Good morning, ladies and gentlemen, and thank you for waiting. Welcome to the Raízen's webinar to discuss the results of the Fourth Quarter and full year results. Today with us we have Ricardo Mussa, Raízen CEO, Guilherme Cerqueira, CFO, and Felipe Casali, Head of IR. We would like to inform you that this event is being recorded and has simultaneous translation to Portuguese. During this event, our participants will be able to listen to the presentation. Afterwards, we will begin the question and answer session when further instructions will be given. Before proceeding, let me mention that forward-looking statements that may be made during this presentation regarding the company's business prospects, operating and financials projections and goals are based on beliefs and assumptions of the Raízen's management, as well as information currently available to the company. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties, and assumptions as they reflect future events and therefore depend on circumstances that may or may not occur. General economic conditions, industry conditions, and other operating factors may affect the company's future results and may lead to results that differ materially from those expressed in such forward-looking statements. Now, I would like to turn the conference over to Felipe Casali. Please, Mr. Casali, you may proceed. Good morning, everyone, and thank you for joining us today for Raízen's Earnings Conference Call for the fourth quarter of the 2021/2022 crop year. With me today are Ricardo Mussa, our CEO, and Guilherme Cerqueira, our CFO and IRO. We also have here today Carlos Moura, that since the beginning of May, is conducting a handover process with Guilherme and will assume the position of CFO and IRO in June. Let's start the presentation on slide three. This year will certainly be marked in Raízen's history. Despite the many challenges, we were able to deliver important achievements. ROACE, our main return metric, recovered to near pre-pandemic levels, while revenue and net income also improved significantly. The robust cash generation in the year supported the reduction on leverage with the net debt adjusted EBITDA ratio falling to 1.3 times. We also had several highlights in our operations and portfolio. Raízen was listed on B3 and completed the largest acquisition since its creation with the successful integration of all assets of Biosev. We expanded our renewables portfolio with the acquisition of Grupo Gera, expanding our footprint in the energy market. We started construction of our second E2G plant and made further progress in selling the biofuel through long-term contracts in hard currency. We also made progress in our biogas project and sold 100% of the production from the first plant fully dedicated to biomethane production. We continue to advance on our agricultural efficiency journey with higher yields on first cut sugarcane, while the average yield of the state of São Paulo fell by 12%. Maintaining the consistency of our deliveries, we maximize returns in the marketing and services segment with a combination of strong sales volume, market share gains, and higher profitability. All this reflected in many operational, financial, and safety records, making us very proud of all of those deliveries. Let's move now to slide four to present our financial highlights. The excellent performance of our business in the period reflects our capacity to create value and deliver superior results from our integrated portfolio. As shown in the chart, the EBITDA contribution of each segment in the year, both renewables and marketing and services, posted positive contributions, which were partially offset by the lower contribution from sugar operations affected by lower production and the commercial strategy that postponed part of the sales to the next crop year. Following the same dynamic from past presentations, I will briefly cover here the highlights of each business, and then we're gonna leave more time for the Q&A session. Let's turn to slide five. As discussed during the year, the lower crushing volumes was due to impacts from drier weather and frost events, which reduced cane availability in the center-south region. The main message I want to convey today is that Raízen continues to make great progress on its journey to capture agricultural efficiency gains and improve yields. On the right side of this slide, you can see that the tons of cane per hectare or the TCH of our fields suffered less than the industry average in both São Paulo State and the Center-South Region. This outperformance becomes even clearer in the case of first cut cane, with our yield increasing 2% on last crop year, while the average yield in the state of São Paulo fell 12%. This metric shows clearly how we are on the right path. Cash cost in the crop year, excluding the effects of Consecana, was mainly affected by higher prices for agricultural inputs, labor costs, materials, and diesel. The lower crushing volume also reduced the efficiency with per unit fixed cost pressured by the lower economies of scale, which should be compensated in the future with the catch-up on our productivity. In terms of investments, CapEx was concentrated in maintenance and planting, as well as in health, environment and safety, with a focus on people as well as asset integrity. The highlights in projects were the continued investment in the construction of our second E2G plant in the Bonfim Bioenergy Park. Let's move on to the next slide, on the renewables segment. Raízen delivered a solid growth on EBITDA of 33% in the year, despite the lower production and sales volume. In ethanol, Raízen's higher average sales price offset its lower sales volume and higher costs. If you recall, our average ethanol price is composed of own sales volume plus the margin realized from resale and commercialization operations, which better shows how we maximize returns in the long -term through scale and operating efficiency gains as well as logistics and market intel. The price also includes the hedge positions formed at the start of the crop, to protect the returns, especially during the intercrop period. For the next crop year, 2022-2023, we do not have contracted proxy hedge positions. In power, we ended the year with dynamics like those of ethanol, with lower own sales volume and higher sales price supporting the better result. Remember that Raízen is Brazil's largest generator of bioelectricity via cogeneration, and that we have expanded our generation based on other renewable sources such as urban waste biogas, solar and hydro. Before moving on to the sugar segment, I want to update you on slide seven on our expansion plans in renewables that we announced in recent weeks. We are very proud to announce some of the most important investments in renewable energy in Brazil. As announced on May 11, we are starting construction on Raízen's third and fourth second-generation ethanol plants, which will increase our biofuel production capacity to 280 million liters per year as of 2024. 