LUXEMBOURG, March 16, 2017 /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 fourth quarter and full year 2016.
Main highlights for the period:
- Gross sales in 4Q16 reached $332.1
million, a 51.9% increase year-over year, while full year
gross sales reached $869.2 million,
28.9% higher than the previous year.
- Adjusted EBITDA(1) in 4Q16 totaled $113.9 million, 42.3% higher than
4Q15.
- Full year 2016 Adjusted EBITDA was $298.0 million, 38.0% above the previous
year.
- Adecoagro delivered positive cash in 2016. Free Cash
Flow(2) from Operations in 2016 was $133.3 million, while Free Cash
Flow(2) was $84.9
million.
Mariano Bosch, Adecoagro's Chief
Executive Officer, said, "2016 was transformative for Adecoagro as
we made significant progress executing on our strategy, generated
strong financial and operational performance, and positioned our
business for future growth. Most notably, we exceeded our revenue
and margin targets, delivered positive free cash flow for the first
time after nearly a decade of heavy investment, which totaled more
than $1.5 billion, and reduced our
outstanding debt."
Bosch added: "As we look ahead, our strategic priorities are to
further strengthening our balance sheet, deepening our focus on
sustainability, managing our exposure to commodities cycles and on
bolstering our position as the lowest-cost agricultural producer
globally."
Financial & Operational Highlights
- The Sugar, Ethanol & Energy business delivered outstanding
operational and financial performance in the fourth quarter of
2016. The combination of dry weather, availability of sugarcane and
operational efficiency enabled our mills to crush 3.1 million tons
of sugarcane, 73.8% higher than 4Q15. In addition, improved
sugarcane productivity resulted in a 1.8% increase in TRS per
hectare. These factors have contributed to significant growth both
in production and sales volumes and dilution of fixed costs.
Adjusted EBITDA in 4Q16 reached $112.1
million, 122.6% higher than 4Q15. Adjusted EBITDA margin
grew from 35.0% to 43.2%, while Adjusted EBITDA margin excluding
third party commercialization activities(3) grew from
39.5% to 48.4%. In addition to the operational enhancements
described above, financial performance was improved by (i) a 51.0%
and 36.4% increase in sugar and ethanol average realized selling
prices, respectively; (ii) a 13.1% decrease in unitary production
costs; and (iii) a $16.2 million gain
from the mark-to-market effect of our sugar hedge position compared
to a $9.7 million loss in 4Q15.
Results were partially offset by a $24.8
million loss from changes in fair value of unharvested
sugarcane (to be harvested in the next 12 months), as a result of
slightly lower sugar futures prices and lower estimated sugarcane
productivity as our plantation stabilizes.
On a full year basis, Adjusted EBITDA in 2016 grew 58.5% to
$265.0 million. Adjusted EBITDA
margin grew from 44.6% to 46.6%, while Adjusted EBITDA margin
excluding third party commercialization(3) grew from
50.0% to 54.7%. This growth is primarily due to (i) a 33.3%
increase in sugarcane crushing as a result of the "continuous
harvest" model, which coupled with a higher sugar mix has resulted
in a 50.8% growth in sugar production and an 43.6% increase in
sugar sales volumes; (ii) higher sugar and ethanol average realized
prices, up 29.6% and 25.5% respectively; and (iii) enhanced
agricultural productivity complemented by the devaluation of the
BRL, which resulted in a 4.6% dilution of production costs per ton
of sugarcane crushed, year-over-year. Results were partially offset
by (iv) a $7.9 million reduction in
gains from changes in fair value of our unharvested sugarcane (to
be harvested in the next 12 months), mainly as a result of slightly
lower sugar futures prices and lower estimated sugarcane yields as
a result of the stabilization of our plantation; and (vi) a
$6.7 million loss from the
mark-to-market effect of our sugar hedge position, compared to a
$7.3 million gain in 2015.
