BrasilAgro Companhia Brasileira de Propriedades Agrícolas - Q2 2023

Transcript

Ana Paula Zerbinati (Head of Investor Relations)

Good afternoon to all. We have a lot of people connected to hear our results. My name is Ana Paula, Head of Investor Relations at BrasilAgro. We're here to talk about the earnings in Q1, the harvest. Our financial statements follow the harvest year to minimize the impacts of seasonality, planting and harvesting. Here we will be talking about Q2 2023 and first 6 months of the same period. For those who are hearing in English, the presentation is available in chat. The presentation is available in the chat for those who are following us in English. Today we have our CEO, André Guillaumon, and Gustavo Javier Lopez, our CFO, to explain to you a little of what happened in the last few months and talk about perspectives for the future. Thank you. I'd like to pass the floor to André.

André Guillaumon (CEO)

André, you have the floor. Thank you, Ana Paula. I'd like to thank you all for participating. We will comment the earnings, bringing the company's numbers, the expectations. Ana used a very wise word, seasonality. Seasonality is a characteristic that is inherent to agribusiness. We will explain some important numbers. Some of these things have to do with seasonality and also the decision to sell. I hope that at the end of the call, we will have questions. We continue believing a lot in the company's results, in the company's business. We will have a quarter with interesting points about sugarcane. Surely we will see the meaning of these numbers. Another challenge, companies like us who have a double strategy, operational results plus sale of farms. Real estate happens, the sale of real estate, it happened. We made a small sale.

Of course, the objective is to really take the decision to sell at a time when we have good liquidity in the market. Let's see the highlights. We need a lot of time for the questions. Financial highlights, we have net revenue, BRL 484 million. Net income, BRL 29 million. Adjusted EBIT, BRL 124 million. We had a sale, a small sale, approximately 900 hectares, a sale in Rio do Meio, sold for BRL 62.4 million, showing once again, reminding you this asset came from the purchase we made. We sold part of this land previously, once again, we have a good result selling another part. Operational highlights in the semester. We finished planting grains. Here we have cotton also.

Everything that was planted in the semester until December 30th, we still have some grain, the end of the planting in Paraguay, and which is not included in this number. These are important highlights. A little later, we will talk about what is happening in this harvest. Next. When we talk about what we expect for this year and the next years, the earnings, we have important sustainability in commodities. When we talk about soybean, we're talking about a super harvest, more than 150 million tons in Brazil. When we look at international levels, we have 4.5 million tons in inventory in the world. We have a super harvest. We have also Argentina with an important drop in the harvest. This is affecting Chicago in an aggressive way.

Brazil has a record of 100, a little over 150 million tons. Every day, the number surprises us, but the number was around 134, 135 million tons. Someone said I'm speaking a little low. Well, when we look at the other commodities, we have a drop, a small drop in the price of cotton. This is linked to inflation, to restrictions due to the coronavirus. It's a commodity that is going like we always say. It has a stable price. Also we have the China effect and ethanol. Ethanol is a highlight. We will talk a lot about this. Here we have many effects, especially in taxation and talking about taxes. No one likes to talk about taxes.

Our tax burden in Brazil is going down, this brings competitiveness for non-fossil fuels with a carbon footprint which is low. In fact, if we are concerned with the climate around the world, this is one of the points that will bring transformation. Here we show the behavior of the curve. Next, it's important when we talk about seasonality. We're in a harvest where we had a cost of planting. I don't remember such high prices for planting during my life. All the farmers paid a premium to be able to plant, to purchase a fertilizer during last year for this harvest now in progress. We begin to see signs of fertilizer prices going back to historical levels. We saw a MAP going from BRL 400 to BRL 1,200. The company really bought at BRL 950.

When we look at chloride, we bought a little before the war, I already mentioned this, and urea seasonality. I would like to highlight a graph that is here, where we see the numbers, the number of tons per bag. When you have stable prices for soybean, we see this relationship between product and fertilizer going back to levels that are close to historical levels, and this will give us a recovery in the margins for farmers, bringing also liquidity, and we will be talking more about this. Just a little information here. Fertilizer was a concern. We have bought everything, and we're now buying some fertilizers that we believe are strategic, and we have seen some changes in the prices. We'd like to remind you, when we decide to buy fertilizer, we look at contribution margin.

We always make the decision based on how much we will sell. This is a new slide that we're including, showing once again the company's concern with its business and also sustainability. As I always said, sustainability is in the company's DNA, a company that develops land in frontier regions and also is concerned about social issues. We are the first company to be part of the Novo Mercado in the SEC, and I will show you highlights for each one of these lines. The highlights for harvest 2021, 2022, 2023 in the environment, we determined to do the first report, the inventory of greenhouse effect gases. This is fundamental for us to measure, to begin working on this and to be more efficient as the years go by. In the concerning social issues with our institute, we have a summary.

