Cresud SA Q2 FY2020 earnings call

Management Statement and Operational Highlights

• Planted Area: Record planted area in the region, almost 270,000 hectares, a 9% growth compared to last year.
• BrasilAgro Transactions: Sold 6% stake for $15.6 million, merged Agrifirma (issuing shares, not cash), resulting in Cresud's stake reducing to 33.6%.
• Agrofy: Capital round increased to $23 million (Cresud subscribed $2 million, BrasilAgro $1 million), valuation $53 million, present in 7 countries, goal to be Lat Am leader in 3 years with expansion to Colombia and Mexico this year.
• IRSA Argentina: Recovery after 18 months, occupancy 95% in malls, 97.1% in offices, Della Paolera doscientos nearing completion.
• Israel: Finished Concentration Law adoption, disposed Gav-Yam shares, privatized Ispro debt, sold Clal shares (direct stake at 8.5% with swaps).

Segment Performance

• Agribusiness: Adjusted EBITDA ARS2.6 billion, a drop mainly due to fewer real estate transactions in the first semester.
• Urban Argentina: ARS3.4 billion, a 6.6% drop vs last year, mainly due to inflation adjustment.
• Shopping Centers: Sales slightly below adjustment, showing a small negative.
• Israel: Positive adjusted EBITDA, mainly due to good results on PBC and Cellcom, and IFRS change on Cellcom.
• BrasilAgro: Sales BRL28.2 billion in Brazil, with more sales expected in the second semester.

Guidance

• Expect more sales in BrasilAgro's second semester.
• Anticipate normal crop yields with continued rain in the South American region.
• Expect real estate transactions in the second semester.

Risks

• Impact of inflation on the urban Argentina segment.
• Export tax changes in Argentina affecting agriculture.
• Coronavirus impact on Chinese demand affecting commodity prices.
• Uncertainty on sustainability of consumer payment programs in IRSA.

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