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Edited Transcript of AGRO earnings conference call or presentation 17-Aug-18 1:00pm GMT

Q2 2018 Adecoagro SA Earnings Call

Luxembourg Sep 3, 2018 (Thomson StreetEvents) -- Edited Transcript of Adecoagro SA earnings conference call or presentation Friday, August 17, 2018 at 1:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Carlos A. Boero Hughes

Adecoagro S.A. - CFO

* Mariano Bosch

Adecoagro S.A. - Co-Founder, CEO & Director

* Renato Junqueira Santos Pereira

Adecoagro S.A. - Director of Sugar & Ethanol Operations

* Walter Marcelo Sanchez

Adecoagro S.A. - Co-Founder, Chief Commercial Officer & Director

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Conference Call Participants

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* Antonio Costa Barreto

Itaú Corretora de Valores S.A., Research Division - Research Analyst

* Danniela Chambô Eiger

BofA Merrill Lynch, Research Division - Associate

* Javier Martinez de Olcoz Cerdan

Morgan Stanley, Research Division - MD

* Lucas Ferreira

JP Morgan Chase & Co, Research Division - Analyst

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Presentation

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Operator [1]

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Good morning, ladies and gentlemen, and thank you for waiting. At this time, we'd would like to welcome everyone to Adecoagro's Second Quarter 2018 Results Conference Call.

Today with us, we have Mr. Mariano Bosch, CEO; Mr. Charlie Boero Hughes, CFO; and Mr. Juan Ignacio Galleano, Investor Relations Manager. We'd like to inform you that this event is being recorded. (Operator Instructions)

Before proceeding, let me mention that forward-looking statements are based on the beliefs and assumptions of Adecoagro's management and on information currently available to the company. They involve risks, uncertainties and assumptions because they relate to future events, and therefore, depend on circumstances that may or may not occur in the future. Investors should understand that general economic conditions, industry conditions and other operating factors could also affect the future results of Adecoagro's and could cause results to differ materially from those expressed in such forward-looking statements.

Now I'll turn the conference over to Mr. Mariano Bosch, CEO. Mr. Bosch, you may begin your conference.

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Mariano Bosch, Adecoagro S.A. - Co-Founder, CEO & Director [2]

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Good morning, and thank you for joining Adecoagro's 2018 Second Quarter Results Conference. As you may have seen in our release, we finalized strong financial and operational quarter in all of our businesses. In a complicated world, this is only explained by our daily work and effort in order to increase productivity and reduce unitary cost of production. As we always stress out, we find this the only sustainable way to become the low-cost producers and generate stable and attractive returns throughout the commodity cycle.

In our Sugar, Ethanol and Energy business, we continue maximizing ethanol production, reaching 77% on a year-to-date basis, making us the producers with the highest degree of flexibility in the production mix. This represents a clear competitive advantage compared to the other players in the industry, and put us in a really good position to maximize returns during the pricing dynamics of sugar and ethanol over the next 18 months.

At the same time, during the first half of the year, we crushed 35% more sugarcane compare to the previous year. Last year's investment toward nominal crushing capacity at our cluster and to increase our sugarcane plantation resulted in a higher cane availability, enabling us to increase milling operations. Higher crushing activities in turn allowed us to export an all-time record of 300,000 megawatts hour and profit from higher energy prices.

Moving to the Farming and Land Transformation business, we reported a solid financial performance. In our Crops business, we suffered the impacts of the drought that hit Argentina. However, thanks to the hard and coordinated work of our teams at the field, we were able to offset this negative effect. In addition, the depreciation of the Argentine peso further contributed to the reduction of our cost of production.

Our Rice business outperformed during this harvest year. All the investments related to water management, including laser leveling, improving logistics of the transportation of the rough rice from the farms to the mills and enhancing industrial efficiencies have paid off. Yields increased by 16% compare to the previous harvest year, while at the same time, the conversion factor increased, resulting in a more efficient industrial process.

Moving to Land Transformation. During the quarter, we sold 2 farms located in western Bahia (inaudible) for almost $53 million. That is a premium of 37% to the Cushman and Wakefield latest independent appraisal.

As a summary, so far has been a very good first semester. We believe we are on the right track to conclude another solid fiscal year, generating attractive returns.

Now Charlie will go through the numbers of the quarter.

