Welcome to the Raízen's webinar to discuss the results of the first quarter 2022-2023 crop. Today with us we have Ricardo Mussa, Carlos Moura, and Felipe Casali. We would like to inform you that this event is being recorded and has simultaneous translation to Portuguese. During this event, all participants will be able to listen to 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 financial projections and goals are based on beliefs and assumptions of the Raízen's management, as well as the information currently available to the company. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions as they relate to the 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 expressing such forward-looking statements. Now, I would like to turn the conference over to Mr. Casali. Please, Mr. Casali, you may proceed. Good morning, everyone, and thank you all for attending the results presentation of first quarter for Raízen's 2022/2023 crop year. With me here are our CEO, Ricardo Mussa, and our CFO and IRO, Carlos Moura. Let us begin the presentation with slide three, showing the main achievements in business generation within our portfolio, which were more than a few this quarter. We began this crop year with the same intensity which we closed the last crop year. We broke a few more records, especially over the volumes of second generation ethanol produced, which reached 7.6 million liters, almost 30% above the same period last year. We made progress on several strategic partnerships that strengthen our performance and leadership in renewables. To give you a few examples, we signed an agreement with Embraer for the development of a sustainable aviation fuel ecosystem. We are also creating the first global supply chain of non-GMO sugar, 100% traceable throughout the entire process, from production to the delivery, with key sustainability investments. In bioelectricity, we are serving more than 12,000 clients from different sectors of the economy by offering 100% clean and renewable power while simultaneously accelerating our energy sales and gaining traction in the electromobility program. In operations, we incorporated the lubricant business recently acquired from Shell, expanding our portfolio of premium products and services, and we increased also the opening of new proximity sites, reaching more than 120 OXXO stores in Brazil. In Paraguay, we anticipated the conversion of the service station network, concluding the process ahead of schedule. We are also increasing further our ethanol exports and our share in the sugar value chain with direct sales to each destination. Another important pillar of our business is our continued push to improve efficiency and operational excellence. It is worth mentioning a few projects about which we spoke little but have made rapid progress. SER+, the Raízen system of excellence, was launched just over a year ago and has already produced several ideas and projects that have brought immediate results by reducing accidents and costs while also increasing operational efficiency. The newly created supply chain structure is focusing on transforming Raízen's operations across the board by achieving productivity gains and optimization with more efficient logistical cycles, reducing further the costs both for Raízen and our clients. All of that entirely supported by our unique and strategic located assets. Other advances are listed on the slide, and as you can see, the list is long. We explore each of those topics in greater details in our release. Well, let's move to slide four to discuss the highlights of Raízen's consolidated results. Our crop year started strong with growth in all segments and in key indicators such as revenues, profits, and return. Our adjusted EBITDA was 55% higher than last year, reaching BRL 3.7 billion. In renewables, the improved ethanol prices and higher volumes sold contributed to the better results. In power, we continue to expand our client base spread over various business segments such as beverages, telecom, among others. We have made progress in our integrated offering of technology intensive, clean and renewable energy with our unique ability to reach clients. In sugar, total sales volume improved 37% in the quarter, with prices 23% higher than the same period last year, reflecting our pricing ability supported by the advances made in the sugar value chain, leading to improved profitability. For both renewables and sugar, we strengthened our initiatives to mitigate the effects of inflation in our operations. We implemented several initiatives internally and with the main suppliers to foster commercial solutions looking to improve our cost efficiency. These initiatives ensure the continuity of our operations and greater control of expenses, avoiding any risk of supply of inputs while improving control over global price increases. As a result, the ex-Consecana cash cost increased by 13% in the period, mainly because of the effect of lower dilution and higher costs with labor, diesel, and other agricultural inputs. As a result, adjusted EBITDA for renewables was BRL 1.1 billion, an expansion of 28%, and BRL 569 million for sugar, 23% higher than last year. In Marketing and Services, sales volume was 6% higher than in the same period last year, where we highlight the LatAm operations that posted a strong increase in demand and network expansion. In Brazil, the volatility of prices brought both challenge and opportunities to our supply and sales strategy. We remain focused on ensuring supply to our clients, optimizing our infrastructure, and improving operational efficiency with superior profitability. RAAS in Brazil operation also improved as a result of efficient management of the business. This resulted in an adjusted EBITDA of BRL 1.7 billion, an increase of 67% in the period. Net profits more than doubled, reaching BRL 1.1 billion in the quarter, and the ROAC, the key metric for assessing our return, improved sequentially to reach 51.5%. Cash generation, as measured by the EBITDA minus recurring CapEx, also improved, reaching BRL 2.3 billion. We also invested BRL 1.9 billion in the quarter, mainly in planting and treating sugarcane fields, and due to the progress made in the construction of our three second-generation ethanol plants, as well as the biomethane plant. In marketing and services, expenditures were mainly related to the expansion and improvements to our refinery in Argentina. Now, moving on to the next slide, we will discuss the consolidated results. Raízen's total general and administrative expenses were BRL 559 million in the quarter, reflecting inflation on expenses, higher consulting costs, and the team increase to absorb the expansion of the business portfolio, and that includes Paraguay and lubricants operations in Brazil. Despite this increase, we captured efficiencies with greater dilution in the quarter-over-quarter comparison, which reflects our disciplined management based on two main initiatives, the Expense Management Program that includes the application of matrix management and our focus on developing initiatives with suppliers and strategic partners. Moving to the cash flows, it's worth mentioning that it followed the typical seasonality in the beginning of the harvest, where inventories are being accumulated to be sold throughout the year. In addition, there was a natural effect on working capital for Marketing and Services resulting from the rising international prices of gasoline and diesel and from acquisition of the lubricant operations, as well as the expansion of the portfolio of renewables. Leverage in the quarter was 1.9 times net debt EBITDA below the same period last year, and the average cost of that is around 100% of Selic rate. Now let's proceed to the next slide, where we will be discussing some updates on our business, starting with the second-generation ethanol. The highlight this quarter was the record production in our E2G plant, in line with the year's plan growing production. In May, we started the construction of our third and fourth second-generation ethanol plants, which means that we have now three plants already under construction and 80% of their future production volumes is already sold on long-term