Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria (CRESY) on Q1 2021 Results - Earnings Call Transcript
Santiago Donato: Good afternoon, everyone. I'm Santiago Donato, Investor Relations Officer of Cresud, and I welcome you to the First Quarter of Fiscal Year 2021 Results Conference Call. First of all, I would like to remind you that both audio and a slide show maybe accessed through the company's Investor Relations Web site at www.cresud.com.ar by clicking on the banner webcast link. The following presentation and the earnings release are also available for download on the company Web site. After management remarks, there will be a question-and-answer session for analysts and investors . Before we begin, I would like to remind you that this call is being recorded and that information discussed today may include forward-looking statements regarding the company's financial and operating performance. All projections are subject to risks and uncertainties and actual results may differ materially. Please refer to the detailed note in the company's earnings release regarding forward-looking statements.
Alejandro Elsztain: Hello. Good afternoon, everybody. We are beginning our first quarter 2021 results in the Page number 2. And we can see and begin with the adjusted EBITDA for the quarter that we are achieving ARS5.8 billion that is 63% higher than last year numbers. When we see about the comparison of the two quarters, it's almost the same at the early business level and Matias explain deeper later. In the urban business, there is an increase of 155% in the urban business comparing year to year and is these when we compare the rental segment its much lower this year, it's 96% comparing to last year. It's big drop, majority of the last six months, our malls were closed. But we had a big increase in the sales of some office buildings that made ARS5 billion in the first quarter in the urban business. About the net results, we are finishing the first quarter with ARS7.5 billion gain, a little smaller than last year number, and resulting to the attributed to the controlling company, it's a much higher. We are in the positive ARS2.9 billion comparing to a loss of last year. This first quarter, it’s beginning with the strong recovery in commodity prices, we are going to explain deeper with Carlos about what is happening on the market. From other side, the conditions at the beginning of the company are the best, and we -- the last weeks, began to rain and the planting, it’s becoming to recover to almost normal. But the market changed a lot the last 90 days and we are going to speak much more deeper now. From the other side, there were no farm sales in the first quarter. I think this is a market that will move a lot. In this new environment of prices, a lot of interest for farmers mainly in Brazil because of the situation of the devaluation on their currency plus the increasing on the prices is making a very positive market with the value of them that they don't pay income back when they buy the new farm, we are very optimistic on that market too. But not only there in the rest of LATAM in this new environment of commodities. Related to the urban business and investments. In September 20 of this year, the Court decreed the insolvency and liquidation of IDBD. After this decision, the group lost control of on the date and proceeding that the consolidation the financial statement. So we don't consolidate more our Israel investment. In Argentina, shopping malls are reopened recently after this lockdown for six months. We did in a partial way, we began in the interior of Argentina after Arcos, after the rest and now 100% are open. So we are seeing much more development on that area too. And in the office was almost normally little more vacancy, but stable comparing to the other things. Related to financials. We successfully exchanged our bonds that matured this year. We are going to explain much more deeper later.
Carlos Blousson : Thank you, Alejandro. Good afternoon, everybody. We're moving to the next space to farming, commodity prices and global stocks. We can see in the graph the prices keep the high trend. In the last three months, the prices continue growing considerably about 26% in corn and 33% in soybean. The reason are the following: Supply and demand. Considering the supply, the production of the crops in United States are lower than expected, decreasing global stock to levels similar to five years ago. In case of South America, the beginning of planting are not happening in the best weather condition due to lack of rain and the export are higher than they usually expected by this time of the of the year. Considering the demand, we’ll see a post pandemic increase mainly in China. The export went up in the other the strategy stops. China has taken advantage of their purchase capability for the dollar has depreciated, making this a more competitive situations. Regarding about the stock's consumptions, in case of soybean, we can see in the graph a decrease in world’s ratio by 24%. This happened due to the post pandemic as demand overcomes the offer particularly in China. Talking about corn, we see that the constant consumption ratio, the world ratio decreased to 25.8%, especially in United States by 40.9%, the reason being that the production decreased in comparison to the forecast and increase in exports. In addition to increments in the use of corn for ethanol productions affected by the increase of oil prices in the world because of the pandemic. We in the soybean price in Brazil continue to be more competitive compared with United States, Argentina directing a higher demand in Brazil. They have already sold more than 50% of their future productions. The current regional head positions the level in soybean is 67% in over the budget price and in case of corn hits level is 53%. We’ve been over the budget in soybean and corn as long as our planting situation happens, we will continue selling at this good price level.
