Adecoagro S.a. · NYSE:AGRO
Adecoagro — Investor Presentation (2018)
43 slides from Adecoagro's investor presentation, 2018
Slide 1: Institutional Presentation
Institutional Presentation
Slide 2: Disclaimer
Disclaimer This presentation may contain certain forward-looking statements and information relating to Adecoagro S.A. and its subsidiaries (collectively, “Adecoagro” or the “Company”) that reflect the current views and/or expectations of the Company and its management with respect to its performanc
Slide 3: Non-IFRS measures disclaimer
investors and others to evaluate and compare our consolidated operating results and to evaluate and compare the operating performance of our segments, respectively, including our return on capital and operating efficiencies, from period to period by removing the impact of our capital structure (inte
Slide 4: Adecoagro Overview
Adecoagro Overview High Quality & ESG Diversified Asset Base Sugar, Financial Ethanol Strategy & Energy Business Growth Farming & Land Strategy Transformation Businesses
Slide 5: Adecoagro Overview
& adecoagro Adecoagro Overview We are a leading agro industrial company in South America We are a low cost producer of food and renewable energy We run our business under a sustainable production model focused on profitability We own land and transform it into its highest production capabilities We
Slide 6: Diversified farming business
Diversified farming business Crops (Corn, Soy, Wheat, Sunflower, Cotton) Rice Dairy 113k hectares of owned, croppable land spread across the most productive regions Producing each crop in the right location driving low cost Own handling, storage and processing facilities production Acquisition of un
Slide 7: Regional expansion and entry into S&E consolidation
Regional Expansion Consolidation First Steps Second Growth Wave and entry into S&E Pre- IPO Foundation Land purchases in Uruguay and ERP implementation NYSE listing 75,000 ha of Brazil Consolidation of SE&E cluster. agriculture production Entry in the SE&E business Initiation in the
Slide 8: Adecoagro Overview
Adecoagro Overview High Quality & ESG Diversified Asset Base Sugar, Financial Ethanol Strategy & Energy Business Growth Farming & Land Strategy Transformation Businesses
Slide 9: Asset base by region
3 Sugar & Ethanol mills 3 Rice mills 2 Free Stall Dairies Mato Grosso do Sul Western Bahía 10 Grain conditioning & storage plants 13k owned ha 6k owned ha 13 MT of Sugarcane crushing 136k ha Sugarcane planted 30 farms 252k hectares of owned land (61% owned) US$ 861 million appraisal by Cushman & Wak
Slide 10: Adecoagro Overview
Adecoagro Overview High Quality & ESG Diversified Asset Base Sugar, Financial Ethanol Strategy & Energy Business Growth Farming & Land Strategy Transformation Businesses
Slide 11: Sugar, ethanol and energy overview
AGRICULTURE AGRICULTURE INDUSTRIAL PRODUCTION PRODUCTION OVERVIEW OVERVIEW OVERVIEW FLEXIBILITY FLEXIBILITY Ha owned cane State of the art mills Tons of Sugar storage Ha own land Tons of crushing capacity m3 of Ethanol storage Own cane processed1 Tons of sugar capacity Bulk VHP sugar Mechanical harv
Slide 12: Adecoagro's cluster in MS
Adecoagro’s cluster in MS Two mills, 45km apart Extensive room for organic growth Possibility to crush sugarcane the whole year Own sugarcane plantation Both mills connected to the local power grid High sugarcane yield and TRS potential One large plantation supplying more than one mill Centralized m
Slide 13: Low competition, continuous harvest
Low competition High TRS/ha potential Continuos Harvest High cogeneration efficiency ICMS Tax incentive Production flexibility
Slide 14: Summary of main competitive advantages
Summary of Main Competitive Advantages: Cost Savings vs Traditional Areas (US$ cts/lb) Country Competitiveness Comparison SOUTH AFRICA FRANCE AUSTRALIA GUATEMALA THAILAND BRAZIL Leasing Continuous Energy Freight Tax Benefit Total Harvest 2018F Total costs4 build-up (US$ cts/lb) Fixed Cost: 90% / Var
Slide 15: Low competition for land from nearby mills
Low competition for land fromnearby mills Average Lease Cost (tons/ha/year) Adecoagro Traditional Areas2 Mato Grosso do Sul, BRAZIL Ribeirão Preto, BRAZIL 100km radius: 12 mills 100km radius: 40 mills Farmer Margins: Cattle vs. Sugarcane1 (R$/ha) The Opportunity Cost of Land is Cattle, Which Has Sig
