Slc Agricola ((SLCJY)) has held its Q3 earnings call. Read on for the main highlights of the call.
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SLC Agricola’s recent earnings call conveyed a mixed sentiment, balancing strong financial performance with operational challenges. The company reported record net income growth and impressive yield improvements in corn, but faced hurdles such as lower cotton yields, increased debt, and higher SG&A expenses. The expansion of irrigation projects and strategic share buyback plans suggest a positive outlook, albeit tempered by financial and market challenges.
Record Net Income Growth
SLC Agricola reported a remarkable net income of BRL 2.1 billion for the quarter, marking a 28% increase year-on-year. This growth was primarily driven by higher volumes of soybean and corn sales, showcasing the company’s robust performance in these segments.
Historical Record Yield in Corn
The company achieved a historical record yield in its second crop corn, reaching 8,243 kilograms per hectare. This figure not only surpassed initial projections by 9.3% but also exceeded the national average, highlighting SLC Agricola’s efficiency and productivity in corn cultivation.
Significant Reduction in Unit Costs
SLC Agricola successfully reduced its unit costs, with soybean costs falling by 27.4% and corn by 17.5% compared to the previous crop year. These reductions reflect the company’s effective cost management strategies, contributing to its overall financial health.
Expansion of Irrigation Projects
The company plans to significantly expand its irrigated area, aiming to reach 53,180 hectares in the coming years. This expansion is expected to enhance yield stability and support SLC Agricola’s long-term growth objectives.
New Share Repurchase Program
The Board has approved a new share repurchase program involving 10 million shares. These shares will be held in treasury for future sale or cancellation, reflecting the company’s commitment to enhancing shareholder value.
Cotton Yield Below Expectations
Cotton yields fell short of expectations, averaging 1,845 kilograms per hectare, which was below both the company’s plan and the national average. This shortfall was mainly attributed to drought conditions in Bahia, impacting overall cotton production.
Increased Debt
SLC Agricola’s adjusted net debt rose to BRL 6.2 billion by the end of the third quarter of 2025, an increase of BRL 2.8 billion from the previous year. This rise was due to strategic investments aimed at supporting the company’s growth initiatives.
SG&A Expenses Increase
The company experienced higher SG&A expenses, totaling BRL 132.4 million, with BRL 51 million being non-recurring expenses linked to the sale of a spin-off company. These increased expenses contributed to operational pressures during the quarter.
Net Loss in the Quarter
Despite the strong net income growth, SLC Agricola reported a net loss of BRL 14.5 million for the quarter, a decrease of BRL 2.8 million from the prior quarter. This loss was primarily due to higher expenses and increased tax liabilities.
Forward-Looking Guidance
Looking ahead, SLC Agricola provided detailed guidance for the upcoming crop year. The company anticipates stable cotton prices and a global supply-demand deficit, while soybean and corn production are expected to exceed demand. The planted area for the ’25-’26 crop year is projected to increase significantly, with cotton, soybeans, and corn areas growing by 11.1%, 14.2%, and 29.3%, respectively. The company’s strong hedging positions and strategic investments, including a partnership with BTG Pactual, are expected to enhance operational efficiency and support future growth.
In summary, SLC Agricola’s earnings call highlighted a strong financial performance with record net income growth and impressive corn yields. However, challenges such as lower cotton yields, increased debt, and higher expenses present operational pressures. The company’s strategic initiatives, including irrigation expansion and share repurchase programs, reflect a cautiously optimistic outlook for future growth.