Earnings call transcript: Adecoagro SA misses Q2 2025 revenue forecast, shares drop

Adecoagro SA reported its second-quarter 2025 earnings, revealing a revenue miss that led to a significant decline in its stock price. The company posted consolidated sales of $392 million for the quarter, falling short of the $423.5 million forecast. This revenue miss, alongside a notable drop in adjusted EBITDA, resulted in a 9.4% decrease in the company’s stock price, closing at $8.50 per share. According to InvestingPro data, the company maintains a healthy current ratio of 1.98, indicating strong short-term liquidity despite the challenging quarter.

Key Takeaways

• Adecoagro SA’s Q2 2025 revenue was $392 million, below the $423.5 million forecast.
• Adjusted EBITDA fell by 60% year-over-year to $55 million.
• The company’s stock price dropped by 9.4% following the earnings release.
• Net debt increased by 11% year-over-year, reaching $699 million.
• Sugarcane crushing was down 20% year-over-year.

Company Performance

Adecoagro SA’s performance in Q2 2025 was marked by challenges in meeting revenue expectations and a significant decline in profitability. The company’s consolidated sales were $392 million, while its adjusted EBITDA dropped 60% from the previous year to $55 million. Despite these setbacks, Adecoagro continues to focus on efficiency and innovation, including exploring Bitcoin mining and maximizing ethanol production.

Financial Highlights

• Revenue: $392 million, down from the forecasted $423.5 million.
• Adjusted EBITDA: $55 million, a 60% decline year-over-year.
• Net debt: $699 million, up 11% year-over-year.
• Net leverage ratio: 2.3x, up from 1.3x last year.

Earnings vs. Forecast

Adecoagro SA’s Q2 2025 revenue of $392 million missed the forecast of $423.5 million by 4.21%. This shortfall is a significant deviation from expectations, reflecting challenges in the company’s operational segments, particularly in sugarcane crushing and ethanol production.

Market Reaction

Following the earnings announcement, Adecoagro SA’s stock experienced a sharp decline. The stock price fell by 9.4%, closing at $8.50, near its 52-week low of $8.31. This decline reflects investor concerns over the company’s ability to meet financial targets amidst operational challenges. However, InvestingPro analysis suggests the stock is currently undervalued, trading at an attractive P/E ratio of 13.9x with a substantial free cash flow yield of 11%. For investors seeking deeper insights, InvestingPro offers 8 additional key tips about AGRO’s investment potential, available through their comprehensive Pro Research Report.

Outlook & Guidance

Looking ahead, Adecoagro aims to maintain full-year crushing volumes similar to last year and expects improvements in sugar and ethanol prices. The company is targeting flat to slightly higher cash costs and is reducing its crop-planted area to improve margins. With a dividend yield of 3.8% and management actively buying back shares, InvestingPro data reveals the company’s commitment to shareholder returns. Discover detailed valuation metrics and growth projections for AGRO and 1,400+ other stocks through InvestingPro’s comprehensive research platform.

Executive Commentary

CEO Mariano Bosch highlighted the company’s strategic initiatives, stating, "We are analyzing the possibility of using a portion of our energy production for bitcoin mining." Renato Junquera Pereira, VP of Sugar, Ethanol, and Energy, noted, "We think that the market didn’t realize it yet... price should react," indicating optimism about future market conditions.

Risks and Challenges

• Operational inefficiencies in sugarcane crushing could continue to impact revenue.
• Increased net debt and leverage ratio may affect financial flexibility.
• Market dependence on Brazilian sugar production poses risks amid potential crop yield fluctuations.
• The exploration of Bitcoin mining introduces new operational and regulatory risks.

Q&A

During the earnings call, analysts inquired about the potential impact of sugar price fluctuations and the strategic rationale behind exploring Bitcoin mining. Executives also addressed concerns about the company’s farming business margins and potential merger and acquisition opportunities in the sector.

Full transcript - Adecoagro SA (AGRO) Q2 2025:

Conference Moderator: Good morning, ladies and gentlemen, and thank you for waiting. At this time, we would like to welcome everyone to Adeco agro Second Quarter twenty twenty five Results Conference Call. Today with us, we have Mr. Mariano Bosch, CEO Mr. Emilio Nieko, CFO Mr.

