Good afternoon, ladies and gentlemen, and thank you for waiting. At this time, we would like to welcome everyone to Adecoagro's First Quarter 2023 Results Conference Call. Today with us, we have Mr. Mariano Bosch, CEO; Mr. Emilio Gnecco, CFO; Mr. Renato Junqueira Pereira, Sugar, Ethanol and Energy VP; and Ms. Vitoria Cabello, Investor Relations Officer. We would like to inform you that this event is being recorded and all participants will be in listen-only mode through 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. Before proceeding, let me mention that forward-looking statements are based on the beliefs and assumptions of Adecoagro management and on information currently available to the company. They involve risks, uncertainties and assumptions because they relate to future events and therefore, depends 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 affect the future results of Adecoagro and could cause 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 2023 first quarter results conference. Before going into the results of our operations, every factor on distributions. Last month, our Annual Shareholder Meeting approved a total cash dividend of $35 million to be paid during 2023. This part of our distribution policy represents approx $0.32 per share, equivalent to 4% dividend yield. Those dividends will be distributed in two equal installments of $7.5 million each in May -- this May and November. In addition to this, we continue buying shares under our buyback program. And this year, we have already repurchased 1.1 million shares, equal to 1% of the company's equity. To comply with our distribution policy, during the rest of the year, we must repurchase at least an additional $30 million in shares. Now let's go into the highlights of our operations. Consolidated adjusted EBITDA during the quarter reached $89 million, slightly higher than the previous year, although we experienced the worst growth of the last 100 years in Argentina and Uruguay. I think this achievement shows the importance of our diversification. Talking about diversification, we have four different segments: crops, rice and dairy in Argentina and Uruguay that suffered the rout in different manners from a huge impact in crops to almost none in rice and dairy. And one segment in Brazil, our sugar, ethanol and energy that is doing excellent. Now starting from the most affected segment, our crop business simply broke even compared to the $18 million generated last year. We are in the middle of the harvesting activities, and we expect to have 30% to 40% reduction of yields compared to the previous year. The good news is that the effects of the drought are over. As of July this year, we will start our new agricultural…

Thank you, Mariano. Good morning, everyone. Let's start on Page 4 with a summary of our consolidated financial results for the quarter. Gross sales amounted to $247 million during the first quarter, making a 20% increase year-over-year. This was explained by both our operational and commercial decision to favor sugar production to capture the price premium over ethanol. In addition, our Rice operations reported a $22 million increase in revenues on account of higher selling prices due to a better mix of higher value-added products as well as to higher book volumes sold. Please turn to Slide 5 for a broader view of our consolidated financial figures. As you can see on the right chart about adjusted EBITDA totaled $89 million, 3% higher than the previous year. This is explained by an outperformance of the sugar, ethanol and energy business, driven by ample sugarcane availability, thanks to the expansion planting activities conducted throughout the last years, coupled with solid productivity indicators. Thus, its greater performance fully offset the decline reported in our farming division mainly in crops, driven by the effects of an unprecedented drought in Argentina, in addition to higher costs. Let's move ahead to Slide 7 with our operational performance. In the first quarter of 2023, crushing volumes amounted to 1.5 million tons that is 1.2 million tons higher year-over-year. This was mostly driven by greater cane availability, which enabled us to resume our continuous harvest model and supply the market during Brazil's interharvest period. Agriculture productivity indicators such as yields presented a year-over-year improvement from 44 tons per hectare to 73 tons per hectare in the quarter, whereas TRS content increased from 100 kilograms per tonne to 111 kilograms per tonne. During the first three months of the year, on average, sugar traded at $0.208 per pound,…

[Operator Instructions] Our first question comes from Isabella Simonato from Bank of America. Please, Mrs. Isabella, the microphone is open.

Hi. Good afternoon. Mariano Emilio, thank you for the question. I have two actually. So first, on -- actually, both of them are on sugarcane. First of all, you mentioned on the release-- the intention to increase crushing this year by 15%, right? But you come off a very good start of the season. I was wondering how do you see this number right, if there is a potential of upside to crushing volumes and therefore, further cost dilution throughout the year? And my second question you remain pretty unhedged right for the season the next one, and sugar prices have been rallying. So I wonder if you are able, first of all, to sell sugar at these levels right in the short term? And second, your medium-term view considering a potential impact of El Nino in Indian production, how do you're seeing sugar global demand and supply and potential views on pricing. Thank you.

