BrasilAgro Q3 2025 Earnings Call - Net Losses Mount as Geopolitical Shocks and El Niño Threaten Margins

Ana Paula, Call Moderator, BrasilAgro: Welcome to the third quarter earnings call. The first nine months of the 2025, 2026 period at BrasilAgro. Thank you for waiting. We started a little bit late today, and we have André and Gustavo to present our earnings. If you’re in English, this presentation is also available on the chat. Before we begin the call, I want to start off by saying, first of all, that BrasilAgro is completing a anniversary. We’re completing 20 years of history, and we’re really happy with this milestone. No one imagined 20 years ago that a PowerPoint would become such a big company that’s so significant in this sector and industry. You’ll also see we have a new visual identity to celebrate this anniversary, and we’re really happy to share our anniversary. Now I’m going to pass the floor on to André to start the call.

André, Executive Presenter, BrasilAgro: Hi, can you hear me now? Great. Sorry about that. We had some technical issues here. Ana, thank you for the introduction. Thank you all for being with us 20 years, as mentioned by Ana Paula, of a lot of resilience and a lot of lessons learned. A lot of achievements and mistakes, of course, but that’s what makes a company mature and really have results. No doubt, the points right were a lot greater than the wrong points. That really helps us to become a better company. That we also enabled the growth of many people and the development of many regions. When we look behind, and this is a reason of a lot of happiness for us.

How many people were able to achieve support for their families, how many regions were transformed, and thousands of kilometers of roads and electrical networks were implemented. Now these 20 years, we’re going to get into a little bit of what this history of 20 years is all about and how we built this. We definitely did this with people’s work and your trust. There’s no work without trust and there’s also not only trust, right? The combination of trust in the company’s investors and analysts in these 20 years and the work on our behalf really made us reach the point we’re in and work in this direction, right? That’s what makes everyone really happy as they are part of this company today.

We’re gonna talk about our results, and it’s a really complex year due to the interest rate and other factors. Let’s look at what we have under our own control, which is technology, plantations, productivity. We know our agribusiness has its cyclical nature, and today we’re experiencing a low cycle moment. We’re gonna talk about this and the good things and the bad things, and that’s why we’re really gonna be available to respond to this, right? Let’s talk about the numbers for the first nine months, BRL 637 million of net revenue. It’s really important to when we look at the first nine months last year, there were sales that were also accounted for, and we have an adjusted EBITDA of 42.8 and an interest rate.

With all of this, we reached those nine months with BRL 76 million of net losses. This is really influenced by the financial expenses and sugarcane in the second half of last year. Thankfully, sugarcane is doing really well this year, but we’ve had very positive perspectives here, and we actually were able to close some harvests that we’ll be able to demonstrate here when it comes to soy. On the next slide, please. Here we can see once again the resilience of the company to continue to sell land. In Paraguay, it’s a small sale, but it’s really important to demonstrate that we have liquidity and that it is a project that in the last few years suffered a lot with climate issues. This year it’s doing really well.

When you have a good productive year, you attract liquidity, right? We were able to accompany a sale in Paraguay, not very big, but very significant when it comes to internal return rates. We’re talking about 23% in BRL, within our historical averages and 14% of the internal return rate in dollars, right? No doubt Paraguay, this year we have very positive production, and we’ll have a lot of success from a productive and real estate perspective as well. Next, please. Here’s a little bit of the scenario, and here’s what we asked to share here, which is this line over here. At the end of each one where we had the beginning of the war in Iran.

What we see is, soy is kind of moving sideways ever since the conflict began. Corn as well is really connected to this. The only commodity where there was a significant recovery after this was cotton. We know why. Because of the connection that cotton has, and the synthetic fibers have, which, oil sub-products really made cotton pull this, the prices. We have cattle raising following a very positive cycle. We have a restricted off supply in Australia and in the U.S. and in Brazil, with an increase of the rate due to the BBB. We have more meat, more food, to The cows just still take nine months for pregnancy, right? This is gonna take a while.

Ethanol was another commodity we expected would react positively as occurred in cotton due to the umbilical cord kind of connection and the price of gasoline. We see the quality of the imports that is not really preserved. We saw petroleum go from BRL 65 and reach BRL 130 or BRL 90. We haven’t seen a recovery in the price of gasoline. We do expect this to happen in the end of the second half if the conflict really perpetuates all the way there. The sugarcane has been following a short historical series. However, we’re gonna talk about the climate, we’re gonna talk about perspective.

