LUXEMBOURG, Aug. 12, 2021 /PRNewswire/ -- Adecoagro S.A.
(NYSE: AGRO, Bloomberg: AGRO US,
Reuters: AGRO.K), a leading agro-industrial company in South America, announced today its results for
the second quarter ended June 30,
2021. The financial information contained in this press
release is based on unaudited condensed consolidated interim
financial statements presented in US dollars and prepared in
accordance with International Financial Reporting Standards (IFRS)
except for Non - IFRS measures. Please refer to page 34 for a
definition and reconciliation to IFRS of the Non - IFRS measures
used in this earnings release.
Main highlights for the period:
- Net Sales reached $278.8 million
during 2Q21 and $449.1 million during
6M21, marking a 54.0% and 35.0% increase year-over-year,
respectively.
- During 2Q21 adjusted EBITDA in the Sugar, Ethanol & Energy
segment registered a 62.1% increase year-over-year, totaling
$73.6 million. The Farming segment,
excluding Land Transformation, increased 14.7% during the same
period, reaching $32.8 million.
Financial & Operational Highlights
- In our Sugar, Ethanol & Energy business, Adjusted EBITDA
reached $73.6 million in 2Q21, 62.1%,
or $28.2 million higher compared to
the same period of last year. Financial results were positively
impacted by (i) an increase in crushing volume of 0.6 million tons
coupled with a TRS content of 135 kg/ton, which resulted in a 30%
increase in TRS production; and (ii) our strategy of continuously
extracting the highest value per ton crushed by maximizing
production of the product with the highest marginal contribution
(59% of total TRS produced was diverted to ethanol compared to 46%
during 2Q20). The combination of these factors enabled us to profit
from the high prices of sugar, ethanol and energy throughout the
quarter. These positive effects were partially offset by (i) a
$12.7 million non-cash loss in the
mark-to-market of our sugarcane mainly driven by the negative
impact of the frost in our unharvested cane (please refer to the
Remarks section on page 5), (ii) a non-cash loss in the
mark-to-market of our commodity hedge position driven by higher
expected prices; and (iii) an $8.4
million increase in selling expenses (higher freight costs
and PIS COFINS taxes) in line with the increase in sales. End of
period stocks amounted to over $70
million, marking a 2x increase year-over-year, led by our
commercial strategy to carry over stocks in order to benefit from
higher expected prices.
On a year-to-date basis, Adjusted
EBITDA reached $131.7 million, 52.6%
higher compared to the same period of last year. Higher results
were explained by (i) a 1.3 million ton increase in crushing
volume; (ii) an 85.7% increase in net sales driven by higher
selling volumes and higher prices measured in U.S. dollars for all
three products, coupled with (iii) a $19.7
million gain derived from the mark-to-market of our
sugarcane, mainly related to harvested cane (realized margin). This
was partially offset by a $25.6
million loss in our commodity hedge position and by a
$9.4 million increase in selling
expenses in line with the increase in sales.
- Adjusted EBITDA in the Farming and Land Transformation
businesses stood at $32.4 million in
2Q21 marking a 19.2% year-over-year decrease, and $88.6 million in 6M21 marking a 36.6%
year-over-year increase. The Land Transformation business
registered a year-over-year decrease as farm sales were made during
2Q20 compared to no sales during 2Q21. Solely focusing on the
Farming business, results stood at $32.8
million in 2Q21 and $83.9
million in 6M21, marking a year-over-year increase of 14.7%
and 64.7%, respectively.
Adjusted EBITDA in the Rice
business totaled $9.6 million in 2Q21
and $37.9 million in 6M21, marking an
increase of 16.2% and 61.9% compared to the same period of the
prior year, respectively. The positive financial performance was
mostly explained by an increase in yields (record high of 7.8
Mt/Ha), area and prices, which led to a year-over-year gain in the
value of our biological asset and agricultural produce. We
successfully achieved these results due to our continuous focus on
(i) productivity as the key variable to minimize costs per ton,
(ii) rice quality to improve industrial efficiencies; and (iii)
efficiency throughout the value chain by focusing on synergies at
every stage of our production process. Improvements achieved were
possible as a result of the investments made at the farm and
industry level generally, and in particular the consolidation and
experience of our operational teams.
