LUXEMBOURG, March 9,
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 fourth quarter ended December 31,
2022. 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 35 for a definition and reconciliation to IFRS of the
Non - IFRS measures used in this earnings release.
Main highlights for the period:
- Adjusted Free Cash Flow from Operations (also referred to as
NCFO) amounted to $141 million in
2022, guaranteeing a minimum distribution of $56.5 million to be paid in 2023 via dividend and
share repurchases.
- Net sales presented a year-over-year increase of 19.3% in 4Q22
and 23.8% in 2022 on a solid commercial strategy in all of our
business units.
- Adjusted EBITDA in 4Q22 was 52.2% higher year-over-year driven
by an outperformance of the Sugar, Ethanol & Energy business
whereas for the full year it amounted to $433 million, in line with 2021.
Financial & Operational Highlights:
Sugar, Ethanol & Energy business
- Adjusted EBITDA in our Sugar, Ethanol & Energy business
reached $101.1 million in 4Q22, 55.5%
or $36.1 million higher compared to
the same period of last year. This was positively impacted by (i)
an increase in crushing volume of 1.9 million tons compared to 4Q21
driven by greater cane availability and enhanced agricultural
productivity indicators; (ii) our flexibility to continuously
maximize production of the product with the highest marginal
contribution (44% of total TRS production diverted to sugar
compared to only 7% during 4Q21; and 93% of total ethanol
production was anhydrous ethanol compared to 64% last year);
coupled with (iii) lower cost of production and higher
mark-to-market of our harvested cane, both driven by higher
volume.
- In 2022 Adjusted EBITDA in our Sugar, Ethanol & Energy
business reached $373.8 million,
$38.9 million higher year-over-year.
Crushing volume amounted to 10.5 million tons, 0.5 million tons
lower than in 2021, due to the start of crushing activities in
mid-March, following a short inter-harvest period. Despite lower
volumes, higher results were mostly explained by an increase in net
sales driven by our operational and commercial flexibility which
enabled us to benefit from attractive prices of ethanol and sugar,
especially during the first half of the year. Throughout 2022, the
price scenario of our products experienced significant changes. The
late start of harvesting activities in Center-South Brazil and strong international oil
prices were constructive for prices at the beginning of the year.
To benefit from this scenario we (i) carried-over production from
2021 into 2022 to be sold at higher prices; and (ii) cleared out
our tanks at the peak of prices achieving record sale volumes (23%
of ethanol sales at prices over 26 ct/lb sugar equivalent). By
mid-year prices, especially of ethanol, experienced downward
pressure caused by regulatory changes in Brazil (reduction of ICMS and zeroing of
federal taxes) and by the delay in adjusting domestic gasoline
prices to reflect international parity. We were able to rapidly
adapt our strategy to the current context by focusing on (i) the
commercialization of sugar and anhydrous ethanol, while we built
inventory of hydrous ethanol; (ii) exporting 35% of our anhydrous
ethanol production into Europe to
capture a premium versus domestic prices – thanks to our
certifications and ability to meet product specification; and (iii)
using our bagasse as fuel to dehydrate ethanol stocks rather than
to produce energy due to lower spot prices. Results were partially
offset by higher costs of inputs, such as diesel and salaries,
among others - partially mitigated by our strategy to be
self-sufficient in potash fertilizer, which accounts for 48% of our
total agricultural inputs' requirements. This not only reduces our
exposure to spot prices but improves our sustainability
profile.