Slide 16: Energy exported
Energy Exported (‘000 MWh) Energy Exported per ton crushed Enough energy for 1.2 million people (KWh/ton) High energy export per ton crushed Efficient equipment: Low energy consumption Cost Advantage(2): + 1.0 U$S Cts/lb High margin and predictable cash flow Source: Company’s fillings. ¹ Source: CTC
Slide 17: Commercial benchmark and logistics overview
Commercial Benchmark: Logistics Overview Adecoagro’s MS Cluster vs. Sao Paulo (US$ Cts/lb) (1) Mills located nearby main rail and l road Infrastructure MG Distance to terminal Cluster Mills: 858km (Railroad and highway) MS UMA UMA Mill: 422km Mills (Railroad) Sugar freight Ethanol freight ICMS Ethan
Slide 18: Regional characteristics
Regional characteristics Effective Miling Hours Average Rain - Center South vs Mato Grosso do Sul(MS) 270 Center South 220 Cluster Average Rain (mm) 170 120 70 2013 2014 2015 2016 2017 20 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec More rain in the traditional season and Less rain in the offseas
Slide 19: Ethanol demand and supply
Ethanol demand(1) Ethanol supply(2) 2 01 7 2 01 8 F 2 01 7 2 01 8 F Brazil Domestic Gasoline vs Eurobob (BRL base 100) since PBR´S formula changed 150.00 R: 95% 140.00 Parity: 62% 130.00 120.00 110.00 100.00 90.00 (1) Flat Otto Cycle; 23% market share (2)2017: 585 MM tons; 55% ethanol mix.. 2018; 56
Slide 20: Ethanol producer fuel (CBIO)
Direct Effects Carbon credit sale will increase revenue/decrease cost to R$50/m3 (0.3 cts/lb sugar equivalent) Indirect Effects Demand shift towards hydrous ethanol due to higher gasoline prices. Consequently, increase in ethanol parity. Floor to sugar prices. Otto Cycle Producers sell Sell to final
Slide 21: Increase in ethanol production mix
Historical Price Evolution in Sugar Equivalent (cts/lb) SE&E EBITDA distribution 27 Hydrous MS (cts/lb) 1% 25 Sugar (cts/lb) 11.2% 10.0% 17.6% 16.9% 1% 23 55.0% 21 ~50% Gap 46.7% 34.5% 46.2% 19 89% 17 15 48.6% 44% 42.2% 36.2% 13 11 2015 2016 2017 1Q17 1Q18 Ethanol Sugar Energy Ethanol Production Mix
Slide 22: Adecoagro Overview
Adecoagro Overview High Quality & ESG Diversified Asset Base Sugar, Financial Ethanol Strategy & Energy Business Growth Farming & Land Strategy Transformation Businesses
Slide 23: Farming business segments
Farming Business Segments Capacity to accommodate 7,000 cows Cutting-edge technology and best practices Potential to double the size over the next couple years Solid track record, with around 79k ha sold Productivity of 36.7 Liter/Cow/Day, 67% above Argentina’s average Capital gains for over US$200m
Slide 24: Lowest cost producer in grains
Soybean Cost (USD per ton) Corn Cost (USD per ton) Rice Cost (USD per ton) Production costs Selling costs Production costs Selling costs Production Costs Fobbing costs Export Tax Fobbing costs Selling costs 202 238 239 129 229 123 180 28 25 13 166 109 16 25 31 76* 14 76* 94 14 152 50 6 14 13 13 13 1
Slide 25: Land transformation process
Highlights since inception Land Transformation Process Over 10mm ha Full Rotation & evaluated High Yields * Reaching its highest production capabilities Medium Over 170k ha put into Low-Yield Crops * Adecoagro applies a production careful process to Natural Grasses develop the land and achieve its h
Slide 26: Adecoagro Overview
Adecoagro Overview High Quality & ESG Diversified Asset Base Sugar, Financial Ethanol Strategy & Energy Business Growth Farming & Land Strategy Transformation Businesses
Slide 27: Net cash from operations and debt amortization
Stable Net Cash fromOperations despite volatile commodity price environment Expansion Capex Wheat Adjusted Free Cash Flow Corn Soybean Sugar Expansion CAPEX decreasing and a FCF increasing from 2018 with most of the debt due on 2024 onwards Debt Amortization Schedule Debt Currency (in Million USD) S
Slide 28: Growth projects by business
Crops SE & E Dairy Rice Land Transformation 2 already approved grains Planting expansion of Two free-stalls and a 2MW Acquiring 8 planters and 5 Average sale of 2 farms to conditioning & storage 51,000 has. bio-digester will be harvesters to reduce rotate our portfolio facilities will start operatin
