Good morning, ladies and gentlemen, and thank you for waiting. At this time, we would like to welcome everyone to Adecoagro's Fourth Quarter 2019 Results Conference Call. Today with us, we have Mr. Mariano Bosch, CEO; Mr. Charlie Boero Hughes, CFO; and Mr. Juan Ignacio Galleano, Investor Relations Manager. We would like to inform you that this event is being recorded. [Operator Instructions]. Before proceeding, let me mention that forward-looking statements are based on the beliefs and assumptions of Adecoagro's management and on information currently available to the company. They involve risks and uncertainties and assumptions because they relate to future events and therefore, depend on circumstances that may or may not occur in the future. Investors should understand that general economic conditions, industry conditions and other operating factors could also affect the future of Adecoagro, and could cause results to differ materially from those expressed in such forward-looking statements. Now I'd like to turn the conference over to Mr. Mariano Bosch, CEO. Mr. Bosch, you may begin your conference.

Good morning, and thank you for joining Adecoagro's fourth quarter results conference. As you are aware, the entire world is going through tough time. The coronavirus disease spreads across the globe. And we are starting to see major impacts on businesses and financial markets as well as international trade and commerce. Given the current circumstances, we have been responsive to protect our people and community and our different businesses. We have activated internal protocols and implemented precautionary measures to reduce the chances of being affected by the virus, both from an individual and economic standpoint. There are times where our constant discipline and strategy of focusing on increasing operational efficiencies and being low-cost producers definitively pays off. And let me emphasize this once more. It's the only way to achieve sustainable profits even during the current circumstances. For this reason, but without underestimating the challenges ahead, we feel confident that we will overcome this situation and generate good results. I must say that it's not only at an operational level that we feel we are well positioned, we also have a very strong balance sheet, with an average life of over 6 years for our debt and an almost 2x liquidity ratio. In this line, I'm proud to say that last December, taking advantage of market conditions, we successfully issued a 7-year local bond in Brazil for a total of BRL 400 million at a very favorable terms and conditions. Moving now to the performance of the company during 2019. I would like to highlight the strong operational and financial figures that we registered in all of our businesses. In our Sugar, Ethanol and Energy business, we managed to increase adjusted EBITDA by 6% despite adverse conditions. As you may all be aware, 2019 has been a challenging year weather-wise…

Thank you, Mariano. Good morning, everyone. Let's start on Page 4, with a brief analysis on the rains in Mato Grosso do Sul. As seen on the chart, rains in our cluster in Mato Grosso do Sul during the 12-month period of 2019 were 35% below the 10-year average and also 35% below the same period of last year. I would like to remind everyone that in addition to the dry weather, in June 2019, our cluster was hit by a frost. The combination of these 2 effects, stunted sugarcane growth, making us to reassess our crushing plan going forward, which leads me to Slide 5, where I would like to discuss crushing activities throughout the year. During 2019, a total of 10.8 million tons of sugarcane were crushed, 4.5% lower compared with 2018. As said, this is explained by our strategic decision to slow down the crushing pace, with a goal of allowing our sugarcane fields to recover from the effects caused by the weather conditions previously discussed. Our slower crushing pace is evident in the 15.3% decrease in milling per day despite a 12.7% increase in effective milling days. Implementation of this strategy, coupled with the normalization of range as of last November, will allow our sugarcane to continue growing at the fields and reach optimal conditions to be harvested at its peak in the upcoming quarters. Please jump now to Page 6, where I would like to walk you through our agriculture productivity. As a consequence of the dry weather during most of 2019, sugarcane yields in the fourth quarter were 23% lower than in the fourth quarter of 2018, reaching 68 tons per hectare. The lack of rains, in turn, favored sugar content. In fact, TRS during the quarter reached 145 kilo per ton, 17% higher…

[Operator Instructions]. The first question today comes from Fernanda Cunha with Citibank.

Congratulations on the results. My first question is in regards with commodity prices and the BRL devaluation we have seen recently. Can you comment on your views of how much -- what's your outlook for sugar and ethanol prices? And also how you're looking at your mix for this crop here? And my second question is in regards to the cost. If you could give a slight more guidance of how you think costs, especially here in the sugar and ethanol business, will be affected this year? And if you could explain how much the BRL devaluation should actually hit your production costs? Just -- would it be fair to say that at the BRL devaluation, we could still see costs dropping around $0.005 per pound, if you could give more guidance on that, that would be great.

Fernanda, thank you for your question. I want to ask Renato to get through both of the two questions. First, on the sugar and ethanol mix and how we are thinking there, and then on the cost part and how the real devaluation affect us. So Renato?

