Adecoagro Q2 2026 Earnings Call Transcript

On Wednesday, Adecoagro (NYSE: AGRO ) discussed second-quarter financial results during its earnings call. The full transcript is provided below. This content is powered APIs. For comprehensive financial data and transcripts, visit The full earnings call is available at Summary Adecoagro reported a record consolidated adjusted EBITDA of $173 million for Q2 2026 and $258 million year-to-date, driven by strong performance in the fertilizers segment.

The company is set to exceed its annual projections in fertilizers due to higher production volumes, increased prices, and cost efficiencies. Adecoagro acquired the Carapo Mill in Brazil, aiming to expand its sugar and ethanol operations and capture operational synergies without affecting its deleveraging targets. In sugar, ethanol, and energy, despite weather challenges, the company maximized ethanol production at a 78% mix due to its premium over sugar, and it strategically built inventories to optimize future pricing.

The fertilizers segment saw a 22% increase in urea production and a significant price surge due to geopolitical factors, with expectations for full-year EBITDA to surpass initial projections. The food and agriculture segment experienced improved production volumes and a gradual recovery in margins, with expectations for continued improvement. The company reported a pro forma net leverage of three times, indicating progress on its deleveraging path, with plans to continue reducing leverage as EBITDA increases. Adecoagro maintained a strong liquidity position and paid the first installment of its annual cash dividend, with a second installment scheduled for November.

Full Transcript Victoria Cabello, Investor Relations Officer Good morning, ladies and gentlemen, and thank you for waiting. At this time we would like to welcome everyone to Adecoagro's 2026 second quarter results conference call. With us we have Mr. Mariano Bosch, CEO; Mr.

Emilio Gnecco, CFO; Mr. Renato Junqueira Pereira, Sugar, Ethanol and Energy VP; and Mrs. Victoria Cabello, Investor Relations Officer. We would like to inform you that this event is being recorded and all participants will be in listen-only mode during the company's presentation.

After the company's remarks are completed, there will be a question and answer section. At this time further instructions will be given. Before proceeding, let me mention that forward-looking statements are based on the beliefs and assumptions of Adecoagro's management and on information currently available to the company. They involve risks, uncertainties and assumptions because they relate to future events and therefore depend on circumstances that may or may not occur in the future.

Investors should understand that general economic conditions, industry conditions and other operating factors could also affect the future results of Adecoagro and could cause results to differ materially from those expressed in such forward-looking statements. Now I will turn the conference over to Mr. Mariano Bosch, CEO. Mr.

Bosch, you may begin your conference. Mariano Bosch, CEO Good morning and thank you for joining Adecoagro's first half 2026 results conference. Consolidated adjusted EBITDA marked new records, reaching $258 million year to date and $173 million during the second quarter, reflecting the earnings potential and scale that our well-diversified agro-industrial platform now has. In fertilizers, stronger operational performance during the quarter resulted in higher production volumes, while higher prices and cost efficiencies supported further margin expansion.

Given higher-than-expected prices during the first half, we expect the annual performance from this segment to be above our initial projections. In Brazil, the sugarcane plantation is in excellent condition. The investments and work done over the years to improve cane productivity are paying off as weather conditions have normalized. Sugarcane availability is now driving the crushing volume growth, and this is also one of the reasons why we view the acquisition of Carapo Mill as highly accretive.

We believe this asset will enable us to organically expand our sugar and ethanol operations by milling the surplus cane that our cluster currently has while further strengthening our presence in the region. As we capture the operational synergies, we see potential to unlock value by increasing the crushing and consequently reinforcing our position among the lowest-cost producers in the industry. Given its earnings potential, this expansion does not alter our deleveraging progress nor our target net debt to EBITDA. For the full year in Food and Agriculture, stronger productivity enabled higher cost dilution.

Raw milk production has improved, supporting higher processed volume in our industries. As a new crop is being commercialized, margins should improve, supported by a more efficient cost structure. To conclude, I would like to express my gratitude to all the teams in Adecoagro. It is because of their commitment that we continue to achieve new milestones despite the different commodity cycles which we navigate.

Thanks to our shareholders for their continued support. And now I will let Emilio walk you through the numbers of the period. OPERATOR Thank you. The floor is now open for questions.

If you have a question, please write it down in the Q&A section or click on Raise Hand for audio questions. Please remember that your company's name should be visible for your questions to be taken. We do ask that when you pose your questions that you're picking up your headset to provide optimum sound quality. Please hold while we poll for questions.

Our first question comes from Gustavo Troiano with Itaú BBA. Sir, your microphone is open. Gustavo Troiano, Analyst at Itaú BBA Hello everybody. Thanks for taking my question.