80% of this volume already has been contracted via long-term agreements in hard currency, which guarantees attractive returns on the investments. We maintain firm in our commitment to expand our portfolio to 20 plants of E2G by 2031, which will expand our ethanol production capacity by 50% without any need to expand our planted area. Another important initiative on our renewables agenda is biogas. On April 26, we announced the start of the construction of our second biogas plant, which is the first one 100% dedicated to the biomethane production. All of the plant's production already has been contracted also through long-term agreements with Yara and Volkswagen in Brazil. Our portfolio of clean and renewable energy solutions will enable our clients to advance further in their decarbonization targets. Together, the three E2G plants under construction and the biomethane plant represent total investment of around BRL 3.3 billion, which makes Raízen a reference in the global energy transition via biofuels. Now let's turn to the next slide on the sugar segment. The sugar segment's adjusted EBITDA in the quarter was BRL 174 million, bringing the total for the crop year to BRL 2 billion, in line with our guidance. EBITDA performance in the crop year was affected by declines in production and sales volume due to the lower than expected harvest in the center south region of Brazil and by the share of sugar in the production mix falling to 51%, down from the 54% last crop year. Another important factor was our commercial strategy with part of inventories held back to sell over the coming months to maximize the profitability. These effects were partially offset by the higher sugar prices captured by Raízen. Another important factor was the improvement in sugar prices realized and hedged by us. Given the positive forecasts for future curves, we are advancing in our hedge strategy. The chart on the slide shows the higher prices already hedged for the coming years to maximize returns in the future periods. We expanded our footprint in the sugar value chain, reaching over 40% of the sales made directly without intermediaries. This represents a great progress on our target of reaching 90% of the sales made directly to clients, increasing our share in global sugar trade flow as well as the return of the operation. Let's go to the next slide with results of the marketing and services segment formed by our integrated platform for fuel distribution in Brazil, Argentina and our recently acquired Paraguay operation. Remember that the results here are presented on a consolidated basis. The last quarter in the crop year were especially challenging for the sector, but also presented good opportunities. In Brazil, we kept the consistency of our strategy, resulting in a strong improvement in returns, as shown by the chart of ROACE. That is our key metric for evaluating the performance of the business, which is also supported by the expansion of the network, growth in sales volume, and also growth in the EBITDA. In the LATAM operations, represented by Argentina and Paraguay, the robust recovery reflects the strong demand combined with higher efficiency on better volumes and the profitability recovery at the pump enabled by the adjustments of higher costs to prices. Meanwhile, sales volume in the fourth quarter increased year-over-year in line with the economic recovery across the board. Quarter-over-quarter, the lower sales volume was mainly due to the weaker demand in Brazil, given the high number of COVID cases in the country, especially in January and February. In the crop year, the robust sales volume growth reflects the stronger demand, as well as our commercial strategy and network expansion. Diesel sales volume remained a highlight driven by the agricultural sector as well as the passenger and freight transportation clients. In aviation, the recovery in volumes should continue gradually with a focus on high profitability segments. EBITDA in the quarter was BRL 1 billion, ending the crop year with a 52% growth, reaching BRL 4.1 billion, a bit above our guidance. One comment on the result for the fourth quarter of the crop year in Brazilian operations. Despite the robust operational results, the ethanol price action affected our supply strategy gains. During the quarter, it became clear that the business environment was improving and we ended March with strong results, capturing gains in efficiency from our supply strategy and guaranteeing the supply to our clients in any given scenario. The investments made in the quarter and year were allocated primarily to expanding and maintaining our service station network. In Argentina, we are investing in improving the quality of products in the refinery in line with regulatory requirements, which explains the increase in both quarter and the year. Moving on to the next slide for an update on the operations in the proximity stores and Shell Box. In the last 12 months, we opened 164 stores, which 90 of them were OSO, own store operations. We are accelerating new store openings in line with our planning. Shell Box, our digital loyalty and payment management tool, continues to evolve at an accelerated pace with over 3.8 thousand accredited service stations and over BRL 5.4 billion transacted via the platform in the last 12 months. We also rolled out the app in Argentina, and in less than three months have already engaged over 60% of the service stations. Let's go to the next slide with Raízen's consolidated financial results. Raízen's solid execution supported the growth in both EBITDA and net income, which doubled from the last crop year, reaching BRL 3 billion despite the challenges of the year. The chart on the right side shows the change in cash flow in the year. First, the strong cash flow from operations mainly reflects the results of marketing and services operations, which keep a high cash conversion rate, as well as the acceleration in sales of the last quarter of the crop year in the renewables and sugar segment. In cash flow from investments, in addition to the acceleration in recurring CapEx during the inter-crop season, we had disbursement for the acquisition of Biosev and the first installment for the acquisition of Paraguay operation and of Grupo Gera, as well as the extra investments in Argentina. In the cash flow from financing, the main impact was the higher debt amortization combined with the lower funding levels in the period, in line with the company's liability management strategy. This led to significant declines in the net debt and in the leverage ratio, which ended the period at 1.3 times net debt adjusted EBITDA in the last 12 months, which is a healthy level to support our growth cycle over the coming years. Moving on to the next slide, now we will present our guidance for the next crop year. We presented our guidance for the 2022-2023 crop year, ending in March 2023, which points to solid improvement in results and an acceleration in investments to expand our business. It is worth mentioning that 2022-2023 crop year started with the effects of interest rates as well as other indicators. That means it will again be a challenging year, but we are confident that the strength that our business portfolio have will be able to capture the opportunities to expand profitability. We also have adapted the way we present our guidance by unifying the renewables and sugar segment given the dynamic nature of the operations and the costs. Lastly, for CapEx in sugar and renewables, we provide a breakdown of expenditures for expansion and projects in line with our robust growth planning. Let's discuss the main assumptions starting with the renewable and sugar segment. Given the weather impacts on our fields last crop year, we have a reduction of our area to be harvested this year. On