Adecoagro S.A. Aktie

Good morning, ladies and gentlemen, and thank you for waiting. At this time, we would like to welcome everyone to Adecoagro's 2026 Second Quarter Results Conference Call. Today with us, we have Mr. Mariano Bosch, CEO; Mr. Emilio Gnecco, CFO; Mr. Renato Junqueira Pereira, Sugar, Ethanol and Energy VP; and Mrs. Victoria Cabello, Investor Relations Officer. We would 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 the 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 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.

Good morning, and thank you for joining Adecoagro's First Half 2026 Results Conference. Consolidated adjusted EBITDA marked new records, reaching $258 million year-to-date and $173 million during the second quarter, reflecting the earnings potential and scale that our well-diversified agro-industrial platform now has.

In Fertilizers, stronger operational performance during the quarter resulted in higher production volumes, while higher prices and cost efficiencies supported further margin expansion. Given higher-than-expected prices during the first half, we expect the annual performance from this segment to be above our initial projections.

In Brazil, the sugarcane plantation is in excellent conditions. The investments and work done over the years to improve cane productivity are paying off as weather conditions have normalized. Sugarcane availability is now driving the crushing volume growth. And this is also one of the reasons why we view the acquisition of Caarapó mill as highly accretive. We believe this asset will enable us to organically expand our Sugar and Ethanol operations by milling the surplus cane that our cluster currently has, while further strengthening our presence in the region.

As we capture the operational synergies, we see potential to unlock value by increasing the crushing and consequently, reinforcing our position among the lowest cost producers in the industry. Given its earnings potential, this expansion does not alter our deleveraging progress nor our target net debt to EBITDA for the full year.

In Food and Agriculture, stronger productivity enabled higher cost dilution. Raw milk production has improved, supporting higher processed volume in our industries. As the new crop is being commercialized, margins should improve, supported by a more efficient cost structure.

To conclude, I would like to express my gratitude to all the teams in Adecoagro. It is because of their commitment that we continue to achieve new milestones despite the different commodity cycles, which we navigate. Thanks to our shareholders for their continued support.

And now I will let Emilio walk you through the numbers of the period.

Thank you, Mariano. Good morning, everyone. Please now turn to Page 4 with a summary of our consolidated financial results. As a reminder, we are presenting our numbers on a pro forma basis, assuming our Fertilizers business had been part of Adecoagro since the beginning of 2025. We believe this provides a more meaningful year-over-year comparisons.

Gross sales totaled $535 million during the second quarter. While on an accumulated basis, they reached $928 million. Despite higher revenues in our Fertilizers segment, overall revenues remain in line across both periods, reflecting mixed prices and volume dynamics across our product portfolio.

Adjusted EBITDA set new high records. The main driver was the strong performance of our Fertilizers business, which benefited from higher production, stronger pricing and operational efficiencies. Such performance more than compensated for the softer results in Sugar, Ethanol and Energy and Food and Agriculture businesses, which I'll discuss in a moment.

Let's move to Slide 6 and review the financial and operational performance of the Sugar, Ethanol and Energy segment. Despite experiencing above-average rainfall, particularly in May, we crushed 3.5 million tons of cane during the quarter, up 3% compared to the same period of last year. This continues the positive trend we've seen since the start of the year. Cane yields have recovered, thanks to the better moisture conditions. Although TRS levels remained below last year's, they have been improving steadily throughout the year.

In terms of product mix, we continue to maximize ethanol production, given its attractive premium over sugar. As a result, we reached 78% ethanol mix year-to-date. By comparison, during the first half of 2025, we maximized sugar production. This shift highlights one of the key advantages of our industrial assets, the flexibility to quickly change production towards the product offering the highest marginal contribution.

On the cost side, production costs were negatively impacted by the appreciation of the Brazilian real. Excluding the FX effect, our year-to-date production costs in local currency remained in line with the previous year.

Turning to sales. The decline we saw this quarter was mainly driven by lower sugar prices and lower sugar volumes sold, reflecting the change in our production mix. For ethanol, lower sales volumes were actually part of our commercial strategy. Following the sharp decline in domestic ethanol prices caused by higher market supply, we decided to start building inventories rather than selling at current market prices. As a result, we finished the quarter with about 41% of our year-to-date ethanol production stored in inventory, positioning us to capture stronger margins once prices recover. This follows the strategy we implemented during the first quarter when we sold inventories and current production, while prices were at their peak, ahead of the new harvest.

Overall, adjusted EBITDA reached $53 million during the quarter and $94 million year-to-date. The decline compared to last year reflects lower sales as well as lower Consecana prices in the mark-to-market valuation of our biological assets, particularly harvested cane. Looking ahead, crushing is progressing as planned, and we are still on track to achieve our full year target. We continue to expect low double-digit growth in crushing volumes this year, supported by greater cane availability.

Now let's turn to Slide 8 to discuss our Fertilizers operations. Urea production increased 22% year-over-year, driven by higher plant utilization and importantly, zero downtime during the quarter. As a result, year-to-date, urea production reached 617,000 tons, remaining well above last year's level, which was impacted by 31 days of downtime due to adverse weather conditions that disrupted gas supply as discussed on previous calls.

On the commercial side, results benefited from a significant increase in international urea prices. Following the escalation of the conflict in the Middle East, a region responsible for roughly 30% of global urea trade, prices reached nearly $800 per ton during the quarter. As we executed sales throughout the period, we were able to progressively capture the surge in prices. Accordingly, adjusted EBITDA more than doubled both in the quarter and on a year-to-date basis. In addition, higher production volumes, together with operational efficiencies, drove a meaningful expansion in margins.

Although urea prices have moderated from the peaks reached in April and May, we still expect full year EBITDA from this segment to be above our original projections. This outlook is supported by higher prices captured during the first half of the year while most of our cost structure remain fixed.

Please move to Page 10, where we describe the performance of our Food and Agriculture segment. As of the end of July, we harvested 92% of the planted area, achieving yields above the prior campaign and producing more than 1.1 million tons of crops. We expect to complete the harvest season during this month and have already begun planting activities of our winter crops for the next season.

In Dairy, processing volumes increased compared to last year, driven by higher raw milk production at our free-stall facilities due to better cow productivity.

Looking at financial performance, year-to-date results still reflect lower commodity prices across much of our portfolio, along with higher costs in U.S. dollar terms. That said, if we focus on the quarter itself, both revenues and adjusted EBITDA improved year-over-year, supported by higher production volumes and a gradual recovery in margins as we begin sales of the new harvest. We expect margins to continue improving over the next few quarters as the benefits of our cost reduction initiatives become more visible. In Dairy, we also expect to continue growing processed milk volumes, supported by the launch of new products under our consumer brands.

Let's move to Slide 12 and review our capital allocation strategy, starting with expansion CapEx. Year-to-date, our largest capital deployment was the final payment of approximately $400 million related to the acquisition of Profertil, which was completed during the previous quarter. At the same time, we continued investing in a number of attractive organic growth opportunities across our businesses. These investments include the expansion of our sugarcane plantations and biomethane operations in Brazil as well as additional agricultural machinery and new cheese packaging line at our Morteros dairy facility.

Before moving on, I would like to highlight that these figures do not include the acquisition of Caarapó mill, which remains subject to customary closing conditions. We expect the transaction to close in the coming weeks with the purchase price paid in cash at closing. Given the estimated earnings contribution from the asset, we do not expect the acquisition to affect our deleveraging targets for year-end.

Now let's move to Page 13, where we present our debt profile. As we typically experience at this point of the year, net debt tends to peak due to the seasonal working capital requirements associated with our agricultural operations. If we exclude that seasonal effect as well as the $58 million increase in readily marketable inventories during the quarter, net debt would already be below 2025 year-end levels. On a pro forma basis, net leverage stood at 3x, which remains consistent with our deleveraging path and reflects the stronger earnings generation we are seeing across the operations, despite the seasonality in cash needs and our commercial strategy to hold inventories for some of our products in anticipation of better pricing opportunities. Looking forward, we continue to expect leverage to decline as EBITDA generation increases.

On the liquidity side, our ratio improved to 1.9x compared to 1.2x in the previous quarter, demonstrating our ability to comfortably meet short-term obligations. Please note that most of our debt remains long term and that its currency composition is closely aligned with our revenue profile, helping reduce foreign exchange risk.

Finally, regarding shareholder returns, the first installment of our annual cash dividend totaling $17.5 million was paid on May 19, equivalent to $0.12 per share. The second installment in the same amount will be paid in November, resulting in a total annual cash dividend of $35 million.

Thank you very much for your time. We will now open the call to questions.

[Operator Instructions] Our first question comes from Gustavo Troyano with Itaú BBA.

It's actually on Profertil and more specifically on the mismatch between production figures in the quarter and sales volumes that you reported for this quarter as well. And basically, I just wanted to hear from you what could be attributed to the usual seasonality of sales volumes and what could relate to maybe one-offs in the quarter, potentially driven by urea price spike or something like that? And still on this point, maybe after the first half, if we should expect that Adecoagro's sales volumes for the full year to reach the 1.3 million tons for the full year concentrating volumes in the second half or if there could be some downwards adjustments to sales volumes after what happened throughout the first half of the year.

Gustavo, thank you very much for your question. I think this helps for a whole clarification of how we sell the urea. We produce 1.3 million tons per year. So we are going to sell 1.3 million tons in the whole year. Argentina consumes 2.5 million tons, so there is no way that we cannot sell the 1.3 million tons. So 1.3 million tons is for sure something we will always be selling. And we could be selling all what we produce every month, and that is easily easy to do it. But we have a strategy where usually and in general, over the years, during September, October and November is the maximum consumption of the urea from producers. So in general, that would be where the higher prices in the domestic market of Argentina, we can find. So we try to concentrate more sales in that specific part. That is for the general years.

This year, in particular, has, as you mentioned, this peak because of the war during March and April. So in April, we tried to maximize the peak. That's why we are selling more than what we originally projected in the first half. So what you can see there is the first half, we sell more or less the average that has been sold in the previous years.

But in this specific year, we were pushing to sell more. But in June -- you may not remember, but in June, the price of urea went down as far as lower than the previous year, so -- and lower than July and August. So during June, we had the lowest price of urea. That's why in June, in particular, we decided not to push on the sales as we were pushing in April and May on what we had produced. So that is specifically why this particular month or this particular quarter, you are not selling all the production being sold. And we are happy with that decision because in June, the price was lower than today's prices or July and August.

So we have more inventory today to be sold during -- at a higher price. Of course, we would have sold 100% in April, that is the maximum. But in April, we push and we try to sell as much as possible, but we couldn't. This is a spot price that every week is being sold, and that's how urea commercializes in general. So that is important to make that specific clarification. And thank you for the question.

Our next question comes from Matheus Enfeldt with UBS.

My first question on sugar and ethanol. You had in previous calls mentioned an expectation of a drop in cash cost of 10% to 15%, if I'm not wrong. If you could provide any updates around that level of cost efficiency or cost improvements for this crop. If you still think that, that number is reasonable when you're looking to the entire crop? That's my first question.

And then the second one on the acquisition of the Caarapó mill. I understand there's potential synergies to capture higher crushing. My question is, what's the excess capacity or excess sugarcane that you currently have? And how do you think -- or how do you anticipate that cost move with a higher or a larger radius for sourcing once you end that plant? And if you could sort of help us get a sense around that. And then just to finalize on that on -- what's a reasonable outlook for crushing for that mill for '27? If it's already possible for you to reach 4 million tons, 4.5 million tons above the 3.5 million tons that the mill crushed last season. So those are my questions.

Matheus, thank you for the question. On the projection of the yield of the milling -- the full milling for Caarapó on 2027, we don't give that guidance, and we want to close first and then we will explain more details on Caarapó.

On the rest of the questions, including some of the synergies from Caarapó, Renato can take the cost and how the cost can be impacted with Caarapó and what are the synergies also with Caarapó. Renato?

Matheus, thank you for your question. So as it was mentioned, we see Caarapó as an extension of our cluster in Mato Grosso do Sul. So we are going to adopt the same operational model there, and we have the same competitive advantage. So our plan in the future is to do the continuous harvest. We're going to take advantage of the high production flexibility that Caarapó also have the high cogeneration potential, the ICMS tax rebate, that is exactly the same as our mills in Mato Grosso do Sul. And we think that Caarapó has a potential to increase the effective crushing a lot, almost double the crushing. This is because the capacity of Caarapó is very similar to the capacity of Ivinhema. So if you consider the milling capacity, the sugar production capacity, ethanol capacity, is very similar to Angelica and Ivinhema mills.

We also think that we have a lot of opportunities to improve some KPIs and to reach the same level as you have in Mato Grosso do Sul. For example, industrial efficiency, we think we have 2% higher than Caarapó. The use of time, that is up 10 kilowatts of energy per tons of cane crushed, we think we can improve and also some improvements in the agriculture, both in yields and TRS.

And to finalize the synergies, we think that we have a lot of synergies related to G&A. So we are going to keep the same structure that we currently have to -- also to use this in Caarapó. And we are going also to benefit from the logistics and commercial assets. So we're going to take advantage of the tanks that Caarapó has, warehouse. So I think there are a lot of synergies to -- that we are going to get in the next years. Of course, part of the sugarcane, as Mariano mentioned, from the cluster, we are going to send to be crushed in Caarapó.

Regarding the other part of your question, the cost, I think it's important to say that quarterly costs might have some temporary distortion caused by cost allocation and industrial seasonality. So it's our better to analyze the costs based on the year cost. But even with this consideration, we think that it is still possible to reach the 10% reduction cost compared to last year. I think this is explained first by the cost dilution. We plan to crush 10% -- approximately 10% more than we crushed last year. We still have plenty of time to do it. Of course, it depends on the weather, but at this point, it's still possible. And so this has an extra cost dilution.