We’re gonna see the El Niño coming along really strongly, and that really increases the intensity of the discussion on sugar production in India and Thailand. We’re not optimistic the prices are gonna get back to BRL 0.18, but we think that the bottom of the well is kind of locked in there. There should be an upside for gasoline and for the production of sugarcane as well. Whenever you have a geopolitical conflict or discussion, you have the cost matrix and the revenue matrix. Unfortunately ’til now, the only thing that was really impacted was the cost matrix. As we’ve shown you in the commodities, it’s the only cotton was where we had an alteration in the matrix just one minute. Here, just one second. All right. Can you see? Yes. Good.

Thankfully, we’re not IT specialists, so we don’t work with this, right? We’re just the farmers and the agronomists. Anyways, as I was saying, we have this cost situation that was impacted by the war, especially for phosphate fertilizers. They went from prices at $600 reaching almost $800. Chloride as well went up a lot, and urea also. Those inputs that are really connected to natural gas went up a lot. Potassium chloride, we had already basically bought about 70% at the beginning of the harvest. With fertilizers, we already had a pretty big position. When you look at the 43, that represents the first harvest, right? Sorry, represents the total amount of fertilizers, not only the first harvest.

In the first harvest, the fertilizers we’re gonna have, that we’re gonna need in the month of September, October, November, we have a much greater percentage closed. Because we estimate and expect that the conflict should be cooling down a bit in the next month. In the first harvest, we already have most of it, the phosphate inputs are bought. When you look at the off-season harvest, plantation of sugarcane in the first half of next year, those phosphate subproducts are not purchased. We also see a exchange ratio that’s kind of skyrocketing. The conflict generated only an increment in the cost matrix, but it still has not led to an increment in the revenue matrix, right?

If the conflict finishes today, no doubt we will have a significant impact in the costs, and we won’t necessarily have a revenue benefit. We must all hope that this cools down as quick as possible. Here about the planted area. The harvest is 25. We closed at 168,000 acres. It’s important to highlight here that the company in the last few years has been a seller. Basically we’ve been able to continue to keep a significant production area. For soy, we’re basically keeping about 94% harvested. We lack a very little, and what’s missing is Paraguay especially. All the rest has already been harvested, and Paraguay is doing really well.

This year we have Paraguay bringing in positive surprises, we’ve already started to harvest. We’re starting the beginning of the harvest for corn in summer. Generally, Central Brazil has a rain distribution that’s really positive. For sugarcane, we already started harvesting in two units, especially in the Serra Branca and Alto Taquari. We started off with the first harvest with a lot of adherence. It’s an El Niño year. A bit of what I started saying is the biggest concern we have is that the northeast region tends to suffer a bit more. It’s a year with a lot of caution when it comes to the next harvest, right?

The harvest that’s gonna be planted around October, November, where we have to critically look at this and be careful when it comes to how we’re gonna allocate capital and especially when we start seeing the risks are very low. We’ve been working on this carefully in the company to really exclude some areas that historically lead to some production issues, right? Because we’re seeing a significant El Niño year up ahead. Great. Now just a bit about the hedge position in the company, and we’re sharing, basically there’s a harvest that the soy we already mentioned we harvested. It’s a year of a lot of volatility, but I think the company was able to position itself positively, and we’ll see the numbers now, right?

It’s worth mentioning that when we were sort of defining the budget last year, we were talking about soy at about BRL 10.60, BRL 10.70, and we had a currency rate at about BRL 6. That was the company’s budget. Ever since we have been locking in some operations. We had a currency rate that was almost at about BRL 4.90. What is important to consider here is basically what we have as a hedge locked in. We have a currency that’s at 65% lock, locked in at about BRL 5.90 almost, BRL 5.89. That’s what we have locked in as. As a currency, Chicago’s at BRL 10.85. Of course, what we need to lock in still is being locked in at about $12.

