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Good morning, ladies and gentlemen, and thank you for waiting. At this time, we'd like to welcome everyone to SLC AgrĂcola's First Quarter of 2020 Earnings Conference Call.
Today, we -- today with us, we have Mr. Aurelio Pavinato, CEO; and Mr. Ivo Marcon Brum, CFO and Investor Relations Officer.
We'd like to inform you that this event is being recorded. [Operator Instructions] Also, today's live webcast, both audio and slide show, may be accessed through the SLC AgrĂcola website at www.slcagricola.com.br, in the investor relations section, by clicking on the banner webcast 1Q '20. The following presentation is also available to download on the webcast platform. The following information is available in thousands of Brazilian reais and IFRS, except when otherwise indicated.
Before proceeding, let me mention that forward-looking statements are based on the beliefs and assumptions of SLC management and all the information currently available to the company. They involve risks, uncertainties and assumptions because they relate to the future events and therefore depend on circumstance that may or may not occur in the future. Investors should understand that general economic conditions, industry conditions and other operating factors will also affect future results of the company and could cause results to differ materially from those expressed in such forward-looking statements.
Now I will turn the conference over to Mr. Aurelio Pavinato, CEO.
You may proceed.
Hello, and thank you all for participating at SLC AgrĂcola's Earnings Conference Call for the First Quarter of 2020.
Let's take a look at Slide 3, please, where we will begin by addressing the COVID-19 situation. The company responded quickly and prudently by forming a crisis committee, which was made responsible for preparing and continuously monitoring our contingency plan and a response guide, which are 2 important tools for identifying the risks and vulnerabilities and for establishing the protection, control and containment measures in the case of any spread of COVID-19 in our operations. The main actions implemented are described on this slide. We clarify with satisfaction that, to date, we have no detect any case of COVID-19 among our employees.
On Slide 4, we argue that the operating units are naturally isolate given that they are locate in rural zones with a certain distance from the nearest small towns. In addition, the geographic distribution of the units has also proved particularly useful for dealing with certain situation since it reduces the risks of contagion and therefore the risk of any impacts on operations. Our business is part of an industry considered essential, if regarded to the continuity of its operations. However, the operations are subject to any constraints in the supply and distribution chains that could be imposed due to the pandemic. Nonetheless, we note that, to date, no restrictions have been imposed that could cause impacts on the normal functioning of our processes.
In relation to possible financing impacts, let's move on to Slide 5, please. At times like this, concerns with cash and liquidity preservation, financial leverage and cost control efficiency are naturally heightened. In this sense, it's pertinent to note that the company started the current crisis with a very comfortable leverage situation, closing first quarter '20 with a net debt-to-EBITDA ratio of 1.9x. The company's debt is 100% denominated in Brazilian real. And '19/'20 crop year presents excellent results in terms of yields.
The CapEx plan was revised to further preserve capital.
In light of the restrictions currently in force on the movement and gatherings of people, the company's Board of Directors, upon recommendation of its Executive Board, in a meeting held on April 9 decided to postpone the date of the Annual Shareholder Meeting to July 29, 2020, which originally was convened for April 29, 2020. Moreover, the Board of Directors approved the AGM's distribution of a mandatory annual dividend, based on the company adjusted net income for the fiscal year ended December 2019 in the amount of BRL 73.7 million.
Now we can address Slide 6, please. Here we present possible impacts in our market. We believe that 2 key factors should be taken into consideration in this case, the logistics chain and the fulfillment of agreements. In both case, the risks present are significant, but have not yet occurred in practice. To date, there have been no significant disruption in the export logistics. On the contrary, Brazil has posted new records in export volumes. Contractual compliance has in its original the strong correlation between the way negotiations are conducted and the players chosen as commercial partners.
Now let's move to Slide 8, where I will comment on our operational performances.
This is the end of our soybean harvest. The final yield of -- for the '19/'20 crop year was 3,900 kilograms per hectare or 65 bags per hectare compared to 3,840 kilograms per hectare report in March. The final yield was 8.1% higher than our initial estimates and 19.4% higher than the national average based on May 2020 estimates from Conab report. Note that, for the third straight year, we set a new yield record for this crop, which is in line with the company's current strategy to focus on maximizing operating efficiency.
The cotton and corn crops are currently in the ball and grain-filling phase, respectively, and are presenting high yield potentials.
Now we can go to Slide 10, please, where I'll make some comments on the international prices of our main products.