the other hand, we are expanding the planting area in line with our agricultural efficiency journey that is already showing its first results reflected in the maintenance CapEx. That CapEx also considers higher costs with agricultural inputs, fertilizers, diesel, and also labor costs. The adjusted EBITDA of renewables and sugar considers a scenario of higher sales volume together with our capacity to better pricing our ethanol, sugar, and energy portfolio, with these factors partially offset by cost dynamics pressured by inflation and Consecana. In marketing and services, the guidance reflects a scenario of higher volumes with opportunities to optimize and capture gains inside our supply and commercialization's integrated platform, besides the incorporation of the operations in Paraguay and the lubricant operation in Brazil. Having said that, we expect a solid growth of our results for the next crop, in addition to our investments plans that has been widely discussed since the IPO. Before going to the Q&A session, I want to give a brief update on the advances in Raízen's ESG journey during the quarter on slide 13. The year was intense and marked by major advances in our ESG agenda. Since our incorporation, we always strive to incorporate environmental, social, economic, and governance aspects into our strategy, giving our firm belief that it will ensure the sustainability of our business. We made progress on achieving our targets, consolidating our vocation as an strategic partner to our clients in their strategy of decarbonizing while maintaining profitability. Recently, we become signatories of the United Nations Global Compact, the world's largest corporate sustainability initiative. We also carried out our first issue of debentures linked to ESG targets, which raised BRL 1.2 billion as part of our strategy of sustainable and profitable growth in renewables. If you would like to learn more about our initiatives and advances on this journey, I invite you to visit our ESG portal, which can be accessed via our IR website. With that, we concludes the earnings presentation, and I now invite you to participate in our questions and answer session. Thank you all very much. Thank you. We will now start the Q&A session. Questions can be asked through the audio by clicking on the Raise Hand icon available at the bottom of the screen. Participants who are connected by phone will be able to ask questions by typing star nine. The moment your question is collected, you will receive announcement to unmute your microphone by typing star six. Questions in Portuguese will be received via text only. Our first question comes from Gabriel Barra from Citi. Hi, Ricardo Mussa, Guilherme Cerqueira, Carlos Moura, Felipe Casali. Thanks for taking my questions here. Let me focus here on E2G. I think that there are some questions here from my side. We have seen a significant increase in CapEx mentioned by the company, right, in the next two E2G plants. My point here is taking into account this increase, how can you think about the return of this project right now? And how much of this impact can be balanced by the increase in E2G? This could offset part of this increase. The one point here that it can be useful to understand is if you do see any impact on the OpEx or the major impact of this inflation is only in CapEx. The second point in E2G, I think that it's really important to understand here the competitive scenario, right, for E2G. There are two points here. The first one is how do you think about, and do you see any products or technology that might concern the company in terms of bringing additional supply to the market? Second, about the opportunities in this sector, I think that it seems to me that there is a huge opportunity here on SAF. My point here is there any intention from the company in terms of investing in a project or bringing partners to produce SAF with E2G in Brazil or outside the country? Those are my questions here. Thank you. Hi. Thank you very much for the questions. I think first of all, related to the increase on the CapEx, we more than offset that with prices. If you take current prices of E2G, if you go to Europe, we are talking about the current spot prices above 1,400 EUR, and our contracts are much better than we anticipated by the time we had the IPO. The returns of each one of those plants are better than what we had initially, much more than offset by prices. The second change that we had was the length of the contract. Initially, we were talking about five to seven years. Now we are talking companies asking for 10-year tenure of the contract. What does it mean is that the market, especially on the- European market, they need long-term contracts, and that relates to your second question on SAF and the competitive scenario. What we see right now is that our competitors, it's very challenging for them to secure long-term contracts because they do not have control of the feedstock. That's one of the main advantages that we have on E2G. We do control our feedstock, and we have long-term contracts of lease of the land. When you talk about someone trying to implement or to invest in a sustainable aviation fuel plant, they need to secure long-term contracts. They need to have a much longer with higher volumes and long-term to secure that they're going to see the returns of their investments. That's what changed since the IPO, is that the demand are coming much more from that end that's pushing prices up and of course pushing also the length of the contracts for a longer tenure. We are not seeing much competition because our competitors, they have a short-term, I would say, not mindset, but they have a short-term supply and difficult for them to compete on those long -terms. That's why we are seeing. Turning to your question about investment in SAF particularly, what we're trying to do is to bring along investors, but we do not own the technology of SAF, so our role here is to guarantee to secure the supply. Sometimes we can also negotiate the offtake agreements of SAF because we do sell jet fuel in Latin America for several different countries. There is no intention of our company to invest on the technology of SAF, but really to do partnership with companies. Bringing to Brazil, as you said, that's my opinion is that on the supply chain side, makes sense to have some plant in Brazil at some point in time because of logistics. Instead of exporting higher liters of ethanol, it's better to export a more value-added product like SAF and have the production locally here. This always depend on the terms, depends on the incentives by the governments locally and in the region that is going to be consumed. All those discussions are taking place right now. I think the bottom line is much more demand than we anticipated, much better prices that offset big time the growth in the CapEx and the returns of each investments remain pretty high and better than we had on the IPO process. Thank you, Ricardo Mussa. Our next question comes from Isabella Simonato from Bank of America. Hello, do you hear me? Yeah, Isabella, we hear you. Hi, Ricardo Mussa. Hi, Felipe Casali, Guilherme Cerqueira. How are you? Thank you for the question. I have two questions, one of them on the guidance. Just wanted to clarify two points, right? You show a pretty robust EBITDA growth for marketing and services, right? If you could try to break this down for us, between