Cresud SACIF y A (CRESY) 2026 Q2 法說會逐字稿

Good afternoon, everyone. I'm Santiago Donato, Investor Relations officer of Cresud , and I welcome you to the second quarter of fiscal year '26 results conference call. First of all, I would like to remind you that both audio and slideshow may be accessed through the company's investor relations website at www.cresud.com.ar by clicking on the banner webcast link. The following presentation and the earnings release are also available for download on the company website.

After management remarks, there will be a question-and-answer session for analysts and investors. If you want to make a question, please use the chat. Before we begin, I would like to remind you that this call is being recorded and that information discussed today may include forward-looking statements regarding the company's financial and operating performance.

All projections are subject to risks and uncertainties, and actual results may differ materially. Please refer to the detailed note in the company's earnings release regarding forward-looking statements. I will now turn the call over to Mr. Alejandro Elsztain, CEO.

Thank you, Santi. Good afternoon, everybody. We are beginning our second, we are now going to introduce the results of the second quarter of '26, and we can see in page number 2, the main events that happened in this first half year.

First of all, the conditions on the weather were okay, better than last year in the two we own and leased land, and we have this year improved the size of hectares in the four countries. So now with lower margins because of the drop of prices, we were very active doing the own and lease lands and we're going to show you in the next page. Related to the prices were stable this year. No big jumps.

Some changes between US and South America, but finally higher cost of inputs, lower margins compared to last year's comparing to the COVID times, but we are compensating that through size between the four countries.

In the only harvest we had in the beginning that was the wheat mainly for our winter crops, we have achieved a better yield comparing to what we expected when we plant. It was like 10% higher comparing the time we planted, and that was a combination of good yield and more use of fertilizer in Argentina. So, we be the yield related to the agriculture for the company, the first half in a positive way, but in the meantime prices of the wheat were not so good, so we had better yields, but still now the majority of that was not sell.

Now we are beginning to sell and we are compensated through the prices now, so we are having good results in the wheat too. In the rest, we are going to expect for the soybean and the corn that they are coming for the second half. We are in good shape but waiting for more rains for the future. Related to Brazilagro, we had lower production results, and that was explained mainly because of sugarcane.

We had some cases of some things affecting the yields of sugarcane that mainly affect the first half of the year in Brazil. The one, the good, very good part of the half of the year was the cattle activity. Here we had very sustained price and we're going to show you the evolution on the prices related to this and Argentina with a very big stock and much more investments on cattle, we had very good results in the 1st 6 months. We are improving our feedlots in south in El Tigre and in the north in Los Pozos farm.

Related to capital market, we issue local capital market bonds up to [$117 million] to repay the, this year debt maturity and in the meantime, Cresud paid a very big dividend. We paid up to [ARS93,000. Pesos], close to [$64 million]. 70% was in cash, 30% in time in Isa shares, and plus of that, we did like almost 1% of Cresud shares pay dividends too. So very actively paying dividends in this year.

Now we can move to page number 3, and we can see what it was the final planted area. A little drop from the last presentation last quarter. We dropped like 6,000 hectares between the four countries, and that was done because we were very strict. The margins in some farms were not so big, and we were very strict on the window of planting time, so we preferred to plant a little less, but with the areas with enough rain and with very positive margins, so that was the reason of small reduction.

Area that [stateed] not planted like 6,000 hectares, we were presenting [32,024]. And this is the break between the four countries, and the main one is still Argentina. Second, Brazil, Paraguay, and finally, Bolivia. And if we move to the next page, we can see the evolution on the prices. The [1, 10, 2] main products, soybean and corn, and where we have the two main activities in volume. Plus, the sugar cane, plus the cattle. These are the four main activities, plus the real estate, plus the service through filo and Agrof.

So in here we see the evolution of the prices the last 14 years and we did the, we wanted to show you how cheap is soybean and corn in real terms. Nominal terms, but in real terms adjusted by inflation, you see how cheap are our main products. So with that, we are still making money in this region that is so benefit in production and still farmers of the region are making good without subsidies for sure. And in Argentina still with taxes on exports. And in the graph below.

I wanted to show these days of changes because Donald Trump announcing China bubble or China realignment and look at what is happening with Chicago Board of Trade of the price. We see jumps and the time that the jump comes to the price of Chicago, the premium to Brazil goes down and exactly the opposite. When the price goes down, premium to Brazil goes.

