Good afternoon. Welcome everyone to BrasilAgro's Conference Call concerning the earnings of Q4 and full year 2018. We have with us Mr. André Guillaumon, CEO; and Mr. Gustavo Lopez, Administrative Officer and Investor Relations Officer. We inform that the presentation is recorded. And the participants will be in listen mode only.

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 simultaneously on the Internet at www.brasil-agro.com, where you'll find also the supporting slides and PowerPoint presentation.

Before continuing, we'd like to clarify that any declarations that may be made during this conference call concerning the business perspectives of BrasilAgro, projections and operational goals, financial goals are based on assumptions of the company's board and on the information currently available.

They involve risks and uncertainties because 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 operational factors may affect the future performance of BrasilAgro and lead to results that will differ materially from those expressed in these considerations. Now, I'd like to pass the floor to Mr. André Guillaumon, CEO, who will begin the presentation.

Sir, you have the floor..

sale and costs. In terms of profitability per hectare, we should expect a revenue that is fairly similar to the previous year. You have an exchange rate that is a little higher in reals. So if we had reals per bag, the price is 6% higher than the previous harvest. Great challenge in the sector.

When we look at the graph on the right, we see that almost 70% of the sale wasn't done physically. We are using sales in the future, and we have a risk of 17% based on the dynamics we have with the issue of freight. So there is no consensus after the trucker strike. So we don't have a clear price for the next harvest.

We are always using tools to help us guarantee the price. And later on, we will have the physical sales. Let's hope that Chicago or the exchange rates will settle down and then we will be more aggressive in sales. So this is the summary. This is a year that brought many challenges.

It's a challenging year for all the companies in agro business for the reasons we already mentioned, freight, Chicago and also the disputes between the U.S. and China. So we have to be very alert, not only for production and sales. So this is very important. Now I'd like to pass the floor to Gustavo, and he will talk about the results of the harvest..

Thank you, André. Good afternoon. Thank you for participating. And now, let's talk about the numbers, the actions that we have carried out. Here on Page 13, we would like to present to you some numbers, the strong results we are delivering. Here, we excluded the sales. We included Paraguay. We have an EBITDA of BRL90 million.

And production of grains, as already mentioned, the actions we have carried out. Cattle raising activity that decreased since volatility, inclusion of mature developed areas and also leasing of lands. Here, we have a graph where we show the participation of the leased areas.

22,000 hectares of sugarcane, 7,000 of grain and the company's objectives are to continue to have leased areas in grains and cattle raising to counteract the risk we have in the year. These activities are different from what's happened in the past.

They allow us to have an operational results and a positive cash flow and thus we don't have to deliver -- thus, we don't have to sell farms to deliver results. 150 million total production here, 50% is sugarcane, 50% grains, especially soybean.

And for us, it was a year with much higher profitability than we had because of the harvest problems in Argentina and higher price of soybean in Brazil, we were able to capture these results. So it was a different year. And sugarcane in São José has changed the company's operational level.

Then we have expenses with sales BRL45 million, appreciation in developing areas, shifting total EBITDA of BRL90 million. Now on Page 14, reminding you that as of this quarter, we're beginning to present EBITDA with the new accounting standards. So we get to the same results. But we decided to adopt best practices.

We closed an adjusted EBITDA, as you can see here, BRL94 million. And there is a participation in EBITDA that is contaminated a little by the farm we have in Paraguay. An adjusted EBITDA here, we are seeing an increase of 217% in relation to last year adjusted EBITDA. The change was 217%. Last year, we had problems to pay all the fixed costs.

And with all the changes that we made, we were able to have a very positive EBITDA. So here BRL134 million, we have the sale of the farm. Having said this, we see the profit of BRL126 million. Here we have interest. Also these -- here we have some effects that we already explained previously on February 9.

And now, we have a new company called [indiscernible], we received all the assets and liabilities. And with the combination of business, we have 100% control of this company in all the assets and liabilities we already informed. And we are showing here the adjusted EBITDA. Additionally, also we had a process.

We had two effects in the interest rates and repeating, you can see the difference in the EBITDA. We understand that from now on with these areas with sugarcane that are leased and the portfolio we have, we should expect that the operational results will continue this way or improve with the leasing of the areas. Page 15.

Well, once again, operational results of Paraguay are consolidated in the results of Brazil. They are included. In 2018, we see a gross profit of BRL47 million, and this is due to more revenue, more soybean sold and also more sugarcane sold, as you can see.

And now expenses with sale, more tons, administrative expenses, we see that as of 2017, we began to consolidate these expenses, including the expenses from Paraguay. We also see financial results here.

Last year, we generated an important revenue and we have taxes here, a result of 126 million, 363% higher than the previous year's in real based earnings per share. Here, balance sheet on the next page, so here we have the costs in Brazil and in Paraguay.

Here, we see an increase in cash due to the inclusion of the ARC, CRA, accounts receivable, the increase. Here, we see the difference between short term and long term due to the receivables, sale of grains 70 million through sale. This is corn and soybean, 70 million to be sold.

So within the circulating assets BRL372 million, here we see we have circulating assets 13% higher. And the liabilities, we have an increase in liabilities because we had to make some investments in São José. And for sugarcane and soybean, this gave us a good cash generation.

We understand that we have great possibility of capturing even better results. We're investing in irrigation to have an irrigated farm. We are renewing the sugarcane plantations 4,000 hectares per year, and this generates an important need for cash for investments. And we also decided to use the ARC or CRA.

So here, we see the liabilities from 203 million to 157 million, 29.3%. Here, the ARC, also total liabilities 200 million. Last year, 58 million, 276%. Total liabilities, 423 million to 215 million.