markets, right, between Brazil and LATAM, at least what sort of growth for each market and how much that embeds in terms of consolidation of lubes and also the recent acquisitions, right, outside Brazil. Just wanted to get a sense of the inorganic contribution versus the organic and have a sense per market as well. On the guidance as well, in terms of sugar and ethanol, if you could just point out what sort of a cost assumption increase are you putting in the guidance. Of course, you mentioned higher production cost, but just wanted to get a sense how much the guidance reflects. Finally, back to E2G, as Gabriel asked, you mentioned in the past, right, you were trying to develop or to diversify your suppliers of equipment and assess different suppliers, so eventually you could accelerate the process of building more plants, right? Just wanted to have an update on that situation. How is your perspective of having different suppliers and eventually accelerating the business plan? Thank you. Thank you, Isabella. Thank you for the questions. First of all, on the marketing and services side, the growth is not particular to Brazil, Argentina, or Paraguay. All the three places are growing. We are seeing, of course, structurally better margins in Brazil. It's still much lower than Paraguay and Argentina, but getting better and better, so we see that in the market. I think what we are seeing here on the constraints of the supply chain in Brazil for diesel in particular, this is helping us, in the sense that the branded volume is growing. That's where the higher margin is, and that's structurally for me. You can see we are growing. Margins are better. We are seeing the volumes are better, and we don't see any change in that scenario, especially for the next six months at least, or by the end of this year, nine months. We still see that happening and getting better and better, in that sense for margins and volumes all over. Argentina, the plan for Argentina and Brazil both are growing. The network's still growing. You can see that we have a record year of converting new volume in both places in Brazil and Argentina. Paraguay, we had a very nice surprise that we are ahead of the curve on rebranding the service stations from Barcos & Rodados to Shell. The Shell brand was amazing, how much the mindset of the country remembers the brand and pay a higher premium for that. That's why we're getting very good margins in Paraguay. The Lubes side, we do not open the number on Lubes, Isabella, for strategic reasons. It was a fantastic acquisition. It was implemented in our business now in the first of May. You start seeing that result in our numbers on the first of May moving forward. What I can say here is that it's a very healthy business. We had a very accretive investment on this one compared to what we have seen out there at valuation, so it was a great acquisition. It's coming at a great moment because they are increasing volume, they have gained market share over the years from 8%-9% reaching 14% market share. The margins for all the Lubes business, not only for us, but for everyone are very high right now, and we don't see that moving backwards. It's very profitable. Unfortunately, Isabella, we do not open that for strategic reasons in our numbers. We are going to see that in the next quarter, all right, the results of Lubes in our numbers. Related to sugar and ethanol, the cost assumption here, what we do have, and again, Guilherme and Carlos can help me on that, but we do have around 10% increase on the cost of labor. We are seeing that. That for me, the major, I would say structural change moving forward, that's the one. The other ones when you say fertilizer costs and diesel costs, of course, they're impacting. We had a very good, I would say, hedging tool for the fertilizers, so we are pretty much done for this crop season. It's going to impact, but it's already in our numbers here. We don't see any risk of moving upwards on that. Diesel is diesel, so we are not hedged on that one, so it depends on what happen on the diesel side. We are also growing our planted area. If you look into our numbers there, but there is still some growth in our planting area. We're going to have a record planting season. I think the message here, Isabella, we are very, very happy with the returns we had on the first crop, the first harvest, so that gave us the assurance that we could move forward and keep renewing. If you compare our last year numbers to the market, you're going to see a fantastic first cut. We are the benchmark for the first time for a long, long time, and this means that we have exhaustion on our fifth harvest. To have the number that we had on ton per hectare of 11% reduction compared to 14%, you can do the math that we have a very bad number on the very old cane and a very good number on the first harvest. This is great for the next years because this tells us that we did a good job on planting. We fixed that. Now it's time to keep renewing. I think one of the major KPIs the market should follow is the evolution of our let's check how is our second harvest this year, how is the planting against this year. It's going on the right direction, right? To your last. Sorry, you have something, Gui? Just the price consideration that we included in the guidance. Basically, for sugar, you know we have almost 80% of the sugar already hedged. But for ethanol, we don't have any price fixed different from this year where we had the proxy hedge that impacted the last quarter. For next year, we don't have anything for ethanol. The idea is that we are going to capture the better prices that are associated with the crude price as well. To your last question, Isabella, on E2G, you talked about debottlenecking the suppliers. It is pretty much done. Remember that we used to have only one approved suppliers. Our target is to have at least five, and we are reaching out to seven. Right now, this is pretty much done. The, I think the procurement team on approving and having new licensed suppliers of equipments, we are pretty much done. We are now have three plants under construction. That was the plan that we talked during the IPO, three plants per year. We can now go into more plants, if we want to, and that's the goal is try to accelerate the E2G investments moving forward. That's where we are right now. We're pretty much the schedule of Bonfim is on time. The costs are looking great. Even the plant on Piracicaba region have had the best year so far on the efficiency, on the conversion. Looks very good. The market, as I said on the question before, it's in our direction, much better prices and much higher volumes. Nothing here that derail our plan, Isabella, only anticipating what we had promised to the market. That's very clear. Thank you. The next question comes from Lucas Ferreira. Hi, everybody. Thanks for taking the time. First of all, welcome Carlos Moura. We wanted to wish good luck to Guilherme Cerqueira in his next steps. I have two follow-ups, if I may. Ricardo Mussa, this you made very clear that in the case of E2G, the prices are more than compensating the CapEx inflation. I wanted to quickly ask you if that's the same case for biogas, which we also see some inflation in the CapEx line. We have less information on the pricing, given the contracts are not disclosed. If you can just tell us if this is also the case for biogas. In the case of sugar and ethanol, and