Good morning, everyone. Welcome to Jalles' Earnings Call, in which we'll be presenting results for Q4 and the 12th month period for crop year 2022/2023, ending on March 31st, 2023. This is being recorded, and it's being simultaneously interpreted into English. Both recordings are available at ri.jalles.com. All participants are in a listen-only mode, and at the end of the presentation, we'll have a Q&A session. Further instructions will be given then. The company's presentations and the release for Q4 results and twelve-month period are also available at the company's website. I would like to say that forward-looking statements made during this presentation regarding business perspectives, forecasts, operational, and financial goals related to the potential for growth are based on assumptions of the company's management as to the company's future.
These projections depend on foreign and domestic markets, and the economic scenario, both domestically and abroad, and are therefore subject to change. We have Mr. Otávio Lage de Siqueira Filho, CEO, and Mr. Rodrigo Penna, CFO, and IR Director, are here with us today. I'll turn over the floor to Mr. Siqueira. You may have the floor now, sir.
Good morning, everyone. I would like to thank you for attending this call. I would also like to thank our team, Rodrigo Penna, our CFO and IR Director. I would like to thank the entire team that helped us put together all these reports. We, of course, want to be as transparent as possible and provide all the necessary information about our business.
I'll be here just for this opening remarks. I would like to highlight the following important events, such as the acquisition of Santa Vitória. Now, we're going to be producing sugar because it was called Santa Vitória Açúcar e Álcool in the past. It only produced alcohol. We now have approved the investments to start the production of sugar. That investment was important so that we can have better results with sugar based on current sugar prices. We're also fixing prices for the future. There are some highlights that are worth mentioning. The rainfall in April of last year, it's very important in Goianésia. That will determine our yields. We had little rainfall in April. Our expectations were a little higher.
Another highlight was the fact that shipments of organic sugar are now back on track because of the disruptions in logistics, a shortage of containers that have been restored. There are some SG&A highlights as well. On the social front, we have been awarded in that conference due to the participation of women, we have been awarded for that number of women in our staff. That makes us very proud. We have been supportive to women to work in every area of our company: tractor, harvester operators. IGPTW, also, for the fourth or fifth time in a row, we have been ranked seventh in the Brazilian Midwest among large corporations. That's an indication that employees are satisfied. That is a customer satisfaction survey. Let me point out a couple of highlights that are in our sustainability report.
Our RenovaBio score was 21.5% above national average for anhydrous ethanol, and 21.25% above in the case of hydrous ethanol. That's again, an indication that we do have good practices as far as the environment goes. We are also starting the production of biogas at Otávio Lage unit. It's expected to start this year. That's a partnership that we have put together to generate that thermal electric energy with Albioma, a public company from France. The results are very promising. We have been able to reduce water re-consumption, and that was a 33% reduction for both our agricultural and industrial activities. We have an increase of 72% more native trees. This is a work we have been doing from the very start of operations, recovering riverheads, and we have planted over 5 million trees.
This is also makes us feel very proud. We have 43,683 hectares of native forests. One of them is in Cavalcante. We do have a carbon inventory of over 16, rather, million tons. That is an indication that the environment is part of our DNA. On the social front, on top of having 23% of women in leadership positions, and 24% overall, these are very substantial numbers, and we've been awarded for that. As far as governance goes, we have established our compliance department, and it's now part of sustainability. We have consolidated risk management policies. This is based on an internal audit. As far as efficiency goes, let me point out that we have increased our crushing capacity.
After the acquisition of Santa Vitória, our goal is to reach 9 million tons of sugarcane, and also an increase in our production of electricity. We do have a very modern thermoelectric power plant, and we can increase our energy generation by over 24%. We have invested, and we'll keep on doing so, especially in Santa Vitória, to increase our capacity of sugarcane production, and also our yields, that are already 18.8% above national average. We have been recovering the soil. We are changing the fertilizing strategy so that we can boost our yields. We have been investing in new varieties, in partnerships with IAC, RIDESA, CTC, that makes a huge difference. Our varietal profile is very good. These are new varieties that are giving excellent results.