Slide 29: 2017 to 2021E outlook
144 92 82 71 69 27 21 23 51 22 50 52 55 46 29 2017 2018F 2019E 2020E 2021E
Slide 30: Strong growth in financial performance
& adecoagro Strong Growth in Financial Performance ... Revenues (in USD MM) = Farming Sugar 426 2010 870 2016/17 Avg. 1,200 +26% 1,100 ] 1,000 2021E Adj. EBITDA {In USD MM) w sugar fr @ Farming & LT 287 2010 2016/17 Avg Adj. EBITDA - Maintenance CAPEX {In USD MM) @ Sugar 466% @ Farming & LT r 181 30
Slide 31: Adecoagro Overview
Adecoagro Overview High Quality & ESG Diversified Asset Base Sugar, Financial Ethanol Strategy & Energy Business Growth Farming & Land Strategy Transformation Businesses
Slide 32: Net sales evolution and sales diversification
Net Sales1 Evolution ($ MM) Sales Diversification (2017FY) Farming and Land Dairy Sugar and Ethanol 4% Rice Others 4% 7% Whea t 576 2% Sugar 569 34% or 379 297 375 % 269 259 204 98 51 Soybean 10% 271 322 327 316 274 273 323 Ethanol 193 216 198 24% Energy % 2008 2009 2010 2011 2012 2013 2014 2015 201
Slide 33: Adj. EBITDA evolution
Adj. EBITDA Evolution ($ MM) 300 240 180 265 247 154 167 115 120 110 98 52 60 89 85 59 52 66 67 69 70 54 51 0 (7) (23) (27) (22) (27) (25) (23) (23) (22) (21) (22) (22) -60 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Farming & Land Transformation Sugar and Ethanol Corporate
Slide 34: Adecoagro Overview
Adecoagro Overview High Quality & ESG Diversified Asset Base Sugar, Financial Ethanol Strategy & Energy Business Growth Farming & Land Strategy Transformation Businesses
Slide 35: Sustainability & Profitability: a natural link
Sustainability & Profitability: a natural link
Slide 36: Positive impacts in local communities
We generate huge and positive impacts in the local communities More than 6,600 new jobs were created frominception Local communities are located in poor and isolated rural areas Adecoagro is constantly engaging in Nutrition and Education Programs We care about our people’ssafety 250 Argentina - Work
Slide 37: Land use strategy aligned with sustainability
Our land use strategy is aligned with our Sustainability vision To accomplish with local Biodiversity regulations To fulfill particular commitments (World Bank standards) To avoid development of heavy forests or massive wetlands Trail cameras installed to monitor local fauna Ocelot caught by trail c
Slide 38: Re-using organic residues to produce biogas
We are re-using organic residues toproduce Biogas Cow manure is used by our digesters to produce biogas Biogas fuels a CHP engine with 1.4 MW power capacity +9,000 MWh/year of Renewable Energy is sold to the grid GHG emissions are strongly reduced by transforming methane into CO2 In addition to thos
Slide 39: Integrated sugarcane system reuses all residues
Integrated Sugarcane system is the most efficient agro-model as it reuses all residues Rainfall Solar Energy CO2 O2 Fertilizers Agrochemicals Diesel ELECTRICITY BIO-FERTILIZER PLANTATION COMPOST (ASHES) DIGESTER BAGASSE COMPOST BOILER & MILL POWER PLANT ELECTRICITY VINASSE JUICE CONCENTRATOR VINASSE
Slide 40: Highest standards of corporate governance
One Class of Common Shares CLASS OF SHARES Equal Voting Rights per Share. No Controlling Shareholder ELECTION OF BOARD OF DIRECTORS By Majority of votes in AGM. Staggered Basis. BOARD Highly Qualified and experienced. COMPOSITION Expertise in Business/Finance/Agro industrial BOARD INDEPENDENCE Major
Slide 41: Management and board members
Management Board Members Name Years Past Experience Years with company Name Past Experience Position Position Plinio Musetti Partner in the private equity group of Pragma Patrimonio Mariano Bosch Agribusiness Over 20 years of CEO and Private Equityexperience 47 Since inception Chairman CEO entrepren
Slide 42: Major shareholders
HOLDER NAME SHARES US$ MM % O/S QIA 15,983 129,145 13.6% PGGM Investments 15,381 173,963 13.1% EMS Capital 8,463 95,716 7.2% Jennison Associates LLC 6,320 71.482 5.4% Gic Private Limited 6,286 71,100 5.4% Pointstate Capital 4,852 54,878 4.1% Management & Directors 4,312 48,765 3.7% Brandes Investmen
Slide 43: Investor relations contacts
Charlie Boero Hughes - CFO Juan Ignacio Galleano - IRO Email: Email: [email protected] [email protected] TEL: TEL: +5411 4836 8804 +5411 4836 8624