also another follow-up, if you can give us any sort of idea of costs per unit in this first cuts that you're having now, which is apparently much better, right, than the average of your cuts. How much lower the cost per unit is versus your average cut, so just so we can try to better understand the evolution of your costs over the next, let's say, five to seven years. Thank you. Thank you, Lucas, for the question. First on E2G, sorry, I'm just going back because Isabella also asked about OpEx, if there is any inflation on OpEx. Remember that E2G, we use a by-product that is the bagasse and the leaves to do it. The major OpEx cost other than that is the enzyme that is really FX related. Of course, it's more than offset because our contract is in strong currency, so there is not any big inflation on the OpEx of E2G. It's much more on the CapEx. Why I'm saying that, to your point, is that remember E2G, because all the plants that we are putting in place, we took the decision to go for it with the majority of the plant already sold. We are de-risking big time the plants of E2G by not having any volume risk or price risk. Why I'm saying that, once those plants are fully depreciated after five years, then we have a fantastic and a very, very competitive plant to produce ethanol, because then the CapEx is the major problem, right? Once we pay that, then the OpEx, the running cost of the plant is much lower, and then we are very competitive even to E1G. Related to biogas, thank you for the question. It's a great question on the CapEx. Biogas is much less complex than E2G. On the investment side, we are less impacted on the capital. There is still some impact on the CapEx. As you said, the biogas, we have three major uses. The easiest one is convert that into electricity and sell into the grid, but that's the lowest, I would say. That's not the best use of biogas. What surprises us is that the second use of biogas is injecting into the pipeline to replace natural gas. That's what we did with Yara and Volkswagen. Those contracts are confidential. We cannot share the prices. There are, of course, premiums. What we love about that is that this is, we don't need to invest on the conversion of the fleet, our trucks, to convert from diesel into biogas. That remains a very important part of our program. We were, I would say, positively surprised that we managed to get those natural gas replacement contracts in the short-t erm. We still have, from our 35 bioenergy parks, we have from six to 10 that are much closer to the pipelines of gas in Brazil that you can distribute and connect that into the grid, and that becomes a much easier way to move forward with biogas. The plan is remain the same. We haven't changed the plan for biogas. The returns are a little bit better than we had initially. The return of Costa Pinto is also pretty much the same that we had initially. The good news here is that we are doing very similar to E2G. All those plants are under construction with the volumes already sold in long-term contracts that will, again, pay for those plants, and we will end up with a great asset. If you look into our numbers for the next, I would say, six years, the growth that we have on renewables is quite amazing, and this growth will come from very low-risk projects because all of them are already sold and with volumes and price already fixed and hedged. That's the same for biogas. Related to sugar and ethanol cost per unit, of course, when you increase, I don't have the number here with me. With the increase of productivity, it reduced the total cost, so the returns for that has been. That's why when we look into the prices today, Lucas, if you look into the sugar and ethanol prices for the next three years and the returns we can get from those prices, that's why we are increasing our planting and the investment on agricultural side because the risk of not having the returns for that investment is pretty much low. The major risk that we had in the past was, are we being able to do it in a very efficient way? Are we getting the returns and the efficiency, productivity that we needed to pay that? That's why, for me, the major point was last year when we saw the results of the planting of the previous year. Okay, guys, we are very good shape and that's the right time to increase the investment on the planting. I don't know, Guilherme, do you have more information to share? If you compare the first cut that we are doing now with the first cut that we had before these improvements, I would say that it reduced the unit cost between 10%-15%. Of course, if you compare the first cut that we're doing now with the old sugarcane, it's more than 25% reduction. This is not the correct comparison. We should compare first cut with first cut. It will be between 10%-15% in unit cost reduction. Perfect. Many thanks. The next question comes from Luiz Carvalho from UBS. Hi, everyone. Thanks for taking the question. I have basically three here. My first topic, I'd like to address the company guidance. If you look a few months ago and also pre and post IPO, there has been an important revision in guidance and expectations, right? Our question on this is first, how the company seen the downward revision in expectations, and what were the main drivers for this in your view? We understand further details may be provided in the upcoming Raízen Day, but if you could provide a bit more general sense, a bit more color on what's behind the guidance for sugar and renewables in terms of how the company's seeing prices of ethanol and sugar already at peak levels and also costs in crushing into 2022 and 2023 crop. The second question is with the sugar curve in slightly backwardation and announcements of the company's proxy hedge, how you're seeing the hedging strategy for the current and following crop. Should the market continue to expect Raízen to see similar hedging levels as recent, or may Raízen become more or less aggressive in this strategy? If you can provide an update on the rationale for the decision of the proxy hedges for ethanol as well would be great. Very lastly on the guidance, but on the food distribution business in Brazil, we saw strong margins in the quarter, but with potential upside, at least in our view, over the next couple, I would say, quarters because of the very tight supply demand. We also saw some strong rebound in volumes in March and April. Even though the company's flagging a significant year-over-year increase in results on top of a favorable third and fourth quarter for previous crop, right? If you can give a bit more color on the breakdown on how the company's seeing the margins for the year in Brazil and volumes both in Brazil and international markets, that would be great? Thank you. Oh, thank you. Hi, Luiz. Thank you for the questions. Great questions. First of all, on the guidance, I think when you look into the IPO period and what we are, the picture there, the only change that we see are non-recurrent. The major change when you look into the productivity levels that we have for the entire Brazilian market on sugar and ethanol and sugarcane has been affected by the dry period and the frost of last year. That was the major change. For us, that's really non-recurrent. We do not expect to have this scenario moving forward. That was really the major change that we had. Of course, inflation was also high, but inflation was more than offset