LUXEMBOURG, May 12, 2022 /PRNewswire/ — Adecoagro SA (NYSE: AGRO, Bloomberg: AGRO USReuters: AGRO.K), a leading sustainable production company in South Americatoday announced its results for the first quarter ended March 31, 2022. The financial information 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 see page 27 for a definition and reconciliation to IFRS of the non-IFRS measures used in this earnings release.
Main highlights of the period:
- Adjusted EBITDA reached $86.5 million in 1Q22, a decrease of 20.8% year-on-year, due to lower yields and prices in the Rice business. Sugar, Ethanol & Energy adjusted EBITDA was flat year-over-year despite lower crushing, due to strong sales.
- Net profit achieved $65.2 million in 1Q22, 3.4 times higher year-on-year.
Financial and operational highlights
Sugar, Ethanol & Energy activity
- Adjusted EBITDA of our Sugar, Ethanol & Energy business reached $57.3 million in 1Q22, only 1.5% less compared to 1Q21. Crushing volume during 1Q22 was 0.3 million tonnes as we resumed harvesting activities in our Cluster in mid-March after a short inter-harvest period. Despite the drop in production volume, our commercial strategy of carrying over 153,000 m3 of ethanol and 23,000 tonnes of sugar from 4Q21 to 1Q22 enabled us to benefit from attractive prices for ethanol and sugar. High ethanol prices continued in April, supported by the delay in the start of the harvest in the Centre-Sud, and we were able to capture them by selling our remaining ethanol stocks in addition to our monthly production. In April, we achieved a record monthly sale of 125,000 cubic meters composed of 70% hydrous ethanol and 30% anhydrous ethanol at an average price of 26.4 cts/lb of sugar equivalent (6.7 cts/lb more than the average price of sugar).
- The operating results achieved are not an indication of our expectations for the full year. As anticipated in previous releases, we expect 2022 crushing volume to be in line with 2021 but concentrated towards the second half of the year as our plantation continues to recover from the severe weather of 2021. In line with this strategy, during the 1Q22, we focused on harvesting reform areas primarily related to the 5th cut and above, with limited growth potential. This allowed us to (i) maximize ethanol (97% blend) and capture attractive prices; (ii) allow sugarcane areas with the greatest potential to continue to develop; and (iii) free up an area to plant new canes to be harvested next season. Improved cane availability and positive productivity prospects supported by above average rainfall in March and April will allow us to continue to benefit from the constructive price scenario. We believe we are in a strong position to benefit through our low sugar commitments (38% covered), which gives us the flexibility to continuously maximize the product with the highest marginal contribution.
Agriculture and Land Processing Occupations
- The adjusted EBITDA of the Agriculture and Territorial Transformation activity amounted to $35.6 million in 1Q22, scoring a 36.6% or $20.6 million down from 1Q21. Despite the good performance of the Crops and Dairy Products activities, the decline is mainly due to a lower contribution from our Rice activity. Lower rice prices at harvest time, coupled with lower yields due to the La Niña weather effect, led to a $16.3 million year-over-year loss in the valuation of our biological assets and agricultural products.
- In May, we completed the acquisition of the rice business of Viterra in Uruguay and Argentina, as indicated in our previous press release. We believe this transaction will improve the performance of our Rice business, as it will bring Uruguayan-branded rice and better weather risk mitigation, in addition to providing other business and logistical benefits.
Net income and adjusted net income
- The net result amounts to $65.2 million during 1Q22, marking a year-over-year gain of $45.8 million. This is mainly due to the currency effect. In the case of Brazilthe national currency appreciated by 15.1% in 1Q22, compared to a depreciation of 9.6% in 1Q21.
