LND Brasilagro Cia Brasileira De Propriedades Agricolas

FORM 6-K
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF THE
SECURITIES EXCHANGE ACT OF 1934

dated November 5, 2018

BRASILAGRO – COMPANHIA BRASILEIRA DE PROPRIEDADES AGRÍCOLAS
(Exact Name as Specified in its Charter)

BrasilAgro – Brazilian Agricultural Real Estate Company

U (Translation of Registrant’s Name)

1309 Av. Brigadeiro Faria Lima, 5th floor, São Paulo, São Paulo 01452-002, Brazil

U (Address of principal executive offices)

Gustavo Javier Lopez,

Administrative Officer and Investor Relations Officer,

Tel. +55 11 3035 5350, Fax +55 11 3035 5366, ri@brasil-agro.com

1309 Av. Brigadeiro Faria Lima, 5 ^th  floor

São Paulo, São Paulo 01452-002, Brazil

U ( Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F  x    Form 40-F  o 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T
Rule 101(b)(1):  U                    

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T
Rule 101(b)(7):  U                    

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes  o    No  x 

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): Not applicable.

For the quarter ended September 30, 2018

São Paulo, November 5, 2018 – BrasilAgro (B3: AGRO3) (NYSE: LND) , the Brazilian leader in acquiring, developing and selling rural properties that offer high potential for price appreciation in Brazil, announces its consolidated results for the quarter ended September 30, 2018 (“1Q19”). The consolidated quarterly information is prepared in accordance with International Financial Reporting Standards (IFRS).

1Q19 Conference Call

November 6, 2018

Portuguese with simultaneous English translation

2:00 p.m. (Brasília)
11:00 a.m. (NY)

Phone Brazil: +55 (11) 3127 4971
Phone U.S.: +1 929 378 3440

Password: BrasilAgro

MESSAGE FROM MANAGEMENT

We ended the 2017/2018 harvest year with record results for the Company and we started the 2018/2019 harvest with equally motivating prospects. In 1Q19, we reached Net Revenue of R$270.7 million and Adjusted EBITDA of R$127 million, mainly reflecting the recognition of the sale of part of the Jatobá Farm as announced last July.

The estimated production area for the 2018/2019 harvest is 135,100 hectares in Brazil and Paraguay, an increase of 31.4% compared to the previous harvest, mainly due to the lease of the Parceria V Farm, announced in September, adding 23,600 hectares of mature land in the region of Mato Grosso and potential for second crop cultivation in up to 80% of this area.

In addition to soybean, corn and sugarcane crops and pasture, this year we began cultivating cotton in more than 1,500 hectares in Bahia. The cotton crop will allow us to capture the good current price levels and, mainly, to demonstrate the potential for cotton production of our lands in that region.

The lease of mature areas and the introduction of new crops reinforces our strategic plan to reduce the volatility of operating cash flow and achieve greater flexibility in the real estate portfolio management.

The planning of our agricultural operation, the development of new areas, added to the active management of real estate activities are factors that will certainly generate value for our shareholders. We remain confident that there is potential for new opportunities, relying on our strong cash position and prepared to make the best investments.

On October 16, the Annual Shareholders’ Meeting approved the distribution of R$41.0 million in dividends, equivalent to R$0.76 per share, generating a dividend yield of 5.3%, demonstrating our commitment to the return to our shareholders. Our entire team is committed to ensuring that the 2018/2019 harvest year brings good results and significantly contributes to the Company's growth.

OPERATING PERFORMANCE

Definitions: 1Q18 and 1Q19 – quarters ended on September 30, 2017 and September 30, 2018, respectively | 2017/2018 Harvest Year – fiscal year started on July 1, 2017 and ended on June 30, 2018 | 2018/2019 Harvest Year – fiscal year started on July 1, 2018 and ended on June 30, 2019.

Leasing

On September 3, we announced the leasing agreement to explore an agricultural area of 23,500 hectares in the municipality of São Félix do Araguaia, in the state of Mato Grosso. The new farm was named Parceria V.

The leasing agreement has a duration of up to 10 harvest years, and payment per harvest year will be a minimum of 9.39 soybean bags per hectare or 17% of the total production, whichever is greater.

The area will be cultivated with grains and is already in the process of planting for the 2018/2019 harvest. These areas are mature, with more than 5 years under production and are suitable for a second crop.

The agreement is part of the Company's business strategy aimed at the reduction of the volatility of agricultural operations results and maximization of the combination of the Company’s operating and real estate return.

Development of Areas

During the 2018/2019 harvest year, we intend to transform approximately 4,000 hectares in Bahia and Paraguay, totaling 127,500 hectares of transformed area in 11 years of operation, which represents an average growth of 29% in the portfolio transformation, which is the main valuation index of our properties.