by higher prices that we see right now. For me, the only surprise that we had that was not compensated fully was the weather. That's why we always look into how on a relative basis we are moving forward. Because this weather issue that we had in Brazil last year, it's if this is something happening more frequent moving down the road, it's going to be compensated by prices. That's why we're looking to that, and we are more concerned about our relative recovery on our productivity rates for our sugarcane portfolio. That's for me, the major one. We do not see any changes when you look down the road, the potential that we had of this recovery. That's why the first and second harvest still very important to us to look how fast we are progressing on that. That's a big swing in our bottom line returns, and I don't see any change on that. It's even better than we had at that point in time. I think you're talking about rationale of hedging. Hedging is hedging. Hedging, when we look into that, we are not speculating on that. The only reason we do not have proxy hedge this year, it's an election year in Brazil. As an election year, there is, of course, you have seen Brazil working below import parity level, and that's exactly why we do not do any proxy hedge because of this situation. For us, we still have the same mindset of, when we see prices that are giving us fantastic results, then we do not speculate, and we try to hedge that, and we see that. When you look into New York 11 prices, as I said on my IPO or during the IPO, we see that there is a structural change on sugar prices. We look into right now the cost of fertilizer, the cost of production all over the globe for everyone. There is a cost pressure, and this also another support level for prices moving ahead. Having said that, we still see prices on 2022, 2023, 2024, fantastic prices out there. We are progressing the same way we did before on hedging more and more sugar because we see those levels, despite the backwardation that you said, is still very high to us. We were already hedged at almost 15% higher than the previous year. It was a record year for us on results, and we are looking 2023, 2024, more than 20% higher prices, still very good returns on the next few crops. That's why, Luiz, when you look into the decision of making investments right now on increasing our productivity are more than back up for those great results, and we should not take any speculation, and we should progress the same way. We haven't changed our hedging strategy. The only change was on the ethanol because of elections in Brazil. I think once election is over and we'll see how the new government, if there is a new government or the same one, whatever, then we decide if we are going to move forward on the proxy hedging. But we still have this tool in our hands. We plan to use it and try to mitigate the volatility of our results moving forward. It's still very good scenario going ahead. Your last question on market and services about the on the next crop, the next year that started now in April, we still see good volumes, so the growth is coming. Especially on the diesel we see the harvest in Brazil moving on the right direction, consumption moving up. This scenario of very difficult scenario to supply because Brazil is below import parity prices. We don't see that changing because we see a longer war happening in Ukraine and Russia. We see the election year still pressure to have lower prices of fuel. We don't see a change in the scenario that we saw in the last quarter of the calendar year in last year, the last quarter of our financial this year. We see that scenario the same way we did before, and we see margin still recovering. Luiz, remember that margins in Brazil, if you look on the percentage basis compared to price, are still very low. Comparing to other countries, still very low. This situation that we guarantee to our retail that the supply security, we see that strategy paying off. We see our partners very happy that we are keeping them with the supply base and a competitive base. That's the more profitable margins with those guys, and that keep growing. We are positive. We already have a great start in April, and we see that moving forward on that direction. The same thing for Argentina and Paraguay. We have had a great year in Argentina on converting new sites and new volume. We are managing very well the crisis in Argentina of buying crude. The same thing in Paraguay. It's amazing how fast the conversion into Shell branded stations. The volumes and especially the margins have been protecting those countries. We are very, very confident on the numbers that we put on the table here, Luiz. Perfect. Very clear, Musa. Thank you very much. Next question comes from Christian Audi from Santander. Thank you. Hi, Ricardo Mussa, and hi, executive team. I had three questions, Ricardo Mussa. First, if we could start on capital allocation. Now that you've announced the guidance and therefore your CapEx, can you just talk a little bit about how you think about allocating capital in terms of paying down debt, if any, because you already have such low leverage, and also how you're thinking about dividends going forward? The second question, in the sugar and ethanol segment, you've talked about how things are improving, costs are. You've been able to reduce costs. I was wondering if you could give us a bit more color. Is that a process, Ricardo Mussa, that literally is happening on a linear fashion? In other words, May is better than April, that has been better than March. Do you expect this to continue to happen as this year progresses in a linear fashion, or is it gonna be a bit more volatile? Should we expect, you know, continued quarter-over-quarter improvements in your operating efficiency? Then the third and last question, Ricardo Mussa, on I know you're focusing, and rightfully so, on, in fuel distribution, on your improvement on return on capital employed, which is the correct way to do it. But I was wondering if you could share with us, for your guidance, how you see the BRL 100 per cubic meter, more or less, margin of this quarter evolving as the year progresses, just so that we can get a sense of what's embedded in your guidance, please. Thank you. Thanks, Audi. Quickly talking about capital allocation. What we are considering, the guidance is that to maintain a leverage that's around 1.5, we close the year with 1.3, we are considering distribution of the dividends 50%-75% payout as we had discussed in the IPO time. The idea is that despite the big investments that we have in the new plants, we will maintain a leverage around 1.5, and paying dividends as we can, and maintaining this leverage ratio and the 50% payout minimum. To your second question on the S&E, sugar and ethanol, again, the renewables piece and what you see that we had our older cane, the fifth and the sixth cut on sugarcane is pretty bad. Of course we still have some hangover, I would say, on this transition. This hangover is every time, every month is behind us, so you should expect, I would say, progress towards that on a linear way and moving every month, moving forward. Of course, the weather can help or reduce, so that's why our target here is comparing to the market, and if the market this year goes up, we should be better than the market. If it go down, we should be better than the market. That's what should always expect