Earnings call transcript Q1 2023

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Operator

Good afternoon, ladies and gentlemen, and thank you for waiting. At this time, we would like to welcome everyone to Adecoagro's First Quarter 2023 Results Conference Call. Today with us, we have Mr. Mariano Bosch, CEO; Mr. Emilio Gnecco, CFO; Mr. Ethanol VP; Sugar, Ms. Pereira, Junqueira and and Energy Renato Officer. Vitoria Relations Cabello, Investor

mode presentation. inform We completed, that participants further and listen-only recorded would there will instructions the you in this question-and-answer like time, to will that be event section. remarks the After company's is a being be will through are given. company's At all be

that to and let the assumptions uncertainties may statements. because statements circumstances the therefore, results and expressed are could industry should conditions, conditions forward-looking proceeding, based information Investors risks, forward-looking or and currently materially in cause They other depends me on company. such that to of available Adecoagro involve and future. Adecoagro of differ they beliefs could future mention may from management future relate occur the on operating those that and the economic in understand Before events on general factors not assumptions affect to and

conference Mariano turn conference. I'll may Bosch, to your you Bosch, the begin Now Mr. CEO. over Mr.

Mariano Bosch

morning, Adecoagro's quarter joining conference. XXXX thank and results you first Good for

represents the paid into Those part million distributions. policy each November. cash May $X.XX Shareholder dividends of every total distribution factor in to approved going month, two and approx to installments This yield. our equivalent $X.X of our Before of this will per in Annual X% our dividend share, equal be Last Meeting million $XX dividend distributed during a results XXXX. -- May be operations, on of

in comply company's our the already repurchased the to shares, program. we buying distribution under rest million must an buyback have shares. additional policy, this this, with repurchase X% equity. And during year, equal continue to $XX we at million we To shares addition of the year, of In least X.X our

last of reached experienced million, into previous worst go growth although of during and Argentina higher we year, highlights years EBITDA the $XX in than XXX slightly let's Uruguay. the adjusted the operations. the our Consolidated quarter the Now

have this different segments: Uruguay shows rice our crops dairy. dairy of rice we huge and manners four different the in in about diversification, the none and a almost from think I in crops, impact rout Argentina achievement to importance and that suffered diversification. Talking in

segment that And doing excellent. in our and sugar, ethanol one Brazil, is energy

Now starting our from crop simply year. million segment, last to the even the business most compared affected generated broke $XX

in harvesting activities, that of and expect are We the compared reduction XX% yields are drought effects year. is the good previous the the XX% have of to of we news over. The middle to to the

this a but yields, only harvesting July new start As completed Nino, the campaign better logistics, rice In margins. we we and activities prices we had year, of agricultural El better business, so with X% reduction which with our good will forecast means of range. in

business, to continue for in continue offset with benefit to increased year-over-year. business costs in the XX% EBITDA In Sugar, Energy expect adjusted by We some line increase previous the by dairy we of productivity, this. In from and Brazil, year feed. Ethanol our higher with

of Because and productivity outlook The Xx inter-harvest was of doubled this we one very we traditional this, compared more looks for during to sugar are very segment players year. scenario availability period. few to excellent and and almost last cane, produce Cane constructive. is promising the indicators crushed the price

and over by pound. and ethanol increased premiums to This For are beginning per $X.XX XX% trading since to have anhydro represents XX% year prices sugar instance, the above ethanol. now of XX% the hydrous

to are we sugar prices uniquely Fundamentals this are still we more supportive and going are forward, positioned have from as our to than XX% profit sugar of hedged.

biomethane. in vinasse, production to of stability reached conversion produce production the after about have biogas, renewable energy XX very into are than excited technology years we we Another more the from and the development, its involves developing

to We biomethane produced the its from diesel replacing recently on consumption. first run vinasse, become player effectively fully vehicles

cost in the than a resulting potential second our the which whole biomethane diesel will to of to savings replace our our open Fully million has building opportunities. are consumption double process production, will biodigester We improvement XX liters. and more up, project doors footprint. This of new scaled business also additional this carbon technology

We our very the is implemented circular of which units. different proud are example model we business this achievement, of benefit of shows in approach and clear business innovative our the a

the for energy. constantly To renewable efficient conclude, food want to producer congratulate I becoming sustainable and most working team and our towards of

if our We have generate that opportunities. value a of operations, I returns on we good full will year of feel focus shareholders. great to and we for challenges day-to-day us, confident also continue our but ahead continue

through numbers I the you the let will Emilio quarter. of walk Now

Emilio Gnecco

Thank morning, everyone. Good you, Mariano.

