Message Font: Serif | Sans-Serif
No. of Recommendations: 1

Unfortunately, the company doesn't provide its cash flow statement in the quarterly results, but if you look at the Q4 results, they spent about $28m on property, plant, and equipment in fiscal 2011. During the year the were developing 20,100 hectares, or nearly 50,000 acres.

They plan to develop a similar area this year, so I would expect similar capital expenditure. I'm not sure how much a weakening real will have on this spending as I don't know how much of what they do relies on imports.

As you pointed out, they are still ramping up production, but it is taking two forms as new land is being planted with each season and they are seeing increasing yields on land that has been in production for a few years (at least for soybeans).

I also recently talked to IR and was told that the company is kind of in standby mode as they wait for the government to clarify its stance on foreign ownership of land. In the meantime, BrasilAgro will continue its program of setting up partnerships to increase the land effectively in its portfolio.

Similarly to Cresud, this is more of an asset play - investors are buying the land on the assumption that it will become more valuable through both investment and growing demand for food. I share your concerns about cash flow, but I think at this stage of ramp up, it is natural to see the numbers we are. The big question is whether they pursue the debt or dilution path going forward.
Print the post  


When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.