Jalles Machado S/A (JALL3) Q4 FY2026 Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen, and welcome to Jalles' conference call to discuss the results of the fourth quarter of crop year 2025-'26. This event is being recorded and includes simultaneous interpretation into English. Both recordings will be available on the company's investor relations website at ir.jalles.com. [Operator Instructions] The earnings release and release slide presentation for the fourth quarter of 2025-2026. [indiscernible] are also available on the Brazilian [indiscernible] and Exchange Commission, the CVM website. Before proceeding, I would like to mention that the statements may conference regarding retention that constitute forward-looking statements based on the managements current expectations. Such expectation is subject to change due to macroeconomic condition, market risks and other factors. Joining us today are Otávio Lage [indiscernible] our CEO; and Rodrigo Siqueira CFO and IRO. I'd like to take the call to Otávio Lage.

I'd like to first inform thank you on joining this call. We will very transparently and very seriously present fourth quarter figures of 2025-2026 crop year and we're very happy to come on our investors to know these have been tough times. So thank you for believing in us, and we hope to be in 45 years. evidence to in fact, there are always to get it right in Jalles Machado [indiscernible]. We know that there [indiscernible] in the market. But we have weathered crisis before and this is a good moment for us to innovate, for us to believe in changes, for us to stand up, dust off, and look out for opportunities. The company has found opportunities to stronger such challenging moment. I'd also like to thank our team, our CFO. The whole team has been working hard. The team has been devoted on a daily basis, looking to bring us better results. Please read the sustainability report, it's a quick read, it's only 117 pages, but we did put it together. In all transparency, we want you to have a snapshot -- this clarity of the company in sustainability. We always been very careful about the environment we've always cared about governance. Even way back when it was not in fashion, but we always strive to look after the environment, because the environment allows us to exist. We're going to present the results, Rodrigo [indiscernible] will be representing. And this last year was no easy year. We had lower yields. But that has happened before. We work with nature. We can't control age. We can mitigate some risks as we've always done it. We have irrigation that can be used just to maintain the crops even to salvage them if necessary. And we've been investing also in the Santa Victoria plant that we recently bought. We've gone from 59 tonnes and we expect to get to 70 tonnes per hectare. We know this is no easy task. We need to change management we need to change the varieties. But we've been doing it, and we're very happy with the results we've been having. The pricing has also left quite a bit to be desired this year, and we're hoping to see pricing and prices in general, buying back up. We've taken a number of measures to reduce costs to cut back costs. We reduced personnel substantially. And we've been trying to invest in matters that will deliver quick returns, and we've also reduced our CapEx. I'll turn the call over to Rodrigo for him to talk about the operations and the figures. And I'd like to thank you all again, thank the shareholders, patrons and all the stakeholders as well. We hope to see a better figures in our next meeting together, with better interest rates with better cash flow. And we are certain will and see better days soon. We have had tough moments in the past, and we will survive this as well, we will weather this moment. So again, we hope for better days, and we hope to be smiling due to good results in the future and very soon. Thank you.

