Lavoro Limited's Q1 2025: Navigating Supply Constraints, Farmer Sentiment, and Store Count Dynamics

These are the key contradictions discussed in Lavoro Limited's latest 2025 Q1 earnings call, specifically including: Supply Constraints and Their Impact on Financial Guidance, Farmer Sentiment and Its Influence on Business Operations, and Store Count Reduction and Financial Health:



Revenue Decline and Market Conditions:
- Lavoro reported a 13% year-over-year decline in consolidated revenue to BRL 2.0 billion in Q1 2025.
- This decline was primarily due to lingering input price deflation in Brazil Ag Retail and a 12% depreciation of the Brazilian real against the prior year period.

Gross Profit Increase and Margin Expansion:
- Gross profit rose by 10% to BRL 321.2 million, with gross margin expanding by 320 basis points to 15.6%.
- This was driven by improved distribution margins in Brazil Ag Retail.

Brazil Ag Retail Performance:
- Revenue in Brazil Ag Retail declined by 23% year-over-year to BRL 1.55 billion, due to last year's input price declines and farmer liquidity constraints.
- Despite this, gross profit grew by 7% to BRL 189 million, with a 350 basis points gross margin expansion.

Crop Care Segment Growth:
- The Crop Care segment saw revenue increase by 68% year-over-year to BRL 293.7 million, led by strong performance from Union Agro and Perterra.
- The growth was supported by strong commercial execution and expanded product registrations.

Updated Financial Outlook:
- Lavoro updated its full-year 2025 outlook, anticipating consolidated net revenue between BRL 6.5 billion and BRL 7.5 billion.
- This update reflects the impact of widespread supply constraints in Q2 and is no longer expected to see EBITDA growth compared to 2024.