Renato Junquera Pereira, Sugar, Ethanol and Energy VP and Mrs. Victoria Cabello, Investor Relations Officer. We would like to inform you that this event is being recorded and all participants will be in a listen only mode during the company’s presentation. After the company’s remarks are completed, there will be the question and answer section. At that time, further instructions will be given.

Before proceeding, let me mention that forward looking statements are based on the beliefs and assumptions of Adecco Agro’s management and on information currently available to the company. They involve risks, uncertainties and assumptions because they relate to future events and therefore depend on circumstances that may or may not occur in the future. Investors should understand that general economic conditions, industry conditions and other operating factors could also affect the future results of Adecco Agro and could cause results to differ materially from those expressed in such forward looking statements. Now I’ll turn the conference over to Mr. Mariano Bosch, CEO.

Mr. Bosch, you may begin your conference.

Mariano Bosch, CEO, Adeco Agro: Good morning, and thank you for joining A de Coelho’s twenty twenty five Second Quarter Results Conference. Consolidated adjusted EBITDA during the quarter reached $55,000,000 while year to date amounted to $91,000,000 From the very beginning, we know that commodity prices and weather risks are to enhance risks in our space. Therefore, through the years, we set our minds on becoming the lowest cost producer, while also diversifying our operations across geographies and products. We understood that this combination along with the investment made to consolidate our asset base, would act as a natural hedge against these events and enable us to continue delivering results to our shareholders. These are the years when our sustainable production models are truly put to the test, together with our efforts in enhancing day to day efficiencies in order to overcome challenging scenarios like this one.

In our Sure, Ethanol and Energy business in Brazil, weather has not been good to us. We experienced extreme dry weather and even a cold front in June in our operations. Despite this, our strategy of increasing year after year the size of our plantation to secure hurricane availability enables us to have our crushing forecast in line with the previous year. The same goes with the investment made to have a larger operational flexibility to produce both sugar and ethanol and storage capacity, which today grant us commercial flexibility to switch between products to always get the better margin and to stop production if needed. Going to our farming business in Argentina and Uruguay, we are focusing on the efficiencies in every stage of the value chain.

In rice, prices have significantly come down, but our work on seed genetics allows us to offer customized rice varieties at premium prices and cut new markets, which in turn enables us to partially offset the drop in global prices. In dairy, thanks to our growing market presence, we are increasing the processing volumes in our industries, while we continue working on expanding our product portfolio to access new destinations. In the case of crops, we are finalizing a very challenging campaign in terms of prices and costs. Now our focus is on the upcoming season, where our main goal is to improve the margins of each of our crops. As a consequence, we are reducing our leased area by approximately 30%.

Before passing the word to Emilio, a brief comment on the memorandum of understanding that we signed with Tether. We are analyzing the possibility of using a portion of our energy production for bitcoin mining. We are excited about the potential innovative project as it proves how cutting edge technology and the agribusiness industry can join forces to maximize the value of our assets and production. Lastly, an update on sustainability. In mid May, we published our 2024 integrated report in which we explained how in our sector sustainability is fully aligned with profitability.

I would like to express my gratitude to all the people across Adecco Agro. These are the moments where our hard work and commitment ends up making the difference and allows us to be the lowest cost producers at all time. I am convinced that we have the right people and that we are following the right strategy to generate good returns and value for our shareholders. Now I will let Emilio walk you through the numbers of the quarter.

Emilio Nieko, CFO, Adeco Agro: Thank you, Mariano. Good morning, everyone. Please turn to Page four with a summary of our consolidated financial results. Sales totaled $392,000,000 during the second quarter, while on an accumulated basis, they reached $716,000,000 Higher volumes sold across all our operations more than offset the lower prices seen for most of our products on a year to date basis. Adjusted EBITDA marked a 60% year over year decline in both periods, reaching $55,000,000 during the quarter and $91,000,000 year to date.

Lower results were mainly explained by losses in our biological assets in line our sugar, ethanol and energy businesses on lower production as well as in our crops and rice operations on lower prices. In addition, results were also negatively impacted by higher costs in U. S. Dollar terms in our farming division, together with one off expenses incurred by the company in connection with Teva’s tender offer. Now please turn to Slide five.

