
Sale of Farm
CHAPARRAL FARM: On March 26, we announced the sale of 12,335 hectares (8,796 arable hectares) of Chaparral Farm, a rural property located in Correntina, Bahia. The sale value corresponded to 350 bags of soybean per arable hectare or R$364.5 million (~R$41,435/arable ha), at an expected Internal Rate of Return (IRR) in Brazilian real of 15.0%.
This transaction marks the first sale of a fraction of the Chaparral Farm, which was acquired in November 2007. So far, R$125.0 million have been invested in acquiring and developing the property. The total area of the property was 37,182 hectares (26,444 arable ha), which, after the sale, now stands at 24,847 hectares (17,648 arable ha).
Chaparral Farm | Unit | Sale |
Legal Reserve Area and Permanent Preservation Area | ha | 3.539 |
Arable Area | ha | 8.796 |
Total Area | ha | 12.335 |
Book V alue (acquisition +CAPEX) | R$ mm | (33,9) |
Book V alue (acquisition +CAPEX) | R$/ha | (3.863) |
Nominal Sale V alue | R$ mm | 364,5 |
Nominal Sale V alue | R$/ha | 41.435 |
IRR R$ | % | 15% |
IRR U$ | % | 8% |
4
3Q24
Lease
Alto da Serra Farm: In March, we announced the lease of over 7,000 hectares to produce sugarcane as part of diversifying our revenue. The farm, located in Brotas in the interior region of São Paulo, will enable the Company to enter the sugar production market.
This operation marks the Company's entry in the state of São Paulo, one of the main sugarcane energy hubs in the country. Possession of the farm will occur gradually. In 2024, 5,060 hectares and the rest will be leased by 2029.
We are confident that the expertise of our team, combined with the potential of the Brotas region, will produce tremendously successful results.
5
3Q24
Property Portfolio
The Company's property portfolio comprises 266,211 hectares across six Brazilian states, as well as Paraguay and Bolivia.
LOCATION | TOTAL AREA (ha) | ARABLE AREA (ha) | ||
Owned | Leased | Owned | Leased | |
Brazil | 132.397 | 59.092 | 89.421 | 59.092 |
Bahia | 73.906 | - | 52.346 | - |
Maranhão | 17.566 | 15.000 | 10.137 | 15.000 |
Mato Grosso | 12.224 | 30.623 | 6.188 | 30.623 |
Minas Gerais | 24.212 | - | 17.846 | - |
Piauí | 4.489 | 13.469 | 2.904 | 13.469 |
São Paulo | - | 5.060 | - | 5.060 |
Bolivia | 9.875 | 1.065 | 7.925 | 1.065 |
Paraguay | 58.722 | - | 33.555 | - |
Total | 200.994 | 65.217 | 130.901 | 65.217 |
Total (Owned + Leased) | 266.211 | 196.118 |
The current mix of the production area, which includes owned and leased land, enables greater flexibility in portfolio management and reduces volatility in operating cash flow.
22/23 | Participation (%) | 23/24 | Participation (%) | |
Owned | 217.737 | 78% | 200.994 | 76% |
Leased | 60.157 | 22% | 65.217 | 24% |
Total Area | 277.894 | 100% | 266.211 | 100% |
Owned | 142.899 | 70% | 130.901 | 67% |
Leased | 60.157 | 30% | 65.217 | 33% |
Total Arable Area | 203.056 | 100% | 196.118 | 100% |
6
3Q24
OPERATIONAL PERFORMANCE
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The table below shows the projected area in the 2023/2024 crop year by region.
Culture | BA | MA | MT | PI | SP | Brazil | Bolivia | Paraguay | Total |
Ratoon Cane | - | 14.500 | 4.899 | - | 3.710 | 23.109 | 1.693 | - | 24.801 |
Plant Cane | - | 2.572 | 778 | - | 813 | 4.163 | 380 | - | 4.542 |
Soybean | 13.709 | 7.159 | 26.651 | 14.215 | - | 61.735 | 3.014 | 5.863 | 70.613 |
Corn | 397 | - | - | 1.944 | - | 2.341 | 498 | 753 | 3.592 |
Corn 2nd Crop | - | 1.075 | 8.350 | - | - | 9.425 | - | - | 9.425 |
Bean | 7.315 | - | - | - | - | 7.315 | - | - | 7.315 |
Cotton | 2.058 | - | - | - | - | 2.058 | - | 2.180 | 4.238 |
Cotton 2nd Crop | 862 | - | 2.029 | - | - | 2.891 | - | - | 2.891 |
Others | 19.630 | - | 875 | - | - | 20.505 | 609 | 3.167 | 24.281 |
Agricultural Total | 43.971 | 25.306 | 43.582 | 16.159 | 4.523 | 133.542 | 6.194 | 11.964 | 155.946 |
Pasture | 10.519 | - | 700 | - | - | 11.219 | - | 4.155 | 15.374 |
Grand Total | 54.490 | 25.306 | 44.282 | 16.159 | 4.523 | 144.760 | 6.194 | 16.119 | 171.320 |
As announced previously, due to high volatility in corn prices, which pressured margins, we changed the planted area mix for the 23/24 crop year in relation to initial projections. We plan a 8% reduction in the total planted area compared to the initial estimate.
Compared to the previous quarter, the planted area decreased by 3,000 hectares due to the weather in Paraguay. We were affected by the lack of rainfall, which adversely impacted planting, especially of corn and soybeans, within the ideal window.
We completed the planting of grains and advanced approximately 70% in the planting of sugarcane.