That’s gonna lead to a really interesting combination because even with the currency dropping, we should be able to have an average currency of about BRL 5.65, BRL 5.70. The Chicago will also be able to recover, right? Cotton is a crop where the currency is a lot better actually due to a area reduction when we saw a major concern with the cost of capital this year, with a crop that we can’t put capital at risk. We had already performed some sales back then, and we have about 60% of the cotton sold at a type of currency that’s about BRL 6.65 per dollar. We’ve also seen about 76% of the commodity sold. For ethanol, we’ve been working on volume.

Ethanol we’ve already, we see corn is about 54% sold and farm receivables, which is also very significant. The company has over BRL 600 million in this line here in the company. It’s a super significant account and we’re working on it in the P&L. There’s a currency that’s really adherent to the harvest, which is BRL 586, and the Chicago about BRL 1,079. Next, please. Gustavo now, that was the intro, but we can get into the numbers now. I’m just gonna close my camera real fast here and pass on the mic.

Gustavo, Financial Executive/CFO, BrasilAgro: Thank you, André. Wow, thank you all for your presence and doing this presentation of the results. This exercise starts off in the beginning of July, and then it goes up until July 30th. We consider about BRL 76 million within the highlights. Last year, in the same period, we had presented a positive result of BRL 76 million with total revenue about 27%. I want to remind you that we already had mentioned on the December 31st with the impact that impacted the revenue and the results. We also saw that we also had a sale in the farm performed previously and this year. We at the moment just accounted for this transaction, the one that I was mentioning in the beginning of our presentation. The adjusted EBITDA in this period was BRL 42 million, BRL 42.8 million. Prior to this was BRL 195 million.

On the graph we presented this, with the main movement in these two periods that we have, one part that’s on the right side here at the center, with the soy and corn. It’s important to highlight also that everything we have here, up until the March 31st was, basically stocks and collections that were performed in 2025 with everything that would be like the new harvest. As I mentioned, the 240,000 tons of soy. Only sold about, 55,000 tons in this quarter. The decision of carrying on this a little more up ahead, due to the fact that in the beginning of the war, we had this expectation, of a short-term solution that we saw rates, started to pressure a bit.

Considering the excellent harvest that goes in as well, as well as due to this increment and this increase, we have at the logistics level. We decided to hold this a bit more and see if we could find opportunities that were better for logistics, because the products are already practically all sold, about 60% compromised already. We’re just searching for the best moment, right, for all of this. Until the March 31st, we had already sold only the stocks, and then we had BRL 11 million sold in soy and BRL 22 million in corn.

Then sugarcane with a difference, BRL 56 million that we had presented on the December 31st when we talked about the ice period and the frost we had in the region of São Paulo, and issues also with burns in the northern region. Cotton had, we had a harvest in some areas with losses, and that led to reducing the amount of hectares that were planted during this new harvest and the farm and sold of the other administrative and costs and then especially when you can see this in sugarcane and the farm, and that explains the main differences between the ex-adjusted EBITDA, right?

When we see the results of this exercise in the top part on the graph are you can do ±BRL 76 million. You see the price of sugarcane and cotton that represented a variation of about -BRL 36 million. The lower volume of sugarcane as well, which added to this BRL 19 million. There was a reduction in the cost as well, with some soy, corn crops that we should have some kind of a saving because of the productivity in the past. We can see the fair value, when you can see the performance of everything we’ve been marking to market at fair value.

The impact of the prices as well presented for ethanol and sugar, that really impacted this, generating an impact with a lower result and this sale of farms and also an impact that was positive for this period of BRL 37 million of financial results, which we can only see at the bottom part, last year during these nine months, 2025 with BRL 93 million and this year. This impact represents BRL 56 million. I always wanna remind you that the first line of financial investments, we have the minimum cash. We see our interest on liabilities as well, which is the cost of debt that the company has. We see approximately BRL 55 million.

In the last year, this effect of 15-59 was smaller because of a lower interest rate at a percentage level. After we saw that for these nine months, especially for mark-to-markets, which are the updates to fair value and the other variations as well are practically at a null effect. To complete this, we are presenting the BRL 76 million that are negative. You can see this performance that we’ve had in sugarcane as well. Here you can see the gross results once again. Mentioning that everything that was commercialized here, with the exception of soy, which is 55,000 tons. All the rest are the sale of stock of the prior harvest.

