Adecoagro S A : 2024 Annual Report and Annual Accounts

Published: 2025-05-15 11:29:12 ET AGRO

Published on 05/15/2025 at 11:29

Adecoagro S.A. (the "Company" or "Adecoagro") is a holding company primarily engaged through its operating subsidiaries in agricultural and agro-industrial activities. The Company and its operating subsidiaries are collectively referred to hereinafter as the "Group". These activities are carried out through two major lines of business, namely, Farming and Sugar, Ethanol and Energy. Farming is further comprised of three reportable segments, which are described in detail in Note 3 to these consolidated financial statements.

The Group was established in 2002 and has subsequently grown significantly both organically and through acquisitions. The Group currently has operations in Argentina, Brazil and Uruguay. See Note 30 for a description of the Group companies.

The Company is the Group's ultimate parent company and is a Societe Anonyme corporation incorporated and domiciled in the Grand Duchy of Luxembourg. The address of its registered office is 28, Boulevard Raiffeisen, L-2411, Luxembourg.

The Company has no branches for years 2024 and 2023.

As of December 31, 2024, our issued share capital amounted to $167,072,722.50, represented by 111,381,815 shares in issue (of which 11,328,038 were treasury shares) with a nominal value of $1.50 each. All issued shares are fully paid up. Consequently, there were 100,053,777 common shares outstanding. The authorized share capital is of USD 220,287,267 and the Board of Directors is authorized to issue up to 146,858,178 shares of a nominal value of USD 1.5 each out of such authorized unissued share capital. As of December 31, 2024, the total unissued share capital totaled USD 53,214,543.

We are a leading agro-industrial company in South America, with operations in Argentina, Brazil and Uruguay. We are currently involved in a broad range of businesses, including farming crops and rice and other agricultural products, land transformation, dairy operations, sugar, ethanol and energy production. Our sustainable business model is focused on (i) a low-cost production model that leverages growing or producing each of our agricultural products in regions where we believe we have competitive advantages, (ii) reducing the volatility of our returns through product and geographic diversification and use of advanced technology, (iii) benefiting from vertical integration in key segments of the agro-industrial chain, (iv) acquiring and transforming land to improve its productivity and realizing land appreciation through strategic dispositions, and (v) implementing sustainable production practices and technologies focused on long-term profitability.

Farming Business

As of December 31, 2024 we owned 197,417 hectares (excluding sugarcane farms) of farmland in Argentina and Uruguay. During the 2023/2024 harvest-year, we held leases or entered into agriculture partnerships for an additional 155,189 hectares of arable land. We own the facilities and have the resources to store and condition 100% of our crop and rice production. We do not depend on third parties to condition our production for sale. In addition, within our land portfolio there is a portion destined to cattle grazing activities in the Argentine provinces of Corrientes, Santa Fe, Formosa and Santiago del Estero. In 2024, we entered into new lease agreements with third-party cattle farmers for a total area of 15,789 hectares.

Our Farming business is subdivided into three main businesses:

Crops business: We produce a wide range of agricultural commodities, including soybean, corn, wheat, peanut, sunflower and cotton, among others. In Argentina, our farming activities are primarily conducted in the Argentine humid pampas region, where agro-ecological conditions are optimal for low-cost production. Since 2004, we have expanded our operations throughout the center-west region of Uruguay, as well as in the northern region of Argentina. During the 2023/2024 harvest-year, we planted approximately 2209,425 hectares of crops, including second harvests, and produced 743,514 tons of grains. We also planted an additional 14,363 hectares where we produced over 320,000 tons of forage used to feed cattle in our dairy operation. During the current 2024/2025 harvest-year, we planted approximately 240,000 hectares of crops (including second harvest) and an additional 11,599 hectares of forage.

Rice business: We own a fully integrated rice operation. We produce irrigated rice in the northeastern provinces of Argentina and in Uruguay, where the availability of water, sunlight, and fertile soil results in a coveted region for the low-cost production of rice. We believe that we are one of the largest producers of rough (unprocessed) rice in South America, producing 357,980 tons during the 2023/2024 harvest-year. We own four rice mills and one rice snack facility in Argentina and two rice mills in Uruguay that process our own production, as well as rice purchased from third parties. We produce different types of white and brown rice sold both in the domestic Argentine retail market under our own brands and abroad. During the current 2024/2025 harvest-year, we planted 64,477 hectares of rice.

