2Q23: Vittia maintains profitability in a challenging scenario

Vittia, a Brazilian biotechnology and special plant nutrition company with solutions for various agricultural crops, released its 2Q23 results. As in 1Q23, this second quarter's results were impacted by an unfavorable scenario for the sale of inputs, but the company believes that the fundamentals for the sector continue to be positive for the year and that demand will resume in the second half of the year, especially for innovative and sustainable technologies that can contribute to increased productivity in a more challenging scenario for the producer.

The positive highlight was the gross margin, which, despite having fallen in the quarter (from 25,8% in 2Q22 to 16,3% in 2Q23), in the semester remained higher than last year: from 30% it went to 31,3% – increase of 1,3 p.p. Net revenue went from R＄ 156,8 million in 2Q22 to R＄ 72,8 million in 2Q23; and gross profit, which in 2Q22 was R＄40,4 million, in the same period this year was R＄11,9 million. “In this adverse scenario in relation to demand, we had a reduction in gross revenue of 13,7% in the biological pesticides line, this being the smallest reduction among all Vittia lines – which reinforces that this line is one of our focus areas. investments and commercial effort”, states the Company’s CFO and Investor Relations Director, Alexandre Del Nero Frizzo.

The executive highlights that the company realized that the producer's movement during the period was to postpone purchases, due to the marketing challenges arising from the unfavorable scenario in the prices of commodities produced in the 2022/2023 harvest. “Despite the challenges observed in the short term, it is important to highlight that Brazilian agriculture, and also the agricultural inputs market, observes a favorable scenario for the 2023/2024 harvest, as even with the reduction in expected profitability in nominal terms, the producer There is still a prospect of good earnings”, he adds.

In this context, Vittia states that 2023 will not be a record year, but it still expects a good year for business. With the aim of bringing more productivity, sustainability and cost reduction to rural producers, Vittia continued to invest in the area of ​​research, development and innovation, which totaled R＄ 6,9 million in 2Q23, against R＄ 5,8 million in 2Q22 . In the same period, investment in Capex was R＄15,7 million, compared to R＄20,2 million.

Biological products gain relevance

As the company's lines showed a reduction in sales compared to the factors exposed above, it was biological products that were responsible for the 1,3 p.p. increase in the gross margin for the semester, with a significant gain in relevance within the total gross profit: in the first half of 2022 they represented 37,2% of gross profit; in the same period of 2023, they represented 62%.

“Biological products have been resilient and continue to grow,” says Frizzo. One of the reasons is the growing adoption of sustainable practices by farmers, who, with the search to reduce costs and increase crop productivity, continued to increase interest and experimentation with Vittia's biological technologies.

“The market history shows that the sale of special fertilizers grows on average 13% per year and should remain at this level in a scenario of price stability, while market projections for biological pesticides are around 30% per year until 2030. These are positive projections for Vittia, which is well inserted in the biological defense market, and this is a line that should gain more and more participation within the company's business”, says Frizzo.

Research, development and increased distribution capacity

In July 2023, Vittia opened a new Distribution Center, in Luís Eduardo Magalhães (BA). Driven mainly by the strength of agribusiness in the region, the city recorded an increase of almost 80% in residents, the largest population increase in Bahia, according to the 2022 Census.

Almost 20 years ago, Luís Eduardo Magalhães was the location chosen for the installation of the company's first Distribution Center. Now, the new space has doubled the storage capacity (600 tons), to serve 20 cities in the region. “The Northeast is a region where Vittia grew up and wants to continue growing. Therefore, the company has been making investments in its sales force, not only in the Northeast, but throughout Brazil”, highlights Vittia's CFO.

The executive believes that in the second half of the year there will be many last-minute requests and those who are prepared will have better results. “This is a crucial aspect and we understand that there are few players that have the same capillarity and distribution capacity as Vittia”, he adds, referring to the company's other four CDs, in Sorriso (Mato Grosso), Primavera do Leste (MT ), Jataí (GO) and Ijuí (RS).

The Research & Development area is another strength of the company, not only in terms of professionals, but also in terms of routines, equipment and controls – which should continue to boost the expansion of the company's business, especially in the line of biological products. , with the launch of new products and the addition of new biological targets to the current line.