This is the last call -- last conference call for 2025, 2026 for this crop year. So thank you very much for joining us on this conference call as well. As Otavio said, we wish this year had been better than it was. We had okay prices in ethanol and okay prices in sugar, but we had a 15% crop failure. But still, we have highlights that we're going to be looking into. We were able to keep our debt levels, keep our leverage in spite of the substantial crop failure. We have a hedge for sugar that's quite high for the next two sugar crops. And we know that our irrigation can mitigate the climate risk to a certain extent. And the organic risk as well. And this also helps us not be subject to the seasonality of the sugar and ethanol commodity prices. And we've worked to keep the company in addition, where we will not need to capture anything in the coming 3 years -- capture any new loans. So let's get started with the presentation, shall we. Let's talk about the world sugar market. We had a 1.6 million tonne surplus with a use of 41%. This is from October to September. This is the crop year used on a global scale because of the northern hemisphere countries. These data agro data updated on -- or in June 2026. So we have a new year starting in October 2026. And we should have about 2.2 deficit where the supply surpasses demand. The curve here in this last 15 years, as you can see there is no high supply that starts deficit. That doesn't quite match the excesses we see in sugar prices. And why is it that we're going from a surplus to a deficit? India is going down by about 1 million tonnes. Thailand almost 2 million. The European Union is also going down by about 2 million. And Brazil, according to data agro, we see that the center south of Brazil is growing by about 1 million tonne. So the next sugar -- rather, the next sugar king crop starts in October 2026 with the 2.2 million tonnes in deficit. So there is a perspective of change -- an expectation of change in the coming 12 months. Here, we have crushing compared to yield or rather sugar production. It should be about 40 million, this is what we've been seeing by most references. And [ 740 ] million tonnes in crushing with 42% mix. Well, what do we have then for ethanol in the center itself when it comes to the supply. We should have about 5 million liters more year-on-year when it comes to supply. Some of that coming from corn, about 2 billion and the rest coming from sugar cane with higher crushing volumes and with the more ethanol focused mix from last year. But these 5 million liters extra for a like-to-like comparison, it translates to 2.9 million liters when we compare to the previous [ crop year ]. With two meeting that was recently announced by the government, there's another meeting next week as well. Everything suggests that, that should happen. So the industry has met with [ Minister Alexandre Servier ] with the President, Otavio was present at this meeting. So everything is set, I would say that -- so I would see E32 in-force as of August. There is the natural auto cycle. We're considering 680 million tonnes. There's 2% more. And so far, it's been more than that. The auto cycle growth. So we're talking about when we have a like-for-like almost 2.9 billion liters that need to be used by the market. And that, especially now in the middle of the crop year, this leads to a substantial amount of supply. Looking into some more data, when you look at the ups and lows and the sugar price cycles. We have an analysis ever since 1998, showing how the prices have behaved. And whenever price goes down, the corrected historical average. The time it will take to recover as the time that will be below the average. So there were several events like this. And between 2006 and 2009, this is the longest period to recover, 2012 to 2015 and 2017 to 2020. These were the longest low cycles. 144 days on average. This is the length of these cycles. Less than 1.5 years. And the longest one between '17 and '20 was almost 4 years long. I had said 444 days, slightly more than slightly over year. And now we have been in a low cycle for 383 days. If we look at the average it should be close to the end of the low cycle. But we just wanted to share with you the low cycles. And our comfort. We have our sugar well hedged for the coming 2 years following our hedge policies that we applied in the past 2 years. So it's already lasted over a year. If it lasts for another 2, it's going to be 3 years and Jalles would be well hedged when it comes to sugar. So it's a strength of the company. We look at an SCA forecast, we would see that the gasoline petrol prices wouldn't change. And the curve for the average price in Sao Paulo would be this. So the estimated weighted average gross price would be [ BRL 3.16 ] that's a BRL 0.21 decrease year-on-year. Our forecast is a bit more conservative for the year. But again, this is the SCA data. We have given no guidance around pricing yet. Well, we would expect to be slightly lower than [ BRL 3.16 ]. Now let's look at our operations. So start talking about the actual company and not so much about the market. We had 10% less crushing year-on-year and almost 15% less than expected the TCH, the yield was 84% compared to 74% this year, 74% last year, 84%, so 11% decrease and climate had a substantial impact. We're in the states that were most impacted by the climate. So Minas was [indiscernible] that was most impacted. They had the most prop failures. Angola was the second most impacted. So the centers didn't have such a major impact when it comes to the drought. But these two states Minas Gerais really felt the impact. So we had 10.4 tonnes per hectare. Our TRS was 10.4. We had thought about a higher sugar mix at the start of the year, but at the end of the crop year, we already started focusing on ethanol in the [ Goias ] plants. And the average age of the sugarcane field is quite comfortable for us is about 3.2 years. We have not stopped renewing the sugarcane fields. This is a must for us. Our sugar cane fields need to be ready to have a good vegetation phase and produce a lot of yield when the climate plays along. Let's talk about the rain fall. On every site, we had a higher rainfall than the historical figures. In Minas Gerais, it was quite good. Only in April and May did remain less than the average or the historical average. And this choice here are from June. And in Santa Victoria we had 110 of rain. And that was quite good to help the sugarcane feel at the end of the crop year. And we've had over 30% of the crop of