contracts fixed in hard currency, which ensures a very attractive returns to our investments. Let me point out that these plants come into being already part of the Raízen System of Excellence, which ensures best practices to increase efficiency and productivity. The prospects for E2G are constantly evolving. Global demand continues to grow following the implementation of biofuel mandates in several countries. We have been engaging in development of new bio-based and sustainable aviation fuel technologies, further increasing interest in our E2G. Our expanding renewables agenda is proceeding exactly according to plan. Continuing the presentation, let me move now to the next slide to talk about the sugar market. We have made consistent progress in increasing our share in the sugar value chain, and this year, more than 50% of sales were made directly to destination with no intermediaries, which firmly moves us towards reaching 90% share in the upcoming years. As mentioned before, last week, we announced our partnership to establish the first global supply and marketing chain of non-GMO sugar from sugarcane. With this unprecedented partnership, we will sell a product with greater added value over a long-term contract. This means we are leveraging our scale and commercialization capacity to enter a market that has been trending in many parts of the world. Now let's move to the next slide to go over Marketing and Services. As already mentioned, the Marketing and Services scenarios both in Brazil and in Latam has been quite volatile, requiring a more precise focus to mitigate business impacts and maximize our returns. In Brazil, the main highlight was a tax rate review that created new challenges in terms of supply, but had an important offset, a potential reduction of informality throughout the industry. We achieved the record results in the quarter in our operations in Argentina and Paraguay. However, it is important to note that the remainder of the year will be very challenging. In addition to the scheduled stop at the refinery, the economic scenario also requires disciplined management to mitigate any possible impacts on our business. On top of that, the Argentina economic scenario requires an adaptive capital management, reducing exposure to the local currency at this time of turmoil. All this has been done with planning and focuses on maintaining an adequate level of return on the business. Now let's move to the next slide with a brief update on our ESG agenda. The highlight was the launch of our annual report disclosing the results and progress made over the last crop year. We have advanced in our ESG agenda with several initiatives to monitor closer the developments and the results. This includes updating and disclosing new goals and commitments and releasing the strategic sustainability plan. We also approved Raízen's climate strategy and creation of a water governance and management committees, as well as reviewing the code of conduct for suppliers. If you wish to learn more about our initiatives and progress on this journey, I invite you to visit our ESG portal accessible from our IR website. Well, I will now invite our CFO, Carlos, to talk about our expectations for the remainder of the year. Thank you, Felipe. Good morning. I hope that all of you are safe and well. Going to the slide 11. These are the six pillars presented during the Raízen Day in May of this year. I would like to reiterate that each of them brings traction for the expansion of this quarterly performance and will continue to support and deliver the guidance for the year. Worth to remind that we expect the adjusted EBITDA to be between BRL 13 billion and BRL 14 billion in this year, and so far, the figures of this quarter are absolutely consistent with our estimates, despite the challenges and the volatility that we have seen in the market. With all this said, we have the following. First, we are expanding sales and business volume on all segments, while also increasing the client bases and transactions, mainly in the bioenergy segment. Second, we improved our profitability by optimizing our supply strategy with an assertive pricing management. In renewables, we have maintained high levels of the sales in the international market and in sugar, we have made progress in the chain, both in higher added value. The third pillar is related to the improved sugar prices captured by Raízen in this market based on the superior scale, market reach, and sales capacity. Fourth, we have made progress in rebranding all service stations in Paraguay ahead of our schedule and consolidated the recently acquired lubricant business in Brazil. The fifth pillar is the increase in the operational efficiency with a growing volume of business, improving the efficiency per mile driven, supported by our strategic assets and technology applied. Last but not least, agro-industrial efficiency. It's important to mention that despite we are still in the first weeks of harvest, we managed to keep the performances of the first cut of sugarcane at Raízen, which continues to perform above the average of the Center-South region. In the following months, we will have a better view, not only of the first cut but also the second cut of cane. In addition, our industrial performance indexes, known as RIT/STAB, also maintained high and optimized levels in addition to our rolling out in Raízen operational excellence system, denominated SER+ and ReduZa, which is our programs to reduce the external water intakes. We have been rigorous in the business environment analysis and what are the possibilities ahead of us as we will explore in the next slide. Please note on the left column that we listed the main opportunities for this year. We have perceived an increase in the worldwide demand for biofuels as an energy alternative for higher prices of other sources, usually fossil, which increases our ability to scale our business and improves access to clients. In sugar, we are once again differentiating ourselves, as Felipe presented, by signing a pioneering forward contract for no GMO sugar, which will start to be delivered in this year. Together with the increase in sales in sugar to destination, we are enhancing the value added in this commodity, while at the same time we are developing new markets and expanding our portfolio of long-term clients. Another important topic is the evolution of Shell Box, an instrument of convenience and loyalty for individuals and companies with GMV superior to BRL 7 billion and counting. On the challenges side, the point of attention is the climate risk that can affect further sugarcane yields in the Center-South of Brazil, in addition to the macroeconomic and political scenario, both in Brazil and Argentina, especially in terms of how to handle the inflation effect over our costs and the rise of, in interest rates on our balance sheet. We have proven quarter-over-quarter our ability to adapt the scenarios. We will remain attentive, disciplined, and motivated with a constantly evolving our business portfolio. Thank you all, and we can move to the Q&A session. We inform you that the Q&A session will begin soon. Thank you for waiting. We will now start the Q&A session. Questions can be asked through the audio by clicking on the Raise the Hand. To send your question by text, just click on the Q&A icon also available at the bottom of the screen. For participants connected by telephone, just press star nine to send your questions and star six only once to unmute yourself. Questions in Portuguese will only be received by text. Our first question comes from Bruno Montanari from Morgan Stanley. Good morning. Thanks for taking my questions. I have a few, but let me do two here. Thinking on your sugar national operations, what are the company's thoughts about potential M&A for capacity increases at this point? I mean, although the current market environment is a bit turbulent, perhaps it could also bring opportunities at an attractive value. Wondering what the company thinks about this. And then on Marketing and Services, we understand the quarter have had very good tailwinds that helped Raízen to achieve very high returns. The question is, would one quarter give