Fernanda, thank you for your question. It's important to highlight, as Charlie mentioned, that the refinery price, which is set by Petrobras and affected by oil price volatility, accounts for only 30% of the total composition of gasoline sold at the pumps, which means that any movement in oil will mostly affect that parts related to the refinery. Also, the Brazilian real devaluation helps to mitigate the impact of low price. Lower oil shouldn't lead most mills and center [indiscernible] to maximize sugar, and it should result in a reduction in ethanol production of approximately 4 million cubic meters what, in our view, is margin and [indiscernible] offset and negative impact in demand, preserving high parity ratios at the pumps. Regarding the costs -- the proportion of the CapEx and cost that is in real denominated is between 90% and 95%. Therefore, the devaluation of 15% in Brazilian real reduces our costs and CapEx in about 13%. It's important to highlight that our total CapEx for 2020 is already negotiated in reals. And for this reason, there is no risk of -- to have our supply adjusting the price as a consequence of the currency devaluation. I think our final cost in cents per pound would be close to $0.085 per pound.

Okay. And can you just give any color on how much of this feedstock you have already purchased for this crop year?

Sorry, again the question?

How much -- if you just can give like an overview of how much of your feedstock of your production costs that you have already purchased for this year?

From the CapEx side, we have already bought everything. So everything is already negotiated in reals. So no chance of the price change. And regarding the cost, almost 100% of our input is already priced. So we see a very low increase in our cost for the real devaluation.

[Operator Instructions]. The next question from comes from Thiago Duarte with BTG.

I have the three questions. The first one is related to sugar and ethanol as well. If I could just go back a little bit on this discussion about the mix between sugar and ethanol in 2020. Renato, I understand your arguments with regards to the mitigations that the market -- the market prices on ethanol and gasoline should have based on the Brazilian real depreciation and so on and so forth. But just to get a sense, I mean, in your calculations or your estimates, if we assume the spot price for Brent and the fact that Petrobras is possibly going to keep the import parity of their gasoline price at the refinery, would you say that your mix between sugar and ethanol in 2020 is going to be very different from 2019 or not? Just for us to get a sense of where you're seeing your profitability between the 2 products, considering the market prices. That would be the first question. The second question is related to crushing volumes in 2020. I think it's very clear for us at this point the reasons why crushing volumes were lower in 2019. But considering that you are expanding your planted area, and considering that you took the decision to keep the cane in the farms for longer given the impact of the frost and so on, can you provide us some sort of indication of whether you could be crushing closer to 12 million tons this year already? Or for any reason, you should not, just for us to get a sense of your recovery base there? And finally, just considering the ups and downs of the different currencies in Brazil and in Argentina, can you clarify for us regarding the expansion CapEx for 2020? How many dollars you expect to be spending this year considering the very final phase of the 5-year plan, that would be very helpful? And that's, of course, for Sugar and Ethanol and for Farming and Dairy as well.

Thank you, Thiago, for your question. Regarding the first part of your question, as a TRS producer, our strategy is always to maximize. The product is more profitable at the moment. And our high flexibility gives us the advantage to always arbitrate the products. As we -- now currently, as we continue in the offseason periods, now in Mato Grosso do Sul, we remain paying 14% of premium for hydrous and 20% for anhydrous. In our mill in Minas Gerais, however, product is already -- is likely favorable to sugar. For the remaining part of this season, considering that the Mato Grosso do Sul has a tax rebate, we think that we are going to be maximizing ethanol in Mato Grosso do Sul and sugar in Minas Gerais, but of course, this can change. And we are -- and our flexibility will give us opportunity to change according to the market. And regarding your second question about the sugarcane outlook, I think as the consequence of the normal rains that we had in December, January and February, we have a better sugarcane outlook for 2020. The yields of the first half of the year will be -- will still be impacted by the drought that you had in '19, but the situation should improve at the beginning of the third quarter as we will be crushing sugarcane with normal development. We had a very good planting in 2019, and the sugarcane will be harvested in the second semester. The sugarcane -- regarding our mill in Minas Gerais, the sugarcane outlook is fantastic and we started crushing very early this year. Actually, we started on March 8. This scenario will allow us to crush, I'd say, close to 11.5 million tons of sugarcane, of course, depending on the weather.

Thiago, just to complement on the mix, we also have to take into account the RenovaBio program that also favors a little bit more on the ethanol. So the important part is the flexibility, but we are now adding something else on the calculation. And the other important part, in regards to our strategy, is to take into account the amount of storage at the mills that we have, that this gives us additional flexibility to maximize the price of ethanol, as we've done this past year. So this past year, all the investment done in storage has been paid in the year. So we make more money with the strategy of storage than the total cost of the CapEx of this -- of the whole times. Just to clarify or to add that on to Renato's answer. And then on the last part of -- or your last question, the third question regarding the Capex. On the $50 million to $60 million remaining CapEx to complete the 5-year plan, that is what is still happening in 2020, most of it has already been committed or expensed in part. And as Renato was explaining, more than 80% of that is in sugarcane plantation, and the sugarcane plantations are mainly in reals. That's why we can expect that to be reduced in line to what the numbers that Renato has already explained.