We expect that we can have yield gains and more efficiency on the agricultural side. These are the highlights. Once again, thank you once again for being partners, and the confidence, and we are still hoping for better days, and they will surely come eventually. Thank you so much. Over to you, Rodrigo.
Good morning, everyone. Thank you, Otávio. Thank you for your opening remarks, and thank you for the hard work of the entire team and all the directors, of course. Let me just share my screen with you. Can you see my screen in presentation mode? Yes, we can. All right, great. Once again, thank you for attending yet another earnings call. As we expected, this quarter would bring less revenue, given the advanced sales we had to benefit from the opportunities for both Jalles.
You can see that in the pro forma results. It was a year filled with challenges, tax changes, the impact of weather-related events. Results for the entire year were very positive and with good news as far as the future is concerned. I'll be talking about the sugar production in Santa Vitória and the growth that Otávio has just mentioned, our journey to boost our yields in agriculture and the integration with that company that have given us excellent results. Let me start with the highlights. We had an 11.1% revenue growth when compared to the previous crop year. These are consolidated numbers.
Organic sugar shipments are now back on track. It's a fourth quarter in a row of growing or increasing shipments, a little below what we expected for the year, but we had those shortages of containers in the past. This is an upward trend. Adjusted EBIT was 34%, compared to 48% last year. In absolute numbers in the pro forma, we have very similar numbers. Adjusted EBITDA was 12% above that of last year when in consolidated numbers. We announced this pro forma number. We don't like them in general, but for this specific year and for the next, because there's the consolidation with Santa Vitória. It was part of results when the transaction was concluded as of April 2022. That was part and parcel of it.
It's key so that we can have a more comprehensive view, taking into account Santa Vitória, especially because we have benefited from better prices earlier, and that did not show in the consolidated report. Pro forma revenue was BRL 2.341 billion, when you include Santa Vitória numbers. Adjusted EBIT, as I said, was 34%, and then pro forma, including Santa Vitória, was 32.5% for the year. Net income was BRL 692 million, impacted by those BRL 428 million related to that advantageous purchase. When you have the pro forma profit and removing that effect, numbers are BRL 325 million, combining Santa Vitória and Jalles' operations. Below last year's numbers, still a substantial number as far as results are concerned.
Our cash earnings, BRL 321 million pro forma, BRL 283 million, are the consolidated results. In cash earnings, we exclude a couple of items that are very clearly detailed. As far as COGS are concerned, numbers were up, and one of the drivers was the fact that biological assets were positive, and this year they were negative. That increased COGS and decreased COGS last year, and we have higher costs for inputs and fuels. That's the breakdown of our COGS, so that you can clearly see the main elements or the main items.
I would like to point out that labor used to be the largest contributor, and now that we have a spike in recent years or in the last year, inputs are now accounting for more than labor, and also fuel and lubricants are at the same level of the cost of labor. As far as CapEx is concerned, when we exclude Santa Vitória, CapEx was up, not including agricultural practices, that was 12%. When you include Santa Vitória numbers, including the maintenance, planting, all the other activities, that was a 51% increase. Agricultural practices now, despite not including Santa Vitória numbers, the increase was 40%, excluding Santa Vitória numbers, and we have 104%. That was caused by higher input costs, especially fertilizers and fuels, and even that partnership that ended up impacting those numbers.
We have maintained our hedging policy for the 2023-2024 crop year, ended March with 210,000 tons fixed. Average price was BRL 1,965. The average price today is a little over BRL 2,000. BRL 2,020, BRL 2,030 for the 2023-2024 crop year. 2024-2025, we had a little remainder there to sell. Average prices were up, now we're starting to hedge for 2025-2026 crop year. I would like to remind you that these prices are well above historical levels, which are BRL 1,800. That's why we have maintained the policy to benefit from this moment in time and maintain our hedging policy. I'll be talking a little bit about Santa Vitória strategy. Onto the debt, we had very interesting loans.