you confidence to perhaps reach the top end of the guidance or eventually think about surpassing it? Thank you very much. Hi, Bruno. Ricardo Mussa here. Thank you for the questions. Regarding your first one, of course we still have a lot of spare capacity inside Raízen, so it's not something that we're seeking as a huge priority to us to keep increasing and looking to M&A. Having said that, we always look into opportunities that can bring synergies. We also look into opportunities that can bring more biomass to our E2G expansion that is growing very fast. That's why we're always going to be looking very carefully what are the options in the market. That, that's all I can share at this moment. Of course, we still have a lot of spare capacity inside our company. We have to fill in the agricultural expansion, and we are moving toward that as we speak. Okay. To your second point here, of course, Carlos can tell more about the guidance in the end, but what we're seeing as I always said since the IPO, we can clearly see a trend or a structural change on the margins for this segment. That is still very low compared to other places. We see the advantages now that reduction on tax, reduced tax evasion. This helps also to improve profitability. In the end, it's still a very volatile market. It's difficult to see on a monthly basis, even a quarterly basis. For me, the most important thing is the trend that we're looking to the margins of this entire segment, especially inside Raízen moving further up. I don't see there is a reason why this trend should be going backwards. There might be some hiccups because of inventory fluctuations, but in the end, very positive scenario because of this, I would say reduction on tax evasion that should also help on the short term and even on the long term. I think again, I repeat what I always said is that structurally, we are seeing a change on the margins for the segment and especially inside Raízen. Thank you very much. Once again, if you have a question, click on the raise the hand. We ask that each participant make only two questions. Our next question comes from Gustavo Sadka from Bradesco BBI. Good morning, everyone. My first question is about also about the fuel taxes. What for ethanol especially, what's your balance after the PLP 18? There seem to have to be some relevant pressure on ethanol producer prices due to the gasoline tax reduction. The PEC 15 came and introduced some enforcement for lower taxes on the renewables, and we saw some states like São Paulo and Minas Gerais approving a lower ICMS rates for ethanol. In our view, is the tax of the PEC 15 as satisfactory, or we need more exemptions for ethanol in order to return to what we could say pre-PLP 18 scenario? My second question is about fuel distribution. It seems like the window for its for imports is reopening. Would that change Raízen sourcing strategy with the company potentially importing more, or is it still too early to take more imports as it could jeopardize some quotas with Petrobras? Thanks. That's it. Oh, great questions, both of them. Regarding the first one on the ethanol, I think the market is not, the price of ethanol is not embedded with the BRL 3.8 billion that the government is going to inject on the ethanol because this has not been ruled how exactly it's going to work. I think this, if you look into what we are seeing in the market today on ethanol, I don't see that the reflection of these BRL 3.8 billion that goes from August to December, impacted yet. I think as soon as this is adjusted and implemented state by state, it will happen. I'd say a very low risk of not implementing that because it's something that the state does not have to put their money out of their own pockets, so it's the federal government. The federal government wants to make sure that these arrive or get to the ethanol producers. This, I think, is the only thing that is missing right now on the ethanol side. We have seen it to be very straightforward. Internationally, the demand for ethanol is still very high. I think the major change that we saw is that during the crisis that we are living now with, especially the Ukraine war, is that clients they are asking for long-term contracts instead of short-term contracts. There was a change on the commercial side for our clients asking to have security of supply. This is helping us, of course, you see we are increasing our exports, compared to what we had last year. I don't see a change on that trend, to be very honest. I think it's still a very good trend. Again, people always talk about fuels. Remember that more than 55% of what we produce is going for industrial use, and this is still growing for plastics, for chemical surfactants, for hand sanitizers. That demand hasn't changed, and it was not impacted at all by any change on what people are talking about the mandates related to the energy crisis around the globe. Okay. That's very important. That's why we haven't seen any change on the demand for our products, especially on the export side. Related to the import parity, then, of course, we don't open our commercial strategy, supply strategy for that. Remember that we do have a very flexible supply chain to import and export. Of course, we always look into that very, very closely, the quota of Petrobras and what we see moving forward. Again, you should look into Raízen as I believe we have the best capability here to take advantage of both ways, locally and internationally. Remember that we do have operations in Argentina and Paraguay that we supply from the same sources, so we have the synergies of bringing ships and deviating ships if it makes sense. I'll give an example. When we had prices of fuels in Brazil cheaper than import parity, we diverted some vessels into Argentina, into Paraguay. We also have a very strong trading capability to move to other places. When we have a situation like now in Brazil, import parity is getting better, we should look very carefully and take advantage of that. We are not going to share exactly what our strategy for the short term. I think we should expect the same flexibility and I would say competitive advantage on our side to go through this cycle. Remember, if you have a question, please press Raise the Hand, or you can send by text on the Q&A icon available at the bottom of the screen. Our next question comes from Isabella Simonato from Bank of America. Good morning, Mussa, Carlos, Felipe. I have two questions. First of all, on the guidance for the renewables and sugar, right? You mentioned when you published the guidance, you were expecting an increase in crushing of 5%, right? I wanted to get a more updated view on how you're seeing crushing volumes for this year, and if that's not met in terms of crushing, how what offsets that probably to reach the guidance you reaffirmed. Second of all, I mean, the company has a big CapEx plan, right, for the upcoming years. As we noticed this quarter, there is some working capital investments, especially to grow the business of direct sales of sugar renewables. I wanted to and also, Carlos, you mentioned debt refinancing, right, as an opportunity for the company. I wanted to get a better view on how you're thinking balance sheet and leveraged for the upcoming quarters or for the next 12 months. Those will be my questions. Thank you. Thank you, Isabella. I'll go to the first one on the crushing side of our sugar and ethanol business, and I'll leave Carlos to answer the second part of your question. What we are seeing right now is that we are looking to our first and second cut still very well, very good, so even better than what we had. That's a very good indication. We are suffering more on the fourth and fifth cut, so there is a gap that is opening, that's on the sense that we are moving toward the right direction. That's very good. Very, I would say, we are very enthusiastic what we are looking ahead in the future. This year the weather has been a little bit worse than we expected, so difficult to get the 5% increase on the crushing. We are looking a little bit lower compared to last year, but not much. What we have, Isabella, is we have a lot of time for crushing, a lot of spare capacity. Why this