Adjusted EBITDA reached $136.3 million in 2Q23 and $225.5 million in 6M23, 15.2% and 10.1% higher year-over-year, respectively. Diversified model continues to pay off.
LUXEMBOURG, Aug. 17, 2023 /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 second quarter ended June 30, 2023. The financial information contained in this press release is based on consolidated 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 25 for a definition and reconciliation to IFRS of the Non - IFRS measures used in this earnings release.
Main highlights for the period:
- Gross sales were 6.5% higher in 2Q23 and 11.3% higher in 6M23 driven by our consistent Sugar & Ethanol strategy which gave us flexibility to shift production to sugar and execute sales at solid prices; coupled with an increase in average selling prices captured for rice.
- Adjusted EBITDA presented a year-over-year increase of 15.2% in 2Q23 and 10.1% in 6M23, mainly explained by an outperformance of the Sugar, Ethanol & Energy business. This fully offset the decline reported in the Crops division driven by a record drought and higher costs.
- Adjusted net income in 2Q23 was $42.4 million, 3.7% lower than the previous year, while year-to-date it stood at $81.3 million, presenting a 38.4% year-over-year increase.
- Net debt/LTM Adjusted EBITDA of 1.9x was in line with the same period of last year, while liquidity ratio stood at 1.3x.
Financial & Operational Highlights:
Sugar, Ethanol & Energy business
- During 2Q23, we crushed 3.6 million tons of sugarcane, 9.2% higher YoY. TRS content per hectare increased 35% as a consequence of our implementation of agricultural techniques such as pre-sprouted seedling (MPB). We diverted 48% of TRS to produce sugar, in order to capture solid prices which traded on average 33% above hydrous ethanol in Mato Grosso do Sul. Within our ethanol production, 70% was anhydrous ethanol which commanded a premium. In terms of ethanol sales, we exported to Europe as well as conducted 52% of our quarterly sales during a peak of prices (12% above market). Leveraging on our storage capacity, we carried into the following quarters over 30% of our expected annual production of ethanol, to profit from higher future prices. Results were positively impacted by lower unitary cost of production driven by higher volume crushed, and lower cost of certain agricultural inputs.
- All of the above, contributed to our Adjusted EBITDA, which in 2Q23 reached $116.8 million, 12.0% higher YoY. Year-to-date Adjusted EBITDA amounted to $193.5 million, 19.7% higher YoY, explained by the same drivers.
- Sugar prices continue to be supported by strong fundamentals, and are trading, on average, above 24 cts/lb. We are in an excellent position to profit from this scenario as we remain unhedged in 26% of our expected 2023 sugar production and 87% of 2024's production (hedged volume at 22.3 cts/lb and 23.0 cts/lb, respectively). Assuming weather going normal, we expect to increase 2023's crushing volume by 15% compared to 2022. This, in turn, would result in a reduction in unitary cash cost, due to better dilution of fixed costs.
Crops, Rice, Dairy & Land Transformation
- Adjusted EBITDA in 2Q23 reached $24.3 million, 21.8% higher YoY. Results were driven by higher selling volumes and prices in our Rice business; coupled with higher productivity and commercial flexibility in our Dairy business. Results were partially offset by an underperformance of our Crops business caused by the drought. Harvesting activities for 22/23 campaign have almost concluded and presented a 30%-40% reduction in yields of our main crops. During 6M23, Adjusted EBITDA for our segments in Argentina and Uruguay presented a 22.9% reduction YoY, mainly impacted by the reduction in crops yields.
- Planting activities for our 23/24 campaign are underway. We expect a positive outlook as weather is shifting to moderate El Niño pattern. In addition, there have been positive developments impacting the price of some of our products. The reduction of rice exports from key producing countries creates a very attractive opportunity for South American rice. In the case of rice, soybean, corn, peanut and sunflower, the Argentine government has passed resolutions that allow for the use of a preferential FX rate.
Remarks
2023 Shareholder Distribution Update
- Share repurchase during the first seven months of the year amounted to 1.7 million shares (1.6% of the company's equity) at an average price of $8.54 per share, totaling $14.4 million.
- On May 24th, we paid $17.5 million in cash dividends (approximately 0.16$/share). Second installment of $17.5 million to be paid in November 2023, resulting in an annual cash dividend of $35 million.
Non-Gaap Financial Measures: For a full reconciliation of non-gaap financial measures please refer to page 25 of our 2Q23 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 2Q23 earnings release, please access ir.adecoagro.com. A conference call to discuss 2Q23 results will be held on August 18, 2023, with a live webcast through the internet:
Conference Call
August 18, 2023
10 a.m. US EST
11 a.m. Buenos Aires
11 a.m. Sao Paulo
4 p.m. Luxembourg
To participate, please register at the link
Investor Relations Department
Emilio Gnecco
CFO
Victoria Cabello
IRO
Email: [email protected]
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 2.8 million tons of agricultural products and over 1 million MWh of renewable electricity.
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