We had an incentivized debenture earlier in 2022, another one during the crop year, 2023-2024, BRL 450 million and BRL 350 million, a total of BRL 800 million, all of them with maturity profile between seven to 10 years. Our debt profile is very elongated. The average maturity is 5.1 years. We were prepared to have that robust cash, our cash position is very good to pay for the acquisition of Santa Vitória. Even after the acquisition and the CapEx, our cash position is BRL 1,000,000,020 in March 2023. Leverage is very comfortable, 0.95%, considering consolidated EBITDA, 0.69% when you include all the EBITDA for the pro forma year of Santa Vitória. 0.7%, that's our debt ratio. Most of it, 58% with the capital markets.
26% are basically multilateral, [SPO], the Brazilian Development Bank, a smaller portion of working capital with bilateral banks. Only 9% is denominated in dollars, still we are protected. We have that hedging, that we're not exposed to foreign exchange fluctuations. I'm going to go over operational highlights because we discussed that at length during the previous call. Let me just give you an update as far as rainfall is concerned. For Otávio Lage in Santa Vitória, the last rainy season, rainfall was satisfactory with the equivalent to the historical distribution, which is good for this crop year. Since April of last year, we had a very dry month. The ratoons harvested in April and May are still recovering from that stress we had last year.
A lot less rainfall than the average in the region, but the rainfall was satisfactory, as I said, in this last rainy season. For the year, the average sugar prices were a little above those of last year. In ethanol, the average prices were below at BRL 326. Average prices were BRL 132, and we benefited from that higher prices in the previous crop year, and then prices came down to BRL 80, BRL90. We withheld the sale of CBIOs, and now we resumed it for 2024, for the 2023-2024 crop year. We stopped selling for some time when prices were down. Today, prices are between BRL 130-BRL 140. Okay, on to the sugar mill in Santa Vitória. Ever since the M&A, we've been discussing or negotiating with the market.
Despite the many qualities we have been able to extract from that acquisition, the point is, they only produced ethanol back then, the investment wouldn't justify the investments in sugar because of historical prices between sugar and ethanol. There were many advantages in that deal, and we are getting more and more excited because of the acquisition, because the industry is well-built, a lot of water in the surrounding areas. The expansions are going smoothly, new partnerships. There's a very large area. A lot of areas being offered for agricultural partnerships, way above our need to reach that 2,700. We've signed deals with the area we need.
This has been going well, and we are very excited with the team and the level of engagement of the Santa Vitória staff with the integration and that growth project. The downside is we don't have sugar. This is something we experienced at the Otávio Lage unit. Whenever sugar prices pay that premium better than that of ethanol, we decided to make the investment to be more flexible because we did not need that investment up until we reached 2.7 million tons to produce ethanol 100%. As far as the process goes, of course, you have the boiler crushing. We would have to make adjustments. I mean, not adjustments, but investments per se.
As the molasses that is ready to produce either ethanol or sugar, we have increased that capacity in almost 4 million tons, an additional capacity to both produce ethanol and sugar once the molasses are ready. We would have to make investments in preparing, crushing, boilers, that portion is already there available, that will increase our flexibility. We'll be able to have a mix of 52% sugar. Investments are estimated conservatively speaking, there are several efficiency gains we can capture in that investment, it's BRL 170 million. We can have or process 150,000 tons per crop year. The mix goes up from 36%-51% of sugar. We can export more, further mitigating the risks inherent to the business. We can benefit from that ethanol premium, or rather the sugar premium, that's interesting for investments.
It's a very viable investment, and at the same time, we mitigate risks in having sugar accounting for more of our production when compared to that of ethanol. On to brownfield, this is the current status of the Jalles and Otávio Lage units. That's organic growth. Of those BRL 517 million that we announced between agriculture industry and irrigation, we have executed BRL 300 million, BRL 160 million in 2021- 2022, and a little over BRL 140 million for 2022- 2023, according. It would still be short or still BRL 216 million to use. There were some delays as of crushing for the year because of that problems we had last year. We're now recovering part of it this year already. That's the reason why we haven't seen more revenues now, more greater crushing numbers for this crop year.