Finally, South America is very balanced and it's not changing its price in dollars, and this is affecting mainly South American prices, so some small changes because of the China and US relation, but finally not changing the very good shape that the sector is spending and the recovery of the stocks that we were looking at the last year.

So, I wanted to share that that the margins for farmers are decreasing because of the long-term trend of this. A lot of new technology coming to the sector, improving the yields, and this is making small margins and we are having good margins, small margins. This year we are expecting smaller but in a bigger scale because of the expansion of the land.

And in the next page we can see. The weather is in a good condition. We see the graph is in green or is in blue, same accumulated rains, so small, very small areas without good rain. So, we are expecting a normal or almost normal crop of the four countries, and here we see the sowing progress. 100% of the corn and soybean of Argentina of Bolivia, Brazil. Brazil, the corn is a little late.

This is corn mainly of [zarinha], second corn, and this is a little delay and in Paraguay too. So, we are not achieving up to now 100% of the corn. We expect to arrive close to 100% but probably not to the 100 because of some lack of rain that affected mainly Brazil and Paraguay. So, balance with the conditions and Controlling costs.

So, normal operation here up to now, after, up to end of January. Understanding that majority of soybean and corn will come from now in Brazil it's beginning to harvest on Mato Grosso, but May in Argentina harvest of soybean will be April, May, and maybe the majority of the corn will come in July, August, September. So, we are in the middle of a good time of the summer crop that is the mainly more important for the for the company.

We can move to the next page and we can see some good news. The government is doing what it said in the past, decreasing the taxes on exports, small reduction we saw during this quarter, [26% to 24%] in the soybean, [9.5% going to 8.5%] in corn and sorghum, [9.5% to 7.5%] in wheat and barley. Some small drops going in the good direction, not expecting to go to zero, mainly the soybean that is the big revenue for the country.

But in a good direction and maybe we can see a surprise in the [seriess] going to zero that won't cost so much. We expect for next year maybe go to that direction and keep reducing the soybean for the future. That's what Millet announced at the beginning, and it began from [33]. Now he's in [24].

So, he's going in that direction. And the other main achievement of the government in the right part of the graph. The big GAAP of the past between the [$2] the official and unofficial, but now the two, the blue and the orange, going close to almost together. So the farmer is decreasing taxes and receiving almost the official and the unofficial dollar of the same.

So what is that affects now farmers are really receiving dollars and the taxes are decreasing, and this is affecting the liquidity for the agriculture and. Areas, so we are seeing more liquidity. We didn't announce up to now in six months any real estate operation, but we think we are going to close the year having transactions on the region.

So, we keep that in mind, and we think we're going to achieve the normality. And in Argentina, more than normality Argentina was close to 0 the last [1-2] years. Now we expect some transactions too, but in Paraguay, but in Brazil, because the liquidity is still there. And a part of these two big news, taxes reducing and the gaps between the [$2] there were two news, one is related to US, and one is European Union, and the third one is China related to US. The United States established a new framework to bilateral to Argentina.

So, Argentina is very close now in the relation with the US, and that will improve access for beef and other markets, mainly for beef. They're expecting going from 20,000 tons to 100,000 tons. And related to Mercosur, that will improve Hilton quota to South America, to Argentina too, but this was not signed.

Finally it was delayed, was approved. We need the refresh the agreement to the rest, the regulatory and parliamentary is not approved still, so we need to wait for that. But the US is almost done and China is the third.

That China improved what was Argentina from 400,000 tons to more than 500,000 tons, improving 17% what we are now exporting to China, but reducing to other countries, mainly to Australia, mainly to Brazil, and improving to Argentina, Uruguay, and United States.

So, the three effects for beef are affecting and probably our next page we can see the evolution in the page number 7, evolution of the price of Argentina. Argentina was very bad on prices in the past, was the lowest, but now recovered and today between the four countries Argentina, Uruguay, Brazil and Paraguay, Argentina is in the highest because of the quality of Argentine beef.

