Adecoagro SA (AGRO) Q4 2024 Earnings Call Highlights: Record Crushing Volumes and Strategic Growth

Adecoagro SA (AGRO) reports strong financial performance with record sugarcane crushing and strategic shareholder distributions despite market challenges.

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Mar 21, 2025
Summary
  • Consolidated Adjusted EBITDA: $103 million for Q4 2024; $444 million for the full year 2024.
  • Gross Sales: $368 million for Q4 2024; nearly $1.5 billion for the full year 2024.
  • Net Cash from Operations: $161 million in 2024.
  • Sugar, Ethanol and Energy Crushing Volume: 12.8 million tons in 2024, a record for the mills.
  • Net Sales for Sugar, Ethanol and Energy: $178 million for Q4 2024; $680 million for the full year 2024.
  • Adjusted EBITDA for Sugar, Ethanol and Energy: $105 million for Q4 2024; $364 million for the full year 2024.
  • Adjusted EBITDA for Farming Business: $4 million for Q4 2024; $103 million for the full year 2024.
  • Adjusted EBITDA for Rice Segment: $50 million for the full year 2024.
  • Adjusted EBITDA for Dairy Segment: $8 million for Q4 2024; $34 million for the full year 2024.
  • Distribution to Shareholders: $102 million in 2024, including dividends and share buybacks.
  • Net Debt: $522 million, in line with the previous year.
  • Liquidity Ratio: 4.5 times.
  • Net Leverage Ratio: 1.2 times.
  • Expansion CapEx: $104 million in 2024.
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Release Date: March 14, 2025

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

Positive Points

  • Adecoagro SA (AGRO, Financial) achieved a consolidated adjusted EBITDA of $103 million in the fourth quarter and $444 million for the full year 2024, marking an 8% year-over-year increase.
  • The company reported record results in its Rice and Dairy segments, driven by investments in production and asset consolidation.
  • Adecoagro SA (AGRO) set new records in its Sugar, Ethanol, and Energy business, achieving a new crushing record and maximizing sugar production.
  • The company distributed $102 million in dividends and share buybacks in 2024, exceeding its distribution policy by $32 million without compromising debt commitments or growth projects.
  • Adecoagro SA (AGRO) generated $161 million in net cash from operations in 2024, demonstrating strong cash generation across its businesses despite challenges.

Negative Points

  • The company faced a year-over-year loss in the mark-to-market of its biological assets in the Sugar, Ethanol, and Energy business.
  • Net sales in the Sugar, Ethanol, and Energy business decreased by 22% year-over-year during the fourth quarter.
  • The Crops segment reported a negative adjusted EBITDA of $3 million in the fourth quarter, impacted by lower international prices and higher costs.
  • The company experienced lower-than-expected corn yields due to the impact of spiroplasma.
  • Adecoagro SA (AGRO) faced challenges with dry weather conditions, which affected sugarcane yields and required strategic management of sugarcane harvesting.

Q & A Highlights

Q: What are the main triggers for a positive price action on sugar, and what is the expected timing for this?
A: Renato Junqueira Pereira, VP, Sugar, Ethanol and Energy Business: The sugar market is currently dependent on Brazilian production due to disappointing crops in India, Thailand, and Pakistan. The Brazilian crop is expected to be smaller due to last year's drought and fires. This scenario suggests that sugar will need to be traded at a premium over ethanol. We have hedged 31% of our production at $0.207 per pound and will increase hedging if prices rise above $0.19 per pound.

Q: How might global trade changes, such as import tariffs, impact Adecoagro's Farming and Crops business?
A: Mariano Bosch, CEO: The tariffs and trade tensions benefit South American soy and corn production, improving basis prices. For rice and dairy, we see opportunities in new markets like Central America, benefiting from current price levels.

Q: Can you provide more visibility on the Tether offer and its impact on management's priorities?
A: Emilio Gnecco, CFO: We cannot comment further on the Tether proposal due to legal restrictions. Discussions are ongoing, and we continue to operate normally, focusing on delivering results and creating shareholder value.

Q: What are the expectations for sugarcane crushing volumes in 2025, and what constraints exist?
A: Renato Junqueira Pereira, VP, Sugar, Ethanol and Energy Business: We expect to crush around 13 million tons of sugarcane, with a slower start due to dry weather. We are selecting lower potential cane for early harvest and expect improvement in the second semester with 18-month cane. Third-party cane is not needed unless weather conditions worsen.

Q: What is the outlook for ethanol prices and parity with gasoline?
A: Renato Junqueira Pereira, VP, Sugar, Ethanol and Energy Business: Ethanol demand remains high, with current inventories sufficient for 1.8 months of consumption. Prices are 32% higher year-over-year in reais terms. We expect prices to potentially surpass the 70% parity due to a smaller sugar-oriented crop and increased ethanol demand.

Q: What are the expectations for margins in the Sugar and Ethanol division in 2025?
A: Renato Junqueira Pereira, VP, Sugar, Ethanol and Energy Business: Production costs should be similar in reais and slightly lower in dollar terms, with labor costs increasing with inflation and some crop protection inputs decreasing. Overall, costs are expected to be stable.

Q: How do tax credits affect production costs, and what is the expected production cost mix?
A: Renato Junqueira Pereira, VP, Sugar, Ethanol and Energy Business: Production costs are calculated based on ethanol sold during the year. The mix should remain similar to last year, with tax credits not significantly affecting costs.

Q: What is the outlook for CapEx and expansion costs given the increase in harvest area?
A: Renato Junqueira Pereira, VP, Sugar, Ethanol and Energy Business: We leased strategic farms with better soil quality and topography, reducing planting costs by 15%. Expansion planting costs are about BRL13,000 per hectare, and we expect improved planting costs in the coming years.

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