Market Value of the Portfolio

We hired the independent consulting firm Deloitte Touche Tohmatsu to conduct a market valuation of our properties. According to their appraisal, as of June 30, 2018, the market value of the portfolio was R$1.32 billion .

We review the internal market value of our farms annually, and on June 30, 2018, when the valuation was conducted, the market value of our portfolio was R$1.26 billion.

In order to estimate the market value of our farms, we considered for each property: (i) its level of development; (ii) soil quality and maturity; and (iii) agricultural aptitude and potential.

The table below shows the internal market valuation of the portfolio performed by independent consulting firm Deloitte Touche Tohmatsu on June 30, 2017 and 2018, considering the sale of part of the Jatobá Farm:

In April, we began harvesting sugarcane in the Alto Taquari, Araucária, Parceria III and Parceria IV Farms. We estimate to deliver 1.8 million tons until the end of the sugarcane harvest year. For the next harvest, we estimate to deliver 2.2 million tons, an increase of 17.3%, through investments and productivity increase in São José Farm.

In addition to the 13,518 hectares estimated for active pastures during the 2018/2019 harvest, the Company has 4,253 hectares of pastures without livestock at the Chaparral Farm, which represent areas still under development.

The drought period is concentrated between July and September (1Q19), which represents a lower weight gain for the period. This figure should increase non-linearly in the next quarters.

OTHERS

In order to improve the Company’s results, mitigate operating risks and as a real estate strategy we leased 14,120 hectares to third parties in the state of Bahia, in the Midwest region and in Paraguay. The areas were leased to local farmers and the contracts have a term of up to five harvests.

In addition, we have 2,539 hectares of grasses cover crops and sorghum, in order to increase the organic matter and accelerate the maturation of the soil.

FINANCIAL PERFORMANCE

The consolidated financial statements were prepared and are being presented in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board.

EBITDA and Adjusted EBITDA

EBITDA and Adjusted EBITDA are presented based on Net Income adjusted for interest, taxes, depreciation and amortization, pursuant to accounting standards.

Adjusted EBITDA was calculated by excluding biological assets in progress (sugarcane and grains planted) and adjusted for the harvest’s derivative results and depreciation expenses, including depreciation of fixed assets of the farms, developed areas and permanent crops.

Income Statement

In 1Q19, the recorded net revenue from sales was R$241.7 million, 189.0% higher than the same period of the previous year. This is mainly due to the revenue of R$123.3 million (present value) from the sale of the Jatobá Farm.

Net revenue from grains (soybean and corn) in 1Q19 increased R$32.8 million compared to the same period last year, from R$8.9 million, from the sale of 15,300 tons, to R$41.7 million, from the sale of 36,000 tons.

Soybean revenue increased by R$33.6 million in 1Q19 compared to the same period last year, from R$6.1 million, from the sale of 6,800 tons at R$899.41 per ton, to R$39.8 million, from the sale of 32,200 tons at R$1,235.56 per ton. The increase in sales of soybeans in 1Q19 compared to 1Q18 reflects the higher volume stored in the period.

Corn revenue in 1Q19 decreased by R$871 thousand compared to the same period of the previous year, from R$2.8 million from the sale of 8,500 tons at R$325.53 per ton, to R$1.9 million, from the sale of 3,800 tons at R$489.73 per ton.

Sugarcane revenue in 1Q19 increased by R$586 thousand compared to the same period of the previous year, from R$73.5 million from the sale of 889,300 tons at R$82.68 per ton, to R$74.1 million from the sale of 848,600 tons at R$87.34 per ton of sugarcane. The increase in per-ton sugarcane price was due to the higher price of the TRS (total recoverable sugar), which went from 0.574 R$/kg in 1Q18 to 0.628 R$/kg in 1Q19.

Cattle-raising revenue in 1Q19 increased by R$1.6 million compared to the same period of the previous year, from R$380 thousand from the sale of 205 head of cattle at R$4.66 per kilo, to R$1.9 million, which refers to the sale of 1,103 cattle to R$4.70 per kilo.

Leasing revenue reached R$582 thousand in 1Q19 and refers to third-party leases of Farms. These lease contracts have a duration of up to 5 years with value of up to 18% of production, and the minimum value is 5 soybean bags per hectare.

In 1Q18, we had other revenues in the amount of R$103 thousand, and in 1Q19, other revenues totaled R$22 thousand. These amounts ​​refer to the provision of storage services and sale of inputs and by-products.

Gains or losses from the variation in the fair value of agricultural products are determined by the difference between their harvested volume at market value (net of selling expenses and taxes) and the production costs incurred (direct and indirect costs, leasing and depreciation).

Harvested agricultural products are measured at their value at the time of harvest considering the market price of the area of each farm.