In the institute, we're closing the semester here. In the institute, our projects are annual projects. We have this highlight. The institute, led by Ana Paula and her team, Tanya and Carla, we help more than 18,000 people. Reminding you that there is a focus on education. Education, building schools, preparing teachers in the regions where we are working. In governance, not only due to new regulations from the SEC in Brazil, the CVM, we had the approval of transactions with related parties. This also is very good for the investors. Also, we have an audit committee now and the maintenance of the tax committee. On the same page, what do we have? We have the metrics where we hired an outside company that does these reports on materiality. Eight points are analyzed in this metrics.

Eight points, beginning with health and in the workplace. People development, also greenhouse effect gases, climate changes, compliance, management of water resources, relationship with communities. What changed from the previous metrics to the current metrics? It included the SAS methodology, so a new balance. Some factors were included in the metrics. One thing that is new, innovation and technology. Productivity, we already had. Now it is more important. Greenhouse effect gases, relationship with communities, and biodiversity. What do we do with this? We bring this inside the company, and we work with the company's management and also civil society. We work on an action plan. We work on an action plan, and then we will have new surveys and make the necessary changes. Well, here, it's important to say that we're preparing the company more and more.

We will show the growth. The company this year is investing more than BRL 85 million, and here we separated some groups. I'd like to highlight when we talk about technology, we have projects in connectivity and important projects for monitoring and mapping in a just-in-time way. Also in technology, bio inputs. In infrastructure, we are building. We are now an important producer of soybean. We had a very small production of seeds for our units. We were a small producer of seeds. We're expanding this. We want to be able to supply seeds that are our own seeds. Certifying this, initially, we want to have a production unit for seeds for our needs. This has to do with the following. When we talked about irrigation, this is in a unit where we have an irrigation project that allows us to improve the production of seeds.

Some that we have, some seeds that we use are difficult to replicate, so we're checking all the units where we have irrigation to produce seeds. I'd like to call your attention. The company is beginning to have a more integrated vision, looking at where we can be more efficient within the chain and where we have value. We're analyzing and working on this. The company also, most of these BRL 85 million in investments are being invested in transformation. During the semester, we increased land. We acquired Panamby Farm in a partnership, also Regalito's. We acquired in Mato Grosso, Panamby Querência, Regalito in São Félix do Xingu, and São Domingos Farm, a new region in the west of Mato Grosso. These are 15,000 hectares that are now in operation that we transformed.

We'd like to remind you, all these units will plant the second crop. 15,000 hectares is the physical area. A little over 15,000, almost 16,000, 17,000 hectares are being transformed. I believe that here we have a highlight. In spite of being a company that sells assets, when we look at the graph on the left, we went from 134,000 hectares to 170,000 hectares in the last five years. This is a highlight. The company had the capacity to add a little more than 22,000 useful hectares. When we add the growth of area, even with sale, we saw the company's capacity to always increase its capacity to generate value to investors. In the pie charts we have here on the right, the breakdown of crops.

The company is more and more diversified now due to volatility in prices and commodities. The graph on the right shows areas that are ours, areas that are leased to third parties. Our objective, I already mentioned this many times, leasing must mitigate volatility. Our own land reduces the need for capital, it's a win-win situation. Well, here, everyone's interested to see what happened with sugarcane. And the harvest. The harvest, 100% of the planting is over. We finished planting within the windows that we call ideal planting windows. In Brazil and in Paraguay, we began the harvest. We began the harvest for soybeans, especially in Mato Grosso, a little in Xingu. We have been harvesting since January 11 with very good productivity. In a certain way, the company is not different from Brazil.

In the last few months, in the last 5 weeks, all the production units are working. We saw this in many regions, and soybean has been spectacular. We have a problem in the south. We don't have production units in the south where there are problems. As I always say, we still have some work to do, but we can see that the harvest will be very good within the company. Rainfall has been good. We have seen rain that was present in the central part of Brazil and also in the north. We see La Niña losing strength. The ideal world for farmers, for those who don't know, is to plant with La Niña and harvest during El Niño. La Niña anticipates rain and El Niño does the opposite.

We have a more neutral situation, which will certainly make the rainfall continue, and this will affect productivity in the second crop and will also help a lot in sugarcane. Next, please. Here we begin to see some more color. Fundamentally. Let me see if I can use the mouse. Beginning with tons produced, we have a drop. In our release, we had foreseen this drop, and we had an impact, especially you who follow us. Some of you follow these sugarcane crops. We had a drop in the center and south and also in Maranhão. In Maranhão, in the north, maybe rainfall and also a fire that we had during the harvest. When you have a fire, you don't lose sugarcane, but you have to anticipate the burned sugarcane. You anticipate maybe a sugarcane that was going to grow during 12 months.

