Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria (CRES) Earnings Call Transcript & Summary

Good afternoon, everyone. I'm Santiago Donato, Investor Relations Officer of Cresud, and I welcome you to the first quarter of 2026 results conference call. First of all, I would like to remind you that both audio and a slide show may be accessed through company's Investor Relations website at www.cresud.com.ar by clicking on the banner webcast link. The following presentation and the earnings release are also available for download on the company website. After management remarks, there will be a question-and-answer session for analysts and investors. [Operator Instructions] Before we begin, I would like to remind you that this call is being recorded and that information discussed today may include forward-looking statements regarding the company's financial and operating performance. All projections are subject to risks and uncertainties, and actual results may differ materially. Please refer to the detailed note in the company's earnings release regarding forward-looking statements. I will now turn the call over to Mr. Alejandro Elsztain, CEO.

Thank you very much, Santi. We are beginning today our first quarter of 2026. And if we begin in Page #2, we can see the main events for the quarter. We are beginning a big campaign. This is our biggest campaign in our history. And overall, the weather conditions are good. The winter plantation in Argentina, it is under very good condition. And the rest, the beginning of summer plantation that is now beginning is with enough humidity on the land in majority of the areas in South America. Related to the prices, there was a slight increase in commodity prices, and we are going to share with you some events that happened in the first quarter related to export taxes. The government in the moment of the quarter affected this market, that affected a lot the grain market of Argentina. In some days, there was temporary 0 rate for taxes on exports for -- mainly for soybeans. That is the 26% and that boosts prices in Argentina. Related to wheat, as I said before, 100% was planted, and now we are very close to harvest. November and December are going to be harvest time of wheat, barley and the rest. And we are beginning the planting in Brazil and the rest of the region. Argentina is just beginning the soybean plantation. Related to cattle, the cattle of the world is spending good time, high prices on the cattle business in the world, driven mainly by U.S., but the rest of the world, too, and margins and productions are very good. So we are intensifying our activity of cattle in the region on Salta and La Pampa in our farms in Los Pozos and in El Tigre. Related to real estate and when we compare the balance sheet and later Matias will show, there are no farmland sales during the first quarter of this year. And last year, yes, we had. And that's a big difference in the activity. That doesn't reflect what we expect for the year, but it's true that in the first quarter, we didn't show this year. And last year, yes, there was in Brazil. Related to dividends, in November of this year, we received from our subsidiaries, $66 million from IRSA and close to $5 million -- $66 million in total, $5 million in Brazil and $61 million related to IRSA. So a lot of dividends coming from our subsidiaries and FyO too that is paying dividends sooner. And from other side, Cresud was paying dividends, and we paid $64 million, 70% in cash and 30% in kind between IRSA shares and a part of that some shares of Cresud itself, yielding 8%. So very important quarter related to dividends. If we now move to next page, Page #3, we can see the expected planted area. And when I spoke about beginning of very important campaign, we see this evolution. We are growing at 7.4% year-to-year. This is a growth mainly driven by Argentina and Brazil, the 2 countries and mainly leasing a little more land, and that made us to grow 7.4%, so 321,000 hectares total plantation on the region. We move to next page, and we see the evolution of the prices during the year and the small rebound. And I would speak about the rebound on the prices, and this is a lot affected by the tariff discussion. Today, the tariff discussion between China and U.S. is really affecting from where the Chinese are bringing and importing the beans, mainly the beans. In the past, 25 million tons came from U.S., but the last discussion from Trump's administration made that volume go down. And today, there is no certainty what portion will come from the north from U.S. and what portion will come from Brazil and Argentina. That is the affection -- main affection on the prices on the soybean. And the combination of prices on Chicago and basis on South America is making a not very different balance to South America to -- what I'm meaning is this changing on prices is a discussion about which portion is coming from U.S. and which portion is coming from South America. The reality in realis and in dollar terms is not changing dramatically the price for South America, but it's changing the basis of Chicago because of the discussions on the tariffs. So what do we mean is, margins for farmers are much smaller, some cases in U.S. margins are directly negative. In South America, with these prices, we make gains. And in Argentina, with the reduction on taxes, we are going to make much better gains. And if we move to next page, we are going to show what happened in a few days that Argentine affected that market going to 0 taxes on exports. There were for 3 days, really this last -- not a lot, the government announced up to $7 billion up to the 30th of October. But finally, they achieved the $7 billion in 3 days of market. Those 3 days, taxes on exports disappear. They canceled to 0. What was 26%, the soybean, in 9.5% sorghum and corn, 9.5% of wheat on the rest. So on these 3 days, the exporters mainly sell majority of the future market and achieved the $7 billion and the government cancelled that program in 3 days. And