- We have entered into 2023 with good sugarcane availability and
solid productivity indicators. As expected, this has enabled us to
resume our continuous harvest model. We are currently one of the
few players in Brazil crushing and
the only player producing sugar. Being able to crush cane
year-round, even during the traditional inter-harvest period, is
one of our main competitive advantages. While the Sugar &
Ethanol industry in Brazil has to
rely on inventories carried over from the past year, we are able to
supply new production into the market and continuously maximize the
product that offers the highest marginal contribution, which
nowadays is sugar (40% hedged at 19.4 ct/lb). Weather going normal,
we expect our crushing volume in 2023 to be around 15% higher than
in 2022 on account of (i) better productivity outlook; and (ii)
greater sugarcane availability. This, in turn, will result in a
reduction in unitary cash cost, due to better dilution of fixed
costs
Farming & Land Transformation businesses
- Adjusted EBITDA in the Farming and Land Transformation business
amounted to $10.3 million in 4Q22, in
line with 4Q21. Our Rice and Dairy businesses presented an
outperformance compared to the same period of last year, which was
fully offset by the $7.4 million
year-over-year reduction in the Adjusted EBITDA of our Crops
business.
- As we had already anticipated in our previous reports, Adjusted
EBITDA for the full year was 33.0% lower than in 2021, reaching
$82.9 million. Higher results of our
Dairy business driven by volume and better mix of higher value
added products, were fully offset by an underperformance of our
Crops and Rice businesses. Results were mainly impacted by higher
costs, an uneven performance of 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 diesel and agrochemicals, as well as higher
logistic costs, among others. In terms of yields, rice presented a
reduction of 1.0 Tn/Ha compared to the previous campaign as a
consequence of La Niña weather event, 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).
- La Niña weather event has extended its effects during the
beginning of 2023 and continue affecting production as of today.
Almost all of the productive regions of Argentina and Uruguay are experiencing losses in their
summer crop productions. Although we are diversified in terms of
crops and geographical regions, due to lack of soil moisture
because of the drought, we had to adjust our planting calendar and
reduce area. We are constantly reviewing the evolution of each crop
and expect yields to be lower than the previous harvest year. On
the other hand, our Rice and Dairy businesses, which were less
affected by the drought, have a much better outlook for the current
campaign
Remarks
2022 Shareholder Distribution Update
- 2022 was the first year of distribution as per our Distribution
Policy announced in November 2021.
This policy consists of a minimum distribution of 40% of the
Adjusted Free Cash Flow from Operations (NCFO) generated during the
previous year, via a combination of share repurchases and
dividends.
- During 2022 we distributed a total of $71.8 million, or 47% of the NCFO generated in
2021, representing a distribution yield of 7.1%. This was executed
via the repurchase of 4.6 million shares at an average price of
$8.02 per share (average market price
for the year stood at $9.13),
totaling $36.8 million. In addition,
we distributed cash dividends in the amount of $35.0 million, paid in two installments of
$17.5 million each in May and
November 2022, representing
approximately $0.1571 and
$0.1603 per share, respectively.
2023 Announced Shareholder Distribution
- In 2022, we generated $141.3
million of NCFO, which equals to a minimum distribution of
$56.5 million during 2023. Cash
dividends will amount to $35.0
million to be paid in two installments of $17.5 million each, on or about May and
November 2023. Such dividend
distribution is subject to the approval of the annual shareholder
meeting to be held next April 19th.
The balance will be distributed via buybacks and/or dividends as
the case may be.
- During the first two months of the year, we repurchased 0.7
million shares at an average price of $7.95 per share, totaling $5.5 million. Going forward we expect to continue
repurchasing shares, in line with our commitment to generate long
term value for our shareholders
Non-Gaap Financial Measures: For a full
reconciliation of non-gaap financial measures please refer to page
35 of our 4Q22 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 4Q22 earnings release, please access
ir.adecoagro.com. A conference call to discuss 4Q22 results will be
held on March 10, 2023 with a live
webcast through the internet:
Conference Call
March 10, 2023
9 a.m. US EST
11 a.m. Buenos Aires
11 a.m. Sao
Paulo
3 p.m. Luxembourg
To participate, please register at the link
Investor Relations
Department
Emilio Gnecco
CFO
Victoria
Cabello
IRO
Email: ir@adecoagro.com
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.
