Julio Toledo Piza - Chief Executive Officer.

Rodrigo Mugaburu - Morgan Stanley.

Good afternoon. Welcome everyone to BrasilAgro’s Third Quarter 2016 Results Conference Call. Today’s live webcast and presentation may be accessed through BrasilAgro’s website at www.brasil-agro.com. We’d like to inform you that this event is recorded and all participants will be in listen-only mode during the company’s presentation.

After BrasilAgro’s remarks, there will be a question-and-answer session for analysts only. At that time, further instructions will be given. [Operator Instructions] Before proceeding, let me mention that forward-looking statements are based on the beliefs and assumptions of BrasilAgro management and on information currently available to the company.

They involve risks and uncertainties because they relate to future events and therefore depend on circumstances that may or may not occur. Investors should understand that conditions related to the macroeconomic scenario, industry and other factors could also cause results to differ materially from those expressed in such forward-looking statements.

Now, I’ll turn the conference over to Mr. Julio Piza, Chief Executive Officer. Sir, you may begin your conference..

net revenues on the three quarters of R$95 million; net income close R$28 million; EBITDA adjusted little over R$17 million; and also an interesting piece of news is new operating licenses in Paraguay. Before we move into the presentation, we would like to put this chart in the next page in Page 3. This is the soybean price evolution.

And we have always the price in reais and the price in dollar terms. And as we started seeing 18 months ago, a decoupling between the price in reais and dollars, and even - which continues to happen.

And so we have a big gap between the price in dollar terms and reais terms, because of the depreciation of the currency in Brazil, which has very important impact on farmers’ profitability and which of course helps on the operating side of the business.

It does generate some financial concerns, depending on how the financial crops, but overall result is positive. On Page 4, the implication of land is that, looking into farmland prices over the last years, the rate of growth has decreased. It’s pretty much stable.

Few reasons about the decrease, but I think the - I would say that the most important thing that you are seeing in the market nowadays is that very few transactions of the market, because of all the political implications of what happened - these implications of all the political scenario in Brazil and the economic downturn and all of that.

The market is pretty much frozen right now, which is not many [indiscernible] very few transactions happening. The prices were somewhat resilient. But we need to see more liquidity to make sure we have the right price levels. On Page 5, going over our results for the year, I think here, I think we have two different situations in the company.

We can discuss Paraguay and sugarcane, so on the field we have had some positive results on those two. And then I have Bahia and Piauí. On those places, we have had terrible weather. You can see on that chart that rainfall has been very low historical levels, especially in February and March, which are critical months for production.

So we have had really bad weather on these regions throughout February and March. And that’s why we’re expecting to see a significant decrease in productivity at 40% in beans, 30% in corn. And that will negatively impact our results. And that is already shown in the numbers.

So as part of the logical efforts calculation, even though by March 30 almost nothing had been harvested. All those impacts already accounted for in our books. So, summary, Piauí and Bahia from grains, pretty tough conditions; sugarcane, as you already knew, is pretty good, and just started harvesting this year, and things are looking good.

We have not started on March 30, but we have started by now and it’s looking good. Paraguay started delivering the greatest harvest of all times in our history there. You can see on Page 6 that we have had rainfall level a little below historical level, but very crazy. So Paraguay is delivering great results.

We are achieving in Paraguay today, margins per hectare in the size of $250, so it’s pretty good results. So Paraguay, sugarcane fantastic, soybean and corn in Bahia and Piauí is very low. In the case of corn, we did come back to higher prices.

So from a margin perspective, corn is actually not bad, even so you’re producing 30% less you get your margins back up because of the hike in prices. But in the case of soybeans, it’s really damaging for results. On Page 7, our hedge position for this campaign, which pretty much everything is fixed in terms of price.

By knowing what all the volatility in the weather we have been very cautious in the Treedipa [ph] negotiation. So it should have some PO [ph]. But it’s pretty much settled.

Our current prices in reais is way above current market conditions in the case of the exchange rate you had fixed before; so prices are good, above budget, we had above market, but not enough to compensate the decrease in roads [ph]. On Page 8 we have our EBITDA and adjusted EBITDA.

And I would like to remind you that our adjusted EBITDA for us is adding back all the financial results that are related to operational activities, and also all the adjustments related to biological assets. They are not part of the quarter results.

