Good morning, ladies and gentlemen. Welcome to the Earnings Video Conference of Kepler Weber to discuss the results of the second quarter of 2025. Present with us today are Bernardo Nogueira, CEO, and Renato Arroyo, Financial and Investor Relations Director. We would like to inform you that the presentation is being recorded and translated simultaneously. The translation option is available by clicking on the Interpretation button. For those following the video conference in English, it is possible to mute the original audio in Portuguese by clicking on Mute Original Audio. During the company's presentation, all participants will h ave their microphones disabled. We will start the Q&A session. To ask a question, click on the Raise Hand icon. When you are announced, you will be prompted to turn on your microphone, and you will be able to ask your questions.
We would like to clarify that any forward-looking statements that may be made during this video conference regarding the business perspectives of Kepler Weber , its operating and financial targets constitute projections by the company's management, and these may or may not occur. Investors should understand that political and macroeconomic factors, as well as other operating factors, could affect the futu re performance of the company and could lead to results that differ materially from the expectations expressed in such forward-looking statements. We will now show you a video about a new product launch, Kepler Fix, a digital platform aimed at Kepler Weber customers. We will then hand over to Bernardo Nogueira to begin the presentation of the results for the second quarter of 2025. I hand over to Bernardo Nogueira to begin the presentation of the results for the second quarter of 2025.
Good morning, everyone.
It's a pleasure to be here with you today. It's so good to have this time to share a bit about our second quarter and the perspectives we have for our business. I would like to make a brief opening before we go into the results, saying that the snapshot of the second quarter is a bit tough. These are results which are according to our estimates, but a bit tough. The result is the less profitability of all the agricultural chain, which stands at the lowest levels in the last 20 years. With this opening, I would like to show a film, and there are many positive factors in spite of the downturn. I'm going to mention one point which is related to the demand.
We closed the first half of the year with closed portfolio orders 40% higher than the same period of last year, showing that we have a very positive prospect for the next half of the year. We can see that we are going to start in 2026 with a portfolio better than what we had in the previous period. Another point that we'd like to focus on is the resumption of Argentina. Argentina moved from zero in 2023, and now it accounts for 30% of our international sales. It's a very robust growth, and we see that there is a negative growth in our addressable market, which is very significant. The second point that I would like to mention, which becomes very evident in our results, especially in the portfolio that we are building, is the diversification of our business, bringing resilience.
We see replacement and services growing this year, and this is going to last for 2025. Last but not least is the high quarter we have of our costs. We have a record volume and the G&A, which is below inflation. That means that the company saw this moment as so difficult of the chain, and it's going through this period as best as it can. I'm going to go into the results, and then in the Q&A, we can provide more details for you. Net revenue of the second quarter stood at BRL 311 million, EBITDA BRL 38 million, and net income BRL 40 million. For the first half of the year, we stand at BRL 668 million, much in line with what we saw last year.
We saw a drop that we saw of BRL 30 million in EBITDA, and we have BRL 90 million as a result, and BRL 40 million in the net income that was caused by the pressures from the market. When we look at the business lines, we can see some variations which are typical along the half of periods. We can see that part-time terminals recover. It's important to mention two points. The first is the total volume of business, which is very healthy, the drop of revenue at 5%. This is in relation to prices and volume. We are higher than we were last year. In terms of businesses, we are going to see that there are NS services growing, and international businesses, after a growth of 70% from 2023 to 2024, we are also going to report growth.
International businesses that stood at 7% in 2023 doubled its share in our portfolio in 2025, reaching 14%, 15% of the share of our portfolio. We like to mention the diversity at the regional level. We have important projects in the Cerrado in Brazil and also in international businesses. Some countries which are far away are present. Paraguay fights with Argentina as the most important country for us. When we look at the business as a whole, this is a summary of the relevant sales in the period. It's important to mention that international businesses are moving strong. As I mentioned, when Argentina came into our portfolio, it made our addressable market expand. Two years ago, our market was closed, and it's open. Kepler is very competitive, so we have hundreds of clients present. It's another avenue for growth for our business.
I turn the call to Renato so that he can discuss EBITDA.