Soy, as you can see, there’s an improvement in the gross earnings and results as a consequence of better cost per ton. For corn as well, we also see the price and cost leveraging the results of the products. Looking at the unit results, considering BRL per ton, that would be the potential. With the increase in volume, not only for the soy but also corn, we had an increment in the volume. When we look at sugarcane, which is to the right side on the last here to the right, you can see how this performance was of 1,341,000 tons for 2025. For 2025/2026, we have 971,000 tons. That really brought in this difference that’s so significant, about BRL 36 million.

We also see the unit price, not only because of the price of the ATR, but also considering the concentration of the kilogram of sugar that we considered in the provision. That led to our margins, which are normally stabilized, 3,000, 3,500 hectares, which keep a lower margin as a consequence of this impact on productivity. When you see cotton as well, we had, as we mentioned, part of this cotton we performed sales and commercialization, which are produced in irrigation areas that were very positive. We had other areas that did not have irrigation that we had very negative impacts.

Besides having productivity that’s very low, we also had an issue with quality, which made the unit price be a lot lower than what we normally had achieved through a hedge that had led to these results with BRL 9.9 million. The discount made the price be a lot lower, right? This was the main engine, let’s say, that made us decide to reduce the service for this harvest that we’re working with now. We can also see the net debt for the company, a total of BRL 1 billion and the cash level of BRL 887 million. This debt is at 93.2% CDI with the maturities considering those periods.

We have the receivables at the farm, BRL 768 million that we still have to receive. Here, what’s important to mention is we are at a moment where all costs were already incurred. From now on, we’re going to be commercializing and transporting and receiving all of the receivables for production. Here, when we consider soy, for example, we have to receive over BRL 280 million. As we had mentioned in the beginning of this exercise, from now on, we’ll begin reducing the level of leverage, especially considering the understanding that the reduction of interest would happen throughout this year and the next year.

After the beginning of the war and as you saw, the central bank was reducing their pace, we will make a decision to search for a reduction in our level of investments and try to be more efficient as well in how we place in the production. We are at this moment confirming the El Niño for the climate conditions in the next harvest. I think with that, we wrap up our presentation and now we’ll get into Q&A.

Ana Paula, Call Moderator, BrasilAgro: Thank you, André. Thank you, Gustavo.

Bruno, Analyst/Investor: Well, I just wanted to get back to one discussion on the cost of fertilizers that André had already mentioned in the beginning of the conversation. This has been a central point here for discussion, and I think it’s worth reinforcing, right? It could compensate this and maybe amortize a headwind and maybe bring in an inflation year-over-year that could be lower than what the market feared, right?

I wanted to understand what are the assumptions behind this and what are the prices of product, inputs, nitrogen related inputs that you could maybe be more inclined to accelerate purchases for and what would be the timing for this since you have the logistics and the flow required to reach the farms. I would imagine this is probably smaller for smaller farmers, but I would imagine that would maybe consider the stabilized level that would already encourage this kind of movement, right?

To bring in this discussion on the cancellation there of the farm that we saw last month with the worst scenario from the counterparty. How are you considering the risk for the receivable portfolio? Are there any other possibilities of cancellations that are concerning you? Just if you could give us a little more visibility on this, it would be interesting for the market. Thank you.

André, Executive Presenter, BrasilAgro: Okay, Bruno, how are you doing? Well, for fertilizers, you know, it’s an area I love and I’ve been working in this sector. I worked in this sector for 12 years, but I wanna share a little bit of the expectations here. What are we working on from a timeline perspective? The sugarcane harvest started off in April in some areas, and it’s gonna go until the month of November. There’s a period in sugarcane where you’re harvesting it, especially the sugarcane we’re harvesting in these months, where you still have humidity in the soil, and that’s still like the remaining from the rain period.

When you talk about São Paulo, you should have some humidity in the month of May or so. When you get into a region like Mato Grosso, things are a little more complicated, right? You get rain, you get back to having rain in September. The fertilizers and nitrogen based products that we have the need to work on, and we’re gonna be buying considering this, and we’re gonna be harvesting. We’re gonna be fertilizing these sugarcane plantations, right? The discussion we’ve been working on that try to balance out this impact is if we should have the full dose of fertilizers. When you put in this fertilizer for the sugarcane, you have an absorption curve.

