CRESUD INC. - Q1 Fiscal 2025 Summary (Period Ended Sept 30, 2024)
Business Context and Reporting Period
This filing covers the unaudited condensed interim consolidated financial statements for the three-month period ended September 30, 2024 (First Quarter of Fiscal Year 2025). CRESUD operates in two primary segments: Agricultural Business (crops, cattle, land sales) and Urban Properties and Investments (shopping malls, offices, hotels, primarily through subsidiary IRSA). The financial statements are prepared in Argentine Pesos (ARS) and restated for hyperinflation in accordance with IAS 29.
Key Financial Metrics
| Metric (ARS Millions) | Q1 FY25 (Sep 30, 2024) | Q1 FY24 (Sep 30, 2023) |
|---|---|---|
| Revenues | 226,507 | 208,647 |
| Gross Profit | 65,999 | 76,809 |
| Profit from Operations | (172,626) | 359,771 |
| Net Loss for the Period | (72,374) | 244,016 (Profit) |
| Adjusted EBITDA | 73,977 | 44,027 |
| Cash and Cash Equivalents | 98,112 | 128,542 |
| Total Borrowings | 876,669 | 922,318 |
| Net Debt (USD Millions) | 315.7 (CRESUD) / 204.6 (IRSA) | N/A |
Material Changes vs. Prior Period
- Net Loss vs. Profit: The company reported a net loss of ARS 72,374 million, a reversal from a profit of ARS 244,016 million in the prior year. This is primarily driven by a net loss of ARS 222,211 million from the fair value adjustment of investment properties in the Urban segment, compared to a gain of ARS 311,893 million in the prior year. This valuation change reflects macroeconomic conditions and exchange rate variations.
- Revenue Growth: Consolidated revenues increased 8.6% year-over-year to ARS 226,507 million, driven by higher volumes in agricultural sales and land disposals.
- Adjusted EBITDA: Despite the net loss, Adjusted EBITDA increased 68.0% to ARS 73,977 million, indicating strong underlying operational cash generation.
- Land Sales: The Agricultural segment recorded a significant gain of ARS 21,963 million from the disposal of farmlands (including sales in Brazil and Argentina), compared to ARS 85 million in the prior year.
- Segment Performance:
- Agricultural: Generated a segment profit of ARS 10,271 million (vs. ARS 4,195 million prior year), aided by land sales and improved cattle margins.
- Urban Properties: Recorded a segment loss of ARS 175,739 million (vs. profit of ARS 375,481 million prior year) due to the fair value impairment of investment properties.
Guidance, Outlook, and Risks
- Outlook: Management expects the 2025 agricultural campaign to feature a larger planted area and stable commodity prices. The real estate market is showing renewed interest following recent tax amnesties and mortgage loan launches in Argentina. The company plans to continue selling appreciated farmland to optimize the portfolio.
- Capital Actions:
- Dividends: A cash dividend of ARS 45,000 million was approved and distributed in November 2024.
- Share Buyback: A new buyback program was approved for up to ARS 6,500 million (approx. 10% of capital) with a maximum price of ARS 1,500 per share.
- Debt Issuance: In October 2024, IRSA issued Series XXII and XXIII notes totaling USD 67.3 million.
- Risks:
- Valuation Volatility: Significant exposure to fair value adjustments of investment properties due to inflation and exchange rate fluctuations in Argentina.
- Legal Contingencies: Ongoing litigation with IDBD (claiming NIS 140 million) remains in the evidentiary stage; a provision has been recorded.
- Climate: Agricultural yields are subject to weather conditions, with a forecast of weak La Niña potentially impacting wheat and corn production.
Key Facts for Investor Verification
- Non-IFRS Measures: Verify the reconciliation of Net Loss to Adjusted EBITDA (ARS 73,977 million), as the reported net loss is heavily influenced by non-cash fair value adjustments.
- Investment Property Valuation: Scrutinize the ARS 222,211 million loss on investment properties, which is the primary driver of the period's net loss and is sensitive to discount rates and exchange rate assumptions.
- Liquidity Position: Confirm the company's ability to service debt (Total Borrowings ARS 876,669 million) given the cash outflow from investing activities (ARS 52,121 million used) and the recent dividend distribution.
- Land Sales Proceeds: Verify the collection status of the USD 1.13 million balance from the "Los Pozos" farm sale, due in September 2025.
- Hyperinflation Accounting: Ensure understanding of the impact of IAS 29 restatements on the comparability of financial figures year-over-year.