Good morning, everyone. Good morning, analysts, employees. It's a pleasure to be here with you once again for another quarter. Before delving into the EBITDA of the company related to the second quarter and also the first half of 2025, it's important to mention some points. Our structural costs, as mentioned by Bernardo in the beginning of his presentation, G&A, as G&A as a whole, are all very much in line with what we reported last year. It's also minimizing the inflation. We have been making efforts of our company, Kepler and Prócer. Our structural costs, engineering as a whole, manufacturing are very much in line with inflation, and in some cases, lower than last year. Our IPV is accompanying the increase in the volume that we've had.
We would like to mention a backlog much larger than that of last year. The volume that was delivered in the first half was higher than last year. The CPV of the company accompanies the increase of the volume that was invoiced and delivered. Gross income drops. When we look at the EBITDA, we see the EBITDA of BRL 32.3 million- BRL 38 million. It was a drop of 19.3% to 12.2%. We see the concentration of all this in the drop of the gross income. Now, going back to the detailed information that I provided, the drop is driven by the prices. The prices have been tighter than what we saw in the previous year. This was driven by the macroeconomic situation that we face nowadays and the situation of the price of commodities. There were interest rates of about 10% moving to 15%.
The commodity prices are about $10 per unit. Soybeans, for example, the environment is a little less favorable. The liquidity of the sector has also dropped in the past years. When we look at the effective situation in the last six months, we see that there was a drop of 41%, reaching BRL 91 million. It is evident that this is also reflected in the gross income. It's important to mention that all the items that can be controlled are well controlled. We are looking for other options, and we are looking at replacement and services. We are also concentrating in international markets. These are important avenues we are after. Now, talking about CapEx, it's just natural that every moment of challenges, people tend to de-accelerate a little in terms of investment. Kepler has been making important investments in the second two quarters.
It's important to describe the investments that we have been making. We have been modernizing our plants. We have been making a lot of investments in new products. Last year, 11% of the products that we sold were products that were launched in the past five years. We want to follow this pathway. 22% of the investments that were made by the company were in investments of products. We see digitalization and innovations that are made by investments. The CapEx that the company has been employing is very well qualified. We are likely to have a drop of investments in CapEx in the third quarter. We executed the most essential CapEx in the past quarters. We are still investing in essential products and other investments which are basic to the company. Now, let's discuss our ROIC. This is something we are very proud of. We delivered our ROIC of 24.5%.
Few companies nowadays operating in the sector or operating in Brazil as a whole deliver our ROIC above the capital cost. Our ROIC is very positive, even considering the challenging scenario. When we look, when we make the comparisons, we see that the average of those items is above. The ROIC is delivered at 24%, which is much beyond what the market usually delivers. Now, talking about cash generation growth, we closed the second quarter with BRL 358 million in cash. It's important to look deeper into this to talk about the performance of the second quarter. BRL 357 million was the beginning, and we paid BRL $70 million of dividends. We make CapEx investments of BRL $18 million. The company generated, in fact, cash in the second quarter, cash that came from client advances. This is just natural considering that our backlog is larger. We had a positive adjusted result.
It's very important to mention this. Yesterday, we announced to shareholders and the market in general a new payment of BRL $25 million in dividends to be paid in September, showing the confidence that we have in the recovery and the improvements that we are likely to materialize in the second half of the year. Talking about the internationalization of the company, looking for international investors, we have been in London recently, visiting BRL 7.6 trillion of assets under management. We want to follow this pathway of developing the company internationally. Bernardo was in New York in the first roadshow abroad. We are looking for new international routes in order to bring new investors to the company. This is a briefing of the PCA. PCA is in line in terms of amounts of last year, BRL 8.2 million. Something important to mention is the increase of limits. That increases cooperatives.
The rate has another differential, but the differential of the rate in the country is higher. This can be a good pathway for improvement, provided that this amount can reach the edge. I'll turn the call back to Bernardo before we start the Q&A session.
Good morning, everyone. Thank you, Renato. The next slide brings an update of last quarter. We focus a lot on going again into our investment thesis. I'm going to provide more details about some points than others. The first one, when we talk about investment thesis, we talk about the leading role that Brazil has taken. This will continue even in a more challenging year. We have a record harvest of more than 343 million tons, a record high. We are living this pressure of storage. Storage is a priority in the production chain.
