LUXEMBOURG, May 12, 2016 /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 first quarter of 2016.
Main highlights for the period:
- Adecoagro recorded Adjusted EBITDA(1) of $43.2 million in 1Q16, representing a 113.0% increase compared to 1Q15.
- Adjusted EBITDA margin (1) during 1Q16 reached 36.9% in 1Q16, compared to 18.5% in 1Q15.
- Net income for 1Q16 stands at $2.8 million, $8.3 million higher than 1Q15.
Financial & Operational Highlights by Business:
- Adjusted EBITDA in our Farming and Land Transformation businesses' in 1Q16 was $26.2 million, 13.5% higher than 1Q15. This increase is primarily explained by: (i) a $9.9 million increase in margins from our Crops segment as a result of higher corn prices in the local market. Local prices were driven by the elimination of export taxes and export quotas, coupled with lower costs in dollars resulting from the devaluation of the Argentine peso and lower input prices for seeds, fertilizers and agrochemicals; (ii) a 44.5% increase in margins in the Rice segment as a result of higher rice yields and lower costs in dollar terms due to operational efficiencies and peso devaluation. Results were partially offset by: (iii) lower soybean, white rice and dairy prices; and (iv) a $9.9 million lower unrealized gain from our commodity hedge position.
- In our Sugar, Ethanol & Energy business, Adjusted EBITDA in 1Q16 reached $22.1 million, $19.7 million higher than 1Q15. Adjusted EBITDA margin grew from 4.7% in 1Q15 to 31.9% in the current quarter. Results were driven by strong operational and financial performance, including: (i) the implementation and execution of a "continuous harvest" production system which has allowed the company to harvest and crush sugarcane year-round (see Strategy Execution below). As a result, during 1Q16 we crushed 1.5 million tons, 226.9% higher year-over-year, and produced 166.4 thousand tons of sugar and ethanol measured in TRS equivalent, 223.2% higher than 1Q15; (ii) strong production and sales volumes coupled with higher ethanol prices in both BRL and USD have resulted in a 36.7% growth in net sales; and (iii) a 15.7% reduction in unit costs as a result of fixed cost dilution due to volume growth, coupled with the devaluation of the Brazilian Real. These positive effects were partially offset by an $11.5 million decrease in hedging results (a $0.5 million gain in 1Q16 compared to a $12.2 million gain in 1Q15).
- Net Income in 1Q16 was $2.8 million, $8.3 million higher than in 1Q15. Net income during the quarter was enhanced by Adjusted EBITDA in both the Farming and Sugar, Ethanol & Energy businesses; and was partially offset by a $7.2 million increase in depreciation expenses resulting from the capital expenditures deployed during 2015 for the to completione of the construction of the Ivinhema mill.
- Implementation of a "Continuous Harvest" in our Sugar, Ethanol & Energy business
Since the beginning of the 2016/17 harvest year we implemented a "non-stop" or "continuous harvest". This means that we will harvest and crush sugarcane year-round, without stopping during the traditional off-season. This new strategy will allow us to increase annual sugarcane milling and sugar, ethanol and energy production by approximately 10%. Another benefit of the system is that we will be producing ethanol in the off-season, when market prices usually have a high premium to prices at harvest. In addition, cogeneration efficiency is related to harvested volumes and unrelated to TRS, enabling us to utilize our cogeneration potential during the whole year. Considering that approximately 85% of total costs are fixed, this model will result not only in higher revenues but also in the dilution of our fixed costs.
The investments required for implementing the "continuous harvest" only include sugarcane planting and land leasing expenses for expanding our plantation. These costs in Mato Grosso do Sul are highly competitive due to low competition for land from other mills. No investments in industrial assets or machinery were required.
Maintenance of our industrial equipment and agricultural machinery will be performed throughout the year during rainy days, when milling is forced to stop due to unfeasibility of harvesting.
The "continuous harvest" is part of our strategy of increasing our overall productivity and enhancing our return on invested capital. We believe this model will allow us to remain one of the lowest-cost producers of sugar, ethanol and energy in Brazil. The implementation and execution of this model was only possible after reaching high operating efficiency standards and strong coordination between our agricultural and industrial teams.
(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.
To read the full 1Q16 earnings release, please access ir.adecoagro.com. A conference call to discuss 1Q16 results will be held on May 13, 2016 with a live webcast through the internet:
English Conference Call
May 13, 2016
9 a.m. (US EST)
10 p.m. Buenos Aires
10 p.m. Sao Paulo
3 p.m. Luxembourg
Tel: +1 (844) 836-8746
Participants calling from the US
Tel: +1 (412) 317-2501
Participants calling from other countries
Access Code: Adecoagro
Investor Relations Department
Charlie Boero Hughes
Tel: +54 (11) 4836-8651
Adecoagro is a leading agricultural company in South America. Adecoagro owns over 257 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 corn, wheat, soybeans, rice, dairy products, sugar, ethanol and electricity among others.
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SOURCE Adecoagro S.A.