BrasilAgro Companhia Brasileira de Propriedades Agrícolas - Earnings Call - Q3 2025

Transcript

Ana Paula Zerbinati (Head of Investor Relations)

Good morning, everyone. We are here once again to disclose our earnings for BrasilAgro. Today we're going to talk about the closing of our period from 31 March 2025, the nine months accumulated for harvest year 2024-2025.

Good morning, everyone. Today I have André, our CEO, and Gustavo López, our CFO. For those listening in English, we have the presentation available on the chat in the English version, and at the end we'll also open up to Q&A. I'll pass the word on to André, and have a great call.

Good morning, everyone. Thank you, Ana Paula. Thank you, everyone, once again for being with us. Listening to the results, I'm going to tell you how we've been performing in the third quarter. Everyone knows this is a year with a lot of volatility, especially volatility in the currency.

We are going to share a bit of the strategies in the company and how the company has been able to really deliver the expected results to our shareholders. The highlights, as we always start off with them, are BRL 870 million of net revenue in the first nine months, BRL 195 million in adjusted EBITDA, a year of a lot of volatility, and BRL 76 million in net income. It is good to always remember a bit of the history. When we defined the budget back then, we had at that moment a dollar of $4.90, $4.80. We were very aggressive because we looked at the Focus news estimates, and they were talking about $5.20, $5.30 by the end of the year. We thought it would not be possible to have such a difference in value, and we budgeted $5.30.

The campaign we're working on, we considered a $530 dollar in the beginning of the year. We had a challenge to reach $530, and then from $490 we reached $640 and went back to $570. A lot of volatility in the company was really keeping their eye open to not hinder the results operationally in the company. The company, a little more up ahead, will provide more details. Despite this currency volatility we went through during this period, we also had the new American management come along with all of the tariffs. It is also worth mentioning later that we really believe that marginally Brazil could be benefited from this discussion and is already benefited. I'm going to give you some details. For soy, for example, we were also there. We had pricing reduction expectations due to the supply and demand.

We saw in the last few months that there was a recovery in the premiums. We are going to detail the strategy of the company a little more to capture this possibility even more with premiums that we expect up ahead. For corn, this is a crop that has been really standing out in Brazil. We have started to produce Corn ethanol as well in Brazil, which has brought a lot of stability in the price of Corn. You have some markets that stand out, for example, some new units that are being opened. This has helped us have stable prices, especially for Maranhão and the unit there in Balsas, where we have been able to anticipate the sales of Corn, which is something we did not have in the past.

You would produce Corn, it would go to the internal market or the exports market, depending on where this production was concentrated. Now we start seeing the possibility of locking this in a bit better. Corn and cotton started to come out of that, went sideways a lot. Later we'll discuss this. We also talked about the cycle of animal protein and cattle. We have important recovery due to the price of cattle as well. Ethanol also has an intrinsic connection with petroleum. We've been really monitoring this. You guys have also been looking at the possibility of this reduction as well. This possibility of production compared to the previous harvest. This harvest, the sector had expectations of 610-620 million tons, and now it's being reviewed to 580 million tons, which is what really has been sustaining the price of the ethanol and sugarcane.

It's also at about 17. Next, please. I think that once again, it's worth mentioning. We've been always monitoring the margins, contribution margins, and we are finishing the harvest for summer. We're already positioning ourselves for the next harvest. That's where you have a disadvantage, which is a component you can't lock in way before to establish these exchange rate relationships. It's a big challenge still. That's where advances have been in the commercialization. That also impacted. We see what had to go up is going up, of course. One important highlight is fertilizers have two moments for consumption in the world, where the northern hemisphere is planting and when the southern hemisphere is planting. We're leaving the peak of demand in the northern hemisphere. The Americans, U.S., and Europe and the entire Northern Hemisphere finished their plantation.

Now, the month of May, most of this is happening in April. This made prices accelerate a bit. Now we expect things to kind of move sideways due to the demand in the Southern Hemisphere. Here on this graph, we also have our position. We closed 45% phosphate, 50% chlorate. We are also advancing discussions on defensives, which is a discussion that's a little more delayed. We've been able to also pressure these negotiations a lot to have a reduction in the dollarized price. If we consider dollar by dollar, the price would be a lot tighter compared to the $530 last year. If you look at the graph on the bottom, you also see the exchange ratios, and they're kind of operating in a linear manner. We already had some exchange ratios in phosphate products that were better than in urea.

That's also quite similar. If we look at the inflationary correction in this period, these are products where we think there's not too much room for drops in phosphate products. I think we're at this year that's not less trivial, which is the cost of capital, right? Anticipating purchases considers having capital beforehand with a cost of capital that's very expensive. No doubt at all, the company's cash is allocated with very high interest, and we pressure. We have commercial pressure that should be better than what we allocate cash for or possible rates that producers would consider for debt-taking. We're going to kind of strangle the market a bit until you have demand coming around. Big companies can't wait to buy lunch to dinner, but we are here to really commit to have a good business and a better harvest as well.

