Fertilizantes Heringer SA
BOVESPA:FHER3
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Fertilizantes Heringer SA
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[Foreign Language] Good morning, and thank you for waiting. At this time, we would like to welcome everyone to Fertilizantes Heringer's First Quarter of 2018 Earnings Conference Call. Today, with us we have Mr. Dalton Carlos Heringer, CEO of the company; and Mr. Rodrigo Bortolini Rezende, CFO and Investor Relations Officer.
We would like to inform you that this event is being recorded. [Operator Instructions] The replay facility for this call will be available for 1 week after the call is ended. This event is being simultaneously webcast on Heringer's Investor Relations website at www.heringer.com.br/ir and also on the MZiQ platform, where the slide presentation is available for download.
Before proceeding, we would like to mention that forward-looking statements that might be made during this call in relation to the company's business perspectives, operating and financial projections and targets are beliefs and assumptions of the company's management as well as information currently available to the company. Forward-looking statements are not guarantees of performance, they involve risks, uncertainties and assumptions as they relate to future events and therefore, they depend on circumstances that may or may not occur. Investors should understand that general economic conditions, industry conditions and other operating factors could also affect the future results of the company and could cause results to differ materially from those expressed in such forward-looking statements.
Now we would like to turn the conference over to Mr. Heringer, CEO of Fertilizantes Heringer, who will start the presentation. Mr. Heringer, you may begin.
Good morning, everyone. Welcome to our call referring to the results of the first quarter of 2018. The Investor Relations Officer and CFO of the company, Rodrigo, will be with me today. And those of you who are following our presentation, we are going to cover the global fertilizer market, the Brazilian fertilizer market specifically and also a few words about the company and the results of the first quarter of 2018.
Those of you who are following our presentation on Slide presentation #3, the global production capacity of nitrogen, phosphorus and potassium chloride, which are the main nutrients required by the brand. China is the main one in nitrogen production and phosphorus production itself followed by Canada in production of chloride potassium. Brazil -- although Brazil is a very big consumer, and we will be showing this on the next slide, Brazil is not the major producer worldwide. Brazil is not among the main producers in these 3 main nutrients.
Continuing our presentation. Now we talk about consumption on Page #4. Here, Brazil is a very big highlight because it is a very big consumer, the second largest world consumer in the case of potassium, ranking third in consumers in phosphorus and in the case of the nitrogen nutrient, ranking fourth among consumers. So a very major importance in consumption. And it's vital fact, Brazil has not been able to develop the raw material production projects in -- but when you talk about consumption, specifically Brazil is already a big highlight. And in future terms, probably Brazil will continue to be even more important than today.
When we draw a comparison among the world markets, the main consumer countries, and if we analyze this relationship with Brazil, we can see that Brazil has the growth and demand. And this growth and demand is much higher than the main markets that are bigger than the Brazilian market.
Those of you who are following our presentation, our slide presentation, you can see that China is the biggest consumer in the world, 59 million tons of nutrients, India with 27 million tons of nutrients, the United States with 20 million tons in nutrients and Brazil with 16.6 million tons.
Now when you analyze a longer series, and when you analyze what is going on in terms of growth in the main market, we can see China of 1990 to 2016 with the growth of 3.1%, whereas India, during the same period was 3.2% compound growth, United States, a very slight increase 0.3%. And in the same period, Brazil had a compound growth of 6.5%, clearly much higher than the other important markets. And this leads us to believe that Brazil will continue to hold an important position, not only in terms of size but also in terms of growth rate.
For 2018, we expect 2% growth for the Brazilian market, and this is what we quote in our public presentation here. Nevertheless, the overall picture for grains is slightly more favorable as you can see because projections depending on the macro future situation such as the prices and the weather that might impact a bigger area of crop and the time when the planting will be made during the year will impact this generation of growth. And it could even be higher than 2% because of these factors for the year.
