Morning everyone. I'm Santiago Donato, Investor Relations Officer of Cresud, and I welcome you to the first quarter 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.
Thank you very much. Good morning, everyone, everybody. We are beginning our first quarter results 2023. The main highlight for this quarter, that the strong commodity prices are still, and the sustained margins per acre that have received some impact because of cost of inputs and lower, sometimes lower prices of outputs, but, in general, still keeping good margins per acre for the overall country in South America. The climate is affecting us something, and the climate mainly is affecting Argentina, not the rest, not Brazil, not Paraguay, not Bolivia. In Argentina, the effect of the climate was enough strong, and we're going to show you in the map what is the situation for the country.
Related to real estate, this quarter we were able to acquire a farm in Brazil, close to 11,000 acres, from those net of 5,500 acres of arable land. Some sales, not in the first quarter, but in later, we have seen a lot of movement related to the real estate in the selling, so we are seeing that movement on the market. Related to our service company, FyO, we are achieving very good results in the commercial services, very good EBITDA in the year related to the sale, sales of outputs and the commercialization of inputs, mainly in Argentina, but expanding to the rest of the region, and this is really growing a lot.
Related to the urban business, we are going to see some small pictures related to IRSA, that closed a very good quarter, mainly related to the rental properties, mainly to the shopping centers, that they were recovering a lot comparing to the 2019 numbers, before pandemic. The EBITDA from the urban and the, mainly the hotels are recovering too. The two are bringing very good results. We have successfully exchange offered this quarter, we are going to see later. We are doing a share buyback program, and we've begun again to pay in cash these days. Cresud paid a dividend for the shareholders. We can move now to page number three, and we can see these two representations of our size, that we are increasing again size.
Last year, we are planting 255,000. We are this year planting 260,000. Comparing, I think next year Brazil will surpass Argentine size because Brazil bought some new lands and rented more new lands from cattle to grain, comparable sizes in the two countries. Much smaller between Bolivia and Paraguay. Keeping the breakdown of crops, mainly soybeans and corn as first two, sugarcane being the third. We are seeing the volatility on the prices. We saw some of the drop on the prices of the soybeans, less in the corn, but more in the costs. We are seeing this year, relevant input costs, mainly fertilizers, impacting cost of per acre, mainly Brazil more than in Argentina. In the two, we are seeing margins decreasing because of inputs increasing for this year.
Still enough reasonable and very good margins in the 260,000 that we are planting. We can now move to page number four. Here we can see the drought that is affecting Argentina. This is the water on the arable area. Majority of the country is in the red, showing some areas that they're not so bad. Today and yesterday we had a rain. Really the rain came later for the winter crops. Winter crops that they were 100% planted and they were close to be harvest in December, really suffered a combination of drought plus early frozen that came in October days.
The combination of the drought and the frozen is really affecting, and there are some analysts thinking that Argentina, instead of the 20 million tons that began when the plantation came, is expecting a 10, 11, 12. Some of them are saying below 10 million tons. Close to a loss of half of the plantation. Mainly affected was the corn belt area, the best part, close to Buenos Aires area. In our case, our implication is less because we have some of our farms that received enough good rain. Really, we are not expecting that drought and that frozen affecting half of the yield, but for sure affecting what we budget at the beginning. Now the relevance will be majority of our campaign is 10,000 is just winter, but the rest is pure summer crops.
Majority of the gain comes from the summer, mainly soybeans and corn. After the rain of yesterday, there was some recovery on the soil humidity, but still needs much more rain to have a normal year. No one is clear expecting what is happening, but yesterday was a good signal, mainly the corn belt, that were 30, 40, 50 mm in majority of the areas. Still uncertainty on the case of the yields for this campaign. Talking about real estate, the only things that they were done in the first quarter, one was this, the purchase that we spoke about in Mato Grosso. This farm that 80% of the crop can double crop, can make a double crop, so that will be mainly corn and cotton. These are very productive and efficient farms in the north of Mato Grosso.
For those we paid BRL 285 million, divided into is one in cash, and the first, second payment will be next year in a year period. It's all done, and only we need to transform from cattle to grain, and will be very, very productive farm north of Mato Grosso. The another real estate activity for the quarter, not in the quarter, was done after the 30 September, so the number will be reflected in the last, in the 30 December numbers. We sold a small area in Paraguay from the productive area, close to 500 acres, total acres of 863. We have still remaining close to 59,000. This is a really small percentage of the arable area and the total area.
We really were able to be selling at $3,000 per acre the developed agricultural land. That is really very good. We were buying this land at $250 to 300. You need two acres for land, after preparing the land, so it's below $1,000 per acre. We were selling for $3,000. Very good internal rate of return in U.S. dollars, close to 28%. Really it's the beginning of the selling. This is a very comparable farm to Salta, the one we are doing in Los Pozos in Argentina. This is the first sale of a developed farm in Chaco Paraguay. That is the same of the Chaco of Argentina. We are very happy to begin to share that with other farmers.
