Kepler Weber SA

BOVESPA:KEPL3

Earnings Call Transcript 2023-Q1

[Operator]

Good morning, ladies and gentlemen. Welcome to the earnings video conference of Kepler Weber to discuss the results of the First Quarter of 2023. Here with us today are Piero Abbondi, Chief Executive Officer; Paulo Polezi, CFO and Investor Relations Officer; and Bernardo Nogueira, Commercial Director, who will participate exclusively in the Q&A session. We would like to inform you that the presentation is being recorded and translated simultaneously. The translation is available by clicking on the interpretation button.

For those listening to the video conference in English, there is an option to mute the original audio in particularly is by clicking on mute original audio. [Operator Instructions]. We would like to clarify that any looking statements that may be made during this video conference regarding the business perspectives of Kepler Weber, its operating and financial targets constitute projections of the company's management and these may or may not occur.

Investors should understand that political factors, macroeconomic factors as well as other operating factors could affect the future performance of the company. That could lead to results that differ materially from those expressed in such forward-looking statements. To open the results with the conference of the first quarter of 2022 straight. I pass the floor to Mr. Piero Abbondi.

[Piero Abbondi, executive]

Good morning, everyone. It's a pleasure to be with you once again for the video conference to discuss the results of Kepler. I start with the first highlight for the quarter, which was the net revenue of BRL 323 million, a 26% decrease when compared to the first quarter of 2022. And in spite of this, revenue for the period is second only to the first quarter of 2022. Sales was higher than all the other first quarters in the company's history. We observe a more adverse scenario that reduced the pace of activity in the rural producer segment. Partially offset by projects involving corporate clients. Paulo will provide detail on the performance of each segment later on.

With regard to performance, EBITDA was BRL 77 million, a margin of 24%, net revenue reached BRL 51 million, a margin of 26%. I would like to highlight the resilience of EBITDA and net income, which remained at healthy levels even in view of the drop in the level of activity in the period. On the strategic side, in March, we concluded the acquisition of 50 -- 50% plus one of Procer. The acquisition was a milestone in Kepler's journey and is part of the strategy to accelerate the digital journey, which since 2019, with the launch of the same platform has been seeking to further improve the customer experience with our brand.

Finally, we advanced in another quarter with an exuberant ROIC, reaching 80%, and we maintained a consistent level in this relevant indicator. I now turn the floor over to Paulo to explain the performance of the segment and the financial results for the quarter.

[Paulo Polezi, executive]

Thank you, Piero. Good morning, everyone. Before presenting the evolution of the business segment on Slide 4, I highlight their new repositioning in movement that aims to strengthen and focus on the performance on the various players in the post-harvest chain. In the new format, we classified those harvest customers into 2 groups, Farms, which correspond to the rumor producers of all sizes every business which refer to corporate clients such as trading companies, industries, corporative and serial growers.

On Slide 5, starting with segment Farms, which reached BRL 107.4 million, a reduction of 12.4% compared to the same period of 2022. We had a reduction in the average ticket due to the downturn in the price of steel. The scarcity of resources in the agri business lines such as PCA and the reduction in the value of commodities impacting agricultural income in the period. In business, we reached BRL 110.1 million, a 53% decrease compared to the first quarter of 2022 mainly as a result of the high interest rate scenario, generating lower business volume in the period when compared to the previous quarter. When we had deliveries of large projects that boosted our figures.

International business reached BRL 22.8 million a decrease of 39.7% compared to the first quarter of last year, mainly driven by the long-lasting drought in Paraguay, and the economic slowdown in South American countries since 80% of our exports directed to that region.

As to Ports and Terminals, net revenue reached BRL 31.8 million, an increase of 100% when compared to the first quarter of 2022, which was close to 0 due to a one-off postponement by a client due to its internal operational issues. This increase is the result of the delivery of important projects, including a large port terminal in Paranagua. Finally in replacement and services, we had an increase of 19.4% compared to the same distribution centers, sales of grain sorters, sales of specialized services, including training and the modernization of absolute -- obsolete plants.

On slide 6, we share some projects completed in the first quarter of 2023. And the project of Santa Rosa in Rio Grande do Sul , the compact layout allowed for a quicker execution and each operation of equipment allowing assembly to be completed in record time, meeting the customers' need to store the crop. The project Monte do Carmo in Tocantins service a region where production is experiencing strong growth, allowing for an increase in the customers' bargaining power in addition to saving on site.

