LUXEMBOURG, March 15, 2018 /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 fourth quarter of 2017.
Main highlights for the period:
- Full year Net Income stood at $11.7
million, 214.2% above previous year.
- Delivered positive cash in 2017. Adjusted Free Cash Flow from
Operations in 2017 was $78.0 million,
while Adjusted Free Cash Flow was $7.2
million
- Full year 2017 Adjusted EBITDA(1) was $276.3 million, 7.3% below previous year.
Financial & Operational Highlights
- In our Sugar, Ethanol and Energy business, Adjusted EBITDA in
4Q17 reached $81.3 million, 27.4%
lower than in 4Q16. Operating and financial performance in the
quarter was negatively affected by: (i) substantial rainfalls, an
increase of over 30% compared to the 10 year average, which caused
harvest delays and disruptions, resulting in a 29.4% decrease in
sugarcane crushing volumes compared to 4Q16; (ii) lower realized
sugar and ethanol prices in US dollars; and (iii) higher production
costs driven mainly by the decrease in yields and lower crushing
volumes.
On a full year basis, Adjusted EBITDA was $247.3 million with an Adjusted EBITDA margin net
of 3rd party commercialization of 52%. The year-over-year decrease
in financial performance is primarily explained by (i) a 7.9%
reduction in crushing volumes resulting in lower sugar, ethanol and
energy production volumes, (ii) the increase in cost of production
for the reasons explained above; and (iii) lower sugar prices in US
dollars. These negative effects were mainly offset by: (i) higher
industrial efficiencies (milling per hour increased 6.0%
year-over-year, reaching 2,072 tons per hour), (ii) higher ethanol
selling volumes, (iii) higher realized ethanol and energy prices in
US dollars; and (iv) a $43.0 million
increase derived from the mark-to-market of our hedging derivatives
position.
As a result of excess rains, the unharvested sugarcane as of
December 31, 2017 continues to grow
on our fields and is expected to be harvested during 2018 with
higher yields. This agricultural effect is already factored in the
$11.6 million gain derived from the
mark-to-market valuation of our unharvested biological asset. At
the same time, as we are deferring harvest operations, we expect to
crush more sugarcane during 2018. This, in turn, will enhance
efficiencies in our industrial operations increasing EBITDA
generation.
- On a full year basis, Adjusted EBITDA for the Farming business
reached $50.7 million, a $3.3 million or 6.1% decrease compared to the
same period of last year. This decrease is primarily explained by:
(i) lower margins in our Crops business manly driven by the
appreciation of the Argentine peso, in real terms; and an
$8.5 million decrease in All Other
Segments explained by an extraordinary gain recorded in 2016
related to the settlement of an arbitration dispute with Marfrig
Argentina SA. These negative effects were partially offset by the
outstanding operational and financial performance of our Dairy
business. Cow productivity remains at very high levels and we were
able to profit from higher raw milk prices as a result of of supply
shortages due to excess rainfalls during the first half of the
year. At the same time, the $12.1
million hedging gain derived from the mark-to-market of our
derivatives position also contributed to offset the negative
effects.
Net Income in 2017 totaled $11.7
million, $8.0 million higher
compared to the previous year. The 7.3% lower Adjusted EBITDA was
more than offset by the lower foreign currency losses and lower
income tax payments.
Strategy Execution
- Adjusted Free Cash Flow: During 2017, our
operations have delivered $78.0
million of Adjusted Free Cash Flow from Operations (AFCF
before expansion capex), 41.5% lower compared to 2016. This
decrease is fully explained by the $43.8
million higher maintenance capex invested during 2017, as
our planting and operations stabilize and reach sustainable levels.
At the same time we anticipated additional maintenance expenses
during the fourth quarter as a result of abundant rainfalls.
As for Adjusted Free Cash Flow, we delivered $7.2 million in 2017. As previously announced, we
are currently undertaking several organic expansion projects across
all our existing businesses. This has driven expansion capex to
$70.8 million in 2017. We believe
Adjusted EBITDA and Free Cash Flow generation will increase
substantially as we ramp-up and consolidate these projects.
- Organic Businesses Growth Update (5 Year Plan):
Cluster Expansion: The expansion of the cluster in
Mato Grosso do Sul is moving
forward according to plan. As previously announced, investments in
Angelica are already complete and crushing capacity has increased
by 17%, from 900 tons/hour to 1,050 tons/hour. As for investments
in Ivinhema mill, we are advancing according to schedule and budget
and we expect to conclude them by the first half of 2018.
The expansion of our sugarcane to supply the additional nominal
crushing capacity is also advancing well. We expect sugarcane
planting to grow at a pace that will allow total milling to
increase by approximately 0.5 million tons per year.
Dairy Business: The construction of free stall #3 is
moving forward according to plan. By July
2018, we expect to start populating the facility, targeting
operations at 40% of total capacity by the end of year. We are
advancing well in growing and securing corn silage to feed the
additional cows. As for the bio-digester, we already stabilized
energy production generating attractive results.
Rice Business: We expect to conclude investments by
the first half of the year, allowing us to improve our rice
processing and distribution, and increase the value of main
by-products.
Crops Business: We expect to complete the
construction of one of the two storage and grain conditioning
facilities by end of 2018. This investment will allow us to reduce
our conditioning and logistics costs and enhance our commercial
flexibility.
- Share Repurchase Update: As part of our commitment to
generate long term value for our shareholders, we have been
actively engaged in the execution of our share repurchase program.
Since our last Earnings Release and as of today, we purchased an
additional 4.1 million shares at an average price of $9.6 per share. We expect to continue our share
repurchases under the program during 2018 subject to necessary
investment in our expansion projects.
We believe that both the organic expansion projects, and the
repurchasing of shares represents the best allocation 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.
Non-Gaap Financial Measures: For a full
reconciliation of non-gaap financial measures please refer to page
29 of our 4Q17 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 4Q17 earnings release, please access
ir.adecoagro.com. A conference call to discuss 4Q17 results will be
held on March 16, 2018 with a live
webcast through the internet:
Conference Call
March 16, 2018
9 a.m. (US EST)
10 a.m. Buenos Aires
10 a.m. Sao
Paulo
2 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: 10116540
Investor Relations
Department
Charlie Boero Hughes
CFO
Juan Ignacio Galleano
IRO
Email: ir@adecoagro.com
Tel: +54 (11) 4836-8624
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.