Company anticipates improved fourth-quarter performance with accelerated cotton deliveries.
SLC Agrícola, a major producer of soybeans, cotton, corn, seeds, and beef cattle, closed the third quarter with a net loss of R$17.3 million, reversing the R$167.3 million profit recorded in the same period last year.
In its quarterly report, the company attributed the loss to a drop in gross profits from corn and a negative adjustment to biological assets (revenue and cost) and net realizable value of inventories, partially offset by recognized tax credits from a favorable court ruling.
Net revenue fell 1% year-over-year to R$1.63 billion in Q3.
Cotton lint sales surged 46.4% in volume, reaching 83,300 tons, though the revenue per ton decreased by 12.1%. Sales of cottonseed rose 12.3% to 137,200 tons for the quarter.
Sales of soybeans and seeds jumped 97.8% to 136,100 tons, attributed to delays in the 2023/24 harvest. Conversely, corn sales declined by 41.4% to 393,000 tons. In cattle, SLC boosted sales by 77.7%, reaching 15,174 head of cattle.
Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) dropped 5.8% in the quarter, reaching R$463.1 million, with the EBITDA margin down 1.4 percentage points to 28.4%.
Cash generation was positive at R$147.5 million, representing a 74.6% decrease from the third quarter of 2023. This result reflects the conclusion of input payments and the beginning of revenue from the 2023/24 cotton and corn crops.
Leverage, as measured by the net debt-to-adjusted EBITDA ratio, increased to 2x, up from 1.06x at the end of 2023.
In late October, SLC filed with the Brazilian Securities Commission for a public offering of agribusiness receivables certificates (CRA), aiming to raise R$400 million. This capital is intended to extend debt maturity at a competitive cost.
The company also announced the purchase of an 18.8% stake in its indirect subsidiary SLC Landco for R$524.8 million, with payments scheduled in two installments: one-third in October and the remaining two-thirds in March 2025.
2024/25 Harvest
SLC Agrícola revealed it is expanding its planted area by 11% for the 2024/25 season, totaling 733,900 hectares.
Of this, 51.5% will be allocated to soybeans, 26.2% to cotton, 16.3% to corn, with the rest divided among other crops.
This expansion is a result of recent operational developments, including the extended partnership with Grupo Soares Penido, the joint venture with Agropecuária Rica, and a new lease agreement in Piauí.
The company anticipates favorable weather will enhance crop productivity. With rainfall normalizing in Mato Grosso since mid-October, SLC has planted 77.5% of the planned soybean area. Productivity forecasts show a 0.6% increase in soybean yield for 2024/25 compared to the prior cycle, 2.3% for first-crop cotton lint, 2.5% for second-crop cotton, and 2.3% for cottonseed. Only second-crop corn is expected to see a slight yield decline of 0.6%.
Budgeted costs per hectare for the 2024/25 harvest are projected to decrease by 5.2% compared to 2023/24.
For first-crop cotton, costs are expected to fall by 2.5%, while second-crop cotton costs are projected to drop by 2%. Soybean costs are expected to decrease by 8.3%, and corn costs by 7.8%.
The company also reported progress in hedging for commodities and foreign exchange. For the 2024/25 season, 63.6% of soybean production is hedged, alongside 44% of cotton and 18% of corn.
Preparations for the 2025/26 Season
SLC has already begun procuring inputs for the 2025/26 season, securing 80% of potassium chloride and locking in 33.7% of soybean sales commitments. For the 2024/25 season, SLC has purchased 100% of phosphates, potassium chloride, nitrogen, and 96% of crop protection products, reflecting the overall 5.2% decrease in projected per-hectare costs relative to the 2023/24 season.
