Good morning, ladies and gentlemen, and thank you for waiting. At this time, we would like to welcome everyone to Adecoagro’s Third Quarter 2022 Results Conference Call. Today with us we have Mr. Mariano Bosch, CEO, and Mr. Charlie Boero Hughes, CFO. 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 a question-and-answer session. At this 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 all the 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 will turn the call over to Mr. Mariano Bosch, CEO. Mr. Bosch, you may begin your conference.

Good morning and thank you for joining Adecoagro’s 2022 third quarter results conference. First, I would like to give you a brief update on our distribution policy. Next week on November 17th, we will be paying the second installment of our cash dividend in the amount of $17.5 million. The total cash dividend of $35 million distributed during 2022 is approx $0.32 per share. In addition to this, we continue buying shares under our buyback program. During the first 10 months of the year, we repurchased 3.6 million shares totaling $29 million. Now going into the highlight of our operations, I will start with sugar, ethanol and energy business. We entered this quarter with good sugar cane availability, agricultural productivity indicators recovering from 2021’s frost event, enough storage capacity to carry over our production until year end if needed. We started the quarter crushing at full speed and later during August and September we received very good range, improving yield expectations, but slowing down our crushing pace and reducing our volume in 10% year-over-year. It was because of this lower volume and higher costs that adjusted EBITDA during the quarter went down by 20% year-over-year. But let me point out that the cane that we were not able to process this quarter is being transferred into the following quarters. This will secure our continuous harvest model and we will be crushing cane with an even better productivity outlook. During the quarter, prices were pressured, especially the price of hydrous ethanol, but we were able to adapt our production mix and our commercial strategy to favor the products that offer the premium. We focused on selling sugar and exporting anhydrous ethanol, which have a premium of more than 15% versus the domestic market. At the same time, we built inventories of…

Thank you, Mariano. Good morning everyone. Let’s start on Page 4 with a brief analysis on the rains in Mato Grosso do Sul. As seen on the top tables, rains in our cluster during the third quarter of 2022 were four times higher than during the same period of last year and 28.8% higher than the 10-year average. Moreover over year-to-date rains receded at 22.9% increase compared to the same period of last year. This favored the development of our sugarcane plantation, hence improving its productivity outlook. However, the uneven distribution of rains during the quarter impacted our harvesting and crushing activities as we will see next. Let’s move ahead to Slide 5, where I would like to discuss our sugarcane crushing. Despite having good sugarcane availability and achieving a monthly crushing record of 1.5 million tons in July, increased precipitation registered during August and September resulted in frequent interruptions in crushing activities. The lower use of time led to our sugarcane crushing volume of 3.8 million tons during the quarter, 9% lower compared to same periods of last year. It is important to highlight that the sugarcane left on the ground will be carried into the following quarters with an improved productivity outlook and will ensure the implementation of our continuous harvest model. Being able to crush cane year round is one of our competitive advantages. Most mills enter into the inter-harvest period, which means that they stop crushing activities during summer season, so they have to carry over inventory of the product they believe will be trading at a premium. In our case, we are able to make production decisions and maximize the one offering the highest marginal contribution at all times, in addition to being more efficient in diluting our fixed costs throughout the whole year. On…

Thank you. [Operator Instructions] And today’s first question comes from Henrique Brustolin with BTG Pactual. Please go ahead.

Hi. Good morning everyone and thanks for the space for asking questions. I have two on my side, the first on the sugar and ethanol business. You mentioned in previous quarters that you expected sugarcane crushing volumes to be flat this year and you expect unitary production costs growing in line with inflation. I just wanted to hear on how that stands today – how that stands today based on how your yield and TRS content evolved throughout the crop so far? And also how they impact from the delayed crush in Q3 could affect that? And also on this topic, how are your expectations for 2023 based on the better rainfall levels that you have seen so far in Mato Grosso do Sul. That’s the one sugar and ethanol. And the other one, I just wanted to hear your expectations for 2022-2023 on the crops and rice businesses, especially in terms of how your fertilizer and production costs could advance year-on-year? And how that balances with your yield expectations so far and commodity prices that you are seeing? So these are the two questions on my side.

Hi, Henrique. Thank you very much for your question. I think you are covering a lot of what we wanted to share. So on the first question on the sugar and ethanol, Renato will answer indeed your question.