And we see that Cresud was preparing and now we are improving our production from the [2377 million kg], 7,000 tons of beef. Now we are going to this year to 105,000 tons, so [10.5 million kg], and with almost Same stock. What we are doing, we are rotating more the cattle. We are improving our facilities of pastors in the agricultural areas, and we are doing more feedlot, so we are rotating and producing more intensively. That is very profitable and it's bringing very good results, and Matthias will show you later in the balance sheet of Cresson. And we see in the graph in the graph on the right that the stocks.

In Brazil we're growing the last 20 years but now beginning to decrease from [194 million to 186 million heads], but in the rest in the US, Australia, and Argentina, decrease on the stock. So, the combination of the decrease of the stock, decrease in the cows, and improving demand of cattle that the population is having is making that increasing price and benefiting our company in cattle and now you see.

The new feedlots that we are doing, we're investing money in the two feedlots in Los [pesos] and in El Tigre, and we're going to have like 22 feedlots of 10,000 of capacity instant stannial capacity, each of them that will mean like 5,000 to 60,000 heads per year in cut in feedlots, a part of raising cattle and fattening the middle. So we are probably one of the largest in this.

Raising cattle with bulls and having the, and fattening in the mill and feedlots later. So, we are benefit not having more debing plant like in the past but having big stock making a lot of money in all the activity. Saying that, the other step of [Cresud] that we always talk, production one side, real estate, no news in the first half.

The third is PO, FO evolution on the year. We are closing, we closed last year with 7.6 million tons of traded tons on field representing 6.5% of total Argentina crop harvest and through Advisory specialties, credits, capital, trading, and now B beyondG, that is our branch we are opening in Brazil that this last year did 300,000 tons, small amount compared to close to [$8 million] of Argentina, but in Brazil a lot of room to grow. Brazil it's more than double Argentina.

Crop size, so we are expecting beyond to replicate the story of Argentina. So, this company is making a very relevant [EVT] here we see the last four years in a [$26 million EBITDA] and last year with the official dollar that is very close to the blue chip. So, in the past, the GAAP was here, but now with the [$26 billion and $26 million].

And here we see that this company recently issued two bonds at close to 8% cost. So very relevant company servicing farmers, no light in assets and doing this mission in South America, not only in Argentina. So, we expect this company to keep growing as they were doing [Brazilagro] and Crestwood. Saying that, I will now give the word to [Matias Ivan Gaivironsky].

Thank you, Alejandro. Good afternoon, everybody. So, if we jump to page 9, we can see the main highlights of our investment in IRSA. Remember that today, after the payment of the dividend that we pay in shares of IRSA, our stake went to [51.6] and we are planning to exercise the warrants that that Cresud has from ISA so that the stake will recover to levels of 55% again after the exercise.

During the semester, we saw a positive result of [ARS248.8 billion] pesos compared with the lost during the last year. This is mainly attributable to the gaining the fair value of the investment properties. Then, if we analyze the results from malls, offices, and hotels were positive compared with the previous year.

We saw a recovery in revenues and EBITDA in shopping malls, 2% against last year. In offices, 15.5% and in hotels, 44.8% due to better margins and rates. Also, Irsa cited two new transactions on Rambla del Plaza. So, we already cited 15 different transactions for 15 plots of land in Rambla. So, the progress of the commercialization is excellent.

And also, it has tapped the international capital market again during December, so we increased the size of the notes that we issued during March, so we increased by $180 million that will expire between 2033 and 2035. And finally, it finished the payment of the dividend that was 10% yield during November.

If we go to the next page, we can see. That during the semester, we have a real devaluation of the exchange rate. Remember the last year there was an appreciation. So that generates two important effects on our balance sheet. First is the negative impact on our dollar denominated debt, that when we have to convert those dollars into pesos that generate a loss. But on the other side, on the fair value of the investment property since we have much more assets in dollars and debt in dollars that generate positive results in that light.

Regarding the operational side, I already said what happened about Irsa, about Cresud. We see a drop compared with the previous year. This is basically attributable to the farmland sales. Last year, we had two transactions that generated gains for up to [ARS40.8 billion] pesos, and this year we haven't closed any transactions yet, so that is the main. Difference. If we see the different lines, remember that in the grain line it's not so significant this semester.

We will have the results in the coming two quarters, but we see a positive evolution. This is basically a result from Argentina because of the exchange rate and because of better prices and low results in Brazil, mainly driven by the cotton activity.