The leasing cost is much lower because of the Consecana price. The head count has been reduced. This is because of some efficiencies that we have been obtaining, especially because of the use of new technologies such as 2-row harvest machines, grunters. So we have decreased the number of harvesting fronts, so reducing the number of people working on those fronts. And this is more than enough to offset some diesel and fertilizer increase in costs. So we think it's still possible to have this 10% reduction.

[Operator Instructions] Our next question comes from Pedro Gama with Citi.

So on my side, I have 2 questions in the Fertilizers segment. In the past, the management highlighted that the likely expansion of the Profertil plant as a key growth avenue. However, during the previous weeks and months, a major Argentinian competitor in the gas sector announced investment in a new greenfield urea plant in the same region as Profertil. Building on that, I'd like to ask about 2 questions. First, how does the Profertil current cash cost structure compared to this peer that is vertically integrated in gas production compare itself? And is the unit cost difference significant? And how does this affect Adecoagro long-term competitive position in the Argentina area?

And another question, given that the likely Profertil expansion is a brownfield project, should this theoretically be faster to implement? And what will be the key triggers or market conditions required for you to make a final investment decision? Is that a strategic urgency to bring this new capacity online before your competitor, thereby capturing a first-mover advantage in the domestic market, which usually has higher margin than exports to Brazil, for example? Or could this expansion be postponed in light of the company focus to deleverage? I believe there's the main points.

Thank you, Pedro, for your question. Very important. Number one is South America consumes 10 million tons consumes -- no, imports 10 million tons of urea, 10 million tons. We produce 1.3 million tons. And the announcement is to produce 2.1 million tons. So there are still a lot of need of urea in the whole region. This announcement is to produce urea in 4 or 5 years from now. So there's still a lot to go. When you ask to compare the cost of production from one system to the other, still a lot to understand on what's the other costs. We know exactly what are our costs, but there are a lot of costs on the other side that still need to be understood.

In terms of gas and the cost of gas, the gas is a very transparent market. And we have to renew our contracts, as we said before, and we expect those contracts to be better in terms of prices than what they are today. And we are having offers of gas way cheaper than today. There are still a lot of gas available in the region. So we don't see any disadvantage in buying gas in the region to the competitors or any other competitors there in the region.

Argentina, as we've been explaining for many times, will be a huge exporter of gas. So we are always going to be a buyer of gas at the cost of the export parity, as we've been always saying, that is going to be very competitive. So we still believe that we are going to continue to be the lower cost producer.

And when you think on the selling on the domestic market or on the export, depending on where because with the logistics and the port that we have in Bahía Blanca, we are very competitive to go to Brazil as competitive as to go to Puerto San Martín, that are the northern ports in Argentina. So the differences between the domestic and the export market when we think on the Brazilian market is not going to be really relevant. So that is to understand what the impact of a new plant is in the whole 10 million tons that the region is importing.

And then going to our own project that you were asking, we continue to understand, analyze, going deep, do the engineering work on the engineering on our brownfield projects. And of course, we have a lot of benefits because of having a brownfield project there. We know exactly what's the location of the plant and where it's going to be behind the existing one. There are a lot of synergies with our existing assets. So we are still very keen on that project. We are very interested on continue to understand and also continue to understand what is the real cost of producing it of building the plant and how is the best way to produce this plant or to build this plant in order to continue to be the lower cost producer. And that is where we are focusing and how efficient is that we can build this new plant that, of course, is a relevant investment.

Our next question comes from Lucas Ferreira with JPMorgan.

I have 2 questions. The first one on the commercialization strategy for sugar and ethanol. Renato, if you can talk about, in your view, what are the reasons for ethanol prices to be extremely low, right, at this point? And how the company is reacting to that? I guess, looking at your numbers, you're carrying a large amount of inventories to be sold later in the crop. So how much of capacity you have to carry, if that's still the strategy that you guys are rolling for the second half of the year?

And then on the sugar prices, if this recent rally in prices drives you guys to accelerate selling? And if this is already levels that you think are good enough to do a major acceleration of selling there in the market?

And then if I may, a second question, more on the Argentina farming side, a bit of your outlook considering that we have this strong El Niño coming in, the business has been more and more challenging in the last few years. How much of a recovery in, let's say, normal -- what you think is sort of a baseline yields for the crops and potential yields for the crop? So how much of that gap closure we should see, assuming that El Niño will mostly support rainfall right in the country?

Thank you, Lucas, for your question. I'm going to ask Renato to answer the commercialization, the sugar and ethanol and our strategy with sugar now.

Lucas, so starting with ethanol, so I think the supply of ethanol was high due to the progress of the sugarcane harvest in the corn ethanol. So that's why prices decreased a lot, especially in June and July. With this price, the parity rate at the pump decreased as well. So the parity rate is lower than 60%. And since the early August, we have started to see some signs that demand is picking up, so more liquidity. So we have already seen an increase in price compared to July, about 5%. Now what we are doing, and I think most producers in Brazil are doing, too, is switch the mix to sugar. So this is going to decrease the supply of ethanol. So we think that the combination of lower supply and a higher demand, I think the situation for the Q4 and Q1 is going to be better. That's why our strategy is to carry as much as ethanol as possible to be sold at this point.

We have capacity to carry our production, especially because we have also switched the mix to max sugar. And of course, in a few weeks, we are going to have all the tanks of Caarapó that we can also use to store our production.

And regarding to sugar, we think we are in a moment that the marketing is shifting from 3 million tons of surplus to a deficit of about 2 million tons for different reasons in the most important production countries, India, Thailand, European Union and Brazil. And if you take this with the fact that the lowest stocks worldwide, so the stocks-to-use ratio is still very, very low. Or if you think of the whole picture, we think that the price of sugar has reacted because of this situation. And of course, we are taking the opportunity that the marketing is giving us in these rallies to increase our hedging, both in 2026 and in 2027. Today, currently, we are 7% hedged in '26 at $0.157 per pound. And in '27, we are about 16% hedged at $0.174 per pound. This is not counting Caarapó production.

Thank you, Renato. And Lucas, finally, on El Niño that you were asking on the impact in Argentina. We have an impact on the yields in general, where we expect normalization of yields or improvement of yields. And that's, of course, welcome and that is also including a benefit in terms of the whole cost structure that we have for the Food and Agriculture business.

And even more important than that, because of El Niño, we are also seeing a recovery on the price of rice, that rice is an important product that we produce in Argentina and Uruguay. So that will have an even higher impact. So in general, El Niño for us is a positive scenario. On top of that, the needs of urea are higher in the whole agriculture of Argentina because of more rains. So usually, the consumption of urea in the whole country is higher because of El Niño projection.

Our next question comes from Isabella Simonato with Bank of America.

I have 2 questions. First, since we're talking about the Food and Agriculture business, right? This year, you reduced planted area significantly, right, given the economics. But now we are ahead of maybe a more favorable scenario, prices picked up a little bit, yields as well. If you can give us a sense how can we think about planted area for the 2027 campaign? I think this will -- this would be very, very helpful.

And second, I mean, back to the sugar and ethanol discussion, right, I think we talk a lot about the surplus and deficit in the sugar market, but we have been seeing indeed in the inventories lowering -- declining, right, over the past few seasons, but that not necessarily has been translated into prices that we've seen in the past with similar level of inventory. So part of that, I believe, is China running at lower inventories or the trade flow that is still balanced with Brazil, producing above 40 million tons, I mean, can you explain, I mean, in your views, what would actually need to happen globally for prices of sugar to go back to $0.18, $0.19, $0.20 per pound?

Thank you, Isabella, for your question. Regarding Food and Ag and the planted area, you shouldn't expect differences to this year. We are maximizing returns. We are being very focused on only leasing and planting the areas where we continue to see the returns that we are looking for. So I don't see that changing in any significant way. At least, I don't see that area growing significantly.

And regarding the sugar and ethanol and what's the scenario or what should need to happen to go back to $19 (sic) [ $0.19 ] per pound in sugar, so Renato, if you want to add something to what you've already said.

No, I think it will depend a lot of the El Niño impact on the key countries. Of course, the impact can be higher or lower. So this switch from 3 million to 2 million deficit, I think can be higher depending on what happen in those key countries. For example, in India, we know that the stocks are very low. They are announcing some measures to avoid import sugar. So -- but, of course, it's going to depend on the monsoons that is going to happen there. In Thailand, the same thing. And even in Brazil, despite the higher cane availability that we have in Brazil, I think there are a lot of interruptions in the crushing. The TRS content, especially in June, was lower than everybody was expecting.

The mix is going to -- is less sugar oriented than everybody was thinking at the beginning of the season. So I think all those variables are going to impact the deficit, the size of the deficit and in the price of sugar in the coming months. And I think the world has learned to deal with lower stocks, maybe because of higher interest rates, improvement in logistics. But of course, the fundamentals at some point has to prevail and price has to increase.

[Operator Instructions] Our next question comes from Thiago Duarte with BTG Pactual.

My question goes back to the Caarapó transaction and I think to Renato. Two things here, Renato. The first one, when we look at M&A deals in the industry, I guess, one of the historically most challenging aspects is the quality of the sugarcane that comes along with the mill, right? So my first question to you is whether you have a view on the quality of the cane that you're going to be harvesting coming along with the mill -- with the Caarapó mill in terms of cultural treatment, in terms of the cost, especially the longer cut cane, fifth-cut or sixth-cut cane. I don't know if you already have a view on that.

And the second one is related to when you talk about the optimism about raising the crushing volumes or almost doubling the crushing volumes, as you said, what you would say is the necessary CapEx you're going to have to do in terms of the expansion of the planted area or similar investments that will need to be done? Or you think you will have the additional 2.5 million tons, 3.5 million tons of cane available from your existing plantations. So these would be my questions.

Thiago, thank you for your question. Renato?

Okay. So Thiago, we think that the region is very similar to our region. So the potential to produce sugarcane is exactly the same as Ivinhema. So the potential to have the tons per hectare and the kilograms of TRS per ton of cane is exactly the same. Of course, we are going to adjust some treatments because we have different methodology to treat the sugarcane that they are using today. But we think that is something very quickly to fix and probably we'll have a better cane in the near future.

And regarding the excess of cane that we have in the cluster, we think that we have already something close to between 500,000 tons and 1 million ton that could be diverted to be crushed in Caarapó for the next 2, 3 years. But of course, in order to achieve 6 million tons to 7 million tons, which is very possible, considering the industry that we are acquiring. Of course, we have to plant more sugarcane. So the only additional CapEx, important CapEx that we need to do to achieve these levels is to plant sugarcane. The industry is almost done. So a few investments has to be made to achieve this level.

And just to complement, Thiago, we visited the plantations and the plantations are in a good mood today, which is not something that has to be changed, just a clarification.

That's perfect. And I think, Renato, you also mentioned that you see possibility or opportunity to improve the yields of the cogen in the mill. So the question there would be, if there is also, you think, a CapEx associated with it in terms of improving the megawatt per ton generated?

Yes, there are some CapEx, but it's a small CapEx. So we are going -- we are thinking about things like isolate the main equipments. So we are going to improve the consumption of energy in the mill. So if you consume less energy, we have more energy to be exported. But those investments are not big investments like acquiring a new boiler. So we are not thinking about this type of investments. Just some adjustments in things that we have already seen in our visits at the mill.

This concludes the questions and answers section. At this time, I would like to turn the floor back to Mr. Bosch for any closing remarks.

Thank you all for participating today, and we hope to see you in our next calls.

Thank you. This concludes today's presentation. You may disconnect at this time, and have a nice day.

Good morning, ladies and gentlemen, and thank you for waiting. At this time, we would like to welcome everyone to Adecoagro's 2026 First Quarter Results Conference Call. Today with us, we have Mr. Mariano Bosch, CEO; Mr. Emilio Gnecco, CFO; Mr. Renato Junqueira Pereira, Sugar, Ethanol and Energy VP; and Mrs. Victoria Cabello, Investor Relations Officer. We would 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 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.

Good morning, and thank you for joining Adecoagro's first quarter 2026 results conference. Today, we are presenting the first results from the new Adecoagro, a well-diversified Agri industrial platform composed of three segments: Sugar, Ethanol and Energy, Fertilizers and Food and Agriculture. The $86 million adjusted EBITDA generated already reflects the change in scale and earnings potential with further upside ahead. After the major maintenance turnaround in the fertilizer plant, we are pleased with the ramp-up of operations with the plant operating at full capacity since then. Due to the conflict in the Middle East, urea prices have peaked, and we are progressively capturing the upside, leading to an even better-than-expected results. In Brazil, we achieved a new first quarter crushing record, reflecting the returns on our planting expansion investments. The high flexibility of our mills enabled us to produce almost 100% ethanol, benefiting from better ethanol prices. Harvesting pace remains on track to meet our annual target, supporting further cost dilution.

In Food and Agriculture, results reflect the end of the prior harvest season as we sold our carryover stocks. The harvest of the new crop is well advanced, presenting good productivity indicators. Margins should improve in the coming quarters as we commercialize the new crop, supported by a more efficient cost structure. Overall, higher productivity in Brazil, higher urea prices and better margins in Argentina and Uruguay should translate into a stronger earnings performance and most importantly, higher cash generation in 2026. This, in turn, will enable us a faster-than-expected deleveraging, one of our main priorities following the acquisition of the fertilizer business.

To conclude, I want to reiterate my gratitude to everyone across Adecoagro. It is thanks to their hard work that we are able to navigate different commodity cycles and continue to deliver attractive results to our shareholders.

Now I will let Emilio walk you through the numbers of the quarter.

Thank you, Mariano. Good morning, everyone. Before turning to the results of the quarter, I would like to briefly remind everyone that as part of our efforts to update and simplify how we view our operations starting in January 2026, the company now operates under three reportable segments. Number one, the Sugar, Ethanol and Energy segment; number two, the Fertilizer segment, which reflects Profertil's results; and number three, the Food and Agriculture segment, an integrated platform focused on agriculture and food production that was previously reported across three separate verticals, crops, rice and dairy.