Regarding our production figures on the bottom right chart, we can see that crushing volume in our sugar, ethanol and energy business was 20% lower year over year due to a combination of less effective milling days during the second quarter and a selective slower milling pace adopted during the first months of the year. On the other hand, total production in our farming business reported a 12% year over year increase, explained by higher planted area as well as a record productivity in our rice operations. In the case of crops, harvesting activities are almost complete for the twenty twenty four-twenty twenty five season and the average yield obtained was below our initial expectations. We will describe this in more detail during the presentation. Let’s move to Slide seven with the operational performance of our sugar, ethanol and energy business.

After experiencing below average rainfall during 2024 and early twenty twenty five, precipitations received during April aided our sugarcane yields. Nevertheless, the distribution of rains led to a reduction in effective milling days and consequently a decrease in our crushing volumes during the quarter, which totaled 3,400,000 tons. Although productivity indicators remain below the prior year due to the lagging effect of the dry weather explained before, this saw a significant improvement versus the 2025 as anticipated. On a year to date basis, we have already crushed 4,900,000 tons of cane, 20% less than the same period of last year. This was due to a selective slower crushing done in early twenty twenty five, focused on cane with limited growth potential and a rainy second quarter that consequently slowed down our crushing pace.

In terms of mix, we continue to maximize sugar production throughout the year given its attractive premium. Within our ethanol production, we are maximizing the production of hydrocetanol given the better margin. Let’s please turn to Slide eight, where we describe sales conducted throughout the period. Net sales amounted to $183,000,000 during the quarter, while year to date, they reached $3.00 $2,000,000 The overall increase in sales was fully explained by our commercial strategy to sell our carryover stock of ethanol from last year as well as our daily production to profit from the recovery in prices and clear out our storage capacity. Consequently, we have already sold 320,000 cubic meters of ethanol at an average net selling price close to BRL2700 per cubic meter, 18% higher year over year.

Regarding sugar, the combination of lower prices and the decline in production given the lower crushing were the main drivers towards the decline in sales year to date. Nevertheless, we were able to profit from the sale of bagged VHP during the quarter, which commanded a premium over spot prices. In the case of energy, higher selling prices more than offset the decline in volume exported driven the lower milling year to date. Regarding carbon credits, we sold over 390,000 ceballos at an average price of $10 per ceballo, reaching $4,000,000 in revenues. Please go to Page nine, where we would like to present the financial performance of the Sugar, Ethanol and Energy business.

Adjusted EBITDA amounted to $68,000,000 during the second quarter and $98,000,000 for the first half of the year. Despite presenting higher sales, results were mainly offset by year over year losses in the mark to market of our biological assets on lower volume of harvested gain, together with a year over year losses in the mark to market of our commodity hedge position due to less gains presented compared to the same period of last year. Finally, to conclude with the Sugar, Ethanol and Energy business, please turn to Slide 10, where we would like to briefly talk about the current outlook. As explained in prior releases, our sugarcane plantation has gone through different weather events throughout the last one years. Point However, our annual crushing forecast remains unchanged, thanks to, first, our continuous harvest model that enabled us to flexibly advance or delay harvesting activities, together with higher cane availability due to the expansion planting made during the last years as well as to higher sourcing of third party cane.

This in turn will result in flat to slightly higher cash costs versus the previous year. From a commercial point of view, we are constructive on both sugar and ethanol prices for the upcoming months as we still have the flexibility to switch our maximization strategy to always produce the product that offers the highest marginal contribution. In the case of sugar, we still have a portion of our 2025 sugar production still unhedged and no commitments for the next year in order to profit from any upside in spot prices as the global supply and demand balance continues to rely on Brazil’s production. In ethanol, inventory levels are considerably below the prior year, and the industry continues to prioritize sugar production due to its premium. On the demand side, parity at the pump continues to favor ethanol consumption and new demand has emerged with implementation of the E30 mandate.

Therefore, any decline in crushing volume could further pressure this tight scenario. Now we would like to move on to the farming business. Please go to Slide 12. As of the August, we harvested 97% of the total area and produced over 1,200,000 tons of agricultural produce. The remaining hectares are expected to be fully harvested during the rest of this month.