Page capture summary to commercial financial with sugar decision on during favor premium consolidated over increase making for and to quarter. This our results ethanol. $XXX Gross a a the production amounted start of the Let's sales the quarter, both XX% was explained X our by operational million price first to year-over-year.

addition, reported higher mix to increase well better prices of as volumes sold. book Rice million a In $XX a revenues higher value-added account higher on our selling due to of operations as in products

turn Slide for of Please our to financial X consolidated view broader a figures.

to the in its decline crops, fully driven activities reported indicators. is Thus, conducted in totaled $XX effects farming business, This and with of can higher the of previous higher greater X% by the chart sugarcane the you in on mainly to energy division by expansion availability, unprecedented outperformance productivity adjusted see ample costs. the million, offset As last about throughout by right explained planting solid an thanks ethanol the an the than coupled driven performance our sugar, Argentina, in addition year. years, drought EBITDA

market quarter million with X.X the supply resume our of Brazil's Slide model enabled This operational during performance. In year-over-year. which volumes period. to move XXXX, is first higher driven X interharvest the Let's our greater tons to million harvest was cane that ahead by us X.X mostly crushing amounted availability, continuous and tons to

XX XX XXX tons to tonne. per hectare such improvement in tons per a indicators the per kilograms Agriculture per hectare from increased content whereas productivity kilograms TRS as yields year-over-year quarter, tonne from presented XXX to

first on the taking of equivalent, per to with room $X.XXX our average, with high sugar product TRS a to production months maximize premium as of divided production and degree highest line at in our year, offering respectively. strategy Consequently, of of of marginal three traded as XX% flexibility at which hydro X% XX% traded much of pound, ethanol pound in to the mills. of we per the and $X.XXX to the $X.XXX sugar contribution of Mato anhydrous ethanol sugar pound During per advantage the our

anhydrous this that profit from the dehydrated meters further commanded, premium over in we ethanol production, cubic ethanol was hydrous and our XX% our of to stored tanks. ethanol Within XX,XXX

we same year. Slide X, throughout quarter. production, sales. driven an period offset would our Net like last year-over-year to to on increase the by Let's fully compared describe the amounted of in to sales to XX% reduction sales ethanol in which a please turn This making the higher $XX where increase million, sales was sugar

per sugar, a XX% the As favored presented selling our you of above, selling mix on It to VHP is highlighting increase sales that can in tonnes price to see worth pound. production amounted X% ethanol. the left decision its XXX,XXX premium which sugar our over were price capture sugar reaching volumes sugar $X.XX chart as of

hydroethanol -- its case to due In of sold further volumes ethanol, price. be selling reduction build can inventories, our reduced the of year-over-year dehydrated. the in and we which

local at On ethanol Europe the of given by and the compared market anhydrous year, sell to X% volumes the export other to our on opportunities. hand, market, to increased previous to flexibility depending

to capacity equivalent. pound since and price is the sugar product This meters within we X,XXX at per $X.XXX so cubic have necessary industry sold, exported meet an average the volumes were of specifications certifications of

use increased our price decision prior long-term down to producing to compared year, dehydrate contracts our XX% due hydro by instead fuel of energy though to by energy selling part of the XX% gas volumes ethanol at selling Albea low of prices. Average even to were explained

price we at an previous survive. credits, $XX higher than per year cabo Regarding Cbios, XXX,XXX of sold average X%