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Carlos A. Boero Hughes, Adecoagro S.A. - CFO [3]

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Thank you, Mariano. Good morning, everyone.

Let's start on Page 4, where I would like to comment on our industrial performance. During this quarter, crushing activities reached 3.8 million tons, 54% higher compared to same period of last year. Investments that we've been doing since the beginning of 2017 are paying off. Indeed, the expansion CapEx we deployed to increase nominal crushing capacity at the cluster and to the Spanish working area explains the growth in crushing activities. Adequate weather conditions in turn resulted in a 48% higher effective milling days. At the same time, enhanced industrial operations allowed us to make a better use of our fixed assets.

Please jump to Page 5, where I would like to highlight our agricultural productivity. We remain fully focused on agricultural productivity, since we understand that it is amongst the main drivers for becoming a low-cost producer. Over 70% of total production costs are related to sugarcane production at the field. As a result, sugarcane yields in the first half of 2018 reached 96 tons per hectare, 8% higher year-over-year.

In addition to enhanced agricultural efficiencies, higher yields were explained by adequate weather conditions in the first semester of 2018, which favored cane's development coupled with a longer average growth cycle for the cane harvested compared to the previous season.

TRS content reached 120 kilos per ton in the first 6 months of 2018, 3% higher year-over-year. The combination of these 2 effects resulted in TRS production per hectare of 11.5 tons, 11% higher than last year's first semester.

Let's turn now to Slide 6, where I would like to discuss our production mix. As you can see on the top-right chart, ethanol production more than doubled during the first 6 month of 2018 compared to the same period of the previous year, reaching 304,000 cubic meters. We continued maximizing ethanol production in order to benefit from higher ethanol-related prices.

Indeed, out of the total TRS production, 77% went to ethanol. This marked a record high and represents a 40% increase year-over-year.

As it can be seen in the bottom-right chart, anhydrous and hydrous ethanol traded at $0.173 and $0.164 per pound sugar equivalent on average during this semester, which represents a 38% and 31.7% premium to sugar respectively. These high flexibility puts in evidence the high quality of our mills, allowing us to rapidly shift production in response to changes in relative prices.

Furthermore, ethanol weight on EBITDA distribution for the Sugar, Ethanol and Energy business has almost doubled in the first 6 months of 2018 compared to the same period of the previous year, reaching 65% of total recorded EBITDA. At the same time, sugar represents only 20% of total EBITDA generated during the first half of the year.

Let's move ahead to Slide 7. In the top-right chart, you can see that exported energy reached approximately 230,000 megawatts hour in the second quarter of 2018, 39% higher compared to the same period of last year. It was mainly explained by the availability of additional bagasse as a result of higher crushing activities. Energy prices, at the same time, increased in the quarter, explained by higher consumption and dryer weather conditions. Cogen efficiency went down 11% from 67 kilowatt hour per turns in the second quarter of 2017 to 61 kilowatt hour per ton in the second quarter of 2018.

As we significantly increased crushing operations, we accumulated more bagasse than our consumption capacity at the boilers. It's worth mentioning that the leftover bagasse will be carried forward and burnt throughout the second half of the year. Our efficiency ratio should increase in tandem.

Let's please turn to Slide 8, where I would like to discuss quarterly sales. In order to analyze the evolution of total revenues, it's necessary to evaluate the average realized TRS price. During the second quarter of 2018, average TRS price suffered an 18.5% reduction compared to the same period of last year. As we will shortly see, the dynamics of each of the components of that price, sugar, ethanol and energy, was quite different. However, it's worth noting that during the second quarter of 2017, we maximized sugar production and as a consequence, the weight of sugar, when calculating the percentage change in total revenues in -- is quite large. Declining sugar prices will mostly drive the evolution of total revenues during the second quarter of 2018.

Having clarified these points, let's now analyze the individual evolution of each product. In the case of ethanol, as we decided to keep on maximizing ethanol production, sales volumes increased by 49% compared to last year. Average selling price reached $466 per cubic meter or $0.207 per ton sugar equivalent. The combination of this effects resulted in a 47% increase in net sales.

In the case of energy, net sales increased 33% year-over-year. As previously explained, this was the result of the combination of higher selling volumes and realized prices, measured in U.S. dollars.

