Cresud (CRESY) Q4 2025: Crop Volumes Jump 17% as Argentina Tax Cuts Unlock Margin Upside

2025-09-05 | By EarningsIQ Research

Cresud’s fiscal 2025 closes with a decisive 17% crop volume surge, driven by expanded acreage and improved weather in key regions, even as margin headwinds from input costs and regional disparities persisted. Argentina’s structural tax reforms and currency liberalization are resetting the earnings power of the agri-business, positioning Cresud for scale and margin expansion in the coming year. Management’s focus on land portfolio rotation, operational intensification, and disciplined capital allocation sets a constructive tone for fiscal 2026, with investors watching for further real estate monetization and continued debt reduction.

Summary

• Argentina Tax Reset: Permanent export tax cuts and FX convergence are structurally raising farm margins and liquidity.
• Operational Scale-Up: Crop volumes and planted area hit new highs, with cattle and services businesses intensifying.
• Portfolio Rotation Focus: Management signals continued land sales and selective acquisitions to drive value unlock.

Performance Analysis

Cresud’s fiscal year saw a material operational rebound, with total crop volumes up 17% year-over-year, underpinned by expanded planted area—approaching 300,000 hectares across Argentina, Brazil, Paraguay, and Bolivia. Soybeans, corn, sugarcane, and wheat remain the core crops, with soy and corn together comprising the majority of sown area and revenue. Weather conditions were mixed: central and southern Argentina delivered strong yields, while the north and Paraguay suffered significant drought impacts, particularly in cotton and select grains.

Commodity prices stabilized after last year’s sharp decline, with soybeans and corn rebounding 8-9%, supporting overall revenue. Input costs presented a mixed picture: crop protection costs corrected downward, but fertilizer prices stayed elevated, compressing margins in Argentina. Cattle operations delivered standout results, with higher beef prices and lower feed costs driving gross margin expansion and a 60,000-head herd, intensifying Cresud’s diversification beyond crops. Real estate monetization contributed $66 million in nominal sales from four land transactions, mainly in Brazil and one in Argentina, with substantial gains realized versus book value.

• Input Cost Divergence: Fertilizer inflation remained a drag, even as other inputs corrected, limiting margin recovery.
• Regional Weather Variability: Northern Argentina and Paraguay underperformed due to drought, while Brazil saw better-than-expected corn yields.
• Land Sale Gains: Real estate transactions generated $56 million in gains, validating Cresud’s land banking strategy.

Financially, net income attributable to controlling shareholders reached 96.1 billion pesos, with IRSA investments (shopping malls, offices, hotels) delivering record rental EBITDA and a return to profitability after last year’s loss. Debt remained stable at $354 million, with new bond issuances extending maturities and supporting liquidity for ongoing operations and asset rotation.

Executive Commentary

Strategic Positioning

1. Argentina Macro Reforms and Margin Expansion

Permanent export tax cuts and currency liberalization are fundamentally changing the economics of Argentine agriculture. Soybean, wheat, barley, and sunflower export taxes were slashed, and FX policy convergence eliminated the prior 100-150% currency gap, letting farmers realize true dollar proceeds. This policy reset both improves Cresud’s operating margins and increases land liquidity, with management expecting further tax reductions as fiscal conditions permit.

2. Planted Area Growth and Operational Intensification

Cresud is scaling up its agricultural footprint, forecasting to surpass 300,000 hectares in the next campaign, enabled by favorable leasing terms and selective land purchases. Operationally, the company is leveraging technology—such as precision agriculture and real-time machinery monitoring—to optimize input use and yields, especially in lower-margin environments. Cattle operations are being intensified, with expansion of feedlots and a focus on margin capture from favorable beef-to-feed price dynamics.

3. Land Portfolio Rotation and Real Estate Monetization

Land banking, defined as the strategic acquisition and disposition of land assets, remains a core value lever. This year saw $66 million in nominal sales across four properties, with outsized gains on Argentine land as local prices re-rate higher due to macro reforms. Management is committed to continuing this dual strategy of selling revalued assets while opportunistically acquiring undervalued farms, especially as Argentine liquidity improves.