- Adjusted EBITDA for the Farming business in 4Q16 was
$6.6 million, marking a $4.9 million decrease compared to the same period
of the previous year. This reduction is mainly explained by
extraordinary gains generated in 4Q15 from the mark-to-market of
grain inventories and commodity derivatives amounting to
$6.1 million. Regarding our Land
Transformation business, we did not sell any farms in 4Q16,
compared to a $24.0 million gain from
the sale of three farms in 4Q15.
On a full year basis, Adjusted EBITDA for the Farming business was
$53.9 million, marking a $7.4 million or 16.0% increase with respect to
the same period of last year. This increase is mainly due to higher
margins driven by the elimination of export taxes, export controls
and enhanced by the devaluation of the Argentine peso. Margins were
partially offset by the mark-to-market effect of our hedging
position. In 2016, as a result of the rebound in international
soybean and corn prices, our derivatives hedge position generated
an $8.8 million loss, compared to a
$16.4 million gain booked in
2015.
- Net income in 4Q16 was $11.9
million, $21.5 million higher
than 4Q15. The 42.3% increase in Adjusted EBITDA was partially
offset by (i) a $16.1 million
increase in depreciation and amortization expenses; and (ii) a
$12.6 million increase in accrued
income taxes.
Net Income in 2016 totaled $3.7
million, $8.1 million higher
compared to the previous year. The growth in net income is
attributed to the above explained factors which resulted in a
$82.1 million increase in Adjusted
EBITDA. This was partially offset by (i) a $23.1 million increase in depreciation and
amortization expenses; (ii) a $49.7
million increase in non-cash foreign exchange losses
resulting from the devaluation of the Argentine Peso and slightly
offset by the appreciation of the Brazilian Real; and (iii) a
$17.3 million increase in accrued
income taxes.
Strategy Highlights
- Commencement of Positive Free Cash Flow Cycle
The
conclusion of our heavy capex cycle initiated in 2008, coupled with
the ramp-up and consolidation of our operations, especially our
Sugar, Ethanol & Energy cluster, have marked 2016 as milestone
year for Adecoagro. After eight years of large investments, our
operations have delivered $133.3
million of Free Cash Flow from Operations (FCF before
expansion capex) and $84.9 million of
Free Cash Flow in 2016.
We believe the solid growth in Adjusted EBITDA and Free Cash Flow
is a strong indication of (i) the quality of the assets we have
built, (ii) the focus and dedication of our operating teams seeking
to maximize productivity and efficiency, and (iii) the benefits of
our determination to be the lowest-cost producers for each of the
commodities we produce, and our commitment to generating
sustainable long term returns for our shareholders.
- Balance Sheet Optimization
As discussed in previous
quarters, one of our main goals during 2016 was to continue
reducing our outstanding debt. As of December 31, 2016, our Net Debt was $476.8 million, 25.5% below 3Q16 and 9.1% below
4Q15. The combination of decreasing debt coupled with growing
Adjusted EBITDA, has resulted in a Net Debt-to-Adjusted EBITDA
ratio of 1.6x, compared to 2.4x a year ago.
In addition, the fact that almost 70% of our debt is long term,
mostly with multi-lateral banks such as IFC, IDB and BNDES, allows
us to minimize refinancing risk and manage credit market
volatility.
- Sugar, Ethanol & Energy: Cluster Expansion
Plan
The construction of the cluster was completed in 2015
and the "continuous" or \"non-stop" harvest methodology has been
successfully implemented during the course of 2016 and we are now
operating at full capacity. Accordingly, our operating teams are
focused on finding ways to continue maximizing efficiency and
generating additional synergies and cost dilution. In this process,
our teams have identified certain bottlenecks in our industrial
operations that may be removed with minimal investments which will
allow us to increase crushing volumes per hour and total capacity
per year. We are now engaged in an organic growth project to
address this expansion in production.