Despite the precipitations received from February onwards, some of our crops were impacted by previous of dry weather and high temperatures, excess rainfall or even below average temperatures. Therefore, average yields for this harvest season ended up below our initial expectations in line to below historical average. In rice, our work on seed genetics and the implementation of new technologies resulted in an average yield of eight tons per hectare, a new record for this business. In the case of dairy, we are working on reversing the decline in copper activity seen year to date. At the industry level, we continue to maximize the production of UHC milk for the domestic market, product that offers the highest marginal contribution while developing our brand portfolio across several markets.

To conclude, we began planting activities for our next campaign, starting with wheat and other winter crops. We are foreseeing a reduction in planted area of approximately 20,000 hectares versus the prior campaign due to our decision to reduce our exposure in the northern region of the country as well as to diminish the amount of lease area to improve crops margins. On the following Page 13, we present the financial performance of our farming business. Adjusted EBITDA for the Farming business totaled $1,000,000 during the quarter, whereas year to date amounted to $18,000,000 Starting with our crops segment, the year over year decrease in results was mainly driven by an uneven year over year comparison as in April 2024, we sold La Pecuaria Farm, which generated $15,000,000 in adjusted EBITDA. Furthermore, results were also impacted by lower international prices, lower than expected productivity and higher costs in U.

S. Dollar terms, which combined continued to pressure margins during the period, mainly for our peanut production. Moving on to rice, the decline in adjusted EBITDA during both periods was mostly explained by the outlier prices reported the prior year, coupled with higher costs in U. S. Dollar terms, which in turn fully offset the record production at the farm level.

Lastly, adjusted EBITDA generation in our dairy business was impacted by higher costs in U. S. Dollar terms despite the increase in volumes sold and our work towards improving the mix of higher value added products and maximizing the production of fluid milk for the domestic market. Please turn to Page 15 for a broader view of our debt position. Net debt amounted to $699,000,000 11% higher year over year.

This was due to higher short term borrowings raised to finance working capital in our farming business, given the lower results presented at a consolidated level. Consequently, our net leverage ratio stood at 2.3 times, one turn more than the same period of last year. Despite the increase, we continue with our disciplined capital allocation strategy, which also includes investing in growth projects with attractive returns and distributing cash to shareholders while keeping financial flexibility and a strong balance sheet. Subsequent to the end of the quarter, we completed the issuance of $500,000,000 bond with a seven year tenure and a 7.5% coupon. A portion of these proceeds was used to partially tender our twenty twenty seven senior notes totaling $150,000,000 This transaction proves our constant work towards anticipating our debt maturities and therefore, having most of our debt in the long term.

As an example, the average life of our debt, which got extended from two point five years to four point five years. On the following slide, we describe our CapEx program. Expansion CapEx represented $23,000,000 during the quarter and 53,000,000 on an accumulated basis. In Brazil, expansion CapEx was mostly allocated to increasing our sugarcane plantation size and expanding our harvesting equipment with the acquisition two row harvesters and gruner trucks. In our farming business, our main CapEx program consisted on the development of rice production areas, the expansion of our power gold production capacity at San Salvador rice mill and some industrial improvements in our Monteros milk processing facility.

Let’s turn to Page 17, where we would like to present our shareholder distribution year to date. As of this date, we have already committed $45,000,000 to shareholder distribution. From this amount, dollars 35,000,000 in dividends were approved. The first installment of $17,500,000 was paid in May, representing approximately $0.01 $75 per share, while the second installment will be payable during November in an equal cash amount. In addition, we have already repurchased $10,000,000 in shares under our buyback program, representing approximately 1.1% of the company’s equity.

Thank you very much for your time. We will now open the call to questions.

Conference Moderator: Thank you. The floor is now open for questions. If you have a question, please write it down in the Q and A section or click on raise hand for audio questions. Please remember that your company’s name should be visible for your question to be taken. We do ask that when you pose your question, that you pick up your headset to provide optimum sound quality.

Our first question comes from Gustavo Troiano with Itau BBA.

