Adecoagro recorded Adjusted EBITDA of $40.7 million in 3Q12

LUXEMBOURG, Nov. 13, 2012 /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 2012. Main highlights for the period:

• In 3Q12, Adecoagro recorded Adjusted EBITDA of $40.7 million and an Adjusted EBITDA margin of 24.7%.
• Adecoagro's Sugar, Ethanol and Energy business Adjusted EBITDA in 3Q12 was $46.4 million, 8.3% higher than 3Q11. Adjusted EBITDA margin reached a record high of 60.6%. Good weather conditions allowed the company to increase the pace of its harvest activities and crush 19.9% more sugarcane than in 3Q11. Dry weather also had a positive impact on sugar content in cane (TRS), which was 3.5% higher in 3Q12 than in 3Q11. If normal weather conditions persist during the fourth quarter, we expect to compensate for the lower year-to-date sugarcane crushing, production volumes and financial performance, resulting from the delayed start of milling due to challenging weather conditions in 2Q12.
• The Farming and Land Transformation businesses' Adjusted EBITDA in 3Q12 was $0.7 million, $14.9 million below 3Q11. Most of our crops are harvested during the first and second quarter. Adjusted EBITDA for the Farming business in the third quarter is almost always lower than in other quarters and is primarily derived from the mark-to-market of grain inventories and commodity hedge positions. Unrealized hedge results account for $13.9 million of the lower year-over-year underperformance. Adecoagro has successfully begun the 2012/13 crop season. Crop planting is advancing on schedule. Assuming normal weather during the growth season and current-level commodity prices, we expect to obtain attractive margins per hectare, resulting in a profitable 2012/13 harvest year.
• Net income in 3Q12 was $(2.8) million, $32.9 million less than in 3Q11, which is mainly explained by: (i) a $14.0 million non-cash loss generated by the mark-to-market of our long term biological assets, compared to a $34.0 million gain generated in 3Q11; and (ii) a $3.1 million unrealized loss generated by the mark-to-market of our commodity hedge position in 3Q12, compared to a $12.5 million gain generated in 3Q11. These negative effects were partially offset by a $2.5 million foreign exchange loss in 3Q12 compared to a $22.8 million loss in 3Q11.
• As of September 30, 2012, Cushman & Wakefield updated its independent appraisal of Adecoagro's farmland. Adecoagro's 285,787 hectares were valued at $938.0 million. Adjusted by the sale of La Alegria and San Jose farms in November 2011 and June 2012 respectively, and the acquisition of La Canada farm in November 2011, the appraised value of our farmland portfolio increased $49.3 million or 5.6%, since September 30, 2011.

This value creation is driven mainly by: (i) the transformation of underutilized or undermanaged cattle land into high yielding crop and rice land; (ii) the ongoing transformation and productivity improvement of all our farmland through our sustainable farming model focused on cutting edge technology and best practices, such as, no-till farming, crop rotations, balanced fertilization, integrated pest management and water use efficiency; and (iii) the increase/decrease in farm margins driven by changes in commodity and input prices.

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 the Company's total return on invested capital.

• The construction of the first phase of the Ivinhema mill in Mato Grosso do Sul is progressing on schedule. The assembly of the boiler, mill, powerhouse with generator and ethanol distillery have been completed. Interconnections and assembly of pending mill parts and equipment are expected to be completed mid-November. Ivinhema is expected to undergo test runs as of the end of November and start commercial milling operations at the beginning of the 2013 harvest, with a nominal crushing capacity of 2 million tons of sugarcane. Capacity will increase to 4 million tons in 2015 (phase II) and reach full capacity of 6.3 million tons in 2017 (phase III).

The foregoing highlights are only a summary of our results for the third quarter. You should read the full 3Q12 earnings release, including a reconciliation of Adjusted EBITDA to IFRS, that is available through our website at ir.adecoagro.com. A conference call to discuss 3Q12 results will be held tomorrow with live webcast through the internet:

English Conference Call
Nov 14th, 2012
11 a.m. (US EST)
1 p.m. Buenos Aires
2 p.m. Sao Paulo
5 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
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 285 thousand hectares of farmland and several industrial facilities spread across the most productive regions of Argentina, Brazil and Uruguay, where it produces over 1 million tons of agricultural products including corn, wheat, soybeans, rice, dairy products, sugar, ethanol and electricity among others.

SOURCE Adecoagro S.A.