In sugarcane, as Alejandro mentioned, there was compared with the previous year, we have Drop in the results with a negative result this semester that we expect that to recover in the coming two quarters, That it was basically because of some climate conditions in Brazil that affect the production.

Regarding cattle, as Alejandro mentioned, we have positive numbers. We see here a drop, compared with the previous year, but this is basically related to Brazil activity since we have lower stock of cattle there, so that decreased the production, but very positive numbers in Argentina, where prices increased much higher than inflation and production was very positive.

Going to next page. So, with all those drivers about Irsa, [Resur, and Fio], we finished the semester excluding the change in the fare value with similar numbers than the previous year. And the main effect of this semester came in the line of fair value of investment properties basically from Isa that we can see a very negative numbers last year of almost [ARS3100 billion pesos] and a positive number this year, [ARS184 billion pesos]. That if we analyze the numbers this year in dollar terms, prices of our properties remain stable, but when we convert those dollars into pesos, that generate this important positive number.

About the other effect that came in the line of the net financial results in the first line of the table, you can see the net effects result that last year was a positive numbers of [ARS48 billion pesos] this year generate a negative number of [ARS45 billion pesos], and that is the main effect on this year, the second main effect this year. . Well, with all these different numbers, we finished the semester with a net result of [ARS183.9 billion pesos] attributable to our controlling shareholders, [ARS74.4 billion pesos].

About the debt, remember that this year we had, some amortizations, that basically are in March. So, for that reason, we went to the local capital market in December and January and we raised it almost $117 million dollars in two series, one for a three-year tenure and the other one-year tenure. One year was an interest rate of 5.75% and the other a three-year tenure at [$7.25 million]. So, with that is we already have all the proceeds that we need to cancel the debt this year.

And regarding dividends, as Alejandro mentioned, we finished the payment of dividends that we paid part in cash, part with [ira] shares, and part was, shares that we did a buyback in the past. So, we resus pay around [$63.7 million] this year. Something else to add is the warrants expiration. Remember that in 2021, Cresud did a capital increase that had warrants attached to those shares. And those warrants will expire next week, so the last window opportunity to exercise the warrants will go from the February 17 to February 25. So, we expect the shareholders will exercise the warrants.

We, according to the shareholders meeting, we included. A cashless option for the warrants, so the warrants are tipping the money. So, there was an option also to exercise in a cashless basis. So basically, shareholders will receive the difference between the price of the shares in the market and the exercise price of the warrant. So that will happen in the next 10 days, 15 days. So, with this, we finished the formal presentation. Now, we open the line to receive your questions.

Well, now is the time for the Q&A session. If you have a question, please click the bottom label raise hand or use the chat. We will take the questions in the order we received them.

I think we have some in the chat. At this point the first one is related to our stake in Brazilagro. What is your view on the rather depressed share price of Brazilagro? Would you consider increasing your shareholding? This is the first one from this, investor, and the second one.

I would say, okay, let's answer the first. I think Brazil is in a special moment. Politically speaking, next, this year, sorry, now we are in 26. This October is election time, Presidential election time. And there is doubt if Lula or the center-right is going to come to government. I think it's an opportunity. Brazil sounds like the capital market is expecting and we can see that from the currency, the exchange rate of the real.

I was at six and now it's at 520. Some expectations of the Capital market in a good direction of Brazil. Yes, I think it's a good opportunity, Brazil market and shares of Brazilairo for sure. Brazillairo always speaks about what's the amount of the value of the land that the company owns. Some valuations the com the company gives. And, but a part of that, there is a big land lease that we never make this calculation.

So, the combination of own land and leased land makes a big discount on the price of the share of Brazillaro. Yes, for sure. Cresud owns 35% and it's always thinking if to improve or not. We have a big stake. We began with 7%. We have today 35%, and we are optimistic of Brazil's situation.

Thank you. The second question is related to the warrants. Give me second, are you? Sorry. It comes another question in the middle. Are you going to exercise your IRA warrants or exchange them in the newly introduced cashless option? Are sufficient funds available to fully exercise the warrants?

Yes, Cresud will exercise the warrant definitely. The idea is Cresud will do it on a cashless basis. Because basically, when we analyze liquidity at the IRSA level, there was significant liquidity after the issuance of the bond. [IRsA] has More than [$300 million] in cash, so the idea is that PRU will do it on a cashless basis. After that, Cresud will increase again to levels of 55%, our stake in EUS.