is good? The good part of that is that we should end the crush earlier than we had in the plan. This should help on the total sugar, the concentration of sugar in the plant, because we don't need to go through the rainy season to end our crushing. Let's see. It's still early to say how it's going to be the final number, but today we have less tons of sugar compared to what we had initially in the year. We are looking to some compensation on the total sugar recovery by the end of the year because of the spare capacity that we have in place and what we're seeing. This last week was a good week on rainfall. That was very helpful to reduce the fires on the field and also help on everything that we planted in June, July for next crop season. I think the message here is optimistic. We are seeing the trend that we saw in the past on the first cut, going to the second cut and moving forward. Of course, the older cane is suffering more than we had anticipated. Isabella, good morning. Thank you for the question. The balance sheet management has a very important concept behind it, is to sustain the business strategy. The very good example is regarding the position that we have made in the trade account receivables in order to reinforce our strategy in sugar to attend the client at the destination. This was very important in terms of profitability. Naturally, the ROAC is not evolving at the same pace due to the turnover of the assets that we will increase in the future. Naturally, we also explore the reduction of the forfaiting transactions in our balance sheet because it's the best allocation of capital due to the fact that you reduce the interest-bearing over the balance sheet, and you don't have the PIS/COFINS, for example, over financial revenues, and it's a smart usage of our capital. Taking into consideration the crop base that we have in our fields, we believe that we will reach, even with the impact of inflation and costs in our CapEx, we will reach the level of CapEx programmed by the company for this year crop. In the liability side, we are working in trade finance, and it's clear in our balance sheet the increase in transaction of ACC, prepayment, and other ones, and naturally, trying to expand the duration. Of our average debt in order to have more comfort in our balance sheet due to the maturity of debt for the next two years. The strategy here is to give more comfort to sustain the investment cycle, and also maintain the financial expenses under control. Our next question comes from Thiago Duarte from BTG Pactual. Hello, good morning. Morning, Mussa, Carlos, Felipe, everybody. Yeah, I have two follow-ups actually. The first one on the previous discussion, Mussa, regarding sugarcane productivity. You made some very important clarifications regarding crushing volumes this year and the encouraging signs for productivity for the earlier cuts. My question is really about the total sugar equivalent production or the TRS per ton, right? You mentioned that if you finish the crop earlier, you might be able to maximize that, but in spite of eventually not growing the total crushing this year. Just if you could, you know, some indication on where we see or we should see TRS per ton throughout the crop, right? The first quarter, we saw a 6% year-over-year decline. Just, you know, that would help us to understand the production volume from your own cane throughout the rest of the year crop. That would be very helpful. The second follow-up, going to the working capital discussion. You know, this quarter was very interesting because it's in some ways the opposite from what we saw last quarter, right? Last quarter margins weren't as good, but you guys delivered a very nice, you know, improvement in terms of capital employed, so that's how you maximize the ROIC. This quarter was the other way around, right? Somehow, you know, you exchanged payment terms for prices. You got good margins in the sugar business, good margins in the fuel distribution. If you could comment a little bit on how we should expect to see, Carlos already mentioned that, you know, that there are optionalities regarding, you know, rates and how you're managing working capital. Is this a trend in a way that how we should see capital employed relative to margins going forward? Should we think of this as more of a fluid situation that could go up and down depending on the quarter? Just some additional color on that would be very helpful. If I actually may, on a third one, you know, you reiterated the guidance, the EBITDA guidance on the consolidated level for the year. Could you comment a little bit on how you see your guidance specifically in the sugar and renewables and in the fuel distribution versus the guidance that you released last quarter? Which one you're feeling more confident about achieving? Which one is not? That would be helpful as well. Thank you. Thiago, well, I'm going to share here part of the answer with Carlos. Thank you, Thiago. Always very good questions. The first one on how do we see that, still a little bit early to tell exactly how it's going to end. Of course, we're not seeing any upside on crushing volume. It's going to be downside on the crushing volume, what we had expected initially from what we had in plan. But we might see some upside on the TRS. Today, I would say it's slightly negative, but not mainly, nothing major, but it's slightly negative. You've asked my personal opinion here from what I'm seeing from the team here. I think the biggest highlight, I'll give some examples, Thiago, that I love to say that there is a widening gap between what we are doing on the initial of planting compared to the older cane, but widening a lot. I'll give you an example. In Piracicaba region, we managed to have our first cut getting 130 tons per hectare. That's unbelievable. We never saw that for a long, long time. It tells us that we are doing a great job on the planting side, and we should get that. The older cane, Thiago, if you go Piracicaba region, are getting 35 tons. It's very, very low. There is a big difference from what you have the newer cane and the older one. That's the combination. Of course, it's looking to the average. It's a good story compared to the market, but doesn't tell the whole story. That's for me, again, a very critical point looking ahead what we should expect for the next years. Of course, it takes time to renew everything, but we are very confident on what we are delivering here on the short term and already now in the midterm. That's related to the crushing. Overall, to your number there, you should not expect any upside and slightly downside to what we had. Of course, prices, it will depend. I'm going to jump into the final question, then I'll leave Carlos to talk on the working capital and the guidance. It does depend, this year, Thiago, we will have our fourth quarter from January to March will be a very interesting one because there's going to be post-election. We don't know how it's going to be exactly the tax. So there will be a huge difference on tax on ethanol if these things come back. There might be a huge price increase in the first quarter. We don't know. There is a lot of moving parts for the final quarter. What we are seeing is that the resilience of our business on Marketing and Services is clear, a structural change in the margin, so I don't see that as a gap. Maybe ethanol prices is the big swing in my point of view, what will be from now till the end of the crop season because of, for instance, as I explained before to Bruno, the BRL 3.8 billion that the constitutional amendment gave for this sector is not embedded in the price yet. There is a big change on tax happening in the first quarter. These will create a lot of volatility discussions on cash and carry, discussion on future prices, export parity, a lot of things happening. I see the players to understand exactly what's going to land. Again, this can create a lot of opportunity, and this could impact positively our business of renewables by now. But it's again difficult to predict, Thiago. Yeah. Good morning, Thiago. We have several moving parts in this sense. That's the reason why that we put two slides in order to give more color