And it's actually on Profertil and more specifically on the mismatch between production figures in the quarter and sales volumes that you reported for this quarter as well. And basically I just wanted to hear from you what could be attributed to the usual seasonality of sales volumes and what could relate to maybe one-offs in the quarter, potentially driven by the urea price spike or like that. 3 million tons for the full year, concentrating volumes in the second half, or if there could be some downwards adjustments to sales volumes after what happened throughout the first half of the year. Thank you very much.

Mariano Bosch, CEO Hi Gustavo, thank you very much for your question. I think this helps for a whole clarification of how we sell the urea. 3 million tons in the whole year. 3.

3 is for sure something we will always be selling. And we could be selling all what we produce every month. And that is easy to do it, but we have a strategy where usually and in general over the years, during September, October, and November is the maximum consumption of the urea from producers. So in general that would be where the higher prices in the domestic market of Argentina we can find.

So we try to concentrate more sales in that specific part, that is for the general years. This year, in particular, has, as you mentioned, this peak because of the war during March and April. So in April we try to maximize the peak. That's why we are selling more than what we originally projected in the first half.

So what you can see there is the first half we sell more or less the average that has been sold in the previous years. But in this specific year we were pushing to sell more. But in June, you may not remember, but in June the price of urea went down as far as lower than the previous year and lower than July and August. So during June we had the lowest price of urea.

That's why in June in particular, we decided not to push on the sales as we were pushing in April and May on what we had produced. That is specifically why this particular month or this particular quarter, you are not seeing all the production being sold. And we are happy with that decision because in June the price was lower than today's prices, or July and August. So we have more inventory today to be sold at a higher price.

Of course, we would have sold 100% in April. That is the maximum. But in April we pushed and we tried to sell as much as possible, but we couldn't. This is a spot price that every week is being sold.

And that's how urea commercializes in general. So that is important to make that specific clarification. And thank you for the question. Gustavo Troiano, Analyst at Itaú BBA That's clear.

Thank you very much. OPERATOR Our next question comes from Matthias Enthiut with UBS. Matthias Enthiut, Analyst at UBS Hi, morning everyone. Thank you for the time.

My first question on sugar and ethanol, you had in previous calls mentioned an expectation of a drop in cash cost of 10 to 15%, if I'm not wrong. If you could provide any updates around that level of cost efficiency or cost improvements for this crop, if you still think that that number is reasonable when looking to the entire crop. That's my first question. And then the second one on the acquisition of the Carapó mill.

I understand there's potential synergies to capture higher crushing. My question is, what's the excess capacity or excess sugarcane that you currently have, and how do you think, or how do you anticipate that costs move with a higher or a larger radius for sourcing once you end that plant? And if you could sort of help us get a sense around that, and then just to finalize on that, what's a reasonable outlook for crushing for that mill for 27, if it's already possible for you to reach four, four and a half million tons above the three and a half that the mill crushed last season. So those are my questions.

Thank you. Mariano Bosch, CEO Hi Matthias, thank you for the question. On the projection of the yield of the milling, the full milling for Carapó in 2027, we don't give that guidance and we want to close first, and then we will explain more details on Carapó and the rest of the questions, including some of the synergies from Carapó. Renato can take the cost and how the cost can be impacted with Carapó, and what are the synergies also with Carapó.

Renato. Renato Junqueira Pereira (Sugar, Ethanol and Energy VP) Hi Matthias, thank you for your question. So, as it was mentioned, we see Carapó as an extension of our cluster in Mato Grosso do Sul. So we are going to adopt the same operational model there, and you have the same competitive advantages.

So our plan in the future is to do the continuous harvest. We're going to take advantage of the high production flexibility that Carapó also has, the high cogeneration potential, the SMEs tax rebate that is exactly the same as our mills in Mato Grosso do Sul. And we think that Carapó has a potential to increase the effective crushing a lot, almost double the crushing. This is because the capacity of Carapó is very similar to the capacity of EVM.

So if you consider the milling capacity, the sugar production capacity, ethanol capacity is very similar to Angélica and even Emma mills. We also think that you have a lot of opportunities to improve some KPIs and to reach the same level as you have in Mato Grosso do Sul. For example, industrial efficiency, we think we have 2% higher than Carapó. The use of time is also more than 2% higher.

The cogeneration exports, kilowatts of energy per ton of cane crushed, we think we can improve, and also some improvements in agriculture, both in yields and TRS. And to finalize the synergies, we think that we have a lot of synergies related to G&A. So we are going to keep the same structure that we currently have to also use this in Carapó. And we are going to also benefit from the logistics and commercial assets.

