Good morning, ladies and gentlemen. Thank you for waiting. At this time we would like to welcome everyone to Adecoagro's Second Quarter 2015 Results Conference Call. Today with us, we have Mr. Mariano Bosch, CEO; Mr. Charlie Boero Hughes, CFO; and Mr. Hernan Walker, Investor Relations Manager. We would like to inform you that this event is being recorded and all participants will be in a 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, everyone and thank you for joining our call. I would like to start by mentioning that as you all know, prices for all the commodities we produce are experiencing a weak cycle portraying a difficult scenario for all commodity producers. It is in this adverse context where our focus and strategy of being the lowest cost producers, peso -- is we founded this company, we have been determined to produce under a sustainable production model. Each crop in the right location where the combination of agricultural conditions such as quality of soil and weather together with our operational efficiency would allow us to become the low cost producers for each of the commodities we produce. In our sugar, ethanol and energy business, our operational efficiencies are improving day by day. We have put together a great team that is motivated and determined on being the most efficient and low cost producer in the field. And I am confident to say, we are in the right path. In this quarter, we are reporting significant improvements in our agricultural and industrial operations. Our sugarcane yield has reached 100 tons per hectare and also improving its sugar content. Our cane milling per day has increased over 20%. As we always say, in cogeneration we are one of the most efficient producers in Brazil, exporting 65 KWh per ton of cane crushed. And that’s higher than last year and we continue to improve. This same enhancement can be seen in every part of the operation such as efficiency in harvesting, transporting, planting etcetera. In our crops and rice operation, we focused on achieving the highest efficiency on a hectare per hectare rate. This includes implementing best practices and technologies such as no till, crop rotation, integrated pest managed, balanced fertilization, among others. But overall it is our operational teams focus on efficiency that is key in increasing productivity and having the lowest cost of production. In our diary business, over the next five years we have developed the revolutionary large scale milking technology in Argentina. After two years of fine tuning and adapting the productive system, this quarter we achieved our target of 35 liters per cow per day which leads us to focus on even more challenging goals. We are really proud of the assets and management teams that we have been able to consolidate. I am satisfied with the operational results obtained thus far. Despite operating in this adverse scenario, our low cost strategy and focus on efficiency has allowed us to still generate good returns. Most importantly, we are very optimistic about the future. On top of this great team [indiscernible], we have completed our growth CapEx cycle on time. And now we are confident we will reap the benefits of the investments made and start generating attractive cash flows. Now I would like to ask Charlie to walk you through the main operating and financial highlights of the quarter. Charlie, please go ahead.

Good morning, everyone. I would like to walk you through a few slides the reflect the main operational and financial highlights of the quarter. Let's start on page 4, where I would like to comment on the weather conditions in our cluster in Mato Grosso Do Sul. As you may see in the chart, during May we suffered some excessive rains which caused logistics and operational disruptions which were later compensated by a very dry June which allowed us to accelerate the pace of harvest. Overall, weather during the quarter was well aligned with the historical average. Moving on to the next Slide. I would like to focus on sugarcane milling. During the second quarter of 2015, our mills crushed 2.9 million tons of sugarcane compared to 2.1 million tons in the second quarter of 2014. This 36% increase is explained by two main factors. Firstly, milling per day increased by 22%, as a result of the ramp up of capacity at the Ivinhema mill together higher milling efficiencies in all of our mills. And secondly, the effective milling days increased by 11% primarily by the timely commissioning of the Ivinhema mill. On a year-to-date basis, sugarcane crushing reached 3.24 million tons, 54% higher year-over-year. In addition to the drivers I just explained for the second quarter, the commodity growth reflects our strategy of accelerating the start of the 2015 harvest in each of our mills in order to extend the season and increase annual sugarcane crushing. This will allow us to enhance our margins and dilute our costs. This strategy was made possible by our focus on minimizing the inter-harvest maintenance but most importantly, by the increase in sugar availability. Please now shift your attention to page six, where I would like to highlight a few agricultural productivity metrics.…

[Operator Instructions] Our first question is from Thiago Duarte of BTG. Please go ahead.

I have two questions. The first one in Argentina, I would love if you could share your thoughts on the upcoming elections and what kind of impact that you believe, of course depending on the results, but what kind of impact you believe that could have in your business going forward. And still on Argentina, any update on land monetization, if you have seen any change in the land market in terms of liquidity or prices or anything that you believe might change the pace in which you have been monetizing land over the last year. That will be the first question. And the second one is based on your very last comment regarding cash generation and leverage. Can you share with us a little bit on your thoughts of how much cash you expect to be able to generate under the current price environment for this year, next year, and what's your leverage target is right now considering the current environment in terms of net debt to EBITDA. Thank you very much.

