Mariano Bosch - Chief Executive Officer Charlie Hughes - Chief Financial Officer Marcelo Sanchez - Director, Commercial.

João Soares - Bradesco Augusto Ensiki - HSBC Isabella Simonato - Bank of America Merrill Lynch Thiago Duarte - BTG Pactual Edmond Safra - EMS Capital LP.

Good morning, ladies and gentlemen and thank you for waiting. At this time, we would like to welcome everyone to Adecoagro's Third Quarter 2017 Results Conference Call. Today with us, we have Mr. Mariano Bosch, CEO; Mr. Charlie Boero Hughes, CFO; and Mr. Hernan Walker, Investor Relations Manager and Director of the Senior Management team.

We would like to inform you that this event is being recorded and all participants will be in listen-only mode during the company's presentation. After the company's remarks are completed, there will be a question-and-answer section. At that time further instructions will be given.

[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'll 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 2017 third quarter results conference. I would like to start by referring to what I believe was the main highlight of the quarter. By the end of September, Adecoagro made its debut in the debt market by successfully issuing a 10-year $500 million bond with 6% coupon rate.

This was by all means an outstanding transaction that it has further strengthened our already solid balance sheet position. Enhancing our availability to execute our strategy and focus on long-term shareholder value creation.

At the same time, these are result of market confidence in the company and its availability to continue generating attractive returns. Moving to performance of our business during the quarter I'm proud to present good financial and operational figures.

In our sugar, ethanol and energy business faster [ph] increased in Angelica's nominal crushing capacity, we were able to fully offset the first semester delay in crushing activities. Our expansion project is being executed at high speed.

Asset investments at the Angelica mill are complete and nominal crushing capacity has now reached 1,050 tons per hour. Works at Ivinhema are advancing according to plan and we expect to conclude them by the end of next year.

Regarding sugarcane plantation, almost 50% of the needed land to supply the increased capacity at the mix, are already leased and expansion activities are well underway. At this pace, we feel very confident to reach our initial target of crushing 14.2 million tons by 2023.

It's important to remember that since this is a marginal investment that enhances the efficiency of the entire operation. IRR is above 20% given at current commodity prices. Moving to our farming and land transformation business I would first like to comment on our daily operation. We are announcing the completion of our first bio-digester.

We believe, this enhanced the sustainability of our free stall operations by generating 1.4 megawatt of electricity out of the manure produced by our 7,000 milking cows. In addition to increasing revenues and securing our energy requirements.

This project exhibits our commitment to the environment as we're reducing our carbon footprint by lowering greenhouse emissions. At the same time, it's worth mentioning that this project would further contribute to cost reduction as more bio-fertilizers will be used in the detriments of other chemicals.

We're convinced that we succeed to develop a highly profitable and self-sustainable through which we transform digital propting [ph] into animal propting [ph] in a very efficient manner and we're keen to expanding our existing operations.

In this slide the growth project that we announced is ongoing according to the scale and budget, we're confident to reach the initial target of doubling capacity during the next five years. Existing operation efficiencies coupled with a current energy phase, would allow us to generate an IRR above 20%. Once current market conditions are factored in.

In the case of crops and rice, the 2016, 2017 harvest year is completed, and we achieved very good yield and economic results despite the floods and heavy rains that hit most of the productive regions of the country.

This heavy rains not only - efficiency and commitment, but also a coordinated work between the harvest, logistic and commercial teams to maximize the sale of our production after the rain. From an operational perspective, all of our teams are fully focused on the planting 2017, 2018 harvest year.

Crops are developing in excellent conditions and we're starting the period in which most of the yields are defined. At the summary, so far this has been a good year and I think that the accumulated financial and operational figures so prove. We are in the right track to conclude and have a solid fiscal year generating attractive returns.

On a long-term perspective we're convinced that we need to keep on focusing on the operational efficiencies in order to become the low-cost producers of each of the commodities that we produce. This as I always insist, is the only sustainable strategy to generate stable and attractive returns to our shareholders.

Now I would let Charlie, walk you through the numbers of the quarter..

Thank you, Mariano. Good morning, everyone. Let's start on Page 4. As shown in the chart on top left. Milling per day increased by 7% in the third quarter of 2017. And so, we started expansion in nominal crushing capacity at the Angelica mill.

This additional capacity allowed us to accelerate the milling phase and crush a total of 4.1 million tons in the third quarter 2017, 8th September 2016 [ph]. As of today, we have crushed more than 8.9 million tons of sugarcane. We're well on track to reach our target during November and December assuming normal weather conditions.

Please turn to Page 5 for I would like to highlight a few agriculture and productivity metrics. Assuming seeing a couple of charts [ph], yields per hectare during the quarter had reached 80 tons, 24% lower than last year.

