Adecoagro S.A. (AGRO) Earnings Call Transcript & Summary

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. [Operator Instructions] Before proceeding, let me mention that forward-looking statements are based on the beliefs and assumptions of Adecoagro's management and all 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 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 17, 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 highlights of our operations, I will start with Sugar, Ethanol and Energy business. We entered this quarter with good sugarcane availability agriculture productivity indicators recovering from 2021 frost event, enough storage capacity to carry over our production and TDM, 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 gain 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 hydro ethanol, but we were able to adapt our production mix and our commercial strategy to favor the products that offer the premium. We focus on selling sugar and exporting and hydro ethanol, which has a premium of more than 15% versus the domestic market. At the same time, we built inventories of hydro ethanol and used our own bags of fuel to dehydrate and turn it into more an hydro ethanol. We are one of the few players that can benefit from exporting and hydro ethanol to Europe because we have the necessary certifications and the industry capacity to reach the product specification required there. The high flexibility of our assets and our ability to sell into the domestic and market is a very important competitive advantage for us, especially in times like this, when we experienced sudden changes in the market outlook of all the different products we're producing now moving to our farming business. As already seen in the previous reports, we finished '21-'22 harvest with an adjusted EBITDA reduction for our crops and rice business and an increase for the day. At the present time, all our teams are fully focused on planting activities for the new season. Although conditions started dry in some of our regions, we're advancing very well in all of our plantations, and we are in an excellent situation to maximize yields in all of our production for 22'23 harvestation, being so well diversified in terms of geography and products allow us to extend the planting and harvesting window and mitigate weather risks. Regarding our land portfolio as every year, Cushman and Wakefield conducted their independent appraisal and they value it 2.5% above last year. Finally, in October, we celebrated Adecoagro's 20th anniversary. This was a good opportunity for us to reflect on our journey. Since inception, we have been convinced of our mission of producing food and renewable energy and sustainable production model. We are proud of the work we have done in our 4 business segments, which are a great example of low-cost production with a positive carbon balance. At the same time, we continue to create job opportunities and contribute towards the sustainable development of the regions where we operate located in the interior of Argentina, Brazil and Uruguay because of the natural advantages of these regions, we can produce more with less. On top of this, our sustainable production model allows us to make an efficient use of water, care about the land and the environment. [indiscernible] of carbon credits and transformed byproducts into bio inputs used in our own operations. These are a few examples of the things we do, and together with our ESG committee that oversees all our developments, we continue enhancing our sustainable production models. Lastly, thank you to all our employees and stakeholders for being part of this journey. We are excited about the opportunities ahead and motivated to continue taking steps in this direction. Now let's go into the numbers of the quarter. Carlos, please?

