CRESY

Cresud S.A.C.I.F. y A. (CRESY)

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Cresud S.A. (CRESY)

F1Q13 Earnings Call

November 23, 2012 9:00 AM ET

Executives

Alejandro Elsztain – Second Vice Chairman and CEO

Matias Gaivironsky – CFO

David Perednik – Chief Administrative Officer

Analysts

Pedro Richards – Raymond James

Presentation

Operator

Good morning everyone. And welcome to Cresud’s First Quarter 2013 Results Conference Call. Today’s live webcast both audio and slideshow maybe accessed through Company’s Investor Relations website at www.cresud.com.ar/ir by clicking the banner teleconference. The following presentation and the earnings release issued last week are also available for download on the company’s website. After management’s remarks there will be a question-and-answer session for analysts and investors. At that time further instruction will be given. (Operator Instructions). You will have also the possibility of sending a question via webcast by clicking on the question to host tool.

Before we begin, I would like to remind you that this call is being recorded. And that information discussed today may include forward looking statements regarding the company’s financial and operating performance. All projections are subject to risks and uncertainties and actual results may differ materially. Please refer to the detailed note in the company’s earnings release regarding forward-looking statements.

I would now turn the call over to Mr. Alejandro Elsztain, Chief Executive Officer of Cresud. Please go ahead sir.

Alejandro Elsztain

Thank you very much. Good morning everybody. We are beginning our conference call of results of 2013 first quarter. If we can go to page number two, we see the main highlights for the first quarter.

From fiscal year 2013, the company adopted accounting policies, IFRS, that is changing a lot of our balance sheet and we are going to take a lot of minutes to explain the effect of this new system for our balance sheet.

The operating income totaled 180 million pesos, 9% lower than last year due to our 20 million operating loss from the agricultural segment offset by 16% increase in the operating income from the Urban segment. The agricultural segment was affected this year a lot in derivatives. Future sales of this campaign were 30 September very high, and those made a loss [business of] [ph] 36 million pesos loss this year comparing to last year that was a 16 million pesos gain.

So, there is a very big strong effect on the agricultural in derivatives that is affecting the agricultural line that is just [hedge] [ph] of the campaign that will change, I’m not very happy because the prices went down. But this effect was in the 30 September and but it’s affecting comparing year to year. But reality is agriculture for first quarter is almost zero, in the IFRS system, agriculture is reflected every time you are producing, and the first quarter is not producing. So, this affect is almost zero, we’re going to talk about just cattle and dairy, mainly the sugarcane business is doing very well.

Our net loss of 16.5 million pesos was reflected this quarter, mainly due to higher net financial results; we’ve started the crop season and we expect to plant crops in approximately 207,000. This is the planted area of Cresud that is going to go to Cresud, Cresca, Agrouranga and BrazilAgro. Apart from that there is some (inaudible) some funds that Cresud doesn’t produce and [replacing] [ph] in a fixed payment to others to reduce and diversify the risk.

Crop production, mainly corresponding to various planting during 2011 and ‘12 season decreased by 19%, and due to lower yields caused by the drought that affected the whole region. That was the main explanation of last year that affected the last part of this crop that we harvest between June and September.

The beef cattle segment recorded a loss of almost 2 million pesos in gross income compared to profit of last year of 6.7 million pesos, this was really explained by lower holding results, last year holding was positive like 9 million pesos, this year it’s almost zero.

In the case of the milk, the production, we continue to note high production levels, in excess of 20 liters per cow, in El Tigre facility. We have increased our interest in IRSA shares, reaching 64.5%. And our general shareholder meeting resolved to pay 120 million pesos cash dividend that is going to be paid soon, this represents a dividend yield of 4.53%.

If we move to page three, we see the weather and humidity conditions in the region, this is very good news for Cresud and all of the companies in South America, we see the green shows good weather conditions, yesterday we had rains in the North of Argentina too, that is the part that is more delayed for planting because it’s not always it’s planted in December, so it’s very good news for the whole portfolio of plan of Cresud. So, we are expecting and we’re going to see in next page, that USDA is expecting good yield for the whole region.

And here we see that in fourth page, USDA estimations shows that the drop of last year soybeans Argentina was for 49 million to 41 million, expecting for next 55 million tons. In the case of Brazil the same, from 75 million tons, last year drought went to 66 million and it is expected to be 81 million surpassing the United States yields of soybeans so becoming Brazil the largest soybeans producer of the world.

Read the rest of this transcript for free on seekingalpha.com