LUXEMBOURG, May 14, 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 first quarter of 2018.
Main highlights for the period:
- Adecoagro reported Adjuested EBITDA of $61.9 million in 1Q18, marking a 38.4% increase
compared to 1Q17.
- Adjusted EBITDA margin net of third party commercilaization
reached 47.9%, 44.9% higher year-over-year.
- Net income in 1Q18 was a gain of $8.5
million , $2.6 million, or
43.0% higher compared to 1Q17.
Financial & Operational Highlights
- Adjusted EBITDA of our Sugar, Ethanol & Energy business in
1Q18 reached $48.0 million,
$17.7 million or 58.6% higher than
1Q17. Results were mainly driven by (i) a 16% increase in milling
per hour, offsetting the 10% decrease in effective milling days as
a result of rainfalls, (ii) the maximization of ethanol production
(87% of TRS went towards ethanol), which enabled us to profit from
significantly higher relative prices. Indeed, anhydrous and hydrous
ethanol traded at cts/lb20.4 and cts/lb19.1 sugar equivalent during
the quarter, implying a 40% premium to sugar, (iii) a $13.1 million increase driven by the
mark-to-market of our hedging derivatives position; and (iv) lower
production costs as a result of higher crushing volumes and
enhanced operating efficiencies. The offsetting effect of lower
sugar prices were twofold. On the one hand, it resulted in lower
sales revenues while on the other, it implied a lower margin
recognition of our unharvested biological asset, captured in the
Changes in Fair Value line.
- Adjusted EBITDA for the Farming and Land Transformation
businesses in 1Q18 was $18.8 million,
slightly below 1Q17. Results were primarily explained by a
$2.7 million lower gain in our Crops
business partially offset by a $1.9
million higher gain in our Rice business.
In our Crops business, results
were mainly explained by lower registered and projected yields as a
result of the dry weather that has been affecting Argentina since the beginning of the year. At
the same time, soybean and corn prices in the local market
increased significantly during the quarter resulting in: (i) a
higher margin recognition of our unharvested biological asset; and
(ii) a negative mark-to-market of our commodity hedge position.
As for the Rice business, higher
results were explained by the enhancements in farming margins,
which are captured in the Changes in Fair Value line, driven by
productivity gains (yields were 15.9% higher compared to the
previous harvest year); coupled with the depreciation of the
Argentine peso.
Net Income in 1Q18 was a
$8.5 million, $2.6 million or 43.0% higher compared to 1Q17.
This increase is explained by a $17.2
million increase in Adjusted EBITDA; partially offset by (i)
a $6.8 million increase in
depreciation and amortization charges, coupled with (ii) a
$7.9 million increase in financial
losses.
Strategy Execution
- 5 Year Plan Update The expansion of the cluster in
Mato Grosso do Sul is moving
forward according to plan. As previously announced, investments in
Angelica mill are completed and the mill has reached a nominal
crushing capacity of 1,050 tons/hour. Investments in Ivinhema mill
are advancing well and we expect to conclude them during the next
quarter. The expansion of our sugarcane to supply the additional
nominal crushing capacity is also advancing well.
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 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 Business: The
construction of free stall #3 is almost fully completed. We expect
to soon start populating the facility and start operating
activities by August. By the end of the year, we target to operate
at 45% of total capacity. The free stall will be populated with
cows of our own breed to avoid sanitary issues and guarantee high
quality milk. As a result, the ramp up pace is mainly determined by
the biological reproductive cycle of the cow herd. By mid-2019, we
expect to be operating at full capacity. Free stall #4 is under
construction and will be populated with cows in 2019.
Rice Business: We
expect to conclude the investments of the packaging machine for
branded white rice and the expansion of finished goods storage
capacity during the second quarter. This will allow us to improve
our rice processing and distribution, enhancing margins.
- SanCor Investment Proposal: On March 23, Adecoagro submitted an investment
proposal to partner with SanCor, one of the largest milk processors
in Argentina. The offer remains
subject to the full compliance of specific conditions, including
but not limited to the restructuring of its fiscal and financial
liabilities; and the negotiations of definitive agreements. We are
currently in the due-diligence phase, ensuring the fulfillment of
all the necessary conditions to make this deal accretive for
existing shareholders.
- Share Repurchase Update: Since January 1, we purchased 1,6 million shares
equivalent to 1.4% of outstanding shares or $15.4 million, at an average price per share of
$9.39. We expect to continue our
share repurchases under the program during 2018 subject to the
already committed investments in our expansion projects.
- Farmland sales at strong premium to independent
appraisal: In May 2018, we signed
sale agreements for Rio de Janeiro
and Conquista farms, located in western Bahia and Tocantins,
respectively. The farms total 9,300 of croppable hectares and the
selling price for both farms was $53.0
million (70% in cash), representing a 37% premium to Cushman
and Wakefield´s independent farmland appraisal dated September 30, 2017. At the agreed selling
price, we estimate that we would record capital gains in excess of
$35.0 million, which would be
recognized in the second quarter 2018. The sale of the farms
remains subject to the completion of due-diligence.
(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
May 16, 2018
9 a.m. (US EST)
10 a.m. Buenos Aires
10 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: 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.