Brasilagro Companhia Brasileira de Propriedades Agricolas

BOVESPA:AGRO3

Q4-2025 Earnings Call

[Ana Paula Zerbinati Gama, executive]

Good morning, everyone. We are here once again for the results call of BrasilAgro. I'm here with André Guillaumon and Gustavo. Today, we will be representing the complete numbers of the year. For those who are following us, our accounting number starts year -- goes from July to July. So today, we are reporting on the fourth harvest of the year '25. For those who are following us in English, we have simultaneous translation in English. Thank you so much. I'm going to pass the floor to André.

[André Guillaumon, executive]

Thank you, Ana Paula. Thank you to everyone. It is a pleasure once again to be with you to talk a little bit about how our year was? It was a year with a lot of challenges, a lot of volatility in the financial aspect. I would like to make a parenthesis. I remember in the past when we were discussing the budget of the year with the company's Board, the dollar was at BRL 4.80 and we went up to BRL 5.30. -- the middle of the way, we saw the exchange rate going to BRL 6.40, and now it's at BRL 5.40. So that shows the magnitude of volatility that we worked with during the year, and we're going to be showing you some numbers on how we worked to mitigate these volatilities.

So let us begin telling you about the numbers and results of the company. And there are new things, there are things that we want to share with you. First, I think the net revenue of the company was able to reach BRL 1.2 billion this year with an adjusted EBITDA of BRL 267 million and a net income at the end of the exercise of BRL 138 million that later we'll go into the details. Gustavo will show you the comparison of EBITDA a year-over-year. The difference is not very large. But when we look at the difference of financial costs and what we will show during the presentation.

Next slide, please. Well, here, there's a parenthesis. I always like to open a parenthesis. The focus of the company is operational and for real estate. I -- sometimes you might be surprised with the news that BrasilAgro is selling farms. Of course, we are going to sell farms. That is our business. And for those who do not understand this business, shouldn't even be making this kind of comments. It's important that everyone realizes that selling farms is part of our DNA, and we will be doing it when the market is good, when it is bad, we will always be selling farms.

That is our intrinsic characteristic of how we remunerate our shareholders is how we sell our assets. And this is the top numbers of how we've been selling properties, BRL 240 million with revenue from sales of farms, BRL 120 million is something that we had done previously. You know very well. We mark transactions only when we deliver the title. We sold in Alto Taquari 1,700 hectares, which -- in which remain 140 hectares, which we delivered at the end of this exercise after we finalized all of the sugarcane area, and then that's when we finalize that transaction.

This was a year that I think we need to celebrate from the real estate point of view. Everybody has been seeing the difficulties that there has been more loss of liquidity in the sector, but there is a ponderation here when we always talk about the diversification of cultures and regions. It's not only true for mitigation of operational and commercial risks. It's also true for the mitigation of our real estate risks. And what I am bringing from the sales that we did from the [indiscernible], we saw a sector of grains with more repressed margins in other sectors with bigger margins, and we saw a recovery of cattle raising over the year.

And once it recovered, we brought liquidity for an asset of cattle raising that we had in Bahia, and it was very assertive in recovering that liquidity. It was an asset that we required in the past for BRL 10 million, and we sold it now at a nominal value of BRL 140 million. We invested in it at the present moment of the transaction. It was accounted in our audit of BRL 30 million with all of the investments that we had made and the investments that had been amortized. So what I want to highlight here is that selling the farms are part of our DNA. We will always be doing this. That is important.

And here, I just wanted to make that very clear of how efficient we are in capturing other activities that are standing out and still carrying out the sales with other activities. The square on the next slide, reinforcing once again our DNA is where we bring the challenge when we would talk to the analysts with everyone that would accompany us, how difficult it was for us to calculate the EBITDA of me and Gustavo were able to do it, but the difficulty is foreseeing the sales. So I think better than forecasting is the history. It's the history that we have is the best forecast. So productive budgeting, we will add proactivity. So we look at the history of productivity for the last 5 years, and we brought this methodology so we could share with you. We bring the history of the sale of the company in the last 4 years. We sold BRL 1.9 billion in companies, an average sale of BRL 380 million per year. That's what the company knows how to do, and we will continue to do that. And then over the years, showing below the transactions and the nominal values of each one with the tier of every the investment.

Next slide, please. So continuing in this chapter, this real estate chapter, which is fundamental to the company for all of the investors that are following us. It's one of the important things for them. We this year do not recurrently evaluate the farms. We do it with third parties, and we are bringing to you firsthand the evaluation that was made by Deloitte, which is our evaluator for many years already year-over-year. So here, in this graph, we have an evaluation that is very important. And on the square below, it shows the evaluation of the plans of the company and what is the evaluation of Deloitte reached BRL 3.5 billion in our assets. The square above, we set up these 2 squares on the right and on top to show the capacity that the company has of adding value in the transformation of areas. When we look at the evaluation of the portfolio in the past it was BRL 300 million, BRL 500 million.

So then people ask me, oh André, if it was BRL 300 million, BRL 500 million, then in the middle, we sold BRL 550 million in funds. So that is the real capacity that we have to bring returns to the shareholders. So you might ask me, but André, how does this portfolio appreciate year-over-year or every 2 years? Well, it's because of our intrinsic activity, which is to add value, mature the land, bring in new operations where the EBITDA is changed in that area. So the important point in the last few years, there was an important maturing of our areas. There were massive investments that we are accompanying irrigation, an area that we had in bay area, we saw any irrigation that was representing 150 sacks. When we add irrigation, it has an important leap in value, and we are finalizing this in Hoja ginkgo plantation.