As a consequence, we see this portfolio, which is higher than last year by 14%. We see that what has been invoiced in terms of volume was higher when compared to the last 10 years. This is a solid thesis, and we use this as our foundation. Another point that we mentioned in the last call was the business with BH, which is one of the largest partnerships that we've made with a cereal producer. We continue with this strong pipeline with new businesses. This also covers biofuels. Talking about strategy, those who were with us in Kepler Day, you can remember that the second pillar of our strategy is to expand our addressable markets. This is very clear when we refer to Argentina. It moved from zero to zero, and now it accounts for 30% of our international business.
With very good prospects, Argentina is like an addition of a Mato Grosso, which is the largest state that we have now. This is in addition to our portfolio. We have already been there five times, and we have a very important presence. We've been there for eight, seven years. The leaders of agribusinesses are Kepler clients, and we are resuming this relationship in a very consistent manner. As for strategy, we mentioned data monetization during our Kepler Day, and it's important to see the materialization of our strategy. It started back then with the acquisition of Prócer. We acquired Prócer. Prócer is an Apple Watch of Silos. We acquired Prócer, which is a leader in this universe. That was back in April 2023. We made an integration activity with Kepler.
Now we are in a position, as we did in the first quarter, to execute an agreement with XP to provide tools for hedging. We have the opportunity to be this platform. We also have businesses and discussions with seven other companies in the chain, from logistic operators, tradings, insurance companies. This universe is moving ahead. For sure, we are going to bring some good news along the year. In relation to efficient management, as mentioned in the beginning, we have been talking that we have been having a tougher second quarter. The margins have been dropping along the chain. That started with a crop of 2024 and 2025. We were prepared for this drop, and we made adjustments to our organization, our structure, so that we could face those tougher times. We managed to reduce the G&A by 5% along the year.
Something that we understand we must have is to operate in a business that meets the expectation of a client. NPS is a way we use to measure the engagement, and it went from 36 in 2018 to 72 in 2024. This is an indicator that we use to measure our performance constantly. This is something that the company is very proud of. Now, moving on to the next slide, we also brought this slide in the previous call. It's very interesting because it puts all the items into perspective. What we see in orange is the soybean price according to Bushell. We see a very large variation. We can see the return of soybeans prices at pre-pandemic levels. Select also plays an influence in our business. We see 10 years ago when SELIC rate was higher, standing at 14%.
Below, we see the magnitude of the crop that moved to 340 million tons. The deficit, people say, "Oh, this is something that has always existed." This is not true. The storage deficit was close to zero in 2016. The situation in 1993 happened as a result of a crop failure. The crop in Brazil was higher than the capacity of implementing a new structure for storage. These are the foundations of our business. Today, it stands at 59% of the capacity in Brazil. This is something very favorable to us. When we combine all the factors, this is what we notice. When we put all this into perspective, we see that the last time that the soybeans and the interest rates were at the level they were, EBITDA of Kepler , which you see in gray, was negative.
When we were here, I remember quite clearly in 2022, when the EBITDA was at 30%, people say, "When soybeans will go back to those levels?" We understand that agriculture goes round in cycles. They ask, "Where are we going to be when it goes back to that level?" We can see that we're not going back to a negative EBITDA. We do not see this happening. We see that the EBITDA in the 12 months and the toughest was the second quarter. We can see that June is already recovering. The third and the fourth quarters will move at higher levels. We can see that there has been a maintenance, as we can see at the top, close to 15% or above 15% of the EBITDA, even in a very challenging environment for the agribusiness as a whole.
The message of this slide is so positive because first, we are not going to go back to the levels that we saw in 2016 or 2017 as a result of a combination of factors. First is the demand for storage because it's still going to be there in the next 20 or 30 years. Also, the strategy that we adopted to diversify, to reposition services, and also to work in ports. Also, the lean manufacturing that we have adopted in 2016. Now, it's the culture of the company. We look at costs. We are also seeking for efficiency at all times. The three factors in a combination put in the level of profitability, which is very different from what we saw in the previous crisis. Even with the second quarter stuff as we saw, we managed to generate cash. We are also announcing the payment of dividends.