You have to anticipate, for example, you have to harvest cane with 8 months. This has an important impact in productivity and also an important impact in the sugar content, ATR. The great highlight, later on, we will say more. What I'd like to highlight in this slide, in this drop in productivity, later on, we'll have a vision looking at each year. I say 2021 for every farmer was a spectacular year. We had a combination of productivity in the case of sugarcane and also high prices, a very positive price for the sugarcane sector. When we look at the harvest, a drop here from 132 to 124. When we look at 6 months, we see a drop of from 145 to 114. This is the impact.

Later on, we will explain in detail. I'd like to say once again, and I've said this constantly, we're going back to historical margins. Very attractive. Last year, we had a margin of BRL 10,000 per hectare. Now we're working with BRL 4,000-5,000. It's important to have this vision. When you look at every six months, you see the impact. When you have a drop in price that happened last year, we had. You have this effect, and this is the impact that we will analyze in detail. Well, everyone knows about this. This is the data for cattle. As I always say, this, it's. We use cattle raising while we transform the land, and it's a transition phase. We have here the number of heads of cattle. We have been maintaining.

Some of this area will be transformed in the next few years to arable land. We have GMD. Here, as you can see, I'd like to say that the highest GMD is in December, January, February, and March. When we look at the semester, the semester includes one month of GMD. This is average daily gain in weight during the semester. The other semester, it's a little lower. Here, too, we had late rainfall in Paraguay. In Paraguay, we had a lower GMD in December and January. Today, everything is back to normal. Rainfall has gone back to normal. This is a picture of the semester. Well, talking about how the company is positioning itself, let's look at 2022, 2023. The company has 65%, 68% of the soybean sold at a price of BRL 14.62.

I'd like to remind you, we began to sell products with soybean at BRL 12, BRL 13, BRL 13.20, BRL 13.17. Today, we have an exchange rate, as I mentioned, around BRL 5.52. Our exchange rate, BRL 5.52. The other crops, we're making progress, less in corn. Most of this corn is second crop. In Mato Grosso, cotton, the opposite. Cotton is a crop that you sell more rapidly, and you have interesting operations in the beginning. We have sold more than 60% of cotton at the price of BRL 0.87-BRL 0.88 per pound. Here we sold at a time of volatility and with the exchange rate and the months before the elections in Brazil. We sold at BRL 5.70 per dollar. Unfortunately, Brazil is not a recurring model for sugarcane, but we're hedging part of the production, especially in Maranhão.

During the harvest, we did hedging of 34%. The initial graph today, ethanol is being sold for 2,600 per cubic meters, and this is the price we used. Well, the next slide. Now, I'd like to pass the floor to Gustavo, our CFO, and he will talk about the numbers.

Gustavo Javier Lopez (CFO)

Thank you, André. Welcome to our conference call here. Let's begin. First, we have six months already. As we said, two-thirds of the harvest was already harvested, and we have the sale of the previous harvest. We look at six months, 2023, we have a pro-profit of BRL 29 million, and it's important to tell you about expectation the company had concerning this number. We compare with the same period last year, we see a large difference.

André Guillaumon (CEO)

In terms of inventory, we had soybean, 35,000 tons, 620,000 tons of corn. This inventory was sold at the soybean with the same price, very similar prices to the previous year. In the case of corn, a little higher than we had reported in the previous year. We saw a contribution margin that was a little lower due to the increase in the prices of fertilizer, especially in the second crop. We understood this expectation for a bit. The sale we knew would represent BRL 90 million. In fact, we were able to carry out our plan. When we compared this with the previous year, we had 50,000 tons extra more in soybean.

We have to remember that the costs that we had, 3,600 per hectare prices, the price of soybean bags went to 160. We had a result of BRL 90 million more in the six months of the previous year. There's a difference between what we estimated and the operational EBITDA. We had a difference in sugarcane. In sugarcane, André said we had already foreseen 100,000 tons less in production. This had an impact of BRL 50 million when we compare with the same harvest previous year. We knew BRL 25 million actually. BRL 15 million was the cost, and we had a higher price in diesel oil from BRL 4.80 to BRL 6.60. The impact on each ton that is harvested two to three liters. This is a very relevant cost.