Please now turn to Page 4, where you can see our first quarterly results under this new organizational structure. Gross sales totaled $394 million in the first quarter, representing a 22% year-over-year increase. This growth was driven primarily by a strong performance in our fertilizers business, supported by higher production volumes and slightly improved prices, together with higher ethanol and energy prices in our sugar, ethanol and energy operations. These factors more than offset the lower prices across the remainder of our commodity portfolio, including sugar, peanuts and rice. Adjusted EBITDA reached $86 million, more than doubling the level reported in the prior year. In addition to higher sales, results benefited from a first quarter crushing record and our operational flexibility to produce nearly 100% ethanol throughout the period, combined with lower natural gas sourcing costs, which is the main input for urea production.

Moving to the financial and operational performance of our operations. Let's start with the Sugar, Ethanol and Energy segment on Slide 6. Due to the rainfall received in the final months of 2025, the cane that remained unharvested recovered meaningfully in yield and was collected during the first quarter under our continuous harvest model, one of our key competitive advantages versus other players. As a result, we achieved a new first quarter crushing record of 2.2 million tons of cane, a 49% year-over-year increase, driven by higher productivity despite harvesting a smaller area. In terms of product mix, we reached a 96% ethanol mix during the quarter as ethanol prices traded substantially above global sugar prices and therefore, offer superior margins. This highlights the operational flexibility of our industrial assets even while maintenance work was being carried out.

On the cost side, production costs were negatively impacted by the appreciation of the Brazilian Real and by the acceleration of certain agricultural expenses that were typically concentrated later in the year, which more than offset the cost dilution from higher crushing. Although we maximized ethanol production and executed sales at higher prices than in the prior year, quarterly sales were below last year, mainly due to lower sugar sales, reflecting weaker global prices and lower volumes sold. Overall, adjusted EBITDA for the period reached $41 million, exceeding the performance reported in the previous year. As of today, our crushing pace remains on track to meet our full year target. Accordingly, we expect low double-digit growth in crushing volumes driven by greater cane availability, and we anticipate a full year of ethanol maximization given the current price scenario.

On Page 8, we present the Fertilizer segment. The year-over-year increase in urea production was primarily driven by a higher number of operational days compared to the same period last year. As mentioned in our previous call, the fertilizer plant experienced 19 days of downtime during the first quarter of 2025, mainly due to adverse weather conditions that disrupted gas supply. By contrast, this quarter, we recorded only 10 days of downtime as we ramped up operations following the major maintenance turnaround executed at year-end. As of today, the plant is operating continuously at full capacity.

In terms of sales, the 68% year-over-year increase was mainly driven by a 16% improvement in urea prices. Following the escalation of the conflict in the Middle East, a region that accounts for approximately 30% of global urea trade, prices began rising sharply in early March, with only a partial impact reflected in this quarter results. As a result, adjusted EBITDA showed a strong year-over-year recovery, reaching $53 million. In addition to higher sales, performance also benefited from greater cost dilution due to the increase in production and lower gas sourcing costs as we leveraged contractual flexibility to secure a portion of our gas supply at more competitive prices. Looking ahead, we expect adjusted EBITDA in 2026 to be stronger than previously anticipated, potentially exceeding prior year levels, supported by a favorable market price outlook.

Please move to Page 10. In our Food and Agriculture segment, first quarter results were impacted by lower commodity prices, mainly in peanuts and rice as well as by higher costs in U.S. dollar terms as we finalize the sale of carryover inventories from the previous harvest season. Regarding the 2025-'26 campaign, we are currently in the harvesting phase, which we expect to complete over the coming months. As of today, more than half of the planted area has been harvested, resulting in over 700,000 tons of agricultural products. In our dairy operations, processing volumes increased year-over-year, driven by higher raw milk production at our Profertil facilities, reflecting improved cow productivity. We expect margins to improve over the coming quarters as the new crop is harvested and commercialized, reflecting the cost initiatives implemented. In dairy, we also anticipate further growth in processed milk volumes, supported by the launch of new products under our retail brands.

Please turn to Page 12 of the presentation, where we outline our capital allocation strategy, starting with our CapEx program. During the first quarter of 2026, we paid the final installment related to the acquisition of a 90% equity stake in Profertil. As a reminder, the $1.1 billion transaction was financed through a combination of $400 million in cash on hand, $400 million in new long-term debt facilities and $300 million in equity proceeds.

On the following Page 13, we present our debt profile. Our net debt increased to $1.6 billion in the first quarter of 2026, reflecting the seasonal working capital requirements associated with planting and harvesting activities in our food and agriculture business. Excluding this seasonal effect, net debt would have already declined compared to the fourth quarter of 2025. On a pro forma basis, net leverage stood at 3.2x, consistent with our ongoing deleveraging path supported by improved operating results despite the seasonality in cash needs. Looking ahead, we expect this metric to continue to decline driven by higher adjusted EBITDA generation, primarily from our Fertilizers segment. It is also worth noting the company's strong liquidity position and full capacity to repay short-term debt. The majority of our indebtedness is in the long term, and its currency composition is well aligned with our revenue mix, mitigating currency risk.

Finally, regarding shareholder returns, a cash dividend of $35 million was approved. The first installment of $17.5 million will be paid on May 19 with the second installment payable in November in an equal amount.

Before concluding, I would like to share a brief closing remark. These are the first quarterly results we present under the new corporate structure, representing an important milestone for the company. The performance already reflects a stronger and more resilient platform, supported by increased diversification and a more robust earnings profile. As shown in the top right pie chart, our revenue base is now more diversified than in the past. This evolution enhances our ability to deliver consistent performance across different cycles, while improving the stability and sustainability of our cash generation. Over the years, we have demonstrated a strong track record of consistent results and cash flow generation despite commodity price volatility and adverse weather conditions. Today, the company is particularly well positioned to benefit from upside in fertilizer prices, which could translate into stronger-than-anticipated results while we continue to scale up the platform and reinforce our strategic relevance within the sector.

Thank you very much for your time. We will now open the call to questions.

[Operator Instructions] Our first question comes from Matheus Enfeldt with UBS.

My first question on capital allocation midterm, how you think Profertil is you mentioned that one of the avenues for future growth could be the expansion of the fertilizer capacity from Profertil. And now how do you think that would be the best path moving forward? And I'm thinking particularly whether it would make sense to perhaps find a partner for this in order to accelerate a potential FID, if you could take advantage of investment programs in Argentina in the near term and sort of perhaps take advantage of higher fertilizer prices for longer if you think of a partnership could make sense for that, and how to do that?

And then my second question also on the fertilizer business, is sort of trying to understand how the pricing of urea is undergoing in Argentina. Previous comments mentioned pricing at import parity. So how is the -- how are the consumers of your fertilizers really taking this impact in higher urea prices? And how the contracts work if you set contracts. If you set prices in advance in time, what's the time line for that? When do you expect to set prices for the remaining sales for the year? Those are my two questions.

Hi, Matheus, thank you very much for your question. I'm going to start for your second question, and then I would like to reask about the first one because some part of it, we couldn't understand. So going to the fertilizer business, and how prices are generated. You mentioned about the import parity and the import parity in Argentina is because Argentina consumes 2.4 million tons of urea and only produces 1.3 that is 100% produced by Profertil. So there's always a need of importing urea. That's why it's clear that there's always going to be an import parity pricing. The reduction on potential uses of urea are at the most a 10% reduction. So we are far away to becoming a net exporter.

So we'll always be a net importer at this level of production and the capacity is only that one. So that is absolutely clear. And then when that urea is needed and when are the needs in Argentina is for wheat and corn, mainly for those two crops, then for rice and many other crops. But the main drivers are wheat and corn. And for wheat, the needs are July -- June, July onwards. So the need of the usage of fertilizers is starting now or in the following 2 months, in the next two months is where the need for wheat are going to be delivered. And then during September, October and November is mainly for corn. So those are the two moments where the consumption of fertilizer is higher within Argentina. So that is how urea is going to be priced domestically. Then going to the first part of your question, there were some noises so we couldn't hear you clearly. Can you repeat that?

Yes, sure. I'm just thinking on the potential to expand the fertilizer plant, the urea plant with Profertil. You mentioned that this is a potential but sort of a longer-term plan. But my question is, could you find ways to potentially accelerate that given how high prices are in the near term and likely to stay higher for the next couple of years and finding a potential partner, perhaps someone with natural gas, perhaps someone willing to reinvest in Argentina, if that could make sense to accelerate a potential FID? That's my question.

Okay. Clear. Thank you, Matheus. In any case, constructing a urea price -- urea plant needs 4 years. So -- and the total timing in general is 5 to 7 years. So in this case, it's difficult to go below 4 years. So taking that into account, this increase in fertilizer prices as of today, we are not expecting that to influence our decision on making a urea plant. Having said this, of course, we are interested on expanding the plant because we do believe on being the low-cost producer of urea in that specific area. We do believe that Argentina will be a net exporter of natural gas for many, many years going forward.

There are many projects being developed in the whole gas production, including Vaca Muerta as the main leading area where the gas is increasing. So we do see that happening in Argentina. There are transportations being built, and there are more transportations going through by Bahia Blanca that is where we have this -- so we do see a great opportunity to expand this plant. So we do believe that makes sense. And we also do believe that the region is a net importer of urea. Even in situations like this where the urea price goes up, the region, including Brazil, we import around 10 million tons of urea and the region only produces 2 -- 2.5 million at the most. So there's still a lot of space to be a producer of urea. But this is a project that we are studying in details, and we are working on it, but we still don't see exactly when and how we will start to make it happen. And of course, there are several ways of financing, including partners, et cetera...

Our next question comes from Isabella Simonato with Bank of America.

I have two questions still on the fertilizer business. When we look at the average prices that you guys had in Q1, it looks quite similar to urea prices in Brazil, right? So my question is, can we assume that, that trend continues into Q2? I mean when we look at April and May, can we see a high correlation of the prices you've been selling to the prices in Brazil. And to that point, can you comment a little bit on how volumes are being sold? I mean, the pace of them? Are you seeing the farmers taking a step back in this moment and trying to delay a little bit purchases or not? Just to have a sense of the overall environment. And the second question is on the sugar and ethanol side. You mentioned, right, that costs move up because of FX, but also on some agricultural costs. But I assume that since you're crushing more, right, for this year, you have more cane availability, better productivity. I mean, can we think about some normalization or some decline in unitary costs going forward?

Thank you for your question. I'm going to address the first one, and then I will ask Renato to take the second one. On the first one, the answer is yes. The urea price is very correlated to the CFR Brazil. So the main market of urea is CFR Brazil. So that's how we all price urea in the region. So you will see a correlation there, and it's easy to look at it. And the urea price is always a spot price and this CFR reflects the spot price of urea. And then regarding the pace, as I mentioned before, June, July and August is where the needs of fertilizers starting in Argentina. We don't see that need being reduced.

The most that can be reduced is 10%, but we don't even see that reduction happening. So we do continue to see producers, and we as producers are using the urea because it is where you see the most or the higher reaction on your productivity at the farms. So the higher impact in productivity within fertilizers in general is urea. So that's why we continue applying it. And so we don't see that as a relevant reduction. Then going to your second question regarding the sugar and ethanol cost and our expectation for this year, Renato can be more clear here.

Hi, Isabella, we expect the cost reduction in Reais. The reduction is going to be between 10% and 15%. I think the main factors that will reduce the cost is the volume, as you said, we are going to have more cost dilution and some efficiency gains that we are having in our operation and also a lower Consecana price. So those factors are more than enough to offset some pressure in costs in fertilizer and diesel costs. The cost in the quarter is just an anticipation of some agriculture operation that we did because of the weather was in a good condition to do it, especially weed control and plant control, but this is just the cost that we had in the first quarter, we are not going to have in the future. That's the reason we think it's difficult to measure cost of production by quarter. It makes more sense to see it annually.

[Operator Instructions] Our next question comes from Gabriel Barra with Citi.

I have two here. One trying to change gears here and understand a little bit better the scenario for the crop season this year. I remember in the last conference call, we have talked a little bit about the mix for this crop season. As you have discussed, it seems that the strategy to focus on ethanol is up and running, but we are seeing ethanol price dropping to lower levels in the beginning of the crop given this higher supply. So my question here is trying to understand the company's strategy for the mix from now on, given this lower ethanol price and this, let's say, weak sugar price that we are seeing in the market today.

So I want to try to understand here the structure of the company and the commercialization strategy here for this crop season. The second point, it's -- you're seeing this quite strong market for fertilizers. And at the end of the day, we still see the company given the recent acquisition with net debt EBITDA close to 3.2x above, let's say, the comfortable zone that I think that is, let's say, the sweet spot here for the company in terms of capital structure. How should we think about the company deleveraging path to reach the 2x net debt to EBITDA in the following quarters or even months given this better scenario for fertilizers? Do you think that it's feasible to think that we are going to reach this number at the end of the year? Is this the focus of the company right now? How should we think about the capital structure of the company at this point given the current scenario for commodities? So those are my two questions.

Okay. Thank you, Gabriel, for your question. Renato is going to answer your first question regarding the mix and the crop season.

Hi, Gabriel. The year started with a tight ethanol inventory and high prices. So that's why we took advantage of this scenario to sell almost our whole production of first quarter and all the carryover until the end of April with prices close to $0.20 per pound equivalent. Since then, with the beginning of the new sugarcane season, ethanol prices have fallen about 20%. This was passed on to the pump.

So the rate of the pump today is close to 60%. We think that this 60% at the pump, it's enough to absorb the ethanol surplus from one year to the other. So the demand of ethanol is going to increase and the hydro ethanol can reach about 30% of market share. In our case, specifically, the 60% of parity rate at the pump is still an ethanol equivalent close to $0.17 per pound. So that's why we are still maximizing the ethanol production, and we think we are going to keep maximizing maybe for the whole year. At this point, we have stopped selling our ethanol, and we are in our tanks to sell the ethanol in the last part of the year.