The next question comes from Christian Audi with Santander.

A couple of questions. First, on the demand side, given the impact that coronavirus may have, and I know it's a challenging dynamic to try to quantify the impact it could have on demand, but how are you going about, thinking about that? In other words, the impact that you could have on the demand for your ethanol and the demand for your sugar or any other products? The second is going back to a little bit of a discussion on pricing that we were having. So as oil prices come down, gasoline prices in Brazil come under pressure even with the depreciation of the real, which will likely pressure ethanol prices in Brazil, which could lead you to want to shift some of your production to sugar, but that, in turn, could pressure sugar prices. So can you talk a little bit more about that? At the end -- I understood your point about mix, that you have the flexibility, which is great, but at the end, what is your outlook given this macro situation for sugar prices as a whole? Because it seems to me that as you were -- as you shift from ethanol to sugar, that could also put pressure on sugar prices given the increased production. So if you could add a little bit more color there that will be very helpful, please.

Christian, thank you for your question. Renato will address, and then I can complement. Renato?

Thank you for your question. As I mentioned, we have a high flexibility in our mills to switch the production from ethanol to sugar. In Mato Grosso do Sul, as was mentioned, we have the tax rebate and also the -- even the tanks availability to sell the ethanol at the peak of the price in the offseason. So we believe, at this point, that we are maximizing ethanol in Mato Grosso do Sul because of those 2 points. In Minas Gerais, the mill has a lot of flexibility to produce sugar. Actually, Monte Alegre mill can produce up to 7% sugar, and we think we will be producing sugar. But of course, we are going to be paying attention to the market to arbitrate according to the prices in the coming months.

And just to follow up. That's very helpful. How can, I mean, obviously given that sugar prices already had an important correction rate, but as you make that switch, which is a great flexibility that you have, as you explained, that would bring more sugar into the world's production rates, not just you, but Brazil as a whole. And wouldn't that be an added pressure point for sugar prices globally to have more sugar coming in as you switch from ethanol to sugar production?

Yes. But the fundamentals of sugar is very good. So the crop is almost over, and it should be reduced by 6 million tons of sugar in Thailand. Indian harvest remained behind last year and sugar production should reduce to 27 million tons versus 33 million last year. Even if higher production coming from Brazil, most analysts are expecting a dearth for the current season between 7 to 11 million tons of sugar in the world. So I think that the fundamentals of sugar is still very good. Once we pass this particular moment over the sugar, we will go back.

Christian, also to complement, in soybean, for example, the fundamentals are still there and are similar to what we saw before the crisis. And yesterday, as an example, China bought 20 barges of soybean. So that's going on and the demand, we still see there. That's why, in terms of the fundamentals of the commodities that we are producing, apart from sugar, we still see that there.

Great. And any color on how you're going about thinking on the demand side for your products, given this very fluid uncertain dynamic with the coronavirus?

I think it's too early to predict any impact on demand. It depends a lot on the growth of the world and Brazil. So we expect that we are going to be -- our demand is reducing a little bit, but it's too early to give any final number. You remember that we produce items that people, all will be consuming, for example, sugar. So I think the impact should be lower than other products.

[Operator Instructions]. The next question comes from Ezra Cohen with EMS.

It's Edmond Safra. I'm sorry, I joined the call a little delayed and I didn't catch the part in your comments where you give a little bit of guidance. Could you repeat what you said earlier? Also the quality of the call wasn't very good, so -- that's why I didn't catch it.

Sorry, Ezra, can you clarify your question, please?

Mariano, It's Edmond. Just -- on your final section of your comments, you gave a little bit of color on your profitability, but we couldn't catch it very well. The line wasn't very good. Profitability going forward?

Sorry, I think I am not getting exactly in which part, but we didn't give any specifics on the profitability going forward. What we said is that we are very well prepared for challenges ahead. But maybe we -- Charlie can go through the last part of his presentation.

Edmond, it's another variable still with a lot of volatility. But just making an exercise, if we factor the current commodity prices and how that is being offset by the benefit of having most of our cost in reals in Brazil and in pesos in Argentina, which, in some way, mitigates the downturn of the commodity prices. So far, we could be expecting a reduction between 5% to 8% on our projected EBITDA. So that's a way of having a clue or an idea on how all these changes could be affecting our EBITDA performance.

This concludes our question-and-answer section. At this time, I would like to turn the floor back over to Mr. Bosch for any closing remarks.

Thank you, everyone, for joining the call. And just to transmit that we are very well prepared for the challenges ahead, and we will continue to be the low-cost producers of all the commodities we are producing today. So thank you for joining.

Thank you. This concludes today's presentation. You may disconnect your line at this time, and have a nice day.