BrasilAgro (LND) Q1 2027 earnings review
BrasilAgro resumes farm sales, but its crop profit falls
BrasilAgro, the Brazilian farmland developer and crop producer, returned to selling farms while its crop margins shrank. Chief executive André Guillaumon closed the sale of part of the Rio do Meio farm for a R$51 million gain, which junto with a R$76 million non-cash gain on soybean-linked receivables swung the group to an R$81 million net profit. However, cash profit from crop operations fell by nearly a third because derivative gains turned to losses and grain unit costs rose.
| Sales from crop operations (excluding farm sales) | R$300.9M -1% from a year ago |
|---|---|
| Gain from farm sales | R$50.8M zero a year ago (Rio do Meio sale) |
| Cash profit (Adjusted EBITDA) from crop operations | R$43.8M -32% from a year ago |
| 2026 sugarcane & 26/27 grain harvest outlook | Cut 3–5% from last quarter's estimates |
⚖️ Verdict: ⚪ Neutral
The story is unchanged because the resumption of profitable land sales is offset by weaker crop execution and rising gross debt. Selling part of the repossessed Rio do Meio farm at nearly three times book value eased the drought in property deals, and management locked in 57% of its new soybean crop at higher prices. The bad news: mill bottlenecks forced a second cut to the 2026 sugarcane harvest plan, and total debt rose to R$1.07 billion despite cash collections from past farm sales.
The question now is whether second-quarter sugarcane deliveries and incoming farm installments will lift farming cash flow and pay down gross debt. One view is that deferred cane and locked soybean prices will drive a strong rebound; the other is that El Niño weather, mill delays, and interest costs will consume the cash. Second-quarter cane sales and the December debt balance will settle it.
🐂 Bull Case
Rio do Meio Sale Reopens the Land Business
"We began fiscal year 2026/27 with the resumption of the real estate cycle," chief executive André Guillaumon wrote. BrasilAgro buys underdeveloped farmland, improves the soil, and sells the property for a capital gain. Last fiscal year that engine stalled, generating just R$4.1 million in farm sale revenue and leaving crop losses uncovered.
In September, the Brazilian landowner sold 1,753 arable hectares of its Rio do Meio farm in Bahia for 425 soybean bags per hectare. That deal brought in R$94.2 million in nominal value, R$77.0 million in recognized revenue, and a R$50.8 million accounting gain, or 2.9 times book cost. The buyer also leased another 383 arable hectares with an option to buy them by March 2028.
This transaction matters because BrasilAgro repossessed 4,092 hectares of Rio do Meio last year after a 2022 buyer stopped paying. Reselling nearly half of that recovered land at a 26.2% expected annual return in reais proves that buyer defaults do not trap land value permanently.
What to watch: cumulative revenue from farm sales through the second quarter. Further deals this year will show whether land buyers have returned across Brazil despite a 13.75% base interest rate.
Soybean Hedges and Early Input Buys Protect Margins
BrasilAgro locks in crop prices and currency rates months before harvest to shield its cash flow from commodity swings. Because high interest rates raise the cost of working capital, Guillaumon also adjusts which crops the company plants on each farm to protect returns.
- Soybean price hedges for 2026/27: 57% of the crop locked in at US$12.26 per bushel, up 11% from US$11.00 last year
- Soybean currency hedges: 65% of dollar revenue locked in at R$5.51 per US dollar
- Fertilizer purchases: 95% of phosphate and 98% of potassium bought, with 94% of total needs acquired below budget
- Planting pace: 68% of planned soybean area planted by late October, 17 days ahead of last year
"In light of El Niño, we revised the planting window and crop mix farm by farm: we removed corn from the less suitable areas in Mato Grosso," Guillaumon said. Cutting first-crop corn acreage by 15% and shifting land into soybeans and cover crops lowers weather risk while locking in higher soybean prices.
What to watch: realized soybean gross margin per ton in the third and fourth quarters when the new harvest sells. A margin above 30% will confirm that early fertilizer purchases and US$12.26 hedges beat input inflation.