We had calculated BRL 50 million. Also, the price and the effect in September, October, November, which had a strong impact on the semester's results, especially the last semester. When we look at the revenue, BRL 455 million, when we compare this with the previous year, and here we have BRL 80 million in volume, and the difference comes from sugarcane. The less volume. We know we have a combination of the sale of real estate. Last year in the six months, we had recorded part of the sale of a farm. We have another part that will be recorded in the next year. We had the sale of part of a farm in Rio do Meio, worth BRL 216,000. We hope to continue this.

When we look at the adjusted EBITDA, we see everything that we expected due to the impact of price and lower volume, which was estimated, and especially due to the fire. In the end, this had an effect of BRL 360 million. In the adjusted amount, we see a combination of two activities: the sale of farms and operations, BRL 124 million. Last year, BRL 600 million. The difference is BRL 250 million due to the sale of farms. And the other difference, BRL 180 million, is due to the price of sugarcane and BRL 50 million, the higher costs, especially in sugarcane. On the next page we prepared, these are the three main activities. This is some detail about what I mentioned.

We knew that this year we would have 35,000 tons of soybean. Last year, 83,000 tons. Last year, we had an EBITDA to recognize during this semester. This year, we anticipated the sale of soybean. The prices that we sold for were very similar. The cost when we look at BRL per ton, the cost was higher, and the margin began to be ad-adjusted at 30%. Last year, we had an extraordinary year, 50% margin for grains and 65% margin for sugarcane. When we compare with the last year, especially when we look at the cost, chemicals, fertilizers, and diesel oil, as I mentioned, for sugarcane, this affected the contribution margin.

We look at corn in the middle, 114,000 tons. We sold almost all the inventory. The prices were a little higher, 7% higher. The cost also went up. Here we have the price of fertilizer. This has generated a lower contribution margin per ton, 30% margin. Sugarcane on the right, we're looking at the semester. We see that the price of sugarcane began very high, and then prices began to drop with a floor in September, then going up in October, November. During the 12 months, we saw that the price is still high. Prices are still high. We have a large difference in the semester. Last year, BRL 200 per ton.

I remember that. Sixty percent of our production, we have a contract with a premium of 20% and this leverage even more this price shown during the, in the, in these six months. We see the price per ton and also the ATR which André showed, and so the margin. When we look at the full harvest, the margin is 30%-35%. We highlight, last year when we had BRL 230 million, we had a margin that we had never seen before. When we look at BRL 118 million in the same amount of land, we see that there is a margin of BRL 4,500-BRL 5,000 per hectare still above. If we consider that EBITDA BRL 8,000 extra because of depreciation. If we consider this, we see that margins are still high.

Here, we made all the adjustments, eliminating all biological aspects. We see sugarcane represents between 35%-40%, grains a little more. Here, as I said, in the next 6 months, we will have the total harvest for soybean, 150,000 tons of corn. All this will be in the result and will be represented in EBIT. On the next slide, we will see debt. We said that we have a company we are not very leveraged when we look at receivables, so we don't have high leverage. BRL 550 million without considering Alto Taquari farm, which we will deliver the farm, we will transfer 'cause it was sold. We will be receiving the payment next year. Here, this is our debt, BRL 560 million in the last quarters.

We took out a loan with an interest rate of 10.5%. This allows us to continue to have a debt that is low. The interest rate is lower than the CDI rate. We're working with a debt that is a little longer. We did this to buy some inputs, especially for the next harvest. We have the cash, 300 million BRL in cash and adjusted EBITDA. Net debt, net adjusted debt is very low. In terms of debt, the company is very healthy. Now the evolution of our shares, share price. Here, as always, we believe we have a great opportunity to have a higher price for our shares. We know that this was foreseen, as we mentioned, due to the price of commodities, especially sugarcane. We don't control the prices.

We are always doing our best to guarantee the productivity, but still we understand that the company has a great potential selling farms, having good harvests, and especially the company will also continue to transform cattle raising land into farmland. We understand that there are excellent opportunities for investments. Thank you. Now we'd like to begin the Q&A session.

Ana Paula Zerbinati (Head of Investor Relations)

Thank you, André. Thank you, Gustavo. We have a few questions, but first we will hear Thiago Duarte from BTG.

Thiago Duarte (Managing Director)

Good afternoon. Can you hear me?

André Guillaumon (CEO)

Yes, we can hear you very well.

Thiago Duarte (Managing Director)

Thank you, Gustavo. Good afternoon, André, Gustavo. Two questions. The first involving the results from the sugarcane operation. You talked a lot about the price of sugarcane, the ATR ethanol. Yes, you gave us good information on slide 13, slide 12 or 13, about the gross results.

