Adecoagro recorded Adjusted EBITDA of $66.5 million in 4Q13, driving 2013 Adjusted EBITDA to $180.7 million
LUXEMBOURG, March 20, 2014 /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 fourth quarter of 2013.
Main highlights for the period:
Financial & Operational Highlights
- In the 2013 fiscal year, Adecoagro recorded an Adjusted EBITDA of $180.7 million, 28.4% higher than that of 2012. Adjusted EBITDA margin in 2013 reached 28.9% compared to 23.8% in 2012.
- In 4Q13, Adjusted EBITDA was $66.5 million with an Adjusted EBITDA margin of 42.1%, compared to $68.5 million and 40.0% in 4Q12, respectively.
- The Farming and Land Transformation businesses' Adjusted EBITDA in 4Q13 was 38.5 million, 17.6% higher than 4Q12. This increase is mainly explained by: (i) higher rice yields and white rice prices; (ii) an increase in cow productivity coupled with higher milk prices in the dairy business; and (iii) the sale of the San Martin and San Agustin farms which generated a $21.3 million gain in 4Q13 compared to a $19.4 million gain in 4Q12.
On an annual basis, Adjusted EBITDA grew by 29.6%, from $68.6 million in 2012 to $88.9 million mainly driven by: (i) operational and financial performance in the dairy and rice businesses; (ii) gains generated from our commodity hedge position; and (iii) the sale of five developed farms generating $28.2 million gains in 2013 compared to $27.5 million the previous year.
- In the Sugar, Ethanol and Energy business, the fourth quarter of 2013 marked the conclusion of the 2013/14 sugarcane harvest. Favorable weather during the quarter allowed our mills to increase the pace of milling, which reached a total of 1.8 million tons, marking a 28.7% growth quarter-over-quarter. Adjusted EBITDA of our Sugar, Ethanol and Energy business during 4Q13 was $35.2 million with an EBITDA margin of 33.9%, compared to $42.3 million and 43.2% in 4Q12, respectively. This reduction was mainly driven by: (i) 9.2% lower TRS content as a result of the frost which impacted the Center-South region of Brazil in mid July 2013; (ii) lower sugar and ethanol prices; and (iii) the commercial strategy to carry sugar and ethanol inventories into the inter-harvest season to capture higher prices, postponing sales and margins to 1Q14.
On an annual basis, Adjusted EBITDA in 2013 totaled $115.2 million, 18.2% above 2012. Adjusted EBITDA margin during the period expanded to 38.8% from 36.2%. The improvement in financial performance was primarily driven by a 43.0% increase in cane milling, resulting from (i) a 16.0% expansion of our sugarcane plantation, (ii) the ramp up of the Ivinhema mill which increased our nominal crushing capacity by 2.0 million tons, and (iii) a 4.6% increase in sugarcane yields. The growth in crushing and production was partially offset by: (i) a 5.4% reduction in TRS content; (ii) lower sugar and ethanol prices throughout the year; and (iii) our commercial strategy to increase year-end sugar and ethanol inventories by 58.6% and 45.5% respectively, as explained above.
- Consolidated Net Income in 2013 totaled a loss of $25.8 million, compared to a $9.3 million gain in 2012. Despite the 28.5% growth in Adjusted EBITDA, the net loss is mainly explained by: (i) a $55.7 million non-cash loss generated by the mark-to-market of our long term biological assets (primarily sugarcane); (ii) a 19.0 million loss resulting from the mark-to-market of currency derivatives used to hedge future US dollar inflows generated by our forward sugar sales; (iii) a $25.9 million increase in accrued interest expenses as a result of lower interest income, and higher interest expenses resulting from an increase in oustanding debt and lower capitalization of interests related to growth projects; and (iv) a $23.6 million foreign exchange loss, generated by the impact of the depreciation of the Brazilian Reais and Argentine Peso on our outsanding dollar-denominated debt.
- Farm Sales: During the fourth quarter, Adecoagro successfully sold the San Agustin and San Martin farms. The San Agustin farm was sold for $17.5 million, representing a 19% premium over the latest Cushman and Wakefield independent appraisal. The transaction generated $14.9 million of Adjusted EBITDA and resulted in an IRR of 20.3%. The San Martin farm was sold for $7.8 million, representing a 15% premium over Cushman and Wakefield. The transaction generated $6.3 million of Adjusted EBITDA and resulted in an IRR of 34%.
In aggregate, during 2013 Adecoagro monetized five farms or 14.2 thousand hectares of its developed land portfolio. All farms were sold at premiums to the Cushman & Wakefield independent appraisal dated September 30, 2013 and generated in aggregate $59.4 million dollars of cash proceeds and $28.2 million of Adjusted EBITDA.
- Sugar, Ethanol & Energy Expansion: The construction of the first phase of the Ivinhema mill was completed during the beginning of 2013 on schedule and budget. Ivinhema's milling operations commenced on April 25, 2013, with 2.0 million tons of nominal crushing capacity, generating important synergies and efficiencies with the Angelica mill.
We are currently commencing the construction of the second phase of Ivinhema, which will expand milling capacity to 5.0 million tons per year by 2015, rather than 4.0 million tons as originally planned. The enlargement of Phase 2 will allow Ivinhema to enhance operational efficiencies and economies of scale, improving operating margins and accelerating free cash flow generation.
Phase 2 will consist of expanding the milling equipment, building a new fluidized bed boiler, 2 new electrical generators and expanding the sugar factory and ethanol distillery. Annual production is expected to increase to 300,000 tons of sugar, 240,000 cubic meters of ethanol and 360,000 MWh of energy exports. Total capital expenditure is estimated at BRL 583 million.
- Share Repurchase Program: On September 23, 2013, Adecoagro announced that its Board of Directors had authorized the implementation of a share repurchase program for up to 5% of the outstanding shares over the next 12-months. As of the date of this report, Adecoagro repurchased a total of 2.3 million shares or 1.9% of shares outstanding.
To read the full 4Q13 earnings release, please access ir.adecoagro.com. A conference call to discuss 4Q13 results will be held tomorrow with live webcast through the internet:
English Conference Call
Mar 21, 2014
11 a.m. (US EST)
12 p.m. Buenos Aires
12 p.m. Sao Paulo
4 p.m. Luxembourg
Tel: (877) 317-6776
Participants calling from the US
Tel: +1 (412) 317-6776
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 269 thousand hectares of farmland and several industrial facilities spread across the most productive regions of Argentina, Brazil and Uruguay, where it produces over 1.3 million tons of agricultural products including corn, wheat, soybeans, rice, dairy products, sugar, ethanol and electricity among others.
SOURCE Adecoagro S.A.