SLC Agricola SA (SLCE3.SA): 2Q26 Preview: Higher figures ahead, but all eyes remain on likely effect of El Niño

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SLC Agricola SA (SLCE3.SA): 2Q26 Preview: Higher figures ahead, but all eyes remain on likely effect of El Niño

SLC Agricola SA (SLCE3.SA)

23 July 2026 Citi Research

Thus, we reduced our adj. EBITDA estimate for the quarter slightly, mainly due to higher SG&A expenses, but kept our 2026

forecast at R$2.8bn. We keep our Neutral rating on the name, backed by limited FCF yields over the next couple of years,

considering likely impacts of El Niño on production yields and high leverage under a scenario of high interest rates. We trim our

TP to R$14.5/sh (from R$15/sh) given the higher leverage ahead related to the acquisition of Mato Grosso Block land—as we

commented here—partially offset by a higher FX forecast. On the positive side, we believe SLC may have advanced in urea

acquisition since international prices have declined in a meaning manner, with a normalization in worldwide supply and an

easing of the Middle East conflict. Thus, costs for the upcoming season may not increase so much, while we believe SLC may

adopt a cautious stance in a likely scenario of a strong El Niño—to the point of impacting productivity in a relevant way—being

able to reduce the application of fertilizers slightly or apply a simpler pesticide technological package, while also being able to

make efforts to reduce its capex to protect margins and balance sheet. We note that FX could increase in the coming

weeks/months given the proximity of presidential elections in the country, and agricultural products could increase in

international markets as global supply could decrease, depending on the real impact of El Niño, both being an interesting

upside risk to the thesis. We emphasize that the eventual scenario of a drop in productivity may lead to an increase in