When we look at the results in the quarter, what really hurt more than price was the cost during the quarter, with a strong drop in productivity and relevant increase in the price, unit price. Does this make sense? The cost was much higher than the average cost of the semester as you show. More than this, I'd like to understand, first of all, do you believe that the cost per hectare that you projected for this harvest 2022, 2023 of 10,300, does this still make sense in spite of the result of this semester? How much do you believe there will be a drop in the price of cost when we believe productivity will increase in your region next year? I'd like to know about this.

The second question, André, in one of his comments to the press yesterday night, André was very optimistic in relation to the sale of land. If you could give us more details where you see opportunities to sell farmland. I believe that there are more opportunities to sell land than to buy land. Thank you,

André Guillaumon (CEO)

Thiago. Very good questions. Gustavo, would you like to begin with the cost allocation and the impact due to the drop? I can talk about the cost in the future and sale of land.

Gustavo Javier Lopez (CFO)

Thank you, Thiago. In fact, yes. If we look on slide 13, we will see that we have BRL 50 million in higher costs. Higher costs equivalent to BRL 50 million. This represents 45%. This is what we estimated in price increase, the price of diesel oil, the impact of fertilizer prices.

What you said is true. What happened in the last quarter, the area that suffered the fire that was burned, we prepared strategies to avoid having impact in the next harvest. We bought some inputs. We began to use some fertilizers. When you look at the last quarter, yes, there is a great impact. Now, we have to understand that we have a higher cost. When you have 200,000 tons less, the price per ton also goes up. This increase is. That's why it's this high. In fact, for next year, we want to avoid this impact next year. We want to maintain our revenue, and we understand that now we have to begin looking at costs. There's news about a drop in the price of diesel oil. This has a great impact.

There will be a drop in diesel oil. We have to revisit our costs.

André Guillaumon (CEO)

Thank you, Gustavo. Supplementing this issue of costs, Gustavo explained well. Thiago, we begin to see prices. Recently, there was news about a lower price of diesel oil. This has a great impact. I was talking to investors and I made a calculation. In soybean harvest, you use 12 liters per hectare diesel oil. In sugarcane, you spend 170 liters of diesel oil in the harvest. There is a great difference. When we look at our forecast, we saw an increase in the price of diesel oil. When we look at if 2021, diesel oil used to cost BRL 3.80, and today it's twice BRL 6.80 per liter.

It's 2x the price with this impact. Second question. When we talk about land, sale of land, purchase of land, there's an interesting thermometer. In the last few months, there has been a great interest in buying our assets. Brazilian agriculture is not separate from other things, but in a certain way, farmers still have a good liquidity. We had a year. We're talking about margins of 28%-32%. When we look at this, we see I made a calculation this morning. When we look at the cost of production of a hectare of soybean, last year, BRL 31-BRL 32 to produce a hectare. Today, the price has dropped to BRL 28. With this, I always say that what brings liquidity to the farmer is a good harvest, even more than good prices.

I always say the farmer tolerates greater fluctuations in price, but they don't tolerate fluctuations in performance. We're looking at a very high harvest in the Midwest and in the state of Bahia. In Bahia, we should have a record harvest, there's a lot of liquidity, and you know that we're going to capture this. This is for the sale of farmland. We will probably have more sales in the next few months. We're looking at purchase too. You can expect that Everyone asks me, "How much will you sell?" And I say, "Look at the last five years. This is what we want." It's important to say that during the last year, we made purchases in 2021. Now we had a small sale, but it becomes important in the last six months. It became important.

Thiago Duarte (Managing Director)

Thank you.

Very clear.

Ana Paula Zerbinati (Head of Investor Relations)

Thank you, Thiago. Now, Pedro Fonseca.

Speaker 4

Good morning, Andréi, Gustavo, Ana. Thank you for the opportunity. First, a follow-up of Thiago's question. I'd like to confirm about sugarcane. In terms of production productivity, it makes sense to think of a recovery in the next harvest going back to 2,100, which you had estimated for the harvest in 2022. Is that correct? The second, concerning what Andréi mentioned in the beginning of the presentation, that the company was seeing new prices. Today, we have a good situation in performance. What can we expect in terms of hedging in the short term? Hedging. Do you see an opportunity in a certain commodity or not? Thank you.

André Guillaumon (CEO)

Thank you, Pedro. Okay. I'm sure that we're recovering. Yes. There's a detail.

It's difficult to see this impact. When we had the coronavirus, beginning of the pandemic, no one knew what would happen. Like every company, this affected the planting of sugarcane. Also, we discussed this this week. In 2020, we preserved cash. Now last year, we planted more, and this year, we are planting an important amount of sugarcane. Yes, we're expecting a recovery for this reason and also a recovery because we're in making important investments in irrigation for our plantations in Maranhão. We're installing more piping, more irrigation equipment. Sugarcane grows with fertilizer, sun and water. We should have a good result. In the Midwest, sugarcane is doing very well. We expect a good recovery in Midwest, which is what is happening in Center and South.