Thank you, Mariano. Good morning, everyone. Let's start on Page 4 with a brief analysis on the rains in MatoraSosul. As seen on the top tables range in our cluster during the third quarter of 2022 were 4x higher than during the same period of last year and 28.8% higher than the 10-year average. Moreover, year-to-date range presented a 22.9% increase compared to the same period of last year. This favored the development of our [indiscernible] 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 coking crushing. Despite having good sugarcane availability and achieving a monthly crushing record of 1.5 million tonnes in July, increased precipitation registered during August and September resulted in frequent interruptions in crushing activities. The lower use of time led to a choking crushing volume of 3.8 million tonnes during the quarter, 9% lower compared to the same period 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 we 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 a year-to-date basis, crushing volume reached 7.3 million tonnes, 24.4% lower compared to the same period of last year. This was fully explained by the dynamics of the first quarter, namely the late start of crushing activities as expected, and the fact that harvesting activities in that period were mostly concentrated on reform areas with limited growth potential. Please jump to Page 6, where I would like to walk you through our agricultural productivity. Sugarcane yields during the quarter were 9.4% higher compared to the same period of last year, reaching 65 tons per hectare, while TRS content presented a 6.4% improvement amounting to 141 kilograms per ton. On a year-to-date basis, sugarcane yields were impacted but presented a gradual recovery as we expected. During the first quarter of the year, yields were 40.9% lower year-over-year due to the impact of 2021 adverse weather. In the second quarter, they were 24.5% lower, but during the third quarter, yields improved 9.4% year-over-year. TRS content in turn reached 129 kilograms per tonne, flat compared to the same period of last year. Let's move ahead to Slide 7, where I would like to discuss our production mix. During the quarter, prices of ethanol experienced significant changes in light of new regulatory measures related to a temporary reduction in federal taxes and of adjustments in domestic gasoline prices to reflect international parity. Our production mix reflected these changes in order to consciously maximize the product offering the highest marginal contribution at all times. At the beginning of the quarter, we maximized anhydrous ethanol followed by hydrous ethanol and lastly, sugar. By mid-quarter, sugar prices surpassed hydrous ethanol. And by the end of the quarter, they surpassed anhydrous ethanol effectively becoming the most attractive option. This high degree flexibility constitutes one of our most important competitive advantages since it allow us to make a more efficient use of our fixed assets and profit from higher relative prices. On average, during the third quarter and anhydrous ethanol results were traded at $0.198 per pound, 8.5% premium to sugar, while hydrous ethanol traded at $0.173 per pound, 5% discount to sugar, Thus, we diverted as much as 60% of our TRS to ethanol to profit from higher relative prices to further take advantage of price premiums, 57% of our total ethanol production was anhydrous ethanol, most of which was exported to Europe at attractive prices. We are one of the few players which have the necessary certifications to export to Europe and to capacity to meet production specifications. Year-to-date, we diverted as much as 69% of our TRS to ethanol, the product trading at a price premium. Although production of both ethanol and sugar was lower as a consequence of the reduction in crushing volume, this was offset by higher average prices. We were able to capture attractive prices, thanks to our high inventories at the start of this year. Let's please turn to Slide 8, where I would like to discuss our selling volumes and average selling prices by product. As you can see on the left chart, year-to-date ethanol reported an 8.7% increase in selling volumes to 385,000 cubic meters, mostly driven by Anhydrous ethanol sales, which increased by 43%. Moreover, average selling prices were up 22.8% year-over-year to $0.227 per pound, thanks to our commercial strategy of clearing out tanks at the peak of prices and our flexibility to sell into the domestic and export market. We will go into more detail in the following slides. In the case of sugar, there was a 41.5% decrease in volume, which partially offset the 13.7% increase in average selling prices. Lower volumes sold were driven by lower production due to both lower crushing and lower mix. This was highlighting that sugar continued to trade at stable levels throughout the quarter, even though Brazilian mix switch to maximize production of these products. This was sold because Brazil was the only region at the time with available sugar to meet global demand. Energy selling volumes were down 