LUXEMBOURG, Aug. 14, 2014 /PRNewswire/ -- Adecoagro S.A.
(NYSE: AGRO, Bloomberg: AGRO US,
Reuters: AGRO.K), one of the leading agricultural companies in
South America, announced today its
results for the second quarter of 2014.
Important Notice:
- Under IFRS accounting, the sale of a non-controlling interest
in a subsidiary is accounted for as an equity transaction, with no
gain or loss recognized in the consolidated statement of income.
Any difference between the selling price and the book value is
recognized in Shareholder's Equity. This type of transaction had
not been contemplated when the Company originally defined its
Adjusted EBITDA in 2011. Management believes that the sale of a
controlling or non-controlling interest in a subsidiary, whose main
underlying asset is farmland, is a key element in its Land
Transformation business since in either case it allows the company
to monetize the capital gains generated by the transformation of
undeveloped or underutilized farmland, thereby enhancing return on
invested capital. Accordingly, the Company has decided to include
the gains or losses from sales of non-controlling interests in
subsidiaries in its Adjusted EBITDA definition.
Financial & Operational Highlights:
- In 2Q14, Adecoagro recorded an Adjusted EBITDA(1) of
$72.8 million, 75.6% higher than
2Q13. Adjusted EBITDA margin was 36.9% in 2Q14 compared to 22.0% in
2Q13. 6M14 Adjusted EBITDA was $107.5
million, 52.6% higher than 6M13.
- Adjusted EBITDA margin grew to 35.5% in 6M14 from 24.2% in
6M13.
- Net Sales in 2Q14 reached $197.5
million, while 6M14 net sales were $302.8 million, showing a 5.0% and 4.0%
respective increase compared to last year.
- In our Farming and Land Transformation businesses, Adjusted
EBITDA in 2Q14 was $41.8 million,
$20.6 million or 96.9% higher than
2Q13. Year-to-date Adjusted EBITDA stands at $77.7 million, marking a 94.3% increase over
6M13. These improvements are explained by increased operational and
financial performance in the following segments: (i) in the Crops
segment, higher crop yields coupled with lower production costs
resulting from operational efficiencies and devaluation of the
Argentine peso, increased our margins, resulting in a 42.4% growth
in Adjusted EBITDA; (ii) in the Rice segment, an increase in
planted area together with lower costs driven by the implementation
of efficient production technologies and the devaluation of the
Argentine peso expanded Adjusted EBITDA by
232.8%.
Performance was enhanced by the Land Transformation business which
generated $25.6 million of Adjusted
EBITDA in 2Q14, 269.6% higher quarter-over-quarter, through the
sale of a 49% stake in Global Anceo S.L.U. and Global Hisingen
S.L.U. (please see transaction details in page 3, Strategy
Execution – Land Transformation).
- In the Sugar, Ethanol and Energy business, our mills crushed
2.1 million tons of sugarcane in 2Q14, 21.1% higher than 2Q13. The
increase in cane milling, resulted from (i) the ramp up and
consolidation of our cluster in Mato
Grosso do Sul, which resulted in higher milling efficiency
per hour; (ii) favorable weather conditions during June which
allowed us to accelerate the harvesting pace; and (iii) a 17.6%
expansion of our sugarcane plantation. As a result, year-over-year
sugar, ethanol and energy production volumes grew by 40.6%, 9.8%
and 31.3% respectively. In addition, financial performance was
enhanced by (i) a 5.5% increase in sugarcane yields coupled with a
0.9% increase in TRS; (ii) operational synergies and efficiencies
which reduced our production costs; and (iii) a 79.0% increase in
energy revenues resulting from higher cogeneration productivity and
higher prices; and partially offset by lower sugar and ethanol
prices. As a result of the above, Adjusted EBITDA in 2Q14 reached
$35.6 million, 37.8% higher than
2Q13, while Adjusted EBITDA margin expanded to 46.7% from 33.1% in
2Q13.