Area in Production by Crop 23/24 | Area in Production by Property 23/24 | |||||||
Harvest | Harvest | |||||||
(projected) | (projected) | |||||||
14% | ||||||||
4% | 41% | |||||||
9% | 171.320 | 41% | 171.320 | 52% | ||||
hectares | hectares | |||||||
17% | ||||||||
7% 8% | 7% | |||||||
Soybeans | Corn and Corn 2nd Crop | Owned Area Operated by BrasilAgro | ||||||
Bean 2nd Crop | Sugarcane | Leased to third parties | ||||||
Pasture | Cotton | |||||||
Leased Area Operated by BrasilAgro | ||||||||
Other | ||||||||
7
3Q24
Status of Operations
The table below shows the planting and harvest status for the Company's crops.
1Q | 2Q | 3Q | 4Q | |||||||||
Jul | Ago | Set | Out | Nov | Dez | Jan | Fev | Mar | Abr | Mai | Jun | |
Soybeans | Planting | Crop | ||||||||||
Corn | Planting | Crop | ||||||||||
Corn 2nd Crop | Crop | Planting | ||||||||||
Beans | Planting | Crop | ||||||||||
Beans 2nd Crop | Planting | Crop | ||||||||||
Cotton | Crop | Planting | ||||||||||
Cotton 2nd Crop | Crop | |||||||||||
Sugarcane | Crop | Crop | ||||||||||
Planting Status
100% Planted
100% Planted
100% Planted
100% Planted
Harvest Status
95% Harvested
28% Harvested
100% Harvested
0% Harvested
Grains and Cotton
Production per product (tons) | 22/23 Harvest | 23/24 Harvest | Change | 23/24 Harvest | Change |
Realized | Estimated | (%) | Projected | (%) | |
Soybean | 204.606 | 248.471 | 21% | 202.793 | -18% |
Corn | 53.700 | 60.853 | 13% | 19.601 | -68% |
Corn - 2nd Crop | 69.628 | 102.566 | 47% | 61.180 | -40% |
Beans | 2.057 | 5.631 | n.a. | 8.264 | 47% |
Beans - 2nd Crop | 1.957 | 2.221 | 13% | 5.023 | n.a. |
Cotton | 13.345 | 13.546 | 2% | 14.069 | 4% |
Cotton - 2nd Crop | 8.795 | 12.740 | 45% | 12.740 | 0% |
Total | 354.088 | 446.028 | 26% | 323.669 | -27% |
We updated the projected production of grains and cotton in the 23/24 crop year to 324,000 tons, a reduction of 27% from the initial estimate, due to the reduction in planted area and lower yield of some crops.
8
3Q24
The reduction in planted area can be explained by: (i) the high volatility in corn prices, resulting in a change in product mix and a decrease in corn planted area (first and second crop) by 9,200 hectares; and (ii) weather conditions during the ideal planting window, leading to areas of corn and soybeans not being planted in Bahia and Paraguay.
The reduction in tons produced is mainly explained by: (i) the decrease in planted area, which represents approximately 95,000 tons; (ii) weather conditions; and (iii) crop management during crop development.
Paraguayan crops were the most affected by weather conditions; the lack of rain significantly impacted corn and soybean yields. As for cotton, rainfall forecasts are favorable and yield could be in line with estimates.
Sugarcane
Sugarcane Harvest Year Result | 2023 Harvest Estimated | 2023 Harvest Realized | Change | 2024 Harvest Estimated | Change |
(Apr/01 to Dec/31) | (Apr/01 to Dec/31) | (%) | (Apr/01 to Dec/31) | (%) | |
Tons harvested | 2.121.691 | 1.975.027 | -7% | 2.076.046 | 5% |
Hectares harvested | 25.178 | 24.951 | -1% | 24.801 | -1% |
TCH - Harvest tons per hectares | 84,27 | 79,16 | -6% | 83,71 | 6% |
For the 2024 crop, we have started operations in São Paulo, one of the main sugarcane energy hubs in Brazil. Sugarcane cultivated in the area will be used by a local mill that produces sugar and ethanol and we will be compensated for a mix of ethanol and sugar, which will provide us with greater assurance and predictability.
Overall weather forecasts in Brazil are favorable and we are optimistic about recovering TCH, which could reach 83.71 tons harvested per hectare, with total production of 2.0 million tons.
In Mato Grosso, we completed planting within the optimum window, with good moisture levels ensuring germination. In Maranhão, we had significant rainfall in March and April, which provided favorable conditions for planting. However, in São Paulo, planting has been delayed due to excessive rain and humidity.
In Bolivia, adverse weather conditions, characterized by lower rainfall and high temperatures between September and December, impacted the Company's operations. Although rainfall resumed in March and April, the sugarcane fields are still underdeveloped in comparison with previous years.
In April, we began harvest in Brazil, with favorable weather conditions contributing to well-developed sugarcane fields with high productivity potential.
Cattle Raising
22/23 Harvest | 23/24 Harvest | Change | 23/24 Harvest | Change | |
Cattle Raising | Realized | ||||
Realized | Estimated | (%) | (%) | ||
(until mar/31) | |||||
Hectares | 16.080 | 15.374 | -4% | 15.219 | -1% |
Number of heads | 21.652 | 20.164 | -7% | 19.108 | -5% |
Meat production (kg) | 2.572.377 | 2.918.317 | 13% | 1.415.982 | -51% |
Weight Gain per Day | 0,61 | 0,56 | -9% | 0,43 | -22% |
Weight Gain per hectare | 160 | 190 | 19% | 93 | -51% |
9
3Q24
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Disclaimer
BrasilAgro - Companhia Brasileira de Propriedades Agrícolas published this content on 08 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 08 May 2024 21:43:38 UTC.