in this sense, slide 10 and 11, that we present the levers that supports our reaffirmation of our guidance and naturally opportunities and challenges ahead that sustains our decision to maintain this guidance. Again, we are working hard to put this year as another historical year for the company. Going to the working capital, Thiago, it's important to say that we have finished last year with sugar to destination with 30% of our volume, and we've increased it to 50%. This was a 60% evolution in our allocation of volumes for year-over-year. This will continue. Our goal is to reach 90%, but I believe that the pace will moderate for the next quarters. First, due to the natural evolution and the turnover of the assets. Second, for the prudence that we use to manage our balance sheet, maintain our leverage below the limits that the management imposed, considering, once again, the extension of the average duration of the debt. We believe that we have some opportunities to have a relief in working capital due to the fuels price, because you reduce the effect of the taxation and the price itself over the inventories and the accounts receivables. In a comprehensive sense, it's important to note that we will maintain our prudential approach using the balance sheet at the service of our strategy. All right. Thank you. Our next question comes from Gabriel Barra from Citi. Felipe Casali, thanks for taking my questions here. I have two. Let me start with one. You mentioned in the slide of opportunities and risks the end of the call about political risk. Correct me if I'm wrong here, but it's not clear whether this risk is relative to Brazil or other regions such as, for example, Argentina or Paraguay. Looking specifically at Brazil, we saw some recent speech from one of the candidates talking about the desire to invest in fuel distribution sector again in Brazil. My point is, do you see any risk in terms of the election outcome? If you could, I don't know, give us some color about potential scenarios here and if you see any risk here in terms of not a government intervention, but political risks, right, in terms of regulation, tax and et cetera. The second one, maybe I focus here on E2G. The company was able to deliver a production of close to 7.6 million liters of E2G in this quarter. Remember in terms of the company's total capacity of this plant in the Costa Pinto mill, we have a quarterly, let's say, capacity of 8.7, 8.5 million liters per quarter, right? My question is: How can we manage this production volume in the short term? I think. Do you believe that you can reach the potential of the capacity to have in Costa Pinto? That's my points here, on those two questions. Oh, thank you. Thank you. Good question. First, on the political risk, we of course, we are mentioning much more about Brazil because of elections, and this is bringing much more volatility. We don't see who wins the elections, a big change on the. I think the biggest change would be. In my point of view, the privatization of the refineries, one way or another, so depending who wins the election, this should impact the privatization process of Petrobras. In fuel distribution, if you look into our history, when we had the PT party running the government, we had a great distribution business when we had Temer, we had Bolsonaro. I don't think any change will impact the distribution business of fuel. I think the biggest change on the upstream and midstream, not on the downstream, we're very transparent, and we have lived to that for many years. I think the point that we raise here is the volatility towards the elections that would imply what will happen with FX, what will happen with Petrobras increasing or reducing prices and elections pressure on that. That's what we are related to. There is no election in Argentina. Argentina, there is a different risk because of much more what happens with FX in Argentina. That's the risk that we mentioned politically is related to Brazil. To your point on E2G, of course, we haven't given you the full detail. If you look into the month of July, we had more than, if I'm not wrong, 3.6 million liters going in one single month. Of course, we reached more than 95% of what we need to run the plant, and it's running exactly the same way now in August. We are very happy what we achieved that. I think the two points on E2G is if you look into the construction of the sites, they are on time, they are on budget, and we are delivering even better than we thought the number of plants per year and the bottleneck of the constructions. The good part of looking at our plant in Piracicaba, it gives us the confidence that we are, even though that plant has not all the other improvements that the new plants will have, we are able to run the plant at full capacity, and that's a great example for us. We are getting more confident. Every month that moves forward, we are getting more and more confident on the E2G. The market is getting better and better, so the market is getting better prices, getting longer contracts and great clients. This hasn't changed a needle from what we had last year, even improved. Again, this has been exactly the same. For us, huge focus on E2G implementation is speed up the construction, and we are more confident than ever with the current production that we are getting from Piracicaba plant. Thanks, Mussa. Thanks, everyone. The next question comes from Lucas Ferreira from JP Morgan. Hi, everybody. Good morning. I have two questions on the sugar and ethanol business. The first one, Mussa, you mentioned, you know, so many variables ahead for ethanol. So how to think about, first of all, your sugar and ethanol mix, and so how you see the profitability of both going forward? On the commercialization strategy, would you still be inclined to kind of speed up exports, despite of the credit coming from August, December? Would you be willing to kind of maybe carry a little bit more inventories for the fourth quarter, thinking about, you know, the PIS/COFINS things coming back? So how to think about the commercialization strategy for both commodities? The second question is about the costs. If you can give us sort of a perspective for the cost increase for the inflation of this crop, considering also so many moving parts. You just mentioned the crushing eventually coming lower than expected yields, but on the other hand, diesel prices going down. Consequently, put it this way, how you see the inflation this year? Thank you. Well, thank you, Lucas. Thank you for the question. First, of course, we cannot share a lot of our commercial strategy on the call. It's part of the strategy of the team. What I can share here is that the team is excited, to be honest, because this can bring good opportunities down the road. The mix, we had a mix towards ethanol a little bit higher on the beginning of the year to take advantage of the prices. We have flexibility to go more into sugar. This will depend on how the team here is looking for the next three to four months. We do have some contracts already on exports that was closed with very good prices, so we have to honor those contracts and a very good price on ethanol. This reduces a little bit the potential change on the mix that we had, but also guaranteed to us good prices moving ahead. Exports remain very important to us. We are going to see that our mix to export still very high, going to be like that, and it will not change, right? Talking about carry of ethanol, it will depend also how we perceive the market and especially this political situation moving forward. I think the discussions will. They're already happening, but that's not the right time to make any decision on that. Maybe a little bit further. looks like there's going to be opportunity, to be honest. If we believe that the PIS/COFINS is going to return, in beginning of the year, a new government, don't see how they are going to keep taxes low. I think there is a higher chance. that's going to play an important Part of the decision here. I'll let Carlos comment on the costs, but it hasn't been a big issue for us. It's better, let Carlos comment. Thank you, Mussa. Good morning, Lucas. On the cost side, I would like to