Ethanol explained sales where EBITDA by $XX Energy mark-to-market of our the Please million, in pressing an gain harvested go during XX% and in on to to was million by higher $XX quarter increase Adjusted the and like business. the Page higher This an of X, volume. financial performance the was year-over-year would present increase year-over-year. Sugar, we

higher offset Results were due of worth is by inputs with partially It well higher reported freight. crush. higher pound a cost decrease as volume costs as costs coupled per a in on increase due to to basis that production, the mentioning

the with year. about of Ethanol business, for turn XX, where conclude Sugar, please current Finally, briefly talk would like to the the rest to outlook Energy we and the to Slide

to availability costs. higher turn, in fixed XX% in weather utilize to XXXX This, normal, in as due capacity. we expect crushing industrial better reduction around going to enough Assuming will volume unitary have of sugarcane dilution XXXX we than in cost our result a in our be

has point commercial year prices of an throughout the average in a per and contracts about on now are From $X.XX trading XXXX sugar view, increase pound. registered

sold as sugar to to and prices. our commitments in as the low market this have from scenario the be are we excellent We of in quarter an table at tons position low shown into second profit carried XX,XXX over

and of asset ethanol Brazilian there the March after being ethanol sugar XX% XXXX, scopes our Brazil's the zeroed production as mid-XXXX. allow been for on above On us an flexibility tax positive well. federal In announced Furthermore, gasoline achieve of developments mix to addition, return flexibility. have since X, annual government

remains National set X, ethanol Council the also place term. ICMS the in gasoline Policy the outlook on changes collection for to XXXX. Finally, the Consequently, of take for Finance short June of for constructive introduced

move to we on to would the business. Now like Farming

of making decrease activities Slide to previous 'XX a hectares a campaign go reached campaign. Please the to total the compared X% for XX. Planting XXXX, XXX,XXX

most for are currently of harvesting undergoing grains. We our activities

the crops. mentioned the have cannot over a we XX% tons to of regard, area As report throughout that produced XXX,XXX mention agriculture April, all produce. of below-average precipitations In during stage the our previous of total of our and that end definition help the continued we this of yield of we

in last and received to current levels, terms remain the negatively impacted. risk. development yields Although Precipitations at few will weeks downturn the geography, products crop of reducing enable was we are diversified in

However, XX, campaign be levels. XX between to expect XX% to we historical for yields graphs our to lower compared XX%

and allow a Nino semester improvement of El harvest in in soil is the weather of season. the of Looking 'XX-'XX moisture shifting likelihood to for outlook forward, the strong recovery reservoirs levels will an in there XXXX. the favoring water This for second

we this activities of year, reflected which are winter July our As crops for will quarter last results in the Mariano in planting mentioned, begin XXXX.

On performance our Page reduction we Farming businesses. EBITDA the of and year-over-year. like a would making totaled $XX to XX, Land adjusted XX% following million, Transformation financial present the

performance drought. the As of expected, consequence a our crops business had as a poor

offset driven improved by However, this selling Rice the was business, by of our higher volumes. performance

results in with presented business the On dairy line last other the hand, year's.

business, crop adjusted to our In $XXX,XXX. EBITDA amounted

previously previous in reduction a in area results mainly the explained, and in by were coupled in yields reduction U.S. the season. in versus dollar plant the impacted cost As increase a with genuine terms

Adjusted was results a volume both EBITDA in our a Rice an and by mix $XX to drivers. other prices to XX% increase higher the in presenting compared value-added were of previous among average due explained year. better increase Higher business products, million,

by partially However, offset a by reduction caused dollar terms. funds in costs some of the impact in results line year-over-year were a our and right higher in of U.S. yields

achieving our in Moving were integrated higher on mix continuous and value-added prices, by with to in explained line on business. million, products, coupled selling $X Adjusted totaled the Results average year. operations. focus of with dairy our increased vertically last we higher efficiencies the EBITDA

reflect Again, an cost fee sales the which land of of of of although higher of on soybean evolution La prices. of the were In farms mark-to-market costs, no Brazil, our in latest dairy account account tracks were transformation, the offset farm cows case of receivable results to corresponding the results including concluded, by Nina. sale

present we to from where million turn XXXX, strategy. In operations. capital allocation of our now generated XX, Page net cash we Let's to $XXX would like

repurchase. our earlier, XX% the a of mentioned of cash a Mariano the to distribution As policy, during we year cash generated distribution share to via and minimum of dividends according previous are committed combination