Thank you, Isabella, for your question. Very good question. I will ask Renato to go through the answers of both questions that we can explain clearly.

Isabella, regarding the sugarcane question, the sugarcane outlook looks very good at this moment. We had a very good summer in terms of weather. A lot of good rains and hot weather, which is the ideal that weather for the development of the sugarcane. So we're expecting yields higher than we had in the last two years. I think this is the main reason. We had crushed 1.5 million tons in the first quarter. I think we were one of the few players crushing sugarcane during this period. So considering this scenario, the sugarcane is no longer a limiting factor. So we have plenty of sugarcane to have a full year of crushing. Of course, we depend a lot on weather to estimate the crushing from now on. But we are optimistic that we are going to increase our crushing in about 15%. And considering the second question about the sugar, I think we are very positive with the sugar scenario. Actually, the S&D situation has improved very quickly. Back in October, most analysts were projecting a surplus of 4 million tons of sugar. Today, almost the consensus is a 3 million deaths I think the reason for this change were some problems in some key countries like India, Thailand and European Union. So at this moment, the market is very dependent on Brazilian sugar production. So everybody is expecting that Brazil is going to produce 38 million tons of sugar, which is challenging, but it's possible. I think we have already done once, I think, if I'm not mistaken, 2020. And we think that this cycle of high prices will last longer because we are not seeing any reaction from any other country. The Brazil has a limited crystallization capacity. So in order to increase sugar out of Brazil has to be invested the mills has to invest in new sugar kitchens, and it takes approximately a year. And with the market inverted as we are seeing now, we are not seeing any additional capacity being installed. Also the other crops that compete with sugarcane in Brazil. And even if we -- in other countries like Thailand, like Thailand, they are having a lot of competition with other crops in Brazil, the grains and in Thailand, Cassava, -- that's the reason that we're so optimistic about sugar, and we are not very advanced in our hedge position. As it was mentioned, we have ranged only 50% of our production, mainly the sugar that we have already produced and sold. So we haven't sold anything that is supposed to be delivered in the future, and we haven't sold anything for next drought yet.

Thank you, Renato. Isabelle on the first question, a quick clarification, the 15% increase is an increase to the previous year, not to our current estimate...

That is clear. Thank you.

Our next question comes from Rodrigo Almeida from Santander. Mr. Rodrigo, your microphone is open.

I have a few questions here. So my first question maybe was to Mariano. It's regarding the strategic side of the company and capital allocation. Actually, I'll divide this question in two parts. So I mean, we've always seen on the pages of farming company, right, which is indeed in the company's DNA being the lowest cost producer, and we've been very familiar with this strategy. But my question to you is, you've clearly proven yourselves on the industrial side of things. You've been doing a great job on the industrial side. You've been investing on the biodigesters here as well. So my question goes along the lines here of whether you could eventually invest more say on the downstream side of things. Maybe perhaps I'm thinking very upon here, maybe perhaps on soba pricing. I don't know anything that that's related more to the downward side of things. So that's the first part of this first question. The second part of the question is on capital allocation still. But I assume on the farming side. So perhaps if you could explain to us here, what's your point of view on perhaps expanding each other countries inside Brazil, maybe land and these costs are high, but I wanted to get your view here on whether you could be thinking of expanding into other cultures in Brazil. That would be nice to hear from you. And then I have a few other questions here on the Sugar national side. I think I wanted to get your view first on the government's policy to increase debt on blending gasoline. If you have any opinion on that, if it's fees more or how long could it take to reach the 30%. Anything on that front would be helpful for us. in the industry and tube ethanol. And actually, it's a broader question, maybe that's question here on the biodigestion biomethane production. I understand you're doing that first to replace the diesel consumption, right? But then we're seeing some even distributors investing more in the transportation side for Biomethane. So perhaps if you could explain to us what's your take on selling this biomethane to others, it would be nice to understand as well. Thank you.

