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Cresud(CRESY) - 2023 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported a significant drop in operational income, with a decrease of 59.2% compared to the previous year, primarily due to adverse agricultural conditions and higher costs [50] - Net income attributable to controlling interest was ARS20.4 billion, down from ARS40 billion in the previous year [51] - The net financial results showed a gain of ARS16.4 billion, lower than the previous year's gain of ARS34.5 billion [23] Business Line Data and Key Metrics Changes - In the agricultural segment, the company expects a year-to-year drop of 4% in yields, with total crop production forecasted to decrease from 798,000 tonnes to 765,000 tonnes [12] - The service area is expected to maintain stable revenues despite lower volumes due to drought conditions in Argentina [16] - The real estate segment saw a significant sale in Brazil, with a total valuation of BRL409 million, which will be recognized in the next quarter [43] Market Data and Key Metrics Changes - The company noted a decrease in commodity prices post-pandemic, with prices for soybeans, corn, and sugarcane under pressure [7] - Argentina's soybean yield is expected to drop by 47%, while corn yields are projected to be 28% below last year's levels [9][37] - The occupancy rate for IRSA reached 97%, recovering from a pandemic low of 89% [20] Company Strategy and Development Direction - The company is focusing on maintaining stable sales and achieving breakeven in the current challenging environment, particularly in Argentina [17] - There is an emphasis on expanding operations in Brazil, with plans to increase service offerings and potentially raise capital to support growth [56] - The company is optimistic about future recovery in Argentina, particularly with government announcements regarding soybean pricing [34] Management's Comments on Operating Environment and Future Outlook - Management highlighted the adverse effects of drought on yields and the high cost of inputs, which have pressured margins [33] - The expectation of improved rainfall patterns with the potential shift from La Niña to El Niño could positively impact agricultural yields in the future [68] - The company remains cautious but optimistic about the agricultural sector's recovery, particularly in Brazil [72] Other Important Information - The company extended its buyback program for an additional 180 days, having already repurchased 80% of the planned shares [25] - A dividend of ARS9.5 billion was announced, translating to a 6% annual yield [52] - The company raised $20 million in pesos at zero interest for a period of 1.5 years, reflecting a credit rating upgrade from AA to AA+ [61] Q&A Session Summary Question: What is the outlook for farmland prices in Argentina? - Management indicated that farmland prices in Argentina have not followed the upward trends seen in the US and Brazil, but they expect potential increases with the next government [54] Question: When can ADR investors expect to receive cash and stock dividends? - The company is working with Bank of New York to expedite the distribution of dividends, expected to be processed within 10 days [30] Question: Are there any reductions in fertilizer costs? - There has been a significant drop in fertilizer prices, approximately 30% year-over-year, which is expected to help margins in the upcoming campaign [57] Question: What are the expectations for rainfall in the next 12 months? - If El Niño conditions develop, it is anticipated that rainfall could exceed 1,000 mm in key agricultural areas, which would be beneficial for yields [68] Question: Are there plans to list a brokerage company on an exchange? - Currently, there are no plans for such a listing, but the company is considering capital needs for its expanding operations in Brazil [69]