In addition to another major problem in the region. The project Boa Esperance in Parana delivered in March 2023 is an expansion that allowed the producer to gain scale since there is a more robust flow now with the new equipment.

Now on Slide 7, we have Uige project in Angola with the constant presence of Kepler brand since 2004. We provide a complete project. Providing support during the assembly phase and to its commissioning and the ramp up. Finally, we described the El Socorro project in Venezuela. This is the first installation of silos for the client. Cooperate as a buyer of local corn Kepler is a reference brand in Venezuela with a constant presence in a strong after-sales services, which generates confidence to local customers.

On, slide 8 is a way of demonstrating the renewal of orders in the portfolio, we recorded the entry of 14 different supplies engaged in the quarter, which together add up to approximately EUR 178 million in new sales. In the table, we highlighted the entry of new projects in the Port and Terminals segment amounting to EUR 71 million in works. In an important Port Terminal in the northeastern portion of the country. Revenues will begin to come in second quarter of this year and will continue throughout 2024.

On Slide 9, we show the evolution of EBITDA in the first quarter of 2023, where we generated BRL 77.4 million, a reduction of 47.3% compared to the first quarter of 2022. EBITDA generation reflect lower operating leverage due to a naturally weaker seasonality in the beginning of the year as producers and investments tend to accelerate in the second half of the year with the harvest of crops and the grant of government financing lines.

Despite this scenario is a margin of 24% remained at a level well above the average of recent years, in line with good operational management practice and expenses under control. We show evolution of CapEx investments. In the first quarter of 2023, we had an acceleration of investments that totaled BRL 29.4 million. I would like to point out that BRL 27 million were allocated to expanding production capacity with of EUR 24.4 million allocated to the new powder coating line and $10.2 million to the acquisition of new production machines.

We also had BRL 400 million in the new project development, 1 million in IT and 1 million in safety app renovations. Cash generation remained consistent even taking into account the last favorable seasonability. Seasonality at the beginning of the year, ending with the quarter with a balance of BRL 318.6 million, contributing to maintaining the company's financial robustness. If loans are not considered, the net cash balance was BRL 147.3 million, which remained at a robust level even after the investment of BRL 50.8 million.

For the acquisition of 50% plus 1 share of gross share in the month of March. On like 12, highlight the improvement in the liquidity of our share. KEPL3 hold average month financial volume grew 16% in trade 16.2 million a day. As mentioned by Piero on Slide 13, we showed the ROIC for the first quarter of 2023, which reached the mark of 83.3% and 19.7 percentage points in relation to the first quarter of 2022 mainly due to the acceleration of investments in the period. I always remember that the high ROIC is one of the strengths of our business model that allows us to add manufacturing capacity with the need for larger investments.

On Slide 14, we show the payment of EUR 77.7 million in dividends paid on April 5, 2023, expanding the payout to 151% on a cash basis. With this, I finish my part and turn the floor back to Piero.

[Piero Abbondi, executive]

Thank you very much, Paulo. Before moving on to the question-and-answer session, I would like to point out some of the recent achievements and comment on our prospects for the remainder of 2023.

Firstly, I must stress the evolution of Kepler resilience in the face of more adverse scenarios such as the one we are experiencing, specifically in the segment of rural producers. Even so, both sales and profitability remained at levels above the historical average. We also celebrated the completion of the acquisition of 50% plus 1 share of gross share wage, in addition to increasing recurring revenues in the segment of replacement services will allow us to several avenues of growth linked to the increase in the connected customer base, which already accounts for 13% of aesthetic storage in Brazil.

Finally, I highlight the repositioning of the company's business segments. Involvement that aims to strengthen and focus on the various players in the post-harvest chain. Highlighting the brand's strong performance from origination to domestic consumption and exports of agricultural products. As prospects for the year 2023. I mentioned that Brazil project a new grain production record in the '22/'23 crop with 313 million tons. This level will demand new projects and we are preparing to capture all the opportunities that will arise. Demand continues to be positive. Especially for corporate customers from agribusiness, cooperative, important terminals. They will provide good opportunities to mitigate this lower pace of rural producers and the consequent maintenance of capital activity level in 2023.

In our favor, there is also less pressure from material costs together with actions to reduce expenses and costs, contributing to the delivery of good profitability in the year. With this, I conclude the presentation of the results for the first quarter of 2023. Please, operator, we can proceed to the question-and-answer session.

