Good morning, everyone. I'm Santiago Donato, Investor Relations Officer of Cresud. I welcome you to the 2Q 2023 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 click the button labeled Raise Hand or use the chat. Before we begin, I would like to remind you that this call is being recorded and the information discussed today may include forward-looking statements regarding the company's financial and operating performance.
All projections are subject to risk 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. Please go ahead, sir.
Good morning, everybody. We are beginning today our second quarter 2023 results. We are going to begin in page number two, talking about the main highlights for the half year. We are achieving a record planted area in the region, and we began to include in our performance the farms that we own and we are leasing to third parties. What does it mean? Some farms, own farms that we rent, sometimes to generate a client to sell, sometimes directly to share the risk of production in the area. That's the reason that in next page, we are going to see that we are achieving close to 290,000 hectares of total land in the combination of leasing and owning land.
About the campaign progress, there are mixed conditions, and we are going to see depending countries and crops. In general, there is a sustained commodity price, and for this campaign, affecting a very important growing cost, more affecting in the case of Brazil than in Argentina, but affecting margins. We are going to see a good and sustained commodity prices, but this growing cost, taking a great portion of those margins of comparing to last year. That's why Matias later will explain some of the lower margins on the first semester. That is the least important in number of crops. Majority comes in summer. That will be reflected in the third and in the fourth quarter. The climate. Climate is affecting mainly Argentina.
We are going to see the effect of the drought in Argentina mainly, not affecting Brazil or not importantly in Bolivia and Paraguay, but this is really changing in the case of Argentina. We were lucky about some of the impact came to some regions that we have few farms, not a lot. We are going to show you our map and our location of the farms. That is affecting a little less in our case. Related to BrasilAgro. BrasilAgro has good rain results, so we are expecting very good in corn and soybeans, but was affected mainly in sugarcane. When we are comparing our balance sheet, we are seeing much lower results coming from sugarcane. Last year, sugarcane had resulted in increasing in prices, very good yields and lower costs.
This year, the three are affecting negatively, so that is the main change, the adjusted EBITDA for the year. In the real estate, the second effect on the balance sheet. Last year, the first semester was mainly affected by very good real estate sales. A lot of sales done mainly in Brazil, all of them in Brazil. This year, we are just looking at two small sales that I'm going to explain a little later. The main two effects on the agriculture are related to sugarcane and real estate. Related to IRSA, we were buying more shares, from this semester, with six months, we're increasing our stake from close to 54% to close to 57% of IRSA. IRSA had very good result this semester. The EBITDA is rebounding a lot, and the leverage of the company is amazing.
We are going to show you later. From dividends, we were receiving dividends from BrasilAgro, from IRSA, from FyO. That company is really receiving from subsidiaries a lot and expecting to receive much more in the future because all of them are in very, very good shape. We were buying back shares, and we were paying dividends in the semester that we are going to show you later. We can move now to page number three. Here we can see the evolution of the prices of the soybeans and corn. There was a rebound recently affecting, that's why the reason I'm talking about better commodity prices, but on budget. They are not surpassing us like last year. The prices of the crops that you are receiving, they are close to the budget prices, not a gain.
Last year, we had like 20%, 30% gains on prices that this year we are not expecting. We are close to budget. Saying that the commodities are firm enough, not reflecting the loss that Argentina had. That main reason it is because Brazil had more than increased what Argentina lost. The region balance is good. It's not good in Argentina, but having so much area planted in Brazil that there is not a lack of grains for the next campaign. Here we see our evolution, and we are showing 8,000 hectares. Are hectares that Cresud and BrasilAgro own, and we are leasing to third parties. For example, in Argentina, we have leases in Los Pozos, in our farm in Salta or in La Suiza, our farm in Chaco, where we diversify our production risks.
Sometimes we are tempting to a client to lease for later selling, as happened in. We are doing that in, for example, in Paraguay, we are leasing, and the one who bought Morotí portion of the 500 hectares is leasing on top of that some hectares of the farm. Really is the way of bringing clients to our big projects too. We are achieving close to these 300,000. We have the expectation of keep growing on that number between the four countries, between own and lease. We can go now to page number four, here we see the evolution of the drought in Argentina. Here we see the red showing big drought. On December, the drought was almost everywhere.
Look at the yellow, the yellow reflects our farms area and where our plantations are own and lease farms. The points are showing our plantations. Let's see what happens currently, two months later, when the rains came. Some of the rains came, majority of our points are located in yellow to green areas where the drought is not affecting so much. The worst of the drought came to the main corn belt, north of Buenos Aires or south of Santa Fe or east of Córdoba, southeast of Córdoba. Our majority of our points are really better located. Here we are expecting not to be affected as Argentina is. In Argentina, the comments are about 35, 37, 32, depending the source, really the big drop from the 49 million tons original. We are not expecting to be affected so much.