A quick summary here of the production in the company. I want to highlight a few things. We need to talk about the good news and the bad news, but especially the highlights that have been taking place, right? The company in the last two years incorporated over 20,000 hectares of plantations, especially in Mato Grosso region, mostly three units in Mato Grosso, Panambi and units that we leased. That incremented the surface a lot. Of course, you know our business model is always looking at non-mature areas and making them become more mature, which brings in a little bit of volatility to our results. We had a lot of soy in the first year in this harvest in Mato Grosso, in areas that sell pastures. We had areas that did really well.

We considered about four units, two in Mato Grosso and one in Maranhão. Sorry, one in Piauí and one in Bahia that produced a little bit below what we had budgeted. In exchange of these 16 production units, the other ones were a little bit above. It is important to highlight that the company in the previous harvest is 300,000 tons. What we consider for soy, we considered what was the reduction in the area, which is really connected to the corn, the off-season harvest, etc. Also the effects of the productivity. Projected 600 toneladas a menos in function of the reduction of the plantio, and 28 in function of those four units in Mato Grosso, which had a unit with a lot of rain problems in the Chapada dos Guimarães. Significant excessive rain, a unit there with over 3,000 millimeters of rain.

That was the main issue in Mato Grosso. In Bahia, Bahia was spectacular until February. In February, we had a 35-day unexpected summer period. The later ones had a bigger impact for corn. This was adequate and adjusted accordingly. The contribution margin in our first exercise was really bad, but that was adapted. In the corn harvest, you do not have much triggers to mess with. You have this off-season or second harvest corn. That is where we were able to reduce the cotton off-season area as well. We increased the corn, which was an excellent decision, very precise when we looked at the contribution margin, production, and profitability of the crops. The cost of capital is super important. When we consider cotton, we are considering a crop with costs of about BRL 12,000-BRL 14,000, depending on the unit.

It's a very important crop for capital allocation. When you look at the ROI, we were able to reduce this area significantly for the harvest of corn. In the next graph, I talked about the volatility in the year. Here you can see the numbers we're closing with. Soy, we had a more aggressive budget. When we looked at the actual prices per sac, we'll be able to deliver 2% above in the BRL per sac, of course, due to the dollar that was not locked in. The currency, once again, we've been locking this in ever since the beginning. This started off in April-May from last year. We had this rush of the dollar, and we had a lot being sold already. It's worth mentioning we had a budget of a dollar that was $5.30.

We were locking in the margins and the contribution costs. At that moment, you had a dollar screen of $4.90. We were locking in what we could do there. We were able to close soy at about $10.90, better than what we see on the screen today. Currency is $5.40, worse than what it was now. Back then, we had to take on a stance to be able to lock in the prices. For ethanol, we had good recovery. We were able to take on significant recovery when it comes to price levels. Corn as well. For Corn, we locked in about 60% with prices that are almost on average in the company, at about 8 or 9 reais more expensive. For cotton, I think we were very fortunate in locking in the price of the pound per price.

The harvest that we are ending at 2024/2025, we have cotton of 77.30. Next harvest, we have also taken on some positions due to the currency. You can see we have closed cotton at 69, but the currency at 6.4. That allows us to have good value per sac. Another line that also impacts our results is the receivables from farms. Here, we are also taking on our position. We just brought in details for 2026. We will also take advantage of the volatility and the type of currency, locking in a bit more than 20% with the currency at 6.24. This is a photograph of our harvest. The summary of these numbers are the numbers Gustavo will be presenting now. Thank you so much, everyone. Thank you, André. Good morning, everyone.

We want to thank you all for your presence and monitoring and watching our presentation of these first nine months for 2024-2025. To highlight here the exercise in this that you can see on the left side here of the period for our financial year, you have a result of, as you can see, a net income where in the previous period we had reached BRL 5.9 million. On the right side, you can see that the main variations in this period went from the BRL 5.9 million expected. How did we reach the BRL 76 million in this period of nine months of 2025? Our best prices, especially for sugarcane and Corn, we saw a positive variation of about BRL 47 million, approximately, as well as a bigger volume sold of soy and sugarcane with a positive variation of BRL 20.6 million.

The price and volumes are a reflex of this increase in the net revenue, operational net revenue. If you believe there's a variation of about 20%, there are BRL 540 million in the same period the previous year. The sales of the farm at the Qatari, and that's what we had already considered in the previous semester. That explains the positive variation. On the other side, we also see the financial results considering the volatility that I mentioned, especially with the Chicago prices and real prices, all the way to the interest and the increment, also the Selic rate. They present a big variation when you compare from one year to the other.