highlight that we are suffering the effect of the production volume naturally. Mussa mentioned our vision regarding this evolution for the year crop. Probably this will continue to affect our cost structure. At the same time, this year, we will perceive a relief in our costs, especially in the planting and preparation for the next crop. In labor, probably we will remain in the same level due to the inertia of the inflation over the workforce salaries. We are seeking opportunities in our procurement area, developing several projects of value engineering in order to review specifications, maintaining this same level of quality and performance, operational performance. Keeping our eyes more focused on mitigating these inflationary and supply chain effects. In expenses, that's not the major part of the cost structure, but it's important to reinforce our discipline. Lucas, in the end, we clearly see the trend now. It looks like the worst of the inflation is getting behind us, so we are seeing if the steel price is going down. We're seeing even the fertilizer price already moving down. Of course, there is still hangover, as Carlos said. I think the view for the, say, medium term and short term is getting a little bit better than what we had a couple of months ago. Still, again, it's a huge pressure, but we are dealing with that very, say, in a healthy way. I'm very glad with the management of what the team is doing here. Perfect. Carlos, if I may squeeze in like a follow-up. You guys announced like this very relevant buyback program. How do you see room in the balance sheets for this to come sort of on top of the let's say payout ratio you guys had in mind before in terms of dividends for the year? This should come as like an addition to return to shareholders you had in mind before? Or not necessarily gonna see like the full picture buybacks plus dividends. Our objective with the buyback program is to maintain open the program in order to observe some opportunities in the market. The price of our share is definitely undervalued, and the company needs to maintain its capital structure prepared for in the right moment to put in place this initiative. It's very important to maintain our program open. Due to our liquidity level and our capital structure, we have conditions to attend the program at any moment. Regarding the distribution of dividends or interest on own capital, we are defining the evolution of the next two quarters in order to analyze the best size and the best momentum to proceed the distribution in the next quarters. Amazing. Thank you very much. The next question comes from Luiz Carvalho from UBS. Please, Luiz, you can press star six to unmute yourself. Hi, Mussa. Carlos, Felipe, can you hear me well? Yes, perfectly. Hi, how are you doing? Oh, perfect. Thank you. Good. How are you? Thank you. Two questions here. If I take the hook of the last question in terms of capital allocation, you already mentioned about dividends and buybacks. There was some news recently in the press about BP and Bunge divestment and news that Raízen might be looking to the assets. Just want to, I don't know, hear your thoughts. I mean, you recently made a huge acquisition, Biosev, which, you know, gives scale to the sugar and ethanol business. How do you see this asset and how does that fit in your capital allocation strategy? The second question is about the food distribution business. We have been talking to several players and of course the first half of the year was, you know. It's a positive for the industry, as you just mentioned. We also had some tax reductions, which by the end of the day might reduce the tax evasion. Talking to other players, there is a sense of, I don't know, mess in the sector mostly because of this tax changes, right? The PEC, the tax changes are creating some discrepancies. I wonder to try to understand a bit better your views on how this is playing with Raízen and how this might play out over the next maybe 12 months-18 months. Thank you. Thank you, Luiz. Related to acquisitions on the segment, I think that, as I mentioned in the beginning, we made a huge acquisition last year. It was, the M&A team did a great job, and even the conclusion here of the acquisition was also fantastic. We're very glad what we did, what we accomplished. We still look into all those opportunities, not only the one that you mentioned, but other ones, if there is any, I would say, potential synergies to our business. I like when I look into those deals, I always like the idea of having more biomass available for E2G. That will clearly be a bottleneck shortly, what we see the demand for the market. Strategically, that's the major point of looking into other opportunities. Having said that, I don't know if it was Isabella in her report said, we still have one Biosev inside of our company with spare capacity here to grow, and that's the major focus for us. We never discard any potential deal if there is the right price, the right synergy, and that's as much as we can share right now. We do have a lot on our plate, a lot to do internally. We have to always look into those opportunities, not only for the short term, but also for the long run. E2G and biogas play a major role when you look into those things. Related to Marketing and Services, the fuel distribution business in Brazil, as you said, has been a lot of things happening in the first quarter. That was difficult to capture because you see tax changes, price changes, and market was at some point having to import more, import less. I think it will be. It make the life of the analysts harder to compare because a lot of things could impact the numbers here of each company. As I said, I think the all the movements are good for the segment. Movements that reduce tax evasion, a movement that make for us, for instance, the reliability of supply that we guarantee to our clients was unbelievable throughout all those months that make the brand more valuable, make the relationship more valuable. I only see us coming out stronger in this period. To be at Raízen has been a great momentum with all the partners that we had in Brazil, all the sales team and so on and so forth. We might see fluctuations, but the trend is very good. That's, I think, the major point here. What's the trend of margins and profitability of the sector, and I clearly see the changes. There might be some. Okay, this quarter we had more impacts of inventory, the other ones less impact, or it's going to fluctuate a little bit. The most important piece, I think, for everyone to look into what's the trend, what's ahead of us, and I only see the trend, a good trend, lower tax evasion and more profitable business. That's all I can say, Luiz. Okay. No, clear enough. Thank you. The next question comes from Régis Cardoso from Credit Suisse. Hi, guys. Good morning. Can you hear me well? Yes, perfectly, Régis. Nice to see you again. Hi, Mussa. Thanks so much for taking the questions. A couple of topics. One of them is on the E2G. I think that was a big topic in the Raízen Day. I guess one of the key messages was that you had pretty much cleared many of the supply constraints on the construction of the plant. I wanted to get a word from you on whether you have any updates on that front, if you believe it will be possible, let's say, to accelerate the pace at which you ramp up E2G capacity, and whether you continue to have the same strong demand for long-term hard currency contracts as you've had in recent months and quarters. That's the first topic. The second topic, maybe also involving Carlos in the discussion, related to the working capital and this time more specifically on the second quarter. I guess working capital was a big positive in the previous quarter and now it pretty much gave back all of the gains in working capital and Marketing and Services. Of course, you have the seasonality on the renewables and sugar businesses. If you could maybe explore a little bit more the details of the working capital. It was quite sizable, some BRL 10 billion. How much of that you would expect to come back throughout this crop year? Thanks. Oh, thank you, Régis. On E2G side, as I'll give you some update here. I think if you look