Adecoagro recorded Adjusted EBITDA of $43.8 million in 3Q13

LUXEMBOURG, Nov. 12, 2013 /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 2013. Main highlights for the period:

Financial & Operational Highlights

• Adecoagro recorded Adjusted EBITDA of $43.8 million, 7.6% higher than in 3Q12. Adjusted EBITDA margin was 24.8% in 3Q13 compared to 24.4% in 3Q12.
• 9M13, Adjusted EBITDA was $114.2 million, 58.1% higher than in 9M12. Adjusted EBITDA margin grew to 24.1% from 17.2% in 9M12.
• The Farming and Land Transformation businesses' Adjusted EBITDA in 3Q13 was $10.7 million, compared to $0.7 million in 3Q12. Since most of our crops are harvested during the first and second quarter, Adjusted EBITDA in the third quarter tends to be the lowest of the year, and is primarily derived from the mark-to-market of grain inventories and commodity hedge positions. Financial performance quarter-over-quarter is primarily explained by: (i) profit generated by the mark-to-market of our soybean and corn derivative hedge positions; (ii) increased productivity per cow and higher milk prices in the dairy business; and (iii) higher industrial efficiency and prices in the rice business.
  We completed the 2012/13 crop year. 9M13 Adjusted EBITDA totaled $50.7 million, 41% higher than 9M12. Results from the Crops segment were negatively affected by dry weather during the growth season, resulting in below average crop yields. These effects were partially offset by significant operational and financial improvements in the Dairy and the Rice segments.  
  During the fourth quarter, we expect that earnings from the Farming & Land Transformation businesses will be mainly driven by the biological growth of the new 2013/14 crop and rice planted area, productivity of the dairy business, mark-to-market of our hedge positions for the new crop and the sale of the San Martin farm, which will generate roughly $6.5 million of operating profit.
• In the Sugar, Ethanol and Energy business, good weather conditions allowed our mills to crush a record of 2.8 million tons of sugarcane during 3Q13, 32.6% higher than in 3Q12. Nevertheless, Adjusted EBITDA during 3Q13 was $39.2 million, 15.5% below that of 3Q12, primarily explained by: (i) the commercial strategy to carry ethanol seeking higher prices, resulting in a 72.6% increase in ethanol inventories and a deferment of sales; (ii) a 4.4% fall in sugarcane TRS (Total Recoverable Sugar) as a result of the frost that affected the center south region of Brazil during mid-July 2013 and the excess rains that affected the region during June 2013; and (iii) lower sugar and ethanol prices.
  Year-to-date, Adjusted EBITDA was $79.9 million, $24.7 million or 44.8% higher than the same period of the prior year. Adjusted EBITDA margin expanded from 32.2% in 9M12 to 42.1% in 9M13. We expect to continue crushing sugarcane until mid-December with financial performance subject to weather conditions and ethanol prices.
• Net income in 3Q13 totaled a loss of $6.1 million, $3.3 million lower than in 3Q12. The loss for the period is primarily the result of: (i) a $5.8 million foreign exchange loss, generated by the mark-to-market effect of non-deliverable currency forwards; and (ii) a $12.2 million non-cash loss resulting from the mark-to-market of our sugarcane biological assets.

Farmland Valuation Report

• As of September 30, 2013 Cushman & Wakefield updated its independent appraisal of Adecoagro's farmland. Adecoagro's 278,336 hectares were valued at $919.3 million.⁽¹⁾ Adjusted by the sale of the Santa Regina farm in December 2012 and the Lagoa do Oeste and Mimoso farms in May 2013, the appraised value of our farmland portfolio increased by $18.4 million or 2.0%, since September 30, 2012.
  We believe that the increase in the appraised value from September 30, 2012 to September 30, 2013 was mainly driven by: (i) the transformation of underutilized or undermanaged 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 rotation, balanced fertilization, integrated pest management, and water efficiency practices; and (iii) land appreciation.
  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.

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. As of September 30, 2013, Adecoagro repurchased a total of 55,899 shares at an average price per share of $7.50.

Farm Sales

• On October 3, 2013, Adecoagro completed the sale of the San Martin farm for a total price of $8.0 million, equivalent to $2,294 per hectare, representing a 15% premium over the Cushman & Wakefield independent appraisal dated September 30, 2013. San Martin is a 3,502 hectare farm located in the province of Corrientes, Argentina. The farm is used for cattle grazing activities and is a subdivision of the Ita Caabo farm acquired by Adecoagro in 2007. This transaction will generate approximately $6.5 million of operating profit in 4Q13.

To read the full 3Q13 earnings release, please access ir.adecoagro.com. A conference call to discuss 3Q13 results will be held tomorrow with live webcast through the internet:

English Conference Call
Nov 13, 2013
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 278 thousand hectares of farmland and several industrial facilities spread across the most productive regions of Argentina, Brazil and Uruguay, where it produces over 1.2 million tons of agricultural products including corn, wheat, soybeans, rice, dairy products, sugar, ethanol and electricity among others.

SOURCE Adecoagro S.A.