Adecoagro recorded Adjusted EBITDA of $78.1 million in 4Q15, 107.1% higher year-over-year, driving 2015 Adjusted EBITDA to $203.1 million

Mar 17, 2016, 17:22 ET from Adecoagro S.A.

LUXEMBOURG, March 17, 2016 /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 of 2015.

Main highlights for the period:

Financial & Operational Highlights

  • Adjusted EBITDA in 4Q15 totaled $78.1 million, 107.1% higher than 4Q14. Adjusted EBITDA margin was 37.2% compared to 18.3% in 4Q14.
  • Full year 2015 Adjusted EBITDA was $203.1 million, 5.8% below the previous year. Adjusted EBITDA margin in 2015 was 31.3%, slightly above 2014.
  • In our Sugar, Ethanol and Energy business, Adjusted EBITDA in 4Q15 reached $48.5 million, 18.4% lower than 4Q14. Operating and financial performance in the quarter was negatively affected by: (i) substantial rainfall, almost twice the historical average, which caused harvest delays and disruptions, resulting in a 21.9% decrease in sugarcane crushing volumes year-over-year; (ii) lower realized ethanol and energy prices in US dollars; and (iii) a $9.7 million loss derived from the negative mark to market of our sugar hedge position compared to a $7.2 million gain in 4Q14. These effects were partially offset by: (i) a 5.9% increase in sugarcane productivity leading to fixed cost dilution; and (ii) the devaluation of the Brazilian Real, which dilutes most of our costs measured in US dollars. The un-harvested sugarcane as of December 31, 2015, is scheduled to be harvested during 1Q16.

On a full year basis, Adjusted EBITDA was $154.6 million with an Adjusted EBITDA margin of 41.2%, in both cases slightly above the previous year. The year-to-date improvement in financial performance is primarily explained by (i) a 15.2% increase in sugarcane crushing volumes resulting in higher sugar, ethanol and energy production and sales volumes, which was made possible by the timely completion of the Ivinhema mill and our focus on expanding our sugarcane plantation; (ii) a 15.1% year-over-year increase in sugarcane yields and a 1.1% growth in TRS content, which resulted in a 16.4% increase in TRS per hectare; (iii) an 8.4% increase in cogeneration efficiency ratio, which reached an average of 66.4 KWh exported per ton of sugarcane, one of the highest in the industry; (v) enhanced production efficiencies and operational leverage in our cluster leading to cost dilution. Operating and financial performance was largely offset by lower sugar and ethanol realized prices in US dollar terms, and the deferral of milling into 1Q16.

  • The Farming and Land Transformation businesses' Adjusted EBITDA in 4Q15 reached $35.4 marking a $50.4 million increase compared to the same period of the previous year. This increase was primarily driven by (i) a $10.7 million increase in Changes in Fair Value in our Crops segment, resulting primarily from higher wheat and corn gross margins driven by an 11.2% increase in wheat yields and higher net prices for both crops as a result of the elimination of export taxes (except for soybean which was reduced 5%) and elimination of export quotas in Argentina; (ii) a $24.0 million gain generated from the sale of farms in Argentina; and (iii) a $1.6 million gain from the mark-to-market of our commodity hedge position, which  was $13.1 million higher than 4Q14.

On a full year basis, Adjusted EBITDA was $70.3 million, 17.6% lower than 2014. Financial performance was primarily explained by: (i) lower commodity prices; (ii) higher production costs in US dollars resulting from the appreciation of the Argentine peso in real terms during most of 2015; and offset by higher soy and corn yields and hedge results.

  • Net Income in 2015 totaled $18.4 million, $15.9 million or 654% higher compared to the previous year. The growth in net income was achieved by (i) a $26.8 million increase in the value of our sugarcane plantation as a result of higher future sugar and ethanol prices; (ii) an $18.4 million decrease in depreciation and amortization expenses, mainly explained by the depreciation of the Brazilian real; (iii) an $8.0 million higher net gain from farm sales; and (iv) a $2.4 million decrease in income taxes. These effects were partially offset by a $28.6 million increase in financial losses, driven by the effect of the depreciation of the Argentine peso and the Brazilian real and the $12.5 million decrease in consolidated Adjusted EBITDA.

(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.

Strategy Execution

Farmland sales at strong premium to independent appraisal

  • During November and December 2015, we sold La Cañada farm located in the province of San Luis, Argentina, and the sale of a 49% minority interest in El Orden and La Carolina farms, located in province of Santa Fe, Argentina. The farms were sold for a total price of $34.8 million, representing a 57% and 48% premium to Cushman & Wakefield's independent farmland appraisal dated September 30, 2015. In aggregate, these transactions generated capital gains of $24.0 million in 4Q15. For more information please see Land Transformation segment (page 12).

New Macroeconomic Outlook and Agribusiness Reform in Argentina

  • The new government led by President Mauricio Macri has implemented major policy changes in the agribusiness sector since it took office. The most important changes include the elimination of export taxes for all agricultural commodities (except soybean which was reduced by 5%), the elimination of export quotas and restrictions for corn and wheat, and a >50% nominal devaluation of the Argentine peso. These changes have and will continue to have a significant impact on margins and profitability for the sector and Adecoagro. The expected profitability of Argentine farmland has more than doubled as a result of these policy changes, assuming equal level of prices and production costs.

Commencement of Positive Free Cash Flow Cycle

  • The new government led by President Mauricio Macri has implemented major policy changes in the agribusiness sector since it took office. The most important changes include the elimination of export taxes for all agricultural commodities (except soybean which was reduced by 5%), the elimination of export quotas and restrictions for corn and wheat, and a >50% nominal devaluation of the Argentine peso. These changes have and will continue to have a significant impact on margins and profitability for the sector and Adecoagro. The expected profitability of Argentine farmland has more than doubled as a result of these policy changes, assuming equal level of prices and production costs.

Inclusion of AGRO in MSCI Index

  • On November 30, 2015, Adecoagro was included in the MSCI Argentina and Frontier Market indexes. As a new foreign-listed constituent, Adecoagro's weight will be allocated in two phases: 50% was allocated in the November 30, 2015 Semi-Annual Index Review and the remaining 50% weight is expected to be allocated during the May 2016 Semi-Annual Index Review. AGRO's share liquidity has more than doubled from an average of $2.3 million before November 2015, to above $5.0 million post inclusion.

To read the full 4Q15 earnings release, please access ir.adecoagro.com. A conference call to discuss 4Q15 results will be held on March 18, 2015 with a live webcast through the internet:

English Conference Call

March 18, 2016 11 a.m. (US EST) 12 p.m. Buenos Aires 12 p.m. Sao Paulo 4 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 http://webcast.neo1.net/Cover.aspx?PlatformId=xmkS3qwN4GEi7PUcj%2FAOyw%3D%3D

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.



RELATED LINKS

http://ir.adecoagro.com