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Good morning, ladies and gentlemen, and thank you for waiting. At this time, we would like to welcome everyone to SLC AgrĂcola Fourth Quarter of 2017 and Year of 2017 Earnings Conference Call. Today, we have with us Mr. Aurelio Pavinato, CEO; and Mr. Ivo Marco Brum, CFO and Investor Relations Officer. We would like to inform you that this event is being recorded. [Operator Instructions]
Also today's live webcast, both audio and the slide show, may be accessed through SLC AgrĂcola website at www.slcagricola.com.br in the Investor Relations section by clicking on the banner Webcast 4Q '17. The following presentation is also available to download on the webcast platform. The following information is available in thousands of Brazilian reals and in IFRS, except when otherwise indicated.
Before proceeding, let me mention that forward-looking statements are based on the beliefs and assumptions of SLC AgrĂcola management and on information currently available to the company. They involve risks, uncertainties and assumptions because they relate to future events, and therefore depend on circumstances that may or may not occur in the future. 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 I will turn the conference over to Mr. Aurelio Pavinato, CEO. Mr. Pavinato, you may proceed.
Good morning, and welcome to SLC AgrĂcola's earnings conference call for the fourth quarter and fiscal year 2017. Let's turn to Slide 3, please.
As we comment in the message from management of our earnings release, 2017 was an excellent year for our business, which was made possible by the groundwork we have done in recent years, which we will refer to as Phase 3. This figure shows that after periods of strong expansion in planted area from our IPO in 2007 until mid-2015, we have now redirected our efforts to projects focused on operating efficiency gains and prioritizing strategies that add value to our business, strengthening our certifications and realize the appreciation in our property prices. These initiatives are already bearing fruits, as you will see a bit later, and will further improve the efficiency and stability on the production front while improving profitability in cash generation on the financial front.
Let's go to Slide 4, where I will detail some of our achievements in the year. In the '16/'17 crop year, we had 393,000 hectares and set a new record for our cotton lint yield of 1,807 kilograms per hectare based on the age of first and second cotton crops, which is about 13% above our initial target and 11% higher than the national average.
The soybean yield also beat our target by around 7%. This level of productivity, the financial results of our agriculture operation also easily beat our initial target to set new records of BRL 568 million for EBITDA and BRL 289 million for net income.
Another important event in the year announced in December was the sale of 11,600 hectares, which is aligned with the current strategy to realize real estate gains and boosted our EBITDA by BRL 170 million and our net income by BRL 80 million. These results made it possible to pay special dividends of BRL 200 million in October last year, representing a dividend yield of 9%. We are also proposing to the annual shareholders meeting in April the payment of another BRL 200 million in dividends.
During 2017 and in early 2018, we concluded 2 share repurchase programs in the total amount of 3.6 million shares, and are in the final phases of acquisition in a third program involving another 2 million shares. The main reason for the buyback programs is the excessive discounting on our stock price compared to the company's net book value. Yesterday, the Board of Directors approved the cancellation of 3.6 million shares.
Let's turn to Slide 5, please. In 2017, we also concluded our first sustainability report, which was produced in accordance with the international framework of the Global Reporting Initiative, GRI, and aligned with the principles of transparency and good practice. The [ Parnaiba ] and Planeste farms have obtained certification under the standards ISO 14001, NBR 16001 and OHSAS 18001, which brings to 7 the number of our farms with this level of certification. In the Planalto farm, we've obtained ISO 9001 certification. Note that no other company in the industry in Brazil has this level of certification.
In terms of people management, we registered another decline in employee turnover to 16.7%, marking the fourth straight year of a decline in this indicator. By means of the comparison, our turnover in 2013 was over 40%. Due to this and other initiatives, we are awarded by Great Place to Work as the seventh best company to work for Rio Grande do Sul state, climbing 3 positions in relation to 2016. All these efforts are aligned with the Phase 3 of our strategy which seeks to build a more efficient, secure and robust company.
