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Adecoagro (AGRO) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Consumer Staples· Aug 12, 2026

Source: earnings call transcript

Executive summary

Adecoagro Q2 FY26 — Record Adjusted EBITDA Driven by Fertilizers, Strategic Sugar/Ethanol Inventory Build

Adecoagro delivered record adjusted EBITDA in Q2 FY26, primarily fueled by exceptional performance in its Fertilizers segment, which benefited from strong pricing and increased production. The company strategically built ethanol inventory amidst low domestic prices, anticipating future recovery, while also progressing with the accretive Carapa Mill acquisition to expand sugar and ethanol operations. Despite seasonal debt peaks and mixed commodity prices in Food & Agriculture, management remains focused on deleveraging and operational efficiencies.

Highlights

5

  • Consolidated adjusted EBITDA reached a record $258 million year-to-date and $173 million during the second quarter.

  • Fertilizers segment adjusted EBITDA more than doubled both in the quarter and on a year-to-date basis.

  • Urea production increased 22% year-over-year in Q2, reaching 617,000 tonnes year-to-date.

  • Sugarcane crushing volume grew 3% year-over-year to 3.5 million tonnes in Q2.

  • Liquidity ratio improved to 1.9x compared to 1.2x in the previous quarter.

Concerns

4

  • Sugar, Ethanol and Energy segment adjusted EBITDA declined to $53 million in Q2 and $94 million year-to-date.

  • Domestic ethanol prices declined sharply, leading to a strategic inventory build of 41% of year-to-date production.

  • Food and Agriculture segment year-to-date results reflected lower commodity prices and higher U.S. dollar costs.

  • Net debt peaked seasonally due to working capital requirements, with pro forma net leverage standing at 3x.

Guidance & targets

CategoryTargetConfidence
Fertilizers segment annual performance
above our initial projections
medium materiality
High
Impact of Carapa Mill acquisition on deleveraging
does not alter our deleveraging progress nor our target net debt to EBITDA for the full year
high materiality
High
Sugar, Ethanol and Energy crushing volumes growth
low double-digit growth
medium materiality
High
Fertilizers segment full year EBITDA
above our original projections
medium materiality
High
Impact of Carapa Mill acquisition on deleveraging targets
not expect the acquisition to affect our deleveraging targets for year-end
high materiality
High
Net leverage trajectory
decline as EBITDA generation increases
high materiality
High
Sugar, Ethanol and Energy production cost reduction
10% reduction cost compared to last year
medium materiality
High

Segment performance

SegmentRevenueYoYQoQMargin
Consolidated
Consolidated adjusted EBITDA marked new records, reaching $258 million year-to-date and $173 million during the second quarter. Overall revenues remained in line across both periods, reflecting mixed prices and volume dynamics.
Gross sales (Q2): $535 millionGross sales (YTD): $928 millionAdjusted EBITDA (YTD): $258 million
$535 million——$173 million
Fertilizers
Stronger operational performance resulted in higher production volumes, while higher prices and cost efficiencies supported margin expansion. Adjusted EBITDA more than doubled both in the quarter and on a year-to-date basis, driven by higher production and stronger pricing.
Urea production (Q2 YoY growth): 22%Urea production (YTD): 617,000 tonnes
———more than doubled
Sugar, Ethanol and Energy
Despite above-average rainfall, crushing reached 3.5 million tonnes, up 3% YoY. Cane yields recovered, and the segment maximized ethanol production given its attractive premium. Adjusted EBITDA declined compared to last year due to lower sales and lower CONSECANA prices.
Crushing volume (Q2): 3.5 million tonnesCrushing volume (Q2 YoY growth): 3%Ethanol mix (YTD): 78%
———$53 million
Food and Agriculture
Stronger productivity enabled higher cost dilution. Year-to-date results reflected lower commodity prices and higher U.S. dollar costs, but Q2 showed improved revenues and adjusted EBITDA. Margins are expected to continue improving with cost reduction initiatives and new harvest sales.
Planted area harvested (end of July): 92%Crops produced: >1.1 million tonnesDairy processing volumes: increased
————

Deals & partnerships

Carapa Mill Acquisition of a sugar and ethanol mill to expand operations and leverage surplus cane.

The acquisition of Carapa Mill is expected to close in the coming weeks, with the purchase price paid in cash at closing. It will enable milling of surplus cane from Adecoagro's cluster and strengthen regional presence.

Capital programs

Profertil Acquisition completed
Period spend: $400 million

Final payment of approximately $400 million related to the acquisition of Profertil was completed during the previous quarter, representing the largest capital deployment year-to-date.

Sugarcane plantations and biomethane operations expansion underway

Ongoing investments in the expansion of sugarcane plantations and biomethane operations in Brazil.

Agricultural machinery underway

Ongoing investments in additional agricultural machinery.