And what drives this growth and the consumption of fertilizers both in the world and in Brazil? The world is having a very strong growth rate in the last few years globally. And in our presentation, we portray years in terms of growth of the GDP -- global GDP growth rate for '18 and '19, these are estimates on Slide #6, but they are probably very close to what we're really materializing in terms of growth rate. So we have a global GDP growth rate which is very robust and which brings about an improvement in per capita income. Some countries still have very low per capita income. But this global GDP growth rate, this will be generating a higher demand for food. And this might not happen in more developed countries or those who have a very high per capita income already. However, the world has a very big part of people who have a low per capita income in many countries. And this will surely generate an increase in demand for food.
And another reality that we have been seeing in terms of urbanization in the world is that increasing the world's population becomes an urban population also, leading to a higher demand for food because people in urban areas, they basically have no agricultural production or at least a local one. And this will be generating this demand for food from the agricultural production that we have in the world today. And besides, we have the growth of the population itself. According to current estimates, we will have 9 billion people in the world by 2050, so all these factors together will be bringing about a growth in the demand for food. And this will lead Brazil to have an important -- to play an important role in the production of food and therefore use of fertilizer. Fertilizers are basic for agricultural production. Without having a correlation of the use of fertilizer technology, we can say certainly that agricultural production will not grow. In order to achieve increase in agricultural productions, you must have vegetable nutrition with all these nutrition-based nutrients that are called fertilizers.
Those are following our presentation on Slide #7 now. Brazil has been having in the last 3 months or 4 months a very marked improvement in the scenario for fertilizer demand with an improvement in soybean prices. Some countries, such as Argentina for instance, they have the production -- the local production hindered because of the dry spell. And Brazil has 43% of the total demand for fertilizers in soybean in Brazil. But if we include corn and the other grains as a whole, this is very relevant. So grains with this reality of the current scenario, which is more promising that is to say bringing farmers a better expectation regarding profitability. This will certainly be able to lead us to a better balance between supply and demand, bringing about the major change in the current scenario vis-à-vis the one that we had at the end of 2017, at the beginning of this year. In January the scenario for corn that was being planted or we were having the second crop being planted. The reality regarding the farmers' expectations, those who were planting the second crop in January was less favorable than the scenario that materialized today. And in this specific case, bringing to a second crop with [ little ] technology possibly a smaller area with a reality of use of fertilizers are lower than what would have occurred should the current corn price situations of today were already under way in December and January. So the reality now brings about the characteristic of much better expectations as a whole for this reality of demand and as a consequence of better balance between supply and demand domestically here in Brazil as well.
And I would like to mention as well that overall, the small crops that we call other crops, they are small vis-à-vis demand for fertilizer. So these other crops are also improving. And we see the prices of [ HF ] with a very big drop over 2016 and 2017. And they brought about a very positive cost effect, which is an important drop in the inflation rate. However, this reality of drop in food prices makes producers of these products, fruits and legumes and green leaves, they have a better expectation -- or they had a much more expectation regarding their profitability in 2017. And this is going through a very important adjustment now, and the expectation for fruit and vegetables have their current prices with a much better reality for the producers. And this will certainly lead to a bigger consumption for 2018.
Now I would like to turn more specifically to the Brazilian market. The first quarter was marked by a drop in consumption of 1.3%, and this drop was stronger as I said before due to the decrease in the use of technology, mainly in the second crop corn in the regions where planting is carried out for the second crop and the price expectation when this crop was planted, the expectation was very bad for producers, so they used less fertilizers because of their prices expectations and also due to the drop that we saw in the prices of sugar and more recently of alcohol -- of ethanol as well where sugarcane areas were not so much renewed in the first quarter of 2018.
