Buenos Aires, November 12th. One of the largest farming companies in South America, Cresud, doubled its revenues, expressed in Pesos (AR$), during the first quarter of the fiscal year 2020. According to its financial statement, revenues jumped to AR$4,527 million from 2,234 million a year before, reaching a 102% annual increase (domestic inflation rate was 55%). But the Gross Profit just increased by 46% and Segment Profit just 13 percent.
Following, the most remarkable statements from the press releases of Cresud, referring to the 1Q results.
Our portfolio under management is composed of 730,481 hectares, of which 289,538 are in operation and 440,943 are land reserves distributed among the four countries in the region where we operate: Argentina, with a mixed model combining land development and agricultural production; Bolivia, with a productive model in Santa Cruz de la Sierra; and through our subsidiary BrasilAgro, Brazil and Paraguay, where the strategy is mainly focused on the development of lands.
We periodically sell properties that have reached a considerable appraisal to reinvest in new farms with higher
appreciation potential. We analyze the possibility of selling based on a number of factors, including the expected future yield of the farmland for continued agricultural and livestock exploitation, the availability of other investment opportunities and cyclical factors that have a bearing on the global values of farmlands.
In the first quarter of the fiscal year 2020 Brasilagro completed the sale of a fraction of 1,134 hectares of the “Jatobá” farm located in Jaborandi, State of Bahia, Brazil for an amount of BRL 22.7 million (BRL / ha 20,018). The farm was valued in books at BRL 1.7 million and the internal rate of return in dollars reached 7.0%. After the end of the quarter, in October 2019, it has sold a small fraction of 85 hectares of its “Alto Taquarí” farm, located in the State of Mato Grosso, for BRL 5.5 million. The farm was valued in the books at BRL 1.2 million and the internal rate of return in dollars was 13.0%.
During this campaign, we expect to transform 13,211 in the region: 8,769 hectares in Argentina and 4,442 hectares in Brazil.
The result of the Farming segment increased by ARS 92 million, from ARS 730 million gain during the three-month period of fiscal year 2019 to ARS 822 million gain during the same period of 2020.
The result of the Grains activity decreased ARS 81 million, from ARS 508 million gain during the three-month period of 2019 to ARS 427 million gain during the same period of 2020, mainly as a result of:
• A negative variation in the production result of ARS 151 million originated mainly in Argentina due to lower prices and exchange rates than expected for the 18-19 campaign. Brazil also incurred in higher soybean production costs. And finally, in Bolivia mainly due to a lower degree of progress, prices and hectares of winter soybean for the current year.
• The effects mentioned above were partially offset by a positive variation in the holding result of ARS 66.4 million, mainly originated in Argentina because of better prices in fiscal year 2020 due to the effect of August devaluation and additionally because of higher grain stock from 18-19 campaign.
The result of the Sugarcane activity increased ARS 97 million, from a ARS 358 million gain in the first quarter of 2019 to ARS 455 million gain in the same period of 2020. This is mainly due to a higher profit in Brazil as a result of an increase in productive result due to better yields, higher total sugar obtained and better prices.
Link to the Financial Results