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4th Quarter 2014 Earnings Webcast
March 20, 2015
4Q14
…
DISCLAIMER
This press release contains forward-looking statements that are based on our current expectations, assumptions, estimates and projections about us
and our industry. These forward-looking statements can be identified by words or phrases such as “anticipate,” “forecast”, “believe,” “continue,”
“estimate,” “expect,” “intend,” “is/are likely to,” “may,” “plan,” “should,” “would,” or other similar expressions.
The forward-looking statements included in this press release relate to, among others: (i) our business prospects and future results of operations; (ii)
the implementation of our business strategy, including our development of the Ivinhema project; (iii) our plans relating to acquisitions, joint ventures,
strategic alliances or divestitures; (iv) the implementation of our financing strategy and capital expenditure plan; (v) the maintenance of our
relationships with customers; (vi) the competitive nature of the industries in which we operate; (vii) the cost and availability of financing; (viii) future
demand for the commodities we produce; (ix) international prices for commodities; (x) the condition of our land holdings; (xi) the development of the
logistics and infrastructure for transportation of our productions in the countries where we operate; (xii) the performance of the South American and
world economies; (xiii) weather and other natural phenomena; (xiv) the relative value of the Brazilian Real, the Argentine Peso, and the Uruguayan
Peso compared to other currencies; and (xv) developments in, or changes to, the laws, regulations and governmental policies governing our business,
including environmental laws and regulations.
These forward-looking statements involve various risks and uncertainties. Although we believe that our expectations expressed in these forward-
looking statements are reasonable, our expectations may turn out to be incorrect. Our actual results could be materially different from our
expectations. In light of the risks and uncertainties described above, the estimates and forward-looking statements discussed in this press release
might not occur, and our future results and our performance may differ materially from those expressed in these forward-looking statements due to,
inclusive, but not limited to, the factors mentioned above. Because of these uncertainties, you should not make any investment decision based on
these estimates and forward-looking statements.
The forward-looking statements made in this press release related only to events or information as of the date on which the statements are made in
this press release. We undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date on which the
statements are made or to reflect the occurrence of unanticipated events.
2
Sugar, Ethanol & Energy Business
3
1.8
2.3
4Q13 4Q14
6.47.2
2013 2014
4Q14
Our mills crushed a total of 7.2 million tons of sugarcane in 2014, 31% over 2013
Sugar, Ethanol & Energy Business– Sugarcane Crushing
31%
Sugarcane crushing 4Q14
(millions)
4
Sugarcane crushing 2014
(millions)
+12%
4Q14
Enhanced harvest and milling efficiencies at our mills allowed us to increase daily milling by 8.7%
Sugar, Ethanol & Energy Business– Rainfalls
Mato Grosso do Sul Rainfall 2014 (1)
(1) Data has been obtained from Ivinhema, Mato Grosso do Sul.
5
Operational Metrics 2014 2013 Chg% 4Q14 4Q13 Chg%
Total Days (1) 255 252 0.9% 79 76 4.7%
Effective Milling Days 187 180 3.7% 60 53 14.0%
Total Crushing (thousand tons) 7,233 6,418 12.7% 2,296 1,755 30.8%
Milling per Day (thousand tons) 38.7 35.58 8.7% 37.96 33.08 14.8%
(1) Total Days vary as a result of different starting days at each of our mills
-
50
100
150
200
250
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Rai
ns
(mm
)
Mato Grosso 2014 Rains 17 Year Average Rains
99,409
124,412
2013 2014
13,616
23,39125,764
36,267
2011 2012 2013 2014
Sugarcane Planting
(hectares)
4Q14
Sugarcane planting is a key strategy to supply our mills with quality raw material at low cost
Sugar, Ethanol & Energy Business– Sugarcane Planting
+25%
Sugarcane Plantation Size
(hectares)
6
9,085
10,543
2013 2014
126.5 130.5
2013 2014
71.8
80.8
2013 2014
4Q14
Enhanced sugarcane management resulted in higher agricultural productivity indicators
Sugar, Ethanol & Energy Business– Agricultural Productivity
TRS content
(kg/ton)
+13
Sugarcane yields
(tons/ha)
7
TRS per hectare
(kg/ha)
+3 +16
335.6
413.7
2013 2014
47.1
29.4
2013 2014
132.5
173.8
2013 2014
325.1
469.9
2013 2014
Sugar Sales Volumes
(thousand tons)
+45%
4Q14
Despite the fall in sugar prices, sugar net sales grew 31%, driven by a 45% increase in volumes sold
Sugar, Ethanol & Energy Business– Sugar
Sugar Net Sales