Gustavo Troiano, Analyst, Itau BBA: Hello, everyone. Thanks for taking my question. Actually, I have two two points to explore with you guys, both of them and and the sugar and ethanol business. In the earnings report and also earlier in the call, you mentioned that we should expect similar crushing figures year over year for the full year despite this lower than anticipated start of the season. Right?

So just wanted to catch up with you guys. What what are the main drivers behind this crushing acceleration expected for the second half? And in which direction do you believe there could be an asymmetry here for for crushing figures for 2025 full year? And the second question on sugar prices. You already mentioned that you are constructive with both sugar and ethanol prices, But just wanted to hear from you, what are the main triggers or timing for us to be to see better sugar prices going forward?

And you also mentioned in the earnings release that there are no hedging commitments for 2026 at this point. So I think it could be useful for us to understand a little bit of timing so so so we can anticipate a little bit of when do you guys intend to start these commitments for for 2026. Thank you very much.

Mariano Bosch, CEO, Adeco Agro: Thank you, Tao, for your question. Renato can answer both of them. Renato?

Renato Junquera Pereira, Sugar, Ethanol and Energy VP, Adeco Agro: Thank you, Gustavo, for your question. Regarding the crushing, as Emilio mentioned, we had a difficult first quarter, especially because of the drought of last year. And the second quarter was the crushing was impacted by the rains, in April. But afterwards, we have been crushing, very well. Actually, in July, we crushed more than 1,500,000 tons of sugarcane, and we have been crushing a lot in August as well.

Actually, we reached our daily record, last week. So we have been crushing very fast. So we think that this is still possible to crush the same amount of sugarcane that we crushed last year. So we’re going to be very similar to what we have crushed last year. And we think that the yields in the last quarter is going to be much better than the yields that we have been obtaining now and in the third quarter because of the frost that we had.

So that’s why we are optimistic about reaching the same level of crushing. Regarding the price of sugar and ethanol, we think that we are optimists in both cases, especially in the short term. In the case of ethanol, the demand is still very strong. So hydro’s demand is almost 2,000,000,000 liters per month. Part is still favoring ethanol consumption.

Priority at the pump is at 66%. We had the E30 addition in August, which represents approximately 700,000,000 liters in additional demand. And we think that the sugarcane, the amount of sugarcane that Brazil will crush this year is going to be lower because we have been seeing lower TRS content and also yields in all the sugarcane areas in Brazil. So the and the meals in most areas are maximizing sugar, so less ethanol supply. So if you take the level of stocks today is 30% lower than the same period last year.

So that’s why we think that the price of ethanol is going to increase. We are building inventories to sell our stocks more towards the end of the year. We think that there is upside between 510% considering the current price levels. And in the case of sugar, we’re also, optimist. We think that the price of sugar is under pressure in the short term because of the funds high short position and because of the Brazilian higher sugar mix.

But as I mentioned, the TRS and the yields are lower than expected. Actually, the TRS per hectare is 15% lower than the same period of last year. So we think that the amount of sugar that Brazil is going to produce is lower than initially expected. And the world is still very dependent on the Brazilian sugar. So we think that the price is going to react, and we are going to see more opportunities to hedge our remaining part of the sugar of this year and also the sugar for next year.

And I think it’s very important to mention that since the July, we are maximizing ethanol in Mato Grosso do Sul. If you consider the tax season in Mato Grosso do Sul and the appreciation of the Brazilian real, the parity in Mato Grosso, the hydro ethanol part in Mato Grosso is close to zero one eight five dollars per pound. So that’s why we’re maximizing ethanol. So that’s why we are so we are positive in both products.

Gustavo Troiano, Analyst, Itau BBA: That’s super clear. Thank you very much.

Conference Moderator: Our next question comes from Thiago Duarte with BTG. You can open your microphone.

Thiago Duarte, Analyst, BTG: Hey, hello guys. Good morning everybody. Thanks for taking the question. Yes, I have a question on sugar and ethanol and then a follow-up on Renato’s comments just now. Right?