So we're going to take advantage of the tanks that Carapó has, warehouse. So I think there are a lot of synergies that we are going to get in the next years. Of course, part of the sugarcane, as Mariano mentioned, from the cluster we are going to send to be crushed in Carapó. Regarding the other part of your question, the cost, I think it's important to say that quarterly costs might have some temporary distortion caused by cost allocation and industrial seasonality.

So it’s better to analyze the costs based on the year cost. But even with this consideration, we think that it is still possible to reach the 10% reduction in cost compared to last year. I think this is explained first by the cost dilution. We plan to crush approximately 10% more than we crushed last year.

We still have plenty of time to do it. Of course it depends on the weather, but at this point it is still possible and so this has an extra cost dilution. The leasing cost is much lower because of the CONSECANA price. The headcount has been reduced.

This is because of some efficiencies that we have been obtaining, especially because of the use of new technologies such as two-row harvest machines, Grunners. So we have decreased the number of harvesting fronts, so reducing the number of people working on those fronts. And this is more than enough to offset some diesel and fertilizer increase in costs. So we think it's still possible to have this 10% reduction.

Matthias Enthiut, Analyst at UBS That's helpful. Thank you. OPERATOR Once again, if you have a question, please write it down in the Q&A session or click on Raise Hand for audio questions. Our next question comes from Pedro Gama with Citi.

Pedro Gama, Analyst at Citi Hi Mariano and Adecoagro team. Good morning. Thank you for the opportunity to ask questions. So on my side I have two questions.

In the fertilizer segment, in the past the management highlighted the likely expansion of the plant as a key growth avenue. However, during the previous weeks and months a major Argentinian competitor in the gas sector announced investment in a new greenfield urea plant in the same region. Building on that, I'd like to ask about two questions. First, how does the current cash cost structure compare to the peer that is vertically integrated in gas production?

Is the unit cost different significantly, and how does this affect Adecoagro’s long-term competitive position in the Argentine arena? And another question: given that the likely preferred expansion is a brownfield project, should this theoretically be faster to implement, and what would be the key triggers or market conditions required for you to make a final investment decision? Is there a strategic urgency to bring this new capacity online before your competitor, thereby capturing first-mover advantage in the domestic market which usually has higher margin than exports to Brazil, for example?

Or could this expansion be postponed in light of the company focus to deleverage? I believe that is the main points. Thank you. Mariano Bosch, CEO Thank you, Pedro, for your question.

Very important. Number one is South America consumes 10 million tons, consumes, imports 10 million tons of urea. Ten million tons. 3 million tons.

1 million tons. So there is still a lot of need of urea in the whole region. This announcement is to produce urea in four or five years from now. So there's still a lot to go.

When you ask to compare the cost of production from one system to the other, still a lot to understand on what's the other cost. We know exactly what are our costs, but there are a lot of costs on the other side that still need to be understood in terms of gas and the cost of gas. The gas is a very transparent market and we have to renew our contracts, as we said before. And we expect those contracts to be better in terms of prices than what they are today.

And we are having offers of gas way cheaper than today. There is still a lot of gas available in the region. So we don't see any disadvantage in buying gas in the region to the competitors or any other competitor there in the region. Argentina, as we've been explaining for many times, will be a huge exporter of gas.

So we are always going to be buyers of gas at the cost of the export parity, as we've been always saying, that is going to be very competitive. So we still believe that we are going to continue to be the lowest cost producer. And when you think on the selling on the domestic market or on the export, depending on where, because with the logistics and the port that we have in Bahía Blanca, we are very competitive to go to Brazil, as competitive as to go to Puerto San Martín, that are the northern ports in Argentina. So the differences between the domestic and the export market, when we think on the Brazilian market, are not going to be really relevant.

So that is to understand what the impact of a new plant is in the whole 10 million tons that the region is importing. And then going to our own project that you were asking, we continue to understand, analyze, going deep, do the engineering work on the engineering on our brownfield project. And of course we have a lot of benefits because of having a brownfield project there. We know exactly where the location of the plant and where it's going to be, behind the existing one.

There are a lot of synergies with our existing assets. So we are still very keen on that project. We are very interested in continuing to understand and also continue to understand what is the real cost of producing it, of building the plant, and how is the best way to produce this plant or to build this plant in order to continue to be the local producer. And that is where we are focusing and how efficient is that we can build this new plant.

That, of course, is a relevant investment. Pedro Gama, Analyst at Citi Very clear. Thank you.