Hello, Thiago. This is Mariano, I am going to take the first part of the question regarding Argentine election and the impact on our business. Simply taking into account what all the candidates are saying, it's clear that for our specific business, any candidate should be better than what we have. So it should be beneficial for the business in which we are in. So that’s the first part of your first question. And then on the second part regarding the land sales and what we expect to so in this current year. I would say that we continue to focus on potential sales on the already developed farms. So that something we are currently marketing and depending on the specific opportunities, if there is potential buyer that is willing to pay a price at which the future cash flows would not be attractive enough for us, in that case we are sellers because a return of that asset is not good enough and we will be able to re-allocate that money into something more attractive. So we continue to expect a sale as we have been doing in the last ten years. We see the market in a very similar situation that it would have been in the last three-four years. So we don’t expect changes regarding what we have been doing in the past. So that is for all the Argentine part of your question. Then regarding the cash generation and our expected debt, Charlie, would you like to take that part of the question?

Yes. Hi, Thiago. As we have already said, we are finishing our CapEx plan for this year and not commissioning [important] [ph] CapEx for 2016. Having said this, we are expecting to generate cash as we continue with our efficiencies in milling of the sugar and ethanol business. So by the end of the year, we are expecting to finish the year with net debt to EBITDA ratio around 2.7. Obviously this will depend on our current strategy and some other things. So in terms of cash generation for 2016, if we consider a consensus, the EBITDA by the [indiscernible] minus the taxes and CapEx, some interest that we are expecting to spend in 2016, we are estimating we would generate a free cash flow after CapEx in a range of $90 million to $120 million for next year.

Thank you very much, Mariano and Charlie. Just two follow up questions on your comments. First, on the economics of the business in Argentina, the farming business in Argentina right now. What do you see as the economics of that business? I mean you mentioned that you would grow for further land sales if you think that the economics is not making much more sense or anything like that. What do you think of the economics given how the prices for most of your commodities are right now? That would be the first follow up question. And the second one is, is basically on this cash flow and you mentioned the consensus figures for the year. How challenging or comfortable are you with those estimates right now for cash flow towards this year and next year, based on the consensus figure that you mentioned. Thank you.

Taking the first part of your question. We expect that margins for next year improving to compared to this current year. Compared to what we are harvesting right now and that will depend on how much we can adjust the costs of planting. That is where we are right now in that situation. As an example, a cost of glyphosate is being 20% lower than last year at the same time in dollar terms. So we are reducing 20% price in that specific input. And in planting for example, that is more peso denominated and part of problem is that the Argentine peso is too strong, we are also reducing in dollar terms between 12% to 20%. So in every single line of our cost lines, we are reducing this plating season compared to last year planting season. So that’s why we are optimistic on a margin say for following years given at this level of commodity prices. On top of that, if you assume any kind of devaluation in Argentina, that will of course benefit us in a much more extreme numbers than what I was just mentioning. So that’s the first part of your question. Going to the second part on the cash flow generation and how comfortable we are, Charlie?

Yes. Thiago, basically of course you have to consider weather and prices but on the variables that we do control, looking at what we have done and the achievements that we have done, we feel comfortable on the efficiencies and productivity. So I would say that in terms of EBITDA and cash generation for both 2015 and 2016, we feel very comfortable.

[Operator Instructions] The next question is from [Nam Tron] [ph] of UBS Capital. Please go ahead.

It's Edmond Safra from Ems Capital. I was just wondering how the recent floods in Argentina may have affected production in general and Adecoagro in specific.

Hi, Edmond. Thank you for your question. According to where we have the farm and where flooding has occurred, we are almost not affected by the flooding. It's only 1% of the area of all our planted and future planted area that has been affected. So I would say that we are not affected in terms of the flooding. The positive thing here is that we start the season with all moisture of the - soil is full of moisture. So we are in a situation where we can expect a good year because of having the soil full of moisture and water.

Our next question is from Vincenzo Paternostro of Credit Suisse. Please go ahead.

My first question is regarding the sugar and ethanol business in Brazil. We have seen low ethanol price and naturally also low sugar price in international market. I don’t know whether you can comment on what's your view on profitability in the short term and even term-end we expect any sugar price recovery or more specifically on volumes, when do you expect to reach full production at Ivinhema mill. So my first question are related to the sugar and ethanol business. My second question is regarding the potential impact of the El Nino, so I don’t know if you have any view on what could be the impact of El Nino on yields for Adecoagro, both in Brazil in the sugar and ethanol and also in Argentina for grain. So that would be my two questions. Thank you.