27.2% year-over-year, driven by lower average selling prices, coupled with a decrease in selling volumes as a consequence of lower crushing and of our commercial decision to use [indiscernible] gas to dehydrate ethanol. Regarding carbon credits, let me remind you that due to the efficiency and sustainability in our operations rank among the highest in the industry, we have the right to use carbon credits every time we send ethanol. Year-to-date, we sold 457,000 Cbios, 24.2% higher than the previous year at an average price of $0.18 per bio. We do not speculate on cbio prices, but rather sell our credits as we generate them. In fact, prices were volatile throughout the year, impacted by regulatory changes in the underlying product. For example, prices reached fixed as high as $40 per cibio, which we were able to capture. Please jump to Page 9, where I would like to walk you through our anhydrous ethanol sales throughout the year. As previously mentioned, during the third quarter of 2022, hydro's ethanol prices in Brazil experienced downward pressure and hydrous ethanol in the domestic market also experienced a decrease in prices as seen on the graph, although demand remains stronger due to the 27% mandatory blend with gasoline. However, the export market, in particular Europe remained an attractive outlet for players with the necessary certifications and the ability to meet product specification. In this line, in hand with a switch in our production mix, our commercial strategy during the quarter focused on the commercialization of sugar and the export of Anhydrous ethanol, which amounted to 61,600 cubic meters at an average price of $0.209 per pound, $771 per cubic meter. At the same time, we built inventory of hydrous ethanol either to be sold at higher expected prices at a later stage or be converted into hydrous and hydrous ethanol. On a year-to-date basis, anhydrous ethanol sales were 74.2% higher compared to the same period of last year on higher volumes sold abroad at more attractive selling prices rather than in the domestic market. Exports amounted to 82,100 cubic meters at an average price of $0.208 per pound, $768 per cubic meter, and we have an additional 50,000 cubic meters to export until year-end. Please turn to Page 10, where I would like to walk you through our sales. Net sales amounted to $163 million during the third quarter of 2022, 9.5% higher year-over-year. This increase was driven by higher selling volumes and higher average selling of sugar and anhydrous ethanol, measured both in [indiscernible] as well as in U.S. dollars. Despite the changing price environment observed during the quarter, especially regarding hydrous ethanol, we were able to benefit from this scenario as we adapted our production mix and commercial strategy to favor the product offering at premium. On a year-to-date basis, net sales amounted to EUR 395 million, 7.2% higher year-over-year. ethanol sales were 40.5% higher compared to the previous year, fully offsetting the 33.5% reduction in insured sales and 33.9% in energy. CBA's sales in turn reached $8 million during the first 9 months of the year. Finally, to conclude with the sugar Ethanol and Energy business, please turn to Slide 11, where I would like to discuss the financial performance. Adjusted EBITDA during the third quarter was $111 million, 9.6% lower year-over-year. Despite higher sales, the decrease was driven by a year-over-year loss in the mark-to-market of our sugarcane fully explained by the impact of lower volume and higher agricultural costs on our harvesting gain and by an increase in costs, mostly explained by fuels, lubricants, salaries in addition to the reduction in volume. Results were partially offset by a gain in the mark-to-market of our commodity hedge position due to a decrease in prices. On a year-to-date basis, adjusted EBIDA amounted to $273 million, $2.8 million higher year-over-year. This was explained by higher net sales year-over-year gains in the mark-to-market of our sugarcane and of our commodity hedge position and lower selling expenses. Results were partially offset by the aforementioned increase in costs. In terms of breakdown, during the first 9 months of the year, ethanol amounted for 72% of total adjusted EBITDA generation in the sugar Ethanol and Energy business, considering other operating income, while sugar accounted for 24%. I would now like to move on to the Farming business. Please bring your attention to Slide 13. As of the end of October of 2022, we harvested 292,000 hectares with an even performance of yields, successfully completing the 2021 and '22 harvest season. This amounted to over 1.1 million tonnes of agricultural products harvested and transported across 10 provinces in Argentina and Uruguay. We're currently engaged in planting activities for 2022 and '23 harvest season, in which we expect to plant 279,000 hectares, 1.3% lower than the previous campaign, fully driven by a reduction in second crop area due to the impact of below-average range during the past month. Let's move to Page 14, where I would like to walk you through