Later we will tell you or we will show you that the case of Heringer the dynamic was slightly different in terms of drop, but we saw in the market overall, which was as, I said before, 1.3%, going from 6.4 million tons in 2017 to 6.330 million in 2018. Very much because the crop profile of Heringer is much more diversified than the remainder of the Brazilian market in terms of fertilizers. So once the company have a more diversified profile, the reality that was faced in the expectations regarding corn versus it didn't have the same dynamic for Heringer. Or in a comparison to what happened with the overall scenario for the sector that had this 1.3% drop. Continuing the presentation, the Brazilian local production or domestic production has been dropping consistently very much because of a situation that has been occurring into the production of urea, one of the raw materials for fertilizers and that offers nitrogen. And basically today all the domestic production of urea is produced by Petrobras. And as you can read in the newspapers, this is public information, there is an expectation that this production might be sold by Petrobras, and Petrobras has been working with a possibility of diluting or decreasing the number of plants in operation. Today, there are 4 as we read that the news published in many media saying that Petrobras could have even less plants for the production of urea than they have today. And this is bringing about a drop in the production of raw materials as you can see on the slide, coming from BRL 1.936 million in 1Q '17, going to BRL 1.860 million in the first quarter of '18. On the other hand, the import that had grown very much in 1Q '17, because the 1Q '16 already now looking at the figures for 1Q '18, we see a drop of 14.1% in imports.
In 2017, the import that did not occur in the first quarter, and also in second quarter of '17, they were in line with the reality that has been occurring in a recurrent fashion that is seeing the purchases of fertilizers being made early, meaning for the crop -- for the grain production areas in Brazil. And the reality that drove this was the fact that farmers soon after the harvest of December crop, they already positioned themselves very strongly in terms of the purchase of fertilizers. And this did not occur in the third quarter of '17. And this additional volume of imports that we saw in the first quarter of '17, and also in the second quarter of '17 generated an important surplus of inventory in this sector. And as of the first quarter already of 2017, this brought about a major pressure both on prices and margins for the sector as a whole. And the whole situation that I have just described is no longer seen in 2018. Why? because imports are already much lower in the first quarter, and our expectation is that some corrections vis-à-vis 2017 will happen in the second quarter of 2018. And on the other hand, the market has been delivering a dynamic that is very different from the one that we saw in 2017. Agricultural prices today are much more favorable than the ones that we saw in 2017 for the farmers, for the producers. And has happened in the previous years, leading the farmers to sell their grains more quickly than what happened in 2017, and as a consequence with the purchase of fertilizers in a much faster speed than we saw in 2017 already. So this reality about deliveries and domestic production and imports, all this together, in our opinion is leading inventories in 2018 to be well adjusted, which was not the case in 2017, as I have already mentioned.
Continuing our presentation, on Slide #12, for those who are following the presentation. For the main fertilizer raw materials, we see some slight variations in the prices and up and down. But if you have very strong oscillation up or down, this generates loss of inventory or difficulty to transfer this to the final price. So the oscillation, the variations that we have been seeing, they are very small in U.S. dollar terms. And we can manage them better because they have been occurring in a very slight fashion in dollars per ton. And this reality is very healthy as you can see on the chart in the international market.
Now continuing the presentation, we have a reality that has been occurring ever since the summer crop was planted, the '17, '18 summer crop, which has a pretty radical review upwards. The rainfall last year was delayed in the main consumption region that is to say of fertilizer for grains specifically. And this delayed planting last year. And this generated by the agencies that make estimates of production, mainly CONAB, a view that we could have a production that could be much lower than the '16, '17 crop year and that had been a record harvest with 237 million tons produced among all cereals or all grain included, and the last review by CONAB generated this seventh estimate here in April. Once again, correcting it upwards, restating it upwards, leading the estimated production for the '17, '18 crop year grains as a whole going towards 230 million tons, which was a very slight drop, vis-à-vis the initial expectation when we saw the summer planting last year, so the reality of higher prices now and a production that is more robust in terms of volume. This is improving the expectation from the part of farmer -- of producers. And this will bring about the possibility of a higher consumption and with a higher use of technology that is say fertilizer for this year.
On Slide 14, you can see a very long series in which you can see that Heringer have been holding an important position in the Brazilian market. It is one of the most important distributors of fertilizers in Brazil in operation, and from 1995 until 2017 from 11.3%, where the market 5.4%. In spite of the drop that we saw in the last 2 or 3 years, when you look at the longer series, you can see that the company has been delivering a performance, which is much better than the market overall. As I said before, expectation for this year is that the markets will be grown by 2%. And here in the presentation, you can see our figures, the figures that we estimate for 2030. This will lead the country to a consumption position higher than 10 million tons or 10 million tons higher than what exists today. So we are estimating 47.5 million tons for 2030 in the Brazilian market.