4. Service Platform Scale and ESG Initiatives

Cresud’s services arm (FYO) is now the largest agri-broker in Argentina, handling over 7 million tons and representing 6% of national grain trade. This business provides input sourcing, credit, and advisory to third-party farmers, diversifying revenue and embedding Cresud deeper in the agri value chain. ESG progress is tangible: 25% of soybean and 15% of corn output now carry international sustainability certifications, and community engagement continues through education and health initiatives in rural areas.

5. IRSA Investment and Urban Real Estate Upside

IRSA, Cresud’s 54%-owned urban real estate arm, delivered a record year in shopping mall EBITDA, expanded its development pipeline, and returned capital through dividends and share buybacks. The Ramblas del Plata project and new mall acquisitions signal continued urban asset growth, with improved asset values supporting Cresud’s consolidated balance sheet.

Key Considerations

This quarter marks a step-change in Cresud’s structural earnings power, with Argentina’s macro reforms, operational intensification, and disciplined capital allocation converging to unlock value. Investors should weigh both the cyclical and secular forces at play.

Key Considerations:

• Argentina Policy Continuity: Sustained government commitment to tax reduction and market liberalization is critical for ongoing margin improvement.
• Weather and Input Cost Volatility: Regional climate swings and stubborn fertilizer inflation remain key risks to margin realization.
• Land Valuation Re-Rating: Argentine land prices are rising as liquidity returns, but Brazil remains in a holding pattern pending further price adjustment.
• Capital Allocation Discipline: Management’s preference for debt reduction, share buybacks, and selective asset rotation supports shareholder value but limits aggressive expansion.
• Service Platform Leverage: FYO’s growth as a broker and input provider embeds Cresud in the agri supply chain and diversifies earnings.

Risks

Policy reversal risk in Argentina remains material, as future governments could slow or reverse tax and FX reforms. Regional weather volatility, especially drought in the north and Paraguay, continues to threaten yields and profitability. Fertilizer and input cost inflation could further pressure margins if not offset by operational efficiencies or higher output prices. Real estate liquidity is improving in Argentina but remains subdued in Brazil, limiting broader asset rotation opportunities.

Forward Outlook

For Q1 2026, Cresud guided to:

• Planted area exceeding 300,000 hectares, with record crop volumes expected
• Continued expansion of cattle operations and service platform in both Argentina and Brazil

For full-year 2026, management signaled:

• Ongoing margin expansion from tax policy and operational scale
• Further land sales in Argentina as prices re-rate, with selective acquisitions where value is compelling

Management highlighted several factors that will shape results:

• Weather conditions for summer and winter crops are favorable so far, with strong early rains
• Technology adoption in precision agriculture is expected to drive input efficiency and yield gains

Takeaways

Cresud’s 17% crop volume growth and structural margin reset from Argentine reforms mark a pivotal inflection, with operational scale and capital discipline positioning the company to capitalize on improving agri and real estate cycles.

• Margin Reset: Permanent tax cuts and FX convergence are directly lifting farm profitability and asset values in Argentina.
• Operational Scale: Record planted area and intensified cattle/feedlot operations are driving volume and margin leverage.
• Capital Rotation: Land sales and selective acquisitions remain a core lever for value creation and liquidity management.

Conclusion

Cresud exits fiscal 2025 with operational momentum and a fundamentally improved margin structure, thanks to decisive Argentine policy changes and disciplined execution. The company’s focus on scale, portfolio rotation, and capital returns positions it well for fiscal 2026, with investors watching for continued real estate monetization and further leverage of its agri-services platform.

Industry Read-Through

Cresud’s results underscore the transformative impact of policy liberalization on agri-business margins and land values, providing a playbook for peers in markets undergoing similar reforms. Land banking and active portfolio rotation remain key value drivers for diversified agri-holdings, particularly where regulatory shifts unlock latent asset value. The scale-up of service platforms like FYO signals a broader industry trend toward integrated agri-services, with input, advisory, and brokerage offerings becoming essential for margin resilience. Brazil’s slower land price adjustment and persistent input cost inflation highlight regional divergence, emphasizing the need for local market agility and disciplined capital allocation across Latin American agri-businesses.

CRESY Consumer Staples Agriculture Land Banking Real Estate Argentina Commodity Tax Reform