Adecoagro Recorded Adjusted Ebitda Of $70.3 Million in 3Q14, Representing 60.6% Year-Over-Year Growth

LUXEMBOURG, Nov. 12, 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 third quarter of 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:

• In 3Q14, Adecoagro recorded Adjusted EBITDA⁽¹⁾ of $70.3 million, 60.6% higher than in 3Q13. Adjusted EBITDA margin⁽¹⁾ was 35.7% in 3Q14 compared to 25.4% in 3Q13.
• 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 3Q14 reached $202.8 million and $505.9 million in 9M14, showing a 14.9% and 6.5% increase, respectively.
• In our Farming and Land Transformation businesses, Adjusted EBITDA in 3Q14 was $22.6 million, compared to $10.7 million in 3Q13. Since most of our row crops are harvested during the first and second quarter, Adjusted EBITDA in the third quarter is primarily derived from rice and milk sales, and the mark-to-market of grain inventories and commodity hedges. The 111.4% growth in financial performance year-over-year is primarily explained by a $16.6 million gain resulting from the mark-to-market of our soybean and corn derivative hedge positions related to the new 2014/15 crop.
  On an accumulated basis, 9M14 Adjusted EBITDA totaled $100.2 million, 97.9% higher than 9M13. Year-over-year growth is mainly explained by: (i) increased operational and financial performance in the Crops segment, resulting from higher yields and lower production costs; (ii) higher margins in the Rice segment, resulting from an increase in planted area coupled with lower costs driven by the implementation of efficient production technologies and the devaluation of the Argentine peso; and (iii) a $25.5 million gain in our land transformation business.
• In the Sugar, Ethanol and Energy business, Adjusted EBITDA during 3Q14 reached an all-time quarterly record of $54.7 million, 39.4% higher than 3Q13. Adjusted EBITDA margin reached 49.2%. This improved performance is primarily explained by: (i) a 3.8% increase in sugarcane content (TRS) coupled with a 6.7% increase in yields; (ii) an increase in sugar, ethanol and energy sales volumes driven by higher year-to-date crushing and production volumes; (iii) a 69.4% and 21.7% increase in energy and ethanol prices, respectively; and (iv) enhanced production efficiencies and operational leverage. Operational and financial performance was partially offset by a commercial strategy to carry ethanol inventories into the off-season seeking higher prices; and lower sugar prices.
  Year-to-date, Adjusted EBITDA was $94.1 million, $14.2 million or 17.7% higher than the same period of the prior year.
• Net income in 3Q14 totaled $11.2 million, $17.3 million higher than in 3Q13. On a cumulative basis, net income for 9M14 was $15.3 million, $45.7 million higher than the same period of 2013. Net income was enhanced by operational and financial improvements in the Farming and Sugar & Ethanol businesses.

Strategy Execution

Independent Farmland Appraisal Report:

• As of September 30, 2014 Cushman & Wakefield (C&W) updated its independent appraisal of Adecoagro's farmland. Adecoagro's subsidiaries held 269,923 hectares valued by C&W at $934.4 million. Net of minority interests, Adecoagro's land portfolio of 257,036 hectares was valued at $884.4 million.(1)
  Adjusted by the sale of the San Agustin and San Martin farms in November 2013 and December 2013, respectively, the appraised value of our farmland portfolio increased $24.5 million or 2.9%, since September 30, 2013.
  We believe this increase is mainly explained by: (i) the transformation of undermanaged and underdeveloped land into croppable land; (ii) the ongoing transformation or continuous productivity enhancements of all our croppable land; 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.
  We believe this increase is mainly explained by: (i) the transformation of undermanaged and underdeveloped land into croppable land; (ii) the ongoing transformation or continuous productivity enhancements of all our croppable land; 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.
  Sugar, Ethanol & Energy Expansion

Sugar, Ethanol & Energy Expansion:

• The construction of the second phase of the Ivinhema mill, which will add 3.0 million tons of nominal crushing capacity, is advancing according to schedule and will be commissioned in March 2015. As of September 30, 2014, we successfully planted 29,565 hectares of sugarcane, 61.0% higher year-over-year, in order to supply our new capacity with quality raw material.

Changes to Executive Management Team & Board of Directors

• Renato Junqueira Santos Pereira has been promoted to Director of the Sugar, Ethanol & Energy business and a member of the senior management team. Mr. Junqueira has been Operations Manager for our Sugar, Ethanol & Energy business since 2010 and has vast experience in the Brazilian sugarcane industry. Before joining Adecoagro, he served as the CFO of Usina Moema until it was acquired by Bunge. Renato is an Agricultural Engineer from Universidade de Sao Paulo and holds an MBA from the University of California, Davis.
• Marcelo Vieira has assumed the role of non-executive member of the Board of Directors of the Company after retiring from his position as Director of our Sugar, Ethanol & Energy business. Marcelo Vieira has been a member of Adecoagro's senior management since 2005, and has been instrumental in the development and expansion of the company's operations. As a board member, Marcelo will continue adding strategic value to the Company.
• Paulo Vieira has stepped down as member of the Board of Directors of the Company after almost 10 years of service. Paulo Vieira has provided invaluable guidance and leadership to the Company. We wish Paulo Vieira success with his endeavors and sincerely thank him for his contribution and service.

Sunflower Processing Plant

• On October 2, 2014 we inaugurated a state-of-the-art sunflower processing plant located in the city of Pehuajo, Buenos Aires, Argentina. The plant was built in a 50/50 joint venture with CHS Inc., the largest farmer cooperative and one of the largest grain handlers in the US. The plant processes confectionary and black oil sunflower into specialty products such as kernel, in-shell seeds and oil seeds destined to niche markets in Europe, US, and Middle East. The plant required a total investment of $35.2 million, of which 50.6% was financed through local debt. This strategic investment will add synergies and vertical-integration to our sunflower production, enhancing the margins and returns of our Crops business.

(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 3Q14 earnings release, please access www.ir.adecoagro.com. A conference call to discuss 3Q14 results will be held on November 13, 2014 with live webcast through the internet:

English Conference Call

Nov 13, 2014
11 a.m. (US EST)
  1 p.m. (Buenos Aires)
  2 p.m. (São Paulo time)
  5 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.