- 1Q22 adjusted net income achieved $14.7 million, $39.8 million lower than that of 1T21. Adjusted net income excludes (i) any non-cash results from bilateral foreign exchange fluctuations; (ii) any revaluation resulting from hectares held as investment property; (iii) any accounting result of inflation; and includes (iv) any gain or loss resulting from the disposal of non-controlling interests in subsidiaries whose primary underlying asset is agricultural land (the latter is already included in Adjusted EBITDA). We believe that adjusted net income is a more appropriate measure to reflect company performance.
- Our annual meeting of shareholders, held on April 20 approved a cash dividend distribution of $35 million to be paid in two installments of $17.5 million each. The first installment is approximately $0.1571 per share and will be paid on May 17, 2022 to the shareholders of the Company registered at the close of May 2, 2022. The second installment is payable in or to November 2022 in an equal amount in cash. A Luxemburg a withholding tax of 15% will be applied on each tranche of the gross amount of the cash dividend distribution.
- In addition, since the beginning of the year, we have repurchased 1.5 million shares under our existing share buyback program, totaling $11.6 million.
- The distribution of dividends and share buybacks 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 the CNFO.
Pioneers in the marketing of renewable natural gas certificates
- At the beginning of April, Adecoagro officially became the first company Brazil market renewable natural gas certificates. Gas-recs, as they are called in the market, attest to the production of renewable (non-fossil) natural gas. In this line, the industries of Brazil can voluntarily purchase these credits to decarbonize the gas consumed in their operations. The sale involved 25,000 certificates to Metso Outotec, at a unit price of BRL1.80.
- In 2022, our biogas unit in Ivinhema (Mato Grosso do Sul) will generate 1 gas-rec per 1 million Btu produced (about 30m3 of methane), used both in our industrial process to generate steam, or in its conversion into biomethane.
- We are proud to be the first players in a market that rewards sustainable operations, as was the case in 2020 when we launched the marketing of carbon credits under the RenovaBio program.
Non-GAAP Financial Measures: For a complete reconciliation of non-GAAP financial measures, please refer to page 27 of our 1Q22 earnings release available on Adecoagro’s website (ir.adecoagro.com)
Forward-looking statements: This press release contains forward-looking statements based on our current expectations, assumptions, estimates and projections about us and our industry. These forward-looking statements may be identified by words or phrases such as “anticipate”, “plan”, “believe”, “continue”, “estimate”, “expect”, “intend”, ” is/are likely to”, “may”, “plans”, “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 prove to be incorrect. Our actual results could differ materially from our expectations. In light of the risks and uncertainties described above, the estimates and forward-looking statements discussed in this press release may not occur, and our future results and performance may differ materially from those expressed in such forward-looking statements due to , including but not limited to the factors mentioned above. Because of these uncertainties, you should not make any investment decisions based on these estimates and forward-looking statements.
Forward-looking statements made in this press release relate only to events or information as of the date the statements are made in this press release. We undertake no obligation to update forward-looking statements to reflect events or circumstances after the date the statements are made or to reflect the occurrence of unforeseen events.
To read the full 1Q22 earnings release, please access ir.adecoagro.com. A conference call to discuss 1Q22 results will be held on May 13, 2022 with a live webcast on the Internet:
May 13, 2022
09:00 EST USA
10am Buenos Aires
10am Sao Paulo
3 p.m. Luxemburg
Participants calling from the United States: Tel. : +1 (844) 435-0324
Participants calling from other countries: Tel. : +1 (412) 317-6366
Access code: Adecoagro
Replay of the conference call
Participants calling from the United States: Tel. : +1 (877) 344-7529
Participants calling from other countries: Tel. : +1 (412) 317-0088
Access code: 9810624
Investor Relations Department
Charlie Boero Hughes
Tel: +54 (11) 4836-8651
Adecoagro is a leading agro-industrial company in South America. Adecoagro owns 219.8 thousand hectares of agricultural land and several industrial facilities distributed in the most productive regions of Argentina, Brazil and Uruguaywhere it produces more than 2.7 million tons of agricultural products and more than 1 million MWh of bioelectricity.
SOURCE Adecoagro SA