🐻 Bear Case
Crop Cash Profit Fell on Derivatives and Quality Costs
While the farm sale lifted total profit, the underlying farming operation earned less cash than a year ago. Sales from crop operations held steady at R$300.9 million, down 1% from last year, as a nearly threefold jump in corn volume offset lower soybean, sugarcane, and cotton deliveries.
However, operating Adjusted EBITDA — cash profit from farming before land sales and biological fair-value marks — fell 32% to R$43.8 million, pulling the margin down 6 percentage points to 15%. About two-thirds of the drop came from crop derivatives, which swung from a R$9.6 million gain to a R$3.4 million loss as soybean prices rose.
Field costs and overhead also hurt margins. Cost of goods sold excluding biological asset marks rose 1.2 percentage points of crop sales to 83.8%. Soybean unit costs rose 13% on "write-downs resulting from quality adjustments to soybeans from the 2025/26 crop", while corn unit costs jumped 17% partly from "higher harvesting costs, due to losses associated with pig damage". Other operating expenses rose 1.3 percentage points of crop sales on R$2.2 million of labor lawsuit provisions.
What to watch: combined operating Adjusted EBITDA across the first half of fiscal 2027. Clearing last year's R$71.3 million first-half total will require second-quarter sugarcane volumes to overcome weak grain margins.
Mill Delays Force Another Cut to Sugarcane Plans
Sugarcane is BrasilAgro's main source of farming cash flow during the first half of its fiscal year, and the company expected a strong rebound after frosts and fires hurt the 2025 crop. Field yields did improve between April and September, with tons harvested per hectare rising 14% from a year ago to 75.86.
Even so, the company cut its 2026 sugarcane harvest forecast for a second straight quarter, down to 2.06 million tons from 2.15 million in the fourth quarter and 2.18 million initially. In Maranhão, "slower crushing pace at the mills delayed the harvest and led to the deferral of approximately 175,000 metric tons of sugarcane to the next quarter". Meanwhile, the average sugar price the company received fell 13% from a year ago to R$1.04 per kilogram, and management also trimmed its 2026/27 grain and cotton harvest plan by 3% after cutting corn acreage.
What to watch: sugarcane tons sold in the second quarter, when the harvest year ends. By our math, hitting the revised 2.06 million ton plan requires harvesting 853,000 tons between October and December, five times the volume sold in last year's second quarter.
Gross Debt Keeps Rising Despite Farm Collections
Guillaumon emphasized that the balance sheet became leaner this quarter because net debt minus farm receivables dropped 51% to R$136.3 million. Last quarter, management also pledged to use incoming farm sale installments to pay down R$150 million to R$160 million of gross debt over the fiscal year.
The balance sheet shows the opposite happening so far. BrasilAgro collected R$71.7 million in cash from farm installments, yet total debt rose 5% from June to R$1.074 billion because the company borrowed R$93.0 million in new loans while repaying only R$61.9 million. Short-term debt due within one year climbed 12% in three months to R$534.0 million.
"Interest expense increased due to a higher debt balance, which rose from R$895.0 million in September 2025 to R$1.074 billion in September 2026," the company stated. Interest on liabilities rose 19% from a year ago to R$27.8 million. Net financial income only turned positive because higher Chicago soybean prices created a R$76.0 million non-cash upward mark on farm receivables, compared with a R$42.1 million loss a year ago.
What to watch: total gross debt at year-end, set against the R$534.0 million of loans maturing within twelve months. Continuing to add gross debt while paying a R$30.0 million dividend in November will keep annual interest costs eating into crop profits.
👓 Other Themes
New Hedge Accounting Shifts Derivative Losses to Equity
Starting in July 2026, BrasilAgro adopted hedge accounting for part of its crop derivative contracts. Previously, mark-to-market swings on derivatives hit the income statement immediately before the physical crop was sold. Under the new rule, "Losses of R$18.1 million on cash flow hedge derivatives (R$11.9 million net of taxes) were recorded in equity" this quarter and will flow into operating income only when the hedged soybeans and cotton are delivered.