[Operator]

[Operator Instructions] The first question comes from Fernando [indsicernible] with XP.

[Unknown Analyst]

Good morning. Congratulations on the results. We have 2 questions on our side. The first is related to the demand for product post harvest, especially for farm and agri business. We saw that the revenues were to be depressed in the first quarter compared to last year, but I would like to mention how you see the demand for the quarters to come for the year? Especially the seasonality, which is more concentrated in the second half, as you have just mentioned.

And the second part would be about for Procer. You mentioned the release that contributed with BRL 4 million in for replacement and services. Since its consolidation, could you provide more information on the integration process is going? And how much value can you still capture for the year? Thank you.

[Piero Abbondi, executive]

I'm going to start answering the question about the market for 2023 and then Bernardo will complete and provide more details in relation to Procer, Paulo will be the one to answer about.

First, to talk about demand in 2023, we see that this will be a year where we'll go back to normalcy. 2022 was an exceptional year. We worked at 100% of capacity for different reasons, but it was a very heated year, and the demand was very stable year, especially considering the delivery date both for us and for an industry. This year, we go back to normal in the sector with a weaker net for the first half of the year. And then after the progress completed, the rural producers will resume the purchases, and we will plan the new crop that will be '23/'24.

So this is where we see a stronger demand, a great agribusiness and we call CPF, which are companies who was planning is more regular along the Europe agribusiness, Ports and Terminals as well. And as for rural growers, we see that demand is going to be a little bit pushed to the future. We have seen lots of interest, lots of locations. And we are going to use the next months to prepare for the other quarters. This is exactly what used to happen in the past. And this is just a natural movement that we see in our market.

I would like Bernardo to provide more detail. Maybe he could give some example. It would be very niche to have some examples.

[Bernardo Nogueira;Commercial Director, executive]

Okay. Okay. Great. Fernando, thank you very much for the question. [indiscernible] is going to be a year where we go back to normal. '22 was an exceptional year, but we believe that '23 is also going to be a very strong year even though we're going to go back to normal change with, we see a very heated demand, and there is a level of ambiguity, high interest rates and soybean prices had an important drop in the last 6 months.

But on the other hand, we added more than 40 million tons this year. So we reached 333 million equivalent to the whole soybean production of Argentina so while the reducer has -- is facing high interest rates and its difficulty to make investments. On the other hand, we see that the agri businesses, the major cereal producers are operating at a record. And we have seen 2 major crops. The first crop is higher than our static capacity. So we see that there is going we see a very strong room and we see investments coming in. And this is a big challenge we are facing. And it's important to mention that for the next crop, consultant say that we are likely to grow even more. So we are going to go to 330 million tons. And we are likely to reach to 400 million tonnes in 2024. So this is way with no return, we need to have a continuous demand for solutions for storage.

[Paulo Polezi, executive]

Okay. Okay. Fernando. Thank you very much for the question. We need to talk a little bit about Procer. The first point is that we had in the balance sheet in the materials, we saw the consolidation of the revenue of Procer as of March as we said, 50% plus 1 share that allows us for the complete consolidation of the results. So in March, Procer had a net revenue close to BRL 5 billion, and this was according to what we expected. And we'd like to remind you that all those who are following this acquisition process.

Just for us to have an idea in 2022, Procer had sales of BRL 60 million and at the margin of 26%. So it's a company that works in the field, small equipment, connecting clients and customers and allowing services to be provided. And we provide the [ termimetry ] services. It's an equipment company and also technology, all operating together. The integration has already started. This is part of the question. It started in March and going to have different phases. The planning was with a lot of detail for series in [indiscernible]. So the main plant is located in [ Penang ] and [indiscernible]. But the main areas which are the operating and the commercial areas are already operating in an integrated manner.

The main cases is the following. The main factor that led us to acquire Procer the possibility of connecting the plant in Brazil according Colombia's data, the approximately 17,000 plants. And Procer has about 12% of the extending capacity. And with is, when we put all those forces together, we are going to go after this market. We are not going to reach the 17,000 plant to that because not all of them are ready to be connected, but we are on this journey. And the prospects for the year are the following. We expect to grow very strongly because Procer has grown a lot. And also in 2022, as the automation, this is a year when we go back to normal. So Procer, there is likely to have a level of activity with similar to ours. We the first half with revenues and a slower pace and a stronger second half.

