Key Takeaways
- Revenue Decline: 1Q25 consolidated revenue decreased by -13% y/y to R$2.05 billion (-24% in USD terms), driven by a decline in inputs and grains revenue.
- Segment Performance: Crop Care revenue grew by 68% y/y, while Latam Ag Retail increased by 4% y/y; Brazil Ag Retail declined by -23% y/y.
- Gross Profit Growth: Consolidated gross profit increased by 10% to R$321.2 million (-4% in USD terms), with an expansion in gross margins.
- Increased Net Loss: Net loss widened to R$267.1 million from R$71.0 million in 1Q24, largely due to deferred tax changes and higher finance costs.
- Adjusted EBITDA Decline: Adjusted EBITDA decreased -5% to R$54.4 million, reflecting higher SG&A expenses.
Lavoro’s 1Q25 Financial Overview
Lavoro Limited (Nasdaq: LVRO, LVROW), the first U.S.-listed pure-play agricultural inputs retailer in Latin America, reported its fiscal first-quarter 2025 results for the period ending September 30, 2024.
Ruy Cunha, CEO of Lavoro, stated, “Our 1Q25 results reflect a continuation of trends seen in previous quarters, with robust growth in Crop Care, relative stability in Latam Ag Retail despite market headwinds, and gradual gross margin recovery in Brazil Ag Retail.”
Market Challenges and Liquidity Constraints
- Sector-Wide Liquidity Issues: A significant tightening in inventory financing conditions due to risk aversion among suppliers and financial institutions impacted commercial activity.
- Inventory Shortages: Key product shortages in November and December constrained operations, particularly in Brazil Ag Retail.
- Revised FY2025 Guidance: Lavoro has adjusted its outlook to account for near-term disruptions and inventory challenges.
Segment Performance
Revenue by Segment (BRL, in millions)
Segment | 1Q24 | 1Q25 | Change % |
---|---|---|---|
Brazil Ag Retail | 2,017.9 | 1,549.9 | -23% |
Latam Ag Retail | 324.2 | 337.0 | +4% |
Crop Care | 175.0 | 293.7 | +68% |
Total Revenue | 2,366.0 | 2,052.7 | -13% |
Gross Profit by Segment (BRL, in millions)
Segment | 1Q24 | 1Q25 | Change % |
Brazil Ag Retail | 176.3 | 189.0 | +7% |
Latam Ag Retail | 44.7 | 47.8 | +7% |
Crop Care | 75.9 | 84.3 | +11% |
Total Gross Profit | 293.3 | 321.2 | +10% |
Adjusted EBITDA by Segment (BRL, in millions)
Segment | 1Q24 | 1Q25 | Change % |
Brazil Ag Retail | 48.2 | 45.1 | -6% |
Latam Ag Retail | 15.2 | 10.4 | -32% |
Crop Care | 29.0 | 35.9 | +24% |
Total Adjusted EBITDA | 57.2 | 54.4 | -5% |
Financial Challenges and Strategic Response
Impact of Market Conditions
- Deferred Tax Adjustments: A R$152.1 million tax adjustment significantly impacted net income.
- Higher Finance Costs: Increased financing costs of R$60.7 million y/y further affected profitability.
Cost Optimization Measures
- Retail Network Optimization: Adjustments to store networks and operational structures.
- Fixed Cost Rationalization: Strategic reductions in overhead expenses.
CEO Outlook
Cunha stated, “We are focused on navigating near-term challenges and implementing strategic measures to position Lavoro for long-term success. Our cost-saving initiatives will start yielding benefits in the second half of fiscal 2025.”
Looking Ahead: FY2025 Revised Guidance
Lavoro has revised its FY2025 revenue and EBITDA projections:
Metric | Previous Guidance | Revised Guidance |
Consolidated Revenue (BRL) | R$7.50B – R$8.50B | R$6.50B – R$7.50B |
Inputs Revenue (BRL) | R$6.90B – R$7.90B | R$5.90B – R$6.90B |
Consolidated Revenue (USD) | $1.32B – $1.50B | $1.12B – $1.28B |
Inputs Revenue (USD) | $1.22B – $1.38B | $1.02B – $1.18B |
Projected exchange rate for remaining FY2025: 5.90 BRL/USD.
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