Good afternoon, everyone. I'm Santiago Donato, Investor Relations Officer of Cresud, and I welcome you to the second quarter of fiscal year 2026 results conference call. First of all, I would like to remind you that both audio and slideshow may be accessed through company's investor relations website at www.cresud.com.ar by clicking on the banner webcast link. The following presentation and the earnings release are also available for download on the company website. After management remarks, there will be a question and answer session for analysts and investors. If you want to make a question, please use the chat. 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 will now turn the call over to Mr. Alejandro Elsztain, CEO.
Thank you, Santi. Good afternoon, everybody. We are now going to introduce the results of the second quarter of 2026. We can see in page number two the main events that happened in this first half year. First of all, the conditions on the weather were okay, better than last year, in owned and leased land. We have this year improved the size of hectares in the four countries. Now, with lower margins because of the drop of prices, we were very active doing the owned and leased lands. We are going to show you in the next page. Related to the prices, the prices were stable this year, no big jumps.
Some changes between U.S. and South America. Finally, higher cost of inputs, lower margins comparing to last year's, comparing to the COVID times. We are compensating that through size between the four countries. In the only harvest we had in the beginning, that was the wheat, mainly for our winter crops, we had achieved a better yield comparing to what we expected when we plant. It was like a 10% higher comparing the time we planted. That was a combination of good yield and more use of fertilizer in Argentina. We began the yield related to all the agriculture for the company, the first half in a positive way, but in the meantime, prices of the wheat were not so good.
We had better yields. Still now majority of that was not sold. Now we are beginning to sell. We are compensated through the prices now. We are having good results in the wheat too. In the rest, we are going to expect for the soybean and the corn that they are coming for the second half. We are in good shape, waiting for more rains for the future. Related to BrasilAgro, we had lower production results and that was explained mainly because of sugarcane. We had some cases of some things affecting the yields of sugarcane that mainly affect the first half of the year in Brazil. The good, very good part of the half of the year was the cattle activity.
Here, we had very sustained price, and we're going to show you the evolution of the prices related to this. Argentina, with a very big stock and much more investments on cattle, we have very good results in the first six months. We are improving our feeders in south in Tigre and in the north in Los Pozos farm. Related to capital market, we issue local capital market bonds up to $117 million to repay the this year debt maturity. In the meantime, Cresud paid a very big dividend. We paid up to ARS 93 billion, close to $64 million. 70% was in cash, 30% in kind, in issue shares. Plus of that, we did, like, almost 1% of Cresud shares paid dividends too. Very actively paying dividends in this year.
Now we can move to page number three, and we can see what it was the final planting area. A little drop from the last presentation last quarter. We dropped, like, 6,000 hectares between the four countries. That was done because we were very strict. The margins in some farms was not so big, and we were very strict on the window of planting time. We preferred to plant a little less, but with the areas with enough rain and with very positive margins. That was the reason of small reduction. Area that stayed not planted like 6,000 hectares, we are presenting 333.4. This is the breakdown between the four countries, and the main one is still Argentina, second Brazil, Paraguay, and final Bolivia. If we move to next page, we can see the evolution of the prices.
The 10 two main products, soybean and corn, where we have the two main activities in volume, plus the sugarcane, plus the cattle. These are the four main activities, plus the real estate, plus the service through FYO and Agrofy. In here, we see the evolution of the prices. The last 14 years. We wanted to show you how cheap is soybean and corn in real terms. Nominal terms, but in real terms, adjusted by inflation, you see how cheap are our main products. With that, we are still making money in this region that is so benefit in production and still farmers of the region are making good without subsidies for sure. In Argentina, still with taxes on exports.
In the graph below, I wanted to show this state of changes because Donald Trump announcing China battle or China realignment. Look at what is happening with Chicago Board of Trade of the price. We see jumps. The time that the jump comes to the price of Chicago, the premium to Brazil goes down. Exactly the opposite, when the price goes down, premium to Brazil goes up. Finally, South America is very balanced. It's not changing its price in dollars. This is affecting mainly South American prices. Some small changes because of the China and U.S. relation, but finally not changing the very good trade that the sector is spending and the recovery of the stocks that we are looking at the last years.