So we have important plans for Procer this year. We're going to accelerate as businesses get integrated. If there's anything missing Fernando, please let us know. Thank you.

[Unknown Analyst]

No, it was very clear. Thank you very much.

[Operator]

The question comes from Renata Cabral with Citi.

[Renata Fonseca Cabral Sturani, analyst]

Hello, everyone. I have 2 questions on my side. The first one is in relation to the evolution of the commercial part to the pipeline in relation to the first quarter of 2022 and 2023 revolution, probably, you would compare those periods, member of clients and segments because we imagine that there were in some sort of exchanges considering the credit conditions and this information would help us a lot. The second question is about the credit positions, there's a delay to the PCA environment with NDS, Development Bank announced another line. I think the announcement happened last 3 weeks ago. I'm not sure and I have a question in relation to the group Fiagro of you. Was it possible for you to finance any project? Thank you.

[Bernardo Nogueira;Commercial Director, executive]

Our pipeline is very robust. We have been monitoring. We have tool in the CRM that we used, and we have all the tools in the backdrive, and we use this tool in order to monitor this. So we observed a growth of 10% of new entries of interest and also in the accumulated period. As the opportunities come in, we negotiate and we win some businesses, we do some businesses, but we saw that the entry of orders was higher than the first quarter of last year.

However, the orders are not being completed. They are not being closed, we are not winning, we're not losing. Maybe there's some uncertainties in the political arena or maybe the interest rates are playing it too. And -- on the one hand, the pipeline is growing because we know that when conditions grow, we have the full house in order to bring in business into the plant or into the house, into the business. So this is a snapshot.

In relation to the mix, we can see clearly, as we mentioned before, with this record crop of 313 million tons even if the producer is facing in a moment where he's going to hold back investments, the remainder of the chain will have to invest, when we think of the cereal grower and cooperatives. There are a lot of demand. This thing happens to the Ports and Terminals. Estimated that soybean exports, we grew by 22%. So we need capacity. Our clients make capacity to do this. So the mix is migrating to other corporate -- corporations such as Ports and Terminals.

In the first half of the year of this year, we saw growth in Ports in the report, we closed another business of more than BRL 70 million and up worth in the state of Bahia. And this is a movement that we see for this year, a very strong growth in corporate clients. And there's something I would like to add, which is very interesting, which is related to or replacement and services, which is very similar to -- which is closer to the OpEx than to the CapEx of our clients. We have 7 distribution centers from Rio Grande do Sul to [ Ara ], and we are invoicing them directly to our clients. The Board has approved the completion of other 2 DCs, and this will bring us premium relationship with our clients, and we'll be closer to that.

So we are going to be attentive to costs. We're going to do a very good management. So we are no longer using severities as we did last year. But still, we're going to have a 2023, very robust in terms of results as well.

[Paulo Polezi, executive]

This is Paulo speaking. Could you ask again your second question? To make sure we understood it well.

[Renata Fonseca Cabral Sturani, analyst]

Yes, I would like you to make some comments about how you see the credit conditions for the sector, especially for storage, which is our business, right? Considering that the PCA is being held back by the government, but there was credit that was granted by the development bank, the NDS and this happened recently. And I would also like to know about the Fiagro that was announced in December. Is it operational? Or can we expect it for the second half of the year.

[Paulo Polezi, executive]

Thank you very much for the question, question was very clear. Yes, we are waiting for the next software plan. And this usually happens in the beginning of June. So we are about 60 days away from the date. The announcement of software plan was very important for us. However, as we have mentioned before in other calls, this these funds had not reached the end player. And this explained partially what Bernardo has just explained. We have a robust pipeline of orders, but their materialization is much slower because the credit has not reached us. So this is something that is still at way. We do not have a lot of funds or resources available in the market. The amounts available are very limited. So it seems that everything will have been only after the announcement happened in July.

And those who dialogue with the government as a representative of sector, especially on the [indiscernible], we understand there is an agenda that is being built on the deficit of storage capacity has been discussed and all the problems that we have been facing waste and losses. So there is a request every month and there is an amount that has been requested, which is BRL 17 billion for the storage and that would encompass captors business. The sector understands that this is necessary order to decrease the problems that we are facing now. And everybody -- everybody is expecting this announcement as we have since the plant started.