the crop year. So this is going to make sure the return is better that the planting is also better for next year. When it comes to pricing, sugar has gone down by 11%. But it was to an extent, offset because we had our hedge with the hedge settlement and the commodity were set. Ethanol was 10% higher at BRL 3.40. And it was our strategy to leave most of our ethanol to be sold in the third and fourth quarters. We really wanted to have ethanol after the crop year is over, so that we could sell. We sold 102% of our yield -- of our production. We ended the last crop year at a higher level, and now we've climbed back to regular levels. We still had a lot of ethanol carrying over from 1 crop year to the next. And in sugar, we're also more efficient in our inventory management. And in the warehouses, we also had a substantial reduction about BRL 15 million. And this was thanks to the procurement team managing inventories better as well. Now financial highlights. When I look at the hedge and derivatives, we had a positive BRL 5 million results or effect. We had BRL 220 million if we look at exchange, the exchange rate as well. And in the index your figures, the that we had for [ IPC CDI ] rates in our debts. We'll look at the interest rate curve from the start of the past period till now. And all of the [ IPCA ], the consumer Brazilian consumer price index rate had an impact that you can see here. Our adjusted EBIT with biologicals. And with the hedges, we had a 14% margin and BRL 296 million in adjusted EBIT. Now adjusted EBITDA was BRL 206 million with a 61% margin. Net income was BRL 9.5 million against BRL 55 minus last year. And in cash, well, there's depreciation, but other effects such as biologicals noncash hedge, noncash taxes we had BRL 120 million plus. So this was a better year than last year. Last year wasn't a good year either. But considering we had a 15% crop failure, it was still a reasonably good year. Debt levels. Let's look at our indebtedness. We were able to reduce it by almost [ 1% ] when we look at our net debt. The leverage went from 1.2 to 1.3x. But this is because our EBITDA was lower because of the crop failure, but we still sustain the debt. We ended the year with BRL 1.8 million in cash. And of the debt is due in 2027. The rest is longer term. And even with cash being higher than our liquidity would need to have further capital coming in. This has already been signed. It's been announced to the market, but this would only take place in about 3 years. And the average debt term goes from 4.7 to 5.2 years. So this is quite comfortable, and we've always had this as a policy. We've always were to have a robust liquidity, and this became even more advantageous because our general capitation cost is the same as our application costs. So we're not carrying over higher cash, we're not having this cost. We're having 0 cost, even though we have a higher cash. So the interest we're getting from this cash invested is the same as we're paying for the hedge. '26, '27 is hedged at to [ 2,489 ] and we have 40% higher than the average price. This has been worse today because this is the 13th of May, and the figures have got worse. And as per the guidance we released last night we have 85% fixed or sugar that's 100% of the total volume available because there's always a discount due to a possible crop failure and the partnership that we have with [ Consecana ]. And sugar is almost 50% of that. So this is a natural hedge. So looking at what is available, we have 100% fixed. Considering the sugar production guidance, if you look at March, we had an even higher volume fixed for the crop year. But as we defined, we would be focusing on ethanol in the first months, then we reversed that so that will not be sold in excess, and then in so in excess because of the guidance of lower sugar production. So everything we publish when it comes to the hedge or the hedge strategies. We always speak about our sugar production capacity. So when we have less sugar capacity to hedge possibility is higher spare. So when we look at the next year and we have almost 50% of our capacity for hedging if you reduce it or if you have 50% of that for sugar, then it's going to be 100%. As we don't have a guidance for next year, we're looking at the capacity that we have right now. So that we don't failure to comply with any CVM requirement. COGS, we had an increase of 8% in unit costs due to that 15% crop failure. This is a year where if there were -- or there had been no drought, we would have had a reduction in our cost in production. And the real -- the Brazilian real had an increase in value this year in comparison to the American dollar. So production guidance, we had 10% more in crushing and the ATR, which is the TRS is a bit lower now because we had a lot of rain at the end of the crop year. So we're expecting to be lower. And the mix is going to be more ethanol-based, only 31% sugar. But as I said, this year is going to be a -- well, it's going to be the decision we're going to be looking at in the course of the year, maybe we'll focus more on sugar at one point and then more on ethanol at another. And as for CapEx, you had lower CapEx at the end of the last crop year, 6% lower than the guidance. And we're expecting to have 12% less for the next year. This is our guidance. As Otávio said, we are working on reducing our CapEx. We reduced OpEx and nonessential CapEx the ones that don't have -- don't deliver quick results, quick returns. So we're holding back the CapEx that is not key. We're increasing our irrigation, especially in Santa Victoria. And this is basically it. We've been doing irrigation because this is really very beneficial. We wanted to be doing it faster, but they are the electric power issues in Santa Victoria. But that was it. We'll now start our Q&A session. But just before we do that, I'd just like to say that there are some real highlights in this crop year, good liquidity good sugar hedging for the next 2 years. This is already considering a very long low cycle for sugar. And we're working with the cost reduction and increase in income competitiveness. We've been talking about this a lot reducing costs, increasing competitiveness and efficiency -- and increasing efficiency -- this has really been a target we've been pursuing. This is the time when we really have to be innovative and creative and do what needs to be done for us to be more competitive as Jalle's always done in past crisis. All right. So let's get started with the Q&A session. Thank you very much for joining.