💲 Other KPIs
Farm sale receivables — installment payments owed by buyers of properties BrasilAgro has sold, indexed to soybean bags — rose 16% from June after falling for four quarters. The Rio do Meio sale and a R$76.0 million positive mark-to-market from higher Chicago soybean prices outweighed R$71.7 million of cash collections. About R$218.4 million is due within twelve months.
By our math, free cash flow — operating cash flow of R$83.5 million minus R$10.1 million spent on land improvements and R$3.9 million on equipment and sugarcane fields — dipped 8% from a year ago. Operating cash flow fell 26% on higher working capital tied up in customer receivables, but the farming group offset most of that drop by cutting capital spending by 62%.
Total arable land — farm area suitable for planting crops or grazing cattle across Brazil, Paraguay, and Bolivia — edged down 1% from 191,920 hectares in June following the sale of 1,753 arable hectares at Rio do Meio. Owned properties make up 63% of the arable base, while leased land accounts for 37% to reduce cash flow volatility.
🔮 Guidance
Cut. The revised forecast lowers the 2026 cane harvest by 4.5% from last quarter's estimate and 5.6% from the initial plan, leaving volume up 18% from the 2025 crop. By our math, having harvested 1.20 million tons through September leaves 853,127 tons for the fourth calendar quarter. It is the second trim to the 2026 forecast — minus 24k tons, then minus 97k tons — caused by slow mill crushing in Maranhão.
Cut. Management reduced its grain and cotton harvest plan by 3%, or 13,671 tons, from the initial estimate set last quarter, which slows expected growth over the 2025/26 harvest from 6% to 3%. The cut comes from a 14% reduction in first-crop corn output to 73,123 tons and a 4% trim to second-crop corn to 92,582 tons, slightly offset by a 1% increase in soybeans to 261,192 tons.
Held. Total planted acreage sits 0.3% below last quarter's initial plan and 1.4% below the 166,995 hectares farmed in 2025/26. Because corn prices have not recovered and El Niño brings weather risk, the agribusiness group cut first-crop corn area by 15% and second-crop corn by 5%, moving that land into soybeans (+1% to 75,474 hectares) and cover crops (+8% to 21,068 hectares).
Cut. The projected cattle herd was trimmed by 4% and beef output by 2% from last quarter's estimate, though planned meat production still represents a 59% increase over the 1.46 million kilograms produced in 2025/26. By our math, producing 415,049 kilograms in the first quarter at a seasonal 0.36 kg daily weight gain leaves 1.91 million kilograms for the rest of the year to reach the 0.44 kg daily target.
Held. Estimated per-hectare farming costs barely moved from last quarter's budget across most crops: soybeans stayed at R$5,152 per hectare (+2% from last year), first-crop corn at R$5,058 (+9%), cotton at R$10,618 (-20%), and sugarcane at R$10,962 (+10%). Only second-crop corn costs rose 3% from the prior estimate to R$4,378 per hectare, which is still 12% lower than last year.
❓ Key Questions
Why did gross debt rise despite R$72M in farm collections?
Management said last quarter that farm receivables would pay down R$150 million to R$160 million of debt this year. In Q1, the company collected R$71.7 million but raised R$93.0 million in new loans, lifting gross debt to R$1.074 billion.
Will Maranhão mills crush the 175,000 tons of delayed cane?
Slow mill crushing deferred 175,000 tons of sugarcane from Q1 into Q2 and forced a 97,000-ton cut to the 2026 harvest forecast. Investors need to know if mills can finish crushing before the rainy season leaves cane standing in the field.
Are 2025/26 soybean quality write-downs and pig damage finished?
Soybean unit costs rose 13% on quality write-downs from the 2025/26 harvest, and corn unit costs jumped 17% partly from wild pig damage affecting 45% of sold volume. With R$70.8 million of soy and corn still in inventory, could more write-downs follow?
What triggered the R$1.3M lease default provision in Paraguay?
Selling expenses included a R$1.3 million credit loss provision for an unpaid farm lease in Paraguay, where BrasilAgro owns 32,210 arable hectares. Is this a single tenant issue or a broader sign of financial stress among Paraguayan farmers?