Biological assets corresponding to ratoons of sugarcane are measured at cost less depreciation (Accounting Standard IAS 16), while planted cane is measured at fair value (Accounting Standard IAS 41).

Biological assets correspond to agricultural products in formation (not yet harvested) and cattle, measured at the net present value of the expected cash flow from these products. The calculation of fair value considers the best estimates in relation to sales prices, discount rates, direct and indirect costs, leasing, yields and selling expenses.

Cattle biological assets are measured at fair value and controlled in accordance with two methodologies: 12 to 15-month calves and steers (heifers) are controlled and valued by head, while

older animals are controlled by weight.

Fair value variation is impacted by variations between fair value and cost, as well as by fair value variations between the periods.

Gains or losses from the variation in the fair value of grains and sugarcane biological assets are determined by the difference between their fair value and their book value. Book value includes investments and costs effectively incurred until the moment of appraisal, as well as write-offs arising from the harvesting of the agricultural products.

The table below shows the results of the sugarcane harvest in the fiscal year, including gains (losses) in the value of agricultural products and biological assets:

IMPAIRMENT (REVERSAL OF PROVISIONS OF THE RECOVERABLE AMOUNT OF AGRICULTURAL PRODUCTS, NET)

A provision to adjust inventories at the net realized value of agricultural products is constituted when the fair value of the inventory is higher than the realized value. The realization value is the sales price estimated during the normal course of business less estimated selling expenses.

On September 30, 2018, there was no reversal of provisions of the recoverable amount of agricultural products.

The estimated cost of production per hectare of sugarcane in the 2018 harvest was 38.5% higher compared to the cost incurred, because in 2018 harvest crop handling costs of the São José Farm started to be accounted by the Company, which didn’t exist in the previous harvest and also due to the raise in CCT – Cutting, Loading, and Transportation costs, related to the diesel fuel price increase.

Cost of goods sold (COGS) came to R$78.9 million in 1Q19. Due to the fair value adjustments of agricultural products, period changes in costs are directly linked to the market price of commodities at the time of harvest.

Soybean COGS increased by R$15.5 million in 1Q19 compared to the previous year, from R$6.4 million, from the sale of 6,800 tons at R$933.67 per ton, to R$21.9 million, from the sale of 32,200 tons at R$679.80 per ton. The decrease in cost per ton was due to the increase in volume produced.

Corn COGS decreased by R$1.9 million in 1Q19 versus the previous year, from R$3.5 million, from the sale of 8,500 tons at R$412.06 per ton, to R$1.6 million, from the sale of 3,800 tons at R$424.45 per ton.

Sugarcane COGS increased by R$8.5 million in 1Q19 versus the previous year, from R$44.7 million, from the sale of 889,300 tons at R$50.28 per ton, to R$53.2 million, from the sale of 848,600 tons at R$62.73 per ton of sugarcane. The increase in cost per ton is mainly due to expenses with crop handling in the São José Farm as of this quarter.

Cattle-raising COGS reached R$1.7 million in 1Q19 compared to the previous year, from R$411

thousand form the sale cost of 205 head of cattle at R$1.9 thousand per head, to R$2.1 million from the sale cost of 1,103 head of cattle at R$1.8 thousand per head.

Other COGS in the amount of R$33,000 in 1Q19 mainly refers to the raw material inventory adjustment. In 1Q18, other COGS in the amount of R$95,000 refers to the sale of waste.

In 1Q19, we recorded R$1.2 million in selling expenses, 59% higher compared to 1Q18, mainly due to the provision for doubtful accounts (PDD), as shown in the other selling expenses line.

In 1Q19, general and administrative expenses increased by 35% compared to the same period of the previous year, from R$7.6 million to R$10.3 million.

As of this quarter, we began to incorporate the depreciation and amortization of Morotí (operation in Paraguay), which impacts the Depreciation and Amortization line and explains the 120% increase compared to the last quarter.

The 44% increase in Personnel Expenses is due to the provision for the Long-Term Incentive Plan and the payment of bonuses.

The 66% in leases and rents in general is due to the grace period agreed in the renegotiation of lease contracts, which ended last quarter.

Other expenses include costs regarding telephony services, building maintenance, registry, insurances,

shares listing and others. In 2017/2018 a significant amount of these annual expenses was accounted as of the second quarter.

The reduction in other operating expenses (income) is a result of the decrease in the provision for legal claims.

The consolidated financial result is composed of the following items: (i) interest on financing; (ii) the impact of the monetary variation on the amount payable from the acquisition of farms; (iii) the impact of the U.S. dollar exchange variation on the offshore account and also Cresca’s receivables in 1Q18; (iv) the present value of Araucária and Jatobá Farms’ sales receivables, fixed in soybean bags; (v) the result from hedge operations; and (vi) bank fees and expenses and returns on cash investments.