The bottom part, right side here, considering the financial results, we can see how there is a reduction of the revenue and the financial investments and applications, which was proportional also to the volume and the cash. Last year, we operated with a cash of about BRL 330 million. This year, BRL 146 million because there is also a bit of a big investment in these areas that André mentioned that we incorporated gradually. You have the update of the fair value for leases, which also impacts about BRL 32 million. We had some new contracts and renewals. The increase in the Selic rate also impacts this. Previous year, also as part of these leases, we have the obligation to deliver the sugarcane at a negative variation in the price, which has positively benefited these leases in this year.

As we are having an increment in prices, this also helps to worsen this line a bit. Updating the fair value of the receivables, we have 7.8 million sacks of soy. Last year, they had registered a positive result of about BRL 31 million because there was a price of soy from Chicago that was a lot higher, about $12.5. The CDI was also about 10%. In 2025, the results, which were about BRL 4.7 million, had a dollar that was a lot better and a CDI of about 14.25%. We can say that this also impacted it. Last year, we also had some benefits in the financial results. Anyways, I just want to remind you that these are not actual results, right?

What actually has a cash effect would be the first line where you have the revenues from investments and you have the derivatives, of course, as long as they're actual, right? The interest also on the financing that is normally paid off. As you can see in the previous period, we had a profit of BRL 41.9 million. This year, we had a positive effect in some model and a negative impact of BRL 31 million, which would be 14 negative. As André mentioned, we were at a type of currency of about BRL 5.45, BRL 5.48, and the dollar reached levels of BRL 6.20, which is what we had considered also. This increment in the Selic rate of 13.5% considers the currency variations of the results that impacted things differently when we compare one exercise and the other.

Another line that I also want to highlight, the EBITDA and the margin of 10% last year, this amount was about BRL 16 million. Last year, remember, it was that year where we had a very high cost composition and price of commodities that dropped also. The value of the real that also gained a lot of value. When you consider the central part here, with the adjusted EBITDA, you can explain why there is not this variation of BRL 16.4 million to the BRL 295 million. As we can see, who most contributed was the sugarcane operation, BRL 48 million, soy, BRL 21 million, and especially the sale of the farm with the BRL 103 million. On the next page, we have the gross results for each crop.

Here, it's important to mention that all of these crops, except for soy, are related to the stock we sold in the previous harvest. When it comes to Corn, we had mentioned when we compare one period with the other, there was a very significant reduction in the amount produced and commercialized. We understood it would not be a good moment, and the margins did not really keep up with this. Due to agricultural issues, we sometimes need this for preserving the soil quality. The beans we also finished selling, sugarcane also we had already mentioned, BRL 1.3 million, and for the sugarcane. Also added on to part of our leases being in tons of sugarcane. The impact of pricing also impacts costs, but with margins of 33%. Our expectation for corn and for sugarcane is to keep the contribution margin.

For corn, where we had a contribution margin that was negative, with the impact of price and the internal demand. We consider we have very positive margins in corn in the pre-second harvest. Cotton is also a crop we're incorporating. We're working to be able to consolidate this in the basket of products in the company. As André has also mentioned, I think our expectation for this harvest is generally, when you consider the harvest and the second harvest, they're very positive. We have a lot of areas that are in areas that are irrigated, which gives us more comfort and safety. We understand that the margins here in this case are going to be very close to what we expect for the previous harvest.

I think we also have some work to do with the commercialization and the way we take care of the quality of this product to be able to have a balance in the subproduct. The soy, which we left for last, during this quarter, we had the main activity. De aquellas, más o menos unas 150,000. So about 150,000-160,000 tons. The strategy of the company was to ship more of this product in the second semester to be able to have an improvement in the premiums. The challenge we had with some farms in Mato Grosso do Sul with the rain issue made most of the production which was impacted due to lower productivity. We have very tight margins.

The expectation for the other 150,000 tons we have to commercialize is that these were all harvested with excellent quality, considering the farms that had really high productivity with costs per ton being a lot better than what we're presenting here. The prices, of course, will be because they didn't have discounts as we suffered in this first quarter. On the next slide here, you can see our debt in the company at the moment. The total debt level with a cash of BRL 105 million, BRL 779 million of the adjusted net debt. You can consider that the interest, the cost of our debt is a very low cost of debt. We were able to combine a series of instruments with different types of indexes. It allowed the company to have very low costs.

However, the Selic rate is at about 14% with a perspective of about 15%. As André has mentioned also, this is a concern we have, especially considering some crops where you have a return or contribution margin that's very good, such as the cotton case. You have a very high plantation cost. When we consider that this should be performed through part of the financing costs, the returns are very low. Now we're going to have an exercise to rethink the budget and the way we're going to fund. We were working with about BRL 1 billion of capital de giro, working capital. This year we had considered about 30%. There was an expectation that we had a year ago was that the interest would be headed towards 9%, and the scenario changed completely.

