LUXEMBOURG, Nov. 13, 2017 /PRNewswire/ -- Adecoagro S.A.
(NYSE: AGRO, Bloomberg: AGRO US,
Reuters: AGRO.K), a leading agricultural company in South America, announced today its results for
the third quarter of 2017.
Main highlights for the period:
- Adecoagro reported Adjusted EBITDA(1) of
$75.3 million in 3Q17, marking a
16.2% decrease compared to 3Q16. Adjusted EBITDA year-to-date
stands at $187.2 million, 1.6% higher
than 9M16.
- Gross sales reached $262.9
million in 3Q17 and $657.6
million in 9M17, 6.7% and 22.4% higher year-over year,
respectively.
- Net income in 3Q17 was a loss of $2.9
million, compared to a $6.8
million gain in 3Q16. Year-to-date, Net Income stands at
$6.8 million, $15.0 million higher than the previous year.
Financial & Operational Highlights
- Adjusted EBITDA for the Farming and Land Transformation
businesses in 3Q17 was $6.9 million,
$9.1 million or 56.8% lower than
3Q16. These results are primarily explained by (i) an $8.1 million extraordinary gain recorded in 3Q16
corresponding to the settlement of an arbitration dispute related
to the early termination of land leasing contracts; (ii) a
$1.1 million decrease in our Rice
segment, driven by the postponement of rice sales volumes to the
fourth quarter to capture higher prices; and (iii) partially offset
by a $0.4 million increase in our
Dairy segment as a result of higher milk prices. Year-to-date,
Adjusted EBITDA reached $37.6
million, compared to $47.3
million for the same period last year.
- In the Sugar, Ethanol & Energy business, Adjusted EBITDA
during 3Q17 was $74.3 million, 7.4%
lower than 3Q16. Adjusted EBITDA was positively affected by: (i) an
8.4% increase in sugarcane crushing coupled with a 1.8% growth in
TRS per ton of sugarcane, which led to an 11.6% increase in total
TRS produced; (ii) higher sales volumes for sugar, ethanol and
energy, 2.2%, 8.2% and 32.0% respectively, coupled with a 21.8%
increase in energy prices; and, (iii) a $9.6
million higher result from the mark-to-market effect of our
commodity hedge position (a $0.2
million gain in 3Q17 compared to a $10.8 million loss in 3Q16). These positive
effects were offset by a 14.2% increase in production cash costs
per ton of TRS produced in BRL terms. Approximately half of this
cost increase is temporary and will be reversed in the fourth
quarter. The net increase in cost is explained by lower sugarcane
yields which have increased the amount of hectares harvested,
leased and treated and purchases of sugarcane from suppliers.
On a cumulative basis, Adjusted EBITDA in 9M17 grew by 8.5%
reaching $165.9 million. The main
drivers for the increase were (i) a 30.6% increase in net sales, as
a result of higher sugar, ethanol and energy sales volumes and
realized prices; (ii) the mark-to-market effect of our sugar hedge
position in 9M17 generated a gain of $36.5
million, $59.5 million higher
than in 9M16. These positive results were partially offset by (i) a
$37.5 million decrease in Changes in
Fair Value, generated by the mark-to-market effect of our
unharvested sugarcane plantation, primarily as a result of lower
projected sugar prices and productivity; coupled with (ii) a 15.5%
increase in unitary production cash costs as explained
previously.
Strategy Execution
- 10-Year Bond Issuance: On September 21, 2017, Adecoagro completed the
issuance of a 10-year $500 million
bond with a 6.0% coupon. The notes are guaranteed on a senior
unsecured basis by certain of Adecoagro's subsidiaries.
The Company will use the proceeds of the transaction primarily to
repay existing debt of our Brazilian subsidiaries, and for general
corporate purposes.
This transaction has enhanced Adecoagro's ability to manage and
allocate capital more efficiently, has strengthened our balance
sheet and improved our long term financial flexibility.
- Organic Growth Update:
Cluster Expansion: The expansion of the
cluster in Mato Grosso do Sul is
moving forward according to plan. As previously announced,
investments at the Angelica mill are complete and the mill has
reached a nominal crushing capacity of 1,050 tons/hour. We are
currently working on laying the foundations for a new milling
roller in the Ivinhema mill. In terms of sugarcane plantation, we
have successfully leased a total 23.9 thousand hectares of farmland
or 47% of total expansion land needs. A total of 7.9 thousand
hectares have already been planted.
The expansion of the cluster will generate important efficiency
gains and cost dilution. Even at current forward sugar prices, this
project is highly accretive and generates returns well above our
cost of capital.
Dairy Bio-digester: The construction of our first
bio-digester was completed during the end of October. The facility
generates electricity by burning biogas extracted from the
effluents produced by our seven thousand milking cows. On
November 3, 2017, we began generating
and delivering 1.4 MW of electricity to the local power grid. In
addition to increasing revenues and securing our energy
requirements, this facility enhances the sustainability of our free
stall dairy operation by reducing greenhouse gas emissions,
improving the effluent management and concentrating valuable
nutrients which are applied back to the fields.
- Share Repurchase Update: Over the last 12-months and as
of the date of this report, Adecoagro has repurchased a total of
1.5 million shares or 1.2% of outstanding shares for a total dollar
amount of $15.7 million, at an
average price per share of $10.35.
Since the inception of the program in August
2013, Adecoagro has repurchased an aggregate of 4.0 million
shares equivalent to 3.2% of outstanding shares or $35.1 million, at an average price per share of
$8.79.
- Independent Farmland Appraisal: As of September 30, 2017, Cushman & Wakefield
(C&W) updated its independent appraisal of Adecoagro's
farmland. Adecoagro's subsidiaries held 266,532 hectares valued by
C&W at $900.7 million. Net of
minority interests, Adecoagro's land portfolio consists of 246,139
hectares valued at $840.7 million.
Year-over-year, our farmland value decreased by $30.7 million or 3.5%.
We believe the decrease in the valuation of our land portfolio is
in line with the decrease in land prices in Brazil and Uruguay following four years of weak row crop
prices resulting in deterioration of crop margins.
These gains or losses 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.
Please visit http://www.ir.adecoagro.com for the Cushman &
Wakefield 2017 Appraisal Report. 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. Please also refer to page 66 of our Annual Report on
Form 20-F for the methodology employed in the appraisals of our
farmland by Cushman & Wakefield.
(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.
Non-Gaap Financial Measures: For a full
reconciliation of non-gaap financial measures please refer to page
21 of our 3Q17 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 3Q17 earnings release, please access
ir.adecoagro.com. A conference call to discuss 3Q17 results will be
held on November 14, 2017 with a live
webcast through the internet:
Conference Call
November 14, 2017
9 a.m. (US EST)
11 a.m. Buenos Aires
12 p.m. Sao Paulo
3 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: 10113176
Investor Relations Department
Charlie Boero Hughes
CFO
Hernan Walker
IRO
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 1.9 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.