Release Date: May 13, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Tether has become the largest shareholder of Adecoagro SA (AGRO, Financial), holding 70% of the company's equity, which is expected to bring new opportunities and support for future growth.
- Adecoagro SA (AGRO) achieved a new record in rice productivity, demonstrating the effectiveness of investments in seed genetics, land leveling, and machinery.
- The company successfully sold all stored ethanol at significantly higher prices than the previous period, showcasing strategic inventory management.
- Adecoagro SA (AGRO) reported a 28% year-over-year increase in sales, driven by higher volumes sold, particularly in ethanol.
- The company maintains a disciplined capital allocation strategy, focusing on dividends, stock price maximization, and opportunistic buybacks to enhance shareholder value.
Negative Points
- Consolidated adjusted EBITDA decreased by 60% year-over-year, primarily due to losses in biological assets and one-off expenses related to the tender offer.
- The sugar, ethanol, and energy business experienced a 31% year-over-year decline in crushing volume due to dry weather conditions affecting sugar cane yields.
- Lower international prices and higher costs in US dollars pressured margins in the crop segment, leading to a $27 million year-over-year decrease in adjusted EBITDA for the farming business.
- Despite record rice productivity, adjusted EBITDA for the rice segment declined due to lower prices compared to the previous year's record highs.
- Net debt increased by 6% year-over-year, attributed to higher short-term debt to finance working capital, raising concerns about leverage and liquidity.
Q & A Highlights
Q: Can you explain how Adecoagro plans to meet last year's sugar cane crushing volumes despite a weak first quarter?
A: Renato Junqueira Pereira, VP of Sugar, Ethanol, and Energy, explained that despite dry weather affecting yields, the company anticipates better yields due to recent rains. The strategy involves crushing sugar cane with better growth potential later in the year, and if necessary, carrying over some crushing into the first quarter of next year.
Q: What are the unit economics for different crops, and how do they affect margins?
A: CEO Mariano Bosch stated that corn full season, wheat and soybean double crop, and soybean full season are prioritized based on economic benefits. The company maintains a sustainable rotation system, adjusting crop allocations slightly to optimize economic results.
Q: How does the new control group plan to use Adecoagro's cash flow, and will the dividend policy remain the same?
A: Executive Chairman Juan Sartori confirmed that the 2025 distribution policy is approved, maintaining the 40% dividend policy. Future cash flow will be invested in dividends, share repurchases, or acquisitions, focusing on improving return on equity.
Q: What is the strategic plan for Adecoagro's land assets, and how will liquidity be managed with the new shareholder structure?
A: Juan Sartori emphasized the long-term value of land assets and mentioned exploring mechanisms to crystallize their value. Regarding liquidity, he noted that the float remains sufficient for trading, and the company aims to maximize stock price and maintain liquidity.
Q: What is the expected timeline for implementing new projects under Tether's investment, and how does the macroeconomic environment in Argentina affect operations?
A: Mariano Bosch stated that projects will be executed carefully without haste to minimize risks. In Argentina, receiving real dollar value for exports is beneficial, and the company is optimistic about improving long-term results despite increasing costs.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
