Release Date: March 13, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- SLC Agricola SA (SLCJY, Financial) achieved a net revenue of nearly BRL7 billion, driven by significant cotton shipments.
- The company maintained a strong adjusted EBITDA margin of 29.4% and generated free cash flow of BRL34 million.
- SLC Agricola SA (SLCJY) successfully expanded its planted area by 10.6%, totaling 731,000 hectares, indicating growth potential.
- The company received multiple ESG awards, including the Great Place to Work certification and the Gold Seal from the Brazilian GHG Protocol Program.
- SLC Agricola SA (SLCJY) announced a strategic acquisition of Sierentz Agro Brasil, which will increase its planted area by 14% and enhance land portfolio diversification.
Negative Points
- Net revenue declined by 4% compared to 2023 due to lower-than-expected soybean and corn yields.
- Operational performance was impacted by adverse weather conditions, leading to lower yields in cotton, soybean, and corn.
- The company's leverage increased, with adjusted net debt closing at BRL3.7 billion, primarily due to lower soybean productivity and increased planted area.
- Cotton prices are under pressure due to global demand fluctuations and geopolitical uncertainties, affecting profitability.
- The company faces challenges in expanding the cotton seed market, with slower growth expectations compared to other segments.
Q & A Highlights
Q: What are your expectations for the seed business in 2025, particularly regarding sales targets and pricing?
A: (Aurelio Pavinato, CEO) We expect growth in the soybean seed market due to its size in Brazil. However, cotton seed sales are growing more slowly as we develop this market. Seed prices are correlated with commodity prices, and we anticipate stabilization or slight increases due to current commodity price levels.
Q: How do you view the grain market, especially considering the trade war between China and the United States?
A: (Aurelio Pavinato, CEO) The trade war has led to higher soybean inventories in China, which supports prices. Corn prices are sustained by a production deficit. We expect stable prices with potential peaks due to climate effects. Brazilian agriculture could benefit as a reliable supply source amid trade tensions.
Q: Can you elaborate on the impact of global inventories on corn and soybean, and how does this relate to Brazil's position?
A: (Aurelio Pavinato, CEO) China holds significant soybean stocks, reducing its reliance on the U.S. for imports. Brazil has become a major supplier to China. The trade war has shifted premiums in Brazil, offsetting lower prices in Chicago. We expect Brazil to continue benefiting from this dynamic.
Q: What are your CapEx expectations for 2025, considering the expansion of planted areas?
A: (Ivo Marcon Brum, CFO) CapEx will likely remain around BRL1 billion, with increases in maintenance CapEx due to expanded planted areas. We aim to manage investments smartly, focusing on necessary expansions and maintaining operational efficiency.
Q: How do you plan to manage costs and leverage new technologies for productivity gains?
A: (Aurelio Pavinato, CEO) We focus on maintaining cost efficiency and leveraging technology to boost productivity. Geographic diversification helps mitigate climate risks. We aim to increase yields across crops, ensuring competitiveness in volatile markets.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