- Net income in 2Q14 totaled $1.5
million, $25.3 million higher
than 2Q13. Net income in the quarter was enhanced by operational
and financial improvements in the Farming and Sugar & Ethanol
businesses coupled with (i) a $23.6
million increase in Financial Results primarily explained by
the appreciation of the Brazilian Real in 2Q14 compared to a
depreciation in 2Q13, and our adoption of Cash Flow Hedge
Accounting as of July 1, 2013; and
(ii) a $16.3 million increase in long
term biological assets primarily explained by an increase in
sugarcane yields; and partially offset by (i) a $5.8 million higher D&A charge resulting from
the expansion of our asset base; and (ii) an $11.6 million lower tax benefit.
Strategy Execution
- On June 17, 2014, Adecoagro
completed the sale of a 49.0% interest in Global Anceo S.L.U. and
Global Hisingen S.L.U, two Spanish subsidiaries, for a total price
of $50.6 million, which has been paid
in full at closing. The main underlying assets of Global Anceo
S.L.U. and Global Hisingen S.L.U are La Guarida and Los Guayacanes,
two farms located in the Argentine provinces of Salta and Santiago del Estero, respectively.
This transaction generated $25.6
million of Adjusted EBITDA in 2Q14, representing a 28.0%
premium over the Cushman & Wakefield independent appraisal
dated September 2013.
- Guayacanes and La Guarida farms have a total area of 26,299
hectares and were acquired by Adecoagro in 2007, for a total of
$51.1 million. Following the
acquisition, Adecoagro transformed and developed over 10,000
hectares of cattle pastures into crop production. The farm is
currently composed of 17,371 hectares of croppable land which are
used for growing grains and oilseeds and over 6,000 hectares of
cattle grazing pastures. Adecoagro has operated these farms under a
sustainable production model focused on no-till farming, crop
rotation and other agricultural best practices, which have enhanced
productivity and soil quality. After accounting for the purchase
price, transformation capital expenditures, operating cash flows
and selling price, these investments generated an internal rate of
return of 19.1%
- The construction of the second phase of the Ivinhema mill,
which will add 3.0 million tons of nominal crushing capacity and
consolidate our 10.0 million ton cluster in Mato Grosso do Sul, is progressing slightly
ahead of schedule and on budget regarding capital expenditures. We
are currently in the process of assembling the second boiler, the
ethanol distillery and the power substation, and are closely
monitoring the manufacture and delivery of key equipment parts. We
expect phase II to commence crushing activities by the start of the
2015/16 sugarcane harvest.
- On August, 12, 2014, the Board of Directors approved the
extension of the Company's share repurchase program for an
additional twelve month period, and therefore ending on
September 23, 2015. Under the buyback
program, the Company can continue acquiring shares up to 5% of the
outstanding share capital. As of the date of this report, the
Company has repurchased a total of 2.3 million shares for a total
consideration of $18.1 million and an
average price of $7.72 dollars per
share.
Notes:
(1) Adjusted EBITDA is defined as consolidated profit from
operations before financing and taxation, depreciation,
amortization and unrealized changes in fair value of long-term
biological assets (sugarcane, coffee and cattle) plus the gains or
losses from disposals of non-controlling interests in subsidiaries.
Adjusted EBIT is defined as consolidated profit from operations
before financing and taxation, and unrealized changes in fair value
of long-term biological assets (sugarcane, coffee and cattle) plus
the gains or losses from disposals of non-controlling interests in
subsidiaries. Adjusted EBITDA margin and Adjusted EBIT margin are
calculated as a percentage of net sales.
To read the full 2Q14 earnings release, please access
www.ir.adecoagro.com. A conference call to discuss 2Q14 results
will be held tomorrow with live webcast through the internet:
English Conference Call
August
15, 2014
8 a.m. (US EST)
9 a.m. Buenos Aires & Sao Paulo
2 p.m. Luxembourg
Tel: (877) 317-6776
Participants calling from the US
Tel: +1 (412) 317-6776
Participants calling from other countries
Access Code: Adecoagro
Investor Relations Department
Charlie Boero Hughes
CFO
Hernan Walker
IR Manager
Email: ir@adecoagro.com
Tel: +54 (11) 4836-8651
About Adecoagro:
Adecoagro is a leading agricultural
company in South America.
Adecoagro owns over 269 thousand hectares of farmland and several
industrial facilities spread across the most productive regions of
Argentina, Brazil and Uruguay, where it produces over 1.3 million
tons of agricultural products including corn, wheat, soybeans,
rice, dairy products, sugar, ethanol and electricity among
others.
SOURCE Adecoagro S.A.