[Operator Instructions] The first question comes from Guilherme Guttilla from BTG Pactual.

I've got two questions. There's guidance increasing productivity, right? So there is a point we discussed on our last call, which was a potential cost reduction. You said you expected a potential reduction of maybe 5% to 10%. I just wanted to understand if this still applies? If this is something that we should still consider for this year considering the new guidance. And my second question has to do with the mix. You changed the mix substantially in this crop year, right, focusing on the ethanol. Ethanol prices have been low. We see there is a high supply in the market, especially a high supply of corn ethanol. And you also said in the study in this sure you can say that if you look at the average, when we look at the low cycle, we're close to the end of the cycle. Can you just give more color on what is behind this strategy? Why you should have such focus on ethanol at this point? And if you think this sugar cane low cycle could take longer to finish this time or if not? Thank you.

Thank you very much for your question. Thank you for joining the call as well. We have an increase in harvest of 2% and the average TCH is 8% higher. That's what we consider for this guidance with an increase of 10% in crushing. When I look at this year, and we've been spending on inputs, but we've become more competitive than last year. When the war first started, we thought that MAP and urea could have an increase in pricing, but we were already hedged for up to August. We bought all of the crop protection products at a price that was almost 15% lower than last year. Also, the fuel right, diesel in spite of the war, we had the subventions, right? And as we expect, this 8% increase in yield, then we will hold on to this reduction. And we really did our homework to reduce our personnel. We had a 350-person reduction in the three plants. And we've been working with the teams to be more efficient. So we continue to hold on to this 5%, 10% that we mentioned on the previous call. Now as for the more ethanol focused mix, well, we're in [ Guyana ] and Minas Gerais states. It's been almost 30 days that some plants in Sao Paulo that focus more on exports, and they're closer to the port, they turned as well. In Sao Paulo, most of them are focusing more on sugar. In Minas at this point, we were getting the same price for ethanol and sugar. But ethanol has a [indiscernible] value than sugar at this point. And we're analyzing that on a daily basis. When we look at [ Goias ], then ethanol is also looking better than sugar with the current prices. But we need to stress the point that we have a hedge. The sugar we're now producing to produce ethanol. That is being revert in the future market and we getting the adjustments. So it's like we're selling the sugar at a higher price. But if we get a premium for ethanol and sugar, then we're getting it again. But when you spoke about the guidance, I said, this could change. Say that sugar starts to recover. And it recovers more than we expect the ethanol curve to hold, then maybe we'll shift our strategy. This guidance can change substantially in the course of the year. We are looking at this matter on a daily basis. And when we look at the length of the low cycle, how long it's going to last. Well, it's very difficult to predict if it's going to last the average time or longer than the average, my own personal opinion is that there should be changes for the next crop year. When we look at the premises, inventory to consumption ratios, the fit. It wouldn't make sense for the price to stay so long for so long. But the challenge is to know when it's going to change, right? For to surpass the historical average is almost 200, 300 per tonne. Is that it? The corrected historical price is 2,400, so we need to go from 1,600 and go to 2,400. That is to surpass the historical average, but surpassing ethanol is something that should happen faster than that or sooner rather.

Victor Modanese from UBS.