So part of this important gain is a reflection of this investment of this added value, and most of this comes from our capacity of maturing the portfolio. So I think what this is showing, and we always like to draw attention to this. I always play around and say that we want to be drivers and not the passengers of the vector of motivation. So we are always going to bet on the value that will value more than inflation. What we like to do, we put management, we put resources to not only have the basal appreciation, the appreciation that we see that is the fruit of the work of the entire transformation team of the company.

Next slide, please. Now a little bit more about the results, and I think this cooperates with the numbers that Gustavo will present to you. I would say that it was a year of stability. We are seeing the peak of soy now in the next few months, much more connected not to Chicago, but in function of what we are seeing in terms of recovery of the internal basis. You know this much better than me, what's happening in terms of the war, the non-imports of China and this production having its origin in Brazil has strengthened a lot of the basis in the last few months. And that just cooperates with our strategy when Gustavo showed the indebtedness when we collected the harvest in the month of February, March and April. We started the harvest and accelerated it as much as possible because over the harvest, it was very negative.

It went to 20 points negative, but we made a decision once again, that was very assertive. We said we're going to hold for all of the stability, the geopolitical stability that we had. We had a good part of the harvest stuck in Chicago. Also the exchange rate was stuck. So we also had the basis. So we did it in a financial account to carry the stock to the second semester. And we had to do an account of how much the base would be to pay for the financial costs. We did that. and it was worthwhile, and I think we will have bigger upsides. And in fact, the reality of the market today showed that this strategy was assertive. The base kept on going up. We were able to sell. We didn't sell everything. It's important to highlight that, but we started to sell when we understood that it was favorable. We ended up selling base of up to 600 positive points. It used to be less 20 in February and March.

So in average, we were able to have a better basis of what we had at the moment of the harvest. We will be operating in at 80 points, 90 points in average. When in the past, we had a basis of minus 20, minus 30. So once again, the company is very agile in this commercial business of soy. For corn, it's on average. We'll show you how things are going and cotton as well. We will see how the company behaved with the recovery of livestock. There was a punctual drop when the tariff came in, when the recovery of ethanol that was very connected basically. I think there are 2 important factors here. There is a harvest of sugarcane that is lower. We see in all of the expectations, there was a harvest were everybody was talking about BRL 660 million. Today, they're talking about 680 tons. And besides that, the increase of the mixture of ethanol and gasoline leaving 26 to 30, which will generate an additional demand of 1.6, 1.5 in the market that makes ethanol heat up, and we will show you how we were positioned in that as well. Sugar is walking a little bit on the side.

And now the next slide, Ana is always mad at me when we run up because we need to talk about how much the input came in because I'm sure somebody will ask me this question soon in the sequence. But I need to show you how in this business of ours, the challenge is working with the marginal contribution, and this is what we're bringing here. So the first thing is map, that's the phosphated cost. We were monitoring this and these balls that are here within the line. I asked for these balls to be here, but they look smaller. Next time we'll have a larger ball, but the balls that were within the line is the moment where the company made the decision of making an acquisition.

So on the first graph, we can show that we're -- there was phosphated fertilizer costing a lot more, $560, and we bought about 80% to 600 and 60%. So at the end of the year, the end of the harvest, we started to take a position. The next one is chloride of potassium chloride. We also made a decision there. We even bought it a little bit before the phosphated. We thought it was almost -- we were almost at the end of the well, but no one has a crystal ball. We do have a lot of knowledge on this business, and we are company with a lot of business knowledge and the margin of contribution made a lot of sense at that time.

So the company as well was able to buy chloride potassium at $560. That was a real -- that was very assertive and nitronate of I mean, I always say to my commercial team, the best way to get hydrogen -- nitrogen right is to buy it many times of the year because otherwise, we'll never get it right. But we have been showing how these purchases have been doing. And an important part is that we bought it the nitrogenate in the past, and it was assertive. The rest we are waiting for it to accommodate. The graph on the side shows the percentage of things that we started closing. And on the bottom, I think it shows the main question that you will ask and makes sense for Gustavo, how do you wait for margins in the next harvest. This shows us the margin of exchange and how they evolve.

The relationship of exchange is basically what accelerates and what deaccelerates. When we look at the number, everybody can see that the commercialization of soy is a bit more delayed. But basically, we see in our reading that this is because of the relationship of exchange. When the relationship is in favor, it weakens the base. So cooperating with the positive base because China is not buying from the United States, but it also corroborates with the market that's a bit more delayed from the present harvest and of the future harvest.

So the farmers are looking a lot about the relationship of exchange before they decide to buy inputs or sale grains. They're really connected to the inputs of exchange. So now we're going to talk about some good things and some bad things. The good things is the increase of the total volume of commercialized. The bad part is cotton, 38% less than we had projected besides the fact that we do not plant a lot of cotton, but we do have some cotton in Chaco, Paraguay, and we had a very severe drought in cotton in Paraguay that impacted us a lot, which gave us an expressive lowering in -- that in cotton.