Mainly as a result of above average rainfall in November 2015 through February 2016 which were highly beneficial over 2016 crops compared to below average range in the fourth quarter of 2016 and the first quarter of 2017 which has affected the proper development of the current crop.

And a longer average growth cycle for the cane harvested in 2016 compared to the current season. TRS per ton reached 137.7 kilos slightly above last year resulting in our 23% reduction in TRS per hectare. We expect higher average [ph] productivity to increase in the fourth quarter as we will be harvesting crops with longer work cycle.

Let's move to Page 6, production in the third quarter has been positively affected by the increase in sugarcane crushing. As may see on the bottom left, also production measured in TRS equivalent increased by 12%.

In terms of product mix the factors and high growth and average [ph] prices traded during the quarter at an average premium of 15% and 7% over sugar respectively resulted in higher ethanol mix. 52% of total TRS projection was diverted towards ethanol.

Consequently, ethanol production increased by 26% year-over-year while sugar production decreased by 1%. Now let's please turn to Slide 7, where I would like to discuss sales. Ethanol prices at the beginning of the quarter reached lowest levels of observed in season.

However, changes in PIS/COFINs taxes on fuels announced by the government in late July boosted prices by 15% allowing average prices to end up essentially in line with last year. As explained earlier, we maximized ethanol production in the quarter to capture better ethanol prices versus sugar.

Ethanol sales volumes reached 81,001 cubic liters, 8% higher year-over-year. Average realized prices stand at $455 per cubic liter in line with the same period of last year. Selling volumes increased by 8% resulting in a 7% increase in net sales. In the case of sugar, prices continue decreasing during the quarter, trading 11% lower year-over-year.

However, prices were offset by at 21% increase in selling volumes resulting in 7% increase in net sales. Energy prices reached $70 per megawatt hour, 22% higher compared to the same period of last year. It was mainly the result of low rain [indiscernible] recording in the south of Brazil.

As a result of the increase in sugarcane crushing, energy selling volumes increased by 32%. This resulted in a 61% increase in net sales. In aggregate, net sales in the quarter reached $171.9 million 12% higher than the same period of last year.

I would like to turn to Slide 8, where we can see the overhead financial performance of sugar, ethanol and energy business. Adjusted EBITDA in the third of 2017 reached $74.3 million, 7% lower than the third quarter of 2016.

Adjusted EBITDA was profitably affected and 8.4% increase in sugarcane crushing coupled with 1.8% growth in TRS per ton of sugarcane which led to 11.6 increased in total TRS produced.

Higher sales volumes were sugar, ethanol and energy coupled with 21.8% increase in energy prices and a $9.6 million higher result from the mark-to-market effect of our commodity hedged position. These positive effects were offset by 14.2% increase in production cash cost per ton of TRS produced in real terms.

Approximately half of this cost increased is temporary and will be reversed in the fourth quarter. The net increase in cost is explained by lower sugarcane yields which have increased the amount of hectares harvested least times treated and purchases of sugarcane from suppliers.

On a cumulative basis, adjusted EBITDA in the first nine months of 2017 grew by 8.5% reaching $165.8 million and driver for this increase were, a 30.6% increase in net sales as a result of higher sugar, ethanol and energy sales volumes and the realized prices.

The mark-to-market effect of our sugar hedged positions in the first nine months of 2017 generated a gain of $36.5 million which was $59.5 million higher than in the first nine months of 2016.

This positive result were partially offset by $37.5 million decreasing changes into value, generated by the mark-to-market effect of our unharvested [ph] sugarcane plantation primarily as a result of lower projected sugar prices and productivity. Coupled with 15.5 increase in unitary production cash cost as explained previously.

Finally, we conclude with sugar, ethanol and energy business on Page 9. I would like to comment on our sugar, ethanol and energy hedging position. We've entered into hedged positions related to the current [indiscernible] and also next year's production at very attractive prices.

In the case of the sugar for the current crop, we have hedged approximately 70% and an average price of $0.18 per pound. Regarding 2018 production, we have hedged approximately 23% at an average price of $0.185 per pound. I would now like to move on to the farming business. Please direct your attention to Slide 11.

2016-2017 crop was essentially completed during the quarter. A total of 225,000 hectares were harvested producing 877,000 tons of diversified crops. As you may see on the chart, production has gradually increased in 2010 [ph] position driven by our land transformation and sustainable production model which enhances soil quality and productivity.

We have also begun planting activities for the 2017, 2018 crop as you may see in the bottom chart. We expect to plant a total of 231,000 hectares, 3% higher than the previous crop. Let's move to Page 12 where I would like to walk you through the financial performance of our farming business.

As you may see on the chart, on a quarterly basis adjusted EBITDA for the farming business was $6.9 million, 57% lower year-over-year.