Thank you. Our next question comes from Gordon Lee from BDG. Are there any provisions or conditions in the trade agreement with the US or the PTA with the with the European Union that have direct implications, positive or negative, for the products that you focus on?

I think the main impact it's in beef, in the two directions in the European, probably the conditions of European, it's Hilton quota and the American, it's less strict in the health conditions and the quality of raising the cattle. The two are positive for Argentine farmers. Each farmer decides to which country's selling to the packing plants that it's selling to those countries.

The two are improving. The Hilton, we're thinking like doubling in the case of US, 5 times the existing volume. I think the two trades are benefiting cattle raisers in Argentina. So yes, I think, I mean, the rest of the products, I'm not sure if it's going to impact a lot in the soybeans or corn, other two main products of Crescent.

And here there's a question. I don't know if it is for us, but what is the chance of the Mercosur agreement with Europe being ratified and when could that happen?

This is a very political question. This is mainly French and other farmers of Europe. Logical would say let's try to be better global and produce what is more logical and beneficial and more efficient, but Political is political. So I would not do that. They approved a small portion, important, relevant, but the final process was not approved. I think the American, it's close to be closed. It is easier to be approved.

Thank you. One more related to commodity prices. If commodity prices stay low, what step will you take to lower operating costs to be operationally profitable or more profitable?

They use, I think the Argentina is, I think, a very good place to learn how to survive in scarcity. Imagine farmers with these taxes on exports, with these gaps on the dollars, we're receiving very small amount of dollar to survive. What do you say with that? You have to be scarce with water and with the money because you're receiving much less than the other farmers.

So, we learn how to rotate less the land to cover crops, to improve the efficiency of the lack of water, and to be using lower inputs, sometimes not fertilizing the sufficient that the land needs. I think the next step will be for Argentinian farmers in the meantime that Brazilian farmers or American farmers with [$10 or $11] of soybeans are suffering. We with [24] are making money and the new thing that is coming to the world, to the producers, the farmers, is the variable use of the inputs that it's coming, what does it mean?

Now we are equipying, we are putting the machinery with some equipment that makes variable use of seeds, of herbicides, of pesticides, and fertilizers. And with that, you are going to keep using the place that you need, not to use it in the 100% of the lot. So, deciding and using less variable cost. And Argentina is going very fast and Cresud and Brazilagro. Now we are now covering all of our farms and majority of our machines that are working on our farms and using majority of the.

Going to the corn is variable in Argentina for sure. In Brazil it's beginning. There is less use, but it's more use in the rest of the inputs crop and insecticides and herbicides. So variable costs are decreasing to compensate the lower margins because of these new prices, and the technology is allowing Starlink and other technologies coming to the region. Is allowing to use this variable cost of inputs. I hope I was clear. If not, please ask me again.

There is one related to fertilizer prices how are affecting Cresud up town lately.

Fertilizers affect more Brazil than Argentina because in Argentina the land is much more rich, so we fertilize much less than what we do it in Brazil. So, prices, and if war comes again, that will be affecting again more probably to Brazil. But again, it's part of the cost of farming and if this goes up again, will affect for sure farmers of the world.

We give 1 or two seconds more for any additional question that you may have. You can use the chat or raise your hand. Okay. If there are no more questions, I will now turn the call back to Mr. Alejandro Elsztain for his closing remarks.

We closed the first half of the year. Now comes the main activity. In all, because in cattle too, cattle is the majority of the of the kilograms done by the farm, not the feedlot, so it's very positive to the second half, and the rest is the summer crops for Brazil, for Argentina, for Bolivia, Paraguay. We are optimistic on that with these low prices, understanding and the company is really getting low margins, no subsidies on the region, still taxes on Argentina.

Liquidity is coming to Argentina because of these big changes on the market, and I'm optimistic that we're going to show in the second half some results related to real estate too, so I'm optimistic on the balance sheet of Cresud and having the real estate results too. So we are A good year. Argentina is plugging to the world and the world in the agriculture is suffering, but we are in the more benefit region, very profitable and very good in yields, so we are having a very good time. So just to thank you very much, everyone, and let's see next quarter. Thank you very much.

Thank you.