That is going to lead to us having to rethink how we are going to work on this. It is important to mention this debt is very balanced if you consider this working capital. We need about BRL 500 million, which are going to be maturing in 2-5 years, about BRL 37 million above 5 years. Another point that we always consider in our calculations, which has a cash effect, are the receivables for the sale of the farms. To receive this up ahead. With this, we are really comfortable considering the company's leverage. I think here we are wrapping up. Now we are going to start with our Q&A.

Thank you, André and Gustavo. We have two live questions here. Please, we can open up Pedro Fonseca's audio from XP for his live question. Pedro, you are on mute. Hi, it is good to see me.

Sorry, guys. Good morning, everyone. Good morning, André, Gustavo, Ana. It's great to speak with you. Thanks for taking my question. I actually have two here. First, about the purchase of land. André has been talking about this quite a bit. I even saw an article where you were talking about the regions of Maranhão and Piauí. I wanted to understand a bit of why the company considers this to be the most attractive regions. What's the profile of this land? What do you guys consider about pricing? Is there something we should expect to come in the short term? My first question is more about this purchase of land. The second question is about the trade war issues, right?

What have you guys been able to capture as opportunities in the trade war or even as risks when you consider this from a cost perspective? What do you guys think are going to be considered for soy next year? Thanks, guys. Pedro, as always, your questions are very intelligent and provocative. The first ones here we could spend a long time answering, but just to take advantage of what you mentioned on the article you read about what I said, there is a fundamental issue here, which is we always say the company needs to buy land whenever it wants to sell and sell land whenever it wants to buy. We need to be a company that takes on this approach. When I highlighted this region, Maranhão-Piauí, we were considering, I remember perfectly, that the reporter was asking me, like, where do you see more opportunities?

That is due to everything we were talking about, high cost of capital, etc. The opportunities always come out initially where you had more leverage in the last few years. In regions like Maranhão and Piauí, these are regions that had important expansions. We are talking about farmers that need to equate things. They were doing things really well. They had great margins. Now we know we are going to be in a commodity cycle. It is going to be a little tighter in the next few years due to the supply demand. It is important to highlight that this is a bet based on fundamental issues. You could have a tough drought period where you have a reversal in the supply, and then you have an interesting curve for commodities once again.

When you consider the fundamentals, we had a transitional stock of soy that's high and for corn that's low. Focusing especially in the regions that had high leverage in their land. We also talked about expansion in cattle-raising areas. This is going to continue to happen in Brazil. Farmers learned that it's more worth it to have an agricultural acre than a cattle acre. We've seen important recovery in cattle in the last year and a half. We had a perfect storm in the last years before because you had low price of cattle and good commodities, and everyone was kind of stepping on the accelerator to transform cattle-raising areas. Now we're going to balance this out. We'll still see a lot of investments in this. That's where we see opportunities. Yes, there are many opportunities, and we're working on these.

It's difficult with the interest rates we have today because just the walk is growing a lot. And the projects, we were searching for returns that we expect for our cash or that we would be able to apply to this. It's a moment where you have an inflection point, and we start noticing some opportunities. Once again, I mentioned for companies that manage their cash position. Bom, trade war, Pedro, esse é. Then about the trade war. Como eu falei, marginalmente, eu acho que a gente se beneficia. Is there a chapter apart? I think we benefit from this. And PRM is just talking about how we must be balanced with the size of the benefit, right? You see, oh, Chinese just go and buy soy in Brazil, but that's not going to happen because soy has an intrinsic beauty.

Soy is a commodity that in the last 15 or 20 years had half of its production in the Northern Semisphere and half in the Southern Hemisphere. This is wonderful for who's the customer of the commodity because imagine, I can supply my industry part of the year from the Northern Hemisphere and part of the year from the Southern Hemisphere. If I have the contrary, and you imagine, oh, now the trade war is going to send all of the Chinese, all the soy from China is going to come from Brazil then Chinese are going to definitely have to invest in stocking up there. We want ports to have everything set at once. The beauty of the soy complex around the world is that you have a balanced production between the Northern Hemisphere and the Southern Hemisphere.

In the last few years, the Southern Hemisphere was standing out, of course, we're producing more than the Northern Hemisphere, but that's what happens. In some way, we saw Chinese growing to like 105 million tons of imports at Brazil. De 45 até 70. Soy is exports. From 55 to 70. We benefited from this in the last few years. Não tem razão nenhuma. There's no reason to think that you're going to take all of the production in the southern hemisphere because that would require us to need to stock and have logistical structures set up during the rest of the six months of the year. That's not good for industry. Everyone knows this.