I wanted to share that the margins for farmers are decreasing because of the long-term trend of this. A lot of new technology coming to the sector, improving the yields, this is making small margins, and we are having good margin, small margin. This year we are expecting smaller and in a bigger scale because of the expansion of the lands. In the next page, we can see that the weather is in a good condition. We see the graph is in green or is in blue, saying accumulated good rains. Small, very small areas without a good rain. We are expecting a normal or almost normal crop for the four countries. Here we see the sowing progress. 100% of the corn and the soybean of Argentina, of Bolivia and Brazil. Brazil, the corn is little late.
This is corn mainly of Safrinha, second corn, and this is a little delay, and in Paraguay too. We are not achieving up to now 100% of the corn. We expect to arrive close to 100, but probably not to the 100 because of some lack of rain that affected mainly Brazil and Paraguay. Balanced weather conditions and controlling costs. Normal operation here up to now, up to end of January. Understanding that majority of soybean and corn will come from now in Brazil, it's beginning the harvest on Mato Grosso, but mainly in Argentina, harvest of soybean will be April, May, and maybe majority of the corn will come July, August, September. We are in the middle of the good time of the summer crop. That is the mainly more important for the company.
We can move to next page. We can see some good news. The government is doing what it said in the past, decreasing the taxes on exports. Small reduction. We saw during this quarter, 26% to 24% in the soybean, 9.5% going to 8.5% in corn and sorghum, 9.5% to 7.5% in wheat and barley. Some small drops going in the good direction. Not expecting to go to zero, mainly the soybean that is the big revenue for the country, but in the good direction. Maybe we can see a surprise in the cereals going to zero that won't cost so much. We expect for next year, maybe going to that direction and keep reducing the soybean for the future.
That's what Milei announced at the beginning, and it's begun from 33, now he's in 24. He's going in that direction. The other main achievement of the government, in the right part of the graph, the big gap of the past between the two dollars, the official and unofficial. Now the two, the blue and the orange, going close to almost together. The farmer is decreasing taxes and receiving almost the official and the unofficial dollar are the same. What is that affects? Now, farmers are really receiving dollars, and the taxes are decreasing. This is affecting the liquidity for the agriculture and cattle areas. We are seeing more liquidity. We didn't announce up to now, six months, any real estate operation, but we think we are going to close the year having transactions on the region.
We keep that on mind, and we think we're going to achieve the normality. In Argentina, more than normality, that Argentina was close to zero the last one, two years. Now we expect some transactions too. In Paraguay, but in Brazil, because the liquidity is still there. Apart of these two big news, taxes reducing and the gaps between the $2 , there were two news. One is related to U.S., and one is European Union, and the third one is China. Related to U.S., United States established a new framework to bilateral to Argentina. Argentina is very close now in the relation with U.S., and that will re-improve access for beef and other markets. Mainly for beef, they are expecting going from 20,000 tonnes to 100,000 tonnes.
Related to Mercosur, that will improve shift of quota to South America, to Argentina too, but this was not signed. Finally was delayed, was approved, but we need the agreement to the rest, the regulatory and parliamentary is not approved still. We need to wait for that. U.S. is almost done. China is the third that China improved what was Argentina from 400,000 tons to more than 500,000 tons, improving 17% what we are now exporting to China, but reducing to other countries, to mainly to Australia, mainly to Brazil, and improving to Argentina, Uruguay, and the United States. The three effects for beef are affecting and probably on next page, we can see the evolution in the page seven, evolution of the price of Argentina.
Argentina was very bad on prices in the past, was the lowest, but now recover and today, between the four countries, Argentina, Uruguay, Brazil, and Paraguay, Argentina is in the highest because of the quality of Argentine beef. We see that Cresud was preparing, and now we are improving our production. From the 33, we were 7 million, yeah, 7 million kg, 7,000 tons of beef. Now we are going to this year to 10.5 thousand tons, so 10.5 million kg. With almost the same stock. What we are doing, we are rotating more the cattle, we are improving our facilities of pastures in the agriculture areas, and we are doing more feedlot, so we are rotating and producing more intensively.