the financial performance of our Farming and natural formation businesses. Adjusted EBITDA amounted to $17 million in the third quarter and $73 million year-to-date, 31.1% and 35.9% below the same period of last year, respectively. The decline is fully explained by a lower contribution from our crops and rice businesses into the overall result, which fully offset the improved performance in our dairy business. Results were mainly impacted by higher costs, a mixed performance of yields and lower rice prices. In our crop business, we took advantage of a temporary government measure to convert earnings from the state of soybean at a more favorable FX rate than the official one. This, together with higher average prices of most of our crops, resulting in higher sales. However, adjusted EBITDA marked up 57.5% reduction compared to the same period of last year. Results were mainly impacted by higher costs in U.S. dollar terms, driven by a global inflationary environment pressuring margins by a loss in the mark-to-market of our biological assets, mostly due to a faster harvesting base of corn, which resulted in less volume to be recognized during this quarter compared to last year and by a loss in the mark-to-market of our forward contracts, mostly related to corn. Year-to-date adjusted EBITDA was $30 million, 36.8% lower versus the previous year. This was mostly explained by higher costs in U.S. dollar terms, driven by global inflation and an even performance in yields compared to the previous campaign, coupled with a loss in the mark-to-market of our forward contracts. Adjusted EBITDA in our Rice business was $2 million during the quarter and $15 million year-to-date, marking at 23.3% and a 62.6% year-over-year reduction, respectively. Results were mainly impacted by lower yields caused by the impact of La Nina in some of our rice farms and a 9% decline in prices at the moment of August. This resulted in a year-over-year loss in the mark-to-market of biological assets and in the net realizable value of our agricultural reduce after harvest. EBITDA generation was also negatively impacted by higher costs in the U.S. dollar terms, which pressured margins. Moving on to the dairy business. Adjusted EBITDA amounted to $9 million during the third quarter and $24 million year-to-date, marking a 29.6% and a 22.1% year-over-year increase, respectively. In both cases, results were explained by an increase in both volume and average prices and our continued focus on achieving efficiencies in our vertically integrated operations. Again, results were partially offset by higher costs in U.S. dollar terms, driven by the global inflation environment. In the case of land transformation, although no farm sales were conducted, results reflected the mark-to-market of an account receivable corresponding to the latest sales of farms in Brazil, which tracks the evolution of soybean prices. Let's now turn to Page 16, which shows the evolution of Adecoagro's consolidated operational and financial performance. On a year-to-date basis, gross sales expanded 24.8% year-over-year to $970 million, whereas adjusted EBITDA amounted to $327 million, marking an 11% decline compared to the same period of last year. In terms of production, we harvested over 1 million tonnes of crops and rice, while our shocking crushing volume presented a year-over-year reduction for reasons previously explained. To conclude, please turn to Slide 17 to take a look at our net debt position. As of September 30, 2022, net debt amounted to $816 million, 1.7% lower compared to the previous quarter. The decrease in net debt is fully explained by a $50 million increase in our cash position, which offset the 3.6% increase in our gross debt. It is worth highlighting that as we entered the second semester of the year, we have started collecting income from most of our products sold. On a year-over-year basis, net debt was 12.6% higher compared to the same period of last year due to a 15.3% increase in our gross debt position. This was mainly driven by the financing of our inventories, finished goods plus raw materials, which increased $43 million year-over-year, coupled with $81 million increase in our biological assets versus the previous year. This was explained by our strategy to secure our supply chain as we enter into the 2022, '23 harvest season, along with higher costs of inputs. This working capital requirements are being financed by short-term borrowings in our farming division at attractive rates. Thus, short-term debt was 55% higher compared to the same period of last year. At the same time, our liquidity ratio reached 1.3x. This clearly shows the fully capacity of the company to repay short-term debt with cash balance without raising a solid capital. We believe that our balance sheet is in a healthy position, not only based on the adequate overall debt levels, but also on the term of our indebtedness, most of which is long-term debt. Our net debt ratio was 2.1x in this quarter, 6.9% higher than the previous quarter. Thank you very much for your time. We are now open to questions.

