Good morning, ladies and gentlemen. And thank you for waiting. At this time, we would like to welcome everyone to Adecoagro’s Second Quarter 2018 Results Conference Call. Today with us we have Mr. Mariano Bosch, CEO; Mr. Charlie Boero Hughes, CFO; and Mr. Juan Ignacio Galleano, Investor Relations Manager. We would like to inform you that this event is being recorded and all participants will be in listen-only mode during the company’s presentation. After the company’s remarks are completed, there will be a question-and-answer section. At that time, further instructions will be given. [Operator Instructions]. Before proceeding, let me mention that forward-looking statements are based on the beliefs and assumptions of Adecoagro’s management and/or 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 Adecoagro 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.

Good morning. And thank you for joining Adecoagro’s 2018 second quarter results conference. As you may have seen in our release, we finalized strong financial and operational quarter in all of our businesses. In a complicated world, this is only explained by our daily work and efforts in order to increase productivity and reduce unitary cost of production. As we always stress out, we find this as the only sustainable way to become the low cost producer and generate stable and attractive returns throughout the commodity cycle. In our Sugar, Ethanol & Energy business, we continued maximizing ethanol production reaching 77% on a year-to-date basis, making us the producer with the highest degree of flexibility in the production mix. This represents a clear competitive advantage, compared to the other players in the industry and puts us in a very good position to maximize returns viewing the pricing dynamics of Sugar and Ethanol over the next 18 months. At the same time, during the first half of the year, we crushed 35% more sugarcane compared to the previous year. Last year’s investment to provide nominal crushing capacity at our cluster and to increase our sugarcane plantation resulted in a higher cane availability enabling us to increase milling operations. Higher crushing activities in turn allowed us to export an all-time record of 300,000 megawatt hour and profit from higher energy prices. Moving to the Farming & Land Transformation business, we reported a solid financial performance. In our Crops business, we suffered the impacts of the drought in Brazil and Argentina. However, thanks to the hard and coordinative work of our teams that really we were able to offset this negative effect. In addition, the appreciation of the Argentine peso further contributed to the reduction of our cost of production. Our Rice business outperformed during this harvest year. All the investments related to water management, including cluster water leveling, improving logistics of the transportation of the rough rice from the farms to mills, and enhancing industrial efficiencies have paid off. This increased by 15% compared to the previous harvest year, while at the same time, the conversion factor increased resulting in a more efficient industrial process. Moving to Land Transformation, during the quarter, we sold two farms located in Western Bahia, Brazil for almost $53 million, there is a premium of 37% to the Cushman and Wakefield latest independent appraisal. As a summary, so far has been a very good first semester. We believe we are on the right track to conclude another solid fiscal year generating attractive returns. Now, Charlie will go through the numbers of the quarter.

Thank you, Mariano. Good morning, everyone. Let’s start on Page 4 where I would like to comment on our industrial performance. During this quarter, crushing activities reached 3.8 million tons, 54% higher compared to the same period of year. Investments that we’ve been doing since the beginning of 2017 are paying off. In this, the expansion CapEx we deployed to increase nominal crushing capacity of the cluster and the expansion area explained the growth in crushing activities. Adequate weather conditions in turn resulted in a 48% higher effective milling days. At the same time, enhanced industrial operations allowed us to make a better use of our fixed assets. Please jump to Page 5, where I would like to highlight our agricultural productivity. We remain pretty focused on agricultural productivity since we understand that this is among the main drivers for becoming a low cost producer. Over 70% of total production costs are related to sugarcane production at the field. As a result, sugarcane yields in the first half of 2018 reached 96 tons per hectare, 8% higher year-over-year. In addition to enhanced agricultural efficiencies, higher yields were explained by adequate weather conditions during the first semester of 2018 which favors cane development coupled with a longer average growth cycle for the cane harvesting comprehend to the previous season. TRS content reached 120 kilos per ton in the first six months of 2018, 3% higher year-over-year. The combination of these two effects resulted in TRS production per hectare of 11.5 tons, 11% higher than last year’s first semester. Let’s turn now to Slide 6, where I would like to discuss our production mix. As you can see on the top of the chart, ethanol production more than doubled during the first six months of 2018, compared to the same period of…

[Operator Instructions]. Today’s first question will be from Danniela Eiger.