Hi, everyone. I've got two. The first has to do with the guidance concerning crushing this year and next year. in spite of the increase year-on-year that we've see in the guidance, there is still a substantial gap for you to achieve the long-term goal of 9 million, even in a year where the center south is close to a record crop, right, or something that is very close to record crop. Could you break that down a bit? Can you talk about this gap that we still need to bridge before we get to the 9 million? How much has to do with the climate, how much does it do with increasing the planted area or improvements on irrigation or the types of improvements. And when do you expect to hit the 9 million target. And when it comes to the ethanol market, you show there was a substantial decrease now that has been since April. And this is adding pressure to the grower even more than we expected in the market. But in our conversations with the industry, we still see a number of players still with good inventories for the first quarter, which would suggest there would be a lot of ethanol to be delivered to the market in the coming months. So first, I'd like to understand what your inventory management and sales strategies are like for the apartments and for the future months. Do you understand that there is a higher inventory volume with the growers as well that could get to the market in the course of the course of the crop year, adding more pressure or increasing the time the pressure is going to be holding on? These are my two questions. Thank you.

Victor. Thank you for your questions. Thank you for joining. And there are excellent questions. We said that with a climate event, we don't recover everything from 1 year to the next. So the climate was more favorable. Even when you look at rainfall, we had a bit more than the historical average. And when it comes to yield, we had an 8% increase, but as to go back to our normal levels with Santa Victoria at 79 or 80 tonnes per hectare. We would need to be at 8.4% or 8.5% with the size of sugarcane fields. So we have some planned expansion. We have about 2,500 hectares more from this year on to the next being added, should quickly get to 8.5% in the next 2 to 3 years, we should get to 9%, but we're not too close to it yet. There is no guidance looking forward. But if it were the regular yield or productivity of what we had in Santa Victoria 79, we would be at 8.5 % -- yes, 8.4%, 8.5%. So this 8.4% to 9% increase would be a reference and we'll be talking about an additional 4,000 hectares and 2.5 are being added this year. Just to give you some reference, but we're still below our potential, the average potential is 80.4 as we put in the guidance. And [indiscernible] would be slightly above 90%, Santa Victoria about 80%, so it would be at 87%, 88% on average. So this is what we're pursuing. Of course, some of that depends on the climate, on the weather, some depends on crop management and irrigation. And when it comes to the sales strategy in April and May, the first 2 months of this crop year, we sold the ethanol were able to sell. And as of June, we started slowing down. So we're selling, but much more slowly and lower volumes. To increase volume slowly but also to have time to get better prices in the future. Because whenever we reduce ethanol consumption in the Brazilian market, when the price goes down, there is some inertia until the price drop gets to the end customers. So the petrol stations they may hold on to a higher margin for a while, which is horrible for us. In [ Goias ], the prices had gone down by BRL 1 and the petrol stations had only reduced them by BRL 0.20 at one point this year. So it takes a little while, when the prices just decreased, there's a little bit of a delay lags behind till the demand grows. And we had the 2.8 additional leaders appointed billion liters in comparison to last year. When we look at the adjustments of how the market grows with E32 with the inventory reorganization, we had a very low inventory level in the past [ craver ]. So we should sell at a lower rate in the coming months. And at the end of the crushing cycle, we should speed up as the market appetite changes. Did I answer your questions?

Bruno Tomazetto from Itau BBA has got a question.

I have a question that has to do with what Rodrigo just explained, but just trying to understand this increase in TCH in Central Victoria, almost 20%. Last year, the weather was challenging and you had these investments. So this increase in yield productivity stems from all of these actions. Can you try and shed some more light on the 20%, how much it comes from the weather, how much it comes from the investments that the company has made. And I've got a second question. Just to understand your perspective on the El Nino. This is a subject that people have been talking about. Can you share your perspectives on what the practical impact on Jalles would be? What could we expect when it comes to hedge values and what prices could we expect when it comes to pricing when it comes to [indiscernible]? Thank you.

