LUXEMBOURG, August 16, 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 second quarter of 2018.
Main highlights for the period:
- Adecoagro reported Adjuested EBITDA of $137.0 million in 2Q18, marking a 103.9% increase
compared to 2Q17.
- Net Income was negative $31.0
million in 2Q18, $34.8 million
lower compared to 2Q17.
- Adjusted Net Income was $90.1
million in 2Q18, $74.2 million
higher compared to 2Q17.
Financial & Operational Highlights
- Adjusted EBITDA for our Sugar, Ethanol & Energy business
reached $80.9 in 2Q18, $19.5 million or 31.8% higher than 2Q17. This
increase is mainly explained by: (i) the maximization of ethanol
production (72.5% of total TRS), enabling us to profit from higher
prices. Anhydrous and hydrous ethanol traded at 16.0 cts/lb and
14.7 cts/lb sugar equivalent during the quarter, equivalent to
34.1% and 22.7% premium to sugar respectively, (ii) higher energy
revenues due to the combined effect of a 20.7% increase in selling
volumes and a 9.9% increase in average selling prices, in dollar
terms, (iii) the 53.9% increase in crushing activities as a result
of larger cane availability; explained by enhanced industrial
efficiencies, together with an increase in effective milling days
due to favorable weather conditions; (iv) the reduction in
production costs, measured on a per ton basis, driven by higher
crushing activities, coupled with the 14% depreciation of the
Brazilian Real.
Year-to-date, Adjusted EBITDA
totaled $128.9 million, marking a
40.7% increase compared to the same period of last year. In
addition to the previously referred drivers, higher Adjusted EBITDA
is explained by a $3.9 million
increase derived from the mark-to-market of our commodity hedge
positions, partially offset by lower sugar prices.
- In our Farming & Land Transformation businesses, Adjusted
EBITDA reached $61.2 million,
$50.2 million higher than 2Q17. The
improvement in financial performance is mainly explained by the
$6.5 million and $7.2 million increase in results in our crops and
rice businesses respectively as a result of enhanced operational
efficiencies and the 30% depreciation of the Argentine Peso, which
together resulted in a reduction of production costs. Furthermore,
the increase in Adjusted EBITDA is also explained by the proceeds
obtained from the sale of Rio de
Janeiro and Conquista farms, which recorded a $36.2 million capital gain, compared to a zero
result in 2Q17.
On a year-to-date basis, Adjusted
EBITDA grew by 161.2%, reaching $80.0
million. This increase is primarily explained by: (i) a
$3.8 million increase in our Crops
business, due to a higher margin recognition as a result of higher
commodity prices in the local market coupled with a reduction in
production costs, (ii) a $9.2 million
increase in our Rice business, as a result of a significant 17%
increase in agricultural yields, coupled with lower production
costs, measured in U.S dollar. These effects were partially offset
by the negative mark-to-market of our commodity hedge position.
- Net Income in the first half of the year was a loss of
$22.5 million, compared to a
$9.8 million gain recorded in the
same period of last year. This is almost entirely explained by the
$125.3 million non-cash loss derived
from the revaluation of our U.S dollar denominated financial debt,
measured in local currency. Indeed, as a result of the sharp
depreciation suffered by the Brazilian Real and Argentine Peso
during 6M18, we registered a significant loss in our Net Financial
Result line. It´s worth mentioning that this result is non-cash in
nature and represent no equity loss when measured in U.S
dólar.
- Adjusted Net Income, by definition, excludes any non-cash
result derived from bilateral exchange variations and includes any
gain or losses from disposals of non-controlling interests in
subsidiaries whose main underlying asset is farmland (the latter is
already included in Adj. EBITDA). During the first half of the
year, Adjusted Net Income reached $110.1
million, $85.2 million higher
compared to 6M17. It is worth noticing that this increase is in
line with the one reported in Adjusted EBITDA (Please refer to page
34 for a reconciliation of Adjusted Net Income to
Profit/Loss).
Strategy Execution
- Farmland sales at a strong premium to independet
appraial: During June 2018,
we completed the sale of Rio de
Janeiro and Conquista farms, located in western Bahia and
Tocantins, respectively for a total of 9,300 croppable hectares.
The aggregate selling price reached $53.0
million, out of which $34.5
million are paid cash (partially in 2Q18, and the rest
during 3Q18); while the balance is payable in four installments.
The selling price represent a 37% premium to the latest Cushman and
Wakefield´s independent appraisal, as of September 30, 2017.
Cluster Expansion:
The expansion of the cluster in Mato
Grosso do Sul is moving forward according to plan and
budget. Investments in Angelica mill, as previously announced, are
already done and the mill reached a nominal crushing capacity of
1,050 tons/hour. As for the Ivinhema mill, most of the investments
are completed.
At the same time, based on
projected relative sugar and ethanol prices, we commenced minor
investments in order to increase our maximum ethanol production
capacity by 5%, reaching 73% of total TRS production by 2019. It´s
worth highlighting that, during the first half of the year, 77% of
TRS went to ethanol and we feel very optimistic with our 70% target
for the year. We believe that this investment, will result in
higher margins and returns as we will be making a better use of our
assets by producing products with higher margin
contribution.
(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 2Q18 earnings release, please access
ir.adecoagro.com. A conference call to discuss 2Q18 results will be
held on August 17, 2018 with a live
webcast through the internet:
Conference Call
August 17, 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: 10122948
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.