The question is about the quality of the cane. Renato just mentioned a few points about TRS per ton being lowered across the Center South Of Brazil and trying to sort of add up to your guidance of keeping the cane crushing volumes flat this year relative to last year. So, if I understand correctly, the reason why you believe you’re going to be able to crush as much as you did last year is because your harvest area is still significantly lower year over year, and then you expect to catch up. But obviously, this is being compensated by the fact that yields, are lower as well, right? So just to sort of clarify if that’s the reasoning.

So you expect a higher area and lower yields for the full year of 2025 relative to 2024? And perhaps this explain why you’re expecting unitary cost to be flat or up this year relative to last year? So that would be the first question. And the follow-up is regarding the figure Renato just mentioned. So you said that because of the tax incentives and the freight costs and everything, your ethanol equivalent sugar equivalent price in Mato Grosso do Sul is around is over 18¢ a pound.

Right? So my question to you on that is how do you think that applies to not only other mills in Mato Grosso do Sul, but also other meals, located outside of Sao Paulo. So think of Minas Gerais or Goias or even state of Mato Grosso, which I believe face similar sugar and ethanol price equivalent trade off as you guys. So, my question is actually whether you think other mills will not be maximizing the sugar in the 2025 relative to ethanol because of the sugar price right now? You.

Renato Junquera Pereira, Sugar, Ethanol and Energy VP, Adeco Agro: Thiago. Thank you for your questions. Regarding the first question, we think that the yield is going to be very similar to the yield that we had last year. So the area is going to be a bit higher because we’re going to acquire a bit less third party sugarcane. But the yield is going to be, I would say, flat year over year.

We think that TRIS content is going to be slightly lower than last year, especially because of the frost the sugarcane that we have been crushing in July and August. Because when we have a frost, we are obligated to harvest the sugarcane before the ideal period. So that’s the reason why TRS content should be slower. Regarding the second part of your question, we think that the Muse that are in the same situation that we are, that they have the same ICMS system and the same distance to the port should do the same strategy that we are doing. I don’t know precisely how much it represents, but I think, it’s rational to do what we are doing now that is maximizing, ethanol over sugar.

Thiago Duarte, Analyst, BTG: And when you think of maximizing ethanol versus sugar for the full year 2025, do you have like a rough estimate of how much that means in terms of mix, ethanol versus sugar?

Renato Junquera Pereira, Sugar, Ethanol and Energy VP, Adeco Agro: Yes. I think this is a good point. But it’s difficult to say because we start maximizing sugar. In Minas Gerais, in our mill in Minas Gerais, we are still maximizing sugar. So the final number will depend on how it progress from now on.

I think in Mato Grosso do Sul, when we have a full year maximizing ethanol, we have 70% of potential to produce ethanol. This year, considering what has already happened, we think that we’re going to finish the year in Mato Grosso Sul with 60% MAX ethanol.

Thiago Duarte, Analyst, BTG: Very clear. Thank you, Renato.

Conference Moderator: Our next question comes from Lucas Ferreira with JPMorgan. You can open your microphone.

Lucas Ferreira, Analyst, JPMorgan: Hi, everyone. I have two questions. The first one, still on the sugar and ethanol business, Renato, can you discuss a little bit in your view what will be the trigger for you guys to start hedging next season? In other words, do you expect that the sugar market should at some point react to what is in your view and several of other sugar and natural producers, a weaker grain quality coming to the season. So what’s the time you guys think of moving ahead with the hedges independent of the scenario?

In your view, what’s the trigger for sugars to move sugar prices to move from here? The second question, my question is regarding if you can speak a little bit about how the factor entering the group changed or not, the way you guys think about strategy. Already announced MOU that you mentioned in the beginning. So how to think about the way you guys think about growth strategy from now and you analyze projects, the scope of our investments or how TETRA is helping and reshaping or not the way you guys think about growth? And if you can comment that, that will be great.

Thank you.

Mariano Bosch, CEO, Adeco Agro: Thank you, Lucas, for your question. Renato will answer the shoe, Ernesto, and then I will take the third question. Fernando?

Renato Junquera Pereira, Sugar, Ethanol and Energy VP, Adeco Agro: I’m Lucas. As I mentioned before, we think that the sugar price could react in the short term, considering the impact of the Brazilian crop, both in yield and TRS content. As I was mentioning, if you compare to last year, we had less 15% EIS per hectare than last year. We think that the market didn’t realize it yet. I think as Unica is going to start to release the numbers for in August, September, this is going to be more clear and price should react, and then we should accelerate our hedging for next year.