Okay. Very good questions and relevant questions, Rodrigo. Thank you for the number one regarding this capital allocation and our overall strategy. I would say that we have these four lines of businesses that we've been always talking that they all include farming, but they all include a circular a sustainable production system that includes all this circular system. So within the four business lines that we have, all this is included. And this is very important to take into account our ESG approach to each one of these. And each one has its own strategic move. And as you've been hearing, as you can say, we can discuss largely and spend more time of the business plan of each one of these projects. on the sugar and ethanol, as you've been hearing, we have this organic growth, but on top of this, and more relevant. We have all these different technologies that we are developing and all these increases in productivity and efficiencies that we are making every day on our day-to-day job. And I think this has always been the focus. It is not just agricultural part. It's the integrated part. So all this solution is what is relevant when we're talking about this segment. Same thing goes for the daily business. When we think in the dairy business, we are under the production of the feed. We are under the production of the raw milk and then we have this processing of milk going to different products. And the reusing of all the manure of the cows into bio fertilizers and into the biodigester that generate this biogas. So the biogas is not only generated in the -- through the vinasse but also in the manure of the cow. So you can see the same concept of…

Yes. Regarding the question about the increase in the blend rate, we think that is technically feasible to do that, considering that almost 90% of the Brazilian fleet is flax and it would create an additional demand for 1 billion liters of anhydrous ethanol, which is about 10% of the anhydro production, which would be very, very good. But we think that the discussions are still an issue is still in the beginning. So we haven't -- we don't know when it's going to be implemented. We are following the discussions in the news through Unica and the media. Regarding the biogas question that you asked, today, we are -- we stabilized our production of biogas and we started to produce biomethane and we start to replace the diesel of our fleet -- but we also have a lot of demand to sell the biomethane molecule at our mill. So what we are doing now, we are doing now is the arbitrage between the two possibilities to choose what's the best way to do it. So we start with this replacement, but we are also analyzing the possibility of selling it to third parties.

That's great. Thank you so much guys. Have a good afternoon.

Thank you, Rodrigo.

[Operator Instructions] Our next question comes from Lucas Ferreira from JPMorgan. Please Mr. Lucas, your microphone is open.

Hi guys. Good afternoon. Two questions for me. One is a question on your production costs for both main businesses, say, farming and sugar and ethanol. In the sugar and ethanol, what do you expect your, let's say, cash COGS per TRS to evolve this season, considering your very high expectation of increasing crushing. And I believe some other lines like diesel also declining and maybe some others -- and in the case of farming, especially in crops, how you see your fertilizer view next season, it's going to give you some opportunity there to lower costs? And the second question is just maybe a follow-up on the hedge. What prevents you go even deeper there in the hedge curve now. So if it's something you're considering or just because of your policy, you're still waiting for the crop to come. So what prevents you to go above that 2% for next season, but above the 50% for also this season, given the strong prices and I would imagine very strong margins that you get with this $0.26 per pound spot price. Thank you.

Lucas, thank you very much for your question. Regarding the production costs on the farming business -- what you are seeing now are the production costs that have increased of the campaign '22, '23. That campaign 223 had higher fertilizer prices and that's probably the herbicide prices also. And that's what you are seeing now. For the following season, that is what we will be starting to plant in July of this year, the fertilizer prices have reduced by 20% to 30% more on the nitrogen fertilizers and less on the phosphate fertilizers and herbicide in general has also gone down in dollar prices. So that's to go through the cost of production. And again, as the fixed cost per hectare is affected by the yield, and so the yield -- the very bad yield of this year on the production of the different crops is also affecting the cost that with El Nino forecasted for next year, we are not expecting that. So that's for next season, we do expect a decrease in the cost of the overall farming business. Then going into the cost of the sugar and ethanol, Renato will explain in more detail.

In the sugar ethanol, there are some cost components that are decreasing such as fertilizer and diesel. Others are increasing. I think the major one is freight, which has increased because of the freight situation, the competition to grains in Brazil. But I think the most important factor is that the yield and volumes are increasing. So it's going to have a higher dilution in our total cost. So we expect our cost to decrease between 5% and 10% compared to the cost that we had last year. And moving to your other question about the hedge. As I mentioned before, we are very optimistic about the fundamentals of the business for the next, I would say, in the short term and short midterm. So we think that the future price has to be in line with the current price -- so the curve that today is inverted at should be more flat, and we think that is going to happen sometime in the future. And then we will have more opportunity to fix our price at a higher level.

Super clear. Thank you very much.

Thank you, Lucas.

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. Please, Mr. Bosch, you may proceed.

Thank you all for joining the call, and hope to see you in our upcoming meetings.

Thank you. This does conclude today's presentation. You may now disconnect at this time, and have a wonderful day.