Adecoagro recorded Adjusted EBITDA of $37.7 million in 4Q14, driving 2014 Adjusted EBITDA to $215.5 million

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Mar 19, 2015, 06:23 ET

LUXEMBOURG, March 19, 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 fourth quarter and twelve month period ended on December 31, 2014. The financial information contained in this press release is based on unaudited condensed consolidated interim financial statements presented in U.S. dollars and prepared in accordance with International Financial Reporting Standards (IFRS).

Financial & Operational Highlights:

Adecoagro recorded an Adjusted EBITDA⁽¹⁾ of $215.5 million in 2014, 19.3% higher than 2013. Adjusted EBITDA margin⁽¹⁾ in 2014 reached 31.0% compared to 28.9% in 2013. In 9M14, Adjusted EBITDA was $177.8 million, 55.7% higher than in 9M13. Adjusted EBITDA margin grew to 36.3% from 24.7%.

Gross sales in 2014 reached $723.0 million, 12.2% higher than 2013.

Net Income in 2014 stood at $2.4 million, $28.3 million higher than 2013.

The Sugar, Ethanol and Energy business‟ fourth quarter of 2014 marked the conclusion of the 2014/15 sugarcane harvest. Adjusted EBITDA reached $59.4 million, 69.0% higher than 4Q13. Adjusted EBITDA margin increased from 32.6% to 41.9%.

On a full year basis, operational milling efficiencies coupled with favorable weather allowed our mills to crush a total of 7.2 million tons, reaching full utilization of nominal crushing capacity. Adjusted EBITDA reached $153.5 million, marking a 33.2% increase over 2013. Adjusted EBITDA margin expanded to 40.5% from 38.8% in the previous year.

The improvement in financial performance during 4Q14 and 2014 is primarily explained by (i) our strategy of aggressively expanding our sugarcane plantation; (ii) a 31.7% increase in cogeneration efficiency ratio which reached an average of 61.6 KWh exported per ton of sugarcane, one of the highest in the industry; (iii) a 12.5% year-over-year increase in sugarcane yields and a 3.1% growth in TRS content; (iii) a 12.7% expansion in crushing volumes resulting in higher sugar, ethanol and energy production and sales volumes; (iii) a 64.6% increase in realized energy prices measured in USD; and (iv) enhanced production efficiencies and operational leverage in our cluster, which dilutes our sugarcane production costs. Operating and financial performance was partially offset by (i) lower sugar and ethanol realized prices in USD terms; and (ii) the execution of an ethanol carry strategy to capture higher inter-harvest prices, postponing sales and margins to 1Q15.

The Farming and Land Transformation businesses‟ Adjusted EBITDA in 4Q14 was negative $15.0 million, compared to $38.5 million in 4Q13. This decrease was primarily driven by (i) an $11.0 million loss from the mark-to-market of commodity derivative hedges, driven by the rebound in commodity prices during 4Q14; (ii) a $3.6 million non-cash loss generated by the fair value of the 2014/15 rice crop; (iii) lower commodity prices; and (iv) timing of farm sales: in 2013 we generated gains from farm sales in the fourth quarter, while in 2014 gains were generated in the second quarter.

On a full year basis, Adjusted EBITDA was $85.2 million, relatively in line with 2013. Results were mainly driven by enhanced operational and financial performance in our crops, rice and dairy segments; offset by lower soybean, corn and wheat prices.

Net Income in 2014 totaled $2.4 million, $28.2 million higher than in 2013. Net income was achieved through (i) operational and financial improvements in the Sugar & Ethanol business; (ii) a $12.5 million improvement in financial results, mainly related to lower foreign currency losses; and partially offset by (iii) a $21.2 million increase in depreciation related to the ramp up of the Ivinhema mill; and (iv) a $15.4 million increase in income tax resulting from a $45.4 million increase in profit before tax. Despite accrued income tax charges, the utilization of carry forward losses resulted in actual tax payments of $0.4 million.

Strategy Execution

Sugar, Ethanol & Energy Expansion

As of the date of this release, the construction of the second phase of the Ivinhema mill is almost complete, adding 3.0 million tons of crushing capacity to our cluster. Ivinhema began crushing on March 16, with a daily milling capacity of 20,000 tons, and is expected to reach final capacity of 25,000 tons per day by mid April. To supply our new capacity with quality raw material, we successfully planted 36,267 hectares of sugarcane in 2014, 40.8% higher than 2013. We have essentially completed the construction of our cluster in Mato Grosso do Sul. We expect to expand capacity by 1.0 million tons of capacity during 2016/2017, mainly consisting in planting additional sugarcane and extending the harvest season from early March to year end.

Preparations for the start of the harvest

During January and February 2015, our Sugar, Ethanol & Energy teams were fully focused on the inter-harvest maintenance of the industrial milling equipment and agricultural machinery. All reparations and improvements have been accomplished on schedule. We have also implemented various training programs for our employees, seeking to continue improving operational performance. The efficient inter-harvest and the fact that we have sufficient sugarcane has allowed us to anticipate the commencement of the harvest: Angelica and Ivinhema began crushing on March 11 and March 16, respectively.

In the Farming business, our operational teams are ready to begin the harvest of summer crops (corn and soybean). Harvest contractors have been hired in each farm and operating protocols have been revised and adjusted. Farm roads have been improved in order to minimize logistic disruptions during harvest.

(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 4Q14 earnings release, please access www.adecoagro.com. A conference call to discuss 4Q14 results will be held on March 20, 2015 with live webcast through the internet:

4Q14 Conference Call

March 20, 2015
11 a.m. (US EST)
12 p.m. (Buenos Aires)
12 p.m. (Sao Paulo time)
4 p.m. (Luxembourg time)

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
CFO

Hernan Walker
IR Manager
Email: [email protected]
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 1.3 million tons of agricultural products including corn, wheat, soybeans, rice, dairy products, sugar, ethanol and electricity among others.

SOURCE Adecoagro S.A.