[Operator Instructions] And today's first question comes from [indiscernible] Pactual.

Thanks for the space for asking questions. I have 2 on my side. The first on the sugar and ethanol business. You mentioned in previous quarters that you expect that sugarcane crushing volumes would be flat this year, and you expected 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 [indiscernible] and TRS content evolve throughout the crop so far? And also how the 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 the [indiscernible] that's the one on 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 2 questions on my side.

Enrique, 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 in [indiscernible] your question.

Enrique, as it was mentioned here, the last year, frost impact a lot. Our yields for the first semester that we crushed in the first semester. And this as a consequence of that, we had a late start of crushing and also we slowed down the crushing pace in the first semester. And once we finish 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 as it was mentioned before. But then we had a lot of rain in August, September and October. Actually, in August, it rain more than 200 million meters that is usually is 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 slightly lower than last year. But the situation and the outlook 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 yields with more than 80 tons per hectare. And I think the situation for next year is also very good. It 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 we will be able to capture these opportunities. Regarding the costs, I think this year, we are going the factor of the cost dilution that we expect that we usually expect will be lower because of the lower volume of sugar cane crush this year. But next year, we are going to be crushing more sugar cane than we were expecting. Actually, we think that we are going to increase the crushing for next year close to 20%. And then we will have definitely we'll have a lower cost than we have this year. We think that we are going to decrease our costs 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 we will be crushing is going to be much higher.

Thank you, Renato. Enrique, any follow-up questions on the 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 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 good as we can as what we've done up to now. But of course, the 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, some flower, peanuts. Again, we are in the middle of the planting or we are more than half of the area, all the planted area is in an excellent situation. We started the year or the planting season very bright, but now it's great, and we are advancing very well. So again, we can expect as good results as possible, depending on weather 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 happened in 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 went 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.

[Operator Instructions] Our next question comes from Christian Audi with Santander.

I'd like to know what are your thoughts on the federal tax whole thing going on for the sugar and ethanol business, since the reduction in taxes hurt the segment, right, as the biofuel loss is competitiveness. And I'd like to know your thoughts about this. Do you expect them to taxes to come back soon? Is it a problem for maybe next year, 2004, 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 cost dilution looking forward. So I was wondering what's the rationale you since investors sometimes say things regarding a global recession, perhaps. So you guys think there will not be an economic downturn for the next couple of years or so?

Okay. Let's take first your initial question regarding the federal taxes and the [indiscernible] policy and what is it specifically that we are doing regarding that. So Renato can take that question to...

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 security. Any government will recognize the role of ethanol to achieve those 2 subjects. And I think that was the case since Palco with a better moment 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, 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 market. And we can do maybe that 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 costs and regarding that, as Renato explained at the beginning, in the sugar and ethanol business, there is a dilution of costs 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 were particularly below the.

It appears we have lost our speaker line. [Operator Instructions], once again, we thank you for your patience. We are reconnecting the speaker location. We should have the call up and running here shortly. Please stand by. Thank you. And ladies and gentlemen, we appreciate your patience. We have reconnected the speaker location. Please proceed Renato.

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

Yes. Yes, I did.

Okay.

The answer You were saying about yields...

Okay. Thank you, please proceed, sir.

No. Okay. Have you heard the answer on the growth and the dilution of costs because of the increase in yields?

Yes, yes, I did. That's exactly the way I cut off. You may...

Thank you for that. So Victoria will read out some questions that are being asked in written by the web.

We received a question from [ Lori Saperia from Itau. ] 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 its 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. We our 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.

[indiscernible] So we are very optimistic about ethanol price in the short term. That's because the crushing in Brazil might be lower than everybody is expecting because of the rains. It's raining all regions of Brazil. Also the auto cycle in Brazil is increasing at a faster pace than you initially thought, 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 part at the pump close to 7% to 8%, which probably is going to reduce hydrous demand and increase in hydro demand so our strategy is to produce as much as a hydrous 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 hydrous, in hydro and selling more that has a better price. Today is close to $0.20 per pound, the sugar equivalent price. And also, as Mariano mentioned, we will be crushing in the first quarter and probably maximizing a lot of anhydrous and produce 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, it's close to 5%. So by producing sugar, we will 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 all the governments, all the countries are looking for sustainable energy and energy security. We think that any government will support ethanol in Brazil regardless who is the President that's the case since the Pro Alco 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 Bonsucro certification area. So we'll have capacity to export 20% more than we exported this year. This year, we exported around 135,000 cubic meters with a premium over 15% compared to the local market. So next year, we will be prepared to export more if the opportunity is there.

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

Okay. No. Thank you all for your participation. We are sorry for the technical inconveniences and hope to see you again 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 [Operator Instructions]