Brazil going from 540, going back to 740 million tons. In terms of performance, in the morning we had a meeting and we discussed this point this morning. We're making progress with more hedge, more hedging because we begin. We're very cautious until we get the first estimates. And today we began to receive the estimates. The farms that will begin harvest in the next 15 days, where estimates were already made, these estimates are favorable. There is a trend to sell more, especially soybean, and with this price, a good price in Chicago. This is the recovery. Pedro, you say, "What, what opportunities are you seeing?" We have two things we're looking at and trying to capture. One we captured part of already. We saw recently, you must also follow cotton.

We saw a strengthening of the premiums for cotton. We always worked with more negative basis. Now we're closing cotton in the next harvest with BRL 500. Just to remind you, we were selling at BRL 250. Now we see a recovery in basis points for the next harvest, an important increase. When we see a recovery in basis points, we can be more aggressive in the sale. In the case of soybean, there is a great concern in the market and maybe an opportunity, a super harvest that is arriving. We have two factors that we're discussing. We have farmers selling point is low. Farm selling is low. Second, we have the main ports, especially in the South, that... There is a great opportunity, this can happen to strengthen the basis.

Talking about this during harvest is difficult to believe, I know, but there is a lack, there is a lack of soybean. China will buy soybean again from Brazil. High prices in Chicago and strengthening of the basis. We see this on a regional basis. In our cases, we're looking at each region, each farm, looking at logistics. The strengthening of basis will not happen in the same way. For example, it will not go up everywhere. We believe there are some regions, some corridors that will have bottlenecks. While we have bottlenecks, there may be a drop in the premium. We're monitoring the opportunities. When you ask me about new things, I would say basis of cotton and a lot of attention in the basis of soybean in the next few months. Thank you.

Ana Paula Zerbinati (Head of Investor Relations)

We received...

I will join here two questions from Vinicius. What are the perspectives for the next quarters concerning the recovery of historical profits, if we can go back to historical profits that we had in 2022? Also Claudio's question concerning the margins of the main products. We stressed that in the last two years, they were well above the historical averages. Can you talk about the historical averages and prices we can have in the medium term?

André Guillaumon (CEO)

Well, Vinicius and Claudio, let's begin with profit. Yes, last year, as we said, we had a perfect combination. We have a commitment. The company will continue to grow, increasing leasing, purchases, operations. Now, the picture of last year in terms of sugarcane, when we talked about margin, we had a margin of BRL 10,000 per hectare.

In the next few years, being realistic, we believe that the margin per hectare for sugarcane will be 5,000 or 6,000. When we summarize margin and crop. We would have a soybean with the cost reductions I mentioned. We're talking about historical margins of soybean around 30%, 40%. This is what we see. The different thing, what is challenging, is the margin for corn. Corn has been a crop that in the second crop has been very profitable, and Brazil is exporting a lot of corn. We have two challenges in corn. The increase in exports and of course, there is a bottleneck in logistics. We're talking about Brazil with 130 million tons. In 2030, we will have 180,000 tons. A hundred and eighty million tons, we have two large drivers that have to grow.

The exports, production, and consumption of ethanol from corn, ethanol made from corn. I see this with. There was a lot of optimism, the ethanol used in the market and exports. corn was always had highs and lows, depending on the domestic market, when we look at corn in the long term, until 2030, we will be important exporters and the local industry using corn will try to have a more regulated supply. We have. I wouldn't call it a recovery. In the case of corn, we have different profit levels. In the case of cotton, it is leveraged due to the growth of income around the world, cotton, even with the pandemic, has less growth. In the case of cotton, the way I see this, there is competition with synthetic fibers.

I believe that oil at BRL 80-$90 will make cotton advantages. It cannot compete with corn and soybean when you look at the capital invested. Cotton with a margin of BRL 4,500-BRL 5,000 per hectare. When you look at the investment, it's 30%. When you look at soybean, you're also talking about BRL 4,000 with a lower investment. I would tell you that to help you in your forecast, soybean, 30%-40%. Corn, second crop 6 years ago had no margin, and now we have a margin of almost half of the margin of soybean. This year was even better. This year, corn was very similar to soybean and cotton. Sugarcane, I'm optimistic in the medium and long term with the carbon footprint. Ethanol, we know, is better.

