Lavoro (LVRO) Q2 2025 earnings summary

Executive summary

• Out-of-court restructuring agreement reached with key suppliers, extending payment terms and securing multi-year inventory financing for Brazil, aiming to restore supply chain stability and operational resilience.

• The reorganization plan (EJ Plan) is limited to Lavoro Brazil and Proterra, covers R$2.5 billion in trade payables, and standardizes multi-year contractual frameworks with suppliers.

• Preliminary unaudited Q2 2025 consolidated revenue was R$2.25 billion, down 27% year-over-year, with gross profit down 28% to R$366.9 million, mainly due to inventory shortages in Brazil Ag Retail.

• FY2025 financial guidance withdrawn due to ongoing restructuring and audit process uncertainties.

Significant events and developments

• Severe input price deflation (40%-60%), El Niño-induced drought, and farmer liquidity constraints created historical headwinds for the Brazilian ag inputs market.

• Judicial reorganization of a major competitor in late 2024 triggered a sudden tightening of inventory financing, leading to shortages and canceled orders.

• Out-of-court restructuring agreement and EJ Plan filed, covering R$2.5 billion in trade payables, with tailored repayment terms for different supplier classes.

• Multi-year inventory supply and financing framework established to mitigate future supply disruptions.

• Resumption of normal inventory flow from key suppliers expected in 4Q25.

Financial highlights

• Q2 2025 consolidated revenue fell 27% year-over-year to R$2.25 billion (US$384.4 million, down 38%).

• Q2 2025 consolidated gross profit decreased 28% to R$366.9 million (US$62.8 million, down 39%), with gross margin contracting 40 bps to 16.3%.

• Brazil Ag Retail revenue declined 30% year-over-year to R$1.84 billion, with gross margin down 240 bps to 11.5%.

• Cropcare segment revenue dropped 30% to R$251.5 million, gross margin contracted 1,160 bps to 23.7%.

• Latam Ag Retail revenue rose 4% to R$287.3 million, gross margin expanded 480 bps to 22.6%.