that made a big rebound. And if you see in the graph in the part of the right up, you see from the price of soybean in Argentina that was at $300 the soybean. In those days, we went to $360 because of that measure. And we had some stock. Cresud sold those days of stock. So there was a gain because of the stockpile that Cresud has in the past. Later, that price went to the $335. And for the future campaign that was before below $300 a ton, today, we are in a level of $311. What does it mean? The government showed the ability of taking taxes. They promised they are going to take taxes from exports forever, but they are not doing from now. What they did, there was a cancellation for a few days, but the signal is clear. They began the government with 33. They went to 26, a few days of 0, now they do the current that is the 26, the 99, what's in this graph, but farmers are waiting for the signal for reduction. And we think the government is going to accomplish what it promised at the beginning. Slowly, they know that they need the surplus, and I think they are not going to do as fast as we expected, but we are expecting for -- keep reducing taxes on exports as they promised. This is the portion of this graph. But if we see the part in the below, we see the gap between the $2 dollars, the official and the unofficial dollar and look at what was before '23. The gap was huge. The gap between the $2 was up to 164%. But that gap almost disappeared. And recently, in '25, the gap is close to 0. What does it mean? Now farmers are receiving close to the dollars when they are selling. Remember, Argentina, when the prices on U.S. were $500 a ton, Argentinians were receiving $170 because of the gaps of the dollars and taxes of 33%. Today, that gap is below the 26% of taxes. So this is a very important signal. And why do I spend so much time here? Improving the margins for Argentine farmers that cost of Argentina for production is the cheapest of the world. So if we survive with these taxes and with these caps, imagine what will the picture for margins for operation and for the real estate, when the combination of the 2 affecting the farmers, the liquidity for real estate was close to 0 because you were expecting for a price of a farm that the origination or the operational business was not giving. Now the operational is coming back because of these 2 measures. If we move to next page, the Page #6, we can see the evolution on the good regional weather conditions that we see that it's in green, meaning we have humidity, the winter crop is in a very good shape, passing the forecast, passing the budget. For sure, in Argentina, there is not that in Brazil because they have no winter, they don't do winter plantation there. But for winter, it's very good condition. And for summer, it's good condition for planting. We are beginning the planting. Here, we see that the sowing progress is 21% in soybeans, just 9% in corn, 100% on wheat, barley in the winter. That is very close to harvesting. So meaning we are entering to a normal campaign related to the 2, winter and summer crops. And so we are optimistic in the 320,000 hectares in normal conditions. We can move now to next page about livestock. And related to livestock activity, look at what happened in the prices of the cattle. This is the international steel price in the region, Argentina, Uruguay, Brazil and Paraguay. The big rebound on the prices. The best is U.S. What happened on U.S. price is at records. U.S. is spending very good time because that is probably the liquidation time of the stock. U.S. liquidated a lot. And today, consumption is very firm, and there are not enough cows in U.S. and not in Argentina and in the region enough for population that is really lacking to eat beef. And that's the reason we are seeing so good prices. And that is making us to having a more or less same stock. We see on the right, our stock is at 60,000 heads but we are increasing productivity. Look at our production coming from 7 million kilograms to 8 million kilograms, 9 million. Now we are achieving and surpassing for next year in 10 -- more than 10 million. And that 10,000 tons, meaning we are improving productivity in cow and calf and feedlots. We are today intensifying our production, and we are doing 2 professional feedlots, one in La Pampa and our El Tigre farm and the other one in Los Pozos farm. Now we are going to have 2 feedlots close to 10,000 heads each instantly and you rotate 2 or 3 times a year. So we are going to improve a lot the activity and the rotation on the cattle the company owns. And here, we see the margin of the past. In the past, cattle was not relevant, but now is achieving yields of close to $10 million, the activity for cattle. So the combination of cattle, grain and sugarcane are the 3 main operational business. Here, we didn't bring nothing related to the real estate because in the quarter, we didn't sell any asset. We can now move to Page #8 and the third step of our strategy, the service -- commercial services related to farmers. And let's see what happened when we closed last year evolution of FyO, where Cresud owned 51% of the stake. Here, this company from 0 existing on the market today is the largest broker of the country. We achieved 7 -- this number is not exactly, we finally finished with 7.56 is the last number in September. This company closes in September the balance. So the last number related to company is 7.56. That represents more than 6% of market share of Argentina crop. So largest broker of the country, advising 5 farmers, helping with money, giving credits, advising digitally, advising with specialties. So this company is relevant. The EBITDA of this company, it's close to $24 million. It's 400 employees now in Argentina and Brazil, expanding the service in Brazil, too. So this -- the service step is beginning to be relevant in our strategy. So these are the 3 main operations. And without any real estate, we didn't put any page today. Now I will introduce you to Mr. Matias Gaivironski.

