LUXEMBOURG, Nov. 14, 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 third quarter of 2016.
Main highlights for the period:
- Gross sales in 3Q16 reached $246.4
million, a 44.5% increase year-over year.
- Adjusted EBITDA(1) in 3Q16 was $89.8 million, a 32.0% increase compared to
3Q15.
- Adjusted EBITDA(1) year-to-date was $184.2 million, a 35.6% higher
year-over-year.
Financial & Operational Highlights
- In 3Q16, our Sugar, Ethanol & Energy business delivered
outstanding operational and financial performance. Adjusted EBITDA
for 3Q16 reached $80.2 million, 22.7%
or $14.8 million higher than 3Q15.
The main drivers of our performance were: (i) higher agricultural
productivity and efficiency gains in our industrial and cane
logistics operations, which coupled with favorable weather resulted
in a 20.2% increase in sugarcane crushing compared to 3Q15; (ii)
our ability to maximize sugar production, which enabled us to
divert 54% of total TRS to sugar production to benefit from higher
margins and resulted in increases of 44.8% and 37.9% in sugar
production and sales volumes; respectively and (iii) year-over-year
increases of 36.3% and 45.3% in sugar and ethanol prices,
respectively. These positive effects were partially offset by (iv)
a $10.3 million unrealized loss from
the mark-to-market effect of our sugar hedge position compared to a
$3.1 million gain in 3Q15; and (v)
higher unit production costs as a result of the appreciation of the
Brazilian Real.
Adjusted EBITDA for 9M16 reached $152.9
million, or 30.9% higher than 9M15. This increase is
primarily explained by (i) a 22.2% increase in sugarcane crushing
as a result of the "continuous harvest" model, which coupled with a
higher sugar mix resulted in a 27.3% growth in sugar production and
a 46.5% increase in sugar sales volumes; (ii) higher sugar and
ethanol average realized prices, 16.6% and 16.4% respectively;
(iii) enhanced agricultural productivity and the devaluation
of the Brazilian Real, which resulted in a 6.0% dilution of unitary
costs year-over-year; and (iv) a $35.1
million increase in changes in fair value of our sugarcane
plantation, mainly as a result of higher sugar prices. These
results were partially offset by a $24.2
million loss from the mark-to-market effect of our sugar
hedge position, compared to a $17.0
million gain in 9M15.
- Adjusted EBITDA for our Farming and Land Transformation
businesses in 3Q16 was $16.1 million,
76.0% higher than in 3Q15. The increase is primarily explained by:
(i) higher margins in the Rice business driven by strong export
volumes and lower production costs; (ii) a 47.1% margin increase in
our Dairy business, mainly explained by higher productivity, an
8.7% reduction in unit costs as a result of efficiency gains
coupled with the devaluation of the Argentine peso; and (iii) and
an $8.1 million gain in our Cattle
business resulting from the settlement of an arbitration dispute in
connection with the early termination of long term lease agreements
covering our cattle farms. These results were partially offset by
lower soybean and corn prices.
Adjusted EBITDA for 9M16 reached $47.3
million, 35.2% higher than the same period of 2015. The
increase is explained by (i) higher margins in our Crops business,
as a result of higher realized soybean and corn prices driven by
the elimination/reduction of export taxes and quotas 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; (ii) higher margins in our Rice business driven
by a 15.1% increase in rice yields coupled with lower production
costs as a result of efficiency gains and the devaluation of the
Argentine peso. These results were partially offset by an
$8.8 million loss from the
mark-to-market effect of our soybean and corn hedges compared to a
$13.2 million gain in 9M15.
- Net Income for 3Q16 was $6.6
million, compared to $16.1
million in 3Q15. Despite higher Adjusted EBITDA, net income
year-over-year was $9.3 million lower
as a result of: (i) a $26.1 million
foreign exchange loss primarily related to our dollar denominated
debt; and (ii) an $8.6 million
increase in depreciation and amortization. This result was
partially offset by a $3.7 million
decrease in income taxes as a result of lower profit before
taxes.
- Free Cash Flow: Free cash flow net of changes in borrowings
(operating cash flow minus investment cash flow less interest) was
a negative $12.8 million for 3Q16 and
a negative $79.0 million for 9M16.
Year-to-date, we have invested $146.2
million in working capital build-up, mostly related to
increase in product inventory and account receivables.
As we have explained previously in 2Q16, our business is highly
seasonal with high working capital requirements during the first
three quarters of the year. The majority of cash flow is generated
in the fourth quarter, when the bulk of our production is sold. We
expect strong cash flow generation in the fourth quarter as we sell
our inventory and collect receivables, generating positive cash
flow for the full year 2016.
Strategy Highlights
- Share Repurchase Program: On August 9, 2016, the Board of Directors approved
the extension of the Company's share repurchase program for an
additional twelve-month period, ending on September 23, 2017. Under the buyback program,
the Company can continue acquiring common shares up to 5% of its
outstanding shares. Mariano Bosch,
CEO said: "The extension of the repurchase program reflects the
Board of Directors' and Management's commitment towards delivering
long term shareholder value. Repurchasing our shares is one of many
capital allocations tools we can use to enhance returns for our
shareholders".
- Independent Farmland Appraisal Report(2): As
of September 30, 2016, Cushman &
Wakefield (C&W) updated its independent appraisal of
Adecoagro's farmland. Adecoagro's subsidiaries held 266,532
hectares valued by C&W at $936.1
million. Net of minority interests, Adecoagro's land
portfolio consists of 246,139 hectares was valued at $871.4 million. Year-over-year, our farmland
value net of farm sales in the last 12-months increased by
$8.8 million.
We believe the increase in the value of our farmland is mainly
explained by: (i) the transformation of undermanaged and
underdeveloped land into croppable land; and (ii) the ongoing
transformation or continuous productivity enhancements for all our
croppable land.
These gains are not reflected in Adecoagro's financial statements
since the Company does not mark-to-market the value of farmland
assets on its balance sheet. However, land transformation and
appreciation are an important part of Adecoagro's business strategy
and a component of total return on invested capital.
- 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.
- Please visit www.ir.adecoagro.com for the Cushman &
Wakefield 2016 Appraisal Report. Please also refer to page 66 of
our Annual Report on Form 20-F employed in the appraisals of our
farmland by Cushman & Wakefield. The appraisals of our farmland
are only intended to provide an indicative approximation of the
market value of our farmland property as of the date of such
appraisal based on current market conditions. Accordingly, these
appraisals are subject to change based on a host of variables and
market conditions.
To read the full 3Q16 earnings release, please access
ir.adecoagro.com. A conference call to discuss 3Q16 results will be
held on November 16, 2016 with a live
webcast through the internet:
English Conference Call
November 16, 2016
9 a.m. (US EST)
11 a.m. Buenos Aires
12 p.m. Sao
Paulo
3 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 sugar, ethanol,
bio-electricity, milled rice, corn, wheat, soybean and dairy
products, among others.
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SOURCE Adecoagro S.A.