into the equipment's bottleneck, there is no longer an equipment bottleneck for us. We're building the equipment that we had the bottleneck last year. It's not there anymore, so we can go up to about seven plants per year if you want to. We are getting closer to the second plant to get ready, with the Bonfim plant in Araraquara region, we are going to the final stages now of the construction and commissioning beginning of next crop season. That would be a great point now for us to make a decision because what we are seeing is that we are being able to manage the sizable investment on time, on budget, and now the commissioning is the next, I would say, big check that we had on our plates. We are, again, getting more and more confident every time. We had expectations to have two plants per year. Now we are already building three. I would love to go to four or five as soon as we get even confident that the commissioning is good. On the market, Régis, I don't know if you remember, we are getting better prices than what we had a year ago, much better prices. If you look into the spot market, it is almost twice the price that we had a year ago. We are seeing the demand, especially on sustainable aviation fuel, is stronger. It clearly goes through much bigger volume. That's why it has been even more difficult to us to negotiate one plant at a time. We are talking about multiple plants at a time right now, and still the same hasn't changed. We saw with this food versus fuel debate in Europe, the mandate for the non-food related, the advanced biofuel going up. That's why it creates even more momentum to us, and you don't see that change or any change in the on the trend. I must say, Régis, there is no change on the demand side, only better prices and higher demand than what they had previously. Now it's up to us to decide if we are going to more than three plants per year or not. I think we are getting closer to getting more than three plants per year. The next checkpoint now is the commissioning of the plant that is going to happen at the beginning of next crop season. Good morning, Régis. Pleasure to talk with you. Going to the working capital, it's important to note if we analyze in this Slide five, it's clear. You can see the OCF at around BRL 5 billion and matching with the evolution of the trade account receivables in BRL 5.2 billion due to the reasons that we have mentioned. We believe that the growth of the trade account receivables for next quarters will be less intensive, with a relief in inventories due to the price of the fuels and the inventories ahead, and with a lower impact from the restricted cash in the changes in the assets and liability. That's about BRL 1 billion. We believe in a relevant relief in the working capital, moving the direction of the step to the consumption that we had in this quarter for our generation. It's difficult to say will be a generation of X, otherwise I will anticipating the results of the quarter. It's clear that we will have a relief in this generation or this effect in the generation due to the changes in the inventories and restricted cash. Understood, Carlos. Mussa, thanks so much for the answers. Congratulations on the results so far. Thank you. Thank you again. The next question comes from Daniel Sasson from Itaú BBA. Hello. Good afternoon, everyone. Mussa, Carlos, Felipe, thanks for taking my questions. My first question is in regards to your M&S division. Obviously, there are a lot of moving parts here, but you did have excellent results in this quarter. If you could comment on what you're seeing for the second half in terms of demand, market share, and I mean, if you believe that the very high margins that you posted in the second quarter are sustainable in the medium term or maybe if they could suffer a bit with now lower gasoline prices in Brazil because of the repricing of your inventories or if you feel comfortable with the current levels that you've reached, that would be great. My second question regarding CBIOs, right? The recent change in the schedule or the postponement of the program schedule. If you could comment on your views for that specific market right now. We saw a big decline in CBIOs prices and how or if that affects your strategy on the ethanol division in any way. Thanks a lot for your time. Thank you, Daniel. Related to Marketing and Services margins, the only thing that I do not agree with you is that the margins, even today, are not good. In my point of view, if you compare to what we see globally on that, it's a very low margins. Brazil has been over the years with very low margins. Even today, I don't see that as the structurally where the margin should be moving ahead. Be very clear here, I see, again, it's with reduction of tax evasion, this business should have a structurally higher margins. But having said that, it's going to be impacted always with inventory gains, inventory losses. It's difficult to predict what will be the exact number. What I see is the trend. If you look into the trend for the past, I would say maybe 18 months, is a good trend and it's going to be impacted somehow by big changes on tax and prices that could go down or up, but the trend is a good trend. Normally, if you look historically for Raízen, the first quarter for Marketing and Services is normally the worst one, and the best one is the fourth quarter. That has been our historical. This year it started very strong, so it's difficult to see if this is going to maintain or even going up for the next quarter. Normally demand for the second half is better than the first half. Normally you have a recovery, especially on ethanol prices by the last quarter. That normally helps. It's difficult to predict. I think I'm going to reply the same way I said before. I see a change on the market, especially because of reduction of tax evasion. This should be a big change, but the volatility will bring some hard time to look into the numbers and see how much was inventory gains, inventory losses. What we look into here is what's the margins after all that. That for me is the most important KPI. It's how we are going to see that moving up, and we can clearly see the trend. Related to the CBIOs market, it's the change that they have on postponement. It creates pressure for next year as a distributor because it makes the mandate and they postpone to September 2023. Clearly, there's going to be a huge pressure on the volume of CBIOs for next year compared to this year. Because CBIO, there is no valid date you can. I think it's going to be interesting to see how the players look into that. If people will focus more on the short term, trying to deliver a better result right now, and postponing the acquisitions for next year might bring huge pressure on prices next year. This is going to create more volatility, I would say. Of course, as a producer, we don't like when the government make changes on the program, but the change was really postponement and creating much more pressure on the volume for next year. Let's see how the players will look into that, if they prefer to already buy and put that into the and reduce the pressure for next year, or if they're going to make a bet that prices of CBIOs next year will be the same as this year. I clearly see that if you look into the overall I always thought that the implications of CBIOs and sugar prices, not many people look into that together. We look into that together. If you look into the mandate of CBIO moving ahead and how much ethanol production we have in Brazil, this is going to create a pressure that will impact sugar prices. I always tells that to everyone. We saw that this year when you have less CBIO than what we need, the prices should catch up and find the right price to make sure that the producer will focus on ethanol. This will be interesting because I think the sugar prices down the road will also be influenced by the CBIO mandate. The good part is that they protect the CBIO program. We are discussing now with the government to have a better, even a better program moving ahead to make it more liquid. All the discussions with the agricultural minister is a very good one. Thank you. It was very clear. Thanks a lot. The