Hi Henrique. As it was mentioned here the last year frost impact a lot our yields for the first semester that we crush in the first semester. And this as a consequence of that, we had a late start of crushing, and also with slow down the crushing pace in the first semester. And once we finished the sugarcane that was affected by the frost, by the end of – by the mid of July. We speed up our crushing pace and we had the monthly record was, it was mentioned before. But then we had a lot of rain in August, September and October. Actually in August it rained more than 200 millimeters that is usually a dry month. So, we had a lot of delay in our crushing pace, which probably we will be crushing less sugarcane this year than we were expecting earlier. We think that we are going to crush is likely lower than last year, but the situation and the out to look for our sugarcane has improved a lot. So yields for the final part of this year is looking great. Actually today we are crushing sugarcane with a yield with more than 80 tons per hectare. And I think that the situation for next year is also very good. Yields look very good for, especially for the first quarter and second quarter of next year. For this reason, we will have a very intense continuous harvest. We’re going to be crushing a lot of sugarcane in the first quarter, which is a good news, because we think that price of ethanol is going to be very good, especially the anhydrous ethanol. And you’ll be able to capture these opportunities. Regarding the cost, I think this year we are going – the factor of the cost dilution that we expect will be lower because of the lower volume of sugarcane crush this year. But next year we are going to be crushing more sugarcane than we were expecting. Actually, we think that we’re going to increase the crushing for next year close to 20%, and then we will have definitely have a lower cost. Then we have this year, we think that we are going to decrease our cost in approximately 11%. Of course, the numerator is going to be a little bit higher in line with the inflation, but the denominator, which is the amount of the sugarcane that will be crushing, is going to be much higher.

Thank you. Renato. Henrique, any follow up questions on sugar and ethanol? Okay.

No, this is super clear.

Okay, great. So let’s go to your second question regarding the outlook for crops and rice. Today we are in the middle of the planting of crop plant – crops and rice. In the case of rice, we have already planted 90% of our expected area for this year, and it’s all looking great. So in terms of productivity, we can expect as would, as we can as what we’ve done up to now. But of course, what happens from now on until March is the more relevant part of how the crop evolves then on – how the rice evolves. Then on the other crops, the summer crops, corn, soybean, sunflower, peanuts, again, we are in the middle of the planting, or we are more than half of the planted area. All the planted area is an excellent situation. We started the year or the planting season very dry, but now it’s great, and we are advancing very well. So again, we can expect as good research as possible depending on whether going forward. The costs that you were asking, they are pretty much in line with what we saw the previous year. As I mentioned in the last call, the main increase in costs happen in the previous campaign. So this campaign, we are seeing costs in line with what we had the previous campaign. So this campaign, we are seeing costs in line with what we had the previous campaign. And regarding the outlook for the prices again, we are in general for soy, corn, wheat in line or slightly above. And in rice we are particularly optimistic and we are seeing some opportunities. So in rice in particular, we are above last year in our expectation of prices for 2023.

That’s great. Thanks very much.

Thank you. [Operator Instructions] Our next question comes from Christian Audi with Santander. Please go ahead.

Hi, everyone. Thanks for taking my questions here. I’d like to know, what are your thoughts on the federal tax? The whole thing going on for the sugar and ethanol business since the reduction in taxes heard the segment right as the biofuel have lost its competitiveness. And I’d like to know your thoughts about this. Do you expect them to the taxes to come back soon? Is it a problem for maybe next year, 2024? I don’t know. And I’d also like to make a quick follow-up on your answer to last question. You guys mentioned that you expect to cause dilution looking forward. So I was wondering what’s your rationale here since investors sometimes say things regarding a global recession, perhaps, So you guys think that will not be an economic downturn for the next couple of years or so? Thanks.

Okay, let’s take first your initial question regarding the federal taxes and the value of fuels policy. And what is it specifically that we are doing regarding that? So Renato can take that question.

Hi, Christian. We think that in this moment that the world is looking for in this moment of energy transition that the world is looking for sustainable energy and energy secured. Any government will recognize their role of ethanol to achieve those two subjects. And I think that was the case since provoke [ph] with a better moments and worse moments, but ethanol was always supported. So we think that’s going to be the case again. But in any case, we are very prepared to export a lot of energy [ph] as you saw in our results this year. We are going to export a total of 134,000 cubic meters to Europe with a premium over 15% compared to the local markets. And we can do, maybe we can do this again if the opportunity is there. Actually, we are increasing our Bonsucro certification in our sugarcane so you have more ethanol to export if the windows open and if that’s the case.

