Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria (CRESY) Q3 2026 Earnings Call Transcript

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Overview

Cresud's earnings call reflects a positive sentiment, driven by record crop production, improved livestock margins, and strategic debt management. While risks like rising input costs and inflation exist, they are mitigated by favorable macroeconomic developments, such as export tax reductions and increased trade agreements. The Q&A section revealed optimism about Argentina's agricultural sector and potential real estate transactions. Despite some management vagueness on land sales, the overall outlook is growth-oriented. These factors, combined with optimistic guidance, suggest a likely 2% to 8% stock price increase.

Key Financial Performance

Total crop production Increased by 22% year-over-year, from 829,000 tons to 1 million tons. This is a record in production due to favorable conditions and increased planted area.

Sugarcane yields Recovered by 12% year-over-year, following damage in 2025 caused by frost and drought. This recovery reflects improved weather conditions.

Corn production Increased by 8% year-over-year across Argentina, Brazil, and Paraguay. Argentina saw an 11% increase, Brazil 4%, and Paraguay 36%, attributed to normalized conditions in these regions.

Soybean production Increased from 2.60 to 2.90 million tons year-over-year, with significant increases in Bolivia (65%) and Paraguay (178%). This growth is due to favorable yields and operational improvements.

Livestock production Achieved record levels in prices, margins, and production, with 10.7 million kilograms produced. This was driven by high beef prices and efficient operations, particularly in Argentina.

Net financial results Positive at ARS 146.1 billion, driven by lower devaluation compared to inflation.

Net gain for 9-month period ARS 231.3 billion, with ARS 121.6 billion attributable to controlling shareholders, up from ARS 77.3 billion last year. This increase is due to improved operational results and fair value adjustments in investment properties.

Debt issuance $181.4 million issued in the quarter, with interest rates ranging from 4.75% to 7.25%. This extended debt tenor and reduced future interest payments.

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Operating Highlights

Record Planted Area: Achieved a record planted area with favorable conditions, surpassing past volumes.

Livestock Expansion: Record year for livestock in terms of prices, margins, and production, particularly in Argentina and Paraguay.

Capital Markets Activity: Issued $181 million in notes on Argentine capital markets, reducing financing costs and extending debt tenor.

FyO Expansion: FyO, Cresud's service company, is expanding its trading volume in South America, including Brazil.

Crop Production Increase: Forecasting a 22% increase in total crop production compared to last year, reaching 1 million tons.

Sugarcane Recovery: Expecting a 12% recovery in sugarcane yields compared to last year.

Livestock Efficiency: Achieved high productivity in livestock with record margins, expanding feedlot operations in Argentina.

Real Estate Sales: Sold 921 hectares in Paraguay for $1.5 million, marking a small-scale real estate transaction.

IRSA Investment: IRSA, controlled by Cresud, posted strong financial results and announced new developments, including a new office building in partnership with Mercado Libre.

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Risk or Challenges

Input Costs: Rising costs of fertilizers and fuel are negatively impacting farmers' conditions and reducing profit margins.

Sugarcane Production: Sugarcane yields in Brazil were negatively affected by frost and drought in 2025, leading to operational challenges and lower production.

Commodity Prices: While there was a slight recovery in soybean prices, the net effect in South America was negligible, leading to limited price benefits for farmers.

Inflation and Devaluation: Inflation adjustments and currency devaluation in Argentina are creating distortions in financial results, impacting operational profitability.

Farm Sales: Significant reduction in farm sales compared to the previous year has negatively impacted financial results.

Debt Management: Although debt refinancing activities were successful, the company still faces increased interest expenses compared to the previous year.

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Guidance & Outlook

Agricultural Production: Forecasting a 22% increase in total crop production compared to the previous year, reaching a record 1 million tons. Sugarcane yields are expected to recover by 12% compared to last year.

Livestock Business: Expecting a very profitable year with record margins and production in Argentina. Expansion of feedlot operations in El Tigre, La Pampa, due to favorable market conditions.