And you also asked about the new the NDS line. Yes, we celebrated that announcement. It comes at the moment when reaches this period when we do not have a lot of resources or funds available. It's a very important amount that was announced, the development bank, the MDS said that in May, we will provide more detail about the conditions for the loan. And as of May, the credit will start to be granted because difference. The term, the interest rate is very good, 7.59% a year, that's a very accessible interest rate. But there is a new -- there's a line which is in dollar. It's lines that BNDES will demand the client to be an exporter.

But we see this in a good way because an important part of the client base is competitive exporters. And another part also have to face those currency variations. And this is a complementary fund. It's not at software line, but rather the BNDES. And [ Artis ] operational is available in the market. It tries to reflect the conditions of [indiscernible] plant 10 years of period. And this year, we collaborated the first ticket about BRL 7 million. The first force that was funded by the grant with good interest rate conditions. And next week, we are going to have a trade fair in the City of Ribeirão Preto and good conditions will be offered to those clients that adhere to our Fiagro. As interest rates drop, our Fiagro will become even more attractive to our clients, okay?

[Renata Fonseca Cabral Sturani, analyst]

Yes, it was very clear. Thank you very much. Have a good day, everyone.

[Operator]

Our next question comes from Charles Monteiro with Elevate Capital.

[Charles P. Monteiro, analyst]

Hello, everyone. Good morning. Can you hear me?

[Unknown Executive]

Yes, Charles, you may proceed. We can hear you well.

[Charles P. Monteiro, analyst]

Before anything, I would like to congratulate you on the excellent results of the company. Any factor I have 2 questions. The first one going into detail in the quarterly results. We saw an increase when we see the invested capital in goodwill and intangibles. We see that part of the contribution should be related to the acquisition of Procer as well. On those lines and something that drew my attention was the announcement of the ROIC. So how do you imagine the impact of position of Procer when we look at return that it may generate and also the impact on the ROIC indicator.

[Paulo Polezi, executive]

Thanks for the question. You ask your questions. I'm going to answer in that, and Bernardo can add if he feels like it. Beginning with ROIC, Kepler delivered a record more than 80% in return on capital employed. So we performed a very high ROIC and this is allowed by our business model. And why is it significant? We are a company which works with good profitability with growth. Good growth opportunities and no need for capital to increase this capacity to capture this growth.

So as I always say to the analysts and investments, those who had the opportunity to visit our operations. We have a visit plan. It's wanted to understand and see how our operation will happen with -- we add capacity to our machines in a modular way. This allows us to grow with a very ROIC. Procer, of course, is a company that does not require a lot of capital. Procer is a more technological company. So it uses resources and research and development area. And it helps us in the pipeline, and it brings us added profitability, and we have lots of synergies to be captured. We are going to work so that this process margin can be expanded. And this will only improve our ROIC to be better.

And in relation to the second part of your question, goodwill intangibles and based on the quarter report. Yes, this was as a result of Procer. After M&A, we acquired 50% and the other 50% we have an option to acquire up to the end-- so it would be like an application. When you do this process, you also consider I mean, the consultants that did the study, they consider the full amount of Procer. We made an acquisition of 50%, but for book-related already considers the other 50%. And this is a value that's going to be built in the next 5 years. And this is already mentioned the results. And this is why you see this in intangibles and goodwill. This is the reason why you see it in that line.

[Charles P. Monteiro, analyst]

Okay. Perfect Paulo. Thank you very much for the question. It was very clear.

[Operator]

Our next question comes from [ Hermine ] with [indiscernible].

[Unknown Analyst]

Moving on to the next question, I would like to do a follow-up on the previous question that was answered by Bernardo. Could you segregate in each business line, what would be major producers and how many are farms that would help me understand the dynamics of the that was used for this year. Another point I would like to understand CapEx related to the revenues since last year was an outlier according to the figures that were announced. Can we expand this drop in sales across the year? Or do you think we can recover this by the end of the year? So these are my questions.

[Piero Abbondi, executive]

For the question, we are not going to start as [indiscernible] in the end, the question about the dynamics for the year. As I mentioned at the beginning of the presentation, in 2023, we're assuming a normal seasonality of 4 segment. So we have in the first half, in the first quarter, Usually, the start is lower, and it accelerates as of the second quarter in terms of sales and invoicing for the year. So this is part of the dynamic of the rural producer they closed the account in the end of the second crop. And then there is the planning for the year. And the producers year starting July in the agriculture year. And this is why we are aligned with that.

