• Net Revenue: BRL 644 million for the first six months of the fiscal year '25-'26.
• Adjusted EBITDA: BRL 78 million for the first six months.
• Net Income: BRL 77.8 million as of December 31, 2024, compared to BRL 24 million in the previous year.
• EBITDA Margin: 31% for the first half of the fiscal year '25-'26.
• Sugarcane Harvest: Approximately 2.6 million tons, an increment of 4.3%.
• Sugarcane Productivity Growth: 3% increase.
• Debt: BRL 798 million with a cost of 93.4% CDI.
• Net Debt: BRL 516 million.
• Real Estate Sales Revenue: BRL 129 million from property sales.

• Warning! GuruFocus has detected 10 Warning Signs with LND.

Release Date: February 07, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Brasilagro - Cia Bras de Prop Agricolas (NYSE:LND) reported a net revenue of BRL 644 million and an adjusted EBITDA of BRL 78 million for the first half of the year.
• The company experienced a 4.3% increase in sugarcane harvest, with a 3% growth in productivity, contributing positively to EBITDA.
• There was a significant recovery in ethanol demand due to changes in gasoline ethanol percentage, boosting market reaction.
• Brasilagro has diversified its crop portfolio beyond sugarcane and soy, reducing climate change risks and enhancing real estate value.
• The company has been proactive in managing costs, achieving stability in fertilizer prices and reducing replantation rates significantly.

Negative Points

• Soy prices dropped by about 9% from January 2024 to January 2025, impacting revenue.
• Cotton experienced major reductions due to economic factors, affecting the company's results.
• The beginning of the rain period was delayed, impacting the initial stages of crop growth.
• High interest rates have increased the cost of capital, posing challenges for leveraged operations.
• The company's stock value remains low, and there is no current buyback program authorized to address this.

Q & A Highlights

Q: Can you confirm the expected margins for the off-season cotton harvest and discuss sugarcane productivity given recent weather conditions? A: We managed to plant the off-season cotton within the ideal window, and corn prices have improved, enhancing margins. Initially, we projected margins of BRL 400-600 per hectare, but these have improved with better corn prices. Regarding sugarcane, productivity is expected to increase due to investments in irrigation and plantation, despite a delayed start to the rainy season. We anticipate a positive impact on sugarcane productivity in the coming year.

Q: How do you view the M&A opportunities in 2025 given the high-interest rate environment? A: High-interest rates have increased the cost of capital, impacting less capitalized entities. However, this creates opportunities for us to make strategic acquisitions. We see liquidity in regions like Bahia, driven by irrigation projects and agribusiness developments. We are actively seeking occasional acquisitions that align with our strategic goals.

Q: What is your perspective on converting pasture land into farming areas, and how does this align with your long-term strategy? A: Converting pasture into farming areas offers significant opportunities, with potential IRRs of 7-9% compared to 2.5-3% for cattle land. This conversion aligns with our strategy to enhance productivity and capitalize on growing global demand. Our recent projects have shown promising results, and we believe this approach will continue to be beneficial.

Q: How does the drop in the dollar impact your fertilizer acquisition strategy, and are there any weather-related concerns for your farms? A: The dollar's drop has not significantly reduced fertilizer costs in reais, but we are monitoring exchange ratios closely. Weather-wise, excessive rain initially impacted soy productivity in Mato Grosso, but conditions have improved. We are well-positioned for the upcoming harvest, with adequate soil moisture levels.

Q: Does the company plan to initiate a stock buyback program given the low stock value? A: While a buyback program is tempting, we currently have no authorized plans. We continuously evaluate this option, especially if our results remain strong and market conditions warrant it. We aim to balance liquidity needs with potential asset acquisitions.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.