So what are we doing now? Basically, the company already reduced the cotton for the next exercise. And just with cotton for irrigated areas, we know that the percentage of irrigated area has gone down a lot. So for '25 and '26, a good amount of it will be over irrigated areas and the irrigated areas is a very good margin with a lot of good, stable profitability. So we are going to keep cotton culture. It's an important value for cash generation for us, but we need to mitigate the volatility with this culture that is so expensive. So we will be planting 80% of cotton, and it will be over irrigated areas which mitigates the volatility for next year. We won't be here showing such a large variation in productivity.

Next slide. And I think here for sugarcane, you know that everything that's happening, we talked about opportunities in the market, and so nothing is different. There are 2 important effects. We had a summer, I would say, in a certain way in the productive sugarcane regions, especially in Sao Paulo and Maranhão, we had a January and February that was very below average, although we had a lot of rain during the year that was favorable, but the months of June -- January and February are also the months which we have the highest possibility of [indiscernible], which is a past tense that forms for sugarcane. So it was very rainy.

And this year, we mainly had a reduction in the temperatures, which was quite expressive in the months of April and May. So even if there was humidity in the soil, this development went down a lot and part of the sugarcane, which is reflected that we saw last year, part of it came in June in our results. So sugarcane for the beginning of the harvest was affected by that. So I think that the livestock in the company will be diminished in these next few years because of the sale of the asset that we commented on initially. The company has been doing a good work with the livestock. And so we start having to deinvest in this unit of the business. Undoubtedly, we will bring favorable results or in other words, the gain for the price of meat will definitely be transformed into results. So I think all of this is very positive, showing the ability of the company, both of investment and deinvestment in its assets.

[ GMV ] is along the lines of what we budgeted was already around 2% of deviation because of what I commented January and February with rains under the average. Paraguay is doing very well. What we were missing in rain is helping our revenues in Paraguay. So next slide. And I think the last -- previous to the last slide that I wanted to comment on basically is the evolution of the planted area. This shows the capacity of the company of readequating itself and reinventing itself, as I had been showing you previously. We were selling 1.9 in farms over the last few years.

And I think it's important, as I always say, we balance the results. We can't only sell farms because that was a company of the past and not have any operational results. So this is what we've been trying to maintain here, a balance of generation of EBITDA on the operational side of the area. So more and more, you can see this graph that is more colorful with the bases that are more colorful, which is how we are mitigating operational cases. So whoever looks at this graph a few years ago in production, you would see cane and soy. Today, we see other cultures gaining a lot of relevance.

And the graph on the right is how we've been gaining -- well, we do not have a magical area, but we believe in the 50-50, and it seems like it's a capacity for us to stabilize operational capacity. So I think that's a bit of that. Let's talk about new things and the things that we are working on, undoubtedly, we see in the world, agriculture will go through moments that if we do not have any increase in production, we will be going through tighter margins in the next few years. And at this moment of tighter margins are when we have to look for the most efficiency possible, not that the company is only doing this now, the company had already been doing this. You know that for 2 years ago, we already started to announce investments in telemetry and brands in real time.

And now we are bringing to you what we are building an operational center. We rented a small office. As we always said, we like small offices, 150 square meters. We rented an office of 100 square meters in Palmas, which is where we understand we can have a hub in our area of production is there and our curve will be there. So the operation will be centralized for monitoring all of the equipment. They will start to be monitoring through Palmas, whoever would like to get to know it, we have a split on the screen, but the management that will be in Palmas so that we can more and more look for efficiencies in our agricultural assertiveness.

Yesterday, I was discussing this with our people, and we saw updates in our own operations of almost 20% in diesel oil. That's quite relevant. So that has assertiveness, less time of the machines on off time. This is just to collaborate with you and share with you that we are setting up COA in a physical's way, which was focused on the units, and this will be centralized in Palmas that will give us an important leap in monitoring the operations and help us to be more effective in monitoring all the costs. This just prepares the land for artificial intelligence. This data lake that we are developing is where we will be able to add artificial intelligence. So it can be another disruptive point in Brazilian agribusiness as it was in the past, the Norman Borlaug, which was the hybridization of the first transgenic adventures.

I think artificial intelligence and the management of things in real time undoubtedly will give us important gains in agriculture. So just finalize the final head. We ended up with Chicago 1020. And here, it's important to mention that we started the exercise with 580. In the middle of the path, we had 640, a lot of stuff sold, an increase in margin that left everybody concerned in the beginning, but we adjusted our positions, and we were able to finalize in this way. The graph of soy on the right shows how we are taking positions for the next harvest. That is because the margins of contribution, which I commented to with you. We were buying the fertilizer at that moment. So we also had to sell soy, and that was very assertive. We were able to sell soy at around 1070, and there was still some instability, some economic instability, but it was made more sense for us to do 690 with the sold graph.

So this is what we did in terms of price, [ BRL 35 to BRL 65] with the current harvest. These are the numbers we're sharing with you and an exchange of BRL 544, the graph on the right in cotton, we already have this cotton with less volatility, irrigated being sold. So we are already more sold because of decision-making of reduction in the dry area. So since we diminished the dry area, we have a better percentage of the amount sold at BRL 665. That was also very assertive and that will give us a margin of contribution in the next campaign. That's very positive. Ethanol, 50%. We started this in the past.