That is very profitable and it's bringing very good results, as Matthias will show you later, in the balance sheet of Cresud. We see in the graph on the right that the stocks in Brazil were growing the last 20 years, but now beginning to decrease from 194 to 186 million heads. In the rest, in U.S., Australia, and Argentina, decrease on the stock. The combination of the decrease of the stock, decrease on the cows, and improving demand of cattle that the population is having, is making that increase in price and benefiting our company in our retail cattle group. Now you see the new feedlots that we are doing. We are investing money in the two feedlots in Los Pozos and in Deauville.
We are going to have, like, two feedlots of 10,000 of instantaneous capacity, each of them. That will mean, like, 50,000-60,000 heads per year in feedlots. Apart of raising cattle and fattening in the middle. We are probably one of the largest in this raising cattle with bulls and having and fattening in the middle and feedlots later. We are benefit not having more the packing plant like in the past, but having big stock, making a lot of money in all the activity. Saying that, the other step of Cresud that we always talk, production one side, real estate, no news in the first half. The third is FYO evolution on the year. We are closing.
We closed last year with 7.6 million tons of traded tons on FYO, representing 6.5% of total Argentina crop harvest. Through advisory specialties, credits, capital, trading, and now Beyond, that is our branch we are opening in Brazil, that this last year did 300,000 tons. Small amount comparing to close to 8 million of Argentina. In Brazil, lot of room to grow. Brazil is more than double Argentine crop size. We are expecting Beyond to replicate the story of Argentina. This company is making a very relevant EBT. Here we see the last four years. It is $26 million EBT. Last year, with the official dollar, that is very close to the blue chip. In the past, the gap was here, but now the $26 million and $26 million.
Here we see that this company recently issued two bonds at close to 8% cost. Very relevant company servicing farmers, no light in assets, and doing this mission in South America, not only in Argentina. We expect this company to keep growing as they were doing BrasilAgro and Cresud. Saying that, I will now give the word to Matias Gaivironsky.
Thank you, Alejandro. Good afternoon, everybody. If we turn to page nine, we can see the main highlights of our investment in IRSA. Remember that today, after the payment of the dividend that we pay in shares of IRSA, our stake went to 51.6, and we are planning to exercise the warrants that Cresud has from IRSA, so that the stake will recover to levels of 55% again after the exercise. During the semester, we saw a positive result of ARS 248.8 million compared with the loss during the last year. This is mainly we are attributable to the gaining the fair value of the investment properties. If we analyze the results from malls, offices and hotels were positive compared with the previous year.
We saw a recovery in revenues and EBITDA in shopping malls, 2% against last year. In offices, 15.5%, in hotels, 44.8% due to better margins and rates. IRSA signed two new transactions on Ramblas del Plata. We already signed 15 different transactions for 15 plot of lands in Rambla. The progress of re-commercialization is excellent. IRSA tapped the international capital market again during December, we increased the size of the notes that we issued in March. We increased by $180 million that it will expire between 2033 and 2035. Finally, is finish the payment of the dividend that was 10% yield during November.
We go to next page, we can see that during the semester, we have a real devaluation of exchange rate. Remember the last year, there was an appreciation. That generates two important effects on our balance sheet. First is the negative impact on our dollar denominated debt, that when we have to convert those dollars into pesos, that generate a loss. On the other side, on the fair value of the investment properties, since we have much more assets in dollars than debt in dollars, that generate positive results in that line. Regarding the operational side, I already said what happened about IRSA. About Cresud, we see a drop compared with the previous year. This is basically attributable to the farm and sales.
Last year, we had two transactions that generated gains for up to ARS 40.8 billion. This year, we haven't closed any transaction yet, that is the main difference. If we see the different lines, remember that in the green line is not so significant this semester. We will have the results in the coming 2 quarters. We see a positive evolution. This is basically results from Argentina because of exchange rate and because of better prices, and lower results in Brazil, mainly driven by the cotton activity. In sugarcane, as Alejandro mentioned, there was, compared with the previous year, we have a drop in the results with a negative result this semester, we expect that to recover in the coming two quarters.
