SLC Agrícola (SLCE3) Q1 2025 earnings summary

Executive summary

• Net revenue rose 19.1% year-over-year to R$2.33 billion in 1Q25, driven by higher soybean and cotton volumes, improved yields, and a 10% increase in planted area.

• Net income surged 123.1% to R$510.7 million, reflecting operational efficiency and favorable market conditions.

• Adjusted EBITDA reached R$943.7 million, with a margin of 40.5%.

• Major investments included land acquisitions and the purchase of Sierentz Agro Brasil Ltda., expanding planted area by over 100,000 hectares for 2025/26.

• Dividend payout of R$241 million approved, representing a 3.1% yield based on 2024 results.

Financial highlights

• Gross margin improved to 46.2% from 33.0% year-over-year.

• Adjusted free cash flow was negative R$1.42 billion, mainly due to land and equity acquisitions.

• Net debt/Adjusted EBITDA ratio rose to 2.27x from 1.80x at year-end 2024.

• Dividend yield averaged 4.9% over the last four years.

• Total indebtedness increased to R$6,347 million in 1Q25.

Outlook and guidance

• Planted area for 2025/26 expected to grow 13.7% after acquisitions, with 62% leased and 38% owned land.

• For 2025/26, 82% of potassium chloride, 69% of phosphate, and 57% of crop protection inputs are already purchased.

• Hedge positions for 2025/26: 44.8% of soybeans and 7% of cotton locked; corn hedging not available due to short-term trading.

• Cost per hectare for 2024/25 projected to decline 5.4% versus prior forecast, and 10% lower than actual 2023/24 costs.

• Management expects leverage to decrease below 2x EBITDA by mid-2026 as cash generation resumes.