Regarding sugar, sales volume totaled 106,000 tons, marking a 41% reduction compared to the same period of last year. Again, this fall is the result of having maximized ethanol production. Sugar prices in turn continued the downward trend resulting in 56% lower net sales.

Let's please turn to Slide 9, where I would like to discuss production costs. In the table, you can see at the bottom, total production costs during the first half of the year reached $0.063 cents per pound, 26% lower compared to the same period of last year. This is mainly explained by higher crushing volumes that contributed to diluted fixed costs, enhanced agricultural and industrial efficiencies and a decrease in Consecana price, which result in lower leaching expenses, supported to highlight that unit cost measured in dollars were further reduced by the year-over-year depreciation of the Brazilian real.

In order to get to total cash cost production, maintenance CapEx should be added on the ground staff, even if it's not expensed, maintenance CapEx in the sugar and ethanol industry is recorded CapEx that needs to be done to maintain industrial and cane productivity. However, it's worth noting that most of the maintenance CapEx is disclosed in the first half of the year, discounting cash cost calculations on a quarterly basis.

As we get to our annual crushing target, total cash cost should be in a range of $0.093 to $0.096 per pound.

Finally, to conclude with the Sugar, Ethanol and Energy business, please turn to Slide 10, where I would like to discuss financial performance. Adjusted EBITDA for the first semester of 2018 reached $128.9 million, 41% higher compared to last year's same period. The main factors that contributed the increase were: the 54% increase in sugarcane crushing; higher ethanol and energy average selling prices and selling volumes; and a $3.9 million higher result from the mark-to-market effect of our commodity hedge position. These positive effects were partially offset by a $1.3 million higher loss, resulting from the effective fair value of our unharvested biological assets, as a result of lower sugar prices.

Furthermore, adjusted EBITDA margin, net of third-party commercialization, went from 47% in the first half of 2017 to 78% in the first 6 months of 2018.

Let's now move to Page 12, where I would like to focus on the current status of the 2017 and '18 harvest year. As of the end of April, harvest operations for most of our crops were almost ended, with 88% of total area already harvested. We expected to harvest the remaining area during August.

On a consolidated basis, yields have decreased as a result of the drought that hit Argentina in the first quarter. It's fair to say that most of the impact is already booked and we should not expect any further significant effect.

Rice yields reached 6.9 tons per hectare, 16% higher compared to the previous harvest year. Fine weather coupled with a longer exposure to solar radiation allow the crop to properly develop. At the same time, higher agricultural technification enhanced efficiencies and contribute to higher yields. It's important to notice that this evidenced the benefits of our production diversification strategy as a way to mitigate weather risk. Towards the end of the second quarter of 2018, Adecoagro began its planting activities for the 2018 and '19 harvest year. As of the date of this report, a total of 36,533 hectares of wheat have been successfully planted and are developing normally, favored by adequate soil conditions.

Let's move to Page 13, where I would like to walk you through the financial performance of our Farming business. On a quarterly basis, adjusted EBITDA for the Farming business was $25 million, 127% higher compared to the same period of 2017. This improvement is mainly attributed to the $6.5 million and $7.2 million increasing results in our Crops and Rice business, respectively. It was primarily explained by enhanced operational efficiencies, the depreciation of the Argentine peso, which together rebounded in a reduction of production costs and higher yields from our Rice business.

On a cumulative basis, adjusted EBITDA totaled $43.8 million, 43% above last year, in addition to the previously referred drivers, these positive results were partially offset by the negative mark-to-market of our commodity hedge position.

Let's move to Page 14, where I would like to walk you through our Land Transformation business. Our adjusted EBITDA for our Land Transformation business during the first 6 months of 2018 totaled $36.2 million compared to a 0 result during the first 6 months of 2017. During June 2018, we completed the sale of Rio de Janeiro and Conquista farms, located in western Bahia and Tocantins, respectively.

The aggregate selling price reached $53 million for a total of 9,300 cropable hectares. I would like to highlight that both farms were sold at a 37% consolidated premium to the latest Cushman and Wakefield's independent farmland appraisal.

Over the last 12 years, we've been able to generate gains of over $200 million by strategically selling at least one of our fully mature farms per year. Monetizing a portion of our Land Transformation gains allow us to redeploy the capital into higher-yielding activities, enabling us to continue growing and enhancing shareholder value.