This is something that makes us very proud. We can now start the Q&A session.
Thank you. We are now going to start the Q&A session. We'd like to remind you that if you wish to ask a question, click on the Raise Hand button. When being announced, a request to activate your microphone will appear on the screen. You must unmute your microphone to ask questions. For those interested in asking questions in writing, we kindly ask you to use the link available in the chat due to the high number of questions usually received. In order to serve all participants, the questions will be answered in a group manner according to the announced topic. If your question is submitted after the announced topic has closed, the Investor Relations team will provide a response later via email.
During the Q&A session, we are going to prioritize the questions that will be asked live, and they will be answered at first. Our first question comes from Mr. Keefer Kennedy with Citibank .
You may proceed, sir.
Good morning. Bernardo, Renato, and all our IT team, thank you very much for the opportunity of asking a question during your call. I'm going to start asking a bit about the contracted portfolio mentioned by Bernardo. You mentioned that there is a good perspective for the third quarter. I understand there are some exogenous in relation to the execution of the projects, as you mentioned in the release. I would like to understand deeper what's inside the portfolio, what would be the timing and the risks involved. On slide seven of the presentation, you make some comments about BRL 254 million in projects divided into the business units.
The 14% are the BRL 254 million or not. How would those information merge or converge? The timing as well. Since we are talking about different business units, I understand the execution timing is different, ports and terminals and everything. I would like you to provide more color on those informations . I have a second question in relation to Argentina. Can you provide more details about the execution of the activities in that country? You mentioned that 30% of international sales are already made to Argentina. I would like to understand the composition, the share of other countries in terms of international revenues. How are you looking at Argentina? I saw in the newspaper that it was an expedition that you made, the company made to Argentina. I would like to have more information.
Keith, thank you very much for the question. The timing is the fourth quarter and 2026.
We have been building the portfolio for 2026 already. You're asking about risks. Those are portfolios without much risk with the agreement already executed. 0.1% might have something to be decided then. These are materialized businesses. It provides the clarity of where the company is heading. This is going to be distributed. It's something that is specific now. It's going to be distributed along the months to come. We are going to see the impact in the fourth quarter of this year and in the beginning of 2026. I was going to mention this in my final remarks, but I'm going to say now. We are likely to discuss how we're going to see 2026. You ask us some more information about the portfolio. We see that the businesses have been evolving very much in farms and also replacement and services.
Most of the portfolio will be composed of those, and some part related to ports and terminals. We saw a drop in income in this quarter, but we are going to recover along the year. The variation is going to be lower than what we reported. In relation to Argentina, it's fascinating what is happening there. It's really impressive. I made it a point to go there with my team in July. We were there. We visited many clients. We were there for 1,600 kilometers or some more. Argentina, as a market, is the third largest producer of soybeans. It's a major exporter. It's a very competitive country. Fertile soil, production costs below that cost of Brazil. You are at about 100% away from the port. The production in Argentina is very near the export structure. It's a very competitive country.
What we're seeing according to the recent measures, there was a stabilization of inflation, an opening to the international market, purchase of equipment from the international market. As of the second quarter of 2024 and 2025, it's a totally open market. This is very favorable to our business. When you go to Argentina, you notice that there were structures that were deteriorating. We see that there are many old structures. Most of the structures were made 20 years ago. We see in this a major opportunity. When we look at Kepler Weber, we understand that Kepler Weber has been in Argentina for 87 years. I visited the larger producer of wheat, of rice, of soybeans. When we go to Argentina, you have a feeling that you went to Paraná. We see there are great advantages. We are very far from the border.
Since the market was closed for many years, the option that the players had when they wanted to invest, there was not a lot of investment in the last 20 years. Looking at that, we see that we are very competitive. We know that when the market is closed, it does not generate a lot of opportunities. Now we see that we have been very welcomed by those major players. We have representatives there, commercial representatives there, as typical. Specifically in Argentina, we have been making headway with some analysis so that we can have a differentiated presence there. Some Kepler employees are there in order to meet the market. We understand that Argentina had some volatility in the past 80 years. We do not see in the short or medium term any plant or something like this in Argentina.