$XX of XX. April on Shareholder terms Annual million held distribution approved was Meeting dividend our dividends, during In of our

equal The whereas will second the installment an first million amount. installment in May of be paid shall $XX.X be on payable XX, November cash in

equity. X% In $X in during already approximately XXXX, we the shares, represents have addition, company's repurchased which of million

on position. Moving the debt to

last net Our of $XXX increased period year same the X% million. to amounted debt to compared

of inventories was well additional explained financing of finished This in growth by of financing an CapEx. million mainly our the as as goods $XX the

in whereas As XXXX, our with repay net ratio X.Xx of March year. line balances, liquidity full the reached X.Xx, XX, company's showing was leverage our with capacity ratio short-term cash the its debt previous to

were invested To Investments was sugar CapEx this to on our front conclude, projects. as other implantation continue XX% expansion as total increasing related of well to the quarter mostly throughout testing in generate of projects, development as and which our generator out acquisition Ardelyx, small vinasse. more enable the such Tubareducer the energy biomethane will a a of and of production us to

our the our we energy with biodigester will which our results. drought be as currently to business constructing worth are generate the for is expenditure capital second sustainability division, is In uncommitted mentioning an It commitment. in pharma aligned Farming dairy every in that project revising using are our given renewable input impacts of that commoner business, we our our

Thank you very your time. much for

We are now open to questions.

Operator

is Bank Please, open. first Isabella Simonato Our of the microphone question comes from from Isabella, Instructions] [Operator America. Mrs.

Isabella Simonato

afternoon. thank have Hi. the Mariano actually. I Emilio, for you Good question. two

are sugarcane. both of actually, -- first, So them on on

the potential by the a good crushing the next right? sugar start wondering there one, you and was and volumes season unhedged for increase I you season. But intention been remain see of have upside if to pretty release-- to prices is this number the second you the right XX%, further come my you throughout First a off year? mentioned year how rallying. do of all, right, cost this therefore, question on very And of the crushing dilution

views So supply to second, in levels the these impact Thank production, all, global a pricing. sugar Nino potential are if sell how and El in at seeing I first And of and demand Indian you. you on sugar term? right your short you're considering of view do medium-term potential wonder able,

Mariano Bosch

go that Thank you, to questions good your the ask question. of clearly. question. both Isabella, explain I Renato for through can Very answers will we

Renato Junqueira Pereira

We good for the sugarcane. hot weather this the is the summer which of sugarcane moment. very the at in that Isabella, and regarding good the of a rains question, lot looks sugarcane good outlook of weather. had terms very ideal weather, development A

than expecting we're we So yields in the last had higher two years.

reason. the think main I is this

the first X.X We crushed in million had tons quarter.

the I during period. think of one sugarcane we this players crushing few were

So no a considering longer this is scenario, sugarcane the factor. limiting

to full of have sugarcane year we have plenty crushing. So a of

Of lot weather crushing course, depend on. to from a estimate we now on the

the I is India, sugar. million million to optimistic Actually, reason considering in were very quickly. are and are has were X key XX%. But our almost the Union. Back And about analysts crushing second this we that with deaths Today, surplus improved sugar, sugar about we scenario. the I most are of we very a October, in increase projecting think think question change situation for X the Thailand going in tons positive some of the consensus the a some problems countries like S&D European

this dependent at market the production. moment, Brazilian very on So is sugar

sugar, is of is expecting everybody it's produce million Brazil which to that challenging, is tons going So possible. XX but

I'm already done I I not think think, have mistaken, if we once, XXXX.

that And capacity. reaction last seeing we think high crystallization Brazil of has will any we a this not are prices from cycle other longer The country. any limited because

be of year. sugar sugar takes it increase to to has out new order kitchens, invested Brazil a approximately mills and in So invest the in has to

And seeing we're that market that the we not Also now, they advanced Cassava, lot as with the very Thailand, we hedge a in even compete position. with are Brazil. -- And that's countries sugar, are and grains sugarcane additional the other other the not Thailand, in are we about having so capacity of any crops Brazil, are in and our being reason if seeing with inverted we in Thailand, competition in -- crops other like like installed. optimistic

sugar was it sold. production, XX% already of produced that mentioned, have and we only the we ranged our As have mainly

and that So sold sold we we anything yet. next for anything in drought the haven't future, be to delivered supposed is haven't

Mariano Bosch

Isabelle the Renato. first our the increase a the question, current clarification, to increase XX% not you, year, is an quick on Thank to previous estimate...