The man who bought not only bought 500, but rented like 800 surrounding. This is the beginning of buying, beginning of selling, finding buyers for those big farms that we are doing in the Chaco Paraguayan area of Salta and in this case Paraguay. There is a lot of more movement in the real estate, so we are seeing a lot of activity. We are expecting a very active area in the real estate area. Now I will introduce Matías Gaivironsky, our CFO.
Thank you, Alejandro. Good morning, everybody. Going to page six, we have a short breakdown of our investment in IRSA. We can see the strong recovery in the EBITDA, the rental EBITDA. We are reaching pre-pandemic levels after three years that the business was very affected by the pandemic. You know that last year we started to open 100% of our malls. There was a recovery quarter- by- quarter. Now, we are reaching higher numbers than 2019. So we are very happy to see the company with that recovery. Also in the hotels, we are seeing an excellent result, mainly from our hotel in the Patagonia, Llao Llao. The Julin, the city of Buenos Aires, is still some potential to recover.
The tourism in Argentina is growing and we are seeing better numbers, there's still some room for recovery. We are achieving high, one of our records in the hotel industry in the last years. Also we see one transaction. There was a disposal of one floor in the 200 Della Paolera building. We sold for a price of $10,600 per sq m. We received $12.6 million. You know, we are using mainly the proceeds to cancel debt. We saw an impressive reduction of debt of IRSA from $755 million two years ago to the current levels of $307 million.
Going to the breakdown of our financial statements this quarter, first of all, we need to understand what happened with the macroeconomic drivers, that it has an impact on our financials. Basically are the what happened with the FX and what happened with inflation. Inflation during the this year and the this quarter accelerated to levels of 22% in the last quarter, compared with 9% in the previous year. The valuation was 18% this year, compared with inflation of 22%. That means that we have an appreciation of the pesos of 4%. Last year the valuation was 3% against an inflation of 9%, means that there was a real appreciation of 6%. That has an impact on our dollar-denominated debt.
When we recognize results, we are recognizing a gain because of that, and also has an impact on when we value assets at the in pesos term. In real terms, we will recognize a loss. Going to page nine, we can see what happened with our adjusted EBITDA in the Agribusiness. There was a reduction. The 1st quarter is not the most representative quarter of the year, so that basically has an impact on if we have a stock of grains or what happened with the production during the quarter, but it's not the most relevant. We can see the reduction came from the sugarcane. In grains, we see a better result, but still we are not recognizing the campaign. Still this is all sugarcane. Sugarcane that is related to high.
Last year was higher prices of the ethanol and the sugar and lower production during this year because of weather conditions in Brazil and higher costs, as Alejandro mentioned. In the cattle, it's more related to the holding activity or the hold, the result of our stock that increased lower than inflation. Here we're recognizing real terms, so we are recognizing a loss because of that. So that is basically the drop in the adjusted EBITDA. When we go to the operating income, including IRSA, we see a decrease of 12.4%. This is excluding the fair value of the investment properties. The investment properties itself, we see a loss during the quarter of ARS 6.6 billion.
If we see the valuation in dollar terms is very stable, I would say more or less the same than in June this year. The loss is because, as I mentioned at the beginning, the devaluation of the peso, of the inflation was higher than the devaluation. Regarding the net financial results, we see again, during the quarter, ARS 6.3 billion. Here we have different components. What happened with the FX that generated a gain of ARS 4.5 billion this year and ARS 8.7 billion last year. Remember that the real appreciation last year was higher than this year. Also we see a reduction in the net interest from ARS 4.6 billion last year to ARS 3 billion this year.
It's related to the leverage of our consolidated net debt. Also the other important effect is in the line one, inflation assessment, that because of the acceleration of inflation, we are recognizing higher results on this line. Finally, the bottom line, the net result of the quarter, was ARS 5.2 billion against the same last year. Attributable to our controlling interest is ARS 3.5 billion. Regarding the dividends that we received during the fiscal year and during the last quarter, we saw that during the year, Cresud received $40.1 million, most from BrasilAgro and some from FyO. After the quarter, we received, we are receiving this week $24.5 million more of BrasilAgro.
Also IRSA paid dividends for first time in the last years. The previous one was in shares of IRCP. Now IRSA is paying dividends in cash, $7.8 million. Also, Cresud is paying dividends. Last Friday, we started the distribution of dividends that we will see in the next page. The net or the debt amortization schedule and the net debt, we see a slight reduction in the net debt of the company, Sorry, $389.6 million. The debt amortization schedule, we have part that expired this year, but there is no any major amortization or, yes, or expiration during this year.