Here we are forecasting like a 10% in soybeans or 5% in corn. It's a little too early. Today, we are not just having the real numbers, but our areas are not so affected as the country, so we are less negative than now the services are talking about the forecast of Argentina. Meaning that we are expecting for March and June results, our main for soybeans and corn. Let's see if rain keeps coming. There is not reserve. What we have in the land, almost none of the land has reserve. Sometimes the land has many limiters that could give to the property doesn't come the rain. This is not the case this year. Majority of the areas are needing the continuation of the rain for the future.
We are still optimistic on the campaign in Argentina and in the campaign on Brazil. The rest of South America is much better, probably not affected or not below budget, maybe up to budget, because really rain came to the region. In plantation, we can see in page number five, that plantation of the, of the two soybeans is close to 100%. In case of corn, there is some delay. In Brazil, that is at 29%. It's expecting the collection of these days, and comes the Safrinha corn that is coming soon, we are expecting to plant this portion. The part that probably won't be planted will be the remaining in Paraguay. That probably won't give us the opportunity. In Argentina, we think that will be close to all will be planted. It's really.
We are not expecting to be affecting big in the sowing part. Let's see what is the harvesting part for the future. To finalize what in this semester was not very active, the real estate showing these two sales were that they were done in the first quarter. In the second, there are not new. The first two are one in Paraguay, small in 500 hectares. The second in Brazil, 1,400 hectares. No news for this first semester, but very optimistic in the second. A lot of activity. A lot of activity in Brazil, mainly. The liquidity on the farms is huge. In Argentina we are seeing some movement. We are optimistic on the second semester in the activity of the real estate for sure.
First was not very active, but we are expecting much more active in the second. Saying that, I will give you now the word to Matias Gaivironsky, our CFO. Please, Matias.
Thank you, Alejandro. Good morning, everybody. Going to page seven, we can see some of the results from our investment in IRSA. It's important to mention that during the quarter, or during the semester, we bought shares in the market, so we increased our stake to 56.7%. We increased by around 2.3%, our stake in IRSA. Some of the main important issues during the semester for IRSA, there was a very strong operational and financial results. Levels of EBITDA increasing, surpassing pre-pandemic levels, increasing the margins during the compared with the previous year. Very good margins. The occupancy of the last building that IRSA developed today is 100% occupied. The hotels is generating a record EBITDA.
Also, IRSA, during the last quarter, recently, issued new notes in the local market. With that, IRSA solved all the issues with the debt and with the restrictions of the Central Bank and the lack of dollars. Now IRSA hasn't more any risk regarding its debt. We will see that there is a deleverage process that we started in 2020. Going to page nine, to understand some of the results during the semester, we need to understand what happened with inflation and devaluation. Inflation during the semester was 43%, and devaluation, sorry, was 41%. Means that we have a real appreciation of the peso of 1% during the semester and 11% last year.
Will have an impact on liabilities, that all the dollar-denominated liabilities will generate gains because of this, and all the assets valuated in dollar terms will generate losses. If we go to page 10, we can see there is a reduction in the adjusted EBITDA on our agricultural business. Basically, during this semester, we have different effects. The main one is in the sugarcane. We can see a reduction from ARS 9.3 billion last year to a gain of ARS 800 million this year. Remember that last year prices of the sugar was very high, that generated a record gain during the last year. Now prices reduced, and also the climate conditions for the sugar, basically in Brazil, were not the best.
For that reason, we are generating lower results in this semester. Grains also has a reduction from ARS 1.9 billion to ARS 220 million. Remember that that is still not the best part of the year, only the wheat, we have basically the wheat of the results during the semester. Last year was a very good year. This year, with the drought that Alejandro mentioned, we suffer. We have an impact because of that, this is the main reason why our results are decreasing compared with the previous year. In the cattle activity, it's more related to the inflation effects.
Prices were flat in pesos or, yeah, more or less flat in pesos, with the effect of the or when we have to express that in real terms, it's generating losses. Agricultural rent and services, we have a gain because we increased the size of our farms that we rented to third parties. The results of FyO is very good. We can see an increase of 116%, from ARS 1.8 billion to ARS 4 billion during the year. Going to page 11, we can see on a consolidated basis the operating income reducing 44.3%. Excluding the effect in the change in the fair value that is mainly related to our investment in IRSA.