Dairy business: We believe that we are a leading dairy producer in South America in terms of our utilization of cutting-edge technology and in our productivity per cow and grain conversion efficiency. Through the production of raw milk, we are able to transform forage and grains into value-added animal protein. Our free-stall dairies in Argentina allow us to optimize our use of resources (land, dairy feeding cattle and capital), increase our productivity and maximize the conversion of forage and grain into raw milk. We produced 199.1 million liters of raw milk in 2024, with a daily average of 14,478 dairy cows, delivering an average of 37.6

liters of milk per cow per day. In October 2017, we completed the construction of our first biodigester with 1.4 MWh of installed capacity. In 2019, we further acquired two milk processing facilities that, together with some investments done throughout the years, today they produce ultra-high temperature ("UHT") milk, powdered milk, semi-hard cheese, cream and chocolate milk, among other products, with the flexibility to sell to both the domestic and export market based on relative profitability. In 2024, our facilities processed 354.5 million liters of milk, thereby producing 147 million liters of fluid milk, over 7,300 tons of semi-hard cheese, over 13,400 tons of powdered milk and over 6 million liters of cream and cocoa flavored milk. In December 2023, our second biodigester with 2MW of installed capacity started generating and delivering electricity to the local power grid. This facility, as well as our first biodigester, generates electricity by burning biogas extracted from effluents produced by our dairy cattle. In addition to increasing revenues and securing our energy requirements, this facility enhances the sustainability of our free-stall dairy operation by reducing greenhouse gas emissions, improving the management of effluents and concentrating valuable nutrients which are applied back to the fields.

Sugar, Ethanol and Energy Business

We cultivate and harvest sugarcane, which is then processed in our own mills to produce sugar, ethanol and energy. As of December 31, 2024, we had 212,996 hectares of sugarcane plantations in the Brazilian states of Mato Grosso do Sul and Minas Gerais, of which 10,024 hectares were planted on our own land and 202,972 hectares were planted on land leased by us under long-term agreements. We use different techniques to maximize sugarcane production. For example, we use meiosis to renew and expand harvestable areas by planting only a few rows of sugarcane, along with other products in the rest of the field. We harvest the sugarcane within six to nine months and use that production to plant sugarcane in the area where other products have been already harvested. By doing so, we maximize sugarcane plantation efficiency.

Further, we own and operate three sugar and ethanol mills-UMA, Angélica and Ivinhema-with a total crushing capacity of 14.2 million tons of sugarcane per year as of December 31, 2024 (assuming an average of 5,569 milling hours).

For the year ended December 31, 2024, we crushed 12.8 million tons of sugarcane. Our mills produce both sugar and ethanol, and accordingly, we have some flexibility to adjust our production (within certain capacity limits that generally vary between 40% and 80%) between sugar and ethanol, to take advantage of more favorable market demand and prices at given points in time. For the year ended December 31, 2024, we produced 832,389 tons of sugar and 532,715 cubic meters of ethanol.

Since 2020, we have been selling carbon credits or "CBios" under the RenovaBio program. The RenovaBio program was designed by the Brazilian government to cut carbon emissions by discouraging fossil fuel consumption while encouraging the production of renewable energy. Under this program, a carbon credit market is established in which sellers of fossil fuels have to acquire a mandatory quota of carbon credits set based on the amount of non-renewable fuels sold by them in the prior year. Issuers of CBios are biofuel producers whose mills have been certified by the ANP and awarded a score based on how "green" their mill operation is. This score acts as a multiplier for the amount of CBios the mill can issue for every cubic meter of ethanol it sells. CBios, in turn, are financial instruments traded on the B3. Prices are based on the supply of and demand for those credits. In 2024, we sold 601,426 CBios at an average unit price of R$76.3 (average net price of US$14.2).

In 2021, Adecoagro became the first company in Brazil to be authorized by the Totum Institute to issue Renewable Natural Gas Certificates, or "gas-recs", as they are referred to in the market. These certificates attest to the production of renewable natural gas. Industries in Brazil can voluntarily purchase these certificates as evidence of the decarbonization of the gas consumed in their operations. In 2022, we became pioneers in the commercialization of gas-recs in Brazil through the sale of 25,000 certificates, as a result of our biogas production during 2021, at a unit price of R$1.80 per certificate.

The Group manages exposures to financial and commodity risks using hedging instruments that provide the appropriate economic outcome. The principal hedging instruments used may include commodity future contracts, put and call options, foreign exchange forward contracts and interest rate swaps. The Group does not use derivative financial instruments for speculative purposes.

For a detailed analysis of financial risk and uncertainties of the Company, see Note 2 to the Company´s consolidated financial statements as of December 31, 2024.

We have made rounding adjustments to reach some of the figures included in this management report.

Accordingly, numerical figures shown as totals in some tables may not be an arithmetic aggregation of the figures that preceded them.

Disclaimer

Adecoagro SA published this content on May 15, 2025, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on May 15, 2025 at 15:28 UTC.