Let's go now to Slide 7, where I will comment briefly on the price of our main products in recent months. Cotton prices in the international market rose [ excellently ] during the first quarter and in the early 2018, reaching $0.85 per pound, mainly due to the production problems in India and Pakistan in the '17/'18 crop year. Combined with the continued recovery in the fiber consumption, the USDA estimates global cotton consumption in the '17/'18 crop year at 120 million bales, 5.3% higher than in the previous crop year and the highest level in 8 years.
Another factor pushing cotton prices higher in recent years has been the process to reduce China's stocks, which is now in the third straight year. After the current phase, estimates are calling for China to once again, as of 2019, import high volumes of cotton which [indiscernible] for prices.
Adding to this is the outlook for a smaller U.S. crop in the '18/'19 crop year, which has yet to be planted. Given the severe drought in the country's many producing regions, as you can see in the figure on Slide 8, with this situation potentially worsening given the latest projections, which you can see on Slide 9.
For soybean and corn on Slide 10, you can see that the prices for these crops also had rising in recent months, mainly due to the continuation of significant shortfalls in Argentina, with the Buenos Aires Grain Exchange estimating reductions in relation to initial estimates of 10 million tons for soybean and 5 million tons for corn. And marked expectations are currently calling for further downward revisions in these numbers. The shortfalls have been the main driver of the prices in recent weeks.
I will now pass the call over to my colleague, Ivo Brum, our CFO and IRO, who will comment on our financial results in the period.
Good morning, everyone. Let's go to Slide 12, which presents a summary of our financial highlights in 2017.
Net revenue was BRL 1.806 million (sic) [ BRL 1.860 million ], up 16% on the 2016, supported by excellent yields obtained in the crop year, as Pavinato already mentioned. Total adjusted EBITDA, in other words, considering both our agricultural operation and our land sales come to BRL 738 million. We have the agriculture operation posting a margin of 30.6% for a total margin of 39.8% and net income was BRL 369 million, with the agricultural operation posting a net margin of 15.6% for a total net margin of 19.9%. Another highlight was our general and administrative expense, which increased in line with the inflation in 2017 and correspond to only 2.4% of net revenue, down from 3.4% of net revenue 5 years ago in 2012.
Let's turn to Slide 13. We present details of our debt. Adjusted net debt ended the year down 2.8% on a year earlier. We also worked during 2017 to lessen our debt maturity profile and to raise funds at more effective rates. As part of this effort, we issued BRL 200 million in certificate of agribusiness receivables with a term of 3 years. Meanwhile, because of our strong operating results and the EBITDA created by our land sales, the net debt-to-EBITDA ratio fell to just 1.12x, down significantly from a year earlier.
Another important factor was the free cash flow which, as you can see on this Slide 14, was positive for the third straight year, in line with our strategy, at BRL 202 million in 2017, bringing average free cash flow in the last 3 years to BRL 196 million.
I will now pass the call back over to Pavinato, who will comment on this crop year and the outlook for 2018.
Thank you, Ivo. Let's go now to Slide 16. The prospects for the '17/'18 crop year are excellent. As of March 5, we have harvested 47% of the soybean crop, with a yield of 60.8 bags per hectare, a level we expect to maintain through the end of the half, which will be above our budget yield target of 56 bags per hectare.
For our cotton 1st crop, planting remains within the ideal planting window at each of our units. We see the crop presenting excellent production potential. Planting operations for the 2nd crop were concluded in the first half of February with the crop present excellent aspects. While the corn 2nd crop is in the final planting phase, therefore also within the recommended window of planting.
The next slide is 17, presents an updated table of our sales price for 2018. As you can see, we already have secured a good percentage of our hedging for the year at prices similar to those obtained in 2017 based on the amount in Brazilian reais. Our production cost per hectare also have remained stable between the last crop year and this one, as you can see on Slide 18. As a result, we expect our high level of profitability to carry through into 2018 as well.
Thank you, and we will now start the question-and-answer session.
[Operator Instructions] Thank you. This does conclude today's presentation. You may disconnect your line at this time, and have a nice day.