LUXEMBOURG, Nov. 10, 2021 /PRNewswire/ -- Adecoagro S.A.
(NYSE: AGRO, Bloomberg: AGRO US,
Reuters: AGRO.K), a sustainable production company in South America, announced today its results for
the third quarter ended September 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 37 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 $757.7 million
during 9M21, 34.1% higher year-over-year.
- Adjusted EBITDA in the Sugar, Ethanol & Energy segment
registered a year-over-year growth of 56.2% during 9M21 while the
Farming & Land Transformation segment grew 32.6% during the
same period.
Financial & Operational Highlights
- In our Sugar, Ethanol & Energy business, Adjusted EBITDA
reached $138.1 million in 3Q21,
59.8%, or $51.7 million higher
compared to the same period of last year. Crushing volume was only
0.2 million tons lower compared to 3Q20, despite lower than
expected agricultural productivity indicators caused by the frost
that affected Brazil's main
productive areas during June and July. This achievement was
possible as we increased harvested area and the amount of cane
purchased from third parties, in addition to speeding up harvesting
activities to minimize the weather impact. Price scenario for
sugar, ethanol and energy continued to improve as the market
factored in the impact of the frost and of the dry weather in
CenterSouth Brazil. 3Q21's financial results were positively
impacted by (i) a $36.0 million
year-over-year increase in net sales mainly driven by an increase
in the price of all three products, coupled with (ii) our strategy
of extracting the highest value per ton crushed by maximizing
production of the product with the highest marginal contribution
(55% of total TRS produced was diverted to ethanol, especially
anhydrous ethanol); (iii) our strategy of increasing energy
production to capture high spot prices; and (iv) a $20.0 million yearover-year gain in the
mark-to-market of our harvested cane led by an increase in
Consecana prices of 67.0%. These positive effects were partially
offset by a $25.2 million increase in
cost mostly explained by (i) an increase in harvested area; (ii) an
increase in the price of fuel and lubricants among other inputs and
(iii) higher purchased volume of third party cane, bagasse and wood
chips. During the quarter we sold 255.8 thousand CBios at an
average price of 46 BRL/CBio
(approximately $8.7/CBio). End of
period stocks amounted to $135.1
million, marking a 2.3x year-over-year increase, led by our
commercial strategy to carry stocks towards year end in order to
benefit from higher expected prices.
On a year-to-date basis, Adjusted EBITDA reached $269.8 million, 56.2% higher compared to the same
period of last year. Higher results were explained by (i) a 60.0%
increase in net sales driven by higher average selling prices
measured in U.S. dollars for all three products and higher selling
volume of ethanol and energy; (ii) a 1.1 million ton increase in
crushing volume; coupled with (iii) a $39.8
million gain derived from the mark-to-market of our
sugarcane, mainly related to harvested cane (realized margin). This
waspartially offset by an increase in costs combined with a
$23.4 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 $24.8 million in
3Q21 and at $113.4 million in 9M21
marking an year-over-year increase of 19.9% and 32.6%,
respectively. Solely focusing on the Farming business, results
stood at $23.9 million in 3Q21 and
$107.8 million in 9M21, marking a
year-over-year increase of 30.6% and 55.7%, respectively.
Adjusted EBITDA in our Crops segment was $13.7 million in 3Q21, $7.9 million higher compared to the same period
of last year. This was explained by (i) an increase in average
selling prices ($127/Mt increase in
the case of soybean and $71/Mt in the
case of corn), coupled with a year-over-year gain in the
mark-to-market of our biological asset on account of an increase in
hectares, yield and prices. This was partially offset mostly by an
increase in costs driven by inflation of the Argentine Peso being
higher than currency depreciation - inflation in U.S. dollar terms
-. Year-to-date Adjusted EBITDA amounted to $47.9 million, 89.5% or $22.6 million higher compared to 9M20 also mostly
explained by a year-over-year gain in the mark-to-market of our
biological asset on account of an increase in prices. End of period
stocks were 2.3x higher than in 9M20 amounting to over $50 million mainly as a consequence of our
commercial strategy to carry stock in order to benefit from higher
expected prices.
Adjusted EBITDA in the Rice business reached $2.8 million during 3Q21 marking a 54.2% decrease
compared to 3Q20 as a consequence of higher costs, in particular
logistic costs, driven by inflation in U.S. dollar terms. However,
during 9M21 Adjusted EBITDA stood at $40.7
million, 37.9% or $11.2
million higher than during 9M20. 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.
This was mostly captured during the first quarter of the year which
is when the crop is harvested. 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 level. Improvements
achieved were possible as a result of the investments we made at
the farm and industry level and improvements to the consolidation
and maturity of our operational teams.
The Dairy business generated an Adjusted EBITDA of $7.2 million during 3Q21 and $19.3 million during 9M21, an increase of 13.5%
and 32.6% compared to the same period of last year, respectively.