This will happen for 2024- 2025, and 2025- 2026 crop years. These are just pictures. Biogas is also part, the investment in our boiler. Albioma is making that investment in biogas to generate energy. It's almost ready. These are pictures taken in late March. We are adding those reservoirs to produce biogas. It's being filled with vinasse. We're expanding the storage capacity for sugar. The boiler, that was just fantastic. We're also expanding the sugar capacity in Otávio Lage to enable us to make more sugar in the mix than what we had before. We published the guidance yesterday, 7.3 million tons for three units. The TCH will be 84.4. The two units in Goiás will have an average a little over 93 tons per hectare, according to the guidance. Santa Vitória at 67 tons per hectare.
Santa Vitória brings the average down, something that was clearly explained ever since the acquisition took place, and the challenge is to keep on increasing that productivity with everything that is already going on. Everything is going according to plan. We have been able to make adjustments to increase that productivity year after year, and we'll reach full capacity by 2026, 2.7 million tons. Well, the mix will be 33% sugar, 64% ethanol, given the fact that Santa Vitória only has ethanol. This is the guidance as far as investments go. We broke down by estimated investments in the brownfield, 1 million tons for Jalles and Otávio Lage units. We're expanding the agricultural activities in Santa Vitória so that we can have higher or larger areas for sugarcane plantation, and we're now announcing investments in the sugar plant, BRL 127 million, 75% for this crop year.
The plant will be operational for the next crop year, there will always be some investments required that will be used when we start a new crop year. For this one, it's BRL 127. Recurring, replanting renewals and maintenance in between crop years, BRL 362. From 2022- 2023 crop years, the guidance we had given referred to Jalles Machado and Otávio Lage units, because we didn't have Santa Vitória then. That's it. Once again, let me invite you to Jalles Day next week on the 5th in Goiânia in the afternoon, and on the 6th in Goianésia. It's going to be a field day. We'd love to have you in those two events. Thank you once again for the partnership, and for your interest in investing in Jalles Machado.
I once again would like to state that we are very excited with these new projects. That's the challenge, to grow Santa Vitória, to expand our agricultural areas, and improve the sugar cane plants. I didn't mention the hedging for sugar cane. We've seen a drop in prices ever since the announcement was made. Sugar prices are going down. We have just announced the plant, so was it because of our acquisition prices changed so much? Of course, I was kidding. Let's move on to the Q&A session, and then I'll be able to address the hedging. Thank you very much. The floor is yours for the Q&A session .
All right, let's start with our Q&A session. To pose a question, please use the Q&A button at the bottom part of your screen. If you want to ask a question over the microphone, just write that you would like to ask a question. You can submit your question in writing, typing the Q&A box. If you are connecting over the phone, you can also ask a question. In that case, press star nine. Once your name is announced, you'll hear a message asking you to press star six, and then your microphone will be unmuted. Just do that just once. All right, first question. Gabriel Barra from Citi asks the first question over the microphone.
Hello, Rodrigo. [Foreign language]
Perfect, Gabriel.
[Foreign language] Can you hear me? Okay, good. I actually have two questions. You mentioned Santa Vitória. I'll take that as my first question. Could you please elaborate payback for the plant?
The spread is very limited, and returns are very high for that kind of investment. Can you give us more information about your take on these numbers? Along the same lines, we've been talking about these things for quite some time. I was under the impression returns were not as good as expected, what has changed since then? Have there been any changes in the calculation numbers that would justify these investments? That was my first question. My second question is about hedging. When you looked at the charts that you put together, you may make more money or lose money when you hedge. Again, my question is about your hedging policy. Is it worth maintaining this policy, or would it be positive to may change that policy?
If you could please compare that to current prices, I think it would be beneficial for us to understand your hedging policy a little bit better.
All right. Thank you, Gabriel. As to investing in the sugar plant, Santa Vitória, that was your first question, right? Well, in actual fact, the rationale behind it that justified our decision to do it, we're not using the plant this year. It will be operational next year. Given the opportunity given by those crops, in terms of price when comparing ethanol and sugar prices, that changed the ROI completely. Why? We don't need sugar to expand the industry. All the return of that CapEx will come from the delta we'll have between sugar and ethanol prices. That's the assumption we had. Since that delta is greater for these two next crop years.