Isabella Simonato

That is clear. you. Thank

Operator

comes question Rodrigo, Mr. from is from Our next your open. Santander. Almeida Rodrigo microphone

Rodrigo Almeida

here. have few questions I a

Actually, and I'll So my in regarding It's capital first question the was parts. allocation. question the maybe company of side to strategic divide two this Mariano.

seen very which this been is we've company, in we've cost pages being the I with lowest the and familiar always the of mean, farming company's strategy. on right, producer, So DNA indeed

But my on clearly to of you question side things. you've proven industrial the yourselves is,

on doing You've job been the great a side. industrial

well. on as biodigesters You've here the been investing

So here perhaps downstream on the could thinking whether goes my upon very eventually things. side more question along lines on I'm invest say you of of maybe perhaps Maybe the pricing. here, soba

I don't that's related things. downward anything that more the know to side of

that's So part the question. this of first first

on is I the side. of question But second assume allocation farming still. The part capital the on

perhaps So could high, wanted view of into to could these to Brazil. point are on land thinking whether and your but you you expanding in perhaps be cultures expanding each other if here Brazil, on us view get costs other inside here, explain countries maybe your I what's of

a That national would other you. hear on Sugar nice questions the from here I have be And then to few side.

to I think debt gasoline. blending government's the on policy wanted get I to your on first increase view

XX%. you If long or opinion would helpful fees that if take how could to it's be on it Anything any us. on reach have the that, more front for

in And in maybe side diesel replace question, for question the understand seeing to more right? here on broader first investing the some But even biomethane biodigestion transportation ethanol. industry production. distributors Biomethane. consumption, doing the then you're actually, we're tube a the that it's and that's I

biomethane to could you well. what's if others, be Thank your nice you. take understand selling explain perhaps So us it to on this as to would

Mariano Bosch

sustainable all would production and we've these include that been but that circular for allocation all circular and Rodrigo. system. of I one includes they a farming, Okay. say a have relevant businesses talking number the system you always capital this all this Very Thank overall our questions good we include they strategy. questions, that regarding that lines four

we is all this four have, included. the within So lines that business

ESG of and these has growth, and one of one of this, account top we on each one been you've And approach plan important more can can of each the And been projects. say, very move. to these. its each as as hearing, but have is we this take on of to And largely as relevant. own strategic our you've the you hearing, organic time into business this more spend and ethanol, sugar discuss

all on all we in making developing and technologies day these that are we are increases every these efficiencies have and different job. our day-to-day We productivity that

part. been the think has the agricultural part. is not always this I integrated focus. And just It It's

when daily this all relevant for is thing So business. segment. the is what goes solution Same this talking we're about

think the business, the under are of the we we production dairy in When feed.

under We the then manure raw and we to bio this going different biodigester processing fertilizers the are generate the of products. And milk milk into the of production of have all reusing the of and into this cows biogas. that the

biogas the the -- in of not the also the manure is but generated only in vinasse the cow. So through

see in until you and of are rice, simply we concept showing you the can Same better is you much rice see are rice of the since project, in project, the and because price the seed the developing the prices not the we So today, the client same economy. final circular rice what on thing that's which see gone seats up. has

is all what the variety are the because one looking is that right our of specifically we we we developed over have have world that This that clients that a is each them. specific producing varieties for mainly XXX-and-something for

So lines. each development one of is these business all through this four going in

why two shareholders of -- includes since and spending on continue of buyback makes ago, growth XX% XX% lot to the cash this efficient growing. policy on capital that of applied allocation. we these through of being that And years the that projects That's been have being of synergetic time a that developed cash the all we this dividend. generated other net focus is us we've concept this the and more as And lot of distribution distribute a within is for

on and Then answer our quickly. second gasoline. So have on your go of is quick Renato that's view government allocation capital I first. on general or these price to basically -- question a ask on view will through the that the you question to asked policies that that going