Now we look at the screen of November at the area of BRL 2,900. We are also being able to carry this out and a very important line that I would like to draw your attention to are the receivables for '26. Everybody knows that the company basically has BRL 880 receivables in farms. This is marking us at every moment. So we have 80% of soy already sold, very similar to the P&L of the year in co-production. And the exchange rate is also very similar, BRL 6.26, so 80% of the receivables already sold with 60%. So now I pass the floor to Gustavo, and these numbers will be reflected in what -- in the numbers that he will be presenting.

[Gustavo Lopez, executive]

Thank you so much, Andre. Thank you so much. I would also like to thank the presence of everybody. As Ana mentioned, when we began the conference, thank you for also a highlight of the exercise, the net total profit in 2025, we are talking about BRL 180 million, as Andre started to mention in the presentation. During the same period of the same year, the net profit was BRL 288 million. The main variation as is of custom for us to put in the graph on the higher part of the screen, we see how the result of the previous year until BRL 830 million and what were the main variations when we compare the 2 periods. One highlight, as Andre also showed was the evaluation of the different commodities and especially for corn and sugarcane, which was BRL 80 million in positive, there is also a higher number volume of volumes sold in sugarcane, which was positive, BRL 800 million. The real estate had certain changes of BRL 80 million. In the past, we had not sold BRL 20 million of the farm safra.

But in this exercise, we started the sale in Taquari in the first quarter and from the sale of preference that Andre also commented on here gave us a combined result of BRL 180 million. And this price and volume also provoked when we sold the highlight of the exercise. We saw that this combination of price and volume gave us 14%, an increase of BRL 17 million in 2025 and BRL 700 million in 2024. When we observe the adjusted EBITDA for the total of the period, we're talking about BRL 167 million. So that gives us 4% less compared to the previous period, very similar because afterwards, we will see that what's impacting the final results are the financial impacts, the financial final results, I think it's important to go to the right side, the lower right side because the main effects of the increase of interest rates and also the market volatility that Andre mentioned generated an impact which the number tended to 0 in impact.

And today, we're talking about BRL 80 million in negative results. So the revenue of financial applications are mainly the revenue of the cash applications of the company, even if we could have, let's say, even if we would have been able because of the interest rates increase, we could work with a cash flow that was a bit lower. This would generate an impact when we look at one year-over-year in millions of reals. So the passive interest rate, which would give us an influence that was we would have started in '24 in 5.5%. And now we started to work with [indiscernible] of 15%, even though the interest or CDI rates or the cost of the debt of the company is very low compared to what is practiced in the market.

But even then, the impact and the pressure that it's generating in the margins of the company are very relevant. So the 2 lines that continue, which is the update of the income to receive are for the first time, all of the contracts that are for long term, we need to register them for the liabilities and the right to use. And all of that impacts a difference that transits for the results. And over this year, we had the increase in interest rates over leases in sugarcane and remeasuring or renegotiation of a few contracts. And so that generated BRL 400 million negative. So the update of the receivables, as Andre already mentioned, we have BRL 700 million in sales of companies. So this index to the soy, we have to update it, so it can be the present number.

And in the previous year, we had a very strong volatility in the kind of exchange rate to this year, even though Andre mentioned that we started with the BRL 540 or BRL 560, it didn't reach BRL 670. It went back to BRL 540, which in the past was the variation that was presented and that it was neutral. But a summary here as everything on this line was compensated. What we can see is that last year, the cost of the debt was compensated, especially by the demarcation of the market. And this year, these demarcations were practically neutral, which shows how the passive interest rates start to present a very significant material impact. Another highlight is in 2025, we had a gain in the cost of BRL 53 million that were compensated mainly by a swap that we did in terms of the long-term debt with the inflation plus BRL 625 million and other amounts that were carried out with the cash prefix of BRL 270 million.

And part of that, we had done a swap in CDI. CDI was 9% for that period. And this year, the swap generated a loss for the debt of BRL 20 million. In 2024, the result of grains was practically neutral, but the result was negative in cotton of around BRL 5 million. And then the swap had also generated negative results. Well, going back to the highlights of the exercise, we have the margins of adjusted EBITDA that were 65%. And we can see in the part that's in the middle, the operational points was much better than it had been in the same period of '24, especially with sugarcane, corn and soy. And with the sale of the farm, which we had commented, it generated BRL 68 million less than we had originally expected in the last year.

On the next page, here, we see, as we had always commented, soy and sugarcane added up to 60% of the total gross revenue. And going back to soy, the gross result in BRL 76 million, the margin of 86%. The price was 7% less than was commercialized in the year of '24, maintaining a margin of opportunity very close to the previous year, of course, better because of the cost of inputs that were around BRL 140 lower, 8% corn, which is another activity, which, in fact, we had reduced the amount of commercialized and we started producing in some tons 167 to 67,000 tonnes was the consequence of the decision that we had made of not planting in that area because the margins -- the previous margins were very negative.

So even though we had an area of recovery of BRL 772 per ton in '24, but we had to confirm the cost with the lower price of inputs compared to the previous harvest, but we had difficulties with the production that generated this higher cost per production. Going to sugarcane, the gross result of BRL 86 million, I think that had come back to margins that were more historical, closer to 30% and an increment of margin, as we said, was especially in the increase of the price of land and also in the production with a higher level of sugar, but the impact of that price generated this very positive results.