That it was basically because of some climate conditions in Brazil that affect the production. Regarding cattle, as Alejandro mentioned, we have positive numbers. We see here a drop compared with the previous year. This is basically related to Brazil activity since we have lower stock of cattle there, so that decreased the production. Very positive numbers in Argentina, where prices increased much higher than the inflation, and production was very positive. Going to next page. With all those drivers about IRSA, Cresud, and FYO, we finished the semester excluding the change in the fair value with similar numbers than the previous year.
The main effect of this semester came in the line of fair value of investment properties, basically from IRSA, that we can see a very negative numbers last year of almost ARS 300 billion and a positive number this year, ARS 184 billion. That if we analyze the numbers this year in dollar terms, prices of our properties remain stable. When we convert those dollars into pesos, that generate this important positive number. About the other effect that comes in the line of the net financial results. In the first line of the table, you can see the net effects result that last year was positive numbers of ARS 48 billion. This year, generate a negative number of ARS 45 billion, and that is the main effect on this year.
The second main effect this year. Well, with all these different numbers, we finish the semester with a net result of ARS 183.9 billion, attributable to our controlling shareholder, ARS 74.4 billion. About the debt, remember that this year we had some amortizations that basically are in March. For that reason, we went to the local capital market in December and January, and we raised almost $117 million in two series, one for a three-year tenure and the other in one-year tenure. One year was an interest rate of 5.75%, and the other, the three-year tenure, at $7.25 million. With that issuance, we already have all the proceeds that we need to cancel the debt this year.
Regarding dividends, as Alejandro mentioned, we finished the payment of dividend that we paid part in cash, part with IRSA shares, and part was shares that we did a buyback in the past.
We, Cresud pay around $63.7 million this year. Something else to add is the warrants expiration. Remember that in 2021, Cresud did a capital increase that had warrants attached to those shares, and those warrants will expire next week. The last window opportunity to exercise the warrants will go from the 17th of February to 25th of February. We expect the shareholders will exercise the warrants. According to the shareholders meeting, we included a cashless option for the warrants. The warrants are deep in the money, so there was an option also to exercise the in a cashless basis. Basically, shareholders will receive the difference between price of the shares in the market and the exercise price of the warrant.
That will happen in the next 10 days, 15 days. With this, we finish the formal presentation. Now, we open the line to receive your questions.
Now is the time for the Q&A session. If you have a question, please, click the button labeled Raise Hand or use the chat. We will take the questions in the order we receive them. I think we have some in the chat, at this point. The first one is related to our stake in BrasilAgro. What is your view on the rather depressed share price of BrasilAgro? Would you consider increasing your shareholding? This is the first one from this investor. The second one-
Uh, I will-
Okay. Let's answer the first.
I think Brazil is in a special moment, politically speaking. Now we are in 26. This October is election time, presidential election time. There is doubt if Lula or the center-right is going to come to government. I think it's an opportunity, Brazil. Sounds like the capital market is expecting, and we can see that from the currency, the exchange rate of the real. How was at BRL 6, and now it's at BRL 5.20. Some expectations of the capital market in a good direction of Brazil. Yes, I think it's a good opportunity, Brazil market, and shares of BrasilAgro for sure.
BrasilAgro always speaks about what's the amount of the value of the land that the company owns, some valuations the company gives. But apart of that, there is a big land lease that we never make this calculation. The combination of own land and leased land makes a big discount on the price of the share of BrasilAgro. Yes, for sure. Cresud owns 35% and is always thinking if to improve or not. We have a big stake. We began with 7%. We have today 35%, and we are optimistic of Brazil's situation.
Thank you. The second question is related to the warrants. Are you going to exercise your IRSA warrants or exchange them in the newly introduced cashless option? Are sufficient funds available to fully exercise the warrants?
Yes. Cresud will exercise the warrant, definitely. The idea is Cresud will do it on a cashless basis because basically, when we analyze liquidity at the IRSA level, there was significant liquidity after the issuance of the bond. IRSA has more than $300 million in cash. The idea is that Cresud will do it on a cashless basis. After that, Cresud will increase again to levels of 55% our stake in IRSA.