FyO (Service and Commercial Company): Anticipating continued growth in trading volume and operations, with Argentine crop growth driving expansion. EBITDA expected to remain comparable to the previous four years at $35 million.

Debt Management: Issued $181.4 million in notes to refinance upcoming amortizations, extend debt tenor, and reduce future interest payments.

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Shareholder Return Plan

The selected topic was not discussed during the call.

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Key Q&A

Q:What is the mix of owned and leased land in Argentina for Cresud?

A:Cresud owns approximately 150,000 hectares in Argentina, with a 50-50 split between owned and leased land. In Brazil, the ratio is 60-40 (leased to owned), while in Bolivia and Paraguay, most or all of the land is owned.

Q:Can you provide details on the pipeline of land sales in Argentina for the fourth quarter or next fiscal year?

A:Management did not provide specific details on the pipeline of land sales, stating they do not discuss transactions that are not finalized. However, they noted a significant increase in land values in Argentina and expressed optimism about liquidity and potential transactions in the real estate business.

Q:What are Cresud's stakes in its subsidiaries, including IRSA, BrasilAgro, and Hipotecario?

A:Cresud currently holds a 53% stake in IRSA, which will increase to 55% after the next warrant exercise. It owns 35% of BrasilAgro and IRSA owns 29% of Banco Hipotecario.

Q:What is the general outlook for Argentina's agricultural sector, considering the political situation and trade agreements?

A:Management highlighted positive macroeconomic developments, including tax reductions on soybeans (from 33% to 24%) and reduced dollar gaps. Trade agreements with the U.S. and the EU are expected to boost the cattle business, increasing export volumes significantly. Additionally, China has increased its import volumes from Argentina. Overall, the sector is experiencing normalization and growth.

Q:Can you provide an update on Agrofy's performance?

A:Agrofy, in which Cresud owns a 17% stake, is a digital agriculture marketplace. The company has undergone reorganizations, reduced its headcount to 35 employees, and is close to breakeven, expected within three months. It currently spends $100,000 per month and has potential for growth through AI applications.

Q:Review of Unclear Management Responses

A:Management avoided providing specific details on the pipeline of land sales in Argentina, citing a policy of not discussing transactions that are not finalized. Their response lacked clarity and specific data on upcoming sales.

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Earnings Word Cloud

The most frequently occurring keywords in this quarter's earning call

CRESY Transcript

Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria (CRESY) Q3 2026 Earnings Call Transcript

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Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria WT EXP 030926 (CRESW) Q2 2026 Earnings Call Transcript

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The earnings call presents a mixed outlook. Positive factors include the largest campaign in history, expected growth in planted area, and dividend payments. However, challenges such as delayed harvests, competitive pressures, and financial losses due to exchange rates weigh negatively. The Q&A reveals optimism about BrasilAgro and IRSA but highlights uncertainties in trade agreements and commodity prices. Overall, the sentiment is balanced, leading to a neutral rating.

Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria WT EXP 030926 (CRESW) Q1 2026 Earnings Call Transcript

Unknown11-12

The earnings call presents mixed signals: while Cresud received significant dividends and has an optimistic outlook on farmland prices and expansion, there are concerns about commodity price volatility, currency risks, and unclear management responses. The Q&A highlights potential sales and expansion but lacks specificity, which may cause investor hesitation. Overall, the sentiment is neutral as positive and negative factors balance out.

Cresud Sociedad Anónima, Comercial, Inmobiliaria, Financiera y Agropecuaria (CRESY) Q3 2025 Earnings Call Transcript

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The earnings call presents mixed signals. While there is a notable profit turnaround and credit rating upgrade, significant challenges remain, including operating results decline, losses in grains and FyO, and supply chain issues. The Q&A reveals uncertainties about dividends and long-term strategies, which dampen positive sentiments. Given these mixed factors, the stock is likely to remain stable in the short term.

CRESY Report

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