Fertilizantes Heringer S.A. (FHER3) Earnings Call Transcript & Summary

[Audio Gap] that this event is being recorded. [Operator Instructions]. Before proceeding, let me mention that any forward statements -- forward-looking statements that might be made during this conference call regarding the company's business prospects, projections and operating and financial goals are based on the beliefs and assumptions of the company's management as well as on information currently available. Forward-looking statements are not a guarantee of performance. They involve risks, uncertainties and assumptions as they refer to future events and therefore, depend on circumstances that may or may not occur. Investors should understand that general economic conditions, industry conditions and other operating factors may affect the company's future performance and may lead to results that differ materially from those expressed in such forward-looking statements. Now I would like to give the floor to [ Mr. Inhiki Maya], who will begin the presentation. Please Mr. Maya, go ahead.

I am sorry, my mic was muted. Starting with quarterly deliveries, volumes and crops, the second quarter of 2023 reported 362,000 tonnes distributed mainly into soybean, corn, coffee and sugarcane. For the second quarter of 2024, our deliveries totaled 355,000 tonnes, down 1.7%. They more concentrated on sugarcane. The 1.7% reduction in volume delivered in second quarter '24 over second quarter '23 was mainly due to a less aggressive commercial policy aiming to achieve greater profitability. Next slide, we see half yearly deliveries, 831,000 tones down to 811,000 tonnes, down 2.5%, again, for the same reason presented before due to a less aggressive commercial policy and this reduction also concentrated on sugarcane. Regarding the delivered product mix, we posted growth year-on-year of premium products starting 58,000 to 108,000 tonnes. And a reduction in conventional products, starting 2024, the specialty products portfolio was integrated into the company's premium product portfolio so as to achieve greater profitability.

This is [indiscernible] speaking. I will continue with the financial performance in the second quarter '24 and first half 2024. We highlight the main lines. So looking at net revenue. We ended second quarter with a net revenue of BRL 745 million compared to the same period of last year, second quarter 2023, when net revenue was BRL 887 million, a reduction of 16% year-on-year. Now regarding gross revenue, in the second quarter 2024 our gross result was BRL 4,980,000 negative compared to the same period last year, BRL 79,671,000 of loss. So there was a loss reduction compared to the same period last year. Regarding EBITDA. EBITDA in the second quarter 2024 was BRL 54.9 million compared to Q2 '23, BRL 137 million. We ended -- now looking at the first 6 months year-to-date of 2024, net revenue of BRL 1.7 billion compared to the same period for 6 months '23, BRL 2.2 billion. Gross result, we ended with a profit of BRL 12.3 million compared to the same period last year with a loss of BRL 136 million. Regarding the EBITDA, first half 2024, BRL 107 1million loss in the first 6 months compared to the same period last year of BRL 277 million loss in the first 6 months of 2023. Now talking about the financial lines after EBITDA. Looking at the first 6 months of the year, we started with a lesser loss of BRL 362 million compared to the same period last year, in the first half '23 of BRL 37.9 million positive. The main effect was the exchange variation in the first half. This gain, this was the exchange rate given the depreciation of the Brazilian real. We had a 15% depreciation, which led our numbers to be negatively impacted. Now regarding the cash flow, we ended the first half with a cash flow of BRL 59.1 million. And I will highlight the main lines. Negative results, income tax and social contribution, BRL 498.2 million. We had noncash expenses of BRL 368.4 million, mainly comprising interest and unrealized exchange gains. Decrease of BRL 266.1 million in asset accounts, mainly due to the decline in trade receivables. Decrease of BRL 47.8 million in liability accounts, mainly composed of import costs. Net investments of BRL 70.4 million, mainly composed of works to adjust the units. We had a negative then -- negative net cash flow from financial activities of BRL 13,000. Now I'm ending the financial performance data and I'll turn the floor to [ Inhiki Maya ].

Very well. Now speaking a little bit about the outlook of the market. This slide shows the price evolution of the 3 main raw materials imported. In green, the performance of urea. We had some recurring problems related to the supply of natural gas to important Egyptian producers and the announcement of a late Indian auction. All of this was able to maintain the prices of nitrogen-based products high. For potassium chloride prices remained stable in Q2 '24, amid heated and buoyant demand in Brazil, particularly for soybean crop but it was an above expected supply and because of that, the price remained flat. On MAP, we have restricted inventories with a limited supply and late demand for soybean, which maintained phosphate prices high in Brazil. On the last slide, according to the 10th CONAB survey on the 2023/'24 harvest disclosed in July, Brazil should reach a harvest of around 299.3 million tonnes, with grain production seeing a reduction of 6.4% compared to the 2022/'23 harvest, which saw a record harvest of 319.8 million tonnes. This data came from the CONAB, Brazilian supply system.

We will now begin the Q&A session for analysts and investors only. [Operator Instructions]. As there are no questions we inform that Fertilizantes Heringer earnings conference call is closed. Thank you and have a great day.