André Guillaumon – Chief Executive Officer and Chief Operations Officer Gustavo Lopez – Chief Administrative Officer and Investor Relations Officer.

Analysts:.

Good afternoon. We'd like to welcome you to BrasilAgro’s Q3 2018 Results Conference Call. Today, we have with us Mr. André Guillaumon, CEO; and Mr. Gustavo Lopez, Administrative Officer and Investor Relations Officer. Today's live webcast and presentation may be accessed through BrasilAgro’s website.

Next, we will begin the Q&A session exclusively for investors and analysts when further instructions will be supplied. [Operator Instructions] The audio is being presented on the Internet through www.brasil-agro.com, where you will also find the slides and PowerPoint presentation.

Before proceeding let me mention that forward-looking statements are based on the beliefs and assumptions of BrasilAgro’s management and on the 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 general economic conditions, industry conditions and other operational factors may affect the future performance of BrasilAgro conduct Q results that will differ materially from those expressed here. Now, I'll turn the conference over to Mr. André Guillaumon, CEO, who will begin the presentation.

Sir, you have the floor..

Good afternoon. It's a great pleasure once again to be here in Q3 talking to you about the results of the company due to a strategy at all levels in the company and this work has been helping the company to have expressive and recurrent results in the last years.

So, we hope that this work will continue concerning the company's strategy and the clear objectives.

So, once again, it’s a great satisfaction to share with you our time and to be totally available for questions at the end of the presentation to clarify the way we work and the objectives we have for this year and we will be talking about Q3 and we'd like to say that most of the harvest will be booked in the next quarter we have very good perspectives.

I'd like to call your attention to the highlights. We closed the quarter with a net revenue of R$225 million, net revenue R$77.7 million and adjusted EBITDA is R$7.1. Also we would like to see we have recorded all the results concerning the sale that was announced to the market yesterday night of a unit in the Midwest.

Later on we will go into details about this sale. It's an important transaction that places the sale of $60 million, which will generate an accounting result around R$35 million, R$36 million.

It's worthwhile stressing the sale of a small area, so we give up a recurring operational result in sugarcane or a revenue net profit of this transaction of R$35 million, a sale that represents very little reducing the EBITDA and an important result showing that.

Once again we trust, we were always after this strategy where we will align operational results with real estate results and always getting cubism of both where can we concluded the quarter, 90% of the harvest later on I will go into detail about the harvest and the reason, a very good harvest, everyone saw Brazilian numbers.

It could not be different. Later on we will talk in more detail about the revenue. While these are the highlights, let's go on to Page 3. Let's talk about the soybean market. Here, there's something I'd like to clarify.

Although we have other cultures, it's important we have also others but it’s important to talk about soybean because there's a relationship between liquidity price of land and price of the grains. So, soybean is important for the value of land. I believe you have all seen what happened.

The Company, I stress once again we’re after contribution margin and when we begin to sell soybean a lot before the harvest when we began the harvest. We had already 80% of our soybean sold and then we went back to market, not only with 20% but 20% plus the excess production. Well, what happened this year in the markets.

We've been seeing specially, in Argentina that was going to produce 54 million tons, first results showed the drought and there was a reduction of 47 million, then 44 million another drop, 40 million and today the number is close to 37 million tons in Argentina.

In other words, this reduction in the offer of soybean together with an important international game between U.S. and Russia, actually raised the price something that we have never seen before. So the highest price was after the harvest, today was the opposite. This year was the opposite, so during the harvest the price went up.

During the harvest of this commodity went in because of these two reasons. A strong drought, and therefore a rush for purchases going to China and this gave us a premium that we never saw in history. Normally, the market at premiums of 45, between 45 to 60 cents a dollar, and this year it got to 150 points.

We're talking about a $1.50 extra, although soybean is around ten, ten, fifteen as we will see. We had $1.5 more which sent soybean to $12. So together with the production that had a good influence with the climate and also our strategy to mitigate volatility from our portfolio but we will see more details later. So this is on Page 4.