This happens in the months of January, February, and March, where you have most of the dry material accumulated. When you’re fertilizing sugarcane right now, well, not fertilizing, this is bad because it won’t have the availability of the nutrients it needs. It’s growing about 100% as we do every year for an operational matter. You’re gonna kind of fertilize about 100% in the sugarcane. Due to this significant time movement with the prices, sugarcane’s gonna be harvested now that has humidity in the soil or protected through rain in the next month we’re gonna treat. How are we gonna treat this? Well, it depends on this year. We would already set up like a full dose or maybe in installments, right?

When we have a full dose applied, it’s normally older sugarcane where you don’t want to have such a small installment or part, right. In the younger sugarcane, we’re going to drill this down to try to bring this a little bit before the sugar season. Sorry, before the rain season for the sugarcane. The sugarcane we treat and harvest. The sugarcane you’re harvesting now, you should treat. What are you going to harvest in August or the end of July and December? That fertilizer you put in the soil is just to help you operationally because the sugarcane will not absorb that. They are only going to absorb the fertilizer or any crop. It only absorbs this when you have water. You are going to fertilize sugarcane in August. You have no rain, no humidity.

The fertilizer is gonna be stabilized on the surface, and it won’t absorb it. We would do this every year when we had another stable price situation, right? When you have price volatility, then you drill this up ahead of it. When you look at the timeline of the sugarcane, that’s gonna be it. As I mentioned, phosphate products we already have good positioning for. It’s important to see this impact when you get into the discussion on the conflict. The biggest damage is for the nitrogen based products, right? 35% of this goes through the Strait, right? The Hormuz Strait. When you look at phosphate related products, then you could have an increase in the cost matrix, right? With natural gas prices going up, et cetera.

It’s less than 15% of the phosphated fertilizer that goes through the Strait or formulas. Yes, we’re gonna have a cost issue considering the increment of the cost of natural gas, which is the basis of everything. For fertilizers, I try to answer this a bit, and I can add on as well a bit. What we are looking at here is that last year for a hectare of soy, we were talking about BRL 4,100 of direct cost, right, per hectare. All of this confirmation of cost was considering a dollar of almost BRL 6. What has happened during this period, we’re in this process starting up a new budget.

We see that the appreciation of the dollar has really pulled the cost downwards, especially for defensives. Since we’ve already purchased part of the chloride, almost 70% and everything, with the phosphated products and everything for soy and corn, although we have some prices pushed upwards, let’s say, in any of these cases such as the urea for the off-season harvest, we can see that this impact and appreciation of the Real has made costs be very, very similar from one year to another. The big challenge here when we see this in Reais and sacks per hectare with the costs here that are normally 30, 35, historically, we see that it’s kind of at the ceiling, the 35.

The big challenge up ahead is how we are going to position ourselves, right? At a moment where we bought the chloride, we already sold a bit of soy and that would give us a sack of soy approximately with like 4% or 5% better than the previous year, right? When we saw this through the margins, it was actually a little bit better. Of course, from now on, we have to see what’s gonna happen and if this will impact the services especially. When we consider the first version of the budget we had seen before, between March and April, just as presented here and, in fact, the prices for the fertilizers and were kind of stabilizing there.

From then on, we saw a possibility to begin the negotiation, right? When you have scale to buy, you can have some sort of discount, right? Also the doses, we’re talking about 130, 140, 150 per hectare. When you see the impact of all of this, of the price and the fertilizers, there’s not much of an incidence, right? That’s the vision we have, we can see this impact in the fertilizers. Great. Also to answer Bruno, the second part of the question here on financial risk. I think that we were very quick in solving this. We would be able to sell this, right? I like looking at the half full cup, right? We were buying an area. Yes, this transaction, we had a reduction.

This asset will get back to our shareholder base and for our asset base. It is within our base, and we’re gonna be searching for ways to do good business with it, right? We’re not gonna get into details here, but I’d say that this asset that came back was one of the assets we had of a buyer. I don’t think we had a detailed credit analysis, but it’s a buyer that has a leverage rate that’s a lot higher than the others in our portfolio. Generally, our portfolio, we always sell farmers to farms to farmers that already have a big portfolio.

