LUXEMBOURG, Aug. 11, 2016 /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 first quarter of 2016.
Main highlights for the period:
- Adecoagro recorded Adjusted EBITDA(1) of
$51.2 million in 2Q16, marking a 7.6%
increase compared to 2Q15.
- Adjusted EBITDA margin(1) during 2Q16 reached 31.1%
in 2Q16, compared to 28.9% in 2Q15.
- Adjusted EBITDA year-to-date stands at $94.4 million, 39.2% higher year-over-year.
Financial & Operational Highlights
- Adjusted EBITDA for our Farming and Land Transformation
businesses' in 2Q16 was $5.1 million,
84.9% higher than in 2Q15. The increase is primarily
explained by a $24.1 million increase
in margins, mostly stemming from our Crops segment as a result of:
(i) higher realized corn and soybean prices driven by the
elimination/reduction of export taxes and export quotas and the
recent rebound in international markets; (ii) coupled with lower
production costs in US dollars resulting from the devaluation of
the Argentine peso and lower input prices for seeds, fertilizers
and agrochemicals.
Results were partially offset by a
$21.0 million loss generated by the
mark-to-market of our commodity hedge positions, of which
$8.7 million or 41.5% is related to
the current crop and $12.3 million or
58.5% is related to the new crop. The hedging losses related to the
current crop are offset by the higher fair value of biological
assets and the mark-to-market of grain inventories. Hedging losses
related to next year's crop are offset the following fiscal year as
the crop is planted and harvested.
Year-to-date, Adjusted EBITDA
reached $31.3 million compared to
$25.8 million. The increase is
explained by the same drivers influencing quarterly results.
- In our Sugar, Ethanol & Energy business, Adjusted EBITDA in
2Q16 reached $50.6 million, 3.3%
higher than 2Q15. Adjusted EBITDA margin grew from 57.0% in 2Q15 to
58.7% in the current quarter. Despite a 7.7% reduction in
sugarcane crushing due to excess rains, lower ethanol sales as a
result of the implementation of an ethanol carry strategy to
capture higher prices towards the end of the season, and a
$13.1 million mark-to-market loss
from our sugar hedge position; we were able to increase margins.
The main factors contributing to enhanced financial performance
during the quarter are: (i) a 4.6% reduction in unitary production
costs measured in BRL as a result of our focus on low cost and
operational efficiency; (ii) a 14% year-over-year average
devaluation of the BRL, which further dilutes production costs and
depreciation expenses in US dollar terms; and (iii) higher sugar
prices and sugarcane yields resulted in a $17.7 million increase in Changes in Fair Value
of unharvested sugarcane, offsetting the negative mark-to-market
result of our sugar hedge position.
On a cumulative basis, Adjusted
EBITDA for 6M16 grew by 41.5% reaching $72.7
million. Adjusted EBITDA margin expanded to 46.7%. These
results are primarily explained by (i) a 24.2% increase in crushing
volumes, coupled with a 17.0% increase in TRS sold, as a result of
the early start of the harvest due to the implementation of the
"continuous harvest" model; (ii) enhanced agricultural efficiencies
and BRL devaluation resulting in a 20.4% dilution of unitary
production costs; and (iv) higher sugar prices and yields resulted
in a $27.7 million year-over-year
gain from the Fair Value of unharvested sugarcane. Results were
partially offset by a $12.3 million
loss generated by the mark-to-market of our sugar hedge position,
compared to a $13.9 million gain
generated in 6M15.
Since mid-June and throughout
July, rainfalls in Mato Grosso do
Sul in Brazil have normalized,
returning to the historical average. As a result, our mills have
been able to accelerate the pace of harvest and compensate the
crushing delay generated in the second quarter.
- Net Income in 2Q16 was a loss of $17.7
million, compared to a loss of $5.3
million in 2Q15. Despite higher Adjusted EBITDA, net income
year-over-year was lower primarily as a result of (i) higher
financial results losses ($38.3
million loss in 2Q16 versus $14.4
million loss in 2Q15) mainly driven by the devaluation of
the Argentine Peso on our net monetary position in foreign
currency, and a negative mark-to-market result from foreign
exchange futures contracts; and offset by (ii) an $8.8 million decrease in depreciation and
amortization expenses; and (iii) a $2.3
million decrease in income taxes.
- Free Cash Flow: The seasonal nature of our business during the
first and second quarter of the year necessitates us to be net
consumers of cash as we finance working capital requirements. The
bulk of our crops and sugarcane are harvested during the second and
third quarters. Accordingly, the majority of sales and cash
collections are concentrated during the third and fourth quarters
of the year.
Free cash flow, net of changes in borrowings (Operating CF minus
Investing CF minus interests paid) was negative $36.2 million in 2Q16 and negative $66.2 million year-to-date. Free cash flow
generation in the first semester of 2016 was negatively affected
by: (i) a delay in soybean and corn harvesting as a result of
excess rains during the end of March and early April; (ii) a delay
in sugarcane crushing in May and early June in our cluster in
Mato Grosso do Sul due to
record-high rains; (iii) the implementation of an ethanol carry
strategy to capture higher prices towards year-end as we have
successfully done the last two years; and (iv) the rally in
commodity prices in the second quarter has resulted in temporary
cash requirements to cover margin calls related to our commodity
derivative hedges. Once the contracts expire and the crop is sold,
the cash is recovered. We believe that, as a result of these
weather and market-related issues, sales and cash flow generation
during 2016 will be highly concentrated in the fourth quarter.
Despite these delays, we remain confident of our ability to meet
our operational, economic and financial objectives. Our target
expectations remain unchanged.
(1) Adjusted
EBITDA is defined as consolidated profit from operations before
financing and taxation, depreciation, amortization 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, 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 2Q16 earnings release, please access
ir.adecoagro.com. A conference call to discuss 2Q16 results will be
held on August 12, 2016 with a live
webcast through the internet:
English Conference Call
August 12, 2016
11 a.m. (US EST)
12 p.m. Buenos Aires
12 p.m. Sao
Paulo
5 p.m. Luxembourg
Tel: +1 (844) 836-8746
Participants calling from the US
Tel: +1 (412) 317-2501
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 247 thousand hectares of farmland and several
industrial facilities spread across the most productive regions of
Argentina, Brazil and Uruguay, where it produces over 1.7 million
tons of agricultural products including corn, wheat, soybeans,
rice, dairy products, sugar, ethanol and electricity among
others.
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SOURCE Adecoagro S.A.