Fertilizantes Heringer SA
BOVESPA:FHER3
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Fertilizantes Heringer SA
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Good morning. Thank you for standing by. Welcome to Fertilizantes Heringer's First Quarter 2023 Earnings Conference Call. Today with us, we have Mr. Daniil Sergunin, Fernando Maeda and [indiscernible]. I would like to inform you that this event is being recorded. [Operator Instructions].
Before proceeding, let me mention that any statements that may be made during this conference call related to the company's business outlook, operating and financial projections and goals are based on beliefs and assumptions of the company's management and on information currently available to the company.
Forward-looking statements are not guarantee of performance. They involve risks, uncertainties and assumptions because they relate to future events and therefore, 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 performance of the company and lead to results that differ materially from those expressed in such forward-looking statements. Now, I would like to turn the conference over to Mr. Daniil, who will start the presentation. Please go ahead, sir.
Good morning, everyone. Thank you for joining us today. We will begin as usual with our results and our volumes. In the first quarter of 2023, which was substantially higher than in the first quarter of 2022. We posted growth of more than 55%, and this volume is the highest of the first quarter of the company since 2018. It's very important to highlight this growth in the results of the company.
The main crops that contributed to this significant increase were corn, which increased by 100% compared to first quarter '22; and coffee, growing by 67%. Another important point is that despite the growth observed with these commodities, we maintain diversity of our crops as you could see on Slide 4, which is on the screen right now.
Now on the next slide, when we talk about the mix of delivered products, we can see there was a significant increase in conventional crops. Despite increase, it's also important to highlight an increase in absolute numbers, deliveries on specialty products. We understand that the increase in the share of conventional products is also owing to the lower investment in technology by farmers.
We believe this is just a one-off event, and it doesn't change our intention to keep on growing in specialty products as well. Now I give the floor to Mr. Fernando Maeda.
Thank you, Daniil. On Slide 7, on the top line of the table, we can see once again, our volume already shown in previous slides. And this is why we noticed an increase of about 56% when compared to first quarter 2022. As for net revenue, in the first quarter of '23, there was an increase of 12% year-over-year, moving from BRL 1.23 billion to BRL 1.38 billion.
This growth is mostly due to an increase of the volume delivered in this period since the amount of average sale went down, basically owing to lower prices in the fertilizer market. Gross result in the first quarter was negative at BRL 56.4 million, a gross margin of 40.1%, lower than the first quarter of 2022, which posted a positive gross revenue or result of BRL 135 million, a positive gross margin of 11%.
The constant reduction of prices in the last 6 months led to a lower margin in sales of products, which, in some cases, were below the average cost of inventory acquisition. A secondary factor for the lower margin in the period, we also have the growth in volumes and market share gains by the company and also the mix of products this quarter with a higher share of conventional products as we've shown on the previous slide.
And for EBITDA, in the first quarter of 2023 was negative at BRL 139.5 million, a negative margin over revenues of 10.1% lower than first quarter of 2022, which was positive at BRL 85.1, a margin of 6.9%. EBITDA was also impacted by growth result and adaptations in the company's restructuring to increase our deliveries. On the next slide, Slide 8, we show a breakdown of financial results in first quarter 2023. The main highlights, which influenced the financial results are unrealized exchange variation of BRL 38.8 million in first quarter '23, resulting mostly from the exchange variation of debt from the judicial recovery denominated in foreign currency, owing to appreciation of 2.6% of the real vis-a-vis the dollar.
Please note that this debt in foreign currency related to the traditional recovery is a long-term debt and payments begin in December 2023. In the interest on loans and other financial expenses line, expenses in the first quarter of '23 totaled BRL 29.8 million, a reduction of 36% vis-a-vis BRL 46.7 million in the same period of last year.
This reduction is mostly due to the new financial structure of the company's working capital. On the next slide, Slide 9, we show the company's cash flow in the first quarter of 2023. If we compare the numbers of the period, we can see that by the end of the first quarter, the company [indiscernible] cash and cash equivalents amounting to BRL 35.7 million. The main items that make up this result are the negative result before income tax and social contribution of BRL 141.9 million.
Non-cash impact expenses totaling BRL 53.3 million, mostly comprised of inventory provisions and ADA. In the cash flow of operation activities we had influence of seasonality of crops, leading to a reduction in asset accounts amounting to BRL 504.5 million, basically concentrated in inventory accounts and reduction in liability accounts totaling BRL 418.2 million, mostly comprised of suppliers.
In addition in cash flow, net of investments, a negative variation of BRL 19.9 million and cash flow from financing activities, a negative variation of BRL 4.5 million, therefore, closing the period with a negative variation of BRL 26.6 million in our cash flow. Once again, I give the floor back to Mr. Daniil.
As usual, we show price evolution in raw materials, the 3 main raw materials. And as you can see on the slide, particularly for MAP, pricing seems to be stable in the first quarter of 2023 and also a drop in prices for chloride and urea. This is what we show on Slide 11. As for domestic grain production planted area and our results, here, we can show [indiscernible] for 2022 and 2023.
This is the estimate use of fertilizer, 41 million, slightly lower than the previous year. Like we said in our previous meetings, there are several drivers, several factors that led to these numbers. In terms of productivity and also an increase in raw materials in a very significant manner. And now we move on to the question-and-answer session.
[Operator Instructions]. There are no questions. So this concludes Fertilizantes Heringer earnings conference call. Should you have any questions, the company's IR department is at your service. Thank you. Have a good day.
[Statements in English on this transcript were spoken by an interpreter present on the live call.]