As for your first question. It's good that you mentioned that. Because there's an important point I wanted to mention as well, when I answer the previous question, I mean. In this last crop year that ended, we increased 4,500 hectares, our salvage irrigation capacity in Santa Victoria. And another 700 sprinkler capacity at the 7 hectares. So this is an important point, we're better structuring our possibilities. So when we talk about going back to normal levels, that we used to have in [ Goa ] and accelerating Central Victoria. Well, we already have the harvest in Santa Victoria for next year. And we're changing the varieties. We're improving our crop management. We're improving our planting techniques. And we wish we had been faster even on some changes. We had to replace some of the team members to be able to accelerate last year as well. So we're going to be focusing on that as well. Another important point is that we opened a nonfirm plant in Minas Gerais. Enriched [indiscernible] and we were doing it manually in the past, now we're automating it and it's much more accurate. And we can make sure that we're really getting the nutrients applied homogeneously and also reducing costs. So we've just opened that on plant. And this is another positive -- this is the positive piece of news. So with the 4,500 salvage irrigation hectares, we will see the impact next year, the impact next year, yes. And we have another 600, 700-hectare sprinkler structure that is starting as of next week. As of the -- I would rather ask for the El Nino you asked the line impact. And we were even talking about that today. El Nino is normally good to us. It's only good for us. Because if there is an El Nino, there's more rain in the Southern Hemisphere and less in the Northern Hemisphere. In the in this center where we are, there isn't much of a difference. But most times, I mean, El Nino is positive. Maybe this year, if it's too strong, and we have been talking about it if no strong, if it's going to be average strong. It's likely that we're going to have an owning over 95% likelihood and now we don't know if it's going to be an average or a strong line. We're looking at the history and what the impact was light, but we don't know it yet. We don't know where the holding impact is going to be. But if it's too strong, maybe it's going to be harmful for our region. We'll ask it run an analysis for us on this matter. And there is an advantage of having better irrigation capacity to mitigate the weather matter, the weather issue.

[indiscernible] Taiano from Britco BBI has got a question.

I have got two questions. The first has to do with organic sugar. What is -- what are your expectations in terms of pricing and production of organic sugar? And if you could talk a little bit more about the Santa Victoria numbers. When it comes to the credits, if you could just shed some more light about it one.

The second question has to do with credit, CMS credit, but I had an issue with my headphones and I didn't hear your first question.

My first question has to do with the sugar -- organic sugar. What do you expect when it comes to volumes and pricing?

When it comes to organic sugar Well, this year was looking like it was going to be similar to last year when it comes to production and sales. Now there is a question in there, as the U.S. is our most important market, we need to see whether or not we're going to have the tariff increases. This threat is often made, right? But in normal conditions, then the crop year should be very similar to the last. With a local market increase, and also with an increase in Canada. We grew in Canada in the last crop year. We have our Canadian clients here with us. And Jalles, they are discussing this contract for this crop year with us. And the U.S. is also well on track, but we would not only see a change if there is a higher tariffs than other countries have. That could impact price and volumes. But it's a bit uncertain. It's a bit too early to talk about it. And price should be about 5% lower than it was last year in U.S. dollars. We should see a 5% to 6% drop. The contracts and agreements are being negotiated now. These negotiations are going full blast when it comes to volumes and pricing, but this is a with what we give you at this point. That's very clear. And as for the credit. Well, Santa Victoria [indiscernible] -- we're not creating something that was the company is right. When we look at the current dilation. And we did that later. That's why it went down in 1 quarter. I had this impact. But it reflected, I think it showed 5 years of credit that we're not getting. I can give you more details on this specific matter looking at the law that we followed. But that was basically it. And the CMS credit incentive turn is going to be used up quickly, especially with the ethanol focus. We didn't have any credit so we end up using it faster. We're also monetizing credit, PIS and Cofins credit, especially in Santa Victoria. We're monetizing the SMS and the PIS Cofins credits that should help the company's cash flow. -- transforming credit into an offsetting of tax to be paid during the crop year.

Our next question comes from Arthur Davichi from XP. I think Arthur wasn't able to ask this question. I think he left the queue. His back. His microphone was muted.

I've got two questions. Can you give some color on your cost dilution if it's going to be cyclical with crushing? And how much is going to come from the measures that have been taken to improve efficiency? And my second question is more focused on the long term, but what would you need to happen for the sugar prices to react? You talked about the prices that are well, changing in the course of the year, but it's still lower than we saw in the past years, what would you think we would need to see happen for the prices to change?

