Adecoagro recorded an Adjusted EBITDA of $49.7 million in 3Q15 and $124.9 million in 9M15

12 Nov, 2015, 17:09 ET from Adecoagro S.A.

LUXEMBOURG, Nov. 12, 2015 /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 third quarter of 2015.

Main highlights for the period:

Financial & Operational Highlights

  • Consolidated Adjusted EBITDA(1) in 3Q15 was $49.7 million, 29.3% lower than 3Q14. Adjusted EBITDA margin(1) was 30.1% in 3Q15 compared to 35.7% in 3Q14.
  • The Sugar, Ethanol and Energy business continues to deliver operational performance. Our focus on improving operational efficiencies and technical enhancements has proved to be a driver for productivity growth and cost dilution.

Our mills crushed a total of 3.2 million tons of sugarcane in 3Q15, 15.1% higher year-over-year, driven by an increase in nominal crushing capacity combined with higher milling efficiency. Sugarcane productivity increased by 10.5% reaching 86.3 tons/ha while sugar content (TRS) stood at 140.5 kg/ton, resulting in a 14.2% year-over-year growth in TRS per hectare. Our cogeneration operation has reached a record productivity ratio of 72.2 KWh per ton of sugarcane crushed. As a result of these productivity enhancements our sugar, ethanol and energy production increased by 11.7%, 26.9% and 40.2% respectively during the quarter.

Adjusted EBITDA in 3Q15 was $47.1 million, 13.9% lower than 3Q14. Despite higher productivity metrics and production volumes, financial performance was affected by a 14.9%  decrease in net sales, primarily explained by: (i) lower prices; and (ii) the implementation of a sugar and ethanol carry strategy. We are  seeking to capture higher prices towards the end of the year, which has resulted in increased sugar and ethanol inventories by 82.6% and 24.9% respectively year-over-year. Adjusted EBITDA margin during the quarter expanded from 49.2% in 3Q14 to 49.8%, driven by productivity gains and dilution of fixed costs.

  •  In the Farming and Land Transformation businesses, Adjusted EBITDA in 3Q15 was $9.1 million, compared to $22.6 million in 3Q14. This decrease is primarily explained by (i) lower commodity prices for corn, soybean, wheat, rice and milk; (ii) higher production costs in our Argentine operations due to the appreciation of the Argentine peso in real terms; and (iii) a $4.1 million lower gain from the mark-to-market of our commodity hedges. These effects were partially offset by higher productivity in our soybean, corn and dairy operations.

On a year-to-date basis, Adjusted EBITDA was $34.8 million, $65.4 million or 65.2% lower than 9M14. In addition to the drivers described above, this gap is explained by the absence of recorded gains from land transformation sales in 9M15, compared to a $25.5 million gain realized in 9M14.

  • Net income in 3Q15 totaled $2.4 million, compared to $11.2 million in 3Q14. The decrease is primarily explained by the lower Adjusted EBITDA in the quarter and offset by (i) an $11.1 million decrease in depreciation and amortization due to the depreciation of the Brazilian Real and Argentine peso; and (ii) a $5.5 million income tax benefit.

On a year-to-date basis, net income was $17.5 million, 14.7% higher than 9M14. Despite lower Adjusted EBITDA, net income was enhanced by (i) a $15.6 million decrease in depreciation and amortization, driven by the weaker Brazilian Real and Argentine peso; and (ii) a $16.8 million increase in the fair value of our sugarcane biological assets. These effects were partially offset by a $4.1 million increase in financial losses as a result of the devaluation of the Brazilian Real.

Strategy Execution

Independent Farmland Appraisal Report

  • As of September 30, 2015 Cushman & Wakefield updated its independent appraisal of Adecoagro's farmland. Adecoagro's subsidiaries held a total of 269,931 hectares valued by C&W at $935.4 million. Net of minority interests, Adecoagro's land portfolio consists of 257,044 hectares valued at $885.7 million.

We believe the increase in the value of our farmland is mainly explained by: (i) the transformation of undermanaged and underdeveloped land into croppable land; and (ii) the ongoing transformation or continuous productivity enhancements of all our croppable land.

These gains are not reflected in Adecoagro's financial statements since the Company does not mark-to-market the value of farmland assets on its balance sheet. However, land transformation and appreciation are an important part of Adecoagro's business strategy and a component of total return on invested capital.The construction of the second phase of the Ivinhema mill was formally completed during 2Q15. Our state-of-the-art cluster in Mato Grosso do Sul has reached full nominal crushing capacity of 9 million tons.

Share Repurchase Program

  • On August, 12, 2015, the Board of Directors approved the extension of the Company's share repurchase program for an additional twelve month period, and ending on September 23, 2016. Under the buyback program, the Company can continue acquiring shares up to 5% of the outstanding share capital. Since the inception of the share repurchase program in August 2013 and through October 2015, Adecoagro has repurchased an aggregate of 2.4 million shares for a total consideration of $18.4 million and an average price of $7.72 dollars per share.

(1)      Adjusted EBITDA is defined as consolidated profit from operations before financing and taxation, depreciation, amortization and unrealized changes in fair value of long-term biological assets (sugarcane, coffee and cattle) 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, and unrealized changes in fair value of long-term biological assets (sugarcane, coffee and cattle) 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 3Q15 earnings release, please access ir.adecoagro.com. A conference call to discuss 3Q15 results will be held on November 13, 2015 with a live webcast through the internet:

English Conference Call November 13, 2015 11 a.m. (US EST) 1 p.m. Buenos Aires 2 p.m. Sao Paulo 5 p.m. Luxembourg

Tel: +1 (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 CFO

Hernan Walker IR Manager Email: ir@adecoagro.com Tel: +54 (11) 4836-8651

About Adecoagro: 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.

SOURCE Adecoagro S.A.