Adecoagro (NYSE:AGRO) executives highlighted a “transformational milestone” in 2025 with the acquisition of Argentine fertilizer producer Profertil, while acknowledging that the year’s consolidated results were pressured by low-cycle commodity prices, mixed productivity, and higher costs in U.S. dollar terms.
On the company’s 2025 results conference call, CEO Mariano Bosch said Adecoagro is now “larger, further diversified, and more resilient” while keeping its focus on being a low-cost producer. CFO Emilio Gnecco added that, following the acquisition, the company will simplify its reporting into three segments beginning in January 2026: sugar, ethanol and energy; fertilizers; and food and agriculture (combining what were previously reported as crops, rice, and dairy).
Profertil acquisition reshapes scale and segment mix
Gnecco said the company closed the Profertil transaction in mid-December for a total consideration of $1 billion for a 90% equity interest. Of that amount, $676 million had been paid by Dec. 31, with the remainder scheduled for the first half of 2026; he said that as of the call, the outstanding balance was about $50 million expected to be settled before month-end.
Management said the purchase was financed through a mix of cash, debt, and equity:
- Approximately $400 million from cash balances
- Two new long-term debt facilities of $200 million each with a 7-year tenor and a 2-year grace period
- A $300 million equity issuance, which Gnecco described as Adecoagro’s return to public equity markets since its 2011 IPO
Bosch said the equity raise was “anchored by Tether,” which he described as Adecoagro’s controlling shareholder.
2025 results pressured; fertilizer downtime weighed on pro forma performance
Gnecco said 2025 was challenging across agribusiness, resulting in a year-over-year decline of 2% in sales and a 38% decrease in adjusted EBITDA. He noted that Profertil’s results were affected by two events that drove roughly 90 days of downtime in 2025: a major scheduled plant turnaround that shut the facility for 54 days (Oct. 16 to Dec. 8) and a 31-day interruption due to flooding at a third-party gas distributor that impacted gas deliveries.
On a pro forma basis assuming full-year fertilizer results for both 2025 and 2024, Gnecco said fertilizer revenues fell 6% year over year and adjusted EBITDA declined 35%, primarily due to reduced operating days that lowered volumes despite higher urea and ammonia prices. Management said it expects a recovery in fertilizer adjusted EBITDA as operations normalize in 2026.
Gnecco also discussed leverage following the acquisition. On a pro forma basis, net debt reached $1.5 billion, and net leverage increased to 3.3x compared with 1.2x in 2024. He said most debt is long-term and its currency mix matches revenue exposure, helping mitigate currency risk. Going forward, management said it intends to reduce leverage through higher expected adjusted EBITDA—mainly from fertilizers—and a revision to capital allocation.
Segment updates: ethanol mix shift, fertilizer recovery outlook, and cost initiatives in farming
In sugar, ethanol, and energy, Gnecco said above-average rainfall in the fourth quarter reduced effective milling days and limited crushing versus 2024. However, he said the unharvested cane benefited from the rain and showed excellent yields, and that the company is harvesting under a continuous harvest model while maximizing ethanol production. He said cane productivity recovered significantly during the fourth quarter, improving expected yields and the mark-to-market of biological assets.
The company reported a 72% ethanol mix in the fourth quarter and a 58% ethanol mix for the full year as ethanol prices improved in the second half of 2025. Despite lower milling, Adecoagro’s cash cost (in sugar equivalent) was unchanged at $0.128 per pound, which management attributed to machinery upgrades reducing maintenance capex and increased tax recovery from higher ethanol sales. Adjusted EBITDA for the segment totaled $292 million, below 2024, according to Gnecco. For 2026, he projected low double-digit growth in crushing volumes and a full year of ethanol maximization given the price scenario.
For the food and agriculture segment, Gnecco said 2025 results were pressured by lower commodity prices (particularly rice and peanut), uneven yields, and higher U.S. dollar costs. He said the segment’s top line was roughly in line with the prior year as higher volumes partially offset lower prices, but adjusted EBITDA declined due to cost inflation and uneven farm performance. Looking forward, he said Adecoagro implemented margin initiatives including a 22% reduction in total planted area through lease renegotiations, increased the share of rice varieties due to more resilient prices, and used production flexibility to direct dairy output to domestic or export markets based on marginal contribution.
Market commentary: urea price surge, fixed gas cost advantage, and ethanol outlook
In the Q&A, Bosch said the conflict-driven rise in urea prices had lifted prices by roughly 30% to 40%. He emphasized that Profertil’s cost structure is largely fixed—especially gas, which he said represents about 60% of urea production cost—and that Adecoagro has firm gas contracts at fixed prices through the end of 2027. Bosch said the higher urea price “goes directly” to EBITDA and cash generation because costs remain fixed.
He said the company expects average production of about 1.3 million tons per year. Of that, he said around 200 (million) tons had already been produced and sold in January and February, leaving roughly 1.1 million tons still exposed to current pricing dynamics, with monthly selling aligned with production and seasonal demand peaks later in the year.
Asked about commercialization strategy, Bosch said pricing in the region follows international prices and that Adecoagro aims to maximize domestic sales in Argentina at import parity. He said part of the strategy includes delivering product into interior storage locations to be available for peak seasonal demand.
On costs and ethanol outlook, Sugar, Ethanol and Energy VP Renato Junqueira Pereira said the company expects sugar and ethanol unit costs to fall by about 10% to 15% in 2026, citing volume-driven dilution and operational efficiency efforts. He said Adecoagro had already fixed and purchased about 70% of its annual fertilizer needs, limiting near-term exposure to fertilizer price increases until at least mid-year. He also cited equipment rationalization and machine-efficiency initiatives in the field.
On ethanol pricing, Pereira said inventories were very low—about 25% lower than a year ago—supporting strong near-term prices. He said Adecoagro was producing only ethanol in the first quarter under its continuous harvest model and selling ethanol at about $0.20 per pound equivalent in Mato Grosso do Sul. Looking into the main season beginning mid-April, he said ethanol supply could rise by 3 to 4 billion liters, with incremental volumes absorbed by lower stocks, the introduction of E30 “since day one,” and a higher market share for hydrous ethanol. Pereira said even under a 60% pump-parity scenario, ethanol economics remained better than sugar, leading the company to expect ethanol maximization throughout the year.
Capital allocation: deleveraging focus and 2026 dividend plan
Addressing capital allocation and leverage, Bosch reiterated that management’s preferred leverage level is around 2x EBITDA, but said the company moved above that to pursue what it viewed as a highly attractive acquisition. He said Adecoagro expects to return to its comfort range “pretty quick” and that it will remain disciplined in balancing shareholder returns, growth investments, and deleveraging.
Bosch said the company plans to continue its dividend policy, with a board-approved distribution of $35 million in cash dividends for 2026, subject to shareholder approval. He said the cash dividend would be paid equally in May and November, consistent with prior years.
On long-term growth, Bosch said Adecoagro continues to evaluate organic growth in sugar and ethanol, and described significant potential in fertilizers given Argentina’s gas resources and South America’s urea import dependence. He said management is analyzing options such as building new capacity or duplicating the existing plant, while noting such projects are large in capital requirements and typically take three to five years, and that the company had “nothing to announce today” beyond continued evaluation, including consideration of Argentina’s RIGI program for large investments.
Management closed the call by emphasizing improved diversification from adding fertilizers, confidence in normalized operations in 2026, and a continued focus on low-cost production across its business lines.
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.