My questions are regarding ethanol. First on prices, I have noticed an acceleration on the hedges for this quarter. Could you please remind me what is the strategy you use to hedge ethanol prices and also what price levels do you expect to see in the inter-harvest periods? And the second one on volumes. Given the recent drought you faced in Brazil, how many million tons do you expect to crush this year? And then when do you expect crushing to go considering the acceleration seen on the first half of the year? Thank you.

Hi, Danniela. Thank you for your question. I want to ask Marcelo Sanchez, our Commercial Director to answer the first part of your question. And then the second part on -- related to volume, I’m going to ask Renato to answer that part of the question. So Marcelo, can you answer the first part of Danniela’s question?

Yes, Mariano. Thank you, Danniela for your question. Regarding the first part of your question, we hedge our ethanol production, as you know that [BMF] has low liquidity and this year with the new Petrobras policy, we have decided to test a new mechanism to hedge as more portion of our production indexed to international market but we expect to have a good adherence with domestic market when Bahia farms return to normal levels. We expect prices to remain under pressure on low prices until October. And then with the end of the harvest, we see prices essentially increasing and pricing moving to higher levels. It is important to note that with current gasoline prices, it probably moves to let’s say 65% which is a level actually provides an attractive level of demand that will be an asset of roughly 20% in ex-unit prices without restoring demand. And then therefore in our -- it's our strategy to remain positive in our view for the ethanol prices for the remaining portion of the year. And we are going to be continuing with our carried volumes that as you saw, we are -- compared to last year we had 200% more than last year volume that we were carrying and we expect to reach full capacity of our carrying strategy for Q3 at the end of the November.

Thank you, Marcelo. Danniela regarding the volume, you’re asking about the sugarcane volume that we expect, that’s exactly the second part of your question?

It’s how many million tons do you expect to crush? And in Q1, do you expect crushing to go considering the acceleration in the first half of the year?

Okay. So we only include the climatic impact on the sugarcane volumes. And so Renato can explain in detail how we shifted our expected volume. Renato?

Hi, Danniela. Since we had a raining first quarter, we have not been affected by the drought that has been impacting the center and southern region. In fact, the dryer second quarter allowed us to crush very well, capture all the efficiency in the whole sugarcane chain. Additionally, it’s important to highlight that we had considerable rain at the beginning of August. Therefore assuming normal future weather conditions, we plan to crush approximately 12 million tons in 2018 and maintain continuous harvest season for the next year.

Next question will be from Lucas Ferreira with JP Morgan. Please go ahead.

I have questions regarding -- and I wanted to hear thoughts about some subjects. The first one is the trade war between China and US and the tariffs, how do you think it’s impacting your business, both in terms of the Crops business and if you can comment on, price premiums in Argentina, but also on the farmland business, if you saw any change there regarding the pricing and the liquidity of this market? Also the steep depreciation of the peso, how much that could translate into better margins in the quarters to come, if you also could comment on your outlook for the Crops business going forward? You already posted good results, but given the currency that I think it could boost even further your numbers. And finally, this whole discussion on freight rates in Brazil, if you can give us some thoughts about how that could impact your business in a country and give us some rough sensitivities about the financial impact -- potential financial impact? Thank you.

Okay. Thank you, Lucas. I’m Mariano, I’ll try to address your questions. Regarding the trade war, I think this is clearly positive for our Latin American commodities, so what we are producing here has improved prices and we are taking advantage on that improvement in prices. So, for us specifically it’s also giving us the opportunity to get into new markets like Mexico with rice, with corn. So I think we’re taking a positive advantage on this trade war and that’s something we are experiencing and already done -- it’s already happening. Then regarding the farmland -- the pricing because of this, farmland pricing, as we always discuss, is something that takes some time. But this sale that we did, I think was a very good sale and we took a very good moment to execute it. That was someone specifically looking for this. So this approves that there is demand and when the demand happens, we are able to take advantage of that, whether it’s because of the trade war or something else, we don’t know, but we are also seeing some more interest on farmland in general than some months ago. So we are seeing a positive thing there. And regarding the depreciation of the peso for Argentina, as we have explained many times, this is very positive. So we do expect to continue to have -- to continue improving these results and I think with what we’ve shown it’s already explained part of that. And then finally going to the freight in Brazil and the impact and that’s a part of the question, as there are all these discussions on the freight that happened in Brazil, there is a small negative impact in the freight pricing, but there is a positive income in the prices of diesel. For our specific business, it is more important, the impact of the pricing of diesel because of the diesel that we consume, remember that we own almost a 100% of our sugarcane and all the harvesting of the sugarcane, so that our diesel consumption is very relevant. So that’s why we have a positive effect on the measures that happened after all that discussions. Of course those measures in a way, the freights are under discussion, and that they may change in the future in terms of the freight discussion is already there. So that’s a quick answer on all the points that you were asking.