And the increase of the cost is also connected to, as I commented, the leases and tons. And when you increase the price of land, it also impacts the cost of sugarcane. For beans, I think there's small volume. It's a culture that we are trying to diversify a bit with let's say, during the small harvest of Safra in regions where we believe there is a potential to be explored. And for cotton, I think it's a point, as Andre mentioned that -- in the case of Paraguay, it's very important that part of the decision of the company previously was to reduce the super -- the surface, as Andre said, with better productivity of production. But it is still a culture that we are trying to consolidate with our technical knowledge through areas of less volatility, which is the idea, but we still believe that -- we have the potential or opportunity to bring it in as a culture that can diversify our productive areas more.

The next thing that we see here is the cash flow of the company, BRL 870 million with debt of BRL 886 million, a cost of 91.22% of CDI with a net debt of BRL 785 million. Now we have the sale of BRL 567 million in the past in the committee and the financial committee. We added this to some follow-up, especially with the debt adjusted debt. And we did consider the BRL 850, and that's how we understand that we are always working with a level of indebtedness that is very low. The net adjusted debt in its value is like in that percentage. Usually, we work with an index of 80% and now we consider that we are quite reasonable in this sense.

On the right side, we have a program of amortization of the debt, BRL 757 million of the short-term for soy, which we defined as a strategy to capture better the premiums, BRL 486 million from 2 to 5 years, BRL 45 million every 5 years. And as I commented, it's also important to highlight what we still have [ BRL 44 million ] in soy bags that we will receive in the next few years. So what we have verified in the debt that has been very high, and it's impacting our high interest rates is the high interest, which is increasing the cost of credit. We see that in our company is not leveraged enough. We had an initial BRL 500 million to BRL 870 million. And a large part of that is due to the recognition of the interest rates of BRL 100 million, which is adding a lot of pressure to the company, especially if we have that factor of leveraging. So we see that it is affecting the health of the sector. It is increasing the price of the debt and the sector.

We also saw there's a lot of judicial recovery. So just for the definition of our cost, we've been considering this a lot because it's a completely different scenario with an interest rate of 9% and the level of that that's very hard to conduct any kind of decision or forecast. So a decision that we made was to reduce the surface of cotton and diversify that because we have seen with such high interest rates, it doesn't make sense to have some cotton come back.

On the next slide, we see the results of the company, we are bringing a proposal in dividends of BRL 5 billion that will be approved by the assembly. This represents a dividend for BRL 0.65. This is the historic -- history from the last 5 years of BRL 1.3 billion of distributed dividends with a return of around 6%. We understand that we will consider some of what I considered and the cost of interest rates, we have a few commodities in this sense, and it would be a good decision to try to preserve this a bit, which is the decision of the company to pay this amount.

Next slide. Well, here, for the investors which are accompanying us, we will have a BrasilAgro Day on the 26th, so you can get in contact with us from the Relations, Investor Relations to coordinate your presence. Thank you so much. And now we can go into questions and answers.

[Operator]

Thank you Gustavo. Thank you, Andre. Thank you for talking about our BrasilAgro Day, all of the -- we are open now for all of the -- those who want to participate, remember that you should make your participation as soon as possible because we have limited vacancies. Well, now we have our first question.

[Unknown Analyst]

I have 2 points, Andre, to explore. I think the first would be, well, you already talked about it in the beginning, but I could not let this pass. So you advanced well in buying a few inputs in a few commodities. And it seems like you are in a better position in relation to the market. I wanted to hear from you what your margin expectations are and which -- what you already have visibility and what you already know, which you already have directions and then try to make it relative with what you see for the industry.

You already talked about how you expect the margins to be compressed in the next few years. So how are you seeing that and your expectations? And then the second question, focusing more on the appraisal and the internal appraisal that you do plans and on the external. It seems like you are more conservative in relation to the other valuations and price per hectare. Is there any more specific discrepancy that you could highlight? Is there any region or if it's some kind of land in connection or not, which divert with your external numbers. Maybe it would be interesting for us to understand that divergence better.

[André Guillaumon, executive]

Well, let's start with the second, and then we'll talk about the margins because then Gustavo will get to ping pong with the appraisal. First of all Gustavo. Thank you for your participation. As always, your questions are very intelligent. What I would say is the following. What is good to talk about. We currently sell farms over the evaluation of Deloitte. That's one point. Everybody here I mean, nobody here has any bonification or any incentive exchange for appraisal. So we are very conservative.

What I would say on that because why is there so much difference if you look at the last year, the difference was lower and this year was higher I'm going to stick to the point. The first is the good news. Deloitte is get better than us. Great. The investor is very happy. We're always going to sell higher than Deloitte. So what could be happening Gustavo? This is very clear, is the moment when there is an increase of TAC of interest rate.

So what is our methodology. It's the knowledge that we have on the market. We do not have a methodology like Deloitte has to say, "Oh, it's an ABNT that has its comparisons that gets the transactions." They have their own methodology. Now our methodology, those who are in the market all the time buying and selling firms. We have familiarity with the price. What do I see that changes a lot in these moments?

And so what do we do? In a certain way, the sales of the company have a larger deadline than the market sales, and that makes a lot of sense. If you have a cost of capital that is more efficient than your buyer, I want the deadline to be here. So I do not want to sell farms in cash and then for him to sell to be paying the interest rates to the bank.

So that's part of our strategy to sometimes have a longer-term sale because the cost of efficiency of capital is better for the majority of our buyers. So that's usually what happens. Now when you look at Deloitte against BrasilAgro, in a certain way, we have a larger duration of sale and then complementing to what I just told you, when you have a higher tax discount, you generate a larger gap of difference.