Will then be able to get interesting results. It won't cover for all the investments, but after these two crop years, we'll have been able to cover 50% of the investment, a little over 50. Based on historical premiums, we have sugar over ethanol, we'll be able to cover the rest of the investment. That's the premise. The premium between sugar prices and ethanol price will bring that return on investments. We talked to you and the market overall, when we had to calculate return on investments before March, there was that mismatch. It reached its peak in March and April with that price spike for sugar. As to the prefixed hedging, let me also address the sugar plant.
We moved very swiftly after the announcement was made, especially for the 2024, 2025 crop year, because premiums are higher when compared to historical sugar prices and also ethanol prices. The price for ethanol next year when compared to sugar, we are hedging it with room for price increases, 25% of that, and 75% with simple policies. We have been able to discounts here and there, maybe weather-related events, we do that on the spot, but we've done almost 90% for 2024, 2025. Almost 90% of what we set out to do. Our intention was to mitigate risks if prices go up substantially, or if there were delays with the month, we are covered for that hedge to mitigate that risk. Now on to our hedging policy. That was a good question.
Let me just point out, Gabriel, that the historical average prices in reais, numbers that are updated for sugar, is around BRL 1,800, BRL 1,900. They are well above historical prices, and we're now defining investment. We wouldn't like to take any risks. That why we sped up the process even before the market prices went down. We didn't do that at the highest price, but still at reasonable prices as far as investments go. ROI for the project is about 20%. We are being very conservative in these projections. On to margins, we don't have margin calls in our contracts. Almost all of them is term contracts. It's a commodity NDF. We are not having that problem, therefore. Looking down the road, except for the 2023, 2024 crop year, the current one, in which average prices is a little over BRL 2,000.
In March, it was BRL 1,965, and the market is BRL 2,600, BRL 2,700 today. For 2024- 2025 and 2026- 2027 crop years, we are right on the money for future hedging operations. Did I answer your question, Gabriel? It's deleveraged 20% actual. Yes, nominal. 20% nominal with conservative premises, because what actually gives the return is the different prices between sugar and ethanol. That would depend on ethanol prices for future years when we compare it to sugar prices that are fixed. Our premise is two years time frame. The historic prices, I would believe it's going to be bigger, and it was not considered. Future growth for Santa Vitória. For sugarcane, sugar and ethanol production, not including crushing facilities that would require more investments in the agriculture portion, but this is for the futures. This hasn't been included as a criterion for our return calculations.
Henrique Brustolin from BTG Pactual asks the next question.
"Good morning, Rodrigo. I have two questions. One is about the crushing guidance. We see TCH going up, but with less harvested area. I would like to understand how much is that result of the Santa Vitória operations? Also, you said that you're reaching full capacity in 2026 to Santa Vitória, what is the ramp-up, especially taking into account productivity gains? Is it 67 TCH for 2023- 2024? How much recovery you'll have in EBIT in years to come? Are you going to focus on management practices, or have you identified soil quality, sugarcane variety, or new machinery? That's my first question. My second question is about productivity gains for the year. What's your production unit cost for 2023- 2024 crop year?" These are the two questions we would like to ask, Rodrigo.
Thank you, Brustolin. These are very good questions, as usual. On to Santa Vitória first. We have a lot of area under renovation, almost 5,000 hectares that is being renovated. Those areas that were worse, that's why you'll be able to see a pickup next year. Planted area for the year is about 7,000 hectares, there's also expansion. There's a large area for sugarcane next year at Santa Vitória, and we are renovating or improving the worst areas, there will be that effect, absolutely. Our harvested area will be marginally 500 hectares smaller than that of last year, because we are setting aside a larger area for improvements. The growth roadmap up until then.
We'd like to invite you once again to Jalles Day. We'll be discussing these points very closely. Our agricultural teams will be there available, Joel, the operational or Director of Operations, rather, and we are bringing an expert in the industry, Marcos Landell. He knows his way around sugarcane management practices, and he'll be talking about those practices in further detail. We haven't announced any ramp-up numbers as to how we are reaching those numbers, but it's linear to a certain extent. That includes cultural traits, or that would involve irrigation, fertilizers. We'll make some adjustments that have been made with the Santa Vitória team. We are talking about salvage irrigation, because they had the equipment. We're using organic compounds in areas in which they are important. Sugarcane varieties, we talked about that extensively.