Now let's turn to the company's business model. It's a model of fertilizers distribution to small, medium and large producers, and we operate nationwide. And for that, the company keeps relationships and contracts with many different logistics suppliers, guaranteeing an important efficiency in ports, highways, railways and warehousing, which are necessary for the operation of good business in all the main regions of import and also of purchase of domestic raw materials. Brazil still has very poor logistics. But in spite of that, the company has been keeping itself very active and maintaining the necessary contracts and relationships in order to transport and move the products that the company sells every single year. In terms of supply and the purchase of the raw materials, the company also keeps long-term relationships with the main producers and traders of the main raw materials that are required for the production of fertilizers. And we also have the reality of a production that is adequate to the main realities of demand per market. And with that, the company operates 19 mixing units today that sell and distribute fertilizers from all product lines. We have specialty products, and that makes us stand out, vis-à-vis our competitors. We have a very technical work done consistently and work we believe is very important, which is giving support to producers and being able to achieve more with less. Or in other words, fertilizers, giving more support than conventional fertilizers. So our specialty products, right now they are divided into 3 lines. Soil, Fertirrigation and Foliar. And the producers achieved a much higher yield vis-à-vis the use of conventional fertilizers.
We have distribution to the main consumer market in Brazil. Our sales force is very complete. We have a very big client base. And as I said before, our focus is distribution to all crops. So our crops were very much diversified in this first quarter. As I said before, that company achieved 1.2% growth in volume, whereas the market had a drop of 1.3%. And this was very much because of the crop profile that the company aims at, with the diversification of crops, and which has supported us in this growth vis-à-vis the market that dropped 1.3%.
In this first quarter, we see a higher delivery for the coffee crops. And in this case, following the dynamics that we saw in the fertilizer market, we also had a slight drop for corn and a slight drop for sugarcane. I would like to highlight the fact that our main crop, and of course the summation of all the other crops in the first quarter 2018, we delivered 280,000 tons for the other crops. So all in all, the other crops for Heringer, the main sources of deliveries and also revenue for the company, there are small and medium-size clients that require a very wide range of products and services and also differentiated products. And we have been rather successful by keeping our distribution profile.
On Slide 18, those of you who are following us, the company has a very consolidated portfolio in the Solo line. The Fertirrigation line went through a very important increase in the last few years and the last line that the company has been developing is a Foliar line. Last year, the Foliar line had a very big increase as an [ import ] product we can state today that we have a portfolio of products for the Foliar line that is really end-to-end. We have products for all the different crops and products that have been in excellent performance in the field with the farmers, they have a high degree of technicity. And these products of the Foliar line are being seen by our clients that they are much superior to the other players in this area.
Going to the conclusion of my presentation, and then I will give the floor to Rodrigo. Let's turn our attention to the specialty products of the company. The specialty products have an increasing importance for the company. In 2017, we had almost 2 million tons delivered of specialty products. And in the first quarter of 2018, the percentage of the total sold specialty products all in all had 44% share in our overall sales. And the current reality for agricultural product will certainly help us due to the need to produce more and also the expectation that profitability of agriculture product will become better, and this will boost our sales of specialty products.
So I thank you very much for paying attention to me. And now I would like to give the floor to Rodrigo, and he will talk about our financials. Thank you.
Thank you, Dalton. Good morning, everyone. In our presentation of the results of the first quarter, let's go to Page #20, where we can see that the volume produced by the company was higher than the first quarter of 2017. During the first quarter of 2018, we delivered 866,000 tons of fertilizers with a growth of 1.2% vis-à-vis the 856,000 delivered in the same period of 2017. With that, the company was able to achieve a market gain in this period on a year-on-year basis, reaching a market share of 13.6%.