Thank you, Renato. And then Gabriel, regarding your second question on the leverage, I will ask Emilio to answer it.

Hello, Gabriel. Thank you for your question. As you may have seen during the presentation of our quarterly results, we are already showing a reduction in our net debt and even taking into consideration some seasonality of our working capital during the first semester of each year. Now when we think about our net debt on an annual basis and given the current scenario for all of the prices of all the commodities that we produce, including the fertilizers. What we thought would be a reduction of bringing down the net debt levels to 2% in the following 1 or 2 years, we're probably going to see it by the end of this year. So hopefully, by the end of 2026, we'll be in the levels of 2x EBITDA on an annual basis.

Our next question comes from Bruno Tomazetto with Itau BBA.

The first one is regarding your view on El Nino, right? Recent studies suggest a stronger event in this year, and we would like to hear more about what you guys are anticipating in both terms of Sugar and Ethanol segments, maybe more focused on sugar prices and the pace of your hedges moving forward, but also for Food and Agri segments, right? You mentioned in the earnings release an average expected for crops in 2026. So just wondering what could change in a scenario of a stronger El Nino in the coming months? And then the second one is on Food and Agriculture division. Just wondering how you guys are looking at the segment in the medium and long term and considering the lower relevance of results for the consolidated company, also assuming that the company is already consolidating several operations into a single business unit. Just if there could be any opportunity of M&As or divestments more specifically that could make sense, especially now that fertilizers unit has gained a lot of relevance for the quarter, that's it.

Thank you, Bruno, for your question. Regarding El Nino, there are several aspects that can affect if we have an El Nino year. The main aspect is in terms of prices of the different commodities that we produce. As you know, this can affect positively in terms of sugar prices. And if we do have El Nino year, then the Northern Hemisphere can have some less production and then that can improve the prices of sugar basically, and that's probably where the higher impact is -- then in terms of our own product, we are not affected in the sugarcane area Mato Grosso do Sul is not affected in terms of production by El Nino or La Nina because it is in a neutral area. And then in general, that El Nino would mean more rains and more rains would mean more uses of fertilizer.

So that can be positive for the fertilizer business as a global comment. So that is quickly on El Nino or La Nina and this apparently looks like an El Nino year that, of course, would potentially be positive. Then regarding your question on food and agriculture, as we mentioned several times during last year, last year was probably the most difficult year for food and agriculture. Food and agriculture in general, we were having a huge reduction in prices of most of the commodities that we were producing, and we were bringing costs of the previous campaign where the cost was higher. So today, we are harvesting -- we are in the middle of the harvest of this new campaign where the prices have already gone down. So we do expect that going forward in the following quarters, the food and agriculture will start generating more relevant results than what you've seen in this quarter, of course.

So having said this, we do expect that to continue to improve, and we do like the different businesses that we have. And in all of them, we believe we are the low-cost producers. So we went through this difficult time, and now we are in a good position to take advantage of being the producers of the different products that we are doing in the whole food and agriculture business.

Next question from Thiago Duarte.

It's just one question here on circling back to the discussion about the deleveraging and the confidence of the company into going back to your leverage target by the end of this year instead of a few years ahead, given the positive outlook for some of your businesses. So the question is really into what to expect next in terms of capital allocation, either in terms of speeding up dividends and share buybacks or eventually thinking about new growth opportunities. Just how you're thinking about it given that the deleveraging might happen sooner than expected?

Hi, Thiago. Thank you for your question. Of course, the first focus is on deleveraging. And as you've heard us before, we've been always looking to be disciplined. We also do have several projects in each one of our existing businesses that have potential for growth. We were talking about one particular one that is regarding this expansion of the fertilizer business. There are many interesting projects within our ethanol business as you've seen with the biogas and several things that are growing and doing pretty well. So we do continue to see interesting projects. The returns of those projects, we are asking higher returns in order to maintain this level of debt and to continue with our distribution policy or with our dividend policy as we have already mentioned before.

This concludes the question-and-answer section. At this time, I would like to turn the floor back to Mr. Mariano Bosch for any closing remarks.

Thank you all for participating in our call. We are very happy with how the company is going with this new renovated Adecoagro, so we hope to see you in our new coming event.

Thank you. This concludes today's presentation. You may disconnect at this time, and have a nice day.

Good morning, ladies and gentlemen, and thank you for waiting. At this time, we would like to welcome everyone to Adecoagro's 2025 Results Conference Call. Today with us, we have Mr. Mariano Bosch, CEO; Mr. Emilio Gnecc, CFO, Mr. Renato Junqueira Pereira, Sugar, Ethanol & Energy VP; and Ms. Victoria Cabello, Investor Relations Officer. We would 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 and could cause results to differ materially from those expressed in such forward-looking statements.

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

Good morning, and thank you for joining Adecoagro's 2025 Results Conference. Today, we are presenting a larger, further diversified and more resilient Adecoagro but with the same DNA, being the lowest-cost producer. Upon acquiring Profertil, we became the largest producer of urea in South America. This new operation a transformational milestone for us as it broadened our production capabilities more than double our cash generation and reduced earnings volatility by incorporating a stable, consistent and already cash-generating business.

We are adding a unique asset in Argentina to our well diversified our industrial portfolio with the capacity to expand its earnings and cash potential by leveraging on Argentina's largest natural gas reserves. As we rely on natural gas to produce urea, greater extraction will translate into further supply at a more competitive prices. We also have a huge market opportunity of reaching a wider demand in South America that today must rely on imports from faraway origins, such as the Middle East. Due to the ongoing international conflict, urea prices have peaked, and we are very well positioned to capture this upside. As most of our production is still open to market prices and our gas supply remains secure and at a fixed price.

The acquisition of Profertil would not have been possible without the continued support of our shareholders. We raised $300 million in new equity anchored by either our controlling shareholder, further reinforcing their commitment to the company's long-term strategy. Given this incorporation, we decided to simplify the way we view our businesses and move to 3 segments: the Sugar, Ethanol & Energy business, the Fertilizer business and the Food & Agriculture business, all which Emilio will get into more details shortly.

Now looking back to 2025. It was a challenging year for the agribusiness sector as commodity prices reached the low end of the cycle. Today's prices remain under pressure, but with a focus on efficiency and being the local producer, we will be able to continue navigating the [indiscernible]. Higher pricing in Brazil will drive further cost dilution, which will partially mitigate the lower sugar prices.

In Argentina and Uruguay, better productivity will turn into margin expansion and greater results. On top of this, we expect a normalized and full year of operations from the fertilizer business, driving further cash generation.

To conclude, I would like to acknowledge all the people in Adecoagro for their hard work in this tough context. I am convinced that if we remain focused on being the lowest cost producer in each of our sustainable production models, we can further expand our earnings potential.

Now I will let Emilio walk you through the numbers of the year.

Thank you, Mariano. Good morning, everyone. Before entering into the results of the year, I would like to make a preliminary observation with the intention to provide more clarity in the understanding of the numbers we are presenting today. Following the acquisition of Profertil on December 18, 2025, our consolidated interim financial statements incorporate Profertil income statement only for a 13-day period under a new business unit named Fertilizers. Additionally, in an effort to update and simplify the way we view our business units from the beginning of January 2026, the company will change the business segment reporting structure as follows: Segment number one, Sugar, Ethanol and Energy business, as previously known, segment #2, the Fertilizers business. This includes the manufacturing and commercialization of fertilizers. And lastly, segment #3, Food and Agriculture business, which reflects an integrated business focused on agriculture and full production that in the past, were presented through 3 separate verticals, crops, rice and dairy.

Please turn to Page 4, where you can see how the acquisition of Profertil supports our scale. On a pro forma annualized basis, consolidating the 2024 and 2025 results of our fertilizer business, Adecoagro increased its size from a base of $1.5 billion in recurring revenues and a mid-cycle adjusted EBITDA of more than $400 million and cash generation of $150 million to above the $2 billion sales threshold with the potential to generate $700 million in adjusted EBITDA and to double its cash generation.

In addition, the acquisition further diversifies our portfolio, as illustrated in the pie chart at the top right there by strengthening the company's ability to perform across cycles.

Please turn to Page 5 of the presentation. As we have been anticipating over the previous quarters, 2025 was a challenging year, marked by lower commodity prices mix productivity and higher costs in U.S. dollars, which resulted in a year-over-year decrease of 2% in sales and 38% in adjusted EBITDA. On top of that, Fertilizers financial results were affected by 2 events, which resulted in approximately 90 days of downtime. First, Profertil carried out the largest scheduled turnaround of its plant resulting in a full shutdown of 54 days starting on October 16 and ending on December 8, shortly before our acquisition of the company. And second, a 31-day downtime due to the flooding of a third-party gas distributor that interrupted the delivery of gas to the plant.

As a result, again, on a pro forma basis, assuming full year results of our fertilizers business for both 2025 and 2024, revenues were down 6% compared to the prior year, whereas adjusted EBITDA generation declined by 35% year-over-year. We expect a full recovery in the fertilizers business adjusted EBITDA as operations return to normalized levels. At Adecoagro, we have always leveraged on low-cost production and product and geographic diversification to mitigate commodity price volatility and adverse weather events to inherent risks within the agribusiness segment.

With the incorporation of the Fertilizers segment, we have moved to a 3 equal sized revenue streams and a more diversified and less volatile cash generation across our geographies and products, as shown in the pie charts at the bottom of the slide.

Regarding the acquisition of Profertil, we would like to make now a brief summary. Please move to Page 6 of the presentation. We closed the transaction during mid-December for a total consideration of $1.1 billion for the 90% equity interest. From this amount, $676 million had already been paid by December 31, with the remaining balance to be paid during the first half of 2026. As of today, the outstanding balance is approximately $50 million that will be settled before the end of this month. The transaction was financed through a combination of cash balances in the amount of $400 million approximately 2 new long-term debt facilities of $200 million each with a 7-year tenor, 2-year grace period at attractive rates and an equity issuance of $300 million, marking a gross return to the public markets since its IPO in 2011. At the same time, we continue to invest in organic growth projects throughout our operations as outlined in the box on the right-hand side of the slide.

Please direct your attention to Page 7, where we present our debt profile. Our net debt and net leverage ratio increases compared to prior periods, explained mainly by the financing of the acquisition of Profertil and the lower results of the year. On a pro forma basis, net debt reached $1.5 billion, whereas our net leverage increased to 3.3x compared to 1.2x in 2024. Despite this, it is worth noting that the company's full capacity to rebate short-term debt with its cash balance. Most of our indebtedness is in the long term and its currency breakdown matches the 1 of our revenues, mitigating currency risk.

Going forward, we intend to reduce our leverage ratio through higher expected adjusted EBITDA generation, mainly from our fertilizers business together with the revision of our capital allocation strategy. In this sense, we have reviewed our shareholder distribution program in light of our capital allocation priorities and the lower results generated. Accordingly, our Board of Directors approved the distribution of $35 million in cash dividends for 2026, subject to approval at our Annual General Shareholders Meeting.

Moving to the financial and operational performance of our business units. Let's start with the Sugar, Ethanol and Energy business on Slide 9. The weather during the last quarter of 2025 was characterized by above-average rainfall, which reduced the amount of effective milling days and therefore, limited our ability to reach a crushing volume in line with 2024. Nevertheless, [indiscernible] left unharvested at year-end benefited from these 4 [indiscernible] rains, showing excellent yields and is currently being harvested under our continuous harvest model while maximizing ethanol production. Can productivity recovered significantly during the fourth quarter of 2025 as seen on the graph at the top left of the slide, positively impacting the mark-to-market of our biological assets on greater than expected yields for the upcoming quarters.

In terms of mix, we achieved a 72% ethanol mix during the quarter and a 58% mix for the full year as ethanol prices substantially improved during the second half of 2025, becoming the product with a better margin. Although we maximize ethanol and largely increase the amount of volumes sold at greater prices, annual sales remained below the prior year on lower global sugar prices and volumes sold. Despite the decline in milling, our cash cost which reflects how much it costs us to produce 1 pound of sugar and ethylone in sugar equivalent remain unchanged at $0.128 per pound. This is explained by a more efficient upgrade of our machinery, which in turn reduced our annual maintenance CapEx, together with an increase in tax recovery given higher ethanol sales.

Overall, adjusted EBITDA for the year ended at $292 million below 2024 performance. Looking at 2026, we foresee a low double-digit growth in our crushing volumes due to better productivity and a full year of ethanol maximization given the current price scenario.

On the following Page 11, we present for the first time the Fertilizers business. As previously mentioned, the acquisition was concluded in mid-December, and therefore, our financial statements only include Profertil's income statement for a 13-day period. For comparison purposes, we present Profertil's full year results and its main drivers. In 2025, as we described earlier today, the fertilizer plant experienced 2 major stoppages resulting in 90 days of downtime, which adversely affected results. Net sales and adjusted EBITDA declined year-over-year as fewer operating days throughout the year reduced production volumes despite higher prices for both urea and [indiscernible].

For 2026, we expect a full recovery in adjusted EBITDA generation driven by normalized operations compared to the prior year and a positive market price outlook. In the case of our farming business, now Food and Agriculture business, 2025 results were pressured by a combination of lower commodity prices, mainly in rice and peanut and even yields and higher costs in U.S. dollar terms. The top line of this business remained in line versus the previous year due to higher volumes sold, which, in turn, partially offset the decline in prices as seen on Slide 13. Nevertheless, adjusted EBITDA was negatively impacted by the increasing costs and an uneven performance at the farm level.

Looking ahead, we have implemented cost initiatives to improve margins, including a 22% reduction in total planted area through the renegotiation of our lease agreements. We have also increased the share of rice varieties due to more resilient prices while also leveraging on our production flexibility to produce dairy products for the domestic and export market based on marginal contribution.