When people buy fuel, they buy ethanol. It's a clean fuel, this is being seen all over the world. The ethanol market is important. Another thing that is important that I see in sugar, we see important players, sugar producers, using part of the production for ethanol. You have the mixture of 20%. Other countries are also using ethanol. We have an inventory of sugar. The world has sugar for one month, inventories are tight. Corn, also inventory is tight around the world. We have a consumption of 1 billion of 170 and a consumption of 1.60. Soybean too. I can see in the short term the same prices. I can see the same prices in the near term.

We have to look also at the exchange rate. All this has a great influence, especially the exchange rate. We're imagining that the exchange rate will be BRL 4.9-BRL 5 per dollar.

Ana Paula Zerbinati (Head of Investor Relations)

We have a question from Julia Rizzo. What's your vision in terms of the price for sugar and ethanol? The million-dollar question.

André Guillaumon (CEO)

Julia, that's difficult. Even with a crystal ball, I can't... Well, we have to look at the basis, and then we see what we can expect. If you look at ethanol, we see Brazil growing production all the time. Brazil in ethanol, 27 billion liters of ethanol. Brazil with ethanol from corn, 4.5 billion liters. Ethanol from corn, billion liters. We saw an important growth when we look every year, the growth of almost 1 billion liters in one year growth. We see also exports. Exports...

Ethanol exports that are now higher and higher. This year, we exported 2.5 billion liters of ethanol. We're beginning to position ourselves as a country that exports ethanol. When I look at this, you can see a more regular price because you have domestic market that is very strong and an export market demanding Brazilian ethanol. In the case of sugarcane, when we look at India, the fluctuations we have in the regions, sugar, unfortunately, without Brazil, it's produced in monsoon climate regions. They are very erratic, these other regions outside Brazil. One year, a lot of rainfall, another year without rainfall. Sugarcane depends on this. It's a product that is always with highs and lows. Sugar is the cheapest energy in the world.

We look on a worldwide level, we see still regions with a lot of poverty. Sugar is very important in some countries for food. When we look at all of this, we see ethanol becoming growing and becoming interesting. We see sugar linked to climate fluctuations and a new driver, some new countries producing ethanol. If we look at historical prices, I would expect historical prices higher than in the last 10, higher than in the last 10 years for these two commodities. We have annual fluctuations too. Well, many people thanking us. We have some questions that were already answered. What the company is thinking about dividends, whether we will have an intermediate dividend. This is not in the radar. What we expect, that's the billion-dollar question. The billion-dollar question.

If we expect higher share prices and will we buy back shares? That is another question, whether we will buy back shares. Okay. Well, dividends, the company's policy, you have heard us. When we have good results due to the sale of farms, and this has been happening, we're very aggressive in paying dividends. It's very fair to pay back the investors that trusted in us. If we need money to make investments, we will also request this. Now we have seen that the MOIC is 1 to 5. When we have good projects, we will be less aggressive in paying dividends. When we have less good projects, even with projects. In the last year, the company did the following. The company sold, lease, and buy. Last year, this is what we did. We sold, we leased, and we bought.

When you have a portfolio becoming mature and then you sell more, and we know that most of our gains, most of our profit comes from the sale of land. In the next few years, we will see this. In buying back shares, we discussed this a lot last year. We will never make a decision that everyone will be happy. Some shareholders wanted dividends, others wanted us to buy back shares. In this scenario, the best we can do is giving the money back to shareholders, and if they want to buy, they can buy shares. The company has a good liquidity. In the past, you said, "Either I pay dividends or people want dividends to buy more shares." It made sense to buy back shares. Today, our company has a much better liquidity after the follow-on BRL 20 million.

This changed a lot. Today, if I use the investor's hat, if there's liquidity, and if I want to reinvest, I can buy. Shareholders now have more options than in the past when we didn't have liquidity. We there is nothing in the radar concerning buying back of shares, but this can change. If we believe the prices are discounted, we might decide to buy back shares. If we believe that we don't have good land to buy and that we will. If we have resources left over after paying dividends, we could, in the future, buy back shares. We don't have that in the radar. The value of the shares. Yes. I always say there's a great challenge. Our team is always looking at this.

When we began, we had an NAV BRL 1.6, BRL 1.3. An NAV which is much higher when we look at the company, the price of shares should be BRL 40. Our shares had to be worth BRL 40. When we look at the NAV in the past, we're always increasing the company's NAV. I always say that we're looking at this. We increase NAV and we close gap. This is good. The company is always growing, so it's a good investment. It's an investment that has brought an excellent profitability for investors and will continue this way. When we paid 16% dividend yield, 16, plus the appreciation of the land, it was a spectacular profitability. The company pays dividends and is always growing. We're increasing the NAV, we're increasing the operation, we're generating more cash flow.

