Fertilizantes Heringer SA

BOVESPA:FHER3

Good morning. Thank you for waiting. Welcome to Fertilizantes Heringer conference call to discuss fourth quarter 2024 earnings results. With us today are Mr. Fausto Pereira Goveia, Chief Financial Officer and Investor Relations Officer; and Mr. [indiscernible], Chief Commercial Officer. We would like to inform you that this event is being recorded [Operator Instructions].

Before proceeding, let me mention that any forward-looking statements that might be made during this conference call regarding the company's business outlook, projections and operating and financial goals are based on the beliefs and assumptions of the company's management as well as on information currently available. Forward-looking statements are not a guarantee of performance. They involve risks, uncertainties and assumptions as they refer to future events and therefore, depend on circumstances that may or may not occur.

Investors should understand that general economic conditions, industry conditions and other operating factors may affect the company's future performance and may lead to results that differ materially from those expressed in such forward-looking statements. I would now like to give the floor to Mr. [indiscernible], who will begin the presentation. Mr. [indiscernible], go ahead.

Thank you, Carolina. Good morning, everyone. Looking at the deliveries of the fourth quarter of the year, we can see the result of the company's strategy and focus on profitability in premium products as well as risk aversion, which led to a reduction in volume. So there was a reduction in volume. Coupled with that, last year, we faced delayed soybean market, which postponed for the fourth quarter where second crop corn is the main crop in Brazil, but we still had soybean deliveries impacting the delivery of second crop corn, which was also postponed. And we see that the volume migrated to the first quarter of '25.

So it's clear when we look at the percentage that we increased the percentage of soybean volume delivered in Q4, which is uncommon and a reduction of corn delivery explained by this phenomenon of a delayed soybean delivery impacting corn delivery and the reduction of sugarcane because of climate issues, the drought and problems faced in the end of last year.

On Slide 5, we are talking about accumulated deliveries in the full year. This is a reflection of our strategy, as mentioned before, a focus on profitability, on delivering premium products and risk aversion. It's interesting to highlight in this slide the increase in the share of coffee, which is very much in line with what I mentioned. Coffee since last year, and it still remains is one of the crops with the highest remuneration for the grower and for the whole chain.

So we kind of served this wave the market anticipated last year. This is a very traditional market that normally does not bring anything forward. But last year, they did. We were able to serve that wave, and we increased the share of coffee. And this tends to be our strategy for this year as well.

Slide #6 shows a snapshot of what I mentioned, a focus on profitability and premium products. We had a reduction in the deliveries of conventional products, but an exponential increase, not only in Q4, characterized by deliveries of second crop corn, but also throughout the year, more than 3x more deliveries of premium products.

And here, again, coffee played a role in our quest for value creation and profitability. Coffee was the big player in this very good result in terms of increment of premium product volumes delivered throughout the year. Now we'll speak about the financial performance, and Fausto will take over. Fausto?

Thank you, [indiscernible]. Good morning, everyone. Let's start presenting the financials for fourth quarter '24 and the full year 2024, ending the year and the fiscal year. We start with the net revenue in the fourth quarter of 2024. We had a net revenue of BRL 1.3 billion compared to the fourth quarter of 2023, BRL 1.4 billion. So we are 2.9% below compared with Q4 '23, mainly due to a lower volume performed in Q4.

Another important line item is the gross result, BRL 15.6 million positive compared to the same period of 2023, BRL 43.5 million positive, kind of a 60% reduction. On EBITDA, EBITDA was negative by BRL 83 million compared to Q4 '23, BRL 41 million negative. Looking at the full year 2024, we had a volume 8% below compared to 2023, about 140,000 tonnes. The gross result was positive BRL 131.8 million compared to 2023, BRL 8.5 million. And we ended with a negative EBITDA of BRL 192 million compared to BRL 322 million negative in 2023.

Now breaking down the financial results below EBITDA, we ended with financial expenses, BRL 769 million over 2023 of BRL 22 million negative. The main offender here was the depreciation of the BRL, about 14% depreciation over 2024 compared to the dollar with a net income of BRL 1.1 billion versus BRL 326 million negative in 2023.

Moving on to the main items of cash flow. We start with the result before income tax BRL 1 billion negative. Noncash expenses of BRL 745 million, decrease of BRL 29.5 million in asset accounts, increase of BRL 478.9 million in liability accounts with a net cash of BRL 80.2 million positive.

We will now speak about the market outlook, and I turn the floor back to [indiscernible].

Thank you Fausto. On Slide 12, we can see the performance of raw materials and their prices over the year. Let's start with potassium chloride. We can see a reduction of 5%, which led to an exchange rate that was very favorable for potassium chloride, crops like soybean, mainly. There was a great anticipation over the year before the quarter that we are discussing now, mainly in the third quarter, given this exchange rate ratio.

But in Q4, we saw some signaling of price increases, and that happened, particularly in 2025. So this was already a trend in Q4 that the price would increase. When we look at phosphate example, MAP. It saw a strong increase starting in June, basically explained by a demand supply relationship globally. This continues even stronger in 2025, which leads to an exchange ratio, which is not so favorable when we include phosphorus in this account of grains in particular.

Nitrogen fertilizers, mainly, urea followed natural oscillations of this raw material with a slight decrease along Q4. This was basically due to an Indian late demand. But in January, this led to a significant increase. And now urea is at the regular levels. So there was an oscillation after this quarter, Q4 that we are discussing now.

So basically, there was this reduction given this late Indian demand that happened. And now speaking about grain production, our estimate is that we will achieve a record harvest at the level of '22, '23 of national grain production, leading to a projection of fertilizers of 45.7%. There are some adjustments to be confirmed, but that's the number that we are working with.

Productivity back at the levels of 2022, '23, it has increased. Last year, there were a number of climate influences impacting this, but we are getting back to the 2022, '23 levels, just like with planted area, which is maintained with a slight increase.

So this is the final snapshot we have regarding the market estimates of last year. And with this, we end the formal presentation. And Carolina will start the Q&A.

[Operator Instructions] As we have no questions, we inform that the Q&A session is ended and the call is ended. Thank you very much. Have a good day.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]