Let's move to Page 16, which shows the evolution of Adecoagro's consolidated operational financial performance. Adjusted EBITDA during the first half of the year totaled $199 million, marking a 78% increase year-over-year. Improvement in the Sugar, Ethanol and Energy financial performance was primarily driven by the maximization of ethanol production, higher energy selling volumes and realized prices and lower costs of production as a result of higher crushing volumes, enhanced efficiency and the depreciation of the Brazilian real.

At the same time, improvement in the Farming and Land Transformation financial performance was explained by lower production costs as a result of enhanced agricultural and industrial efficiencies in our Rice business, the $36.2 million capital gain from the sale of Rio de Janeiro and Conquista farms and the depreciation of the Argentine peso, which contributed to cost dilution measured in dollar terms.

We expect Adecoagro's production volumes and financial performance to continue growing in line with historical growth, mainly driven by the consolidation of our sugarcane cluster and an increase in operational and financial efficiencies in each of our businesses.

To conclude, please turn to Slide 17 to take a look at our net debt position. As you may see in the left chart, our gross indebtedness as of March 31, 2018, stands at $811 million, while net debt stands at $665 million, 16% higher year-over-year. Our more aggressive inventory carrying strategy coupled with the CapEx deployments explains the increase. It's important to highlight the fact that even though net debt has increased from $574 million in the second quarter of 2017 to $665 million in the second quarter of 2018, the ratio, net debt-EBITDA, has remained virtually flat at conservative levels.

I'd like to mention that our debt is very well structured in the long run, with an average maturity of approximately 7 years. We have a strong and healthy balance sheet, which puts us in a good position to pursue any opportunistic M&A opportunities.

Thank you very much for your time. We're now open to questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Today's first question will be from Danniela Eiger.

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Danniela Chambô Eiger, BofA Merrill Lynch, Research Division - Associate [2]

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My questions are regarding ethanol. First on prices. We've noticed an acceleration on the hedges this quarter. Could you please remind me what is the strategy you use to hedge ethanol prices? And also, what price levels do you expect to see in the winter harvest period? And the second one in volumes, given the recent drought faced in Brazil, how many million tons do you expect to crush this year? And in Q1, do you expect crushing to go, considering the acceleration seen on the first half of the year?

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Mariano Bosch, Adecoagro S.A. - Co-Founder, CEO & Director [3]

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Danniela, thank you for your question. I want to like to ask Marcelo Sanchez, our Commercial Director, to answer the first part of your question. And then the second part on -- related to volume, I'm going to ask Renato to answer that part of the question, so Marcelo, can you answer the first part of Danniela's question?

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Walter Marcelo Sanchez, Adecoagro S.A. - Co-Founder, Chief Commercial Officer & Director [4]

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Yes, Mariano. Thank you, Danniela, for your question. Regarding the first part of your question, how we hedge our ethanol production. I should note that BMF has low liquidity. And this year, with the new petrogas policy, we have decided to test a new mechanism to hedge a small portion of our production indexed to international market, where we expect to have a good adherence with the domestic market when parity of farms return to normal levels. We expect prices to remain under pressure on low parities until October. And then with the end of the center south harvest, we see prices essentially increasing and parity moving to higher levels. It is important to note that we couldn't -- gasoline prices, it probably moves to, let's say, 65%, which is a level that still provides an attractive level of demand. There will be an asset of roughly 20% in hexamine's prices without destroying demand. Then therefore, in -- as our strategy to remain positive in our view for the ethanol prices for the remaining portion of the year, and we are going to be continuing with our carry volumes, that as you saw, we are -- compared to last year, we are 200% more than last year volume that we were carrying, and we expect to reach full capacity of our carrying strategy for the Q3 at the end of November.

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Mariano Bosch, Adecoagro S.A. - Co-Founder, CEO & Director [5]

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Thank you, Marcelo. Danniela, regarding the volume, you're asking about the sugarcane volume that we expect? That's exactly the second part of your question?

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Danniela Chambô Eiger, BofA Merrill Lynch, Research Division - Associate [6]

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It -- it's how many million tons do you expect to crush? And Q1, do you expect crushing to go, considering the acceleration in the first half of the year?

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Mariano Bosch, Adecoagro S.A. - Co-Founder, CEO & Director [7]

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Okay. So we are going to include the climatic impact on the sugarcane volumes. And so Renato can explain in detail, how is it -- our expected volume, Renato?