The growth project consists of expanding the crushing capacity of
our cluster by 3.0 million tons or 30%, from 10.0 million tons
currently, to 13.0 million tons (from 11.2 million to 14.2 million
on a consolidated basis). The project will be implemented during
the next five years in two phases:
- Phase 1 consists of expanding Angelica's crushing capacity by 0.9
million tons throughout 2017 and 2018. We will expand crushing
capacity by 150 tons/hour by installing larger mill rollers in the
first mill, and expanding the sugar centrifugation and ethanol
filtration processes. Crushing will grow gradually and reach full
capacity by 2019.
- Phase 2 will consist of expanding Ivinhema's capacity by 2.1
million tons (400 tons/hour), between 2018 and 2022. This will be
achieved by installing a new mill (#6) expanding the sugarcane
reception, juice treatment and sugar factory. Crushing will grow
gradually and reach full capacity in 2023.
Total estimated capital expenditure is $166 million (52
USD/ton), of which 20% consists of industrial machinery and
equipment, 15% of agricultural equipment (harvesters, tractors,
trucks) and 65% of sugarcane planting (51,000 hectares) to supply
the new nominal capacity. 55% of the capex will be deployed during
2017-2019, and 45% during 2020-2022.
We are confident on our ability to execute this growth project
according to plan. We believe that this organic expansion is highly
accretive and an attractive use of our capital.
______________________________________________________________
(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.
(2) We define Free Cash Flow as (i) net cash generated
from operating activities, plus (ii) net cash used in investing
activities, plus (iii) interest paid, plus (iv) proceeds from the
sale of minority interest in subsidiaries. We define Free Cash Flow
from Operations as (i) net cash generated from operating activities
plus (ii) net cash in investing activities, plus (iii) interest
paid, plus (iv) proceeds from the sale of minority interest in
subsidiaries; plus (v) expansion capex.
(3) Adjusted EBITDA margin excluding third party
commercialization activities is defined as the consolidated
Adjusted EBITDA net of the Adjusted EBITDA generated by the
commercialization of third party sugar, grains and energy, divided
by consolidated net sales net of those generated by the
commercialization of third party sugar, grains and energy. We net
third party commercialization results to highlight the margin
generated by our own production.
Non-Gaap Financial Measures: For a full
reconciliation of non-gaap financial measures please refer to page
30 of our 4Q16 Earnings Release found on Adecoagro's website
(ir.adecoagro.com)
Forward-Looking Statements: This press release
contains forward-looking statements that are based on our current
expectations, assumptions, estimates and projections about us and
our industry. These forward-looking statements can be
identified by words or phrases such as "anticipate," "forecast",
"believe," "continue," "estimate," "expect," "intend," "is/are
likely to," "may," "plan," "should," "would," or other similar
expressions.
These forward-looking statements
involve various risks and uncertainties. Although we believe that
our expectations expressed in these forward-looking statements are
reasonable, our expectations may turn out to be incorrect.
Our actual results could be materially different from our
expectations. In light of the risks and uncertainties
described above, the estimates and forward-looking statements
discussed in this press release might not occur, and our future
results and our performance may differ materially from those
expressed in these forward-looking statements due to, inclusive,
but not limited to, the factors mentioned above. Because of
these uncertainties, you should not make any investment decision
based on these estimates and forward-looking
statements.
The forward-looking statements made in this
press release relate only to events or information as of the date
on which the statements are made in this press release. We
undertake no obligation to update any forward-looking statements to
reflect events or circumstances after the date on which the
statements are made or to reflect the occurrence of unanticipated
events.
To read the full 4Q16 earnings release, please access
ir.adecoagro.com. A conference call to discuss 4Q16 results will be
held on March 17, 2017 with a live
webcast through the internet:
English Conference Call
March 17, 2016
11 a.m. (US EST)
12 p.m. Buenos Aires
12 p.m. Sao
Paulo
4 p.m. Luxembourg
Participants calling from the US: Tel: +1 (844) 836-8746
Participants calling from other countries: Tel: +1 (412)
317-2501
Access Code: Adecoagro
Conference Call Replay
Participants calling from the US: Tel: +1 (877) 344-7529
Participants calling from other countries: Tel: +1 (412)
317-0088
Access Code: 10085547
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.