Hi, Vincenzo, thank you for your two questions. Regarding your first question on sugar and ethanol and difficult price scenario that industry is having. We are very convinced on our strategy of being low cost producers as Charlie mentioned in detail, in each one of our operational metrics, we are doing within the best in each one of these variables. So that’s why we are convinced that even though the industry is going through a very difficult situation, we are doing very well in terms of generation of cash flow that we were projecting. So that’s why we are so committed on our sugar and ethanol industry and how well we are performing there. On top of that, the current devaluation that happened in Brazil is helping us in all our costs of this three commodities that we are producing from the sugarcane. So that’s why we are convinced, we will be able to generate what we are projecting. And regarding the full capacity of Ivinhema, we are currently almost there, so we have done all the CapEx to produce in an hourly basis. So next year, we feel very comfortable that we should be there in terms of full capacity. That’s regarding sugar and ethanol. Going to your second question on El Nino, the effect on our company of El Nino is confirmed and occurs, we would have higher yields or better yields in terms of sugarcane production but we could potentially have more difficulties in terms of crushing all that capacity because of the more rainy days. That’s why we started earlier in the season and that’s why we are lengthening our harvesting season. So that the El Nino for our sugarcane production. And El Nino for crops in Argentina, I would say that in general terms of what happened in the past, more moisture and humid [indiscernible] on our productive areas of soy and corn. Positive in terms of yield. So that’s the concrete effects on El Nino on our company.

Our next question is from Rodrigo Mugaburu of Morgan Stanley. Please go ahead.

One follow up question on the weather. The recent rains in Argentina, did they affect the planted wheat, the current '15-'16 planted wheat. And then the second question also related to wheat, if we see the hedged volumes that you have of the '14-'15 season is roughly 30,000 tons out of a production of around 84-85,000 tons. So if I am right, there is a 50,000 tons missing, not sold yet. That is because of the difficulties due to sell the wheat in Argentina or you are just holding and waiting for the change in government? I wanted to understand a little bit better the strategies there. Thanks.

Rodrigo, one question. Regarding the wheat, the moisture in Argentina and the flooding in Argentina regarding wheat, are you asking about the market or are you asking about us in particular?

No, Adecoagro. The area that has been already planted.

Now in the areas, I mentioned before, the area of Adecoagro is less than 1% that has been affected and wheat is within the same, only 1%. So I would say it's not affected at all. And all the areas of wheat are with very good moisture, so we should expect good yields in terms of wheat. So that’s particular for Adecoagro. Then for the market and how we are hedged and how this expect the price of the market or the price of wheat, I would ask Marcelo Sanchez, our Commercial Director to answer that part of your question.

Hi, Rodrigo, how are you. Regarding the remaining wheat that we do have still on hedge is part of our strategy of having it segregated as per quality. I mean that’s not something like we are playing with the government or any changes in the government allowance etcetera for exports. And regarding the impact of the flooding in the overall wheat area in Argentina. We have received the [indiscernible] report where the expectation of the planting is below last year in an average of 28%-29% below last year planting. And the affect on the flooding, as per some guys that we have been talking to, is something around 200,000 hectares in total in the Buenos Aires province.

[Operator Instructions] I am showing no additional questions. This concludes the question-and-answer section. At this time I would like to turn the floor back to Mr. Bosch for any closing remarks. We do have an additional question come in so we will take that, from [Nam Tron] [ph] of UBS Capital. Please go ahead.

Sorry, it's Edmond Safra again. I wanted to know if you have any acquisition plans in Brazil given the distress of many other producers and the fact that you are going to become cash flow positive very soon?

Hi, Edmond. As we always say, we are always analyzing potential opportunities and we do have a pipeline of things that we are analyzing. But we are always focused on the return on investment that we can achieve from there. And with the positive cash flows that we will be generating, we are going to be always analyzing the best return on investment and we are going to maintain our strategy of looking for the best return on investment that we can achieve. And that includes analyzing all the different options within these potential opportunities in the different, current businesses that we have. Including giving back the money to the shareholders. So those are the different ways on how we analyze, what we are going to be doing with future cash flows that we will be generating.

This concludes the question and session. At this time I would like to turn the floor back to Mr. Bosch for any closing remarks.

Thank you everyone for joining the call. On our sugar and ethanol business, we are in the middle of the harvest and it is very important for us to continue to be focused on all the efficiencies that Charlie just mentioned. So we are committed to be the low cost producers of these three commodities we are producing there. Regarding the farming business, again, we are starting our planting season and it's very important for us to negotiate every cent that we will be investing in our new crop. So we will maintain our commitment to be, again, the low cost producers in this commodity. So thank you for joining the call and hope to see your in our next events on the IR calendar.

Thank you. This does conclude today's presentation. You may disconnect your line at this time and have a nice day.