next question comes from Matheus Santana from Aki Investments. Hello, guys. Can you hear me? Yes, Matheus, we can hear you. I'd like to ask you a question about the biogas business. You have the goal of reaching 39 biogas plants by 2030, and I'd like to know what is the goal of how many plants you're opening per year. I would also like to know about how is the decision made for choosing to include a biomethane plant on it or not. Given that the already announced plant that is being built right now consists of both biogas and biomethane, is it expected to cost around BRL 30 million? What would be the expected cost of one that only includes the biogas? I also would like to know a bit more about the sugar business line. We saw a BRL 2.2 billion other revenue lines that come from a clause related to debt that came from Biosev. Can you explain to us this a bit more? It's also described as being non-recurrent and only for 2022. Is this something like that is one time off and we are only going to be seeing it at this quarter, or we will be seeing again in other quarters during this year? That's it. Thank you. Okay, Matheus, good questions. Related to biogas, we just remember that 39 are modules. Of course, we don't have 39 bioenergy parks. When you talk about modules, it's normally you have a plant like the Costa Pinto mill in Piracicaba is two modules. When you go to Univalem in that way, it's two modules. It's always depends on the size of the bioenergy park. If it's a larger bioenergy park, you can have two or three modules. It's a very small bioenergy park, you can have one module. That's the beauty of that. The biogas production, it's two things. It's normally we select the plants that are bigger and the plants that are closer, for instance, to connect to the pipeline. We have like the Costa Pinto mill is a great example, connected to Comgás. You already sold the entire production to Volkswagen and to Yara, and that's a very no-brainer to move forward. Plants that are further away that are not close to connect to the pipeline, the major use is to replace the diesel in our own fleet, and that's what we are moving towards right now, is how can we increase the expansion of gas fleet of trucks to use also. The interesting point here, Matheus, is having the plants that you don't need to have huge issues with the demand because the biggest demand is our own diesel consumption. What's the beauty of that? Once you replace diesel by biogas, you reduce the emissions of diesel by 95%. So this implicates a much higher value for your first generation ethanol, for your second generation ethanol, and for your sugar and bioelectricity. There is not only the advantage of reducing the cost of diesel replacing by biogas, but also the advantage of having a better product in the end of the day. This, you're going to see different, I would say plans for different plants. What we are looking right now is every plant that we have E2G makes sense to have a biogas plant because one of the feeds, the residues of the E2G production is vinasse, that is the feedstock for biogas. Not by coincidence, you're going to see our expansion of biogas following the E2G expansion. That's where it makes more sense. That's where the CapEx is lower to make the investment on each plant. Of course, I don't want to open here how much is the investment per plant. It depends on the module, depends on the location of the plant. Again, it's part of our strategy and it's moving toward the same direction of E2G. The same way, the beauty again, Matheus, I always made that point, for E2G and biogas, we don't need one additional hectare of farmland. We don't need one additional ton of sugarcane. It's purely efficiency inside of our system, the same way we did before. To your point on the Biosev, I'll leave Carlos to explain. It's a very simple explanation. Thank you, Mussa. Good morning, Matheus. Thank you for your questions. If you check page 9 in our release, you perceive the effect in other revenues that we have the net revenues from the commodities exports related to certain clauses regarding Biosev debts. For this reason, in order to make a proper consolidation, this is a transitory effect. We are recognizing the effect of these revenues and costs in the same amount in order to maintain the margin comparable and avoid any kind of distortion in our numbers. That's the reason why when we put a specific footnote regarding this point in order to be more transparent in this sense. Thank you. This is Felipe here. We received one question on the chat here. I'll read from Giovanni Camilo Santos, a shareholder of the company. It's a good opportunity here for us to explore our bioenergy and power business here. What is the strategy? His question is, what is the strategy of Raízen is adopting now to face the growth on the electric vehicle production and sales in Brazil? Mussa, I don't know if you want to. No, of course, I can. It's a great question. Not many people realize how big Raízen is on the power segment in Brazil. We are big producers. We have huge production of electricity. We are reaching almost 15,000 clients. We closed June with 12,000 clients, so it's increasing a lot the number of clients that we have for power. Power is becoming more and more relevant to us, not only as a producer, but also to commercialize, to reach the final consumer. If you look into the recharge side of electric vehicle, despite the fact we see Brazil as a lower adoption on the early stages here for electric vehicles, not going to be significant on the next five years. We are very well positioned to that. Remember that Shell is the number one company globally on recharge. They have more recharge station than pumps today. We do learn a lot from Shell. Shell is present in more than many countries. They are testing very different things. They know what's happening. They see the speed adoption in more developed countries. They see this lower adoption in developing countries. The main advantage for us is having Shell as a shareholder and having a better understanding where the market is going and how to position ourselves to take advantage of this recharge business that will be at some point relevant in Brazil, but not for the short term. I think you saw that we already started that in some of our service stations. Our partners like the idea of having additional revenue coming from power, and these will be over time, more and more relevant in our business portfolio. You could look into that becoming something that we're going to give even more transparency to the market over time. We already gave some highlights in our last Raízen Day. I was even surprised that not many questions came up this time because this business is booming and is doing well, not only on the size, but also on the profitability. It's a great business for us, and it's going to be more and more relevant moving forward. Thank you. This concludes the question and answer session. I will now return the floor to Ricardo Mussa for his closing remarks. Oh, thank you. Thank you everyone. Great questions. We had more than 20 questions on the call. As I said, we've been living up to what we promised. I think that I always like to finish my conversations and calls. If you look what we promised since the IPO of the business, we more than over-delivered, I think. If you look into the results of sugar prices are better. If you look into our recovery on production, it's going right where we want to be. Margins of fuel is improving. Destination of sugar, part of our strategy, we are delivering the growth on the power segment. So it has been a fantastic start of the crop season, even better than we anticipated here. Very excited about the rest of the year and more excited than ever with the E2G, what's coming ahead of us and starting to see some numbers popping up in our results from E2G shortly. Again, I invite you guys to keep in touch with us, visit us, look what we are doing, and of course, great opportunity to buy. The shares are really, really low, and we saw that. That's why we announced the buyback program. Let's go ahead and keep delivering what we promised the market. Thank you. This does conclude Raízen's webinar. Have a nice day.