The first quarter of 2020 registered sharp volatility in international cotton prices. The economic uncertainties generated by the pandemic, which have readily affect markets in general, led to declines of over 20% in the U.S. dollar prices of this fiber compared to that -- to those at the start of the year. However, price recovered over the course of April and currently are down by around 16% from January. The drop in commodity price over the course of the year will impact decision-making for planting-introduced countries in the northern hemisphere, notably United States, which currently are in the early phase of sowing.
Soybean demand, however, has proved resilience, especially due to the recovery in Chinese imports driven by expectation of rebuilding in the pig herd which has been the main factor supporting prices especially after the past cycle marked by the U.S.-China trade war, which contributes to this scenario of depressed commodity prices in international market. Following the USDA supply-and-demand report released in the first few months of the year, the agency revised upwards its expectations for Chinese soybean imports by approximately 13% from the initial estimate of 85 million tons to 96 million tons.
In corn, in the international scenario, the drop in corn price of approximately 15% compared to the first days of the year reflected in large part the expectations for weaker consumption in the United States, notable because of the shutdown of corn-based ethanol plants and the result increase in the current estimate ending stocks. In the Brazil context, the market proved robust throughout the first quarter due to the demand from the animal protein sector and from export markets.
I will now pass it over to the colleague, Ivo Brum, CFO and IRO Officer, for the comments on the financials for the quarter.
Hello. Please, let's move to Slide 12, where you show highlights of the income statement.
The net revenue advanced 2.2% from first quarter 2019 despite the 4.5% decline in the volume invoiced. For cotton lint, our product with the highest added value, volume invoiced was 23% higher than the first quarter 2019. Except for soybeans, our crops registered increase in unit price compared to the year ago quarter.
Adjusted EBITDA was BRL 183 million, 20% lower than the first quarter 2019. The main factors contributing to this variation in the adjusted EBITDA were the lower soybean volume invoiced and the lower margin of cotton invoiced compared to prior quarter. The lower margin on cotton is explained by the crop's lower yields in 2018/'19 crop year versus 2017/'18 crop year and by the increase in the cost per hectare between those periods.
Net income, however, climbed to BRL 156 million in the first quarter 2020, growing 40% on the prior year quarter. The main factor contributing to the growth was the variation in the fair value of the biologic assets for soybeans, which increased by BRL 148 million compared to first quarter 2019. The variation is explained by the assumption used in the calculation. As commented in the first quarter 2019 earnings release, following the calculation of variation of fair value of biologic assets of soybean in 2018/'19 crop year, both the crop's price and yield improved, leaving the variation of fair value to underestimate the crop's results in that year.
To conclude, on Slide 13, we present our debt position. The company adjusted net debt ended first quarter 2020 at BRL 1.4 billion, an increase of BRL 475 million from the end of the fourth quarter 2019. Net debt was affected mainly by the higher working capital needs, which is -- in turn were influenced by the payments of our [ group's inputs ] for the 2019/'20 crop year. Note that the growth in debt during the period was expected considering the company cash conversion cycle.
Leverage, measured by the net debt-EBITDA ratio, closed the quarter at 1.9x and with a cash position of BRL 774 million.
I'll now hand it back to Pavinato so that he can comment on the look -- the outlook for the remainder of the year and also for the upcoming crop.
Thank you, Ivo.
On Slide 15, we present the updated table on hedges position for '19/'20 and '20/'21 crop year, with prices already considered in reais. We made significant advance on the hedge position both for the current and the next crop year with price that's superior to the current market and also higher than those achieved on the previous crop year, especially when convert to reais. We also made progress in purchase of inputs for the 2020/'21 crop year. To date, we already have acquired more than 2/3 of our fertilizer needs and 50 -- more than 50% of the estimated demand for chemicals, with both negotiation registering a significant drop in the U.S. dollars amounts obtained compared to the '19/'20 crop year. Considering the current scenario of our crops and prices in dollars as well as the current exchange rate, we expect the good level of profitability to be maintained in 2020/'21. Once again, our hedging policy proves to be efficient in protecting the business against short-term price volatility.
And as a final word, I'd like to close by stating that -- to be firmly believed that Brazilian agri business and especially SLC AgrĂcola will rise even stronger after the COVID-19 pandemic.
Thank you. And now we'll be open for questions.
[Operator Instructions] Thank you. This does concludes today's presentation. You may disconnect your line at this time and have a nice day.