Adecoagro's Q3 2025 Earnings Call: Contradictions Emerge on Sugar/Ethanol Crushing Volumes, Pricing Strategies, CapEx Reduction, and Crop Area Adjustments

Date of Call: November 12, 2025

Financials Results

• Revenue: $323M gross sales in Q3, down 29% YOY; year-to-date sales $1.0B

Guidance:

• 2026 crushing expected to be ~5%–6% higher vs 2025.
• Expect 15%–20% reduction in unit costs next year due to higher yields, volume dilution and lower Consecana price.
• Material reduction in growth CapEx for 2026; only high-synergy organic CapEx to proceed.
• Plan to reduce leverage via cost savings, revised capital allocation/distribution policy and potential shareholder capitalization.
• Profertil closing expected before year-end (subject to YPF right of first refusal); financing already in place.

Business Commentary:

• Sugar and Ethanol Production:
• Adecoagro achieved an all-time quarterly crushing record of 4.9 million tons and produced 40% more ethanol than the previous year.

• The switch to maximize ethanol production due to premium commanded over sugar and an improved cane productivity post-frost impacted this positive trend.

• Earnings and Financial Performance:

• Consolidated adjusted EBITDA during the quarter reached $115 million, with year-to-date figures amounting to $206 million.

• The increase in EBITDA was driven by greater results from the Sugar, Ethanol, and Energy business, despite lower global prices and higher costs in U.S. dollar terms impacting overall sales.

• Farming and Crop Strategy:

• The company reduced leased area for crops by approximately 30%, adjusting its crop mix to improve margins.

• This decision was driven by challenging price-cost scenarios, particularly in rice and peanut production, where lower international prices and higher dollar costs pressured margins.

• Debt and Leverage:

• Net debt amounted to $872 million, resulting in a year-over-year increase of 35% due to lower consolidated results and the advance payment for the Profertil acquisition.

• Management plans to reduce leverage ratios in the future through cost-saving initiatives and capital allocation strategy revisions.

• Profertil Acquisition:

• Adecoagro signed an agreement to acquire a 50% stake in Profertil, the largest producer of granular urea in South America, for $600 million.
• The acquisition is expected to reduce results volatility and diversify operations, contributing to shareholders' value in the long term.

Sentiment Analysis:

Overall Tone: Neutral

• Mixed signals: "Gross sales totaled $323 million...29% year-over-year decline" contrasted with operational positives: "Consolidated adjusted EBITDA...reached $115 million" and record crushing of 4.9 million tons. Management highlights cost and CapEx reductions and expects 5%–6% higher crushing and 15%–20% lower costs in 2026, while net debt rose to $872M (leverage 2.8x).

Q&A:

• Question from Matheus Enfeldt (UBS): I want to think a bit about the upcoming year and the upcoming crops. I mean, your crushing volumes, despite of the challenges in weather, were relatively okay. And I was just wondering how is the outlook for 2026, if we could still see some crushing growth in sugar and ethanol and sort of get closer to the 40 million tons capacity and how you see cost advancing for the upcoming crop as well? And then, my second question is, when you think about CapEx, particularly for next year, but I think for the next 1 to 2 years, which we might see some pressure in earnings, given the weak pricing environment that we are seeing right now. You were doing around BRL 250 million, BRL 300 million of CapEx per year. Outside of M&A, which I assume there's still some installments for Profertil, what's the level that we could see moving forward for next year given the compression in cash generation due to prices? Those are my 2 questions.
  Response: Expect 2026 crushing to be ~5%–6% above 2025 and unit costs to fall ~15%–20%; CapEx will be materially reduced to only essential organic, high-synergy projects.

• Question from Isabella Simonato (BofA): I have 2. First of all, you mentioned in the press release, right, that you guys are going to pursue a couple of actions to reduce leverage, right? I understand that, as you just said, reducing CapEx is one of them. But if you could give a little bit more color on what other actions are you thinking about or what your expectation or eventually a target, right, to be reached in 2026, I think that would be quite helpful. And the other question is regarding the decision, right, to significantly reduce your area of crops in the next season. I think it's the first time that you take such a drastic reduction, right? And just if you could give us a little bit more -- sorry, I think I got muted. So the rationale to go with this decision and eventually the economics, right, that are driving it, I think, would be interesting.
  Response: To cut leverage management will lower CapEx, implement cost savings, revisit distribution policy and discuss potential shareholder capitalization; crop-area cuts target low-return leased hectares to boost per-hectare returns and shift to higher-margin/specialty varieties.