I think it’s important to mention that we have already hedged 5% of our next year position at $0.01 $78 per pound. We did this last week. And also, as I mentioned earlier, we have also the flexibility to change the mix towards ethanol much before than the other players. So we are always more open in terms of hedging than the other players because we have this, I would say, higher flexibility. If you take the same period of last year, we were in a position very similar or even lower than the hedge position that we have today.

Mariano Bosch, CEO, Adeco Agro: Okay. Thank you, Renato. Lucas, regarding, Teler and the new shareholder, as we expressed since the very beginning, we are very happy with them as a shareholder. We have already gone through two board meetings. We have our new board with five new members and three of the of and four of the existing ones.

So they are supporting and enhancing the culture of the company. This this culture of being very disciplined on our capital allocation, so all the projects we are looking for this, organic growth, what Emilio just expressed on which are the projects, we are following each one of them and what are the returns and the level of returns and how’s what are the synergies that we are getting within, each one of them. And then also the focus on the day to day of the business, we are going through, lower results to what we were projecting as you can see in the in the returns. And, as you know about the culture of this company that we focus on, this day to day and the level of returns that we need to achieve. So, we are very happy with the support we are having with our new shareholder on following this strategy and culture that we have as a company.

And then very specific on this test on Bitcoin mining that we are doing is a test. This is 5% of the energy that we are generating in Matoro Social. So it’s a clear test, but we are enthusiastic on the potential returns we can get there. Looks like they are very attractive, but we need to see them and as part of the culture, and this new shareholder also wants us to continue with this idea of making things happen and then continue growing once we see the returns, and and we can be, sure about what we are doing. So as a whole, we are really happy with what’s going on with the company as of today.

Conference Moderator: Our next question comes from Matheus Enfield with UBS.

Matheus Enfield, Analyst, UBS: Hi, good morning. Thanks for your time and taking my questions. If I could move forward to the crops business, particularly farming in general, I mean, we’ve seen a pressure in margins coming particularly from costs in an environment where we’re likely to see prices to remain sideways for a good while, at least in our view. So my question here is, how you’re seeing costs advance from here if we could expect a normalization into the second half of this year into 2026? If there’s any developments on OpEx efficiency and CapEx efficiency that the company may look for given the tightness in margins that we’re seeing for the business?

So that’s my first question. And then my second question, sort of a follow-up from the previous question on changes in strategy and the direction that the company is taking. I acknowledge that leverage is perhaps a bit higher than everyone was expecting. But there are a number of opportunities for M and A in the sector, particularly in sugar and ethanol in Brazil, if this is a direction that the company could consider. And if not, I mean, in Brazil, then if there’s a preferred sector for inorganic growth that we could see at least being studied from here?

So those are my two questions. Thank you.

Mariano Bosch, CEO, Adeco Agro: Thank you, Matias, for your question. On the farming in Argentina and Uruguay in the whole farming side, I would like to divide it in the three business segments that we have. We have the dairy business that in that specific case, we are not having the problem of prices and costs. So that business is aligned to what was the previous year and improving, organically. So that’s not an issue in that specific business.

Then on the second one that is on the rice, there is a huge drop in terms of prices. So even though we have a very good, low cost production system for rice, and we also have diversified, as Emilio was explaining, diversified the varieties to get better prices than the average price of the long rice. The overall prices are coming down, and we cannot do much on that regard. So in terms of the total cost, we are improving them. And so that business, we continue to see it relatively sustainable and maybe some way lower than the previous year.

But for the following year, we can see it again at the similar level. So the rice business as a whole is going through difficulties, but not that that significant. Although prices of long rice have gone down 50%, so it’s a really relevant case, the long rice prices. And then finally, the crop segment that is the one that is going really through difficulties, in this case, is soybean, corn, wheat, and peanuts. The more relevant one is peanut.

Peanut is the one that is affecting us more and is probably the more relevant of the four crops. So that drop in prices of 40% in peanuts is the one that is really affecting the the margins that we are getting. So these four crops goes all in a specific rotation and is what we call the segment crops. In that segment crops, the the year that we are showing the numbers is the campaign that is finishing. And now we are starting to plan the new campaign.

