Adecoagro S.A. (NYSE:AGRO) Q2 2020 Earnings Conference Call - Final Transcript
Aug 14, 2020 • 09:00 am ET
Good morning, ladies and gentlemen, and thank you for waiting. At this time, we would like to welcome everyone to Adecoagro's Second Quarter 2020 Results Conference Call. Today with us, we have Mr. Mariano Bosch, CEO; Mr. Charlie Boero Hughes, CFO; and Mr. Juan Ignacio Galleano Investor Relations Manager. [Operator Instructions] After the Company's remarks are completed, there will be a question-and-answer section. [Operator Instructions]
Before proceeding, let me mention that forward-looking statements are based on the beliefs and assumptions of Adecoagro's management and on information currently available to the Company. They involve risks, uncertainties and assumptions because they relate to future events, and therefore, depend on circumstances that may or may not occur in the future. Investors should understand that general economic conditions, industry conditions and other operating factors could also affect the future results of Adecoagro and could cause results to differ materially from those expressed in such forward-looking statements.
Now, I will turn the conference over to Mr. Mariano Bosch, CEO. Mr. Bosch, you may begin your conference.
Good morning, and thank you for joining Adecoagro's second quarter results conference. As we all know, this quarter was marked by the spread of coronavirus disease and the global economic slowdown. In such difficult times, our main concern was to continue running all our operations, while ensuring the safety of our people by imposing strict protocols to provide an hygienic and secure working environment. After all the measures taken, we were able to continue operating all our businesses on a regular basis in spite of the pandemic.
We were in a solid position to cope this challenging macroeconomic context thanks to having a diversified product portfolio, the quality of our assets, the flexibility to adapt to changing scenarios and our constant focus on being low-cost producers. All these has allowed us to maintain profitability even in the current circumstances. It has not been easy, but all the hard work put by our teams in the field every day have paid off.
In our sugar, ethanol and energy business, the impact of the disease led to a significant drop in the demand and prices of ethanol and energy, presenting a very challenging scenario for the industry. We rapidly reassessed our strategy to adjust to the new context, starting by switching our product mix towards maximizing sugar which traded at a premium to the ethanol. Indeed, we diverted 54% of the TRS to sugar production compared with 25% during the second quarter of 2019.
In addition to these, we reduced our crushing base, sized down our operations in tandem with the lower volume, implemented cost reduction initiatives, and postponed uncommitted expenses. Our rapid response, especially under such a sudden change in market conditions, allowed us to continue selling our products with the highest marginal continuation and make a more efficient use of our fixed assets. In addition, this base reduction has improved the conditions of our sugarcane plantations to be milled during the second semester of the year. To give you a