Besides this, when you start thinking in the following way, we experienced maybe the last 15 years differently than what we're going to experience in the next 10 or 15 years in the cost of capital around. A gente conviveu com taxas de juro muito baixas. The last 10 to 15 years, you have low interest rates. Isso é. The next 10 to 15 years, they're going to have higher interest rates. That's the economic world telling us that. This is a pushback when it comes to stocking up when you have interest rates that are high. You have to work with smaller volumes, right? I think marginally in the soy complex this exists, but I think that you may have a little more benefit. When we talk about beef, we're talking about pork, chicken, poultry, and cattle.

Pork and poultry is just corn and soy, right? We are probably going to have an important lever due to the trade war abroad. The challenge is that Brazil should continue to produce in itself in a very peaceful way, in a structured way. People say when you have a war among the big dogs, you really cannot want to be part of this, right? If we can keep a balanced position and a peaceful approach, we will be able to benefit marginally from this. Thank you, Pedro, for the question. That is clear, André. Thank you for your answer. Just one last point about the baseline, just to make sure things are not too crazy. We saw an important splicing in the base curve. When we were looking in February, we were considering minus 30 for April.

That was a screen for the bases that we finished April with 40 positives. Our sensitivity, Pedro, is that it'll be around 60 or 70, which should be the basis in this scenario. It is not that kind of trade war you're going to remember. The first one we had with 240 points. Then you had a price of soy. I believe we'll get back to having positive bases. Everything was headed towards an excessive production of soy in Brazil and the southern hemisphere, that we would have to get back to the negative bases as we were in the beginning. This indicates that we'll have positive bases even with a big supply in the southern hemisphere. Very clear. Thank you, André. Just one last point here. What could we expect when it comes to the price of acquisition of the land?

Is it possible to give us a number? Or is there still a lot of discussions left on this? Bom, Pedro. As you all know, we love simple things that are como a gente compra a terra. Easy to explain and complex to execute, right? We're looking at return rates. Isso é o que a gente está buscando. On top of truth, we have a lot, nice, 10%. On the other hand, we have guys that are even more intelligent with the calculations there. Then you can reach this. I think there are some components that are going to help. I see methanol maybe with the second harvest. We already had a lot of help from the off-season harvest. Not as much as last year, but with the corn methanol.

This expectation should probably get back to being a positive factor that also helps with the composition of the price of land. I would say that I do not see land prices having new peaks as we had in the last few years. I also do not see a very significant reduction if you reharvest it nominally in regards to the sacks of soy. If you look at this nominally, you reduce the sacks of soy. Perfect. Thank you very much, André. Bom, agora vamos liberar o áudio. Now we are going to listen to Guilherme's question from BTG Pactual. Hi, guys. How is it going? André, Gustavo, Ana, good morning. If I could just bring in two questions that are very quick on our side.

Taking advantage of part of your previous answer about logistics, Brazil really has a logistic issue for grains, and part of this is the storage, right? I remember in the last investor day, you guys mentioned that you were interested in looking at the segment a little more. Is this something you're still looking at? Just to get a feel. Shifting topics a bit, I want to understand what you guys expect for the sugarcane harvest, please. Thank you, Guilherme. Great. Two questions that are excellent. Logistics are always going to be on the table. De relevo plano e altimétrico como nós temos aqui. A continental country with so many terrain differences. Nós estamos falando de produção em planície. In the U.S., we have soy in the lowlands, right? You have a different structure for transportation that's more standardized.

That generates important savings for transportation due to the fuel cost. When you look at Brazil, Brazil is a country with higher lands, right? You have productions in higher and lower lands. You have a terrain profile that is more expensive for logistics. Everyone is going to have to look at logistics one way or the other because we cannot change the terrain in the country, right? We have to look at logistics, no doubt, always. We will continue to look at this. We are also considering, Guilherme, that when we consider storage, storage is in our vision, you need to capture some gains, right? The main gain we have in storage is what we consider the internal freight, right? That is where you have the harvest and the city today, and when you have the storage.

When you consider the trading, you're going to consider this from the farm to the port, and then the difference is very small, right? That's where you have the biggest difference in the storage plants, right? You have qualitative aspects, the quality of the grains as well, as I mentioned. We had a complex unit with 3 millimeters of rain, but I can't project results from a silo plant with a business plan the year like this, right? The biggest impact is due to this. The trade-off of this, Guilherme, is the cost of capital. If you ask what the trade-off is, it's the cost of capital. Although you, of course, we had the storage, we covered this in the first harvest PLE last year. We have other storages under discussion as well with the factories.

We have a big challenge now, which is the trade-off of the lines for this type of investment. The last investment we had was at about funding with fixed rates about 8.5%. No doubt, 8.5%. I'm a natural builder, right, for silo plants. With the interest rates we're seeing now, we have to reconsider this. This is a problem that's going to continue to exist. We have a harvest of 320 million and a capacity for storage of a little less than 200. The beauty is that you have 130 million, which is the second harvest. You have this moment where both meet, and that's where we're definitely going to keep looking at this. We should work to. Volto a dizer, o aspecto quantitativo, que é essa questão de custo logístico, e o aspecto qualitativo, que em Mato Grosso também não é menos importante.