This chart explained by [indiscernible] gain recording in 2016 related to the settlement of an arbitration dispute related to the early termination of land leasing contracts and a $1.1 million decrease in our rice segment driven by the fulfilment of rice sales volumes to the third quarter to capture higher prices.

Results were partially offset by $0.5 million increase in our diary segment primary as a result of higher met prices. Let's now turn to Page 14, evolution of our required consolidated operation and financial performance.

On our consolidated basis net sales in the third quarter of 2017 increased by 7% year-over-year mainly explained by higher sugar, soybean, corn and energy selling volumes coupled with higher average realized prices for energy and soybean.

Adjusted EBITDA in the third quarter 2017 totaled $75.3 million representing a 16% decrease compared to the third 2016.

As previously explained, this is explained by extraordinary gain recording in the third quarter 2016 corresponding to the settlement of an arbitration dispute related to the early termination of land leasing contracts coupled with the increase in production cash cost in our sugar, ethanol and energy business as a result of the normalization of use.

On a year-over-year basis adjusted EBITDA stands at $187.2 million, 2% higher than last year. Let's now turn to Slide 15 to take a look at our net debt position. I'd like to highlight that during the quarter we issued 10-year $500 million bond at an interest rate at 6%.

This milestone transaction has allowed us to enhance our balance sheet and into long-term financial flexibility. In addition, this transaction has allowed to extend our average maturity from three years to eight years and reduced our long-term cost of capital. The bond proceeds will be used mainly to refinance debt.

Our cost [indiscernible] we had $300 million of bond for [indiscernible] cash therefore, our gross in debt net in the third quarter 2017 increased to $1.1 billion [ph]. Gross debt will be reduced during the fourth quarter as we continue advancing loans with the bond purchase [ph].

Net debt stands at $586 million while net debt to EBITDA ratio stands at 1.9 times compared to 2.4 times in the same period of last year. We expect net debt to continue following by year end favored by positive cash flow generation with four quarter.

Free cash flow during the first nine months of the year was negative $7 million explained by the seasonality of our working capital requirement. As was the case in previous fiscal year, we expect strong cash flow generation in the fourth quarter as we sell our product inventory generating positive cash flow for the full year 2017.

Thank you very much for your time. We are now open to questions..

[Operator Instructions] the first question comes from João Soares of Bradesco. Please go ahead..

Mariano, what can we assume a little bit better what's happened here with the sugar prices that you reported on this quarter, down 11% year-over-year, continuing that you have already hedged in pursuit amount of this harvest and to much higher prices than last year.

Is this just, I don't know if there's something I'm missing here with regards to these prices. And my second question is, considering the potential tax reform in Argentina.

The potential reduction in the income tax rate and is there any changes in your planning, any visibility on in terms of you guys are going to fix the payout policy in order to make more clear, how much income tax are you going to pay? Basically, those are my questions. Thank you..

Hi, João. Thank you for your question.

Related to your first question, the price of the sugar that we report is a price at which we sell then we have the in the line of other operating income the gain of the mark-to-market of what we've sold before that is almost $30 million something, so in order to have an idea over the benefit of what we hedged before, that should include this mark-to-market gain that this reported in the quarter.

That is to answer the first part of your question. And regarding the tax reforms that we see in Argentina, we're still understanding and there is still sometime to finalize what is it that is going to be final outcome in general terms.

We see this as a positive for Adecoagro Argentina in general, but we need to understand exactly how this ends up in the negotiation with provisions and different taxes that are being negotiated and with that information finalized I think we will be ready to inform more clearly what's the effect on our final cash flow generation, but in general terms I would say this is, clearly positive for us as a company..

Perfect, Mariano. Thank you. Very clear..

[Operator Instructions] our next question comes from Augusto Ensiki of HSBC. Please go ahead..

Two questions. Firstly, one kind of general, what's your current view on the sugar market and what we can expect in terms of or rather what you expect in terms of prices going forward into the end of the year and early next year. And secondly and also you included an adjusted net income on the report.

I wonder if you could go into a little bit more detail what goes into that calculation and basically how you're going from the regular to these or what are the adjustments involved. Thank you..

Hi, Augusto. Thank you for question. We have Marcelo Sanchez our Commercial Director that will take care of the first part of your question regarding our view on the sugar market.

Marcelo, can you share your review please?.

Yes. Thank you, Augusto for your question.

We have been witnessing recent rally in sugar prices that mainly driven by strong oil prices but that current effects supposed - scenario can result in funds also continuing to cover in their source and pricing rallying further this is for the let's say short-term position in prices and of course for next year, this fundamentally the sentiment remains buries [ph] because of the SMD ranging to surplus and given that this is still the long way until this is going to be materialized, we're expected volatility on the next three months to come, that's basically the glue that we do have on the sugar and next year behavior of the millers regarding the hedge that they do have as of today in terms of sugar that will give us a possibly of switching into ethanol and the ethanol will be the main performer since from our view..