with this progression on that sense. What I must say is that the Biosev acquisition brought to us a great team. Even the head of our agricultural team now was a former chief operating officer of Biosev. We implemented a lot of things. We combined our operation in a flawless way, and this for me has been amazing how. That's why we are so confident and keep the pace of progression on that. It takes time. We're already on the third year of this, so we still have. We are in the middle of this process of fixing the past and again, we are not promising here that we are going to be better than the market. We're just catching up and closing the gap, and this already has more than BRL 1.3 billion on the bottom line of the company of additional results just by doing that. The progress is so far so good, and we should see that on every. I don't say if you're going to see that on every quarter, because the quarter sometimes you are affected by inventories that we sold one quarter like we did last time. We postponed the sales of sugar into the first quarter of this year for commercial reasons, and that affect our last quarter, improve the first quarter. We have to be careful in looking that in the short- term. We have to look that in the, in the more broad perspective and look into the big numbers. The KPI to follow is the how is the progress of the planting, how is the progress now. Check the second harvest, because if we are treating well the plantation and moving ahead. This for me is a very important metric to move on. Finally, to market and services, the. You mentioned it very well. We are looking more into return of the capital employed. That's the major metric for us. Margin is a consequence. Having said that, we see margin improving. As I said, we don't have here a number to share. What I must say and I can say here, Christian, is that we still see Brazilian margins pretty much below the average of any other country that we look at out there. The reasons behind that, of course, is always tax evasion and the supply security. What we are seeing right now in the market, the importance of having someone being able to supply is key, and we don't see that moving away from us on this next season. That's again a great advantage of Raízen. We have a great brand, a great program, and consistency. For me, the one on market and services, we are very consistent. We always guarantee supply to our partners. A great brand and the portfolio there, it's great, and the margins are improving. Of course, there is going to be some volatility on this improvement on margins because sometimes you have like ethanol last quarter when prices went down. Normally price went down in April. Last time was in February. We had some losses in February. Now we had gains in April because market recover. It depends. There is going to be some fluctuation. Looking to the average, the return, and we can clearly see the improvement on margins all over the place, and I don't see that trend why it should change. I don't see any reason why this should change and should only progress on the right direction. Very clear, Ricardo Mussa. Just to clarify this last point, you see an improvement in margins for Brazil and for Argentina and Paraguay as well, or more in Brazil versus not as much in Paraguay and Argentina? Let's start with the smaller one. Paraguay, it's the easiest one because Paraguay, we are moving from a local brand to a very premium brand like Shell. We move from Barcos & Rodados to Shell. Margin will improve in Paraguay because we are moving to a much premium product than before. Selling more V-Power premium fuels. This should happen in Paraguay. That's a no-brainer. In Argentina, it always depends on the situation out there on the margins because of the market. Right now what I can say, it's good. Of course, Argentina is coming to a more cautious period that is the wintertime, and they have a shortage of gas. Let's see what's happening in the Argentine market. For us, we still on the bottom line of Argentina, the program and what we have on the Shell brand, we have record years on market share, record year on V-Power sales, record year on the convenience stores in Argentina. All that is related to the Shell brand and our strategy to have a higher premium product. We did everything. It was the best year ever in Argentina, and that was a great start. When we end up the year with these great numbers, great results, we start the year with also very strong in Argentina. We have a great start of the year in Argentina related to margins and volumes. Great. Thank you very much. Our next question comes from Bruno Montanari from Morgan Stanley. Morning, everyone. Thanks for taking my questions. Just a few follow-ups as my questions have been answered. On E2G, can you confirm how many plants then are included in the CapEx for the year? Is it only the three plants or now that you have more security on the supplier base, you could be advancing groundbreaking on other units as well within the guidance? Still on E2G, how many contracts do you have today? I remember that you started with EUR 750, moved to EUR 1,000, and now are you already capturing the EUR 1,400 on a potential new contract? Last on marketing and services, can you talk about the company's current import strategy for fuels in light of the pricing level of domestic product? Thank you very much. Thank you for the questions, Bruno. Right now we have three plants under construction at the same time, so in parallel. We have the plant of Bonfim, we have Rivale, we have Barra. Those are the three plants under construction. Of course, we are only building the plants based on the contracts. All those plants have at least 80% already added in my previous answer. You can do some math here, but the prices are better and more than compensate for the increase on the CapEx that we had previously. You can do some math here, but we cannot share, we cannot have full disclosure on the prices. Here, Bruno, it will depend, so I cannot anticipate that. Our target is to be as fast as we can on the E2G. The first challenge was the bottlenecking. Now we have to keep to see what are the other bottlenecks inside the company. Today we feel very strong, very confident that we are going to be faster than the market is projecting our business plan. Remember that our business plan, we're talking about three plants per year, to reach more than 20 plants, in the period of six to seven years. We already have the pace for that, right? I don't see any risk of not achieving that. With the market still very strong demand, it's up to us now to decide how fast we want to go and how much risk we want to take. That's the max I can share right now, Bruno Montanari. On your market and services side, what's the strategy on import? You can clearly see that Petrobras is not making any awkward movement on imports. Brazil needs to import, especially now, when you have a growth in the diesel consumption in Brazil for the next six months. We still have a role here to guarantee supply to Brazil, and we are doing that. We are going to keep importing, but we are not taking losses when we are importing the product. Of course, we are giving priority to the Shell-branded companies that have contract with us. Those guys have the priority on that, and we are going to keep them on a priority basis. Our strategy is to keep, to secure supply and not making any loss on imports. That