New cheese packaging line at Morterosterry facility underway

Ongoing investments in a new cheese packaging line at the Morterosterry facility.

Carapa Mill acquisition pending regulatory approval
Funding: cash

Benefit:increased crushing capacity, operational synergies

The acquisition of Carapa Mill remains subject to customary closing conditions and is expected to close in the coming weeks, with the purchase price paid in cash at closing.

Perpetual plant expansion (brownfield) underway

Benefit:increased urea production capacity

Engineering work is ongoing for the brownfield expansion project, leveraging synergies with existing assets to maintain low-cost production.

Carapa Mill Cogen improvements planned

Benefit:improved energy consumption and export potential

Small CapEx investments are planned to improve the Cogen's efficiency by isolating main equipment and reducing energy consumption, leading to more energy for export.

Risks & headwinds

Lower domestic ethanol prices Q2 FY26

sharp decline

Mitigation:Strategic inventory build (41% of YTD production stored), shift production mix to sugar, anticipate price recovery in Q4 FY26/Q1 FY27.

Lower sugar prices and volumes sold Q2 FY26

decline

Mitigation:Shift production mix to ethanol when premium, maximize sugar hedging during rallies, leverage flexible industrial assets.

Lower CONSECANA prices Q2 FY26

lower

Mitigation:Impacted mark-to-market valuation of biological assets; no specific mitigation stated beyond general operational efficiency.

Seasonal net debt peak Q2 FY26

peak

Mitigation:Stronger earnings generation, expectation for leverage to decline as EBITDA increases, strategic inventory holding for better pricing.

Potential competitor urea plant 4 or 5 years from now

2.1 million tonnes

Mitigation:Large South American import market (10 million tonnes), Adecoagro's brownfield advantage for expansion, competitive gas prices, focus on remaining low-cost producer.

What to watch in Q3 FY26

Ethanol price recovery

Q4 FY26 / Q1 FY27
Current low
Target improved prices

Why it matters

Ethanol prices significantly impacted Q2 results; recovery is key to realizing value from strategic inventory build.

I think the situation for the Q4 and Q1 is going to be better.

Find out whether AGRO delivers this. Inve re-checks your case every morning.

Q&A highlights

Clarify the mismatch between Q2 production and sales volumes for urea, considering seasonality, price spikes, and full-year sales expectations.

Mariano Bosch explained that annual urea sales will reach 1.3 million tonnes, driven by Argentina's 2.5 million tonne consumption. The sales strategy prioritizes peak consumption periods (Sept-Nov) for higher domestic prices. Q2 sales were impacted by a June price dip, leading to inventory build for future higher prices, despite pushing sales in April/May.

“So we have more inventory today to be sold during -- at a higher price.”

asked by Gustavo Troyano · answered by Mariano Bosch

2 min read 5 chapters

Detailed narrative

Fertilizers Segment Outperformance

The Fertilizers segment significantly exceeded expectations, driven by a 22% year-over-year increase in urea production and a surge in international urea prices, particularly following Middle East conflicts. This led to a doubling of adjusted EBITDA for the segment, with management expecting full-year performance to remain above initial projections despite recent price moderation. The company's cost structure remains largely fixed, supporting margin expansion.

Strategic Ethanol Inventory Build

Facing sharply declined domestic ethanol prices, Adecoagro implemented a commercial strategy to build inventories, storing approximately 41% of its year-to-date ethanol production. This move aims to capture stronger margins when prices recover, leveraging the company's flexible industrial assets to shift production mix towards sugar. Management anticipates improved ethanol prices in Q4 FY26 and Q1 FY27 due to lower supply and increasing demand.

Carapa Mill Acquisition Progress

The acquisition of Carapa Mill is viewed as highly accretive, enabling organic expansion of sugar and ethanol operations by milling surplus cane and strengthening the company's regional presence. Management anticipates unlocking value through increased crushing and operational synergies, without impacting deleveraging targets. The transaction is expected to close in the coming weeks, with the purchase price paid in cash.

Food & Agriculture Recovery and El Niño Impact

While year-to-date results in Food & Agriculture reflected lower commodity prices and higher costs, the second quarter showed improvement in revenues and adjusted EBITDA. The company expects continued margin recovery in coming quarters due to cost reduction initiatives and new harvest sales. The El Niño weather phenomenon is projected to positively impact Argentina farming, leading to normalized or improved yields and higher rice prices.

Deleveraging and Liquidity Position

Despite a seasonal peak in net debt due to working capital needs and strategic inventory holding, Adecoagro's pro forma net leverage stood at 3x, consistent with its deleveraging path. The company's liquidity ratio improved to 1.9x, demonstrating strong short-term obligation coverage. Most debt remains long-term and currency-aligned with revenue, helping reduce foreign exchange risk.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.