Thank you. Our next question comes from Gordon Lee from BTG. Are there any provisions or conditions in the trade agreement with the U.S., or the FTA with the European Union that have direct implications, positive or negative, for the products that you focus on?
I think the main impact is in beef, in the two directions, in the European. Probably the conditions of European, it's Hilton Quota, and the American it's less, less strict in the health conditions and the quality of raising the cattle. The two are positive for Argentine farmers. Each farmer decides to which countries selling to the packing plants, and it's selling to those countries. The two are improving. The Hilton, we're thinking like doubling. In the case of U.S., 5 x the existing volume. I think the two trades are benefiting cattle raisers in Argentina. Yes, I think, I mean, the rest of the products, I'm not sure if it's going to impact a lot in soybeans or corn, are the two main products of Cresud.
Again, there's a question. I don't know if it is for us, but what is the chance of the Mercosur agreement with Europe being ratified, and when could that happen?
This is very political question. This is mainly French and other farmers of Europe. Logical would say, let's try to be better global and produce what is more logical and beneficial and more efficient, but political is political. I would not do that. They approved a small portion, important, relevant, but the final portion was not approved. I think the American is close to be closed. It is easier to be approved.
Thank you. One more related to commodity prices. If commodity prices stay low, what step will you take to lower operating costs to be operationally profitable or more profitable?
I think Argentina is a very good place to learn how to survive in scarcity. Imagine farmers with these taxes on exports, with these caps on the dollars, were receiving very small amount of dollar to survive. What do you say with that? You have to be scarce with water and with the money, because you are receiving much less than the other farmers. We learn how to rotate less the land, to cover crops, to improve the efficiency of the lack of water, and to be using lower inputs, sometimes not fertilizing the sufficient that the land needs. I think the next step will be for Argentinian farmers, in the meantime that Brazilian farmers or American farmers with $10 or $11 of soybeans are suffering, we with $24 are making money.
The new thing that is coming to the world, to the producers, the farmers, is the variable use of the inputs that it's coming. What does it mean? Now we are equipping, putting the machinery with some equipment that makes variable use of seeds, of herbicides, of pesticides and fertilizers. With that, you are going to keep using the place that you need, not to using in the 100% of the lot. Deciding and using less variable cost. Argentina is going very fast, Cresud and BrasilAgro. Now we are now covering all of our farms and majority of our machineries that are working on our farms and using majority of the seed going to the corn is variable in Argentina for sure. In Brazil, it's beginning.
There is less use, but it's more used in the rest of the inputs, crop and insecticides and herbicides. Variable costs are decreasing to compensate the lower margins because of these new prices. The technology is allowing Starlink and other technologies coming to the region, is allowing to use this variable cost of inputs. I hope I was clear. If not, please ask me again.
There is one related to fertilizer prices. How are affecting Cresud, up, down lately?
Fertilizers affects more Brazil than Argentina, because in Argentina, the land is much more rich, we fertilize much less than what we do it in Brazil. Prices, and if war comes again, that will be affecting again, more probably to Brazil. Again, it's part of the cost of farming. If this goes up again, will affect for sure farmers of the world. We give one or two seconds more for any additional question that you may have. You can use the chat or raise your hand. Okay, if there is no more questions, I will now turn the call back to Mr. Alejandro Elsztain for his closing remarks. We close the first half of the year.
Now comes the main activity in all, because in cattle too, cattle is majority of the kilograms done by the farm, not the feedlots, so it's very positive too, the second half. The rest is the summer crops for Brazil, for Argentina, for Bolivia, Paraguay. We are optimistic on that. With these low prices, understanding and the company is really claiming low margins, no subsidies on the region, still taxes on Argentina. Liquidity is coming to Argentina because of these big changes on the market, and I'm optimistic that we're going to show in the second half some results related to real estate too. I'm optimistic on the balance sheet of Cresud and having the real estate results too. We are in a good year. Argentina is plugged into the world, and the world in the agriculture is suffering.
We are in the more benefit region, very profitable and very good in yields, so we are having very good time. Just to thank you very much, everyone, and let's see next quarter. Thank you very much. Thank you.