And there are a few important things here to mention, first of all, in the quarter, EBITDA, so it’s minus R$2.7 million, which is expected given all the results that we had. On the year we see positive R$17 million on the adjusted EBITDA. And an important thing, it is way above last year’s which is a good thing.

But part of it will be reversed in the next quarter. So I think it is kind of new reading. It is the way we calculate every quarter, but because we have not harvested anything by March 30, given that we have had a significant reduction in productivity, I expect that certain part of that will be reversed by next quarter.

So by June 30, the company should be close to zero or either positive, or either negative. That’s our expectation for June 30 on the adjusted EBITDA, which is an okay thing, given how we manage our farms having all these significant investment being depreciated every year.

Given the fact that we have reduced the planting area, having now in consideration that we sold a very large and highly profitable farm, I’d say, it’s unexpected to have a low EBITDA. But, of course, we would turn into a more, have not been for the worst drought in Bahia and Piauí, we would have a very positive one.

But nevertheless, given our business model and all the adjustments from last year’s to this one aiming up to have a close to zero EBITDA is not bad. It’s not great either, but it’s definitely not bad.

On Page 9, our income statement, you can see that even though we are accounting for the results on the crops already adjusted by the favorable yields, here it’s still on R$42 million accumulated results for the year, and which should take us into a positive result, which is going to be the fourth year of positive net income for the company in a row, which for us is very important given the fact that on this year we haven’t had farm sale.

This year, yes, we haven’t had any - we have had a terrible year in terms of productivity in Bahia and Piauí. So it turns up that with a highly positive net income, it is certainly something for us to celebrate. And, of course, an important part of it is that how we manage our financials, which we think was extremely positive this year.

So all in all, I’d like to say, it’s a very challenging quarter for us given what has happened in Bahia and Piauí in terms of weather conditions and productivity. An important part of it has been compensated by results in sugarcane and it will be compensated by results in Paraguay.

And an important notice here, the results in Paraguay, the positive one has not impacted our balance sheet and income statement so far.

We are still using very conservative production, so there will be some surprises, positive ones coming from Paraguay in terms of income statement and balance sheet, but it’s not there; so going back for summary, very tough year’s corn and yield in soybean in Bahia and Piauí, partially compensated by sugarcane and Paraguay.

When I add this to all of the crisenarea [ph] plus good financial management we end up having a decent year, especially because you haven’t had any farm sales here. We expect to have some at some point. Perhaps, it will happen before June 30, perhaps it will happen all the way, but once we do that probably results are going to kick in again.

In a nutshell that’s what I had to share with you guys. So we can move to Q&A. Thank you very much..

Thank you. The floor is now open for questions. [Operator Instructions] Please hold while we poll for questions. [Operator Instructions] Our first question is coming from Rodrigo Mugaburu of Morgan Stanley. You may proceed..

Thank you. Hi, Julio. Good afternoon. A question of the cattle project that you mentioned in the release, can you give some color on what kind of CapEx would that involve? Do you have any kind of targeted returns for that project? Thanks..

Rodrigo, thanks for the question. But I couldn’t understand a word. If you could speak real lower and not - voice a little on a high note, it would be helpful. Thank you..

Sure.

Do you hear me better now?.

Yes..

So my question was related to the cattle project that you mentioned on the release. If you can give some color on what’s the level of CapEx that will be involved in that project.

How much money would you have to invest in that, and if you have any targeted returns for that project?.

Okay, for the cattle project. Now I understand it. Probably in the first few months of it, it will be around R$10 million. That is the initial capital to be invested in the project. I don’t expect it to be much higher than that in a very short-term. So it should be around R$10 million for the next 6 to 12 months.

And most likely part of it will be financed through the long-term [indiscernible] loans we are discussing and we’re waiting, so on a cash basis it should be very - little bit impact in our cash availability, but to put it roughly, R$10 million..

Good. Thank you..

Now, I’ll turn over to Mr. Julio Piza for final considerations. Mr. Piza, you may give your final considerations now..

Thanks, everyone, for joining us. It’s [indiscernible] quarter, given the yields and the weather in Piauí and Bahia. But by June 30, you’re going to have a better understanding of all the impact of that. We just want to get ahead of [indiscernible] and start discussing this openly.

But by June 30 we’re going to have a much clear stand on exactly the implications of all these [indiscernible] and how we have positioned the company for the next cycle. So thank you very much for being with us and see you again next quarter..

Thank you. This concludes today’s BrasilAgro’s third quarter 2016 results conference call. You may disconnect your lines at this time..