For the new campaign, we started renegotiating leases of the land five months ago. So those leases, we are taking them down. So we need to adjust cost, and we are working on reducing the total cost where leases is one of the key elements of reduction of cost. Because of the reduction of leases, this year, we will be planting 30 to 35 hectares less than the previous year. So this business as a whole is being reduced because of the results and the returns that we are getting there.

So that is clearly what’s going on and how we are going through that. You were asking about the CapEx and OpEx in rice and dairy that in both we’ve been doing, more CapEx and OpEx than, crops in the last two years. Those things are also the ones that are helping us on this lower cost of production or reaching margins even lower because of the drop on on prices, but still reaching positive margins. That is as a whole the farming answering the the farming business and how we see the future of this. And then going back to the other question and our strategy regarding leverage.

Today, as you mentioned, we are increasing leverage. The main increase is because of the reduction of EBITDA. So the main increase is in times EBITDA because of the reduction in in in EBITDA and as a percentage. The total debt is increasing, but not really relevant. And we expect to end the the year at around this two times EBITDA that is where, we feel comfortable.

Above two times EBITDA, we’ve always said that we have this internal policy that we don’t like to be above that level. Even having said this, and, regarding your question about potentially doing something around the shoe and ethanol the shoe and ethanol business because there are so many, things for sale in the space because of these more difficult results, we are always, looking at them. We are growing on our organic basis, but we are also looking at potential inorganic growth. In order to get some of this inorganic growth, the returns have to be even higher than the returns that we can see in our organic growth. So are we analyzing?

Yes. Are we gonna close something? We have no idea. The returns have to be very, very clear and attractive in order to move forward there and be above the three times EBITDA because we always want to above the two times EBITDA because we always want to go below that level. So that is a quick answer to your to your question on this regard.

Matheus Enfield, Analyst, UBS: Thank you. That was super clear. Thank you.

Conference Moderator: Our next question comes from Isabella Simonato with Bank of America. You can open your microphone.

Isabella Simonato, Analyst, Bank of America: Hi. Good morning, everyone. Thank you for the call. Two questions. First of first of all, can you give a little bit more details about the partnership right in mind, Bitcoin in the and use the energy, right, in the operation.

So any any disclosure on the terms, the the length of the contract, and and how should essentially work, I think it’s helpful to understand. And second, more on the on the shareholder structure, right, and ultimately, the impact that we’re seeing on the stock liquidity recently. How is the company seeing that and especially, Tetha, right, regarding the the liquidity of the shares, if there’s anything, in mind to eventually, change that somehow? Thank you.

Mariano Bosch, CEO, Adeco Agro: Thank you, Isabella, for your question. In terms of the liquidity of the shares, you can see that the liquidity is being pretty reasonable. And according to our history of, last eleven years being a public company, we are above the average, trading volume that we’ve been having during the whole history of the company. So we are not seeing any issue as of today regarding this. And then regarding the details of the partnership for bit bit combining, this is a test.

This is 5% of the energy that we are producing, and so we want to make it happen. We don’t have clarity yet on how to make it happen and how this agreement will exactly be, but, we see this as a potential interest in ending up selling our energy at a very attractive price. So as of our own calculations as of today, it’s like I don’t want to mention it, but it’s like selling at above $80 per megawatt hour. And so that is what makes us think about this as something potentially very attractive, but we want to make it happen in order to see this 80 or a 100 or a $120 that we are targeting today as a potential sale are possible or not. So that will depend on lot of things that have to happen, and we need to understand all those conversion and see them, happen.

So that’s a a quick, answer to this, thing that we are enthusiastic on on happening.

Isabella Simonato, Analyst, Bank of America: Okay. Thank you very much.

Conference Moderator: Thank you. This concludes the question and answer section. At this time, I would like to turn the floor back to Mr. Bosch for any closing remarks.

Mariano Bosch, CEO, Adeco Agro: Thank you all for joining the for joining the call, and hope to see you in our next meetings.

Conference Moderator: Thank you. This concludes today’s presentation. You may now disconnect at this time and have a nice day.

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