Adecoagro NYSE: AGRO reported record consolidated adjusted EBITDA of $173 million for the second quarter and $258 million for the first half of 2026, led by its fertilizer business as higher production, pricing and operating efficiencies more than offset softer results in sugar, ethanol, energy, food and agriculture.
Chief Executive Officer Mariano Bosch said the company’s diversified agro-industrial platform had reached a new level of earnings capacity and scale. He said fertilizer results were stronger than initially projected during the first half, while improved sugarcane productivity in Brazil and higher raw milk production supported operating performance in other businesses.
Gross sales totaled $535 million in the second quarter and $928 million year-to-date. Chief Financial Officer Emilio Gnecco said the company was presenting results on a pro forma basis that assumes its fertilizer business had been part of Adecoagro since the start of 2025, which management said provides a more meaningful year-over-year comparison.
Fertilizer Segment Drives Earnings Growth
Fertilizer operations were the main contributor to the company’s EBITDA growth. Urea production rose 22% from a year earlier during the quarter, supported by higher plant utilization and no downtime. Year-to-date urea production reached 617,000 tons, above the prior-year period, when adverse weather disrupted gas supply and caused 31 days of downtime.
International urea prices climbed sharply after escalation of conflict in the Middle East, a region that management said accounts for roughly 30% of global urea trade. Prices reached nearly $800 per ton during the quarter, and Adecoagro said it progressively captured the higher prices as it executed sales.
As a result, fertilizer adjusted EBITDA more than doubled both quarterly and year-to-date, with margins also benefiting from higher output and operating efficiencies. Although prices have declined from their April and May highs, Gnecco said the business remains on track to generate full-year EBITDA above the company’s original projections because of first-half pricing and a largely fixed cost structure.
During the question-and-answer session, Bosch said the company expects to sell its full annual production of 1.3 million tons of urea. He said management accelerated sales in April and May amid the price spike but withheld some sales in June, when prices fell below prior-year levels. The company expects to sell those inventories at higher prices later in the year, particularly during Argentina’s seasonally stronger September-to-November demand period.
Sugarcane Growth and Caarapó Mill Plans
Adecoagro crushed 3.5 million tons of sugarcane in the second quarter, up 3% year over year despite above-average rainfall, especially in May. Cane yields recovered with improved moisture conditions, although total recoverable sugar levels remained below the prior year. Management said TRS levels have improved steadily during 2026.
The company maintained an ethanol-focused production mix during the first half, with ethanol representing 78% of production, due to its premium over sugar. However, domestic ethanol prices weakened amid higher supply, prompting Adecoagro to build inventory rather than sell at prevailing prices. At quarter-end, about 41% of year-to-date ethanol production was held in inventory.
The sugar, ethanol and energy segment generated adjusted EBITDA of $53 million in the second quarter and $94 million year-to-date. Gnecco attributed the decline from last year partly to lower sales, lower sugar prices and lower Consecana prices used in the mark-to-market valuation of biological assets.
Management maintained its target for low-double-digit growth in full-year crushing volumes. Renato Junqueira Pereira, vice president of sugar, ethanol and energy, said the company still expects to reduce annual production costs by about 10% compared with last year, aided by greater crushing volumes, lower leasing costs, reduced headcount and operational technologies. He said these factors should offset higher diesel and fertilizer costs.
The planned acquisition of Caarapó Mill, which remains subject to customary closing conditions, is expected to close in coming weeks. Bosch said the asset would allow the company to process surplus cane from its existing cluster and expand organically. Pereira said the mill could potentially nearly double its crushing volume over time, though reaching 6 million to 7 million tons would require additional sugarcane planting. He said Adecoagro currently has about 500,000 to 1 million tons of cane that could be redirected to Caarapó over the next two to three years.
Food, Agriculture and Capital Allocation
In food and agriculture, Adecoagro had harvested 92% of planted area by the end of July, producing more than 1.1 million tons of crops with yields above the prior campaign. The company expects to finish harvesting during August and has begun winter-crop planting for the next season.
Dairy processing volumes increased as raw milk production at free-stall facilities improved with better cow productivity. While year-to-date results continued to reflect lower commodity prices and higher U.S.-dollar costs, quarterly revenue and adjusted EBITDA improved from a year earlier as new-harvest sales began and margins gradually recovered.
Bosch said planted area for the 2027 campaign is not expected to change significantly, as the company continues to focus on leasing and planting areas that meet its return thresholds. He added that an El Niño scenario would be favorable for the company’s Argentine operations through improved yields, potential rice-price recovery and increased fertilizer demand.
Debt, Liquidity and Shareholder Returns
Year-to-date capital deployment included the final approximately $400 million payment for the Profertil acquisition, completed in the previous quarter. Additional investments included sugarcane plantation and biomethane expansion in Brazil, agricultural machinery and a new cheese packaging line at the Morteros dairy facility.
Net leverage stood at 3 times EBITDA on a pro forma basis. Gnecco said seasonal working-capital needs and a $58 million increase in readily marketable inventories contributed to higher net debt during the quarter. Excluding those effects, he said net debt would have been below its 2025 year-end level.
The company’s liquidity ratio improved to 1.9 times from 1.2 times in the prior quarter. Management said the Caarapó Mill acquisition is not expected to alter its year-end deleveraging target because of the asset’s expected earnings contribution.
Adecoagro paid the first $17.5 million installment of its annual cash dividend on May 19, equal to $0.12 per share. A second installment of $17.5 million is scheduled for November, bringing the annual cash dividend to $35 million.
About Adecoagro (NYSE:AGRO)
Adecoagro NYSE: AGRO is a leading agricultural and renewable energy company with core operations in South America. Founded in 2002 by Argentine entrepreneur Alejandro Bulgheroni, the company has grown into a vertically integrated platform covering crop production, sugar and ethanol manufacturing, and dairy operations. Adecoagro’s business model spans the full value chain, from seed selection and planting through harvesting, processing and distribution of commodities.
The company manages over 700,000 hectares of farmland across Argentina, Brazil and Uruguay.
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