In both cases, higher results were explained by (i) an increase in
gross sales coupled with (ii) our continuous focus on achieving
efficiencies in our vertically integrated operations and increasing
our productivity levels in every stage of the value chain. Results
were partially offset by the higher cost of feed on account of
higher commodity prices and the higher cost of raw milk. 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 Dairy business decreased to negative $10.2 million.
- Net Income amounted to $37.0
million during 3Q21 and to $72.0
million during 9M21, marking a year-overyear gain of
$16.7 million and $118.2 million, respectively. This was mostly
explained by the year-over-year increase in Adjusted EBITDA
generation.
- Adjusted Net Income in 3Q21 reached $59.2 million, $21.3
million higher than in 3Q20. 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
Distribution policy
- Adecoagro announces the implementation of a distribution policy
as of January 1, 2022. The Company
intends to distribute to shareholders annually a minimum of 40% of
the Adjusted Free Cash from Operations(1) generated during the
previous year.
The Distribution Policy shall consist of a minimum cash dividend
payable on the Company's outstanding common stock in the aggregate
amount of $30 million per year, in
addition to share repurchases under the Company's existing share
repurchase program from time to time as deemed
appropriate.
Dividend payments are intended to be made in two installments in
May and November of each year.
Any dividend distribution is subject to the conditions of
applicable law and approval of Adecoagro´s shareholders.
Further details of our distribution policy will be communicated in
our 4Q21 Earnings Release report.
(1) We define Adjusted Free Cash Flow from Operations as (i) net
cash generated from operating activities net of the combined effect
of the application of IAS 29 and IAS 21 less (ii) net cash used in
investing activities net of the combined effect of the application
of IAS 29 and IAS 21, less (iii) interest paid net of the combined
effect of the application of IAS 29 and IAS 21 to the Argentine
operations, plus (iv) proceeds from the sale of non-controlling
interest in subsidiaries; less (v) lease payments; less (vi)
dividends paid to noncontrolling interest plus (vii) expansion
capital expenditures.
Share repurchase program update
- Adecoagro is 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 has been
share repurchases under our buyback program. Throughout the year we
effectively completed our 2020/21 buyback program by repurchasing
5% of our outstanding shares, and have since started repurchasing
shares under our 2021/22 program. In this line, during the first
ten months of the year we have purchased over 6 million shares at
an average price of $9.21 per share,
totaling $56.9 million. Going forward
we expect to continue repurchasing shares, in line with our
commitment to generate long term value for our shareholders.
Independent farmland appraisal report
- As of September 30, 2021, Cushman
& Wakefield (C&W) updated its independent appraisal of
Adecoagro's farmland.
Adecoagro held 240,243 hectares valued by C&W at $759.6 million. Net of minority interests,
Adecoagro's land portfolio consists of 219,850 hectares valued at
$709.8 million. On a comparable
basis, current valuation of our land portfolio represents a
yearover-year increase of 2.4%.
Anhydrous ethanol production
- In line with our strategy to maximize production of the product
with the highest marginal contribution, 63.1% of total ethanol
production during 3Q21 was anhydrous ethanol. This enabled us to
capture high market prices during the quarter as anhydrous ethanol
traded at a sugar equivalent price of 21.2 cts/lb on average,
marking a 13.2% premium to sugar and a 16.0% premium to hydrous
ethanol. The 37.7% increase in anhydrous ethanol production
compared to 3Q20 was possible thanks to (i) our open hedge position
which provided us with the necessary flexibility as sugar
commitments were low; and to (ii) the inauguration of our molecular
sieve in Ivinhema which increased by 50% our dehydration capacity.
This project entailed a minor investment of approximately
$4.0 million, had an internal rate of
return of over 150%, and a payback period of less than one year.
The increase in our dehydration capacity serves as a commercial
tool, enhances the efficiency and sustainability of our operations
and heightens our production flexibility. Combined with our high
ethanol storage capacity, it enables us to carry-over stocks
and
places us in a solid position to continue to benefit from higher
expected prices. In this line, we were able to profit from
anhydrous prices trading at a 10-year-high by beginning of 4Q21,
capturing prices over 24.0 cts/lb.
Non-Gaap Financial Measures: For a full
reconciliation of non-gaap financial measures please refer to page
37 of our 3Q21 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 3Q21 earnings release, please access
ir.adecoagro.com. A conference call to discuss 3Q21 results will be
held on November 12, 2021 with a live
webcast through the internet:
Conference Call
November 12, 2021
08 a.m. US EST
10 a.m. Buenos Aires
10 a.m. Sao
Paulo
2 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: 10160835
Investor Relations Department
Charlie Boero Hughes CFO
Victoria Cabello
IRO
Email: ir@adecoagro.com
Tel: +54 (11) 4836-8651
About Adecoagro:
Adecoagro is a sustainable production 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.