On the right side of the page, we can see the decrease from a gain of ARS 44.7 billion during last year to ARS 28.8 billion loss during this year. This is related to valuation of our investment properties that if we measure that in dollar terms are flat, but when we have to express that in real pesos, it's generating losses. Going to page 12, the net financial results. We can see a gain during the semester of ARS 8.8 billion compared with a gain of ARS 16.2 billion last year. Here, it's important to measure two lines, the net interest, that we can see a slight reduction.
When we combine the two lines, the net interest together with the net effects results, part of the results are going in that line that is generating gains. We can see an important reduction compared with the previous year that is related to our deleverage process in a consolidated basis. When we put all these facts together, the net result this semester is a gain of 19.2 billion ARS compared with 74 million ARS last year. There is a reduction. Most of that is related to the fair value of the investment properties. We can see in the next page the dividends that we collected from our subsidiaries. During the fiscal year 2022, we received dividends for $40 million.
This semester after that, we received a dividend of $34.8 million, $7.8 million from IRSA, $24.5 million from BrasilAgro, and $2.5 million from FyO. Cresud distributed dividends in cash, a dividend yield of 3%, more or less $10 million that we distributed during November. Page 14, we can see the debt amortization schedule. Standalone, this is only Cresud. So there was a challenge last year to refinance a debt of $113 million that the Central Bank obliged to do that. So Exchange offer was very successful, was around 90% acceptancy.
There is still a small payment of $14.7 million that we have to do in the next days, but we believe that we will have access to pay that debt without any problem. Also during December, there was a new issuance. We issued a $38.2 million dollar-linked note with expiration in 2026, with amortizations in the three amortizations is month 36, 42, and the remaining at the end. The interest rate was 0, so this also reduced our cost of the debt in dollar terms.
On a consolidated basis, we can see the net debt evolution with important reduction since 2020, from almost $1.2 billion to $680 million and much more diversified in the next years' expiration. We are very happy with this evolution. Regarding the share buyback program, remember that we approved a share buyback program of ARS 4 billion. We executed around 32% of the plan. We already bought buyback around 1% of the shares of the company. The investment was ARS 1.3 billion, we will continue to execute our plan in the future. With this, we finish the formal presentation. Now we open the line to receive your questions. Thank you very much.
Thank you. While we conclude the presentation, now it's time for the Q&A session. If you have a question, please click the bottom label Raise Hand or use the chat. We're gonna take the question in the order as we receive them. First questions: Do you expect farmland sales in Argentina for the next semester or for this year, 2023, and also in the region?
Yes, we are seeing some searches of farms, neighbors or people trying to expand and, probably they are not very happy of putting their money in the banks or in other assets. Yes, some in Argentina, not of the liquidity of the rest of the region. Yes, some movement, so I'm optimistic in Argentina too.
Much more optimistic in Brazil, where the benefit of instead of the per human being that is a farmer, not a society. Instead of him being paying the tax, the taxes on gain, taxes on earnings, they are directly buying a new farm, so they avoid directly to paying. The liquidity there is great. I'm optimistic on the two, but much more in Brazil than in Argentina. I expect the next semester, activity in that.
Next question. Do you think the drought in Argentina will have an impact in commodity prices?
Sounds like the effect of the drought made the prices to keep firmer. If Argentina would have a normal 50 million tons or more, would be different. The 35, more or less, that the market is expecting, sounds like the market accepted.
Because of volumes of Brazil, The market's not too afraid, and we are not seeing the rebound, huge rebound of the prices. Like last year, we saw that when 30 million disappeared in the region. Today, they are not 30 million disappearing. Maybe it could be an effect on the meal, on the, of, because of Argentina industrialized majority of the soybean and Brazil not, and sells directly like as a bean. Maybe could be a deficit on that in the flour of soybeans. Yes, that could be a put firm prices on that because of the low volume on the factories of Rosario. Yes, that could affect.
Good. Here we have many questions from our investors. If we can explain the reasons for the significant tax credit to the PNL in the latest quarter results.
Yes. We have been adjusting our results, our tax results by inflation, in the last quarters. We took a very conservative approach in our balance sheet, recognizing all the losses in the previous quarters. There was a new decision under the Supreme Court that allowed the companies to adjust by inflation in the tax balance sheet. Since that was exactly what we have been doing, we decided to reverse the effect of the tax in this semester. That generated an important gain. Now we have support with our Supreme Court decision. That is the reason why we revert the loss in this semester.
Good. There is a question here regarding a provision of a lawsuit that increased in the second quarter. What do you expect of that ruling? If there can be any other related lawsuits going forward.
Okay. This is related to IRSA's investment in Israel. We explained that during the webcast of IRSA. There is a new claim that IRSA received a couple of weeks ago that is basically a claim for 140 million shekel. The company, IRSA, decided to create a new provision, no matter on all the legal defense that we believe that the chances are very high. The company decided to be conservative and create a provision of 50% of that. That is that provision in this semester. Going forward, no, we don't expect more claims from our investment in Israel.