Before concluding this presentation, I would like to share a few brief closing remarks. Over the years, Adecoagro has demonstrated a strong track record of delivering consistent results and generating cash flow, notwithstanding commodity price cycles and adverse weather events. With the incorporation of the fertilizer business, we have effectively doubled the size of the company, further enhance the stability and visibility of our cash generation and positioned Adecoagro in a new league in terms of scale and relevance.

We acquired a state-of-the-art asset and a gas generating business with immediate earnings contribution and limited execution risk. As a result, we are today a significantly stronger and more resilient company with enhanced diversification and a more robust earnings profile. We are very enthusiastic about the company we are building and the long-term value that this transformational milestone is expected to deliver for all of our stakeholders.

Thank you very much for your time. We will now open the call to questions.

[Operator Instructions] Our first question comes from [indiscernible] with BTG Pactual.

So there are two questions from our side here, please. The first one is on fertilizers. So -- they are now starting to operate referred to at a time when urea prices are actually soaring. So we just want to view we denote to hear a review a little bit on the fertilizer market today. So how are you seeing it if you expect these higher prices to affect the industry volumes in a meaningful way or we may actually see this price increase to maybe flow more directly to preferred to margins. So that's the first.

And the second one is on the sugar, ethanol business. You guys are now estimating a double-digit growth in sugar in creation for this crop year, something that should be largely helped by agriculture. So we just want to know how you're guys seeing the unitary costs going forward, especially since you're going to have a higher dilution from the stronger volumes but fertilizer prices are also increasing. So those are the two, I suppose.

Thank you, Guilherme, for your question. Number one, I want to take the question on the fertilizer business, and then Renato will take the specific of the sugar ethanol.

On the fertilizer business, of course, today, the level of prices have increased because of the conflict, and that increases between 30% to 40%. But before that, the fertilizer prices were also good prices for us and for our business model. And today, how this fertilizer business, how these higher prices on urea transform into higher margins for us, that difference goes directly to the final number to the EBITDA number or to our cash generation because all our costs are fixed. Our gas contract that is 60% of the cost of producing urea are already fixed, and we have in contracts until the end of 2027. So that is pretty easy to calculate and to understand what's the impact on that increase in prices.

Having said this, we produce per year or we should be producing in average 1.3 million tons per year. From this 1.3 million tonnes, we have already produced and said during January and February, around 200. So 1.1 are still open to these increasing prices. And we sell almost every month the amount that we are producing. There are some months that we set some more because of the cyclical acquisition of -- from the farmers. So during July, August, September, we sell more than during February and March. So if the prices continue at this level, that 1.1 million tons that are still available for sale will be impacting directly on our final results.

So that's basically how we see this. And we see fertilizers for this year at relatively high prices. We have this view that even with the conflict finalizing price of fertilizer will be impacted for the whole year with the most probability. And then going to your second question on the sugar ethanol business, I will ask Renato to answer that question.

Yes, Guilherme, I think that our costs can be reduced in approximately 15% between 10% and 15% and I think one of the points you just mentioned is the dilution factor. As was mentioned, we had a lot of rains in the last quarter of last year, which improved a lot the outlook for the sugarcane for this year. That's why we are having a very intense first quarter in terms of crushing, producing only ethanol at high prices. So that's the direction factor.

And then if you go to other points that impact our cost, we think that the labor should increase close to the inflation. Fertilizer, we have already fixed and bought 70% of our annual need -- so we don't see impact until at least the mid of the year. And this, of course, depends on the increase of price of [ Petrobras ] but we have the benefit of the increase of price of gasoline. Also, the leasing cost should be lower because of the consequent prices. And more important, we have been working a lot in adjusting our efficiencies, especially in the agricultural part -- we have been very disciplined in measuring the efficiency of each machine in the field. So we have reduced the number of equipments to harvesting the sugarcane to plant the sugarcane. So we are doing the same thing with less equipment which represent less cost. So we are very optimistic we're going to have a good year in terms of costs.

Our next question comes with Gabriel Barra with Citi.

I have two. Mostly, it's a kind of a follow-up from the last question. The first one is about the fertilizer business. When you think about the new scenario for urea and ammonia price, given the fact that you guys have a really interesting position in the gas price in Argentina. How should we think about the commercialization strategy for the year given this much better scenario, but the level of facility that we have at this point that will make this kind of decision more, let's say, challenging this context, right? So I would like to understand this strategy for the year.

The second point is about the -- another commercialization strategy, but in the sugar ethanol, right? The same case here, right? We see a really tough situation right now for gas price -- for diesel price in the country. You are seeing even that touches has not changed the gas in the price, we are seeing gas price at increasing in the last few weeks which means that it seems to be more supportive for ethanol price during this next crop season for the year. So take advantage of these kind of stronger scenario for ethanol price, how should we think about the mix in the commercialization strategy for ethanol going forward point of view. So those are the two questions.

Gabriel, thank you for asking your question. Renato, do you want to answer the second question on the gasoline prices, et cetera?

So we are more optimistic about the ethanol situation now that the gasoline price will have to increase. Actually, it's already increasing. In the short term, the price are very good because the level of inventories are very low. Actually, it's 25% lower than a year ago. That's why under our continuous harvest model, we are pushing a lot in the first quarter and only producing ethanol. So we are selling it and right now close to 20 per pound equivalent in Mato Grosso do Sul.

When the season really starts which is in mid-April, we believe that the supply of ethanol will increase, something between 3 million and 4 billion liters. But part of this, this is going to be consumed by the lower stocks that I just mentioned. The other part is going to be consumed by the fact that the E30 is going to be effective since day 1 different from last year. And the other part of the volume is going to absorb by a higher market share of hydros ethanol. If you consider a pilot at the pump at 60%, is it still a net equivalent to $0.165 per pound in Mato Grosso do Sul, which is still better than sugar now. So that's why we think that we will be maximizing ethanol the whole year. And of course, with a price better because of the situation of the gasoline that you asked.

Thank you, Renato. Gabriel and on the fertilizer business and our strategy on commercialization. In this case, you have to take into account that we always follow international prices. South America, this region imports 10 million tons of urea per year and the region only produce 1.5 million, 1.7 million tons per year. So the net imports are huge. So always the price is determined by international prices.

Having said this, most of our strategy is selling domestically within Argentina because Argentina in particular, also imports half of the needs that it has per year. So our strategy is to maximize the sales within Argentina, but always pricing at import parity. So that is the concept on how we price and all our strategy. And then as we are producing every month more or less the same amount and the needs of urea are different in -- there is a peak in May and another peak in August, September, October, of the need that urea each at the fields or in the farms, part of the commercialization strategy includes delivering into the storage capacity that is in the interior of the different places in order to have this urea ready to be used. So that is basically how we move strategically on how we sell the urea that we are producing all the year round.

[Operator Instructions] Our next question comes from Isabella Simonato with Bank of America.

My question is a little bit on the use of capital, right? As you said, you are much more unleveraged, right, than a year ago and with a very different cash flow stream profile. And I understand that this higher year-over-year prices should accelerate that. So I was wondering how first we should think about CapEx for 2026? And also cash being returned to shareholders.

Thank you, Isabella. As you know, we've been always very disciplined on this capital allocation strategy. So with the acquisition of the fertilizer business, we have higher leverage to what we have always expressed that is our ideal leverage in terms of times EBITDA. So around the 2 is where we would like to be and where we are working to be. But having said this, when there is something very specific, very attractive as it was the acquisition of the fertilizer business, we get into and we can move into this level as we are today. We are very confident that we are going to be able to go to the levels where we feel comfortably pretty quick, and that's what we are working in.

But as Emilio explained, we are continuing with our dividend policy. So we are continue distributing in cash dividend, $35 million that will be distributed equally in May and November, as we've been doing in the past 3 or 4 years. And also, we are analyzing interesting growth opportunities or growth projects. Each one of these three lines of business have very attractive specific growth opportunities, most of them organic growth opportunities and some of the inorganic but we are always analyzing that, but we will continue to be very disciplined with this general concept of the capital allocation, where some is for returning to our shareholders, some to continue to grow and also to go to the levels of debt of 2x or around 2x studies where we feel more comfortable.

Our next question comes from Matheus Enfeldt with UBS.

My first question is sort of a follow-up for the previous question, which is I understand that the near focus is on the deleverage story which might be relatively quick given what we're seeing in urea and ethanol prices rate. So thinking once you do deleverage in 2, 3 years, what's the next growth avenue that you really view from here. Is it expand more sugarcane crush and is that a possibility or potentially expand more of the capacity in [indiscernible] also if there could be M&A in the pipeline once leverage really drops. So that's my first question.

And then the second question is, I understand that there's a change in the [indiscernible] agriculture segment on how you receive the business. It's going to be now 30% of your revenues, but a relatively small contribution to the overall business. But with a lot of complexity, I think, 10 different commodities that you need to follow. So I'm just wondering how do you think that these assets fit into the [indiscernible] midterm portfolio, if there are ways to potentially monetize better the asset? Or if you can -- or if you have the appropriate scale in the farming business to really run or if you could think of JVs or some partnerships, just on how you think that this fits into your portfolio midterm. Those are my questions.

Thank you, Matheus, for your question. I'm going to start for the second one and go into the first one. We feel very comfortable with the 3 business lines that we have today. We think that the Food & Agriculture business is something that has, as you mentioned, sales in that level, and we see a lot of opportunities to continue improving margins there. And when we think on the margins in terms of EBITDA that is directly to the cash generation. So we feel very comfortable and enthusiastic on how that business is being transformed into a more cash generation generating business. So we don't see nothing strategic. They are on a partnership or anything specific there.

We continue to see a lot of advantages in the domestic consumption business, et cetera, that are improving and is working very well. There are some new products that are adding value and that is very compelling in terms of what's going on there.

But having said this, I'm going to the first part of your question on what is within the most attractive growth avenues that we are seeing today, the sugar ethanol has always been very consistent, and we have this organic growth that we've been talking about and that we've been always analyzing that we expect that to continue to be there as the returns or the marginal returns are continuing to be attractive. But when we explained to the market and when we were so enthusiastic on our fertilizer business, is because we are seeing strategically in South America a huge opportunity in terms of urea production. Argentina has one of the largest gas basins in the world and will become a very important exporter of gas. So one of the big opportunities that we see is to become a larger producer of urea.

So of course, we are analyzing that opportunity of building a new plant, obligating the plant, what are the growth avenues that we are looking there on the fertilizer business. These are investments that are huge in terms of the amount of capital required and are also very relevant in terms of the engineering of that plant, the time that it takes to build it. It's a 3-year project to build a plant that we have today at the minimum. And when you include everything, it's always more 4 or sometimes it's a 5-year project to build a plant like what we have today. So that is a huge project, very relevant. We have nothing to announce today rather than that we are very enthusiastic on analyzing deeper, that the project, the location, the amount of gas and what's the exact amount of gas, et cetera, et cetera.

So we can also think about this [indiscernible] that Argentina has that is a special program to -- with some benefits for large investments like this one. So these are the type of potential projects that can -- could appear in the next year or so.

Our next question comes from Lucas Ferreira with JPMorgan.

Two questions. On the fertilizer business, how to think about the production cost per ton over year ammonia this year since last year, given the stoppage I think not only you lost the volumes, but maybe fixed cost dilution was impacted, right? So assuming the plant is running full this year, and with the gas prices, you have fixed it, what's the cost per ton, more or less that you imagine for this business? And then in the long term, how to think about this business, right? Now we have fixed costs. Obviously, this is a great thing because prices are going up but it could have gone the other way, right?

So my question is how to think about this business? Is this a business we oversee like a very high operating leverage business. So you work with fixed prices that's going to be the business model going forward? Or when the contracts expire, would you be more spot just to understand how to model this long term.

And if I may, on the farming business, maybe if you can quickly comment on the outlook for next season. I know it's maybe too early to say, but any improvement you're seeing for the business? And I think you're being close to the administration, Argentina administration? Any views on -- any clue you have on if Argentina with all the reforms passing, we'll be able to lower further the export taxes. How to think about that?

Thank you, Lucas, for your question. On the second question in terms of the farming business in Argentina with this new administration, everything is improving. We are very optimistic on that, and that's why we feel comfortable with this Food and Agriculture business in general, being able to compete domestically and in the export market also be very positive. The taxes are being reduced. So that is a very relevant improvement that is going on within Argentina and that will certainly help this business to continue to improve. And that's why I mentioned before that we are still optimistic on this farming and agriculture business for Argentina and Uruguay in the coming future.

Going to the first question and regarding the fertilizer and the urea and how we think about prices. Again, this is a very long-term view. This is within our DNA as we were saying at the beginning we believe we are the lowest cost producers in the region of urea when we think on replacing all these imports of 10 million tons of urea that are happening every year in South America. We feel very comfortable that we are within the lower core producers and we've analyzed all over the world, the different plants that are producing urea, the different prices of gas, et cetera. And we are very confident of being the lower core producer. What is the cash cost of producing urea today with this level of 1.3 million tons to be produced in the plan that is what we think that we can produce stabilized is within $180, $190 per ton of urea.

And as you've seen, the prices are much higher, and we don't think that, that level of price is possible in order to come out with urea in this region. So we are very confident to be the local producer in terms of producing urea, and that's why we get involved. We were not seeing that the price is -- was going to be this level of prices as we are today. We were always thinking on this long-term view that we have when we get involved into a business.

Perfect. And just to follow up, the $180 to $190 includes SG&A as well. So it's kind of EBITDA cost?

No, no. I'm talking about cash cost of product.

Our next question comes from Julia Rizzo with Morgan Stanley.

I would like to hear your thoughts from what you know about within the global fertilizer, especially the real production. The dynamics within supply cuts around the key regions close to the Midwest, if you know about anything about supply cuts or supply reduction and how that can affect or last in the market. And derivative to that is, are the planting season starting in the North Hemisphere, especially European engines and I think less likely U.S. Do we know if they have enough urea supplies for the season? Can you give us a sense of the supply/demand disruption that we could be seeing now in urea given the war and [indiscernible] situation?