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Renato Junqueira Santos Pereira, Adecoagro S.A. - Director of Sugar & Ethanol Operations [8]

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Danniela, since we had a rainy first quarter, we have not been affected by the drought that has been impacting the center south regions. In fact, the drier second quarter allowed us to crush very well, capture all of the efficiency in the whole sugarcane chain. Additionally, it's important to highlight that we had a considerable rain at the beginning of harvest. Therefore, assuming normal future weather conditions, we plan to crush approximately 12 million tons in 2018 and maintain our continuous harvesting season for the next year.

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Mariano Bosch, Adecoagro S.A. - Co-Founder, CEO & Director [9]

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Is it clear, Danniela?

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Danniela Chambô Eiger, BofA Merrill Lynch, Research Division - Associate [10]

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Yes, it's perfect.

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Operator [11]

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Next question will be from Lucas Ferreira with JP Morgan.

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Lucas Ferreira, JP Morgan Chase & Co, Research Division - Analyst [12]

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I have questions regarding and I wanted to hear your thoughts about some subjects. The first one is the trade war between China and U.S. and the tariffs, how do you think it's impacting your business, both in terms of the Crops business, and if you can comment on price premiums seen in Argentina? But also on the Farm, Land business, if you saw any change there regarding the pricing and the liquidity of this market? Also the steep depreciation of the peso, how much that could translating into better margins in the quarters to come? If you also could comment on your outlook for the Crops business going forward? You already posted good results. But given the currency that I think it could boost even further your numbers. And finally, this whole discussion on freight rates in Brazil. If you can give us some thoughts about how that could impact your business in the country? And give us some rough sensitivities about the financial impact -- potential financial impact?

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Mariano Bosch, Adecoagro S.A. - Co-Founder, CEO & Director [13]

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Okay. Thank you, Lucas. I'm going to try to address your questions. Regarding the trade war, I think this is clearly positive for our Latin American commodities. So what we are producing here are improved basis, and we are taking advantage on that improvement in basis. So for us, specifically, so giving us the opportunity to get into new markets like Mexico with rice, with corn. So I think we are taking a positive advantage on this trade war and that's something we are experiencing and already -- and it's already happening. Then regarding the farmland pricing, because of this, farmland pricing, as we always discuss, is something that takes some time, but this sale that we deal, I think, was a very good sale and we took a very good moment to execute it. There was someone specifically looking for this, so this proves that there is demand and when the demand happens, we are able to take advantage of that. Whether it's because of the trade wars or something else, we don't know. But we are also seeing some more interest on farmland in general than some months ago. So we are seeing a positive thing there. And regarding the depreciation of the peso for Argentina, as we've explained many times, this is very positive. So we do expect to continue to have -- to continue improving these results, and I think with what we've shown, it's already explained part of that. And then finally, going to the freights in Brazil and the impact and that part of the question, after all, these discussions on the freight that happened in Brazil, there is small negative impact in the freight pricing. But there is a positive income in the prices of diesel. For our specific business, it is more important, the impact of the pricing of diesel, because of all the diesel that we consume. Remember that we own almost 100% of our sugarcane and all the harvesting of the sugarcane, so that our diesel consumption is very relevant. So that's why we have a positive effect on the measures that happened after all that discussions. Of course, those measures either way, the freights are under discussion and that may change in the future in terms of the freight discussion is already there. So that's a quick answer on all the points that you were asking.

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Operator [14]

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Next question will come from Javier Martinez with Morgan Stanley.

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Javier Martinez de Olcoz Cerdan, Morgan Stanley, Research Division - MD [15]

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But I wanted to ask you also about SanCor. How -- can you please let us know how the negotiations are moving? And also, I was curious to know if -- when you are having those negotiations, you are having those in pesos or in dollars?

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Mariano Bosch, Adecoagro S.A. - Co-Founder, CEO & Director [16]

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Javier, thank you. This is something complex that takes time in terms of the negotiation. Part of that is in pesos, and probably most of the discussion is in pesos. And we continue analyzing this investment alternatives, but we are always aiming to maximize our daily production. And when we think on maximizing our daily production, remember that our free stall fee is increasing now. It's advancing very well. We are on time and on budget. So that's working very well. But regarding specifically on the SanCor negotiation, that's something that is still going on, and we've been always -- it's important to stress here that we've been always very disciplined when we talk about capital allocation. So whatever we do, if we do something, it's going to be to achieve good returns for our shareholders.