This farmer that we canceled this business, they didn’t have such a big portfolio, and so their liquidity capacity was smaller, but that’s not what happens in our portfolio with our other creditors. We’re really keeping our eyes open to this. It’s always worth mentioning that the transactions we have protect the risk for this to happen. That’s something we just demonstrated, right. If you have a huge challenge and you can see our horizon here where there’s no possibility of timeframe. In this sense, we have an asset registered in the company, and it’s a lot easier for us to, it’s a sale where you can sell this asset.

This is what we consider you deliver the title, but you deliver the property but not the title. That’s where we can guarantee the solvency of our transaction. As a creditor, where we already had a relationship of leased properties, that was one of the worst in our portfolio. I’d say that our portfolio, we’re very confident about the receivables as well.

Bruno, Analyst/Investor: That’s great. Thank you very much. Very complete answer. Thank you, guys.

Ana Paula, Call Moderator, BrasilAgro: Thank you, Bruno. Now we’re gonna open up Thiago Duarte’s mic from BTG Pactual.

Thiago Duarte, Analyst/Investor, BTG Pactual: Hi. Good day, André, Gustavo, Ana. A pleasure to speak with you always. As always, I wanted to take advantage of this topic on the fertilizers and also hear a little bit of your guys’ opinion as well as André’s, about a more market-based issue. This graph on the exchange, that you present in the presentation, from two years from now, basically, if we were to extend this decades later. That would be maybe not as favorable for commodity. We had the war on Ukraine and then in 2027, 2028. My question here to you, André, how you understand that this ratio will get back to the historical average? Do you understand that it will be a retraction in the demand for fertilizers and a bit of what you guys chose as how you’re gonna work with them eventually, and maybe bring this downwards?

Will it be for the recovery of prices and commodities, as you’ve already presented is happening. The truth is that this happened very little when you look at the grain specifically. My question to you is, first, do you understand that this should get back to the average? Or do you think the sector will have to handle these very unfavorable exchange ratios for a while? That would be my question to you. Thank you.

André, Executive Presenter, BrasilAgro: Thiago always has the intelligent and difficult questions here. He wants to take advantage of my past experience in the industry for fertilizers. Just to understand here, what I’m gonna explain a bit about production, just so we can understand how this will accommodate this. Nitrogen fertilizer industry is one of the most beautiful things. The air we’re breathing here has more nitrogen than oxygen. What the fertilizer industry is all about is they need energy, and that’s why you have the natural gas story. We capture nitrogen from the atmosphere. Through this process that is external, adding energy into the molecules so they can shock. We produce gas, which is called ammonia, NH3. This gas is where you start all of the production of the fertilizer industry.

When you look at the ammonia and you NH3 and you react with SO4, this is sulfate. When you react to NH3, you have just ammonia nitrate. When you get ammonia and you react again to another molecule, you have CO2 and NH2, which is the molecule of urea. That’s really important to understand, right? To understand the fertilizer production. You need to have this fundamental element, which is natural gas. This natural gas is going to be where everything starts. What’s the with phosphate?

[Non-English content]

Thiago Duarte, Analyst/Investor, BTG Pactual: [Non-English content]

Ana Paula, Call Moderator, BrasilAgro: [Non-English content]

André, Executive Presenter, BrasilAgro: [Non-English content] A time where the rain will take longer, it shall give us more favorable time for the fertilization of nitrogen for sugarcane. We are working on this for next year.

Gustavo, Financial Executive/CFO, BrasilAgro: [Non-English content] Okay, to complement the costs that were mentioned, all of this previous budget that we inaugurated has a cost for all of the crops very similar to what we had last year. [Non-English content] Because of the appreciation of the Real, defensives are cheaper. [Non-English content] Fertilizers are costing BRL 180. Now it’s BRL 80 with more chloride.

[Non-English content] Some changes because of that. The concern that we have for the future is the CCT. The CCT may have some kind of impact, some material impact, if we maintain the diesel price over BRL 160. This is the only crop that we are more concerned with. There are still a lot of things that can happen. We still have contracts with service providers to make, and it will be the beginning of a harvest where we need to be very attentive and be able to control the costs that are still going to close.

Ana Paula, Call Moderator, BrasilAgro: Thank you for those answers. Thank you everyone for your questions and for your time with us this morning. We will be closing this call, so if anyone has any questions, please contact us through our investor relations team and see you next quarter.