Now answering your question without any doubt, this year, we are going to go back to normal conditions. And our expectation is to -- everything shows that at least -- we see that our pipeline is full better than last year. So the expectation is to have a second half of the year, which is very positive. If we compare to last year, last year was an exceptional year because we have a very extended delivery date at the end of the previous year, had consecutive increase of steel prices, so our clients were interested in closing the business before prices went even higher. So we closed that more stable in terms of production.

I would also like to mention the importance of implementing and manufacturing for us that made us prepared for us to have a response, which is much more adequate and quicker to any production variation. So the plants have the capacity to make quick adaptations and prepare for a stronger second half and meet the demand at the proper level.

I turn the call to Bernardo for him to answer the question related to the segments on post-harvest, domestic market, and we broke down rural producers, farms and agribusiness, which include all the companies.

[Bernardo Nogueira;Commercial Director, executive]

This segmentation 70% was post-harvest, and they have 2 main objectives. First is to align the company for each kind group. So from commercial up to the plant, we are going to have a very well aligned activity, including all the players when we think about the producer. So they start buying at 300 hectares and you go all to the other side as major players such as [indiscernible]. So we have very distinct engineering projects, and we are very close to all those players.

The second major objective is to have transparency with our investors and analysts so that everybody can understand the moment of the market so that we can have a very clear communication. It's very interesting to see our mix for the year. So we mention ambiguity during the presentation. On the one hand, high interest rates, soybeans, prices very high. And all this would affect the sentiment of the producers. On the other hand, we have a Argentina [indiscernible] into Brazil. So we added our production to this size of Argentina. So we have a demand and need for transport of grains and the whole chain will need to make investments and in order to meet this new demand, there's growing demand.

As we can see in the portfolio, we can see that there has been a downturn of business that were closed with producers, and there is also the number of new companies operating. So this is something that has been built by Kepler in the last 5 years, which is related to our resilience. If we had all the ads in the same basket, our results would be much more major. So we have this resilience as a result of everything we've done, and we are present in the -- across the whole chain.

[Operator]

Your next question was received from Marcelo [indiscernible] with [indiscernible]. What's the strategy for the company in terms of technical assistance.

[Bernardo Nogueira;Commercial Director, executive]

We are very enthusiastic about the opportunity that we have ahead of us. We are entering a new era of connected silos, if we think 20 or 30 years back, Kepler would sell a unit and would meet the requirements at the dealer and now what we have after this journey is that we have more than 1,000 units already connected. So those clients are going to be connected to Kepler forever. And that would generate dozens of opportunities. I'm going to summarize in 3 major opportunities.

First, added value. So you have IoT technologies included. And together with IoT, you have -- we have leaders come back together. We cover for 80% of the market. We have more than 80% of visibility in the market as a whole. Putting the 2 companies together. And this, we have this opportunity to add value. The second major item which Procer brings into play with the management of conservation of the grains. So an average producer has BRL 30 million stored on the farm. So he has to be sure that all the grains are going to be well taken care of. So with Procer there will ensure a recurring revenue for the great cultivation.

And there's another aspect which is very important of our capital and also to our clients as well, which is the management of the unit. With the IoT, this intelligence, to lean a tree [indiscernible]. Inside the silo, our client will be able to have visibility of all the management of the unit, efficiency, preventive maintenance, they do not need to wait for the profit. For example, I was talking to [indiscernible] as a trading company and they mentioned that they said that there is something which is burst always in the middle of the crop. Like to, we will always break in the middle of the crop. And I said that's what we here for, we are going to do preventive maintenance. We are going deal all the data so that the best decisions will be made. And we are going to be a part of this transformation.

As I said, I'm very enthusiastic last week, we had a meeting maybe could mention about it. We had a strategic alignment meeting last week, which was very fruitful that gave us a very clear direction for the next step, the next 3 or 6 months of what we are going to do. And I would also like to invite you, [ Marcelo ] and everybody attending the call. We are going to be in the agri show in the city of [indiscernible]. We need to have a both Procer and Kepler side by side, and we're going to have -- we're going to be able to share everything that we are discussing with you now in this event.

[Operator]

We received the question from [indiscernible]. Considering that there was a downturn for the products of the company. So how much of the share buyback has been completed?