Also the qualitative aspect as well. You have the sugarcane harvest. We are like talking about this always, right? Brazil here is kind of like, since we're not benefited from the others, in this one we are, right? When Bahia is frustrating us, then Bahia is not capable of adjusting the soy in Brazil. We have a big concentration of these areas in Bahia. When you have a frustration in the price, when Bahia, you do not necessarily consider the national price of soy. In sugarcane, it is the opposite. When you have a frustration in the harvest, you switch the price of the sugarcane and the ethanol. You have another point that is beautiful, which is the concentration of sugarcane in regions that are less reliant on the Midwest and the South.

We have a lot of sugarcane in Maranhão, Mato Grosso, Goiás. We also have sugarcane in São Paulo, which is the Midwest here. This is, in parentheses here, highlighting BrasilAgro, in this scenario, frustrated with the sugarcane and productivity in the Central Region. In the north of Paraná and the Minas region, it is benefited due to the fact that this is concentrated in other regions. Our operation in Maranhão, which is almost 17,000 hectares of sugarcane, has the capacity to irrigate, right? You have, once again, this production that can also benefit us in this scenario. When you look at this from the Brazil level, what are we expecting? I'm going to say, André, what do you consider for production?

I have a proxy that's very good, which is our sugarcane production in the state of São Paulo. We already started all of our units, already started sugarcane harvest. We see that sugarcane in São Paulo is a little quicker, shorter, right? If you consider year over year, we see a reduction of productivity. There is a lot of rain now. Na região Centro-Sul, que foi o mês de janeiro e fevereiro. We had the month of January and February. Depois a gente teve o março. And then we had March and April. The trade-off now, Guilherme, is not just water, it is temperature. Now the trade-off is we have the humidity in the soil. Tem condição dessa cana continuar vegetando. We can recover part of this lower productivity caused by the months of January and February.

Why am I talking about recovering part of this? É a melhor coisa para crescer. Like, oh, sugarcane is like grass, right? It's the best best for growth, right? You have water, light, and salt, right? We're probably going to have winter that's a little more rainy. Great, we solved the water, so we're not going to have such a rupture. Mas a gente tem outro fator, que é temperatura. Então, como vai se comportar? The other factor is temperature. How is that going to behave in winter? Because if the temperature drops drastically, then the sugarcane, which is the physiology of the crop, right? Even if you have humidity, it's going to help you a little bit.

Because you will not have so many issues in the end of the cycle, but you do not have much growth in the sugarcane, right? André, consider all of this. You give us a number. Everyone was expecting in the sector about BRL 610 million-BRL 620 million. We believe that even if we, nós estamos apostando numa safra, are betting on a harvest about BRL 580 million-BRL 590 million. That is our vision for the sugarcane harvest. 70% of our sugarcane is not in this region that is hindered, right? Okay, perfect, André. Thank you. Thank you, Guilherme. Now we are going to have a question from Bruno Tomazetto at BBA. Oi, pessoal, bom dia. André, você bem comentou agora há pouco, né? As you mentioned, now to position yourself contrary to the cycle and also being careful with the cash position in the company. I want to hear your mindset on.

Ou interessante, você acha que a modalidade poderia ser nesse momento? Como tem sido essa mudança de mercado? E talvez em ambas as pontas. Has the reality been in the market, etc.? And if you lease, to be able to plant this based on a producer with less efficiency. To deliver this feed operate. Ou até operar bem, mas nesse momento ele fica pouco mais estrangulado com capital e aí poderia. And at this moment, they're maybe a little more strangled with the capital and how could you make this possible for producers? I think that's a modality that we explore a little less. Mas acho que pode ser uma discussão interessante ouvir. I think this could be an interesting discussion. Bruno, you have to come and have coffee here with us. You need to come visit our new office. Anyways, let's start.

Just to give you a bit of this discussion, it was a great question here. No doubt at all, we're looking at this. We had some recent board meetings and we took some proposals here. The challenge is, as Gustavo mentioned, we're going to have opportunities and the expansion that we had in the last few years. Ela vai voltar para a mesa. Então a gente começa a olhar. Was very leveraged. When it comes to pricing. Os preços de arredondamento. We need to accommodate the pricing. I'd say that they had a slight setback, very slight setback. That. Antigamente o cara passava. Before. Ele queria 12 sacas. Before the guy would spend like a month, he had 12 sacks of leasing. Then three months later, he had 18, and then he already had like 20 sacks leased.