We, during the quarter, we saw in the last webcast, we did the exchange offer of our $113 million note that expired in February with a very high acceptance. We received 87% acceptance, the debt situation for the next year is very clear for Cresud. Finally, in page 15, we see the activity on our capital structure. We decided a share repurchase plan that we've finished. We bought ARS 1 billion of shares of Cresud that represent around 1% of the company. Also we decided the dividend distribution for ARS 3.1 billion that we started to pay last Friday. That was a dividend yield of 3%. Our ADR shareholders will receive the payment probably in the next 10 days.
With this, we finish the formal presentation. Now we open the line to receive your questions. Well, let's start with the Q&A session. If you have a question, you can use the chats or click the bottom label for raise hands. We receive the questions, will be taken in the order we receive them.
Mm-hmm.
Here we have the first question regarding margins. Do you expect a change in margins this campaigns as costs are rising as well as prices? If we see that we are gonna have a differentiated dollar for soybean this campaign as we have by the end of the last campaign.
Related to costs, yes, there was a main increase in fertilizers and in herbicides too. That change on costs affected more than 30% in dollar terms in some cases. Yes, as normal, after the increase of the price of the soybeans and the corn, the input companies are increasing their prices and then reducing the margins. We are expecting for the year good prices too, so margins are going to be some decrease and will depend mainly on the yields. If Argentina keeps in track with yields, the margins are going to be better, not worse.
Mm-hmm.
Counting on the increase on the costs too, because last year there was a big drop on the yields. Generally, the one probably is going to be affected mainly in the yields is in the margins is Brazil for sure, where the input costs went up a lot and the output is close to the same. The combination or a little lower, the combination of the two makes a lower margin in general for the farmers for this year. Here we were seeing very record levels of margins for farmers in the world. Everyone in the world is expecting a little lower margins, but still very attractive. Related to the soybeans price and the other crops price, farmers are waiting for sure.
They saw a big increase on the dollar for Argentina that the government gave in September, from the first to the end of September. They sold big proportion of the soybeans. The remaining is smaller, I think it's like 9 million tons. Probably the government is going to be announcing again a new soybean dollar for the selling of the rest to make reserves as it did. For maybe this is the case and for other crops too. The government is, and the farmers are beginning to be expecting now the ARS 160 per dollar for the official. After they receive ARS 200, they are waiting for that for the rest of the crop session.
Good. Here we have another question on the financial front, regarding the bond maturities in November. Are you having access to pay, and which are the plans for the remaining $14 million called out from the exchange?
Thank you. Well, fortunately, the Central Bank haven't changed the rule. Now the rule, you know that note we were forced to refinance in 2020. In that moment, the Central Bank said that they will sell only 40% of the dollars and the remaining, the company has to refinance in the market. We did that very successfully in 2020. Now is the amortization. The Central Bank will sell the dollars. They already sold the dollars, so we are paying today the note, the big one. Small payments that we are doing without problem. We don't know if the Central Bank will change the rule in the future, so it's not in our hands. What we can say is that we are paying today the note.
The remaining is a small amount of money that we have to pay that because of holdouts. We believe that since we raised money in the local market hard dollar, we can use that money to pay. We, if nothing change, we will have the tools to pay the remaining amount in February.
Good. There is a question related to the previous one. If the last official measure that offer to sell soy at ARS 200 FX had a positive impact on Cresud results or if it was very marginal?
Yes. There were like some $2 million gain on that because of having the so small stock and the revaluation of that stock effectively positive us. In the case of our service company in fuel, gave us a positive number too. Yes, the impact was good.
One more question. Do you intend to do more share buybacks, and do you intend to keep on paying dividends going forward? If so, any targets?
Well, we prefer not to give targets here. It's a decision that we take every year in terms of the dividends, that we consider in that moment the liquidity of the company, the debt situation and the plans of CapEx and plans for the money for the year. If you take as a guidance what we have been doing during the last years, every time that we were able to pay dividends, we paid. That I think is a good guidance. BrasilAgro is receiving dividends from years in Brasil and FyO. I believe that we could be in conditions to keep paying. Regarding buybacks, we prefer as well, we prefer to announce the buybacks and not to anticipate that. If we will do it, you will receive the notice.
Okay. Is there any additional question? You can use both the chat or the raise hand. Okay. There are no more questions. We conclude the first quarter results on the Q&A. We turn back now to Alejandro Elsztain, CEO, for his closing remarks.
I will close this quarter saying that we are very optimistic because of the size of plantation that is very big on South America, probably at the pace that we are including new farms and renting new farms, we are in that process in Brazil, but we intention of doing that in some other countries too. We think the number of the operational will be a strong one if climate doesn't really affect.
Related to real estate, what we are seeing is the prices of our assets are really very high and a lot of demand, a lot of interest of smaller pieces. You saw that in the past we were selling parts of thousands of acres, but now we are going to 500 kind of farms to this and installments. This is I think the evolution of BrasilAgro, buying in bulk and selling in smaller and financing. We are keeping doing that. I think this is I'm very optimistic on the year. Just to thank everybody, we see you on the December numbers. Have a very good day. Bye.