Q2 2026 SLC Agricola SA Earnings Call (English, Portuguese) Transcript
Key Points
- Record soybean yield of 4,146 kg/ha, 4.7% above prior cycle and 12% above national average, showcasing operational efficiency.
- Cotton crop expected to be one of the best in company history, with yields projected 12% higher than last year.
- Strong hedging positions for 2025-26 crop (90% soybeans, 94% cotton, 54% corn) and early hedging for 2026-27 (49.2% soybeans, 55% cotton) reduce price volatility exposure.
- Favorable commodity market outlook: global cotton deficit of 5.3 million bales, corn deficit of 24 million tonnes, and tighter soybean supply-demand balance support prices.
- Strategic investments in irrigation (25,000 hectares) and land acquisitions (8,900 hectares) enhance operational resilience and capacity.
- Fertilizer purchases timed well, securing 100% phosphate, 90% potassium, 70% nitrogen at favorable prices, mitigating input cost inflation.
- Land portfolio valued at BRL13.5 billion, with 8.4% annual appreciation over five years, and net asset value of BRL27.12 per share, indicating a discount to market value.
- ESG recognition: fifth consecutive year in Exame's Best ESG awards, five farms with negative carbon balance, and improved ranking in Great Places to Work.
- Leverage increased to 3.09 times adjusted EBITDA, up from previous year, due to higher working capital and investments, causing some discomfort.
- Corn crop faced weather-related challenges from delayed planting and uneven rainfall, particularly in Maranhao and Araguaia Valley, potentially impacting yields.
- SG&A expenses increased due to integration of Sierentz operations, non-recurring costs (e.g., BTG transaction), and higher freight costs from CIF methodology.
- Potential El Nino risk for 2026-27 crop could lead to drought in central-north Brazil, requiring mitigation measures and potentially impacting yields.
- High interest rates in Brazil and global inflation pressure production costs, with fertilizer prices 20% higher than first half of 2025, squeezing margins.
- Debt amortization schedule has concentration of payments in 2026-27, requiring careful management and potential dollar-denominated loans to lengthen profile.
- Soybean acreage in Brazil expected to remain stable, limiting expansion opportunities, and currency appreciation has eroded some commodity price gains.
Good morning, everyone, and welcome to SLC Agricula's second-quarter 2026 earnings conference call. My name is Andre Vasconcellos . I am the Financial Planning and Investor Relations Manager. Joining me today are our CEO, Aurelio Pavinato; and our CFO and IRO, Ivo Brum. It's a privilege to be with you this morning. Please note that this conference call is being recorded and will be made available on the company's IR website, where you will also find the presentation.
(Event Instructions)
We would like to emphasize that the information contained in this presentation as well as any statements made during the conference call regarding SLC Agricola's business outlook, projections and operational and financial targets are based on the management's beliefs and assumptions as well as on information currently available.
Forward-looking statements are not guarantees of their performance. They involve risks, uncertainties and assumptions as they relate to future events that may or may not occur. Investors should
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