Rather, we are going to form a commercial structure such as we have in Paraná, in Mato Grosso, so that we can meet the needs of those clients. You asked about other countries, right? In a summarized way, our international business, 78% is in Latin America. We have leadership in the market in our neighboring countries, Paraguay, Uruguay. The major part of our business is in Latin America. We may meet the needs of Pakistan, Ukraine, some countries which are not in our region.
Thank you, Bernardo. That was very clear. If I could ask another question in relation to the material fact related to Prócer that you posted, you said it was BRL 5.7 million. Let me go back. The control of the company was purchased in March 2023. If I'm not mistaken, you had an option of purchase.
I would like to know if the acquisition that you made is part of that process, this purchase time. Is it something according to the agreement? I would like to know if the stake that you adopted was according to this valuation. Can we understand that if it was related to 5% or 6%? Just for us to understand how the remaining shares of Prócer stood and how much are we going to get there. We're going to get to 100%. Congratulations again on the business.
Keefer, good morning. In order to answer in relation to Prócer, when we announced the purchase of the company in March 2023, we mentioned that there would be some stages of acquisition so that we would have the total equity of the company. In 2023, we purchased 50% plus 1% of common shares.
We mentioned that in 2028, we would buy partial stakes until we get to 2028 at 100%. This present purchase is part of this process, yes. We're going to be close to 55% of the control with common shares. There was an anticipation of some few months from what we planned back there. The valuation was a bit higher because the company grew a bit during this period. We mentioned that this was something related to EBITDA. The valuation of the company also was higher. We can see very clearly in the balance data, the quarterly report as well. In item 25.2, you can read the sales options, and you can see what happened in relation to the liabilities that we have. We are going to consolidate Prócer at full, but we have an option of purchase that will have our liabilities adjusted.
Thank you, Bernardo.
Our next question comes from Fernanda Urbano with XP . You may proceed, ma'am.
Good morning, everyone. Good morning, Bernardo, Renato. Thank you very much for the opportunity to ask questions. I have two questions on my side. First, I would like to talk about the competitive scenario. I would like to understand how you see other players, especially in terms of pricing. We are in a very delicate moment for the clients, especially in the sectors which are exposed to interest rates. I would like to know if you see that the other players are more aggressive in terms of pricing or if the environment is rational. How has this been aligning with the market share of you? Do you see any player that is gaining market share or on the opposite? Do you see any consolidation moves in the market?
This would be the first question in terms of competitive and pricing. The second question is related to Safra Plan that was announced last month, considering all the diversification movement and the projects that are financed by PCA are not so representative when compared to the previous moves. I would like to understand how the negotiations have been and what's your expectation in order to have the funds for the new plan. Thank you.
Hi, Fernanda. Thank you for the question. The competitive scenario, you use the word rational, right? We are within the rationalization. Yes, there is this. The client is using their resources. This client is demanding more efficiency. They do more research. They go shopping more. We see this playing a role in the pricing. We understand that the worst has already gone. We see some instability in prices.
When we look at the market share, when we look at different players, we understand that Kepler has a strategy of maintaining the leadership. We are the market leaders. In 2023, we gained market share in 2025. We are working hard in order to maintain our leadership in the market. In general terms, this is the share now. It's very interesting that there may be variations among the players. To talk about Safra Plan, I'm going to turn to Renato. Thank you, Fernando.
Fernando, good morning. Thank you very much for the question. I quickly mentioned the PCA in the presentation. In fact, PCA accounts for 12%- 13% of our income. 30% of our resources are funded. 40% come from PCA. This is something based on last year. The people became more sophisticated. They issued debentures. Specifically about PCA, BRL 8.2 billion have been approved.
There is a possibility to increase the limit up to BRL 200 million if you reach this 12,000 tons. Even though the interest rate stands at 8.5%-1 0%, it is different when you see the referential interest rate of the market. Last year, the interest rates were at 7.8%, but the referential rate was at 10% or 11%. The point is important to make this resource reach at the edge. If this amount of money reaches the edge in full, for sure, this is going to help our business. We work with the scenario that we had last year in terms of numbers. If it comes to the edge, we see that this is an upside potential, especially for farms and agroindustries. Thank you.
Thank you. Yes, my question has been answered. Thank you.
Our next question comes from Werner Roger of Trigono Capital. You may proceed, sir.