Also during the first quarter, our net revenue went up, reaching BRL 1,041,000,000. It was higher by 3.5% to the net revenue of 1Q '17, which was BRL 1 billion. Also the average fertilizer price during this quarter went up, reaching BRL 1,203 per ton vis-à-vis an average price of BRL 1,176 per ton in 1Q '17.
Gross profit went down. It was BRL 67.4 million in the first quarter. It was 46% lower than the gross profit of 1Q '17, which was BRL 125 million. And the gross margin also dropped. Last year, it was 12.5%, and during the first quarter of '18, 6.5%. And we believe that the bigger volume of the carryover inventory from '17 to '18, the year-end inventory associated to the lower use of fertilizers for the planting of sugarcane and the second crop of corn, vis-à-vis the previous year were the drivers or the main drivers of this reduction in the margin -- gross margin. Freight and commission in the first quarter went up to BRL 51.6 million, reaching 5% of the company's net revenue. Last year, it was almost BRL 49 million, representing 4.8% of the net revenue.
This amount is basically concentrated on freight because freight went up by almost 10% per ton vis-à-vis the first quarter of '17. Commissions, on the other hand, dropped by about 12% in 1Q '18 vis-à-vis 1Q '17. And they were BRL 10 million vis-à-vis almost BRL 12 million in first quarter of 2017.
Our SG&A, net of freight and commission went up 20% in the first quarter of '18, reaching BRL 55 million, vis-à-vis BRL 46 million in the third quarter of '17, reaching 5.3% of net revenue. Whereas in the previous year, it was 4.5% of net revenue. This increase in our SG&A was basically due to the increase in our technical team portfolios as of the third quarter of '17 already. And in the third quarter, we had a higher provision for doubtful accounts. The increase in expenses of fuel and also the lease of vehicle fleet in the commercial area that we didn't have in the first quarter of '17.
Continue the presentation, the EBITDA of the first quarter was negative by BRL 28 million, much lower than the positive EBITDA of almost BRL 45 million in the first quarter of '17, having reached a negative EBITDA margin of 2.7% of the net revenue, whereas in the first quarter of '17, the margin had been positive by 4.5%.
So I would like to remind you that last year, we started the year in a very good situation with EBITDA very much in line with our expectations. And the year was ultimately very different in terms of EBITDA vis-à-vis the historical average of the company. And I would like to remind you that we had only BRL 92 million EBITDA last year, where the historical average in this decade has been varying between BRL 200 million and BRL 350 million, very well.
Net financial income -- or net financial expenses were BRL 34 million, higher than what we had last year in the same period, which was BRL 22 million for net financial expense. And this amount is basically in net deferred and adjustment to present value among others, BRL 23.3 million overall, negative exchange rate variation BRL 4.6 million. And also expense with hedge operations amounting to BRL 6 million. And in the third quarter of 2018, the net result of the company or the net income of the company was BRL 46.7 million, whereas last year, the company had obtained a net income of BRL 7 million and now BRL 46.7 million negative.
And I would like to highlight that in the third quarter, the company had federal tax credits of COFINS in the noncommunicative regime regarding the third quarter of 2008. But there was a favorable decision issued and the Brazilian IRS, ultimately recognized finally the right to be reimbursed by -- for this amount. And at the end of first quarter, the union made a deposit of BRL 32.7 million to Heringer. So the company ended up receiving BRL 32.7 million from the union in the taxes recoverable process. And also as a public information, the first quarter -- or the second quarter, we received an additional BRL 1.9 million. This is public information already.
The company also has liability management with the use of hedge to mitigate the exchange rate risks over the U.S. dollar denominated liability due to fertilizer raw materials. And as you saw in Dalton's presentation, Brazil is not the major producer of fertilizers but is a very big consumer of fertilizer. So we import between 70%, 75% of the fertilizer raw material. A little bit more in some chains, such as chloride, and a little bit less in the phosphate ones but an average of 70% of the raw material consumed by Brazil in the last 2 years was imported. And therefore, Brazil, the price taker in the issue of fertilizer raw material. And at the end of March, March 31, we had $145 million in hedge operations that were billed for an average weighted
rate of [ 3.3 ]. And we would like to emphasize as well that the company has no contract with -- no covenant, no financial covenant.