($ million)
+31%
408 359
Average Realized Price US$/ton
Inventories
(thousand tons)
(38%)
8
+23%
Sugar Production
(thousand tons)
74.3 76.4
2013 2014
243.4
295.1
2013 2014
135.6
146.2
2013 2014
268.1299.8
2013 2014
4Q14
We have implemented an ethanol carry strategy, which should allow us to capture higher prices in the off-season
Sugar, Ethanol & Energy Business– Ethanol
Ethanol Sales Volumes
(thousand m3)
Ethanol Net Sales
($ million)
+8%
557 495
Average Realized Price US$/m3
Inventories
(thousand m3)
+3%
9
21%
12%
Ethanol Production
(thousand m3)
Energy is a key driver of our business and a very important component of our cash generation
Sugar, Ethanol & Energy Business– Energy
Cogen Efficiency Ratio
(Exported Energy per ton crushed (KWh/ton)
10
46.8
61.6
2013 2014
+32%
Energy Contribution to SE&E EBITDA Margin %
Energy Cash Margins
($ million)
Reduction in Production Cost
Energy Cash Margin converted into TRS Equivalent (cts/lb)
1.5
2.8
2013 2014
+88%
4Q14
Energy Cash Margin
39% 41%
2013 2014
+6%
Cogeneration 2014 %
Sales 58,715 100%
Cash Cost (1,737) -3%
Cash Margin 56,978 97%
37% of total segment Adj. EBITDA margin
261.0331.1
290.7
776.9 804.5
601.2
Oct Nov Dic
4Q13
4Q14
330.0
442.7
2013 2014
Total Net Sales
($ million)
27.2
58.7
2013 2014
4Q14
High cogen productivity coupled with high spot energy prices boosted net sales by 116%
Sugar, Ethanol & Energy Business– Energy
Percentage of Water Stored in SouthEast Reservoirs
Brazilian Energy Spot Prices 4Q13 vs 4Q14
(BRL Reais)
+198% +143%
+107%
81
133
Average Realized Price US$/MWh
Cogen Export Volumes
(thousand MWh)
+34%
+116%
11
(2)
(2) Does not include $1.3 million from energy commercialization in 2013
(1)
(1) Does not include 24,0 thousand MWh of energy commercialization IN 2013
0
20
40
60
80
100
Jan Fev Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2010 2011 2012 2013 2014
%
133 174
136
146 29
59
2013 2014
Energy (Mwh)
Ethanol (m3)
Sugar (tons)
35.3
59.4
4Q13 4Q14
10 24
50
63
49
56
4Q13 4Q14
Ethanol (m3)
Sugar (tons)
Energy (Mwh)
Adjusted EBITDA & EBITDA Margin 2014 ($ millions)
115.2
153.5
2013 2014
4Q14
Adjusted EBITDA in 4Q14 reached a record high of $59.4 million, driving Adj. EBITDA in 2014 to $153.5 million with a 41% Adj. EBITDA margin
Sugar, Ethanol & Energy Business– Financial Performance
Adjusted EBITDA Margin
Adjusted EBITDA Margin
Net Sales 4Q14 ($ millions)
+27%
41% 39%
+33%
Net Sales 2014 ($ millions)
42%
33%
+68%
142
108
297
379
Adjusted EBITDA & EBITDA Margin 4Q14 ($ millions)
12
+31%
4Q14
Construction of Ivinhema mill was essentially completed on schedule and on budget
Sugar, Ethanol & Energy Business– Construction Update
Highlights
CONSTRUCTION UPDATE
Ivinhema phase II has been completed on schedule
and oni budget, expanding milling capacity by 3.0
million tons per year.
Consolidated nominal crushing capacity stands at
10.0 million tons
Ivinhema began milling on March 16, 2015, with a
capacity of 20,000 per day and will reach 25,000 per
day in mid April
Ivinhema annual production:
300,000 tons of sugar
240,000 m3of ethanol
360,000 MWh of energy exports.
13
Farming Business
12
26,088 36,677
49,427
69,746
102,325
119,026
153,026
183,454 192,207
232,547 218,572 219,305 225,331
2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 E
92.7139.5
214.6257.9
434.5 454.6415.0
618.8666.6
738.8699.2
848.8
2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 E
4Q14
Higher yields in 2013/14 resulted in a 21% growth in production. 2014/15 planted area has grown by 3%
Farming Business – Planted Area & Production Evolution
15
Farming Production Evolution (Crops & Rice) (thousand tons)
Farming Planted Area Evolution (Crops & Rice) (thousand ha)
+21%
34.5
8.2 8.70.9
52.3
34.7
10.9 7.0
(0.1)
52.6
Crops Rice Dairy Others Farming Consolidated
7.64.9 2.7
0.0
15.2
(14.7)
(3.1)
1.5
(0.4)
(16.7)
Crops Rice Dairy Others Farming Consolidated
Farming Adjusted EBIT 2014 ($ millions)
4Q14
Adjusted EBIT in 2014 was in line with 2013 driven by higher yields and lower production costs
Farming Business – Financial Performance
Farming Adjusted EBIT 4Q14 ($ millions)
16
+1%
(107%) (20%) +34%
+1%
2013
2014
4Q13
4Q14
(45%)
4Q14
Soy and corn positions generated a $16.6 million gain in 3Q14. However, during 4Q14 the rebound in commodity prices generated a $11.0 million loss, resulting in a $0.4 million gain in 2014
Farming Business – Commodity Hedge Position
17
Soybean Hedge: • 192,000 tons (approximately 90% of
production )
• Price: $1,171 cents/bushel
Corn Hedge: • 198,000 tons (approximately 85% of
production)
• Price: $573 cents/bushel
Soybean Futures Contract May 2015
Corn Futures Contract July 2015
Hedge as of 12/31/14
Hedge as of 12/31/14
US
ce
nts
/bu
sh
el
US
ce
nts
/bu
sh
el
(1) Data has been obtained from our Carmen farm in Venado Tuerto, Santa Fe.
