BrasilAgro - Companhia Brasileira de Propriedades Agrícolas Q4 FY2021 earnings call

Key Points

• Capital Increase: Conducted a primary and secondary offering in February, raising almost BRL500 million to enhance liquidity, with daily stock market liquidity increasing from less than BRL1 million to BRL15-20 million.
• International Expansion: Expanded activities into Bolivia by purchasing three production units, with the Brazilian team working there to ensure consistent results.
• Debt Management: Equated short-term debt with a longer-term CRA to accelerate land transformation of 40,000 hectares for intensified production via irrigation projects.
• Dividends: Paid the highest dividend in company history, BRL260 million, from strong operations and real estate sales.
• Portfolio Valuation: Appraisal of the portfolio on June 30 was BRL3.4 billion, with internal evaluations close to Deloitte's conservative estimates, and assets sold above Deloitte's valuations.
• Crop Performance: Varied impacts from weather (drought, frost) and price changes on soybean, corn, sugarcane, and cattle production, but compensated by higher prices in some cases.

The company closed the year with net revenue of BRL721.9 million, net profit BRL317.6 million, and adjusted EBITDA of BRL365.7 million. Production included 282 million tons of grains, 5,000 tons of cotton, 2.2 million tons of sugarcane, and 1,900 tons of beef. Key product segments contributed to the overall financial performance with robust results from operations and real estate sales.

Forward-Looking Statements

• Real Estate Activity: Expect aggressive sales and purchases of productive areas in the next few months, leveraging anti-cyclical opportunities.
• Next Year Expectations: Operational side to remain strong due to good commodity prices (most guaranteed), with a better year anticipated in real estate.
• Land Transformation: Accelerating transformation of 40,000 hectares using BRL240 million from the CRA to boost production through irrigation projects, aiming to finalize transformation in 3-4 years.

Risks Identified

• Climate Impact: Drought, frost, and weather-related issues posing threats to crop production and yields.
• Input Costs: Higher prices of fertilizers, seeds, and agrochemicals increasing production costs, though margins are still positive due to higher commodity prices.
• Commodity Volatility: Varying price increases across commodities affecting portfolio valuation and margin calculations.

Q: Plans to increase the speed of sale of productive areas?

A: Yes, expect good news in the next few months for farm sales, leveraging anti-cyclical opportunities while producers have liquidity.

Q: Impact of input costs on next year?

A: Input costs have increased by 40%, but higher commodity prices (e.g., soybean at BRL140-145 per bag) are expected to maintain positive margins.

Q: Geographical expansion plans?

A: Focus on regions in Brazil with two crops per year (winter and main crop), actively seeking acquisitions and sales while being anti-cyclical in approach.

Q: Impact of climate on next harvest?

A: Expect a more normal climate than previous years, with better conditions in Midwest and Northeast Brazil, though some regions may still face challenges like in Maranhão.