We see the price of land. I would see that it is a market. That continues with flat prices, we don't see a rise in the prices but we believe that the sum of stable prices for land like we always say in the calls, it is an asset that is very solid and gives us security in our investments.

In the last three years, we had a crisis most of the sectors suffered great reductions in billing, in value and our group business land continues with a little lower liquidity but prices are pretty stable. Showing once again to it that investors are investing in Brasilagro because it's a safe investment.

This market with stable prices and now those who sell land now have a good harvests. So in the next few months we should see more liquidity for land in Brazil. So we should see a small rise. I'd like to see that we expect a positive small rise in the price of land. This is always a concern.

BrasilAgro is alert to its trade off to exchange our operational results for real estate results or vice versa, it's a combination of both things. To generate operational results and generate also real estate results so the company changes its strategy. We have talked about our actions and thus today the sale of assets that generate good yields.

So it makes sense sometimes to sell. Going on to Page 5, here we give you more details about the transaction that I call the fifth part of our cardium. We bought this asset in 2007 beginning of 2007 and we began to demobilize five years later. And more recently, we made a sale of 975 hectares of which 660 are for us they were presented.

They have a value of R$11 million and they were sold at 1,208 bags this is the present value of the transaction nominal value R$61.5 million. So hectare being sold at more than R$90,000 both for BrasilAgro is working and making this market go-forward. We'd like to stress a sale that generates an accounting result around R$35 million, R$36 million.

And we give up in a bit of 260,000 hectares with sugarcane. We're talking – we're giving up and recurring a bit of R$1.800 million for an important profit of R$35 million. This is to show how we treat these two types of value generation for the company, valuing attaching value to the operational result and also the price of land.

And thus this helps is to be sustainable. It's important to sell but it's also important to have good results on the operational side. We have here these sales are being done with contract with the sugar mill and as the company has a better performance.

We have a contract in volume every time we crease the average productivity we have more hectares available for sale. And this has happened in this unit in the Midwest. Productivity has been growing year after year, longevity of the sugarcane plantation is increasing.

Our renewal rate has been decreasing and this gives us a generation of net assets as a result of this, without compromising the generation of operational EBITDA from sugar in this region, because of these factors. Our production in terms continues the same.

This sale is not in the numbers that I mentioned and Gustavo will talk about, we will see these results in the next quarter. Going on to Page 6, here we have an evolution an important evolution of the results from one year to another.

The company in 2016, 2017 and in the next harvest had an increase in planted surface and also greater results 15% in area. Since we have this growth focusing on sugarcane plantation, and operational and financial results this represents much more than 15%.

We are increasing 15% in sugarcane plantation, which traditionally generates a result of three, four times more than soybean per hectare.

So when we look at this, we're having an increase in the planted area, it's an important increment also in operational results placing the company at a very good and a very good situation in relation to previous years. So this is what we see the harvest of 1.8 million tonnes sugarcane and being an important supplier and here in our strategy.

We see a constant strategy searching for operational results and balancing this also with the real estate – sale of real estate when we talk about 1.8 million tonnes, we're talking about an important service with long-term contracts.

And this generates for the company's investor as security that this result will have stability due to the culture and also we have contracts from eight to 15 years.

So we have been seeing this our search for operational results, cattle raising over came our expectations we reached at the end of Q3 20,700 heads of cattle, 30% above our objective for the year.

And once again we say what we always said cattle raising is an instrument, it's a tool for value generation in the transformation of land and to mitigate problems in operational results. So we had a growth, this means that the company has great capacity in transformation of land and generating value, decreasing volatility.

So it's not only these two strategies, we also leased land in the areas where we have volatility in production, this contributed to this expressive result. So it was a good year. It was – if we look at the volumes of grains, it was an average year.

