LUXEMBOURG, Nov. 9, 2022
/PRNewswire/ -- Adecoagro S.A. (NYSE: AGRO, Bloomberg: AGRO US, Reuters: AGRO.K), a leading sustainable
production company in South
America, announced today its results for the third quarter
ended September 30, 2022. 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 31 for a definition and
reconciliation to IFRS of the Non - IFRS measures used in this
earnings release.
Main highlights for the period:
- Net sales presented a year-over-year increase of 22.6% in 3Q22
and 25.5% in 9M22 on a solid commercial strategy from all our
business units.
- Despite the 11.0% year-over-year reduction in Adjusted EBITDA
during 9M22, adjusted net income presented an outperformance of
5.8% compared to the same period of last year.
Financial & Operational Highlights:
Sugar, Ethanol & Energy business
- Adjusted EBITDA in our Sugar, Ethanol & Energy business
reached $111.0 million in 3Q22, 19.6%
or $27.1 million lower compared to
the same period of last year. This was mostly driven by a reduction
in crushing volume of 0.4 million tons compared to 3Q21, coupled
with higher costs of inputs, diesel and salaries, among others -
partially mitigated by our strategy to produce our own
biofertilizer. Despite having good sugarcane availability and
achieving a monthly crushing record of 1.5 million tons in July,
increased precipitation registered during August and September
resulted in frequent interruptions in crushing activities. However,
it is important to highlight that rain favors cane development,
hence the sugarcane left on the ground will be carried into the
following quarters with an improved productivity outlook. This will
ensure the implementation of our continuous harvest model, enabling
us to crush cane year-round and maximize production of the product
with the highest marginal contribution. During the quarter, the
price scenario of ethanol experienced significant changes in light
of regulatory measures (reduction of ICMS and zeroing of federal
taxes) and of the reduction in international oil prices.
Nonetheless we were able to rapidly adapt our strategy thanks to
(i) our flexibility to switch our production mix and extract the
highest value per ton crushed at all times; (ii) our capacity to
sell ethanol into Europe and
capture a premium versus domestic prices – thanks to our
certifications and ability to meet product specification; (iii) our
strategy to focus on the commercialization of sugar and anhydrous
ethanol, while we built inventory of hydrous ethanol – which can
either be carried over or converted into more anhydrous ethanol (in
light of low energy spot prices, we are using our bagasse as fuel
for the dehydration process); and (iv) our hedging strategy which
enabled us to secure sugar at 19.4 cts/lb.
- Year-to-date, Adjusted EBITDA reached $272.6 million, $2.8
million higher year-over-year. Crushing volume presented a
2.4 million ton reduction, as we resumed harvesting activities in
our Cluster in mid- March, following a short interharvest period.
Despite the lower production volume, our commercial strategy
enabled us to benefit from attractive prices of ethanol and sugar,
especially during the first half of the year. This was possible
because we (i) carried-over production from 2021 into 2022 to be
sold at higher prices; (ii) cleared out our tanks at the peak of
prices achieving record sale volumes; and (iii) leveraged our
competitive advantage to sell into the export and domestic
market.
Farming & Land Transformation businesses
- Adjusted EBITDA in the Farming and Land Transformation business
amounted to $17.1 million in 3Q22,
marking a 31.1% or $7.7 million
reduction compared to the same period of last year. The decline is
fully explained by a lower contribution from our Crops and Rice
businesses.
- Focusing on our year-to-date results, which offer better
insight than a standalone quarter, Adjusted EBITDA was $72.6 million, 35.9% lower than the previous
year. This was driven by our Crops and Rice businesses, which fully
offset the improved performance in our Dairy business. Results were
mainly impacted by higher costs, lower yields and lower rice
prices. Margins were pressured by the global inflationary
environment which led to an overall increase in costs of
agricultural inputs in U.S. dollars, including fertilizer,
agrochemicals and diesel, as well as higher logistic costs, among
others. In terms of yields, rice presented a 12.5% reduction (1.0
Tn/Ha) compared to the previous campaign as a consequence of La
Niña weather effect, while peanut and sunflower also performed
below last year's average (5.3% and 3.9% lower, respectively).
Moreover, yields for both of our second crops (soybean and corn)
also reported a decline compared to the previous campaign (19.2%
and 6.0% lower, respectively). Regarding prices, while soybean,
corn and wheat experienced a year-over-year increase, peanut and
rice were 3.0% and 7.2% lower, respectively. In addition, rice
prices at the time of harvest were 9% lower year-over-year which,
together with the impact in yields, further contributed to a
reduction in the mark-to-market of the biological asset.
Net Income & Adjusted Net Income
- Net Income amounted to $22.6
million during 3Q22, marking a $14.4
million reduction compared to the same period of last year.
This was mostly explained by a $34.7
million year-over-year reduction in EBITDA generation
compared to 3Q21. Results were partially offset by a decrease in
income tax expense to $4.8 million
versus expenses of $15.3 million in
3Q21. Net income in 9M22 reached $105.9
million, $33.9 million or
47.1% higher compared to the previous year. This was driven by the
above mentioned impact on taxes coupled with the effect of
inflation accounting (higher exposure of our negative net monetary
position to an inflation rate of 66.1% in 9M22 compared to 37.0% in
9M21).
- Adjusted Net Income reached $47.2
million during 3Q22, $12.2
million lower than in 3Q21. Nevertheless, during the first
nine months of the year it reached $106.0
million, presenting an outperformance of $5.8 million compared to the previous year,
despite the year-over-year reduction in Adjusted EBITDA. We believe
Adjusted Net Income is a more appropriate metric to reflect the
Company's performance.
Remarks
Shareholder Distribution Policy Update
- During the first ten months of the year, we repurchased 3.6
million shares at an average price of $8.06 per share, totaling $28.8 million. Going forward we expect to
continue repurchasing shares, in line with our commitment to
generate long term value for our shareholders.
- On November 17th, we will make
our second cash dividend payment of $17.5
million (approximately $0.1603
per share) to shareholders of the Company of record at close of
business on November 2nd. The first
installment of our cash dividend was paid on May 17th in an equal cash amount (approximately
$0.1571 per share), resulting in an
annual cash dividend of $35 million.
A Luxembourg withholding tax of
15% has been and will be applied to each installment of the gross
cash dividend amount.
- Share repurchases and dividend distribution are part of the
company's distribution policy, which consists of a minimum
distribution of 40% of the Adjusted Free Cash Flow from Operations
(NCFO) generated during the previous year. In 2021, we generated
$152.1 million of NCFO.
Independent Farmland Appraisal Report
- As of September 30, 2022, Cushman
& Wakefield (C&W) updated its independent appraisal of
Adecoagro's farmland which consists of 219,850 hectares valued at
$727.5 million. On a comparable
basis, current valuation of our land portfolio represents a
year-over-year increase of 2.5%.
Non-Gaap Financial Measures: For a full
reconciliation of non-gaap financial measures please refer to page
31 of our 3Q22 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 3Q22 earnings release, please access
ir.adecoagro.com. A conference call to discuss 3Q22 results will be
held on November 10, 2022 with a live
webcast through the internet:
Conference Call
November 10,
2022
8 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: 5119012
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 sustainable production company in
South America. Adecoagro owns
219.8 thousand hectares of farmland and several industrial
facilities spread across the most productive regions of
Argentina, Brazil and Uruguay, where it produces over 2.7 million
tons of agricultural products and over 1 million MWh of renewable
electricity.
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SOURCE Adecoagro S.A.
