- Adecoagro recorded Adjusted EBITDA of $29.8 million in 2Q12 and an Adjusted EBITDA margin of 19.5%
- The Farming and Land Transformation businesses' Adjusted EBITDA in 2Q12 was $22.5 million, in line with 2Q11. Operating performance was enhanced by an $8.0 million gain generated by the strategic sale of the San Jose farm, and offset by a $1.6 million loss resulting from the mark-to-market of our crop hedge positions, compared to a $3.0 million gain in 2Q11.
- Adecoagro's Sugar, Ethanol and Energy business began the 2012 sugarcane harvest and milling season during 2Q12. Operational and financial performance during the quarter was negatively affected by abundant rainfalls during April, May and June throughout the Brazilian center-south region. The excess rains delayed the harvest and reduced the sucrose content (TRS) in the cane. As a result, sugarcane milling during 2Q12 was 40.4% below that of 2Q11. Consequently, Adjusted EBITDA for the quarter was $13.5 million, compared to $49.4 million in 2Q11. If weather normalizes during the second half of the year, Adecoagro expects to compensate for the lower sugarcane crushing and production volumes and related financial performance during 3Q12 and 4Q12.
- Net income in 2Q12 totaled negative $14.9 million, $27.6 million less than in 2Q11. The loss for the period is the result of: (i) the delay in the sugarcane harvest, (ii) a $21.4 million foreign exchange loss, mainly non-cash, generated by the impact of the depreciation of the Brazilian Real on our outstanding dollar-denominated debt and non-deliverable forward currency hedges, and (iii) a $10.3 million non-cash loss resulting from the mark-to-market of our sugarcane and coffee biological assets. We expect poor results generated by the delay of the sugarcane harvest to be offset by gains during the next two quarters.
- During June 2012, Adecoagro completed the sale of the San Jose farm at a 31.4% premium over the Cushman and Wakefield independent appraisal dated September 2011. San Jose is a 7,630 hectare farm purchased by Adecoagro in 2002 for a total of $0.7 million or $85 per hectare. The farm was sold fully developed 10 years later for $9.25 million or $1,212 per hectare, obtaining an internal rate of return of 31.8%. The transaction generated $8.0 million dollars of operating profit for the 2Q12 period.
- The construction of the Ivinhema greenfield mill in Mato Grosso do Sul is moving ahead as planned and on schedule. We expect the construction of the first phase of the mill, consisting of a nominal annual capacity of 2.0 million tons of sugarcane, to be completed by November 2012. Ivinhema is expected to undergo test runs in late 2012 and start commercial milling operations at the beginning of the 2013 harvest.
- The construction of the second free stall dairy is well advanced and is expected to start operating during August 2012 with 230 milking cows, generating additional value to our corn and soy production. The facility will be gradually populated until reaching full capacity of 3,500 milking cows and an estimated production of over 120 thousand liters of milk per day by November 2013. The new free stall dairy will expand Adecoagro's milking cow herd to over 7,200 head and annual milk production to 90 million liters.
- The Franck rice mill is expected to be finished by September 2012. Once the assembly is completed the facility will be able to generate additional value to our rough rice production. The mill will have an annual processing capacity of 100,000 tons of rough rice, increasing Adecoagro's total capacity to 300,000 tons.
Adecoagro Recorded Adjusted EBITDA Of $29.8 Million In 2Q12
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