You may proceed, Mr. Werner, with your question. Mr. Werner, your line is open. You may proceed. Our next question comes from Rodrigo Gutiérrez and Gabriel Bajos with Paros Investimento.
This sector experiences an inflection in the agribusiness, or there are mixed signals. Why? Even with the strong drop in the steel price, KV margins had a drop. Why?
Rodrigo and Gabriel, thank you very much for the question. We see an inflection in the second quarter. Yes, you're right. We notice from the portfolio and the mix of this portfolio, we can see that there are healthier margins of the second quarter. I would say there is an inflection point. We like to use the word gradual. There is no new fact, there is no external new fact that would accelerate this recovery. We can say that there is a gradual improvement. In relation to steel, yes.
Steel prices dropped, especially in the past three or four years, just like other commodities such as soybeans. Why don't we see any improvement in the margin when the steel price drops? There is a customized way. When prices drop, follow this. We are not exposed to steel in a speculative way. We do not have a speculative position to steel. In the portfolio, we already have the steel already contracted because we work in a more conservative way. Thank you.
Our next question comes from Mr. Rafael Araújo with Evolve Capital.
In relation to the prices of Kepler Weber's products, what would be the main points for a recovery? A better profitability could increase the prices. How has the volatility of the prices behaved in the past?
Rafael, thank you. Without a doubt, we usually say that there are three factors at play.
First is the profitability of the agribusiness. Prices of corn and soybeans would provide energy to other sectors such as storage and tractors. It's much more successful when the prices are better. In our estimate, when we mention gradual improvement, we are not talking about an improvement in the price of soybeans. We see a stability situation, as we saw in the 12 months. More competitive interest rates would help long-term investments, which is our case. We do not see any changes in the future. There is also the record crop, the record harvest that is about to be completed in 2025. This is very favorable, and this is what has been playing a very positive role in our portfolio. There is a new crop that is going to start to be planted in October with very good prospects.
Analysts, meteorologists, and specialists affirm that we are going to have another growth. Let me just add and make an invitation. The three main factors are interest rates, commodity prices, and the crops. Crops have been mentioned that for next year, we have positive results. We are going to have two consecutive years of record harvest reaching 40% or 41%. This has been favoring our portfolio. Talking about the formation of the portfolio of next year, we have already mentioned that 50% or 56% of the second quarter comes from June. That shows that we are going to have an acceleration in terms of volume considering the seasonality of the business. 40% is concentrated in the first half and 60% in the second half of the year. Since we do not need to make any investments in structure or SG&A, we start to have a dilution in costs.
It is important to mention that in terms of profitability, we are likely to have a gradual improvement as we have been mentioning. The volume would play a role in the dilution of costs. We do not see any prospects of soybean prices changing abruptly. What we can see is a higher volume and a volume which is higher than what we saw in the first quarter.
We would like to remind you that if you wish to ask a question, please click on Raise Hand. Those who are interested in asking a question in writing, we kindly ask you to use the link available in the chat. Please wait. We will complete and close the Q&A session. We turn the floor back to Bernardo for his final remarks.
It was a pleasure to be with you.
As final remarks, we try to bring the information and the answers and the materials. We see an improvement ahead of us, and this is going to perpetuate in the second half of the year. As I said, our profitability is likely to have a gradual improvement. We are very happy to see this clear as facts, not only as perspectives. For the call of the third quarter, we are going to have more material to discuss 2026. This positive view is going to continue into 2026. I would like to say that Kepler completed 100 years in the second quarter. It is a very clear leadership in the business we are operating, which is the agribusinesses. We got the result of GPTW Research of [Brazil's Work]. Once again, we are among one of the best companies to work in the agribusinesses. We are improving in all engagement indicators.
This is the good result of the engagement of Kepler's team. I would like to thank the 2,875 clients served in this period. I would like to thank our 13,000 new shareholders, standing now at 87,000 shareholders nowadays. It is an honor to have your trust. We are working hard to deliver a third quarter with positive results.
The result of the conference of Kepler Weber has been completed. If you have any questions, send your questions to the Investor Relations team by ri.kepler@kepler.com.br. We would like to thank you for your participation and have a great day.