Arthur. Thank you very much for joining. So around the improvements we've been making there and how much that adds to the improvements and how much stems from the weather. That's a bit subjective. It's very difficult to isolate the different factors and know how much each factor has contributed, because even if you look at the weather, there are so many variables because there's sunlight, there is temperature, there's rainfall so it's difficult to pin down. As Otávio said, whenever there's a climate problem weather boom as we had last year, when you look at central south, it wasn't major, but in [ Goias ] and Minas Gerais, there was a bigger impact. So you can't recover all of it from 1 year to the next. Our normal operation will be [ 9293 ] [indiscernible] and [indiscernible], and we're working to get to 80 in Santa Victoria. And if we were in this scenario, would be very close to the BRL 8.5 million in this one that we gave guidance was 7.8%. From BRL 8 million and half to BRL 9 million there is still some expansion to be seen. But there's a lot that is happening. We have this on-farm vena enrichment plant that I mentioned, we invested in irrigations as well. We have new varieties. The crop management in Jalles and our well is getting more and more similar to -- or the one we're having [indiscernible] more and more similar to these entity we salvaged 18,000 hectares, but it wasn't yet quite as much as we wanted. We increased it from 18% to 22%, and we're working on improving that. And when you look at the sprinkle irrigation, we see that the operations was the operation were in too good. Now the effects last year were a bit better. But because the weather was worse in the other areas, business improvements were not that obvious. And we're also increasing the number of sprinklers in 700 hectares. And we want to do that every year. There's another project that we're looking at that's going to be almost 2,000 hectares that we're working on. So it's a combination of several things. And we're sure we're going to make it. And one thing I didn't say today, even though I said in other meetings, is there are new varieties that we are adopting in Otávio Lage and Charles and also [indiscernible], there's a new variety that has been having 25 tonnes per hectare on top of what the other varieties have. We're also trying [ IAC-72007 ] this year, and this has also had a positive impact is not as high as the previous one, which is the [ IAC-8008 ] but it's about 15%, but this is still the very first year that we use it. But it's a substantial increase. And as these new varieties coming to the ground, then we improve our yields as well. As for the sugar price, you asked that as well. Well, this is what's happening. There is a decrease in sugar production in Europe, Thailand and India. All of that due to the low prices that we see. And in India, well, isn't impact that much because it's mostly production for their own conception. There's very little that goes into the global trade. But in Thailand, most of the sugar that they produce is to be exported. And they are starting to migrate to casava because manual, right, because sugar is becoming less viable. And Europe is reducing the sugar beet planted area as well. So -- and if you look at Brazil, if it's hard for a very efficient grower, then people will probably reduce their production. We should have a deficit of over 2 million tonnes and this should have an impact on pricing sooner later. And we have the comfort of Brazil being the most efficient grower. And this adjustment is more important in less competitive countries than in Brazil. But even in Brazil, we could see it happen a plan that is not protected is not hedge, not hedged this year. It's going to be a more challenging year in ethanol and sugar. So we believe that in the next year, we could have a lower investment when it comes to the sugarcane renewal and management, but even Brazil could be affected, yes.

If there are no further questions, I'd like to give the floor to Mr. Rodrigo Siqueira for his final remarks.

So I'd like to say thank you very much. Thank you for your questions. Thank you for your interest in the company. The Brazilian stock market isn't growing through there. Its best moment, nor is agribusiness. It's been a more challenging moment in the commodity cycle. But as Otávio said, this is part of the business. These ups and downs in commodity prices, they are just an inherent part of the business. And what we can do is we can mitigate these risks be it hedging sugar prices, be it improving irrigation structures so that we can mitigate the climate issue or the climate risk. The energy that we have with substantial revenue from Santa Victoria and we can always be more efficient. We can always be more innovative. We can always get better. And that's what we're really looking to improve in the first quartile because in this ups and downs, will sometimes some may be strict down from the market, right? Not only in Brazil but also abroad. So we're really looking to be a winning player and we should operate in the first quartile of efficiency and productivity and yield and cost. So thank you very much. And I'll see you on the next call. And I'd like to thank our IR team, [ Luana, Natal ]. They did a the did all the word concerning the releases and supporting. Thank you very much, everyone. This is the end of the fourth quarter at Jalles conference call. Thank you very much.