If you look at the volume of [Technical Difficulty] leasing of our land to third-parties where we have production. [Technical Difficulty] We have this strategy that has come to stake, this will contribute for when we have exceptional years in terms of climate the results will be even higher.

So this is – so the factor here it’s not only the climate, it’s the strategy going after the objectives that we planned at the beginning of our management. Now going on to Page 7, here we see more details of the crops productivity in area.

So here we didn’t have – the harvest had not ended but until this date, we had an increment in soybean production of 35% more. This number, there is a reduction in the total productivity due to a reduction in the planted area.

So basically we close the year in terms of grains with an expressive results, I believe in the final closing, we will be closer to 40% increase in productivity than the 35% that we reported at the end of this quarter. Service increase in productivity together would be also with the increase in the price of soybean had an important result for us.

And this helped a lot to generate the results during this quarter. Now going on to Page 8. Here we see the results of cattle raising and sugarcane. Cattle raising, we'd like to remind you, cattle raising is a daily activity. So it is not seasonal like grains.

So when we take a picture of cattle raising in March, we still have three months when the cattle will increase in weights. So we still have another three months for these 20,700 heads to gain weight. So we are having an excellent performance in cattle raising with important indices in the case of Paraguay and also Jatobá Farm.

Jatobá Farm was used to be destined to agriculture and now cattle raising. It has – it allows a large number of head per hectare and we've seen a constant recovery in this farm as you know it would be gaining it once leased. And then we began to work on the pasturing the results.

So we – it does not have results like the others, but it has – it is important for volume because it's a largest area for cattle raising. Well, below we see productivity of sugarcane, where in 2016 we had 870,000 tons, in 2017 858,000 tons.

And here I’d like to mention the 15% that I mentioned in the previous page; the growth in the area although was 15%, was significant to represent the growth of 1 million tons in sugarcane. So this operation [indiscernible] increased the results by 1 million tons.

And we hope to increase productivity to the levels to be similar to the ones in the Midwest. We have – and we – in terms of this we are making progress with irrigation too. So we should have a constant increase in terms of sugarcane per hectare in the next few years to be able to go to the levels that we had only in the Midwest.

So we see an important increase of 870,000 tons to 1,000,800 tons. And we see a reduction in the IPCH [ph]. This inclusion of land, this land was pretty weakened now. The company is using the best techniques to renew the sugarcane plantations.

Gustavo will mention the investment we have made and we had a very high cash situation, this cash is being transformed to generate operational results. So this is important for you to know. Most of our cash was used to ring you the sugarcane plantations in this operation. Going on to Page 9.

Here the hedging situation of the company we'd like to remind you like we said in the beginning of the presentation, we're always working on margin when we decide to sell or to hedge. We also decide to do hedging or purchase to guarantee the margin expected per hectare. So this summarizes the harvest, the prices we reached.

So here below we see that we had an average price in Chicago R$10.46, average dollar for this production, the 3.37, 3.40, the exchange rate. So this is the picture, when we were planting in November. And this is guarantee these important results per hectare. Well, I’d like to conclude.

Gustavo will talk about our accounting results and he will talk about our operation in Paraguay and the end of the joint venture..

Good afternoon. We’d like to continue on Page 10. We – so this is to – this is a joint venture. We had with parents Cresud an Argentinian company of farm where we saw a lot of potential for cash generation and also land appraisal in the long-term. We believed in this project. The results during the first years were excellent.

This year too we see this trend excellent results. And we wanted to increase the rhythm of development. And we decided to separate from the part. First we’re trying to sell. And with the sale of this farm, and we decided to form true blocks where we were producing 7,000 hectares and we have another 7,000 ready to plant next year.

When we began the separation, we declined that we would use a new company that we created as to end the joint venture. And on the February 9 this year, we transferred the assets. So here you can see, there is no payment involved. And we have a mandate to recognize this in our numbers through the fair price of these assets.