Adjusted EBITDA in our Crops
segment was $16.3 million in 2Q21,
4.8% higher compared to the same period of last year. This was
explained by (i) an increase in average selling prices
(100 $/Mt increase in the case of
soybean and 60 $/Mt in the case of corn), partially offset by a
reduction in selling volumes as a consequence of our commercial
strategy to carry stocks in order to benefit from higher expected
future prices. The increase in gross sales was partially offset by
an increase in costs driven by inflation in dollar terms.
Year-to-date Adjusted EBITDA amounted to $34.2 million, 75.7% higher compared to 6M20.
The Dairy business generated an
Adjusted EBITDA of $7.3 million
during 2Q21 and $12.1 million during
6M21, an increase of 46.7% and 47.5% compared to the same period of
last year, respectively. Higher results were explained by (i) an
increase in sales volume which fully offset the decrease in average
prices; and (ii) our continuous focus on achieving efficiencies in
our vertically integrated operations and increasing our
productivity in every stage of the value chain. Results were
partially offset by the higher cost of feed. However, once (i)
interest expenses and (ii) the foreign exchange loss related to the
financial debt are taken into account, the year-to-date result of
the business decreases to negative $10.7
million.
- Net Income in 2Q21 resulted in a gain of $15.7 million, compared to a loss of $12.1 million recorded during the same period of
last year. The $27.7 million increase
is mainly explained by the year-over-year increase in EBITDA
generation coupled with a lower FX loss. The year-over-year
positive impact of foreign exchange variations on our
dollar-denominated monetary assets and liabilities is due to (i) a
depreciation of the Brazilian Real of 5.3% during 2Q20 compared to
an appreciation of 12.2% in 2Q21; and (ii) a reduction in the
nominal depreciation of the Argentine Peso from 9.3% in 2Q20 to
4.0% in 2Q21. Year-to-date the $101.5
million gain in Net Income is explained by the same
drivers.
- Adjusted Net Income in 2Q21 was negative $13.8 million, $33.6
million lower than in 2Q20. Despite the year-over-year
increase in EBITDA generation, the loss in Adjusted Net Income is
mostly explained by a change in Argentina's income tax regime, which
established rates starting at 25% and reaching 35% for income over
$50 million Argentine Pesos
($0.5 million). Adjusted Net Income
excludes, (i) any non-cash result derived from bilateral exchange
variations; (ii) any revaluation resulting from the hectares held
as investment property; (iii) any inflation accounting result; and
includes (iv) any gains or losses from disposals of non-controlling
interests in subsidiaries whose main underlying asset is farmland
(the latter is already included in Adj. EBITDA). We believe
Adjusted Net Income is a more appropriate metric to reflect the
Company´s performance.
Remarks
Share repurchase program update
- Adecoagro has entered a path where we are generating positive
cash flow in a structural way and, as stated in past releases, cash
distribution is a priority for capital allocation. As previously
communicated, the preferred vehicle to distribute cash to
shareholders during 2021 will be share repurchase under our buyback
program. During the first seven months of the year, we have
purchased over 3 million shares at an average price of $9.18 per share, totaling $28.0 million. Going forward we expect to
continue repurchasing shares at the current pace, in line with our
commitment to generate long term value for our shareholders.
Weather update in Brazil
- In addition to the dry weather that has been impacting cane
yields in the Center-South region of Brazil, a cold front hit most of the country's
productive areas during the end of June and July. Low temperatures
caused frost damaging sugarcane plantations in various regions
including Sao Paulo and Paraná
states, as well as Mato Grosso do
Sul and Minas Gerais. After inspecting our plantation, we believe
that the frost will cause a reduction in sugarcane availability
towards year-end and beginning of 2022, resulting in a drop in
productivity. Although it is still too early for a final and
definitive assessment of the real impact, we estimate that crushing
volume for 2021 will be roughly in line with 2020, and yields will
be reduced approximately by 10%. The evolution of weather going
forward, in particular the amount of precipitation during
summertime, will be key to determine the impact on 2022. In order
to mitigate the impact of the frost we are speeding up harvesting
pace and acquiring sugarcane from third parties.