Thank you very much, Alejandro. Good afternoon, everybody. So if we move to Page 9, we can see the evolution of our investment in IRSA, where currently we own 53.3% stake. IRSA had a good quarter with net gains of ARS 163 million on net results, mainly driven by the fair value of the investment properties that we will see later. About the shopping malls, there was a good quarter with an EBITDA increasing by 4%, revenues and occupancy went up. There was also a busy quarter regarding acquisition. There was a new acquisition of a new mall, Al Oeste Shopping Mall for $9 million that IRSA thinks -- plan to reconvert in an outlet in that area. There was no major news about offices and good progress in all the developments in the [indiscernible] infrastructure works in Ramblas del Plata project that are on time. As Alejandro mentioned, also IRSA paid dividends during the quarter. So received part of that. There was a dividend yield for IRSA was 10%. About the rest of the segments, there was an increase in EBITDA. On the right part of the slide, you can see an evolution of positive in shopping malls and in offices and a reduction in hotels. Basically, the rental segments increased by 3.5% compared with the previous year. Now if we move to Page 11, we have been talking about the effects on the drivers of what generates inflation and devaluation on our results. During the last year, we had an appreciation of the peso with an inflation higher -- sorry, an inflation higher than devaluation. This quarter was the opposite. So we will see some effects that are generated because of this. If we move to Page 12 to understand the results of Cresud. First, on the operational side, the agriculture business on the left part, you can see there is a reduction. This is basically related to the real estate activity, where last year, we have some disposals during the first quarter. This year, we haven't any. And also here, we include the results from all the receivables that Brasilagro had because the disposals of farms in the past that they have a portfolio to collect in the future. And in that segment, we include the valuation of the bags of soybean that they have to receive. So we mark-to-market every quarter the fluctuation of prices on that. If we see on the right part of the slide, what is the production -- the agricultural production, we see positive numbers compared with the previous year, 10% up in the case of grains, although this is not the most -- it's not the main important quarter. You know that we are starting the campaign. So here, basically, during the quarter, we have the results, the fluctuation of our estimations at the end of the year that we have to give impact during this quarter. So last year, that generated negative numbers. This year generated positive number. So when you see -- we see performance of these grains between Argentina and Brazil. In Argentina, we have very positive numbers and there is offset with some lower numbers in Brazil. About the sugarcane during this quarter was affected by climate condition basically and lower prices. So that generated this drop from last year to this year. And regarding the cattle raising, we have the results that are basically -- last year, the holding results on our stock and this year, there was made higher cost of production and higher cost because of the incentive of the production and the [indiscernible], the feed of -- on the feedlot. Moving to next page. The other important driver or the most important driver during the quarter is the change in the fair value of our investment properties that is most related to IRSA and shopping malls, offices and landbank of IRSA. But if we see these numbers in dollar terms remain very stable compared with June. But when we have to give impact on the devaluation and inflation that generate this positive number and last year was completely the opposite. Finally, about the results, the net financial results this quarter, we see a loss. This is related to all our dollar-denominated debt on a consolidated basis that with a higher devaluation than inflation, we are generating negative numbers. Compared with last year, that was the opposite. The rest remain stable. Net interest here, it appears like an increase in interest payment. This is related also with the devaluation that in pesos term, we are paying more interest. With all these drivers, we finished the quarter with a gain of ARS 110 billion attributable to our controlling interest, ARS 36.8 billion compared with a loss last year. About our debt structure, as you can see, there was a decrease against last year from $350 million or $349 million to $329 million. This is related to the dividends that we collected and that generate positive cash. And the debt amortization schedule that we have part of the cash that we already raised during the last quarter with 2 new issuances that we have part of the cash to cancel the upcoming amortizations, and then we are planning to go to the market to refinance the rest. Finally, about the dividend payments. As Alejandro mentioned during November, our Shareholders' Meeting approved in October, the disposal -- sorry, the payment of part dividends in cash and part in kind with shares of IRSA. So it was 70% in cash, 30% in shares of IRSA. That was a dividend yield of 8.4% that we already paid in Argentina and related to our ADR holders, probably Bank of New York will establish the record date probably next week, and the payment will be probably 10 days after the record date. So with this, we finish the presentation. Now we open the line to receive your questions.

Well, we'll start with the Q&A session. [Operator Instructions] There is one here related to the payment. I think Matias mentioned something related to the payment abroad or to the ADRs, both in Cresud and IRSA. Certainly, we are in Cresud, but we can answer both, which is we have already fixed the date of payment and record date.

No, that is not upon us. We already paid to Bank of New York and they are in charge to converting those pesos into dollars and setting up the record day. So they are in the process. So we expect that they fix their record days during the next week. And the payment then because of the process is 10 days after the record date.

Here, a new question regarding farmland sales, there were no formal sales in the first quarter. If there is any plans to sell any assets in the region for the coming quarters, and how do we see farmland prices going forward?

Yes, for sure, it's part of our strategy for every country, every year. The first quarter without any sales doesn't reflect, we have 3 quarters more, and there are some sales under discussions. I think the situation of Argentina is not comparable to the rest. The reconnection of Argentina because of what I explained before, the gap on the dollars and the taxes and exports is bringing liquidity. So that bringing liquidity probably will be much easier the selling of farms of Argentina. So I think Argentina is rebounding the price of the land. We are seeing in -- mainly in agriculture areas, but slowly in cattle areas too. So in Argentina, appreciation of price of the land and more liquidity because of the new situation of the farmers of Argentina. For the rest, it's different because the drop of prices in Brazil and the increasing on the cost of capital for Brazil is probably affecting prices of the land. And so there, the liquidity is decreasing for farmers, but still enough, and we are expecting sales on Brazil. But the prices on the land on Brazil are adjusting for slower, not for higher, like in Argentina is happening. And in Paraguay, I would say, it's in the same condition of Brazil. So yes, for sure, we are expecting activity in real estate for the next 3 quarters.