Interest variation is mainly due to interest on loans and financing in the amount of R$4.6 million in 1Q19 and the recognition of the financial revenue obtained from the Nova Buriti Farm renegotiation, in the amount of R$9.3 million in 1Q18

The realization of the present value of assets and liabilities, in the amount of R$24.0 million, shows the variation in the amount to be received due to the sales of the Araucária and Jatobá Farms, denominated in soybean bags. This variation is explained by the soybean price index, considering the Chicago Stock Exchange (CBOT), port premium (basis), exchange rate and interest rate (with reference to the CDI).

The derivatives result reflects the commodities hedge operations result and the impact of the exchange variation on cash, which was partially dollarized in order to maintain purchasing power in regard to inputs, investments and new acquisitions, which have a positive correlation with the US currency. In 1Q19, the result of derivative transactions was a negative R$1.2 million, of which R$2.6 million (negative) are related to currency operations and R$1.4 million are related to operations with commodities. In 1Q18, derivative operations totaled R$1.5 million, of which R$1.1 million are a loss related to currency operations and R$396 thousand are in operations with commodities.

The rise in other financial income / expenses is due to the increase in the Company’s cash position, from an average cash flow of R$52.8 million in 1Q18 to R$93.2 million in 1Q19.

DERIVATIVE OPERATIONS

Our risk policy primarily aims to hedge the Company’s cash flow. In this context, we are concerned not only with the main components of our revenue, but also the main components of our production costs. We therefore monitor on a daily basis: a) the international prices of the main agricultural commodities produced by the Company, usually expressed in U.S. dollars; b) the base premium, i.e. the difference between the international and domestic commodity price; c) exchange rates; and d) the prices of the main components such as freight, fertilizers and chemicals, that can significantly impact costs.

The points analyzed when deciding on the price and margin hedging strategy and tools are listed below:

• Estimated gross margin based on the current price environment.

• Standard deviation from the estimated gross margin for different pricing strategy scenarios.

• Analysis of the estimated gross margin in stress scenarios for different hedge strategies.

• Comparison between current estimates and the Company’s budget.

• Comparison of the estimated gross margin and the historical average.

• Market expectations and trends.

• Tax aspects.

Hedge Position on October 29, 2018

Balance Sheet

DISTRIBUTION OF DIVIDENDS

On October 16, the Company's Annual Shareholders' Meeting approved the distribution of dividends in the amount of R$0.76 per share. The payment will be made on November 6 and the Company's shares will be traded as “ex-dividends” from October 17, 2018.

The Company ended the quarter with a cash position of R$110.0 million, a reduction of 18% over June 30, 2018, mainly due to the payment of a part of the loans.

The Company ended 1Q19 with an inventory of 15,700 tons of soybean, 4,800 tons of corn – which will be sold in the next semester – and 20,300 head of cattle. At the end of the 2017/2018 harvest the Company's inventory was 50,300 tons of soybean, 6,300 tons of corn and 21,000 head of cattle.

On September 30, 2018 and June 30, 2018, the balance of loans and financing was R$248.7 million and R$276.0 million, respectively. The payment of interest and principal totaled R$34.4 million in 1Q19.

During the period, R$3.0 million were also disbursed to finance the cost of sugarcane, soybean and corn operations.

PROPERTIES FOR INVESTMENT

The fundamental pillars of the Company’s business strategy are the acquisition, development, exploration and sale of rural properties suitable for agricultural activities. The Company acquires rural properties with significant potential for generating value, subsequently holding the assets and carrying out profitable agricultural activities on them.

Once we acquire our rural properties, we begin to implement high-value added crops and to transform these rural properties by investing in infrastructure and technology, while also entering into lease agreements with third parties. In line with our strategy, when we deem a rural property has reached its optimal value, we sell it to capture the capital gains.

The rural properties acquired by the Company are booked at their acquisition cost, which does not exceed their realized net value, and are recognized under “Non-Current Assets”.

Properties for investment are evaluated at their historical cost, plus investments in buildings, improvements and the clearing of new areas, less accrued depreciation, in accordance with the same criteria detailed for fixed assets.

On September 30, 2018, we recorded R$21.9 million in ongoing work, which refers to the clearance of areas not yet concluded and other investments in the Morotí (former Palmeiras), Chaparral and Araucária Farms.

DEPRECIATION – AREA OPENING

CAPITAL MARKETS

The Company was the first agricultural production company to list its shares on the Novo Mercado segment of the B3 (São Paulo Stock Exchange) and was also the first Brazilian agribusiness company to list its ADRs (American Depositary Receipts) on NYSE (New York Stock Exchange).

Share Performance

On November 1, 2018, BrasilAgro’s shares (AGRO3) were traded at R$15.01, resulting in a market cap of R$853.9 million, while its ADRs (LND) were traded at US$3.89.