So I think that's it. In a certain way, the evaluations are very much in line. We have very specific points. This is usually recurrent. So since you have a region where you have more current transactions, let's say the case of Bahia, you have more appreciation at Deloitte than we do. When you go to Maranhão or Piauí, where you have less current transactions and larger transactions happening. You have an average price of the region that's lower.

So when you get the average price of the region that's lower and you put it on a higher asset generates a difference as well, but nothing can jump to the 40 to 30 difference from one evaluation to the next. What I said is that the methodology, the way you bring the discounts, the way we prefer to have a larger deadline. And the third point is how the methodology of -- the sample methodology of Deloitte comes from transactions, just as we have in by an average price of the average size lower than our properties, you have another price.

And then another area where you have less concurrent transactions, the price is a little bit better than Deloitte. But there are small differences. So when you look at the details, which you definitely looked at the details you see that some are worth more and some are worth less, and that's exactly what I'm trying to say to you.

The next one, margin visibility. I mean it's -- what is the concern? I'm going to take the BrasilAgro often talk more about the sector right now. What are we seeing? We've been taking positions. I think this is the year of discipline where the farmers need to be very disciplined. But just like the reason you are now. So what happened in the harvest -- in the last harvest because of a happy coincidence. We saw the dislocation of the exchange rates, right? When the farmers were looking for revenue.

The last harvest, they planted with $1.470, $1.480, then all of the stability came and he sold at the average of $1. That was a bit more expensive. That really tightened the financial situation, because we bought with a cheaper dollar and sold with a more expensive dollar. He already had some part of the production was still open. And majority, he sold it with a more expensive dollar than he had decided to when he had in his costs.

What are the concerns for the future? We are entering a time of formation of the harvest. It doesn't matter who bought earlier or later, but let's say he bought with the $1.560, not the $1 of today. Because today, farmers already have their inputs at home. They already have their applied fertilizers.

So the farmer comes in with a harvest with a higher dollar, more expensive dollar. And last year is a political year, it's the year of volatility. No one is going to -- it's not about being right or left, but we want Brazil with more stable -- fiscal stability. If there are trends or which show that we will have fiscal adjustments that are more balanced than there is a trend to once again add pressure for the reduction of the exchange rate.

And then what happens is that the opposite of what happened this year. You planted with a cheaper dollar -- and next year, the trend if that continues happening, which we expect for the country is that the trend is that we will close the year because of the exchange rate.

So that is the visibility, especially when we look at exchange. When we look at the offer, well, what regulates, it's the offer and the demand and the offer. And then we have China, which is at a lower amount. And then you have Brazil again coming with the relevance production of the United States confirming its production. So we have a stock of passage, although there are uncertainties in the market that STA seems very high.

But all that mess in my 34 years working in the farms, I was saying, oh, people are migrating more for corn. Well, in my knowledge, everything goes back and forth. So it's nothing if you look at all of the migrations in the last 30 to 40 years of American agriculture, that's what we're talking about 3 and 4.5 more or less because of the migration of corn to soy or the inverse.

In summary, we're going to reach a market that's going to have high offers, higher offerings of stock, which will be able to keep these levels, the level -- the current level. So we are talking about climate, we're talking about biology, about if in the middle of the way, there's any climatic event that will affect this relation of supply and demand, everything that I'm saying is not going to be true, but in the structural aspects of right now, we have the concern for a reduction of margin in the next few years, until these stocks regulate and how will they regulate. They always regulate.

The cost of production that is high, lower margins you remove your foot from the daily transformation. The offer and the demand, on the other hand, is something that is constant. So we also do not have a disruptive event at the side of income, but we have been yielding for years at margins very similar to they are now. It's not like it's a disaster or any of that. But it's very similar and the farmers need to be very prepared to work with these different costs of revenue and income and so.

[Gustavo Lopez, executive]

Thank you so much Andre. A little bit about numbers. The previous year, we started with a cost per hectare for soy and now it's a different number and especially for fertilizers that Andre was showing us and the fertilizers that has happened for almost everything around 6%, 7%. When we go into corn 3,000 to 4,000 -- when we go to cotton, that was the one that when we looked at the cost, 13,000, went to 14,700. That's something that we also saw that took us back when we talk about margin, it was very similar to this year, especially when we talk about the case of soy.

And in our case, with the premise, well, it was dropping at BRL 4,000 per hectare, and now it's 500 per hectare. And what was bank confirmed that now we are going to have to work with the impacts of productivity of sugarcane, but we are also talking about BRL 4000 per margin. So we were foreseeing an EBITDA and operational EBIT very similar to 2024, '25 was in this harvest.

[Operator]

Next question from Thiago Duarte.

[Thiago Duarte, analyst]

Gustavo. It's a great moment. I actually have a few points. The first one is about the proposal of dividends. So it's the lowest in the last 5 years. I imagine that, that is associated to this more careful panorama that Andre talked about when he was talking to Gustavo and his initial considerations, but also draws my attention considering the balance of the company, the company is very healthy.

As you well demonstrated -- when we look at the indebtedness of the company, and we deduce the receivables, the company has no debt. So I would like to understand better from the point of view of capital allocation if we should be careful or if the company sees other uses of capital in this scenario of low margins, maybe there will be more opportunities to grow. Andre like the cycle of growth, which we talked about in [ follow ]. I don't know if that has something to do with that. And that would be the first question.