Julia, thank you for your question. Of course, we are following this very close. There is a lack of urea that is very relevant, 30% of what comes into South America comes from the Middle East and through the [indiscernible] trade. So there will be a lack of supply and that can impact even further what has already been impacted. But -- and also, there is a time needed in order for that to reach the 60 days at least since you asked for the urea until it comes to be used. So yes, it's going to be difficult to supply the whole needs for South America. And for the Americas, in general, Americas are importers of urea globally.

So you're saying that it could be a supply shock, even current inventory levels in the ground. I don't know how much the industry holds inventory for the next season.

No, inventories are very low. The inventories are very low.

In the South America, but in the North America was already enough? Last [indiscernible] for, let's say, European...

[indiscernible] is also under pressure in terms of being importer of urea. I don't remember exactly how much they import, but they import like 5 million tonnes.

And usually, they do not have enough inventories like a 3 months, 4 months into -- I don't know what's the level of inventories in the chain, what usually works?

No, China is relatively low.

Okay. Interesting. So yes, that could mean that urea prices will stay higher for longer, right, until supply gets back on track, right?

Of course, we don't know, but that is a clear possibility.

Okay. I have another question on sugar. If you could help me to -- I would like to hear your thoughts. Recently, we saw a decline in -- or a revision lower from the [indiscernible] harvest. We have Brazil force naturally going max ethanol. We have oil prices reaching over 100 actually futures, even higher. Why you think it's driven it's kind of putting this pressure on the sugar prices compared to other commodities and even strength in the fundamentals. And why do you see that turning?

That's a good question, Julia. We also don't clearly understand as Renato just explained, the sugar production in Brazil that is one of the main producers worldwide is going to be maximizing ethanol. So we expect that to be also transferring to sugar prices in the medium term, but we are not seeing that yet. Renato, can you add something else to...

I think it's exactly that. Once the market realized that Brazil is maximizing ethanol is going to have a less margin to switch the mix towards sugar. And then the market is going to be more balanced. And then we think that has a potential to increase the price of sugar in the second semester. And if you think in the midterm, we think that the supply is going to decrease because today, the sugar price is below most countries' production costs, including most players in Brazil. So we think that it's going to have an impact in the supply. So price should react next year and probably the low price is not going to last that long.

This concludes the question-and-answer section. At this time, I would like to turn the floor back to Mr. Bosch for any closing remarks.

Thank you all for participating today, and we hope to see you in our next conferences.

Thank you. This concludes today's presentation. You may disconnect at this time, and have a nice day.

Good morning, ladies and gentlemen, and thank you for waiting. At this time, we would like to welcome everyone to Adecoagro's Third Quarter 2025 Results Conference Call. Today with us, we have Mr. Mariano Bosch, CEO; Mr. Emilio Gnecco, CFO; Mr. Renato Junqueira Pereira, Sugar, Ethanol and Energy VP; and Ms. Victoria Cabello, Investor Relations Officer. We would 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 and could cause results to differ materially from those expressed in such forward-looking statements.

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

Good morning, and thank you for joining Adecoagro's 2025 Third Quarter Results Conference. Consolidated adjusted EBITDA during the quarter reached $115 million, while year-to-date, it amounted to $206 million. In Brazil, we achieved an all-time quarterly crushing record of 4.9 million tons and even produced 40% more ethanol than the previous year as we switched our production [ maximization ], given premium commanded over sugar. Now, cane productivity has improved as we completed the harvest of all the frost-impacted cane, thus with lower productivity. Going forward and assuming normal weather, crushing volume should improve as we have greater cane availability, leading to a greater cost dilution.

In Argentina and Uruguay, the challenging price-cost scenario continues to pressure results across our businesses. In crops, we are undergoing planting activities for the new campaign, reducing approximately 30% our leased area and adjusting our crops mix to improve margins. In rice, export price of the long rice are still looking for a support level, given the greater supply. Therefore, our decision is to reduce the long grain rice and to increase the mix of varieties. In dairy, cow productivity and processing volumes have achieved a new record. We continue to prioritize the domestic market with the production of fluid milk and value-added products.

In early September, we signed an agreement to acquire a 50% stake in Profertil, the largest producer of granular urea in South America. Profertil is one of the lowest-cost producers within this industry, and it is strategically located in a net importing region with access to competitively priced natural gas. It is run by a highly experienced management team and has consistently generated cash through the years. YPF, Argentina's largest oil and gas producer, owns 50% stake. And together with ACA, we will be jointly acquiring the balance. Closing is expected before year-end and subject to YPF's 90-day right of refusal.

To conclude, I would like to thank all the people in Adecoagro. I know that this year has been one of the toughest, but we need to remain focused on efficiency and on being the lowest-cost producer to overcome this challenging context. Thanks to our shareholders for their support.

And now, I will let Emilio walk you through the numbers of the quarter.

Thank you, Mariano. Good morning, everyone. Please turn to Page 4 with a summary of our consolidated financial results. Gross sales totaled $323 million during the third quarter, making a 29% year-over-year decline due to lower volumes and prices across our different operations. Despite this, adjusted EBITDA improved versus the prior year to $115 million on greater results from our Sugar, Ethanol and Energy business. On a year-to-date basis, sales and adjusted EBITDA stood at $1 billion and $206 million, respectively. Lower consolidated results were mainly explained by a combination of lower global prices and higher costs in U.S. dollar terms.

Now, please turn to Slide 5. Regarding our production figures, on the bottom-right chart, we can see that crushing volume in our Sugar, Ethanol and Energy business was 4% lower compared to the same period of last year. The year-over-year gap reported in the previous release has decreased by the crushing record achieved during the third quarter, which we will get into more detail shortly. In the case of the Farming business, total production saw a 13% year-over-year increase, explained by higher planted area, as well as record productivity in our rice operations.

Let's move to Slide 7 with the operational performance of our Sugar, Ethanol and Energy business. During the period, we achieved a new quarterly crushing record of 4.9 million tons and a 20% year-over-year increase. This was explained by the acceleration of our harvesting pace, which in turn enabled us to crush all the sugarcane that was hit by the frost event experienced by the end of June. Our average yield and TRS content declined compared to the previous year, explained by the impact of the frost in the sugarcane harvested. On a year-to-date basis, we have already milled 9.8 million tons of sugarcane. Despite the strong quarterly performance, we concluded the period with an accumulated crushing slightly below the previous year due to the combination of dry weather, followed by rainy days experienced during the first half of the year, which consequently slowed our crushing pace. Despite this, we still foresee an annual crushing volume in line with the previous year, assuming normal weather conditions until the end of the year.

In terms of mix, we switched our strategy to maximize ethanol production during the third quarter, given the better margins compared to sugar. We reached 58% ethanol mix compared to 45% the previous year when we were maximizing sugar. This clearly reflects the high level of flexibility of our mills as we maximized sugar production throughout the first semester and then switched to ethanol due to its attractive premium as lower sugar prices started to decline.

Let's please turn to Slide 8, where we describe sales conducted throughout the period. Net sales amounted to $131 million during the quarter, while year-to-date, they reached $433 million. Despite the increase in ethanol production, lower sales during the quarter were explained by a decline in volumes sold. Throughout the period, we strategically conducted our sales to profit from better prices. For the last year, we had our tanks full and had to sell our daily production. Ethanol sales were 8% higher year-to-date, thanks to our commercial strategy to sell our 2024 inventories once prices recovered. Regarding sugar, the combination of lower prices and the decline in production, given the lower crushing and switch in mix, were the main drivers towards the decline in sales. In the case of energy, the increase in sales was driven by higher selling prices year-over-year as we comply with our long-term contracts, as well as profit from the peaks in spot prices. Regarding carbon credits, we sold over 560,000 CBios at an average price of $9 per CBio, reaching $5 million in revenues.

Please go to Page 9, where we would like to present the financial performance of the Sugar, Ethanol and Energy business. Adjusted EBITDA amounted to $120 million during the third quarter, making a 20% year-over-year increase. This was mostly explained by year-over-year gains in the mark-to-market of our biological assets, given an improvement in yield, coupled with gains in the mark-to-market of our commodity hedge position. On an accumulated basis, adjusted EBITDA reached $218 million, 16% lower than the same period of last year.

Now, we would like to move on to the Farming business. Please go to Slide 11. By the end of October, we concluded harvesting activities related to our 2024-'25 harvest season, reaching 1.2 million tons of agriculture produced. Now, we are in the middle of planting activities for our 2025-'26 campaign with 52% of the total area already seeded. As you may have seen, we reduced our planting plan by 22% compared to the prior season as we decided to diminish the amount of leased hectares, prioritizing the farms with higher productivity potential and therefore, maximizing the margin per hectare in each of our crops.

In rice, the decline in planting area was driven by the challenging price scenario of the commodity as global prices continue to decline, given the worldwide oversupply. On the other hand, we are increasing our mix of premium varieties over long grain white rice to offset the lower prices from the commodity type. In the case of dairy, not only did cow productivity improved versus the first semester, but it even achieved a new record at 39.1 liters of milk per cow per day during the quarter. At the industry level, we continue to maximize production of UHT milk for the domestic market, a product that offers the highest marginal contribution.

On the following Page 12, we present the financial performance of our Farming business. Adjusted EBITDA for the Farming business totaled $1 million during the quarter, whereas year-to-date, it amounted to $19 million. Starting with our crops segment, lower results were explained by lower international prices and higher costs in U.S. dollars, both of which continued to pressure margins during the period and mainly for our peanut production. In rice, the decline in adjusted EBITDA during both periods was driven by lower sales, given the outlier prices reported the previous year, coupled with higher costs in U.S. dollar terms. Lastly, adjusted EBITDA generation in our dairy business was impacted by higher costs and a mixed performance in prices despite the increase in volumes sold mainly from fluid milk for the domestic market.

Please turn to Page 14 with a broader view of our CapEx program. Expansion CapEx, excluding inorganic growth, represented $32 million during the quarter and $85 million on an accumulated basis. In Brazil, expansion CapEx was mostly allocated to increasing our sugarcane plantation size and the expansion of our biomethane production. In our Farming business, our main CapEx program consisted of the acquisition of agricultural machinery for our rice operations, together with marginal investments in our Morteros milk processing facility to expand our product portfolio.

Now, please turn to Slide 15, where we would like to make a reference to the acquisition of Profertil. On September 8, we announced the market that we signed an agreement to acquire Nutrien's 50% interest in Profertil, the largest producer of granular urea in South America, through an 80-20 partnership with Asociacion de Cooperativas Argentinas. The transaction was valued at approximately $600 million, out of which $96 million advanced payment was made against the sign-off. The remaining 50% stake of Profertil is owned by YPF, Argentina's largest producer of oil and gas, who, as of this date, continues to hold the right of first refusal to purchase Nutrien's equity on the same terms and conditions. This right expires at the beginning of December. Once and if the closing conditions are met, we will provide more details. As Mariano commented earlier, we firmly believe that by acquiring this state-of-the-art asset, we will be reducing the volatility of our results, while diversifying operations across other value chains within the agro-industrial space, where we have shown a well-proven track record.

On the following slide, we describe our debt evolution. Net debt amounted to $872 million, making a 35% year-over-year increase due to the lower consolidated results, together with the $96 million advance payment made for Profertil acquisition. Consequently, our net leverage ratio increased to 2.8x compared to the 1.5x reported in the same period of last year. Going forward and once we conclude the acquisition, we intend to reduce our leverage ratio as we implement cost-saving initiatives across all our operations, together with a revision of our capital allocation strategy and expected operational results. Despite increase in leverage, our liquidity ratio stood at 3.2x, showing the company's full capacity to repay short-term debt with its cash balance.

Let's now turn to Page 17, where we would like to present our shareholder distribution program. 2025 shareholder distribution amounted to $45 million. We repurchased $10 million in shares under our buyback program, equal to 1.1% of the company's equity. In addition, $35 million were distributed via cash dividends with the last installment being paid in a few days on November 19, representing approximately an annual dividend per share of $0.35 and a dividend yield of 4%. With the second final dividend payment, the company concludes its distribution policy for the year 2025.

Thank you very much for your time. We will now open the call to questions.

[Operator Instructions] Our first question came from Matheus Enfeldt from UBS.

I want to think a bit about the upcoming year and the upcoming crops. I mean, your crushing volumes, despite of the challenges in weather, were relatively okay. And I was just wondering how is the outlook for 2026, if we could still see some crushing growth in sugar and ethanol and sort of get closer to the 40 million tons capacity and how you see cost advancing for the upcoming crop as well?

And then, my second question is, when you think about CapEx, particularly for next year, but I think for the next 1 to 2 years, which we might see some pressure in earnings, given the weak pricing environment that we are seeing right now. You were doing around BRL 250 million, BRL 300 million of CapEx per year. Outside of M&A, which I assume there's still some installments for Profertil, what's the level that we could see moving forward for next year given the compression in cash generation due to prices? Those are my 2 questions.

Okay. Thank you, Matheus, for your question. I'm going to answer the CapEx, and then Renato will answer regarding our crushing expectations and costs there going forward. On the year CapEx, as we are mentioning, we are having this more compressed EBITDA and EBITDA margins. And so, we are revising all the different CapEx in each one of the segments that we have today and also taking into account with the potential acquisition of Profertil, we are reducing this at the maximum level. So we are only doing the organic CapEx that really, really makes sense and has a lot of synergies. And so, you can clearly expect a relevant reduction in terms of the growth CapEx coming in each one of our 4 business segments. That's for 2026.

And then, Renato, can you take the question regarding the crushing expectations and costs?

