A further slide in sugar prices took some of the wind out of the
sails of Adecoagro, which revealed that lower-than-expected revenues and
earnings were down in part to a decision to delay sales of sugar and tap higher
The South American farm operator, in which investment legend
George Soros is the top shareholder, reported an 82% slump to $4.61m in
earnings for the October-to-December quarter, well below the $15.4m that Wall
Street had factored in.
The fall - while in part down to higher interest payments
for debt run up paying for a new Brazilian cane mill, and to lower agricultural
commodity prices cutting the value of its crops – reflected also a relatively
small rise in sales, of 17.3% to $144.7m.
Investors had expected sales of nearly $196m.
However, Adecoagro highlighted the role of delaying sales from
its Brazilian Centre South sugar and ethanol business in the hope of exploiting
higher prices, which indeed rallied in New York's ICE futures market to their
highest levels since October earlier this month.
Although the group's sugar production rose 23%, year on
year, in the October-to-December quarter, an increase down to the ramp up of
its Ivinhema mill, its sales of the sweetener rose 19.1% by volume.
After similar tactics in previous periods, sugar inventories
ended last year at 47,096 tonnes, a jump of 59% year on year, with ethanol
stocks up 46% at 74,264 cubic metres.
Adecoagro highlighted a "commercial strategy to carry sugar
and ethanol inventories into the inter-harvest season to capture higher prices,
postponing sales and margins to the first quarter of 2014".
The Brazilian Centre South cane harvest grinds to a halt
around late November, as seasonal rains begin, typically picking up again in
However, the comments came as New York raw sugar futures
tumbled further from their March 6 high of 18.47 cents a pound, standing at
16.73 cents a pound on Friday, down 1.9% on the day.
Adecoagro revealed improved results at its dairy division,
which achieved operating profits of $2.68m for the quarter, compared with a $1.64m
loss a year before, helped by a 22% rise in Brazilian milk prices and higher
The group's more than 6,000 cows on average produced 32.8
litres per day last year, compared with 30.0 litres per day in 2012.
In crops, the group reported damage to its sunflower harvest
from Argentina's late 2013 dryness, saying yields had come in at a
below-average 1.4 tonnes per hectare.
However, the wheat crop harvested late in the calendar year
produced a yield of 2.6 tonnes per hectare, a rise of 44% year on year, and
rains last month had helped soybeans and most corn crops avoid permanent damage
from the hot and dry weather.