The second question would be the transformed area. -- the last year, you transformed a little bit more than 3,000 acres when you have an average of 10,000 acres in the last previous years. I also would like to understand while this deacceleration happened, I imagine that the conditions today, let's say, thinking about the tier of daily areas the cost of developed area went up.

Maybe you could talk a little bit more about that as well. And finally, it's more like a follow-up when you mentioned the difficulties you talked about the management of a cotton in Paraguay. I remember when you entered into Paraguay, I believe that, that was an area with a lot of aptitude for soy. And then you just wanted to understand this venture that you have on top of cotton and understand.

Well, you talked a lot about learning thing, of course, that's very natural for a company that's always trying to diversify that high, where you see more colors.

But I wanted to understand if the expectation is to maintain that area of cotton in Paraguay with everything that we saw this year. Those are the three questions.

[André Guillaumon, executive]

Well, Thiago, good morning. As always, this is the analyst Gustavo, these are very intelligent questions here coming up. So first of all, I'll go backwards to forwards. Cotton. In Chaco Paraguay, it's a very high cost of production. It's a very relevant factor. For Chaco, there is a lot of instability because of the climate, the radicular cotton comes, gaining body at Chaco, not only in BrasilAgro, but not only with our company, there 3 years ago, when we planted cotton in Chaco, we were planting in our first 800 hectares. And at that time, Chaco Paraguay was producing 16,000 acres of cotton us with 800 the old region, was planting 16, 17, especially with the Mennonite cooperatives and we went to 2010. Now -- and in Chaco Paraguay, in the last harvest Chaco produced 45,000 hectares of cotton. Just for you to have an idea, and I'm sure you have these numbers very fresh in your mind.

If we consider Chaco Paraguay, a Brazilian state today, it would be the third state in the level of cotton production. It would be Mato Grosso and then Bahia and then the third Brazilian state would be Chaco Paraguay with 45,000 hectares. There are a lot of other states in Brazil, producing with 35,000 and then the numbers start falling, but there was an important increase of this in Paraguay, this is what I commented.

The culture is more resistant to extract. And later, I can tell you how we saw this empirically. We had this discovery there. And undoubtedly, what happened this year was a sum of factors. So as incredible as it may sound, a great reduction of our production in Chaco Paraguay this year was not because of a lack of water in cotton. It was because of too much rain. We planted cotton in December, especially cotton suffered because of the drought that soy suffered in February and March.

But until then, cotton was very strong. We had all of the numbers as we had decided upon as we had budgeted. So everything was going right, then what happened. Very strong rain came in March and April, especially April and May when cotton had already opened, we had more than 500 millimeters of rain. So that shows that the drought well -- the drought wasn't the problem that we saw was in excess of rain in a few months.

So this makes us be very careful. I think we are going to continue to plant cotton, we're going to have a daily reduction, but I believe cotton is a vector of transformation for the real estate cost, we will just be readequating it in 2 or 3 years with lower margins there, we might have a readequation because there is a very important efficiency there. It's a paradise to come in and nobody leaves when you get in.

So -- our main concern is to balance this out. So we are working there to balance the entrance and excess of flows because of the volatility. The transformation area, which was your second question. What happened in the area of exploitation. I think you remembered you worked with us in the past on the follow-on of the company, when we issued the follow-on, we issued the [indiscernible].

We had a very important concern, which was to accelerate the development as much as possible. So we were racing at that time, basically Brazil with the exception of [ Panambi ], which was a farm that we bought a few years ago. We are finishing the transformation of Chapparal House has no more areas to open. We are finalizing a few things [indiscernible] that we are still missing -- so the reduction of the transformation was because the purpose in the past was reached, have a cross -- have the capital in the company and accelerate the transformation, because we saw this entire discussion of commercial restriction of a few tradings in '25.

So we worked very hard to have that done and we had to reach levels that were even lower and this number is very similar because in Chaco Paraguay, that was the number that we understand accommodate the need for cash flow, it accommodates the operation because it's a heavier opening area than it is in Cerrado of Brazil. So that is the number that we should expect.

There is a need for transformation in Brazil. So just to explain part of the reduction was because of this main objective that we had. Now your third question, and my third answer. Thank you. Where I would add being careful on opportunities. Those are the two things. First, care, being careful because we do not know how the interest rates will go up, no matter how much the company will run with operational numbers. We do not want to pay extra for capital cost.

The challenge here is that my current debt has interest and my receivables from the firm do not have any corrections. They are corrected by soy. But if soy walks hand-in-hand and that's our expectation, we'll have a debt and receivable walking hand-in-hand and that's where we need to be careful, which you very well mentioned, to bring this level of identities, which is very healthy. And today, our net debt is 0, and it will be positive. And that's part of our business. And so when we look at the recurrence of dividends paid in the last few years, I have no doubt that we've been one of the best dividend payers, companies and in 75 we see 3.5% of yield maintaining an average of yield at the house of 9.

So I believe that the market will manage the company. So there's a point of attention. There's a debt that I don't know when the descendant CDI curve will happen. There's a part that's not connected to a debt because it's stuck in soy, soy is more stable on the future, and there's also the generation of business opportunities because of all this that will generate opportunities. So I don't think there's one word that we can use to say bingo, but I think it's a sum of different factors.