Good humidity conditions during crop flowering have enhanced crop growth and development
2013/14 vs 2014/15 vs 20 year Historical Average Monthly Rainfall
Evolution in Argentina’s Humid Pampas (1)
4Q14 Farming Business – 2014/15 Crop Status
18
0
20
40
60
80
100
120
140
160
180
200
Sep Oct Nov Dec Jan Feb
Rains 2014/15 10 Year Historical Average
Crop Flowering Wheat Early Corn Soy Late Corn
Financial Performance
16
Area & Production 2010 2011 2012 2013 2014 Chg%
Farming Planted Area (ha) (1) 183,454 192,207 232,547 219,305 225,331 2.7%
Sugarcane Planted Area (hect.) 53,799 65,308 85,663 99,409 124,412 25.2%
Farming Production (tons) (2)
618,834 666,589 738,847 699,179 848,843 21.4%
Sugarcane Crushing (tons) 4,066,115 4,168,082 4,488,935 6,417,951 7,232,827 12.7%
Net Sales 2010 2011 2012 2013 2014 Chg%
Farming & Land Transformation 197,741 270,766 322,368 327,163 315,837 (3.5%)
Sugar, Ethanol & Energy 204,256 258,939 271,447 297,265 378,633 27.4%
Total 401,997 529,705 593,815 624,428 694,470 11.2%
Adjusted EBITDA 2010 2011 2012 2013 2014 Chg%
Farming & Land Transformation 65,735 67,444 68,647 88,942 85,234 (4.2%)
Sugar, Ethanol & Energy 51,735 109,507 97,505 115,239 153,503 33.2%
Corporate (22,353) (26,885) (25,442) (23,478) (23,233) (1.0%)
Total 95,117 150,066 140,710 180,704 215,504 19.3%
Adjusted EBITDA Margin
Farming & Land Transformation(3) 27.6% 19.9% 17.3% 23.6% 23.3% (1.2%)
Sugar, Ethanol & Energy(3)(4)
19.9% 37.1% 31.2% 34.8% 37.5% 7.6%
Total 23.7% 28.3% 23.7% 28.9% 31.0% 7.2%
(1) Planted Area in 2014 is for the 2014/15 season
(2) Total Production for 2014 is for the 2013/14 season
(3) Corporate expenses a l located 50% to Farming & Land Transformation and 50% to Sugar, Ethanol & Energy
(4) Ca lculated over Net Sa les . Net Sa les i s ca lculated as Sa les less sugar and ethanol sa les taxes .
4Q14
Financial Performance will continue increasing year by year as we improve efficiencies in each one of our businesses and become the lowest cost producers
Financial Performance - Consolidated Financial Performance
20
37 72
30 10 11
155 105
295
227
316
192 177
325
237
326
2010 2011 2012 2013 2014 2015 2016
Sugar, Ethanol & Energy
Farming & Land Transformation
4Q14
Consolidated capex spending is expected to slow down in 2015 as we complete the Ivinhema mill in Mato Grosso do Sul
Financial Performance – CAPEX Evolution
21
2010-2016 CAPEX Evolution
+38%
180
160
80
90
87.1
113.8
584.7
611.4
Debt Cash Net debt
30%
70%
Short term
Long Term
4Q14
Net debt stands at $585 million as of December 31, 2014
Financial Performance - Net Debt
4Q14 Debt Currency Structure
4Q14 Net debt ($ millions)
4Q14 Debt Term Structure
Total debt as of December 31, 2014, was of $698.5
million.
70% of our debt is in the long term, composed mainly
of loans from multilateral banks (BNDES and IDB)
Net debt as of December 31, 2014 was of $584.7
million
698.5
S&E Farming
22
52%46%
2%
Brazilian Reals US Dollars
Argentine Pesos
USD 5.0%
BRL 6.4%
ARS 15.3%
(1) As of December 31, 2014
Average Interest Rate (1)
4Q14
Currency devaluation have a positive impact on our cash position
Financial Performance – FX Impacts
23
Sugar, Ethanol & Energy in Brazil Costs: 100% BRL
Revenues:
• Sugar: USD (80% production hedged; no FX hedge)
• Ethanol & Energy: BRL
Impact on EBITDA: Neutral
Impact on Cash Flow: Positive
Farming in Argentina • Costs: 50% USD / 50% ARS
• Revenues: 85% USD / 15% ARS
Impact on EBITDA: Highly Positive
Impact on Cash Flow: Highly Positive
BRL Spot
ARS Spot
Investor Relations
Charlie Boero Hughes - CFO Email: [email protected] TEL: +5411 4836 8804
Hernan Walker - IR Manager Email: [email protected] TEL: +5411 4836 8651
ir.adecoagro.com
Thank you!