gives you the tone on how we are behaving. Of course, it's not our average price for Brazil. It depends on the region. Regions that have more imported products are more affected, the regions that have less import products. It depends, the pricing mechanism. It adjusts for each region according to the price situation of that particular region. I think the strategy here is to guarantee supply to our client base, but we are not making any losses on the imports. Very clear. Thanks a lot. Our next question comes from Marcelo Gumiero from Credit Suisse. Hi, everyone. Thank you for taking my questions. I have a quick follow-up on the previous questions on marketing and services in Brazil. My question is that, I mean, if you see any concerns, are you concerned on any potential supply shortages for this year, particularly on diesel, provided first, of course, the price dynamics in Brazil. Also, I mean, the global dynamics for diesel with, I mean, crack spreads going very high and maybe inventories not at the ideal level globally. My second question would be related to CBIOs. I mean, we see very high prices for CBIO certificates right now. I mean, we were just wondering if it is a matter of more aggressive targets for this year or if the market is somehow concerned on productivity of ethanol and, of course, CBIOs certificates emissions. I mean, I was just wondering what do you see in terms of upside for your operations or if this is a downside looking from a market and services perspective? Thank you. No, thank you, Marcelo. Great questions. First of all, you're spot on on the global market for diesel. You can see on the crack spread. You see what's happening in Russia, when you have less gas available, a lot of refineries around the globe, they need to use sometimes diesel to run the refineries. There is the shortage of diesel is something that is more affected by the war compared to crude. Again, Russia is also a very important player on the diesel market. This is something that is a big concern globally on the shortage of that. I think we had a scenario that we managed to guarantee that the supply to us, so it was not easy. If you look into our strategy of importing, we have much less availability of product, so we used to do only here, Gulf-based, and we're using from Europe, from other sources to guarantee supply. Clearly the market is not as friendly as it was before. That, in the end of the day, is adjusted by having the right supply chain to do that, having the right volume. We combine the volumes of Brazil, Argentina, and Paraguay together to do the supply sourcing into the region. We have the strength of having Shell as a shareholder to help us on that too, to find molecule. We see that we have a competitive advantage for this scenario, that we have some shortage of fuels to supply to Brazil. For us, it has been challenging, but there was not a single point in time here that we have a lack of product to our base, to our client base, and we don't see that happening on the short. What's happening. We are going to approach the hurricane season, so there's going to be a little bit more caution on the supply side. We're also approaching a higher demand in Brazil. That's why we have to be very, very cautious on locking the supply, on the sourcing for the next six months in Brazil on the diesel side. But we are very well prepared, even compared to the market here, to guarantee supply and making sure that we have competitive molecule into our system. For me, I see that as, of course, a challenging, but we are better prepared in my point of view than the competition to navigate through this scenario. Okay? To your question on CBIOs, why the price of CBIO, I think, It's more related, Marcelo, to the CBIOs. You look into the targets, not for this year, for the next year, for 2023, we start to have very aggressive targets for CBIO. CBIO, if you look into the supply-demand today, we have more CBIOs than consumption. You have the chance. When you look ahead, what we are going to see is a more tight market for CBIO. I think the price are reflecting that. If you compare to other countries, they're still cheap compared to other countries on the. The CBIOs market will work in a way, and I always tell that to people, the CBIOs market will always have an impact because it creates a more steady demand for ethanol, and this may have effect. You talked about effect on the marketing services. But I think the major implication is more on the sugar segment because CBIO will make Brazil less, I would say, flexible to go from ethanol into sugar, and it will create a more stable demand for ethanol moving forward. The CBIO gain, Marcelo, is not the short -term, it's more on the long- term, and I think prices is reflecting what the market is looking for the next two years on the aggressiveness of the targets of the CBIO. It was created to this, right? It was created to make sure that there is more incentive towards renewables, and this will play a role. We are already seeing that happening on the price, and hopefully this will bring more demand or more, I would say, investments on the ethanol segment moving ahead. It's an important piece of the equation for the Brazilian energy segment, and it's working so far so good. It will really make a difference next year moving forward. If you think prices are good right now for the producers, you might be surprised on the long run compared to other countries. For the market and services side, it's pass-through. You have to manage these pass-through prices accordingly and make sure that it's on the pricing at the end of the day. Thank you. All very clear. Thank you. This concludes the question and answer session. I will now return the floor to Ricardo Mussa for his closing remarks. No, thank you. Thank you for all the questions. It was, as I said, last year was a fantastic year with not only we did the IPO acquisition of Biosev. Can you imagine for us putting in place a big company, and it was a flawless execution. We managed to do all that and at the same time have record levels on all the financial and operational standards for the company. It was a record year on profit, on EBITDA, on revenue, a record year on safety. We have a record year on market share. It was all over the place. It was a year to be remembered by Raízen. We see the progress here is for that. We are going to have the Raízen Day on May 25th, so we will have a live webcast. Everyone is invited. Look, we are going to, for the first time, deep dive in our business and give more details of each one of those business there. We are going to be exchanging our ideas, sharing our plans there, and you are more than invited to follow us there. Also a special thanks, Gui, here. We are replacing Gui. Gui is leaving us after almost nine years as CFO of this business. A very smooth transition. We agree on that for a long time to do this transition. A special thanks here to Gui, who managed to bring this company to where we are right now. Welcome here, Carlos, that he's a great guy. We managed to bring him from the market, and he's going to do this transition with Gui. On the Raízen Day, we will do the proper goodbye to Gui and thank him for all the things that he contributed to the business. Okay. I think that's it. Thank you very much, guys. Thank you. See you on the Raízen Day on May 25th. Bye-bye. Thank you. With this concludes Raízen's webinar. Have a nice day.