Now let's go to Page 21. Here we talk about the distribution of fertilizer and the plant of SSP. So the EBITDA in distribution that in the third quarter of '17 had been very strong in terms of sales, which is our core business, BRL 50 million. And this year was only BRL 24 million. And the Paranaguá plant negative BRL 3.8 million, totaling BRL 28 million in negative EBITDA, so this unit continues to be at the adequate maintenance level.
So could you please go to Page 22 now. Let's talk about the working capital of the company in the first quarter. It is very interesting to see that the working capital of the company reflects the seasonality of our business, so Dalton said that the consumption of fertilizer this year tends to grow by 2%. In our estimates, we changed 35 million tons but also in a very seasonable fashion. We believe that 40% of the deliveries has been happening in the last 2 years tend to occur during the first half of the year and the additional 60% in the second half. And the company has analyzed it this way, but the business model due to seasonality should be analyzed always on an annual base and not in a half annual base.
The company has a very strict credit policy. And we try to maintain accounts receivable as low as possible with sales with very short terms, and the company ended last year with 35,000 active clients. And with that, we try to reduce the risk of delinquency and losses.
So the accounts receivable days closed the first quarter with 37 days, lower than the 42 days of the first quarter of '17. And this stems from the very strict credit policy. And inventory days, in the first quarter were 32 days, lower than the 45 days of the first quarter of '17. So this also is driven by constant synergy between the commercial supply and logistics area in order to meet the needs of the client adequately and maintaining adequate inventory levels in order to cater to our clients with the quality and with the time frame that they need, accounts payable days close the first quarter of 155 days higher than 146 days of the first quarter of '17. And as Dalton said, fertilizer raw material prices in the first quarter are less volatile, and they continue to be firm in the international markets mainly for phosphate and potassium products. So this requires a higher demand of working capital for the company.
And now let's go to Page 23. On Page 23, you can see that we closed the first quarter with cash and cash availability of BRL 80 million. And let's talk about the [ taxes ], the negative before tax and social contributions, BRL 73 million. We had expenses in revenues with no cash effect amounted to BRL 51.3 million, basically concentrated in amortization, depreciation and exchange rate variation. We had a reduction in the asset account amounted to almost BRL 250 million, basically concentrated the reduction of inventory that we mentioned. And with that, the company reduced its liability account by BRL 252 million, basically concentrated in financing operations and suppliers.
And the cash flow from operating activities in the first quarter was negative by BRL 26 million. We had investments amounted to BRL 4 million. And some remodeling of warehouses also with investments in client management, which is a system that we are using, CRM, in order to improve the qualification of our clients nationwide. And so with that, the free cash flow was negative by BRL 30 million. And cash flow from financing activities was BRL 43 million in such a way that it was higher by almost BRL 14 million vis-à-vis December -- last December.
So now let's turn to Page #4, please. On Page #4, we talk about sustainability and compliance for the company. And I would like to remind you that we have a sustainability committee in the company that is linked to the board director. And last year we published the sixth sustainability report. And this year, we will be publishing the seventh one with the use of sustainable practices in all -- in the improvement of all the production processes from the plan going to the best way to service our client and sustainable practices to our clients and our stakeholders in general. We also have a compliance committee that was established this quarter with the members that are linked to the CEO directly -- reported to the CEO directly. And the company has had a code of ethics and a code of conduct since 2005. And the company is working in the implementation of compliance policies in several areas in order to further improve our good governance practices. And last channel, we created a communication channel on our website.
