• Gross Sales: $457 million in Q3; over $1.1 billion year-to-date.
• Adjusted EBITDA: $111 million in Q3; $341 million year-to-date, a 29% decline from the prior year.
• Net Sales (Sugar, Ethanol, and Energy): $227 million in Q3; $502 million year-to-date.
• Crushing Volume (Sugar, Ethanol, and Energy): 4 million tons in Q3; 10.2 million tons year-to-date, a 6% increase from last year.
• Adjusted EBITDA (Farming Business): $17 million in Q3; $99 million year-to-date.
• Net Debt: $646 million, a 9% decrease compared to the same period last year.
• Liquidity Ratio: 2.6 times as of September 30, 2024.
• Net Leverage Ratio: 1.5 times, in line with the same period last year.
• Capital Expenditure: $26 million in Q3; $72 million year-to-date.
• Shareholder Distribution: $96 million committed, including $35 million in cash dividends and $61 million in share repurchases.

• Warning! GuruFocus has detected 7 Warning Sign with AGRO.

Release Date: November 14, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Adecoagro SA (NYSE:AGRO) committed $96 million to shareholder distribution, including $35 million in cash dividends and $61 million in share repurchases.
• The company achieved record results in its rice operations, driven by strategic investments in assets, seed genetics, and machinery.
• Despite challenging weather conditions, Adecoagro SA (NYSE:AGRO) maintained a 55% sugar mix and expects a new record in sugar production.
• The company secured attractive financing to construct two biodigesters, aiming to increase biomethane production fivefold by 2027, reducing carbon emissions and costs.
• Gross sales increased to $457 million during the third quarter, with year-to-date sales exceeding $1.1 billion, driven by higher volumes sold across most products.

Negative Points

• Consolidated adjusted EBITDA declined by 29% compared to the previous year, primarily due to an uneven year-over-year comparison.
• The sugar, ethanol, and energy business faced lower results, impacting overall financial performance despite gains in rice and dairy segments.
• Crushing volumes in the sugar, ethanol, and energy business declined by 10% year-over-year due to dry weather, affecting yields.
• Lower international prices for main products and higher costs in US dollar terms negatively impacted the crops segment.
• Net debt amounted to $646 million, reflecting a 9% decrease, but the company continues to manage debt levels amidst growth investments.

Q & A Highlights

Q: How do you see the dynamics of ethanol and sugar prices impacting the market, especially considering the supply and demand factors? A: Renato Junqueira Pereira, VP of Sugar, Ethanol, and Energy Business, explained that ethanol demand remains high, with a low parity at the pump favoring consumption. The stock-to-use ratio is tighter, and the intercrop period will be longer due to weather issues, leading to expected price increases. Regarding sugar, fires have impacted yields, and the market is expected to remain tight, benefiting from higher prices.

Q: Can you provide insights into the expected yields and crop mix in Argentina for the upcoming season? A: CEO Mariano Bosch indicated that they expect better yields due to improved starting conditions compared to last year. The crop mix will see an increase in soy and peanuts, with peanuts becoming more relevant due to stable prices. Sunflower and rice are also expected to perform well, with rice benefiting from specialized varieties and integrated production.

Q: What is the outlook for CapEx, and how does it align with your growth strategy? A: CEO Mariano Bosch stated that CapEx is aligned with their capital allocation strategy, prioritizing shareholder returns while investing in growth opportunities. Sugar and ethanol will see continued investment in biomethane production and sugarcane planting. Rice and dairy will also receive investments to enhance production and processing capabilities, with expected IRRs between 18% to 25%.

Q: How are you managing costs, and what is the outlook for cost reductions? A: CEO Mariano Bosch emphasized their focus on being the lowest-cost producer, which is crucial in a declining commodity price environment. They expect cost reductions in the next campaign, assuming yields align with historical trends, and are actively working towards achieving this.

Q: What are the expected impacts of recent fires on sugar production, and how might this affect future pricing? A: Renato Junqueira Pereira noted that fires will impact yields next year, particularly in affected regions, leading to lower yields and a continued tight market. This scenario supports a flatter future price curve, and the company plans to hedge remaining production to capitalize on potential price increases.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.