Release Date: November 04, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Fertilizantes Heringer SA (BSP:FHER3, Financial) delivered 696,000 tons directly to growers in Q3 2024, with a significant focus on coffee crops, which accounted for 42% of total deliveries.
- The company has focused on profitability and credit risk aversion, which has led to a strategic reduction in volume for certain crops.
- Gross result for Q3 2024 was BRL103 million, an improvement from BRL101 million year-on-year.
- The company recorded a positive cash flow with cash and cash equivalents of BRL363 million for the year-to-date nine months of 2024.
- Fertilizantes Heringer SA (BSP:FHER3) has diversified its premium product portfolio, focusing on high-margin crops like coffee, which is the most profitable crop for the company.
Negative Points
- There was an 11.2% reduction in total deliveries compared to the same period last year, primarily affecting fruits and vegetables.
- Net revenue for Q3 2024 decreased to BRL1.5 billion from BRL1.6 billion in the same period of 2023.
- The company reported a net loss of BRL9 million in Q3 2024, compared to a loss of BRL62 million in Q3 2023.
- Interest expenses increased, with BRL49 million negative compared to BRL33 million negative in 2023.
- The company faced challenges with exchange rate variations, resulting in a negative variation of BRL233 million for the nine months of 2024.
Q & A Highlights
Q: Can you provide an overview of the quarterly deliveries and the main crops Fertilizantes Heringer focused on in Q3 2024?
A: In Q3 2024, Fertilizantes Heringer delivered approximately 696,000 tons, a reduction of 11.2% compared to the same period last year. The main crops were coffee, which accounted for 42% of the total volume, followed by soybean at 19%, corn at 10%, and sugarcane at 9%. The reduction in volume was due to a focus on profitability and credit risk aversion.
Q: How did the financial performance of Fertilizantes Heringer in Q3 2024 compare to the previous year?
A: The net revenue for Q3 2024 was BRL1.5 billion, slightly down from BRL1.6 billion in Q3 2023. The gross result was BRL103 million, up from BRL101 million year-on-year. However, the company reported a net loss of BRL9 million compared to a BRL62 million loss in Q3 2023.
Q: What were the main factors affecting Fertilizantes Heringer's financial expenses in Q3 2024?
A: The financial expenses were influenced by exchange variations and court-supervised reorganization interest. The company ended with a positive exchange variation of BRL58 million, compared to a negative BRL55 million in Q3 2023. Interest rates were BRL49 million negative, compared to BRL33 million negative in the previous year.
Q: Can you discuss the market outlook and the impact of raw material prices on Fertilizantes Heringer?
A: Urea prices remained flat at around $356 per ton due to cautious demand. Potassium chloride prices were about $290 per ton, influenced by increased imports. Phosphate prices remained high at $636 per ton due to restricted inventories and limited supply. The domestic grain production is expected to reach a record 322 million tons, an 8.3% increase from the previous harvest.
Q: What is the company's cash flow position as of the nine months ending in 2024?
A: Fertilizantes Heringer recorded cash and cash equivalents of BRL363 million positive. The main items affecting cash flow included a loss before income tax of BRL507 million and non-cash expenses of BRL399 million. There was also an increase in asset accounts due to inventories and an increase in liability accounts mainly composed of suppliers.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