Related to the fair value losses on investment properties, jumping in the second Q, if we can discuss reasons for that and outlook going forward. I think some parts you explained, Matias, getting in the next quarters, what do you expect for that line of?
It's also related to the investment in IRSA. It's not directly from Cresud. Cresud stand alone. You need to understand how is the procedure. We value the shopping malls with a DCF model, and offices and land bank with a comparables in the market. The comparables, we are using the blue chip swap to convert dollars to pesos, and the DCF is a model that is created in using the official effects. When you measure the properties in dollar terms, valuations are the same, so it's not changing. What happened is that when you have to convert that into pesos, you have to measure what happened with inflation and what happened with the devaluation. Always, when you have an appreciation of the pesos, you generate gains. That is what happened last year. That generated an important gain.
This year is not the same, no? When you analyze basically the blue chip swap, there was an evaluation, converting that into pesos, is lower than the inflation, so that you have to generate a loss in that line.
To more financials, for Matias, any guidance on dividend and share repurchase going forward, and also your targets of leverage at Cresud, going forward?
Regarding the buybacks, we have this program approved for ARS 4 billion. From that, we executed ARS 1.3 billion. We will continue to execute the plan in the future. Dividends, we prefer not to give guidance. We always
Approve in the shareholders meeting that, so there is no proposal yet to our shareholders meeting. Will be, I don't know, in the coming months, the decision. Regarding the leverage, we can see the deleverage on a consolidated basis. That is very positive, because now, IRSA has much more, free cash flow to distribute or to use in future projects. In the case of Cresud, the guidance is probably the same on what we have. We will, I believe, maintain the same leverage, for the year.
Good. Question related to farmland real estate, what would be your average market price of agricultural land per hectares, if possible, separate between crops and cattle in Argentina and Brazil? Outlook on land prices going forward, and would you be looking to increase monetization of your agricultural lands?
There is not an average for sure. Each region has a different price, and Brazil is calling in bags of soybeans. In Argentina, the nomination is dollars per hectare. There was a big rebound on the prices on the land in Brazil, mainly. That region followed the trend of United States appreciation of the land. Not in the case of Argentina, because of intervention of the government, adding taxes on exports and the gap of the dollars, that following the trend of U.S., didn't happen in Argentina. There is a lot of liquidity in the farms of Brazil, really an activity that I've never seen, and a lot of interest of other farmers to increase their stake. They like to be increasing their operation, and they do through buying and paying on installments.
They don't buy and pay in cash. The normal is to pay 20%-25%, and the rest is 20 per year, many installments for the future in sacks of soybean. In the case of Argentina, liquidity was less these last years because of the two effects that I said. Today, the price of the land are much more cheap, and there is not following American or Brazilian prices. I imagine the appreciation of the land of Argentina will come because of probably the next government reducing the gaps on the $ and reducing the taxes on exports, too. I imagine more measures related to farmers. We are seeing the existing government is improving the farmer situation, giving some special $ to farmers. That it's like a net of taking taxes the day they fix their soybeans.
Really, I'm optimistic on the price of the land of Argentina, and the price of the Brazilian farms is amazingly liquid and attractive compared to the past. A lot of realization, yes, for sure, there are years of realizations, and maybe these years are more of realizations where there is so much fair price for the land that sometimes we bought at, I don't know, 10 times lower than today's price or much more than that. Cresud and BrasilAgro loves to do that business, that buying when no one is buying and selling when everyone is selling, is buying, and giving liquidity to the farm, to the company again, to rebuy in another region later when the opportunity comes. Yes, for sure, this is working.
I don't see more questions. I will give one minute more for any additional question. You can use the chat or raise your hand. Here.
We will post a replay today afternoon in the website. I see a question related to that. You're gonna be able to see it again.
There is a question if we're gonna restart again with the repurchase. Yes, we are. We started some yesterday with the JV buybacks, as we have done. We've also been doing. With this, we conclude the presentation and the Q&A session. Thank you very much for participation. I will turn back now to Alejandro Elsztain, CEO, for his closing remarks.
Just to finish, we are in the first half of the year. We spoke about the grains coming the second semester. In this case, expecting the real estate much more active. IRSA in a fair moment and very leveraged. Now, there are much better results, operational results in IRSA too, in the rental properties, too. In the case of services through FyO, it's really a big engine for Cresud, too, and we are seeing big results and expecting the expansion of FyO to Brazil. That will give us more and more EBITDA for the company, too. Optimistic of the second semester. Thank you very much and have a very good day.