SLC Agrícola (SLCE3) Q1 2026 earnings summary

Executive summary

• International cotton prices rebounded in early 2026, supported by higher oil prices and geopolitical tensions, with Brazil expected to strengthen its global market share.

• Record soybean yields were achieved, with a 4.7% year-over-year increase to 4,146 kg/ha and a 12.5% rise in planted area, driven by long-term investments in soil quality, technology, and agronomic practices.

• Net revenue declined 2.7% to R$2.27 billion in 1Q26 due to lower sales volumes and productivity in certain regions.

• All major crops for 2025/26 were fully planted or harvested as of May 8, 2026.

• Hedging strategies locked in significant portions of expected production for soybeans, cotton, and corn, providing predictability amid market volatility.

Financial highlights

• Net revenue for the quarter was R$2.27 billion, down 2.7% year-over-year.

• Adjusted EBITDA reached R$695.2 million, down 26.3% year-over-year, with margin compressing to 30.7%.

• Net income decreased 53.8% to R$236.1 million, with net margin at 10.4%.

• Gross income dropped 12.3% to R$943.2 million, with gross margin at 41.6%.

• Free cash flow improved 4.6% year-over-year but remained negative due to seasonal working capital needs and land acquisition payments.

Outlook and guidance

• The company is closely monitoring El Niño risks and adjusting fertilizer and crop strategies to mitigate potential yield impacts.

• Margin compression in 1Q26 is expected to reverse in coming quarters as higher-yielding farm volumes are recognized.

• For 2026/27, 35.7% of soybean and 33.5% of cotton production are already hedged at favorable prices.

• Fertilizer procurement is advanced for phosphorus and potassium, but nitrogen purchases are delayed due to market volatility and geopolitical risks.

• Strategic focus on irrigation expansion, aiming for 53,000 irrigated hectares in coming years.