This generated a result of R$5 million between the accounting value that we had and market value. Additionally, this investment was made in 2012. And this represented whereas R$78 million. And this investments that had been made in the U.S. dollars at the exchange rate of R$2 and it continued to appreciate the value rose the exchange rate also went up.

And we – at the time that we recognized this new operation. We had R$30 million and we considered it as a result of the operation. This transaction R$35 million have impact in the results. And we recognize this month.

It’s important to mention that all our properties are there at cost value and we recognize this at the time of the end of the joint venture here on Page 11. We can see there’s an EBITDA calculation, EBITDA and adjusted EBITDA. We saw that this would be the best way of making this calculation.

We saw that, we analyzed the nine months and we saw see here the calculation, we are recognizing here. We excluded the impacts from this calculation. And we see that with the gross profit of R$94 million.

As we said we had to increase in productivity in sugarcane, better practices that we introduced in areas that we already had with soybean and now we’re using for cattle-raising. So we have an important growth and we went from a gross profit of R$18.9 million to R$94 million.

And we excluded year some gains, because we have until June 30 to end the harvest. So here we have 35%, 38% of the harvest to ready recognize and the rest continues as a biological asset. And excluding revenue from sale and they have ministered to the expenses.

We added the part that was already recognized, we excluded the adjusted depreciation in these areas that were considered. And we got to an adjusted EBITDA of R$70 million, against R$12 million negative that we had in the nine months of 2017. I’d like to mention that the R$70 million will become recurring in the next areas.

And the main engine is the planted service with sugarcane. We have 5,000 hectares in least farms. And we included this last year and as of this harvest. We will have to – going on to Page 13, we have the income statement. Here we can see net revenue from sale had a growth – an important growth R$71 million.

And you can see in revenue from sugarcane, we see the numbers that André mentioned, with a relevant impact. Here we have 30,000 hectares of soybean. We have already 9,000 to 10,000 harvested the rest is biological acids and in the next quarter we will see the impact of the total harvest.

When we see net revenue of the farms including biological acids, net growth of R$77 million to R$225 million and gross profit going to R$95 million.

And when we see the remaining lines we see the part already sold and administrative expenses are always a challenge we did not have this increase that we see here as to do with the joint venture we had in the past, now it is consolidated. And that’s why we have this increase.

In other expenses other revenue in this line we have the effect that we mentioned, here due to the separation from the company the end of the joint venture and it’s important to mention before this separation from the company we had loans with BrasilAgro and also the company Cresud and we had made a plan, we understood that there was a contingency, if we continued with these loans so he decided to give a part of the interest we had.

And we see the generation of this profit here R$14.7 million. First as offset expenses are also as financial expenses growing growth in the line of financial expenses part of this R$16 million is from this reason.

Today most of the financial revenue we had is here but we’re investing most of the cash flow in investments that will then generate more cash for the company. When we look at the profit before tax is R$109 million, we have tax R$85 million and in comparison with the same period of the previous year we see that the growth was exponential.

So we have it in the quarter, in Q3, we see the main effects were the recognizing biological assets, a good production of soybean, where this harvest and the impact that I mentioned. Page 13, we have the balance sheet.

We have the balance sheet with less cash than the company used to have but we have had a growth in receivables, also we have inventory available for sale. In biological asset that will become inventory and we will have the results in the next few months.

We also see that there is a great growth in these nine months 40% and we see as an offset, we had some growth in the liabilities of the company but not as much as the growth that we signed the assets of the company.

It's also important to mention that this growth we have recorded all the forms that accounts value and as of March 31, we will have the farm in Paraguay at market value. We have short term loans, R$89 million that if we compare with the receivables we have until March 31.

We have to also – we still have 60% of the harvest to be carried out to pay these loans and long-term loans have had this growth. As you can see due to the increase in the planted area of sugarcane and this will help us to have more cash generation. We see net equity here with a profit R$85 million.