Due to the magnitude of the frost
which affected most of Brazil's
sugarcane areas, we expect a constructive price scenario for both
sugar and ethanol, which will improve the already positive scenario
caused by the dry weather in the Center-South region. We are in a
good position to capture a possible increase in prices as 53% of
our current TRS production and 100% of our 22/23 production remain
unhedged. In addition, as a result of our continuous focus on
enhancing efficiencies and upgrading our industrial assets, we have
a high degree of flexibility to switch from producing sugar to
ethanol and vice versa. This will enable us to divert our TRS to
produce the product which offers the higher marginal contribution
at each time. Consequently, we believe that neither our EBITDA nor
our cash generation will be materially affected.
Development of new technologies at the Cluster
- In line with our strategy of enhancing operational
efficiencies, on July 2021 we
inaugurated a peneira molecular in our Ivinhema mill with capacity
to dehydrate 500 m3 of ethanol per day. Prior to this, the
production of anhydrous ethanol was entirely concentrated in our
Angélica mill. This increase in installed capacity continues to add
value to our operations, serves as a commercial tool as it will
enable us to further profit from the price premium over hydrous
ethanol (currently 15%), and heightens our production flexibility
which is one of our main competitive advantages.
Non-Gaap Financial Measures: For a full
reconciliation of non-gaap financial measures please refer to page
34 of our 2Q21 Earnings Release found on Adecoagro's website
(ir.adecoagro.com)
Forward-Looking Statements: This press release
contains forward-looking statements that are based on our current
expectations, assumptions, estimates and projections about us and
our industry. These forward-looking statements can be
identified by words or phrases such as "anticipate," "forecast",
"believe," "continue," "estimate," "expect," "intend," "is/are
likely to," "may," "plan," "should," "would," or other similar
expressions.
These forward-looking statements involve various risks and
uncertainties. Although we believe that our expectations expressed
in these forward-looking statements are reasonable, our
expectations may turn out to be incorrect. Our actual results
could be materially different from our expectations. In light
of the risks and uncertainties described above, the estimates and
forward-looking statements discussed in this press release might
not occur, and our future results and our performance may differ
materially from those expressed in these forward-looking statements
due to, inclusive, but not limited to, the factors mentioned
above. Because of these uncertainties, you should not make
any investment decision based on these estimates and
forward-looking statements.
The forward-looking statements made in this press release
relate only to events or information as of the date on which the
statements are made in this press release. We undertake no
obligation to update any forward-looking statements to reflect
events or circumstances after the date on which the statements are
made or to reflect the occurrence of unanticipated events.
To read the full 2Q21 earnings release, please access
ir.adecoagro.com. A conference call to discuss 2Q21 results will be
held on August 13, 2021 with a live
webcast through the internet:
Conference Call
August 13, 2021
10 a.m. (US EST)
11 a.m. Buenos Aires
11 a.m. Sao
Paulo
4 p.m. Luxembourg
Participants calling from the US: Tel: +1 (844) 435-0324
Participants calling from other countries: Tel: +1 (412)
317-6366
Access Code: Adecoagro
Conference Call Replay
Participants calling from the US: Tel: +1 (877) 344-7529
Participants calling from other countries: Tel: +1 (412)
317-0088
Access Code: 10158085
Investor Relations Department
Charlie Boero Hughes
CFO
Victoria Cabello
IRO
Email: ir@adecoagro.com
Tel: +54 (11) 4836-8651
About Adecoagro:
Adecoagro is a leading agricultural
company in South America.
Adecoagro owns over 220 thousand hectares of farmland and several
industrial facilities spread across the most productive regions of
Argentina, Brazil and Uruguay, where it produces over 1.9 million
tons of agricultural products including sugar, ethanol,
bio-electricity, milled rice, corn, wheat, soybean and dairy
products, among others.
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SOURCE Adecoagro S.A.