Thank you. Marcelo and now for the second part of your question, Augusto. I will ask Charlie Boero to answer your question.

Charlie?.

Hi Augusto, basically what we're trying to do is to align [technical difficulty] concept. So, what we've done here is, we deducted the non-cash effects losses to the net income that's the explanation..

So just the effects losses?.

Right..

$10,000 non-cash, correct?.

Non-cash, right..

Okay, well perfect. That's very helpful. Thank you very much..

Our next question is from Isabella Simonato of Bank of America Merrill Lynch. Please go ahead..

My question is regarding the uses of cash. I understand that most of your CapEx in the coming years is still for sugar and ethanol.

But the recently bond you issued, if you could go into more detail the use of proceeds and is further diversifying the business it is something that you think of eventually, we also know that you're expanding a little bit the diary division. What's the growth plans in the long run? Thank you..

Hi, Isabella thank you for your question. Specifically, on the uses of cash of the bond proceeds. Charlie explained 80% of it is to refinance the exit in that. And then this also puts us in a very strong and solid position on our balance sheet.

So, I would like to be more specific regarding our growth projects and the uses of our plans on the uses of cash. So, I would like to mention regarding our organic growth projects that have already been announced.

And we have already started the construction of this project including 30% increase in our sugar, ethanol and energy blaster [ph] including doubling our daily operations that I mentioned at the beginning of the call that are doing great. Also, our investments already announced on the growing conditions in plants in Argentina.

All of them are generating IRR above 20% at current flat scenario of commodity prices. So, it's clear that this project will allow us to increase EBITDA 50% in the next four years. And in addition, with the rest of the cash that we're generating in the company at this level of prices the best use of capital is also to buy enough [ph] shares.

So, we will accelerate the pace and then our share repurchase product..

That's very clear. Thank you..

Our next question comes from Thiago Duarte of BTG Pactual. Please go ahead..

Quick one from my side.

Basically, a follow-up from the recent calls I think it was one or two quarters ago, Mariano that you - we were discussing the divestment of the monetization of the land transformation business in Argentina it's been a few quarters since we don't see a farm sale and I think one or two quarters ago, you sounded very optimistic about the ongoing negotiations involving.

I think two or three farms. So just nice to get an update from that and whether you think you could resume the farm sales in the foreseeable future it will be great, to hear a little bit more. Thank you..

Thank you, Thiago for your question. We still feel very confident on this current negotiations as we've said many times this is relatively liquid market on the buying and selling of farms.

So that's why it's been taking a little bit longer than what we were assuming, but we're still very confident on achieving this sales of the already transformed farm and some of these negotiations that are still in the middle of the negotiation..

Thank you..

Our next question comes from [indiscernible] of EMS. Please go ahead..

Mariano, its Edmond Safra. Just following up a little bit on your comments on land sales. I presume they would be at valued at three firms or maybe above your recent NAVs on the land. And that coupled with your comment on share buybacks.

How much do you have left on your authorization?.

Thank you, Edmond for your question. We have renewed our share buyback program that is 5% share buyback program in by the end of September. So, we still have a very relevant part of this 5% that we just renewed..

Okay, great. Thank you..

[Operator Instructions] our next question comes from Elaine Chow of [indiscernible]. Please go ahead..

Could you explain a little bit about your current hedging position for the upcoming harvest season and what's your outlook for this harvest? Thank you..

Okay, thank you Elaine for your question. I'm going to ask Marcelo Sanchez our Commercial Director to answer your question..

Can you please repeat the question, I couldn't hear it? I'm sorry..

The question is about this coming season harvest season, what's your current hedging? And what's your overall outlook in terms of the price and volume, especially for sugar..

Okay, thank you Elaine. I'm sorry about.

We as you saw at the end of the third quarter we had hedged almost 23% of our sugar production and for next year and we are - as of today we took advantage on the recent rally that we witnessed in sugar and we achieved around 40% as of to-date the level operates that is going to be in the average for next year with combining what we already have hedged is in the range of between $0.16 and $0.165 a pound for sugar..

Great. Thank you very much..

[Operator Instructions] this concludes the question-and-answer session. At this time, I would like to turn the floor back to Mr. Bosch for any closing remarks..

So, 2017 is been a good year proven by the accumulated financial and operational figures. We are on the right track to conclude and have a solid fiscal year. Before closing the last ending call of the year.

I would like to thank you all for your support and confidence and let you know as we do every year since our inception that we have renewed our commitment to continue with our obsession of create shareholder value by allocating our resources in the projects that generate attractive returns.

We have a promising 2018 coming ahead and are ready to accept the challenges. We look forward to seeing you during our next IR event..

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines and have a nice day..