Matias Gaivironsky: Thank you, Carlos. Good afternoon, everybody. So regarding our investment in IRSA during the quarter, we have different results. Shopping malls as you know were deeply affected by the pandemic with most of our operation closed during the quarter since March, the malls were closed and we started to open during the quarter. In September, we had around 44% of our malls open. Now the situation is different. We opened 100% of the operation but it's not reflected yet in the results. Regarding our commercial strategy, we decided to preserve long term relation with our tenants and really support them during this pandemic. We waved most of the rent during the quarter that has a cost for the company, but we prefer to preserve the relation in the long-run and give the time for the recovery to our tenants. Regarding the offices, its different. The operations were not affected by the pandemic. We have all our buildings under operations, although, most of the companies are working from home, their buildings are under operation. The stock, we have a slight decrease in the stock, because we sold some of square meters during the quarter. The occupancy remain stable at almost 92% and the average rent with a slight decrease to $26 per square meter. We are finishing the construction of the Della Paolera 200 that we will open hopefully during the next month. And regarding the hotels. Up to now, the hotels were closed now, and intercontinental start with some operations, the shops start to open during this week. So we hope to see better results going forward.
A - Santiago Donato: wants to make a question. Please go ahead.
Unidentified Analyst: I would like to ask you, what expectations do you have about the future of the business in Argentina, taking in account the program that the government has to sign with the IMF and the consequences that this will have for the future of the country? Thank you.
Alejandro Elsztain: Related to agribusiness, there is a lot of optimism on the market, and we saw this increase of more than $100 per ton of soybeans and this changed for sure the market feeling and we are considering what this affects the results on the campaign and it's incredible. So in some countries doubles the result, more than doubled the results this increase in the middle of the planting time. So optimism on the food production of the world is coming. And we feel this that it's a new trend that was at $9 to $10 the bushel for many years. Now we are going to the 12th level and this will for sure affect the optimism of the farming industry on South America, and this group between Cresud and BrasilAgro is going to profit on that for sure. And not only in the grains but in the beef demand from China, mainly in Asia, it's increasing a lot, they are recovering their stocks. And this will for sure affect the liquidity on the real estate part of our business, because of the increase in the margin, increasing the gains and the intention of increasing the size of farmers. So that for sure will profit our business theory.
Matias Gaivironsky: And regarding the financial side and the IMF, of course, that will have an impact on Argentina macroeconomic situation. We don't know really what the government will do. Probably what they have been showing is they tried to normalize the curve of the debt with the situation on the refinancing all the sovereign debt in local currency and in dollars. So we hope that they will close an agreement with the IMF. We don't know when but we hope that they will do it. The reason is on the real estate side, definitely better than this year. This year was a very unique situation with malls and hotels and convention centers closed for almost six months. So definitely will be better. We believe that our platform is in conditions again to make attractive business. And since we supported our tenants, we hope that they will strength the relation with them and they can survive this crisis and be ready for the recovery.
Santiago Donato: There are no more questions. We conclude the Q&A session. At this time, I would like to turn back to Mr. Alejandro Elsztain for any closing remarks.
Alejandro Elsztain: For agriculture, first quarter is just the beginning. It's a very optimum situation for the beginning. The first quarter we are planting in good conditions in good window for farming that is relevant for achieving budget yields. We have a big campaign for work and we are very optimistic on the platform and the portfolio that the company is running today. So thank you very much. We see you next quarter. Thank you for everybody. Bye.