Page 14, we can see here on the left, we have here the shares and the price of the shares R$12.60 per share and here we included the market value of the product of the land. According to we had a recent evaluation by Deloitte in the current to a value we got to net value, as you can see here, showing that the company shares are an excellent business.

On Page15, we have the evolution of the price of our shares. And thus, we would like to conclude. And now we'd like to begin the Q&A session..

Thank you. Now, we’d like to begin the Q&A session only for Investors and Analysts. [Operator Instructions] The first question comes from [indiscernible] from Bradesco..

Good afternoon. Thank you. If you could share with us the price of corn, we see production dropping, unfavorable climate. Do you believe the price has already reached a good point..

I will try to talk about demand well. We have – we know that Brazil has two-thirds of the volume of corn is produced in the second phase and third in the first phase of – so we begin to plant the second part in October, so when you plant the first wave – when you wait and you delay the first phase you also delay the second phase of the planting.

So then in the delay of the second, we have the beginning of the dry season, less sunshine and also less rainfall. This is what we had in December and we expected a reduction due to the delay in begin the plantation. So the Brazilian harvest, we're talking about a harvest of R$90 million, this was reviewed to R$85 million.

Some agencies talking about R$82 million. So know that the second phase we won't have a reduction, and also this affects our parity for exports Brazilian corn is becoming interesting abroad. So last year we had 90 million, 33 million to 35 million tons were exported, of the 90 and this year we have between 6 million to 10 million tons left.

Chile we have an export parity that is more interesting. So we should be exporting more because of the exchange rate, and a third pillar that regulates the offer, which is the consumption of neat.

We have seen an improvement in the economy and therefore this represents an increase in the consumption of beef and also poultry chicken we have some challenges in terms of sanitation and this we have sanitary barriers. So we will sell 100% of our soybean and we will see – we will look at the possibility of exporting part of our corn.

So we expect that the price of corn will go up in the domestic market. So this is our vision for the next three four months. Thank you. Well above question in terms of consumption sanitary conditions we've seen the price of chicken reacting and we're expecting an adjustment in capacity for the second semester.

Do you see any sign of a drop in consumption of protein, well finds for the second semester no, what we saw we have corn, the price of corn has gone up from the beginning of the harvest in March until April.

And you know farmers harvest first soybean, so the price of corn came to – the corn came to the market the summer corn came to the market and now the price has – it has stopped rising. We have now the food corn reached 32, 31 then went back to 30 real per bag.

I believe in the second semester it will – it will be a semester there will be attractive for the price of corn. If we look at 2015, 2016 we see a reduction in the industry knowing initially there is space we're talking about a small growth in the economy and I believe its exports will have an effect in the second semester. Thank you..

now I’d like to pass the floor to Mr. André Guillaumon for his final comments..

Well, once again, I’d like to thank you all on behalf of our company’s team.

We have a strong commitment on the part of the company and its employees, who in terms of being an innovative company looking for strategies that will bring recurring increases in the real estate value and also without forgetting the important thing, which is cash generation and the operational results.

So, it’s not enough to have good results one year, but not have recurring results. We want recurring good results and thus we have been looking at each project with greater visibility with constant surge for an EBITDA, a robust result and it has arrived. We hope that year-after-year, we will have these numbers.

So, we’re not here to have good results one year and then not anymore. We have leased, the market lease contracts are five years. So, the decision-making and strategies are here to increase the Ebitda and they’re all in mid and long-term.

So yes, we want to have a company to deliver recurring strong recurring results, and we also have again excellent results in terms of land value, real estate results, always looking at the results with balance. Our generation of results should be balanced and this is what makes us different from the other companies.

We’re not looking only at operational results, nor all the results in real estate, so our management is here to increase the growth and the generation of results for the company. thank you very much and once again, thank you for participating and we are – we continue available with our Investor Relations team.

please, if you need any further clarification, talk to us. thank you..

So we’d like this. We conclude today’s conference call for BrasilAgro. Thank you..