Renato Junqueira Pereira

Yes.

the the to the beginning. which XX% good. the almost about create liters for increase of flax anhydrous the in do issue think the which X would that, that an we think in we that additional is of production, and are discussions technically is of ethanol, be feasible question But about XX% considering that rate, blend anhydro would still demand is very, the very fleet billion Brazilian Regarding still it is an

we implemented. So when -- haven't we know it's going to don't be

through news are We media. the following the the Unica discussions in and

Regarding biomethane of start and today, you but to biogas biomethane we have the replace asked, that produce the also demand to started -- our of at we -- and stabilized our the our sell a we diesel we biogas are to production of question lot fleet mill. we molecule

doing we the possibilities the now is So way do what now, are doing between to what's it. to the arbitrage we two best choose are

possibility it So we third to selling start we also of are but replacement, the with this analyzing parties.

Rodrigo Almeida

That's great. Thank much a guys. you good Have afternoon. so

Renato Junqueira Pereira

you, Rodrigo. Thank

Operator

[Operator JPMorgan. from is microphone Lucas question comes Ferreira Instructions] Lucas, next from open. Please Our Mr. your

Lucas Ferreira

to is afternoon. and cash a sugar like farming, season, increasing costs? main in the the businesses, case me. others how crops, for One both and next you -- some also expectation evolve ethanol. Hi lower you your maybe and very lines hedge. of considering give And going And diesel let's you other a per the your, I follow-up sugar of this guys. Two some fertilizer on say, maybe expect believe high in farming second Good say, do to your opportunity declining your In is costs some TRS production it's just see question ethanol, crushing. there COGS season, and view for to on question what especially and the questions

deeper the there even hedge go curve in now. What prevents you

it's you're still come. policy, if the considering you're crop just of for waiting because or something your to So

Thank strong that margins to per strong above you this season, you XX% you. the price. X% given with but pound imagine prevents very also for for what this get above that next spot $X.XX the So and season, would prices go I

Mariano Bosch

you question. thank Lucas, for your much very

have farming of probably production are you Regarding are and costs are fertilizer prices now -- now. seeing And increased higher 'XX. 'XX, what had prices business That what seeing that production herbicide also. campaign you costs XXX the that's the campaign on the the the that's

the plant fertilizers of the XX% to to For and we what reduced fertilizer general herbicide is have this on also in more less following gone that starting nitrogen and on the in will XX% the year, phosphate season, July dollar prices down be has by fertilizers prices. in

per not go next that's of the crops by on through forecasted the yield we for So to also is fixed cost cost are the the production cost different again, hectare affecting the as the El And year -- very affected of production. yield, this is and so the yield year, expecting that Nino of that. bad with the

that's overall Then the sugar the next Renato we will going of business. a the ethanol, season, farming of detail. in explain the for in expect do decrease into and So cost cost more

Renato Junqueira Pereira

are as In and diesel. the Others are increasing. that cost such sugar components are decreasing ethanol, there fertilizer some

competition and grains has major I increasing. because most which is factor Brazil. one think that important But to situation, freight, yield the the the think of volumes the are in increased freight the is I

in to cost. have So total it's going higher a dilution our

that other the So XX% to question compared your had we decrease the we cost and X% moving And year. our last between to expect to cost about hedge.

of optimistic next, the the in and the before, we are about fundamentals business say, I short I the would very mentioned short midterm. for As term

be at we is in flat, today at curve has more higher our the level. inverted sometime happen the so price current price line price will future. a then to to going should be have future with we is think that opportunity and we think that in fix more to And -- that So the the

Lucas Ferreira

very much. Super clear. Thank you

Renato Junqueira Pereira

Thank Lucas. you,

Operator

time, to Please, this concludes floor the to closing section. for Mr. This may the turn remarks. At any back you Bosch proceed. like Bosch, would question-and-answer I Mr.

Mariano Bosch

in Thank joining and you the see meetings. for you to call, our upcoming hope all

Operator

does This you. presentation. conclude Thank today's

disconnect this wonderful day. have may You a now at and time,

Adecoagro (AGRO) 12 May 232023 Q1 Earnings call transcript