Thank you, Renato. Christian, regarding the second part of your question, I couldn’t understand exactly, but you were asking about the dilution of the costs and regarding that as Renato explaining at the beginning in the sugar, ethanol business, there is a dilution of cost because the increase in volumes we are expecting to increase for next year, almost 20% in terms of volume that the main impact on the dilution of costs and for the rest of the crops as we are expecting yields better than last year, because last year we’re particularly below the…

And apologies, ladies and gentlemen, it appears we have lost our speaker line. We’ll pause momentarily while we reconnect the speaker’s location. You’ll hear whole music while we wait. Thank you. [Technical Difficulty] And ladies and gentlemen, we appreciate your patience. We have reconnected the speaker location. Please proceed Renato.

Okay. Sorry for this inconvenience. Chris when did we cut off? Have you heard the Renato answer?

Yes, yes, I did.

Okay.

The answer cut-off when you were saying about yields.

Okay. Thank you ladies – oh, please proceed, sir.

No. Okay. Have you heard the answer on the crops and the dilution of costs because of the increasing yields?

Yes. Yes. I did. That’s exactly when I cut off. You may proceed. Thanks.

Okay. Thanks you for that. So Victoria will read us some questions that are being asked in written by the web.

We received a question from Larry [indiscernible] from Itaú. The question is, thinking about ethanol strategy, can you elaborate a little on the company’s strategy, the off season in the first quarter of the calendar year? Can we assume that given the new tax scenario in Brazil, Adecoagro has adapted is off season commercialization strategy versus previous years?

Okay. Thank you. Renato will answer.

Just to clarify, because of our continuous harvest model, we don’t have an off season. Ours is a continuous harvest, so we continue our season, so we will continue to harvest with this very good yields in cane that we are having now.

Hi Larry. So we are very optimist about ethanol price in the short-term, that’s because the crushing in Brazil might be lower than everybody’s expecting because of the rains, it’s raining in all regions of Brazil. Also the auto cycle in Brazil is increasing in a faster pace than initially taught is increasing 5% instead of 3% that everybody was expecting. So price of ethanol has already improved 20% in the past month. So hydrous ethanol now has reached a pirate at the pump close to 7% to 8%, which probably is going to reduce hydrous demand and increase anhydrous demand. So our strategy is to produce as much as anhydrous as we can to sell in the internal and external market. And also all the hydrous that we are carrying to the first quarter. We can dehydrate that transforming anhydrous – hydrous sorry, in anhydrous and selling more hydrous that has a better price. Today is close to $0.20 per pound, the sugar equivalent price. And also as Mariano mentioned, we’ll be crushing in the first quarter and probably maximizing a lot of anhydrous and producing some sugar that is very good in the short term as well because of the premium, the cash premium that is very high right now is close to 5%. So by producing sugar, we’ll be able to capture this price as well.

Thank you, Renato.

The audience is telling us that we were cut off before answering the question about the price environment for ethanol and federal taxes. So we’ll answer this again.

Sorry. going back to the other question, considering a moment of energy transition that how the governments, how the countries are looking for sustainable energy and energy secured. We think that any government will support ethanol in Brazil regardless, who is the president. That’s the case since the [indiscernible] here in Brazil with better moments and worse moments but always supported. But in any case, we are very prepared to export a lot of ethanol. Actually we are increasing our bone super certification area, so you have capacity to export 20% more ethanol than we exported this year. This year we exported around 135,000 cubic meters if a premium over 15% compared to the local market. So next year you’ll be prepared to export more if the opportunity is there.

Thank you, Renato.

Thank you. Ladies and gentlemen, this concludes our question-and-answer session. I’d like to turn the conference back over Mr. Bosch for any closing the remarks.

Okay. Now, thank you all for your participation. We are sorry for the technically inconveniences and hope to see you in our upcoming events. Bye.

Thank you. This concludes today’s conference call. We thank you all for attending today’s presentation. You may now disconnect your lines and have a wonderful day.