And in order to conclude my presentation, I would like to go to Page 25. Heringer today is the only company listed as B3. It is an attractive investment opportunity. The market is very competitive, however, it is very attractive at the same time. It is the fastest-growing market in the world as you can see here in terms of fertilizers because we only use 1/4 of the arable areas, so we have a lot of water, lots of area in order to perpetuate agribusiness. In terms of weather, we are able to produce 2 crops per year, planting in October, occurred in January, February. And the second crop is harvested in May, June. And this is impossible in the cold climate countries because of the short cycle between the planting and harvesting of about 100 days. And our company that operates at this market has a largely recognized brand and a very broad portfolio of specialty products and its very big focus on retail.
Additionally, the ownership breakdown of the company is as follows: We have 51.5% in the hands of the control group, OCP 10%; [ Nutrien ] 9.5%. In the first quarter, Concord brokerage house informed by means of funds that they manage that they acquired a position a stake higher than 5% of the total of shares, saying that it is not -- it does not have any intention of change the control of the company. And that these funds are not party to any agreement regarding the purchase and sale of shares issued by the company. So 24% other investors and 5% Concord. 99% of the float is formed by Brazilian investors and only 1% foreign investors. I thank you very much for your time. And now I would like to give the floor back to Dalton.
[Foreign Language] Now we would like to open for questions. Thank you for paying attention to our presentations. Now we would like to open our Q&A session, and this will be only for analysts and investors.
[Operator Instructions] Our first question comes from Márcio Montes from Banco do Brasil.
I would like to know, if you have any expectations regarding a change in dynamics for the second quarter that is usually weaker in order to tap into what was not done before.
[Foreign Language] I'd like to thank you for the question, this is Dalton. The reality that we have been seeing in terms of improvement in the scenario mainly for grains in Brazil will certainly bring about improvements. Nevertheless, this is not going to be fully seen in the second quarter because part of what will be delivered in the second quarter is or was sold in the third quarter. Now the expectation for the year is much more favorable with the picture that we see in terms of agriculture prices in general. So as far the region is concerned, our second quarter, was still a little bit weak, but the second half of the year is much more favorable. We do not work with the expectation of having, for instance, the EBITDA that we had last year at all. We will have something very much linked to the reality of our history except in May last year that Rodrigo said, we had some years we had BRL 200 million, some years we had up to BRL 350 million. So our expectation is more regarding a normal level for the year than what we saw last year.
In terms of volume [indiscernible] question, we grew in the first quarter where the market has fallen to 1.2%, 1.3%, and we grew 2% in volume. And this is today's statistics, and it was published by ANDA that the Brazilian fertilizer market in April grew by 25% in fertilizer deliveries. And for the 4 years -- the 4 months of the year, the market was dropped 1.3%, and we are already growing 3.4%, which is an year-to-date growth that is already higher than our projection. And also, import following the same dynamics that happened in the first quarter, so this is public information that you can go to ANDA's website as I said before and I'm just reinforcing what Dalton said.
[Foreign Language] Thank you, Rodrigo. Yes, the information that you added brings the expectation of going back to a more normal level historically in terms of margin for the year. But Márcio, the second quarter, will still have the impact of deliveries made in the first quarter and that as you saw the margins were still very much hindered for supply and demand.
[Operator Instructions] If there are no more questions, I would like to give the floor back to Mr. Heringer for his closing remarks.
[Foreign Language] Thank you very much, once again, for participating in our call of the first quarter of 2018. In fact, it was a very big challenge this first quarter of 2018 with a margin that was much lower than we have been delivering historically. But during our presentation of today and the model that we presented and looking at the information that we have today, the picture is much more favorable from now on. So we have a reality for the year that will be much more favorable than the one we had in the first quarter. And just reinforcing what Rodrigo said differently from last year when we had a very positive first quarter and afterwards the picture in terms of supply and demand deteriorated over the year leading to this EBITDA last year, which was very much lower than the historical levels of EBITDA for the company. And this year, we expect a reversal of this trend in spite of a very unfavorable first quarter in terms of margins, we believe is the current scenario that there will be a reversal and that the reality of the year will be according to the historical standard of the company. So once again, thank you very much, and wish you all a very good day.
[Foreign Language] Thank you.
Fertilizantes Heringer's conference call is closed. You may disconnect your lines now. We wish you a very good day.