Capital, you can see here we have shares in treasury, 35 million, 164 million, this includes dividends that we will propose, profits reserves and operations we had in the past with other joint ventures, 38 million. So total equity, 755,864,000. On the next page, a quick summary of debt, ARC and the objective.

We have greater flexibility in short-term capital. On the table on the right -- on the graph on the right, we can see 133.8 million in cash, total debt 276 million, 70 million in the short term less than one year. And in one or two years, we see 21 million; 143 million between three and five years; and 40 million after five years.

So this is the financing for sugarcane. Page 18, our proposal for dividend, net profit of 126 million; reserves 5%, 6.3 million; dividends, mandatory, compulsory 30 million; and our suggestion to approve additional dividends of 10.9 million; proposed dividends, 41 million, we will propose.

Now we have appropriation of reserves, BRL90 million thereof, and we'd like to stress the return that we're offering is 5.4%, the yield. And we have noticed, as mentioned, our history in the last few years, distributing BRL170 million and including these amounts. And we had the results that we mentioned. Next, Page 19.

We always try to follow the net asset value. And here, André already mentioned these points. Looking here, BrasilAgro's equity is BRL755 million. And here we see the CapEx, BRL1.4 billion NAV to BRL24.03 per share and 60, so we see here the market cap and so 67%, an excellent business.

And finally, what we'd like to show on the next page, Page 20 comprise of shares AGRO3, BRL14.36 and the trend that we see in the market -- in the stock market. So we'd like to begin the Q&A session. So we would like to compliment all the team at headquarters, in the farms and are always in line with our objective. We thank you very much.

And we'd like to begin the Q&A session. So now we'd like to begin the Q&A session only for investors and analysts..

[Operator Instructions] Our first question comes from Mr. Duarte Thiago from BTG Pactual. Mr. Thiago you may proceed..

First question concerning the price of land in Brazil. When we look at the reports of S&P, we see that appraisal was low recently. When you look at the quarter, you see an appraisal of 12.6% by Deloitte. I believe that these values make sense, looking also at productivity during the last year.

I'd like to hear from you the reason for the difference between the data in the market S&P and the ones you presented. And with this scenario, productivity, profitability and price of S&P lower in the last few months, we should have good opportunities to buy land in the near future. And also the sale of land to foreigners.

Has this affected the negotiations on your side?.

Excellent, two excellent questions. These are questions, it would be pleasure to talk about them for hours. Well, the first question, yes, it's worthwhile talking about this. Our properties, they appreciates due to market appreciation. And as you said, this was small appreciation.

But the great driver for our assets to appreciate is through the transformation, the development of the land. So transformation this year was not very intense, excluding Paraguay. What we call Paraguay in our areas that makes levels of maturity with productivity, industry that makes the land more valuable.

When we look at a portfolio that is mature, we would have an appreciation that is similar to that of the S&P report. So that is the strategy of the company, transform the land, develop the land by making it arable and thus this year becomes mature. So when we look at the portfolio in the graph, we have 28% of the properties being developed.

So year-after-year, so the appraisal comes from this year and the appreciation is not in the mature. It's in the land that is being developed, where productivity is rising thus being more valuable, so this is the important part. This is a characteristic that we won't have in the company.

The company has the capacity to generate value by developing the land, transforming the land. While trying to answer your second question, I'd like to answer the question as a manager. The second is not for me..

Yes, we have worked. We are working on this issue of sales to foreigners. Class entities are working on this global associations because we always say our concern is not a restriction to foreigners, because the country needs capital. So I see this with a lot of optimism, and we have talked to politicians and others.

So I believe that after this turbulence of the elections, we may have some positive answers in these scenarios. And we had meetings with the legal department of the government look for us to cattle raising. We see a favorable environment for investments from abroad.

So -- but we're waiting for the election of the new President in order because we have right now government with more than 84% rejection. So if we look at what was approved, roughly nothing was approved by Congress.

Now linking this with the sale of land and liquidity, we'd like to stress that the sale of land to foreigners represents very little of the sale of land in general. In our scenario, what helps the market are the aggressive margins and also in the last year in the state of Bahia.

When you have an interest in production margin and profitability, then -- so does this remove liquidity? This issue of foreigners in some areas, when you have very large assets, maybe it would. But if you divide, like Jatobá, we see that this is the right path. The Brazilian land market works the following way, producers selling to producers.

I believe that more than 99% of the transactions are from one producer selling to another producer. What challenges us, we are an anti-cyclic company. When the producer has profitability, I want to sell. When they don't have profitability, I want to buy. So answering the second question.

If we understand that the market will remain with lower profitability, this will generate purchases. If the profitability is high, we will sell. We will always be an anti-cyclic company. Hope I understood your question. Thank you. Good afternoon..

[Operator Instructions] Since there are no more questions, I'd like to pass the floor to Mr. André Guillaumon for his final comments..

Well, thank you very much for this opportunity to have this transparent chat. We thank you for your trust in our business, in our company and our management. And we thank you, we thank the team. As Gustavo said, the results we are delivering is due to an enormous effort on the part of our team. And I would like to highlight we mentioned this.

We were certified as an excellent place to work, our company. So this shows that we're on the right track in people management. Well, it was a great pleasure to know that this result is due to many actions carried out, aggressive sales, also good people management, people committed to deliver results. Once again, you can count on us.

In the next year, we are here to have recurring results and more important results. We have an important result in real estate. We will do better in 2019 to continue to have the results we had this year.

Our strategy, I hope, was clear to you and through our Investor Relations department, Ana Paula and Elisa, they're always ready to clarify any points that you may have. Any questions, feel free to contact them and if you want to understand better about the business, more about the business, feel free to get in touch with us.

Thank you very much, and have a good afternoon..

The conference call of BrasilAgro for the earnings of Q4 and 2018 full year is ended. We thank you all for your participation. Wish you a good afternoon..