Cresud S.A. Warrant 2021-08.03.26 on Cresud Q2 FY2025 earnings call

Management Statement and Operational Highlights

• Agribusiness: Large regional campaign with 9% increase in planted area, good climate conditions generally, crop tax exports reduced aiding farmers, Brasil Agro had strong productive results with soybean harvest and good yields.
• Real Estate: No Q2 sales, but expecting more sales in the second half of the year.
• Piauí: Service agriculture company saw tons traded jump from $3 million to $7 million over 10 years, expecting to surpass $7 million this year, EBITDA expected to reach $25 million per year.
• IRSA: Malls had higher occupancy and 21.4% increase in tenant sales QoQ; office portfolio at 100% occupancy; hotels had drop due to tourism decrease; finished acquisition of a new mall in Greater Buenos Aires; sold two plots in Rambla Hl Plata project.

Segment Performance

• Agribusiness: Planted area increased 9% year-to-year, totaling over 300,000 hectares across 4 countries (Argentina, Brazil, Paraguay, Bolivia). Soybean accounts for half of planted area, corn 23%, sugarcane 9%. Brazil Agro had good productive results with soybean harvest showing good yields and input costs down due to devaluation. Argentina saw crop tax exports reduced (soybeans from 33 to 26, corn/wheat from 12 to 9.5) benefiting farmers.
• Real Estate: No sales in Q2, but expecting more sales in the second half of the year.
• Dividend: Distributed MXN 45,000 million in November, representing close to 7% of dividend yield.

Guidance

• Expecting a better operational business than the previous year due to normal planting, positive price trends, and expected yields.
• IRSA expecting positive numbers vs previous year in the next quarter.
• Agrofy expecting to reach breakeven as it reduces staff and adjusts spending.

Risks

• Climate conditions in Argentina had a lag in rain in January, which could impact crop yields.
• Regulatory changes in land development in Argentina, particularly in provinces like Sarta, could affect land projects.
• Accounting adjustments due to currency fluctuations and inflation impacting financial results, such as negative numbers from grain stocks not keeping pace with inflation.

Question and Answer

• Q: Would you be able to give shareholders any kind of guide for what the second half capital allocation will look like between acquisitions, CapEx, dividends and buybacks?

A: Recently repurchased some shares, looking at land purchases and sales, normal CapEx around $5-6 million per year.

• Q: How is the recently completed new free trade deal with Europe going to affect your crops meat exports?

A: Increases beef export quota to Europe, positive for Argentinian and South American beef, and will lead to better product preparation in Argentina.

• Q: How is the business Agrofy performing and what are the expectations for this year?

A: Agrofy is reducing staff, adjusting spending, and expecting to reach breakeven as it aligns with market needs.