I'm not talking about where you have just soy and cotton, right? I'm talking about like harvest, off-season harvest of soy and corn. You can't have 20 sacks, right? That's not going to be just killing yourself for the landlord. We had a slight recovery here. It's important to mention what Gustavo said, right? We're going to. E mais com aquela disciplina nossa. With that discipline. E não passar dos 50-50. Our appetite is to not go over 50-50, right? Especially in a moment where you have high cost of capital. It's important to have the 50-50 to be able to benefit from this. As Gustavo just mentioned, the company has. É extremamente atrativo, né? A gente está vendo hoje todo mundo se financiando aí a CDI mais 5. We see everyone's finding this at CDI plus 4, plus 5.

Menos de CDI, 90% do CDI. Então, acho que esse é benefício importante e que pode sim. I think this is an important benefit. I think this can also lead to some positionings, right? With a lot of caution. We settled on two or three years ago. You had to lease out a lot of areas to transform them. Now the reading is that you are searching for things that are more transformed to cover those. A gente está apontando sim, né? Mas eu acho que perfil pouquinho diferente. High fees, but we're kind of covering a different profile, right? A gente trazer aí aquela área que você tem a metade da área. Then we'll have the area where you have half-half. You already have the mature area, the area that's going to be transformed.

We're keeping our eyes open on this. It's a very interesting question. Players that are capitalized will focus on the sector now. We know that we have space for everyone. We do expect that we'll have growth in mature areas. Okay, thank you. We'll definitely schedule that coffee. Combinado. Okay, great. Bom, eu vou ler algumas perguntas aqui. I'll have some other questions I'm going to read, but I think most of them were already nas perguntas ao vivo. Vamos mudar pouco de tópico aqui, jogar. I'm going to switch topics a bit. E a gente teve de Gustavo. Ele acha que ela está mais limitada nesse ano comparado aos exercícios anteriores. Por favor, poderia comentário? If you guys could please talk about the level of confidence of the management on the dividends and extraordinary impacts in the closing in 2024 and 2025.

And about this situation with the dividends, I'm also going to add on this other question from Tiago Lima, the same question. It's probable that the company is getting to this new cycle of more acquisitions of farms and also a smaller distribution of dividends considering to this. I think we can explore this and then get into the dividends a bit as well. Obrigado aí pela pergunta. Thank you for the question. Levar em consideração de que. We have to consider that in 31 March, we had practically 100% of the costs and with the cash exit. From now on, what we're going to see is practically BRL 900 million of receivables for all of the crops with the sugarcane and. Mais de 200 milhões de reais. Over BRL 200 million of soy. E safrinha de milho para fazer. And the off-season harvest as well.

What we can see is we had a discussion here with the financial committee as well to understand if it was worth it to maybe. Que tem impacto positivo. And positive impact as well. In the premiums and if we could capture this difference considerably. Or maybe the renewal of some other loans also to carry on this difference. These are very complicated moments here, but we understand that the impact of these BRL 300 million that was, you can imagine with like BRL 600 million or BRL 700 million, 150. Através de capital financeiro. And all of the with the capital financed as well, you're going to end up working for the banks. Uma mudança expectativa que foi. You have this big change. E quando isso aconteceu em 8 meses. This happened in eight months, nine months.

Normally you have the habit of speaking with chief economists and banks to establish an opinion and to maybe even consider this in the financial committee and our position as well. E sinceramente. To be honest, it's an era changed completely. We understand that it's a moment where we should rethink all of our investments and consider this and analyze the returns for each of these crops, as I mentioned. You can see the crops also have a contribution margin that is very attractive if you consider the reais per hectare. When you see the returns due to the capital that they need to deploy this, then you start really understanding that it doesn't make that much sense.

I believe that when we speak about this after the shift and the expectations for the interest rate and considering that the situation is mid-term, we're talking about two years and with this level of interest. We're not concerned because we know we have all of this big stock of receivables dentro do forró of the farm. We know that this could lead to any possibility to continue to pay dividends. We understand that we'll have to reconsider part of this to understand the level of dividends that we're going to distribute. Desta do ano vai ser, digamos, positivo. Não isso entendemos que, digamos, no mínimo o 25% obrigatório. At least 25% mandatory we're going to pay, but I think that our mindset is how we're going to face this in this next period of October-November.

That's going to depend on a bit more of this. If you consider also medidas, digamos, de Trump, all of the Trump measures as well, we have expectations that these are premiums that are going to be positive, but they could be even more positive even. This could change a lot of the scenario. I think we're in a moment with a lot of uncertainties. We still don't have all of the. I think we're going to have to analyze this carefully and understand how to apply these resources. Obrigado, Gustavo. Acho que ainda nesse. Thank you, Gustavo. I think still on this topic with the allocation. We're going to have, we have a question from Evaldo Batista about the stock prices versus the value of our assets.