They had a variety that was very specific for that region, and we're now replacing that variety with way more productive varieties, and that will contribute to that productivity gains. The work we do day in, day out to keep on improving and doing the right thing at the right time, as far as the agricultural operation is concerned, we had already been working a lot from the Geribá people, the people that took over right after that. The Geribá folks that were there and worked together with the team they already had. They had some projects underway, and we are taking the Jalles know-how, as far as agriculture is concerned, we're transferring that over to Santa Vitória. The synergy has been very good, and that will to do better, so everyone is committed to the success of that integration.
As to the unit cost, we expect that that will go down. When compared to our budget for the year, when we take the fact that input prices are way below those of last year, and we're still getting some positive surprises. As to the prices, we're being able to negotiate these inputs. Prices are coming down dramatically: fertilizers, chemicals, inputs, industrial inputs as well. Prices had gone through the roof, was an an outrage, so they're coming down, and they're coming down fast. Unit cost is going to be lower, absolutely, for the year.
Thank you, Rodrigo. A quick follow-up on your second answer. Unit cost, thinking about growth in terms of, is it more crushing, an 8% increase? Are you going to be diluting unit costs? Would that make sense, or is it because of lower input prices? Could that be a little bit better than 8% coming from more crushing volumes? I wanted to try to find out where that improvement will come from.
Yes, it does make sense. I think we'd rather be more conservative as far as that projection is concerned. Let's see what the future brings. We have seen substantial decreases for both agriculture inputs, as I said, and in fuel prices as well, and they make an important contribution to our costs overall.
Pedro Fonseca from XP asks the next question.
Good morning. Good morning, Rodrigo. I actually have two questions. One has to do with margins. When we look at the track record of the company, there are several moving parts, price spikes, and then higher input prices, and now Santa Vitória's acquisition. What can we expect looking down the road? What would be EBIT and EBITDA margins? What would be the normalized margin, considering Santa Vitória's M&A, and especially going through that ramp-up of in-productivity improvements? My second question is a follow-up on organic sugar. What do you project as far as prices are concerned and the combination, higher commodity prices, but also freight prices coming down? Can you give us more detail as to the contracts, how you renegotiated prices? Thank you, Rodrigo.
Thank you for your questions, Pedro. As far as margins are concerned, we do not give any guidance in that regard. Historically speaking, even before that major improvement we had in 2021- 2022 crop year, EBIT margin reached almost 50%. Company margins fluctuated between 20-odd and 30-odd. That was the EBITDA margin. Was about 30% in the past, but organic accounted for 20% of our revenues.
Let me give you some color in the organic, looking into the past. When you have lower freight prices, that was important. We have seen some a slight impact on prices, but above from prices of the last crop year. On Jalles Day, we'll also have our commercial people having the chance to explain in depth our expectations with experts for both ethanol, sugar, and they will also touch upon organic sugar projections as well. We're now signing contracts with prices that are above those of last year. About 10% higher when compared to last crop year's prices. This is what we've seen so far.
Perfect. Thank you.
Use the Q&A icon at the bottom of your screen. You can submit the question in writing or just state that you would like to ask a question using the microphone.
If you are using your cellphone, please press star nine. Since we have no more questions, I would like to turn over the floor to Rodrigo for his closing remarks.
Once again, thank you all for attending the call. Thank you for asking questions. Thank you for the partnership. This is an important value to our company. We praise transparency and being close to the market analysts. Once again, thank you so much. Once again, I would like to invite all of you to attend our Jalles Day. We'll be presenting our sustainability report. It's been audited by the Bureau Veritas. Once again, I would like to congratulate our colleagues in the environment department for their excellent work. SG&A, or ESG rather, you'll have a chance to see what we do well above market averages for both the social aspects and environmental aspects. In agriculture practices, we have the best scores in the market.
Thank you. We hope to see you on our Jalles Day, see you. Thank you so much. Have a great day. If you have any questions, please direct them to the IR. We have just received a question in writing. It will be answered by IR. This concludes Jalles earnings call. Thank you so much for attending. Have a great day.