• Question from Julia Rizzo (Morgan Stanley): Can I explore a little bit more Profertil acquisition? You still have some debt to take. I would like to understand what are the rates and how you expect that to be in terms of financing, time to pay, average cost. Also, in your best guess or in the last years, how much Profertil was able to deliver or distribute in terms of dividends but that would be the base case for 2026 distribution for Adecoagro coming from Profertil if the M&A gets concluded? (Follow-up: opportunities within the business, Vaca Muerta supply, expectations for 2026 in terms of how that could help to finance the cost of debt?)
  Response: Financing for Profertil is secured (100%), long-term and at competitive rates; closing targeted by mid-December subject to YPF ROFR; Profertil has paid substantial dividends (> $1B over last 5 years), but specific Adecoagro dividend contributions are premature to quantify.

Contradiction Point 1

Sugar and Ethanol Crushing Volumes

It involves expectations for sugar and ethanol crushing volumes, which are critical for the company's production and sales forecasts, impacting revenue and investor expectations.

What is the 2026 outlook for sugar and ethanol business crushing volumes and costs? - Matheus Enfeldt(UBS Investment Bank)

2025Q3: We expect to crush 70 million tons of sugarcane in 2026, which is 5% to 6% more than last year, supported by higher availability of sugarcane and flexibility in production. - [Renato Pereira](CPO)

What are the main drivers for the expected acceleration in the second half, and do you expect similar trends for 2025 full year figures? - Gustavo Troyano(Itaú Corretora de Valores S.A.)

2025Q2: We expect to crush the same amount of sugarcane as last year. - [Renato Junqueira-Santos Pereira](CPO)

Contradiction Point 2

Sugar Prices and Hedging Strategy

It involves expectations for sugar prices and the company's hedging strategy, which are critical for financial planning and risk management.

What’s the 2026 outlook for crushing volumes and costs in the sugar and ethanol business? - Matheus Enfeldt(UBS Investment Bank)

2025Q3: We expect sugar prices to recover based on current information, considering lower TRS content and yields, and we expect the market to react once UNICA releases numbers. - [Renato Pereira](CPO)

What are the key factors driving sugar price increases and expected timing, and when will hedging commitments for 2026 begin? - Gustavo Troyano(Itaú Corretora de Valores S.A.)

2025Q2: We are optimistic about sugar prices due to lower TRS content and yields. We expect the market to react once UNICA releases numbers. - [Renato Junqueira-Santos Pereira](CPO)

Contradiction Point 3

CapEx Reduction and Strategic Focus

It involves changes in strategic focus and CapEx allocation, which can impact the company's growth prospects and investor expectations.

What is the 2026 outlook for sugar and ethanol crushing volumes and costs? How will CapEx be impacted by the pricing environment? - Matheus Enfeldt (UBS Investment Bank)

2025Q3: We are decreasing CapEx from 413 million to 287 million... We will focus on organic projects with high synergy. - [Mariano Bosch](CEO)

What is Adecoagro's growth potential with increased capital investment, and what leverage levels are acceptable for growth? - Matheus Enfeldt (UBS)

2025Q1: We are committed to investing in those areas that will provide us with a higher return on our investment. - [Mariano Bosch](CEO)

Contradiction Point 4

Crop Area Reduction and Strategic Priorities

It highlights changes in strategic priorities and operational decisions, which can impact agricultural production and financial performance.

What plans are in place to reduce leverage, and what's the reasoning for the significant crop area reduction next season? - Isabella Simonato (BofA Securities)

2025Q3: We decided to reduce the crop area by 14%. This was decided because we found that some of the farmland that we are leasing is less efficient. - [Mariano Bosch](CEO)

Could you clarify the unit economics across crops and their impact on this quarter's low margins? - Thiago Duarte (BTG Pactual)

2025Q1: I just mentioned that we have a very diversified agriculture platform. We basically rotate crops to take advantage of the different prices and different margins in different crops. - [Mariano Bosch](CEO)

Contradiction Point 5

Sugar and Ethanol Demand and Pricing Outlook

It involves differing expectations regarding the demand and pricing outlook for sugar and ethanol, which are significant revenue streams for the company.

What is the outlook for 2026 crushing volumes, costs, and CapEx in the sugar and ethanol business considering the pricing environment? - Matheus Enfeldt (UBS Investment Bank)

2025Q3: We should be able to increase our crushing volumes by 5% to 6% in 2026 compared to 2025, based on the cane conditions we have today. I believe we have a good chance to reach the high end of that range. - [Renato Pereira](CPO)

What are the key drivers of sugar price increases and the expected timeframe for these increases? How might U.S. import tariffs affect Adecoagro's operations? - Gustavo Troyano (Itau BBA)

2024Q4: We expect a positive scenario for sugar due to disappointing crops in India, Thailand, and Pakistan, and a likely smaller center-south crop in Brazil. Sugar will be traded at a premium over ethanol. - [Renato Junqueira](CPO)