In a hyperinflationary economy, Adecoagro showed its third quarter results

(Photo: Adecoagro leadership in the inauguration of its biogas facility in Santa Fe province)

Buenos Aires, November 20th. Last Friday 16th, Adecoagro (“AGRO” ticket in the NYSE) exhibited its III Quarter financial results, closed at September 30th. Total sales accumulated in the first nine months reached US$550 million, versus 658 millions in 2017. But operational profit before financing and taxation jumped from US$81 million to 163 million this year.

Based in Brazil, the “Sugar, Ethanol and Energy” is the largest business segment for the company, accounting 65% of the total sales or US$356 millions. The sales of ethanol reached US$216 millions or 40% of the total sales.

But if operational profit doubled from a year ago to the present, financial costs climbed from US$68 millions in 2017 to US$163 millions in the three quarters of the fiscal year. Thus, Adecoagro exhibited a US$19 million loss versus US$10 million profit last year.

In the IIIQ conference call presentation, officials from Adecoagro explained that their sugarcane operation is up, increasing yields and productivity. Due to a higher ethanol prices, now the company derived 72% of its crushing for ethanol production, while sugar production was reduced to the remaining 28%.

In the farming operation, Adecoagro is planting 237,000 hecteres this 2018/19 season, 78,000 of them with soybean (including second crop), 57,000 with corn (also including second crop), 40,000 of wheat and other 40,00 of rice.

The financial side

According with the formal presentation, from July 1st, Argentina is considered a hyperinflationary economy, since accumulated inflation surpassed the threshold of 100%, that implies that all non-monetary items in the financial report were adjusted by the inflation rate.

In the call conference, officials appointed that net debt reached US$815 millions in the third quarter, 22% from Farming and 78% from Sugar and Ethanol operation. Of this total, 80% is long term debt on a average life of 6.2 years. The 90% of the debt is contracted in dollars at an interest rate of 5.8 percent.

The stock performance in the NSYE showed not reaction to the financial results. The price of the share moves arount US$7.00 to 7.15, versus US$8.18 in November 2nd and US$9.00 a year before.