Okay. So regarding the crushing, I think it was mentioned here that we had an excellent third quarter in terms of crushing. So we finished all the low-yield sugarcane, especially those canes that was -- were affected by the frost. So we pushed the cane that otherwise would be crushed in the third quarter for the last quarter with much better yields. So the yields for the final quarter should be much higher than the average of this year. And it puts us in an excellent condition for next year, especially in the first quarter that we're going to have an intensive first quarter in terms of crushing and of course, take advantage of price of ethanol that should be high at this moment. And we have a potential to crush during this year, I would say, 5% to 6% more than we are going to crush in this year here. So '26, 5% to 6% more than '25, thanks to the conditions of the sugarcane. So we don't think that we're going to have a problem of sugarcane availability. The crushing, of course, depends on weather conditions. And so, it's not only the availability of cane, but the availability of cane, we think we are fine.

So regarding the costs, we expect a reduction of cost for next year, I would say, a reduction between 15% and 20% of the cost. This is mainly a consequence of the volume, both the crushing volume and the yields that should be higher next year, diluting our fixed costs and also the Consecana price that is lower, so the raw material is lower for next year. And also, we have been working in a lot of efficiencies, both in the agriculture and the industrial operation. So we think that we are going to decrease our costs because of those efficiencies that we are getting.

Our next question comes from Isabella Simonato from Bank of America.

I have 2. First of all, you mentioned in the press release, right, that you guys are going to pursue a couple of actions to reduce leverage, right? I understand that, as you just said, reducing CapEx is one of them. But if you could give a little bit more color on what other actions are you thinking about or what your expectation or eventually a target, right, to be reached in 2026, I think that would be quite helpful.

And the other question is regarding the decision, right, to significantly reduce your area of crops in the next season. I think it's the first time that you take such a drastic reduction, right? And just if you could give us a little bit more -- sorry, I think I got muted. So the rationale to go with this decision and eventually the economics, right, that are driving it, I think, would be interesting.

Isabella, thank you very much for your question. I'm going to take the second -- your second question and then ask Emilio to answer the first question regarding the debt level. So, on explaining the reduction in the crop area, I think it's important there that since we started this new campaign that starts in August, where we start planting, and the old campaign, the numbers that we are reporting today that are so negative in the crop business is what we've been harvesting since April until September. So now, we are starting this new campaign. In this new campaign is where we started reducing the cost of leasing. So cost of leasing is one of the main costs in crop production in general, and that's what we are reducing. And because of reducing the cost of leasing, many people didn't want to lease to us. So we've reduced the area. On top of that, we are only securing the farms where we have high productivity levels and the level of return that we are asking and the level of risk that we are running are more important that we are asking more returns for each one of the farms. So the consequence is that we are reducing this. On top of that, we are reducing the structure to manage these farms. And on top of that, we are reducing the cost of planting, the cost of all what we are doing at the farm level. That is in the crop business, including the peanuts that is where we have the highest decrease in prices.

Then, on rice that is part of our crops, we are also reducing area. We are reducing like 25% or 30% the long grain production of rice, but we are increasing the special products of rice. As we've been telling you some years ago, we have been developing special varieties that some of our clients need, and that is how we've been able to maintain certain level of prices. Just for you to have an idea, the reduction in the price of long grain rice was around 50% comparing to the previous year. So the 50% reduction in the price of rice is very relevant, and that's why we are adjusting making all this adjustment, including reducing part of the total area. That's the reason why we are doing it. And because of this is that we are more optimistic in terms of the levels of EBITDA that we can expect for next year comparing to this particular level to this year, all this assuming today's prices of all the different commodities that we are having today. We are not assuming to go back to the other levels. That's what we are -- where we are working, and that's why the consequence is the reduction of the area. So thank you for this part of your question.

Then, Emilio can get into more details on our debt levels and what are we thinking about it.

Yes. Sure. Thank you, Isabella. Thank you, Mariano. Well, let me start. If we take a look back at our history, you can see that we have been very disciplined with our debt ratios. And this is not an exception. We always said that if we encounter an opportunity that today we have in hand, we would incur an additional debt, and rest assured that this opportunity would contribute to our results in the coming years and therefore, become accretive to our shareholders. And although we would finish the year with debt levels above 2x, 2.5x, this debt is very well structured in the long term with an average life of 4.5 years and also at very competitive prices.

Now, at the same time that we do this, we are revising all our capital expenditures, and namely, our distribution policy, we're discussing that for the coming years within management and our Board. The CapEx programs, as we said in the previous question, we are revising all the CapEx programs for each of our different businesses that will definitely -- is expected to be significantly lower in the next years. And as part of a specific plan, we started on the implementation of additional cost savings and additional enhancements in each of our businesses. And last but not least, and this is something that has been very vocal in our previous calls, we are having conversations with our controlling shareholder exploring potential capitalization structures in the company. All of that, of course, will contribute to bring down, in the coming years, the net debt ratios of the company.

No, that's very clear. Just a quick follow-up, Mariano. As you mentioned, right, you are reducing mainly leased area to save costs. But how that shape you for 2027? I mean, how easy is for you to plant more again in 2027? How that changed planted area in the midterm?

I think there is no problem there. This is a market where you can decrease or increase from 1 year to the other. For us, the key is the efficiency and the return. So that's our focus. And the area is a consequence on the return or the return that we are asking, the return that we are willing to have. So we don't see any problem on growing again in terms of the leased area.

[Operator Instructions] Our next question comes from Julia Rizzo from Morgan Stanley.

Can I explore a little bit more Profertil acquisition? You still have some debt to take. I would like to understand what are the rates and how you expect that to be in terms of financing, time to pay, average cost. Also, in your best guess or in the last years, how much Profertil was able to deliver or distribute in terms of dividends but that would be the base case for 2026 distribution for Adecoagro coming from Profertil if the M&A gets concluded?

Julia, thank you very much for your question. On Profertil, in general terms, as we explained in the specific call that we did talking about this, we are very enthusiastic. We think this is a very attractive deal, and this is very accretive to what we have today. So we are very enthusiastic and keen to be able to close it by mid-December, as we just said. For that closing, it's all financed. 100% of the financing is already in place and at the same levels that Emilio just explained that are long term and very good rates. So there's no issue there. But in order to get into more details, et cetera, I think it is important to wait until we can make this final closing.

And in terms of how we report and how this company has been giving dividends, you can see in their own financials that they've done a lot of dividends during every year, and they have already sent more than $1 billion of dividends in the last 5 years. And regarding our accounting, as we have already mentioned, the accounting is going to be on the equity method.

Yes. Okay. So you think it's too early to ask for opportunities within the business, [ how we ] explore eventually Vaca Muerta supply, how you see that dividend -- or expectations for 2026 in terms of how that could help to finance the cost of debt? Is that too early or you can give us a guidance on that sense?

No, I think it's too early to get into all the details. Again, we are very optimistic. We think that Vaca Muerta gas production is growing a lot in Argentina that you've all heard about, all the possibilities that Argentina has in order to produce gas. We are going to take advantage of this natural condition that Argentina has, and we can be the local producer of urea. So there's a lot of expectation on that going forward. But in order to get into all the details, we prefer to talk once this is something real.

This concludes the Q&A session. At this time, I would like to turn the floor over back to Mr. Bosch for any closing remarks.

Thank you. Thank you for coming today, and hope to see you in our next call.

Thank you. This concludes today's presentation. You may disconnect at this time, and have a nice day.

Good morning, ladies and gentlemen, and thank you for waiting. At this time, we would like to welcome everyone to Adecoagro's conference call. Today with us, we have Mr. Juan Sartori, Executive Chairman and Tether's Head of Business Initiatives; Mr. Mariano Bosch, CEO; Mr. Emilio Gnecco, CFO; and Mrs. Victoria Cabello, Investor Relations Officer.

We would 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 and could cause results to differ materially from those expressed in such forward-looking statements.

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

Good morning and thank you for joining today's conference call. We are pleased to announce a new and very important step in Adecoagro's growth journey. The agreement to acquire a 50% stake in PROFERTIL, the largest producer of granular urea in South America. Let me walk you through our strategic rationale behind this transaction.

Please turn to Slide 3. As farmers, we understand the critical role of nitrogen fertilizer in agricultural production with urea being the most widely used. South America, in particular, Argentina, Brazil, Uruguay and Paraguay have vast extensions of land dedicated to crop production. However, the region's urea production falls short of meeting demand, resulting in a structural deficit that makes it a net importer of approximately 10 million tons per year.

Gas is the main input in the production of urea. Argentina is located in one of the largest natural gas basins in the world. And with the development of Vaca Muerta, it is becoming a significant gas exporter. PROFERTIL is strategically located with excellent access to Vaca Muerta's natural gas. Producing urea is an efficient and industrialized way of exporting gas.

In addition, its state-of-the-art facility is located in the Port of Bahía Blanca, province of Buenos Aires, one of the best ports in Argentina with direct access to regional markets. We see in PROFERTIL the same philosophy that we have in Adecoagro of being the lowest cost producers by producing each product in its optimal location.

This is about creating long-term value. PROFERTIL is one of the best companies in Argentina, run by a highly experienced management team with a proven track record. By acquiring a 50% stake, we will become key producers of a critical input for regional agriculture. while securing exposure to a business with attractive fundamentals and consistent cash generation.

For Adecoagro, this transaction diversifies its portfolio, contributing to reducing volatility and reinforcing the resilience of its results. We are positioning Adecoagro to deliver even stronger growth and returns for our shareholders.

In the next slide, I would like to focus on the structure of the deal. PROFERTIL is a 50-50 joint venture between YPF, Argentina's largest oil and gas producer and Nutrien, a global provider of crop inputs and services. Nutrien's 50% stake was up for sale as they undergone a broader restructuring in Latin America. We saw this as an exciting opportunity. We partnered with AKKA, an Argentine cooperative with whom we have a great and long-standing relationship.

They are a leading operator in the commercialization of grains, oilseeds and fertilizers in the country. Through a partnership, 80% Adecoagro and 20% AKKA, we signed an agreement to acquire Nutrien's stake. The purchase price is approximately $600 million. We believe we have a great complementarity with YPF and are excited to start working together. We expect the transaction to be completed before the end of 2025, subject to customary closing conditions, including YPF's 90-day right of first refusal.

On Slide #5, you can see the location of PROFERTIL's assets. PROFERTIL's production complex and dispatch center is located in Bahía Blanca. It has a production capacity of approximately 1.3 million tons of urea, representing 60% of domestic consumption in Argentina. The Bahía Blanca complex is supported by storage facilities spread across the country, making distribution and logistics more efficient.

Moving on Slide #6, we can see in numbers the opportunity that lies ahead. Argentina has consistently consumed more urea than its production capacity. Last year, the country produced 1.3 million tons of urea and consumed 2.3 million tons, needing imports to cover the shortfall. And as mentioned earlier, Argentina has vast reserves of natural gas, which is the main input in urea production.

Gas accounts for 60% of the production cost and having access to a competitively priced gas is a significant advantage. Market opportunity we see is not limited to Argentina or South America, but extends globally as we illustrated in Slide #7. Studies show that demand for ammonia will grow by 12 million to 14 million tons. Even with new facilities, there will be a gap of approximately 7 million tons.

We believe Argentina and PROFERTIL can play a significant role in addressing this demand. Before concluding, on Slide #8, we can see PROFERTIL's financial performance over the past years. This is a company that is healthy and has been generating consistent results. The 5-year average over the period 2020 to 2024 amounted to $750 million in sales and $390 million in EBITDA, offering an attractive EBITDA margin.

This reflects the quality of the assets, its unique positioning and the strong management team leading the way. We are excited to join them and help take PROFERTIL to the next stage of development.

Now I will pass the word to Juan Sartori, Head of Business Initiatives at Tether and Adecoagro, Chairman of the Board of Directors, representing Tether, our largest shareholder.

Thank you, Mariano. Good morning, everyone. At Tether, we are excited to support Adecoagro in this growth strategy. PROFERTIL is a best-in-class company essential to Argentina and South America's agricultural production chain. We believe its integration will significantly enhance Adecoagro's growth platform by gaining more exposure to sustainable real assets that create long-term value.

At Tether, our mission is to build sustainable and resilient infrastructure that benefits communities and drives growth. Adecoagro's proven ability to operate and integrate complex agricultural and energy assets with efficiency and discipline is fully aligned with this vision. We are confident that by combining Adecoagro's operational excellence with PROFERTIL's leadership in urea production, the company will strengthen its role as a key partner for farmers and for food security in the region.

As a long-term shareholder, Tether is committed to providing support, financial and strategic, to help Adecoagro capture these opportunities while maintaining a strong balance sheet and maximizing value for all stakeholders. We look forward to working with the Board, management team and investor community on this journey. Together, we will drive innovation, foster sustainable growth and create lasting value for our shareholders and the communities we serve.

Thank you, and we will now open the call to questions.

[Operator Instructions] Our first question comes from Matheus Enfeldt with UBS.

So I have 2 questions here. The first one is on the process for allocating capital for Adecoagro from now. If you could just walk us through like what are expectations in terms of target IRR, if you think that owning minority stakes or co-controlling stakes and partnerships as this one is sort of the baseline for capital allocation here? And if you still think there is room for capital allocation from where we are?

And then my second question is on leverage. I mean, leverage in my numbers, and I could be wrong here, could move up to 3 3.0, 3.5x net debt to EBITDA. How do you see this developing? And if this is a level that you're comfortable with? Or if you could see more investments and pushing leverage perhaps a bit more with new investments on capital allocation? And also on that, there was a commentary that we repeated from a previous call that Tether could support Adecoagro also financially. What would be a potential trigger for a support from Tether support -- financial support? That's it.

Matheus, thank you for your questions. I will start with Emilio answering on the leverage of the company and how we see this and where we are on the whole financing of the operation.

Okay. Thank you, Matheus, for the question. First of all, well, we have already secured the financing of the transaction. We have more than $1 billion in credit lines approved by different financial institutions. Within those credit lines, Rabobank, who also acted as financial adviser in this transaction has offered us a long-term facility with very attractive terms to fully finance the acquisition.