I have no doubts that things should improve much more.

Gustavo Javier Lopez (CFO)

André, just supplementing your words. In the last five, six years, we paid BRL 1 billion in dividends, and the company is strong, BRL 280 million in cumulative results. We mentioned that we sold farms, and we will receive the payment. In terms of the price of shares, what we have seen, many people look at the company looking at cash flow. Although we have been buying and selling farms every year, but I believe that we have a challenge to increase the planted area, generate more cash. Recently, we leased farms. There is 1 that was acquired and has a potential for a crop and a second crop.

André Guillaumon (CEO)

It's pasture land we're transforming into arable land. With this, we believe that with this, we would have more cash flow. This is what we want. This is what we're after on a permanent basis, growth, a growth of 10%, 12% a year in planted area.

Ana Paula Zerbinati (Head of Investor Relations)

Fine, Gustavo. Well, we're running a little late. We have some questions from Gabrielle, which is important. Let's see. First question. In the last quarter, apart from sugarcane, we had a drop due to the sale of soybean. What is the sales strategy this semester, and why did we have less revenue and volume? The increase in short-term debt. Would you extend the maturity of this debt? Whether it's time to sell and also the cost of freight. Is it going down or is the price of freight still very high?

André Guillaumon (CEO)

I know we could talk about this for another two hours. Okay. Let's talk about the revenue. Freight. We're not seeing lower prices in freight. We see signs of a drop in the price of diesel oil. Harvest is arriving. Prices are not going up, but we don't see the price of freight going down. In terms of debts, the company is. We have cultivated areas, 170,000 hectares, and this needs a lot of working capital. Since we have been working with some banks for a long time, yes, you saw a growth in debt. As Gustavo said, it's a short-term debt, but with a price that is lower than the CDI interest index. It's a loan for working capital. The company is growing a lot. Five years ago, we had a working capital of BRL 200 million.

Today, we have a working capital of BRL 700 million every year. We have a growth in area, and also we had to grow the working capital. Third point, the profitability is we make decisions to sell. When we believe that the price of an asset is going down, not due to operations, not due to commodity prices, but because of higher prices of assets, we know it's time to sell the farmland. This is the logic. Concerning the strategy of selling grain. Every year, you have a different situation. We explained the fluctuation in quarters. Some years, we see a certain curve. What I can tell you is the strategy in the near and medium term has new factors for decision-making.

2, 3 years ago, with an interest rate of 2%, 3%, 4%, 5%, you would say, "I can wait more or less." The way we see it today, you have to be very efficient because you can wait to sell soybean in April, May, or in September, but you will have a cost of one point something a month. The sales strategy is always to have this, the best profitability. We see the price and the cost of capital in the period. If we believe it makes sense to hold the grains we hold. In some regions, you have to hold the sales due to logistics. I'll give you an example. In Xingu, we have a problem for soybean. The whole region has because of the roads. In Piauí, the opposite. It's easy to export it from the Itaqui port.

The strategy to hold back or to sell is cost of capital and these points that I mentioned.

Gustavo Javier Lopez (CFO)

Well, André. André, you answered the question. What we do, we have a capacity for 40%, 50% of... We can hold back 40% to 50% for the next semester. As André said, we had logistics problem and trading companies were paying premiums. Since the premiums were high, we anticipated the sale of this inventory in the last semester of last year. This decision, André mentioned premium, cost of freight. With a cost of 3%, we couldn't hold. We look at logistics, inventory to sell 40%, 50% of the harvest. Every year, we make decisions based on these points.

Ana Paula Zerbinati (Head of Investor Relations)

Well, I believe this is it.

If we have more questions, please get in touch with us in our investor relations department. I will be available to answer any other questions you may have. We're running a little late. Someone said, "Oh, we might we could spend all afternoon," unfortunately, we have to close the meeting. Thank you very much, André, Gustavo, for your time. We had a very good participation. I hope we clarified all the points. Now I'd like to pass the floor to André for his final comments.

André Guillaumon (CEO)

Thank you. Well, once again, thank you for trusting, for your trust. I would say that once again, since we have a good participation, many participants, we said this in the media and even in the other calls, I'd like to reinforce one point, the company's ability to work with people.

We were recognized with the award, Great Place To Work, one of the five best companies to work in agribusiness. I repeat, this recognition shows the sustainability of the business. It's not only myself, André, and Paula. We had such a good award because we have a team that is engaged, that is focused. Once again, I'd like to thank the investors for the trust in our team. This work will continue working with people, revisiting our strategy, looking at everything and making the company grow. Thank you. We wish you a good afternoon.