Next question will come from Javier Martinez with Morgan Stanley. Please go ahead.

I wanted to ask you also about SanCor. How -- can you please let us know how the negotiations are moving? And also I was curious to know, if -- when you’re having those negotiations, you’re having those in pesos or in dollars?

This is something complex that takes time in terms of the negotiation, a part of that is in pesos and probably most of the discussion is in pesos. And we continue analyzing these investment alternatives but we are always aiming to maximize our daily production. And when we think on maximizing our daily production, remember that our free-stall fee is increasing now. It’s advancing very well. We are on time and on budget, so that’s working very well. But regarding specifically on the SanCor negotiation, that’s something that is still going on and we’ve been always -- it’s important to stress here that we’ve been always very disciplined when we talk about capital allocation. So whatever we do, if we do something each it’s going to be to achieve good returns for our shareholders.

Mariano sorry to ask again, because I know that it’s difficult to talk about an open negotiation, but just to try to frame these -- since it’s potentially relevant acquisition. So the negotiations are around the assets that you’re going to buy, the negotiations are around the price, the negotiations are around potential liabilities. So what is the focus of the negotiations?

The negotiations are very open. We cannot explain, indeed it’s an open negotiation as you know, and as you can imagine. But it’s important to understand this disciplined capital allocation that we have. So that’s where we are concentrating and we need to understand very clear there are returns we’re going to lead in many transactions that we get into and that’s not an exception of what we are discussing and analyzing here.

Next question come from Antonio Barreto with Itaú BBA. Please go ahead.

My first question is about the cost. I just wanted to dive a little bit deeper on the cost decrease; you guys delivered an important cost gain. And of course, we have several different reasons why this may have happened; the Brazilian real depreciation is one, the higher TRS, because of the dryer weather, it’s not only one. But even if we account for all those effects, the 25% to 30% cost increase that we have seen was very impressive in the quarter. I just would like to understand what do you guys believe we can attribute this to? Of course, higher utilization helps us well but is there anything else that may have helped and any kind of initiative that may have decreased costs in the quarter for the Sugar and Ethanol business?

I’m going to ask Charlie to complement on what he has already explained on your question.

Hi, Antonio. I’m not sure if I got that -- the question. What we wanted to reflect in this release is that as a consequence of all the efficiencies and productivity that we are getting at the fields, the increase in the crushing volumes, efficiencies at the industry, maximization of the ethanol and the devaluation of the real, all of them helped us to decrease our costs -- operational costs. And in addition, we will see along the year that the revaluation will also have a positive impact not only in the operational costs but also in the maintenance CapEx as most of them are in reals as well and in the expansion CapEx that we are moving forward in order to increase our crushing capacity to 30% and mainly in expanding our sugarcane area. So most of them are in reals as well. With these new effects levels means much less dollars, which means lower investments in dollar terms that improves our cash flows.

Thanks for the answer, and if I may ask you second question about the Rice business, which performed really well in the first half of the year as well. I just would like to know, because when we look at last year’s seasonality, the results seem to be a bit more skewed towards the second half of the year. And my question is, what kind of seasonality should we expect for the Rice business, is it different as you compared to the last one, I guess this would be a little bit on your quick carry strategy to sell rice. I don’t know, if you could explain a little bit more, what should we expect for the second half of the year?

I think that the seasonality is still there, because the seasonality is that we harvest during the first semester and then we end up processing. So in general the second part is more stable in terms of what we expect. But I think that is reasonable to expect more or less same from one year to the other.

[Operator instructions]. At this time, this will conclude today’s question-and-answer session. And I would now like to turn the floor back to Mr. Bosch for any closing remarks.

Thank you. As we just discussed, we’ve had a very good first half of the year. We have a lot of challenging projects ahead that will continue to contribute to our growth and enhance our production efficiencies. Before we close the call, I would like to reiterate my gratitude to all the operational and management teams, it is thanks to their daily efforts and hard work that we have become one of the lowest cost producers in the entire world. While at the same time generate attractive and sustainable margins for all of our shareholders. So thank you for the support and confidence, and look forward seeing you in the upcoming IR event.

Thank you. This will conclude today’s presentation. At this time, you may disconnect your lines and have a great day.