If we think on our projections and including the pro forma of PROFERTIL, we're going to probably end the year in a roughly 3x net debt-to-EBITDA ratio. As we always mentioned, it's above what we believe or we feel comfortable in having in the long run, which is a 2x net debt-EBITDA ratio.

However, of course, we will be revising our capital allocation programs going forward to execute this transaction. And we will be informing the whole market about our plans to bring it down to the desired levels. But as we always said, when there's an opportunity like this, we might go above the 2x EBITDA that we always mentioned as our policy.

On regards to your -- to the first part of your question, whether we are going to be investors of minority stakes, all that, this has a clear fit and as we just explained with Adecoagro as a whole, we are a co-controller of the operation. We are not a minority. So we have a clear co-control in this potential transaction. And in this particular case, we think that we have a good complementarity with our partner.

And the IRR targets are above 20%, and that's how we've been looking at the targets. And as we've explained many times into a new sector, into a new see something that is better than our existing business lines. And this particular case and this particular, we saw it as at the level of price, more -- even more attractive than the growth that we have within our existing business segments.

That's the reason why we decided to invest in this opportunity, and we are very excited with this. But the concept of how we think in terms of capital allocation is exactly the same that we've been explaining in the last 10 years or more since we are a public company. Respecting the support of the shareholder, I don't know, Juan, if you want to complement something on what we just mentioned.

Yes. Matheus, first, quickly on the capital allocation model. This is a transaction where precisely you can decide where you want to be in the curve of IRR versus leverage, because in theory, we have 100% leverage available at good terms and IRR goes from unlevered around 20% to, in theory, infinite IRR as you put the financing that's available to the company.

So we'll always try to do the best IRR possible, managing the risk profile of the company for any volatility. There's a third factor that improves financially in this acquisition, which is that inputs are negatively correlated with our outputs. Generally, our whole agricultural production model has a risk of higher cost of inputs, mainly higher cost of oil, which is correlated with urea.

So I think that as you see the whole allocation that this company and the return profile that it brings to the company, you'll see a model that is much less risky with a much higher IRR and very complementary. So in this case, we are very comfortable with the way it's being financed and it's available to the company.

Now we always said that Tether supports this acquisition. And in the future, if there's need of more capital because the belief that we want to reduce the leverage ratio for whatever reason, we obviously will be supporting the company in that regard. So we are still 100% in that line.

Our next question comes from Lucas Ferreira with JPMorgan.

Can you hear me? Okay. My first question is just to confirm, if you can, discuss a little bit the multiple you're paying for this transaction, if the $600 million includes all the debt. And if you have any sense of what EBITDA to expect for next year, if it's similar to the previous year that you just disclosed in the presentation, would be getting to something near 4x EBITDA, if that's a number you can disclose?

And I just also wanted to understand how the contract with both YPF and the association will work in terms of if you still have the right to keep on acquiring stakes and how you see the relationship there with YPF, if it's obviously strategically important or if you think in the future, you could still be acquiring additional stakes in the company?

Lucas, thank you for your question. On regards of the multiple, you can see in the presentation the past EBITDA of the company. So you can make whatever the calculation you want. We can assume $300 million of EBITDA, something normalized. You can assume -- I think that the $200 million that is 2025 in the projection -- the public projections that the company has are below because of certain specific things of this particular year.

But if you can assume $300 million, that's something that you can think about if the total value is 1.2, we are talking about 4x EBITDA. That could be a way of looking at the pricing of this acquisition. And then on the second part of your question.

And then on the co-control of the company and the shareholder agreement, we cannot comment much, but it's a clear co-control on the company, and we don't know what the YPF is willing to do, but we are -- we believe we are very -- there is a very good complementarity between YPF and us and within us is Adecoagro and AKKA and so that the complementarity is even better when we consider ourselves, including the co-op with whom we have an excellent relationship.

Yes. And just to complement on Mariano's comment, we will be fully controlling the partnership with AKKA, and we will be stepping in the shoes of Nutrien in the existing shareholders of agreement of Property.

Our next question comes from Gustavo Troyano with Itau BBA.

Actually, there's only one point I'd like to discuss with you guys, and it relates to further growth opportunities. We understand that maybe now Adecoagro will go through a moment of deleveraging maybe in the short term. But after that, I'm thinking about like the next steps that you guys are intending to inside Adecoagro's platforms in terms of growth, how should we expect these further moves performing, right?

So just thinking out loud here, if you guys think it's feasible to expand Adecoagro portfolio to other businesses other segments that we are not seeing in the current Adecoagro platform today, so besides sugar and ethanol forming or fertilizers here. Just to understand a little bit more, what's the mindset behind this expansion towards new segments that you guys see for this M&A and for further opportunities that might arise after you deleverage Adecoagros to a more comfortable level as you always used to operate.

Gustavo, thank you for your question. I think we always have to take into account our capital allocation policy. We will always be looking for attractive returns, and that's the only case where we can move outside our existing segments. We've always been very disciplined in our capital allocation policy.

So the returns and being the low-cost producers long term is where we are always going to be focusing ourselves. So this is something very particular, very specific, and we are very excited with this potential transaction, but I don't see other things coming in line if we are now focusing on this specific transaction. And of course, we always -- we've never given guidance on what are the future plans.

[Operator Instructions] Our next question comes from Thiago Duarte with BTG.

A couple of follow-up questions on previously discussed topics. The first one, Mariano, just to try to figure out what's the level of normalized or mid-cycle EBITDA you believe PROFERTIL is capable of operating. You mentioned this year is around $200 million is probably below that, but we also saw a few years ago over $700 million EBITDA. So just your best sense of what the mid-cycle EBITDA generation could be for the company?

And the second one -- the second follow-up is with regards to -- it's actually related to the previous question, which is in regards to should we think of Adecoagro's platform as changing into something that, okay, I'm ready to do and engage into opportunistic deals as long as they are related to low-cost producing companies of whatever they produce, and they are related to agriculture at some level.

So just because I just want to think whether you guys are ready to engage into future deals, whether opportunities like this one show up even though they differ a little bit from what Adecoagro has been doing for the past 15 years. So I think that will be the question.

And finally, whether you're going to be consolidating PROFERTIL's financials or you're going to be just taking the 50% stake as a control format? And how -- so how that is going to impact the financials of the company on a reporting basis? Those are my 3 points.

Okay. Starting from the last one, we are not going to consolidate in this 50% still need to happen. And whenever we make it happen, we'll explain exactly how it's going to be reported, but we are not going to consolidate.

On the second one on how to think about Adecoagro and our growth strategy. As I just explained, we are focusing on within food and energy business -- food and energy sector, and that's where we've been since the very beginning. We started with crop production, then we got into the rice operation, then we got into the sugar, ethanol and energy business. And then we went into the dairy business and the peanut business.

So we've been growing within the food and energy production all along the way. So you should expect Adecoagro to continue within the same business segments or business lines. And now we have a supporting shareholder that gives us the ability to continue growing in this pace that we've been always growing.

For us, the main something we take into account when we're thinking growing is how we can manage and control those businesses and not only capital allocation, but also being able to manage and have the right management teams on each one of the business that we are executing. This is a company, PROFERTIL that we know since 20 years ago, we've been always looking at this company, and this is a very specific target that has appeared today for us. And that's why we are so happy with what's going on today.

And the first question you mentioned regarding the normalized EBITDA nobody can know in this -- as you can -- as you've been able to see in the past years, but I would assume that for 2026, around $300 million, that should be a normalized EBITDA in a normal year.

Next question from Isabella Simonato with Bank of America.

I wanted to maybe -- I don't want to sound repetitive, but just to better understand the rationale of the transaction in the sense that I understand that Tether, right, as a shareholder has also an interest right in this asset and is optimistic about the deal.

But I wonder why this is being done by Adecoagro and maybe not as a separate investment by Tether, right, given this is not an asset that will be consolidated, I understand it's part of the supply chain across agriculture and food. But given that, again, this won't be consolidated and you guys didn't talk about synergies or so on. So I wonder why this is being done with Adecoagro's balance sheet and considering other potential investments, including Adecoagro's own shares, right? What's the rationale for the deal?

And it's still back to the first questions, right? You guys mentioned and Mariano, you just said again, right, that you now have a shareholder that support Adecoagro, right, in those sort of moves. I wondered if you could elaborate a little bit more on what does that mean, right? If this has been from a strategic point of view, if eventually this could be, financially speaking, right, eventually in the need of equity or so on to bring down debt. So just to -- I don't think it's clear to us, right, when you guys mentioned Tether support, right, what exactly does it mean?

Isabella, thank you for your question. First of all, why Adecoagro? This is a company, as I mentioned before, that we've been looking for 20 years. Since 2 years ago, even before Tether was a shareholder, we started talking about this company with our Board, explaining what were the benefits of this company.

Nutrien announced 1.5 years ago that this was for sale. So we've been working on this potential transaction way before Tether was a shareholder with us. And furthermore, in Adecoagro, we've always been developing sustainable production models aiming to be the low-cost producer on each one of the commodities that we were producing. So that's why we are producing sugarcane or sugar, ethanol and energy in Brazil in the best regions where you can produce sugarcane.

That's why we are producing dairy and dairy products in the Humid Pampas that is the best place where you can produce milk worldwide. That's why we are producing rice in the Northeast region of Argentina, where you are the most competitive in terms of being the low-cost producers.

So because of this is that today, we are explaining why you are the best producer of urea and worldwide, we would be the low-cost producers of urea in Bahía Blanca where we have the best port in Argentina to export and to sell within the domestic market also the urea and you have the best access to the gas coming from Vaca Muerta and the gas coming from the south of Argentina.

So being the gas, the most important input in the production of urea and having Vaca Muerta in Argentina and having Argentina becoming an exporter of gas is taking advantage of the natural conditions of what's going on. That's why Adecoagro makes sense to be part of this opportunity. And now I will let Juan explain if he has something else to say on why Tether is supporting. I think he just explained what that means that Tether is supporting Adecoagro.

Thank you, Mariano. And to add a little bit more on what you said and about the question is I don't think you should see Adecoagro as just a disparate collection of very efficient low-cost assets. There's a strategic and industrial logic behind putting all of these assets together.

As we become a company focus in energy and food production that can grow the inputs, that can provide the inputs that can lease the farms that can industrialize the products that can commercialize them and who can do it using its own generated energy. the power and the growth of this company and the whole ecosystem where we are operating is going to have synergies and profitability that are unique to the fact that this company has all of these assets.

And it's not only a hedge fund strategy that this deal is being done because it was very profitable and opportunistic. It's being done inside Adecoagro because it corresponds to the strategy and the idea and the vision that we have for the company.

And I think what you're going to start seeing over the next 12 and 18 months, more of this system generating returns and synergies and creating value precisely because all of these assets complement each other, they correlate each other in a big way, and that's going to be able to generate new revenue streams that didn't exist before when we didn't have it.

So we are supporting that big industrial logic and not only investments that could be done here or there because financially, they are good. And that's the way also we committed since we invested in this company that we believe that Adecoagro was the best platform in order to generate these investments, not simply because financially, it makes sense because we believe in the strategies that they are deploying, and we are able to support it and to accelerate it.

For me, this deal is much more transformative and a signal of what's coming to Adecoagro and it's very exciting anything that's been done before, whether the margins were higher or lower, operating in the normal perimeter until now. So you can expect that line to continue. It's the one we will support. We will definitely always prefer to allocate capital if it's needed with the other shareholders of the company to Adecoagro rather than do investments outside of it as long as it's in exactly the same scope and follows this logic that I've been explaining.

So that's how we can add more value as a shareholder is knowing that we will be there in Adecoagro is really our preferred way of investing in a lot of assets because there's a very big logic and they can generate more value out of it than simply investing on the side on a financial deal because the IRR or the cash flows are attractive. And we believe a lot in the capacity of the company to generate this story, this growth story and the synergies going forward.

[Operator Instructions] Our next question comes from Lucas Ferreira with JPMorgan.

I want to understand a bit more the assets, not super familiar with that. So I just wanted to understand, I mean, the production capacity, if it has room to expand capacity with this, like you mentioned growth of Vaca Muerta.

And eventually, obviously, the cost of gas will depend on international prices, but with more availability, if this cost could even go down for you. And if you can comment also on the -- below the EBITDA line, so assuming $300 million EBITDA, so how much free cash flow the asset generates? So how much CapEx is involved? And if there's any growth CapEx ongoing, anything that we should be aware of in the CapEx line? And sorry, one last one is if you have a number for synergies with Adecoagro.

So I assume the wheat, rice, corn, right, I mean a lot of urea. If you would be buying at market prices anyway. So if there's any synergies with your current farming operations in Argentina or, eventually even in Brazil?

Lucas, thank you for your question. If this transaction is closed. So whenever the transaction is closed, we are going to go into all the details that we can share on this asset. As we explained in the asset, the EBITDA depends on the price of urea. This is an import parity instead of an export parity because Argentina and the regions are net importers.

So that's why it is important. The EBITDA has not a lot of relevant maintenance CapEx, it's only once every 4 years that there is relatively higher or around $50 million to $60 million maintenance CapEx. The rest of the maintenance CapEx is relatively low. The plant is very simple, but very expensive to build a new one. Building a new plant like this is around $2 billion and 4 years to develop it. That's why it takes a lot of time when we think on a growth expansion.

There are projects that are public projects of this plant to double capacity. There is room to double capacity, but that is a very important project that can take almost 4 years and a huge investment.

So that is a different story and something to be discussed further, and those are potential growth projects, but we are not talking about that today nor tomorrow. That will depend on all the other expansion projects that we have, our debt capacity, et cetera, et cetera. So today, we are only talking about the asset as that is very efficient and working very well today.

Thank you. This concludes the question-and-answer section. At this time, I would like to turn the floor back to Mr. Bosch for any closing remarks.

Thank you very much. Thank you for participating on this call and hope to see you in our upcoming calls.

Thank you. This concludes today's presentation. You may disconnect at this time and have a nice day.