[Paulo Polezi, executive]

Thanks you for the question, our share buyback was approved by the Board last month. And then we started our silence period. We didn't have a lot of time to repurchase or rebuy the shares. It's a program that's going to be open on the year. So every day, we are monitoring the market. And as we understand, the reason to do the buyback, we will do that. We have already got 1 digit, and we are going to continue this process.

[Operator]

Your next question comes from Josephin Mendez.

[Unknown Analyst]

How is the company operating in the North region, especially in Ports and Terminals.

[Bernardo Nogueira;Commercial Director, executive]

Thank you very much for the question. Prospects are excellent. As you saw in the release, we completed the project in Bahia. In the growth of the agricultural is in the North region. We installed 2 distribution centers in [indiscernible] as we mentioned, we have the Board approved to bring into other distribution centers in the area. So we have major product for the northern region of Brazil.

[Operator]

Our next question comes from and [indiscernible] with [ Leute ]

[Unknown Analyst]

What were the main changes at the company that would justify for the investors to disregard the lack of success in the past.

[Piero Abbondi, executive]

Thank you very much for the question. If we look at Kepler's history, especially in the past few years, you can see that our focus was on profitability to make the company profitable, keep it in healthy levels. Leverage the potential it has a core number to go into details, so we have this top of mind. We have an excellent coverage. The product portfolio is excellent, products are recognized as being quality products, we are very good at providing solutions. So our branding was focused on profitability and then focus on the sustainability of this profitability. I'm not going to go into all the details, but we had actually in all areas of the company, especially to maintain this sustainability of the profitability.

So as Bernardo mentioned before, coverage in the northern region, we have an additional area, which is focused on the next [indiscernible] we have all the area of technical assistance of both sales in our segment. If we look at 5 years ago, we had a very big increase in the revenues, and we are not selling at EUR 250 million, and we are likely to reach BRL 500 million. So we analyzed separately, Farm and agribusiness because the go-to-market is -- the dynamics is different. Everything leads the company to be stronger in order to maintain the good margins to have good management of the market and responding quickly depending on the challenges that are close to.

Us. And there's also the internal points of the company, such as lean manufacturing, cost management. There are many actions being taken and human resources, personnel, we have a big concern to have a motivated team to have a team that is being developed. We are the 17 best company to work for in [indiscernible]. So there are many actions that take the company to a different level of management. And this is all bringing more resilience to the company in order to face up to the adverse scenarios that we might have to.

[Operator]

The next question comes from John [indiscernible] Silva. Is it possible to think about entering dividends for the next quarters?

[Paulo Polezi, executive]

Yes. Thank you for the question. For me to answer your question, I'll have to go back to what Bernardo [indiscernible] said. 2023 is a year which is likely to be very successful to the company. 2022 was an exuberant excellent year since we managed to pay dividends in both half of the year since we have a very robust cash generation. Cash generation will continue to be robust, and it will allow us to pay dividend for this quarter for the half of the year. We are going to discuss this and the Board. Piero, can you continue, please?

[Piero Abbondi, executive]

Okay. I'll take over since Paulo cannot speak now. We are constantly evaluating what to do with our cash, we are going to reevaluate in the second half. What we're going to do with our cash as we did in 2018. And now talking about investments, which is part of your question. I would like to say that we are constantly allocating the cash of the company if we're going to distribute more dividends or if we are going to invest in projects for automation, technological improvement, gaining productivity, gaining capacity of stock buyback. So we are considering all these, all the possibilities we are going to stop and evaluate what to do with the cash. And then we are going to define to define what we're going to do with the cash.

Last year, we allocated a large amount to the payment of dividend and also to the renewal of the of the production. So as Paulo said, we do not need a lot of investment in order to increase our capacity. So it's a constant management of -- on how we are going to allocate the cash of the company.

[Operator]

[Operator Instructions] [ Mercalo Bernani ] has asked the question as follows.

[Paulo Polezi, executive]

I'm going to summarize Marcelo's question so that we can answer it. In the earnings call in the fourth quarter of '22, you mentioned margins on sales, which would be similar. However, in the first half -- in the first quarter, there was a difference in the revenues and [indiscernible] has what happened, et cetera. So we're going to make some comments? And he asked if the company was aware that we would have a quarter with which would be lower than that of last year? So he is asking about our direction and comparing the 2 period. So he asked about the difference of sales and revenues and income.