If you consider the assessment of the land in the portfolio, would not it make sense to have a buyback program for stock that is cheaper? Tem que concordar com você que hoje a nossa terra é a mais barata que tem. The agro has the cheapest land, of course. André, we will talk about this a bit and what we consider as our vision to complement Gustavo's question on the answer about the distribution of the proceeds in the year. Thank you all, everyone. This is just reinforcing that our stock price is very low and cheap, so you can buy, you are going to make a lot of money off it in the mid to long term, I am sure. No doubt. Buy company stock.

If you look at a historical curve, a company of ours that has projects with returns of 6 or 7 years, no one can look at it in a small vision. My provocation is look at our historical series of dividends paid out and you'll be able to see how this changes a lot. Another day, I was monitoring a report for the bank, showing the profitability at BrasilAgro, the stock and the dividends paid. Ever since our follow-on, it is one of the best profitabilities in the market. Look at our photographs in the company and this is the type of investor as well that we like. The investors that really believe in the projects and they know the duration of these projects are long. We are buying farms to sell in 6, 7, 8 years.

At this moment, we have to be very efficient, as Gustavo mentioned, with the capital allocation. We can't stop doing what we've always done, combining strategy of the company. That's the sense of it. We're not going to lose off track when it comes to buying back stock specifically. This is something that I discussed. It's a little bell that rings whenever we see these kind of things going on. We see there's a big challenge here also because we need to bring to our investors.

It is worth mentioning that when we took on the direct management of the company in 2016, all of the investors were saying, "Hey, we like the company, we like the thesis, we like management, we like everything, but we do not like the liquidity of your stock." The only trade-off we see today, and this is a concern because, of course, in some way, the liquidity of all of the stock, not only BrasilAgro, is really related to the interest rate. We have to be very cautious at this moment so that we do not impact the liquidity even more. That was already an issue for the company. It is not such an intense problem anymore. It is becoming a bigger problem due to the market situation. I cannot act due to the market situation, right?

We are, of course, looking at this so we do not cut down on liquidity. That is the negative trade-off. Does it make sense to buy back? Yes, but we do not have this concern, which is a concern that really changed the company's vision in the last few years, right? This is the only point we add to the weigh in because. You can be sure that if this is the best decision, we will present this to our board. E acho que tem uma última pergunta que acho que a gente não se wrapped up here. We have a last question that we did not cover, which is Reinaldo Veríssimo, also an individual investor, in regards to the non-definitions in the SAFRA plan and if they in some way impacted BrasilAgro negatively.

A lot of people have talked about all-time high harvests in on media and how this has been for the company when it comes to cost of capital. I think the cost of capital is the point that Gustavo already mentioned, but I'm going to now just think about the sector as a whole and not just BrasilAgro. We know what's going on in the monetary situation of the country, and we know that the SAFRA plan has an amount of resources to balance out the interest rates. What happened in the last few years, especially in the last year, the central bank basically steps into this line of BRL 20 billion. When you look at BRL 20 billion, what is this? Interest for the small producers are those 7.5% to 8%, and for the big producers, the 10.5%.

CDI back there, when the government balanced this out, we're talking about a CDI at like 11, 11.25. I'm not sure exactly. It was around 11. You had to balance this difference out. It was spread between 10.5 and a difference of a spread. 11.5-11. That helped to give us that number we all know. 400 billion BRL that were used for the SAFRA plan. What happened in our vision? Due to the monetary tightening, we hope that the government and the associations are working on this to try to increase the amount for trading this. This is not going to be 8.5-14, because if you do that, 8.5-14 or 10.5-14, the resources are not going to irrigate the system.

For sure, the government will increase this, the interest rates that are subsidized, so that these resources adopted for subvention do not have such a negative impact. This is our challenge, and we want to bring in other components and that the government can understand the efficiency of the allocation of these resources and trying along with the associations and the work the FPA has been doing to have more of a budget for this. In the case of the company, we have 30% of our resources coming from this and 70% come from our own capital. The 30%, how did this impact our results? If we had BRL 300 million and we had an interest rate of 10.5%, if this business goes to 11.5% or 12%, then you have 1.5% or 2% more.

1.5% or 2% more from 300 would be an amount that's significant if you look at this year over year. We went from a line of maybe subsidized resources that had an expense of about BRL 20 million, 20 million, to almost BRL 45 million of current resources, right? You have long term. I'm here, I'm just talking about the working capital. This is the effect, but this effect is for everyone, right? We have to be a lot better than the average. This is an effect that is here for the entire supply chain, right? Just as it brings challenges, it also brings opportunities. Also, when you consider a bit of the question from Pedro on acquisition, et cetera, we really have been very cautious about this.

This is a moment where the company continues to grow, but keeps an eye open on cash, debt, and opportunities, and capturing the best for the investors in the company. Excelente. Thank you once again, everyone, for participating. Thank you, Gustavo and André, for your participation. If you still have questions, me and my team at IR will be available to clarify any other questions. Feel free to contact us and send any other questions. Have a great day and see you next quarter.