Adecoagro recorded an Adjusted EBITDA of $39.5 million in 2Q15 and $75.3 million in 6M15

Aug 13, 2015, 19:01 ET from Adecoagro S.A.

LUXEMBOURG, Aug. 13, 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 second quarter of 2015.

Main highlights for the period:

Financial & Operational Highlights

  • Adecoagro's Net Income totaled $1.3 million in 2Q15 in line with 2Q14, while in 6M15 reached 15.1 million, 272.9% higher compared to last year. 
  • Adjusted EBITDA(1) in 2Q15 was  $39.5 million, 45.8% lower than 2Q14. Adjusted EBITDA margin(1) was 24.0% in 2Q15 compared to 36.9% in 2Q14.
  • Our Sugar, Ethanol and Energy business delivered strong operational and financial results in the quarter.   Our mills crushed a total of 2.9 million tons of sugarcane, 35.9% higher year-over-year, driven by an increase in nominal crushing capacity combined with higher milling efficiency. Our agricultural operations are reaping the benefits of operational improvements and technical enhancements performed during the last 3-years. Sugarcane productivity reached 100 tons/ha while sugar content (TRS) stood at 128.7 kg/ton, resulting in a 34.1% year-over-year increase in TRS content per hectare. As a result of the increase in productivity, production and sales volumes were boosted and production costs diluted. Thus, despite lower sugar and energy prices, adjusted EBITDA in 2Q15 reached $41.1 million, 15.3% higher than 2Q14, while Adjusted EBITDA margin expanded to 47.7% from 46.2% in 2Q14.

On a year-to-date basis, Adjusted EBITDA in 6M15 stood at $59.0 million, marking a 49.7% increase over 6M14. In addition to the main drivers explained above, year-to-date results were also enhanced by: (i) an early start of the harvest season which will allow us to extend the season and increase annual milling; and (ii) a $13.9 million gain, which is mostly realized, from the mark-to-market of our sugar hedge position, compared to a $1.9 million gain generated in 6M14.

  • In the Farming and Land Transformation businesses, Adjusted EBITDA in 2Q15 was $2.6 million, compared to $41.8 million in 2Q14. This decrease is primarily explained by (i) absence of gains from land transformation, compared to a $25.6 million gain realized in 2Q14; and (ii) a $7.9 million unrealized mark-to-market loss generated by our commodity hedge positions, compared to a $7.2 million gain generated in 2Q14.

Year-to-date, Adjusted EBITDA was $25.7 million, $51.9 million or 66.9% lower than 6M14. This performance is primarily explained by: (i) no land transformation gains as explained above; (ii) lower margins in the Crops, Rice and Dairy segments resulting from lower prices of soybean, corn, wheat and milk, coupled with higher production costs measured in dollars as a result of the appreciation of the Argentine peso in real terms. These effects were partially offset by higher productivity in our soybean, corn and dairy operations.

  • Net income in 2Q15 totaled $1.3 million, essentially the same as in 2Q14. Net income in the quarter was enhanced by: (i) a $4.1 million decrease in interest expense and a $4.1 million decrease in depreciation and amortization, both driven by the weaker Brazilian Real and Argentine Peso in 2Q15 compared to 2Q14; (ii) a $5.9 million increase in the fair value of our sugarcane biological assets resulting from an increase in sugarcane yields. These effects were partially offset by a $6.6 million increase in income tax expense.

Strategy Execution

Sugar, Ethanol & Energy Ramp Up

  • The construction of the second phase of the Ivinhema mill was formally completed during 2Q15. Our state-of-the-art cluster in Mato Grosso do Sul has reached full nominal crushing capacity of 9 million tons.
  • In an industry with very high mechanization levels and high fixed cost structure, the completion of the cluster is an important driver of economies of scale and operating synergies.
  • More importantly, during 2015 our operations have shown strong signs of operational improvements and efficiency enhancements related to the training and strengthening of our teams and processes which have resulted in fixed cost dilution and increase in operating margins. Some examples that evidence these operational improvements are: (i) the increase in sugarcane yields and TRS content; (ii) the constant growth in our cogeneration exports, which in the current quarter have reached a record of 65 KWh per ton of sugarcane crushed, which we believe is one of the highest ratios in the industry; (iii) the increase in sugarcane milling per hour. Our operational teams and management remain committed towards reaching operational excellence in each task and process, which will allow us to continue reducing our cost of production.
  • The completion of the cluster in 2Q15 will result in a significant reduction in capex spending. Consolidated capital expenditures in 2015 are expected to reach between $140 and $160 million during the year, compared to $324 million in 2014. Regarding 2016, no major capex has been committed, therefore capex will consist primarily of maintenance capex related to the Sugar, Ethanol & Energy.

(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 2Q15 earnings release, please access ir.adecoagro.com. A conference call to discuss 2Q15 results will be held tomorrow with live webcast through the internet:

English Conference Call

August 14, 2015 11 a.m. (US EST) 12 p.m. Buenos Aires 12 p.m. Sao Paulo 5 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

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.