So it's a little bit of what we mentioned in the call, but we [indiscernible] those topics. Would you like to complete anything? No? That's okay. Go ahead.

[Piero Abbondi, executive]

As Paulo mentioned, we do not provide guidance. So we look at the perspective across the year, we continue very optimistic for 2023. And in terms of comparisons we have to say that the seasonality that might .I mentioned that last year was very [indiscernible] in terms of including constant demand. This year, we go back to the normal [ sale ]. We are very optimistic in relation to 2023, everything is very favorable, both for the results of the first half [indiscernible] considering that we have record crops and we have a lot of problems [indiscernible] terms of storage. We believe that [ PC ] is going to be very strong, and we are very close to the government and with the Ministry of the Finance to show how [indiscernible] report in order play a good role in food safety and other aspects. So we are very optimistic for 2023, and it's obviously going to be more concentrated in the second half of the year.

[Operator]

One question came from [indiscernible]

[Unknown Analyst]

I would like to know what would be the perspectives for the International Business Segment. Thank you.

[Bernardo Nogueira;Commercial Director, executive]

Thank you very much for the question about the International Business. This is a segment which is very focused organization. We have a leadership in Brazil and also in Latin America. Our main market for exports in Latin America is Paraguay and there are Brazilian producers who plant in Paraguay, and there was a very significant drought and that effected the demand. So we are always trying to look at the [indiscernible] of our team was in South Africa in April and we are going to take part in Agri show in South Africa in May together with [indiscernible].

So we look at the African continent in a very positive way for our international business, and there is also important negotiation going on, and we -- we'd like to share with you in the next earnings call.

[Operator]

The question and answer session is closed. We turn the call to Mr. Piero for his final remarks.

[Piero Abbondi, executive]

Thank you very much for the interest in our company. I would like to summarize, say that we are very optimistic, as I said, for 2023. We delivered good results in the first half of 2023. The external scenario is very positive. We have a record crop of 313 million tons and prospects are that we have another record crop reaching BRL 313 million. We are also monitoring the profitability of the producers. And we are on the watch out in terms of the cost of imports. So the profitability of the growers will go back to very good levels and without any doubt this is going to be disastrous our business.

There is a big confusion in commodities in the market, especially in the past 15 days with negative premiums. People are facing difficulties with the crops. Prices in Brazil dropped more than the prices of Chicago. So Chicago's prices are stable, and the premiums in Brazil are very high. And the solution to that is to have enough storage capacity, the grower that can store for 3 or 4 months without any doubt, the prices are going to be much better. So the producers [indiscernible] is going to drive our sales in the next months. And this is what we are looking at. We see a lot of interest. We see that the pipeline is very large, transportations and we are very optimistic.

In the Internal side, do we see that the company is doing its homework. Prepared for this growth, we are delivering good results. We made improvements and significant in that few years. Showing the resilience as the company.

So all the segmentation strategy, we are focusing more on agribusiness and farms to the deliver specific value to those segments. And also with different dynamics the way we sell the projects themselves, we are concerned is to deliver higher value and we want to continue to be a premium company with a price differential considering the capacitors, all those sales and technical systems in the RNS. All this has been growing significantly. And now we have Procer and a lot of initiatives and services we see a lot of potential of growth in this area. We are at plans, we implemented lean manufacturing. We enhanced cost expenses. And this led the company to become even more resilient. We are covering territory. We are capturing cross opportunities.

Bernardo has just mentioned International Business. We are also going to new territories. Procer will allow us to meet our clients in a better way and provide more services as well as making more sales of technical systems related to our products. And we are going to open new opportunities in digital services to the rural producers, those who have a post-harvest plant, we are very prepared. We are very optimistic. We are going to continue to build this competitive edge. Kepler has this price premium, we also have this competitive advantage, and we are going to continue along this line in order to deliver good result and better value to our clients and shareholders.

I would like to thank you very, very much for attending this event. It was an honor to be here with you. We changed the format a little. I think it was very nice to be able to be with you closer and I would like to thank you for your attention, and I hope to see you in the next call. Have a nice week, everyone.

[Operator]

The earnings conference of Kepler Weber is now closed. Should you have any questions, refer them to the Investor Relations team via e-mail at ir.kepler.com.br. We would like to thank you for your participation, and have a nice day.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]