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Javier Martinez de Olcoz Cerdan, Morgan Stanley, Research Division - MD [17]

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Mariano, sorry to ask again, because I know that it difficult to talk about an open negotiation but just to try to frame these potentially relevant acquisitions, so the negotiations are around the assets that you're going to buy? The negotiations are around the price? The negotiations are around potential liabilities? So what is the focus of the negotiations?

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Mariano Bosch, Adecoagro S.A. - Co-Founder, CEO & Director [18]

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So the negotiations are very open. We cannot explain -- indeed, it's an open negotiation as you know and as you can imagine. But it's important to understand this disciplined capital allocation that we have. So that's where we are concentrating, and we need to understand very clear that we don't -- we are going to wait in any transaction that we get into, and that's not an exception of what we are discussing and analyzing here.

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Operator [19]

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And the next question will come from Antonio Barreto with Itaú BBA.

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Antonio Costa Barreto, Itaú Corretora de Valores S.A., Research Division - Research Analyst [20]

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My first question is about the costs. I just wanted to delve a little bit deeper on the cost decrease. You guys delivered an important cost gain. And of course, we have several different reasons why this may have happened. Brazilian real depreciation is one. The higher TRS because of the drier weather is another one, but even if we account for all those effects, the 25% to 30% cost decrease that we have seen was very impressive in the quarter. I just would like to understand what you guys believe we can attribute this to? Of course, higher utilization helps us well, but is there anything else that might -- may have helped? And any kind of initiative that may have decreased cost in the quarter for the sugar and ethanol business?

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Mariano Bosch, Adecoagro S.A. - Co-Founder, CEO & Director [21]

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Thank you for your question. I'm going to ask Charlie to complement on what he has already explained on your question.

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Carlos A. Boero Hughes, Adecoagro S.A. - CFO [22]

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Antonio, I'm not sure if I got well the question. What we wanted to reflect in this release is that as a consequence of all the efficiencies and productivity that we are getting at the fields, the increase in the crushing volumes, efficiencies at the industry, maximization of the ethanol and the devaluation of the real, all of them helped us to decrease our costs -- operational costs. And in addition, we will see along the year that the devaluation will also have a positive impact, not only in the operational costs, but also the maintenance CapEx, as most of them are in reals as well and in the expansion CapEx that we are moving forward in order to increase our crushing capacity 30% and mainly in expanding our sugarcane area. So most of them are in reals as well. With this new effects narrows, means much less dollars, which means lower investments in dollar terms that improves our cash flows.

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Antonio Costa Barreto, Itaú Corretora de Valores S.A., Research Division - Research Analyst [23]

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And if I may ask a second question about the Rice business, which performed really well in the first half of the year as well. I just would like to know, because when we look at last year's seasonality, the results seemed to be a bit more skewed towards the second half of the year. And my question is, what kind of seasonality should we expect for the Rice business? Is it different this year compared to the last one? I guess, this has been a little bit on your quick carry strategy to sell rice inventories. I don't know if you could explain a little bit more, what should we expect for the second half of the year?

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Mariano Bosch, Adecoagro S.A. - Co-Founder, CEO & Director [24]

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I think that the seasonality is still there, because the seasonality that we harvest during the first semester and then we end up processing. So in general, the second part is more stable in terms of what we expect. But I think that is reasonable to expect more or less the same from one year to the other.

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Operator [25]

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(Operator Instructions) At this time, this will conclude today's question-and-answer session. And I would now turn the floor back to Mr. Bosch for any closing remarks.

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Mariano Bosch, Adecoagro S.A. - Co-Founder, CEO & Director [26]

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Thank you. As we just discussed, we have had a very good first half of the year. We have a lot of challenging projects ahead that will continue contribute to our growth and enhance our production efficiencies. Before we close the call, I would like to reiterate my gratitude to all the operational and management teams. It is thanks to their daily efforts and hard work that we have become one of the lowest cost producers in the entire world, while at the same time, generate attractive and sustainable margins for all of our shareholders. So thank you for the support and confidence, and look forward seeing you in the upcoming IR events.

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Operator [27]

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Thank you. This will conclude today's presentation. At this time, you may disconnect your line, and have a great day.