I tried to complement as well. I believe that in the last 3 years, I think it was BRL 450 million invested in the funds, not in irrigation or area, but I think we also have for this year CapEx of around BRL 130 million. So at some moment, we thought, well, a little bit of both. One is to preserve the company for an eventual purchase or acquisition. And since we have a large volume of investments in irrigation, more than BRL 36,000 million. We want to renovate not diminish the average age of our sugarcane plantations. So there is a large CapEx in plantation with sugarcane.

So I think there are several projects that we are understanding that make a lot of sense. And with the interest rates and this level, of course, are a bit difficult even to approve them.

[Operator]

Next question from Pedro Fonseca from XP.

[Pedro Fonseca, analyst]

Good morning, Andre, Gustavo. Thank you for getting our questions. The first question, I wanted to explore is a change of mix with the more -- so is there any data that the COGS as a culture where we need a few years of investment with more traffic?

And then the second point Andre, you already commented that the company will focus more on content. I wanted to hear more on what's behind the strategy and changing the mix, if maybe it's more connected to optimism and related to corn or if it's more conjunctural because of the mix of the company and for the next years.

So I think these are the last questions that I would like to explore. And the second point is in relation to the strategy of acquisition of the hydrogen. When we look at the level of acquisition of the company, it's much more delayed in relation to last year. So at this time, the company would have purchase a higher amount urea. So why is there this longer delay with urea?

Does the company think that the exchange rate, which is very terrible today can improve? Or do you think we will eventually see the company using less nitrogen in the next harvest using the stock that's available and the soil that is -- those are my questions. Thank you, everyone.

[André Guillaumon, executive]

Okay. Now you asked questions to the agronomer. Let's start with your last question. I'm only starting with the last question, not to make a mess, but that's how -- so nitrogenase, agronomically is the only nutrient that you cannot use stocks in the soil. You can use potassium phosphate, nitrogen and unfortunately, not nitrogen if it's available in the soy, it's nitrogen that's as available in the soy is compressed from the material and it will be made available for the system.

So the economy of nitrogen, if anybody says they're going to do that for you, take note. It's a reduction of productivity. So that's the first point. You cannot do that with nitrogenase, And then some of it comes from the discussion of certification. Basically, our nitrogenase, has 2 main motives. It has cotton and [Foreign Language], the corn of the smaller harvest and nitrogenase, which we are using today is for the fertilizer of corn. Yes, we are sugarcane. So we are a bit later, but the 2 things we're not betting on, but we have a challenge to work with more just in time, not carrying stock at a moment in which you have high cost of test, but also the other years, as we saw the price of nitrogenase was very higher within the numbers we went and started using that in the sugarcane harvest.

And now we are more prudent because of the cost of capital. Of course, we're phosphated, you said there's the cost of capital, let's just do it. So we did it. Nitrogenase, as we said, we didn't do it. And if you ask us what are you seeing for the future, I think it will accommodate the price discussions of things that may affect the price, Russia, Ukraine, all of that will affect the price of petroleum and of course, it will affect the price of nitrogen.

So it's not like we are betting our peace there. Of course, we are as citizens. But of course, that may bring the issue of the year having a higher cost of capital and to use it over the whole year. The decision of nitrogenase it was a little bit about what I mentioned. We are going to buy nitrogenase from hand to mouth when you need it, you buy it.

So could be at the end of the harvest, you'll say, well, we got the average price wrong, but the strategy of buying Nitrogenase from has always been very. Well, cotton versus corn, there is a weight in this -- and we started to see stability -- more stability of formation or a better market of corn derivatives.

So we start to have more predictability. It's important to have you know. So we have been -- we were one of the first companies to work with corn, the largest producers of corn. So we were not the largest producers, but we understood made sense that we had a large problem of liquidity. So if you ask me what change in corn from them to now, I think the liquidity of the derivatives of BMF checking -- that's when you start having more predictability.

Gustavo will also remember. Every time we're discussing the budget in H1, May -- it doesn't -- did it make sense buy corn. So if it would generate margin corn was always bad. We always think the decision to make it. What's changing in the next few years is that we start to see the market of corn derivatives that allow us to start working some, that's one point.

The second point is that we need to see with the corn is a low added value product, just not like that's times 2 worth times 2 corn. So -- it's a situation that you accompany much better. The ethanol plants are getting you to capture part of the price of corn in this premium, which I'm going to call less economy and less logistical costs transfer the corn long distance.

So that is also something that has made us be audacious. So that's a combination of growth in the cost of capital, which is more capital for cotton, corn, less -- a bit more repredictability, the market of ethanol, which is much more liquidity in your pocket because of the vehicles and also ethanol, making sure you have the logistical redistribution and the distribution of corn. So these 3 things, I mean, I'm very optimistic for the growth of corn in Brazil and BrasilAgro is going to grow because of this as well.

[Pedro Fonseca, analyst]

That was very clear. If I could just make a quick follow-up. When we talk about very strong growth of the harvest corn in the projections of the company. It would be in which states?

[André Guillaumon, executive]

basically, Piauí and Maranhão, basically Piauí and Maranhão.

[Operator]

Thank you so much for everyone's presence, Andre and Gustavo, for your availability at this call. We went over time today. So I'd like to thank everyone who remained until the end with us, and we will be closing this call for now. Thank you. Goodbye.