Adecoagro's Q2 2025 call captured a diversified agro-industrial producer weathering the low point of the commodity cycle. Consolidated adjusted EBITDA fell about 60% to US$55 million (US$91 million year-to-date) as biological-asset mark-to-market losses, a 20% drop in sugarcane crushing (from April rains, drought and a June frost), and a ~40% fall in peanut and ~50% fall in long-grain rice prices squeezed results, while net debt rose to US$699 million and leverage reached 2.3x. Management leaned on the company's structural advantages - lowest-cost production, product and geographic diversification, and mill flexibility to switch between sugar and ethanol - reaffirming a full-year crushing forecast in line with 2024 and a ~30% cut in leased crop area to protect margins. It was also the first call after Tether's April 2025 tender offer established the stablecoin group as controlling shareholder: CEO Mariano Bosch described a supportive new board and a memorandum of understanding to test Bitcoin mining on about 5% of Mato Grosso do Sul energy output, framed as a way to monetize power at an implied US$80-120/MWh.
Good morning and thank you for joining Adecoagro's 2025 Second Quarter Results Conference. Consolidated adjusted EBITDA during the quarter reached $55 million, while year-to-date amounted to $91 million. From the very beginning, we know that commodity prices and weather risks are two inherent risks in our space. Therefore, through the years, we set our minds on becoming the lowest cost producer while also diversifying our operations across geographies and products. We understood that this combination, along with the investment made to consolidate our asset base, would act as a natural hedge against these events and enable us to continue delivering results to our shareholders. These are the years when our sustainable production models are truly put to the test, together with our efforts in enhancing day-to-day efficiencies in order to overcome challenging scenarios like this one.
In our sugar, ethanol, and energy business in Brazil, weather has not been good to us. We experienced extreme dry weather and even a cold front in June in our operations. Despite this, our strategy of increasing year after year the size of our plantation to secure cane availability enables us to have our crushing forecast in line with the previous year. The same goes with the investment made to have a larger operational flexibility to produce both sugar and ethanol, and a storage capacity which today grants us commercial flexibility to switch between products to always get the better margin and to stop production if needed. Going to our farming business in Argentina and Uruguay, we are focusing on the efficiencies in every stage of the value chain.
In rice, prices have significantly come down, but our work on seed genetics allows us to offer customized rice varieties at premium prices and cut at new markets, which in turn enables us to partially offset the drop in global prices. In dairy, thanks to our growing market presence, we are increasing the processing volumes in our industries while we continue working on expanding our product portfolio to access new destinations. In the case of crops, we are finalizing a very challenging campaign in terms of prices and costs. Now, our focus is on the upcoming season, where our main goal is to improve the margins of each of our crops. As a consequence, we are reducing our lease area by approximately 30%. Before passing the word to Emilio, a brief comment on the memorandum of understanding that we signed with Tether.
We are analyzing the possibility of using a portion of our energy production for Bitcoin mining. We are excited about this potentially innovative project as it proves how cutting-edge technology and the agribusiness industry can join forces to maximize the value of our assets and production. Lastly, an update on sustainability. In mid-May, we published our 2024 integrated report in which we explain how, in our sector, sustainability is fully aligned with profitability. I would like to express my gratitude to all the people across Adecoagro. These are the moments where our hard work and commitment end up making the difference and allow us to be the lowest cost producers at all times. I am convinced that we have the right people and that we are following the right strategy to generate good returns and value for our shareholders.
Now, I will let Emilio walk you through the numbers of the quarter.
Thank you, Mariano. Good morning, everyone. Please turn to page four with a summary of our consolidated financial results. Sales totaled $392 million during the second quarter, while on an accumulated basis, they reached $716 million. Higher volumes sold across all our operations more than offset the lower prices seen for most of our products on a year-to-date basis. Adjusted EBITDA marked a 60% year-over-year decline in both periods, reaching $55 million during the quarter and $91 million year-to-date. Lower results were mainly explained by losses in our biological assets in line with our sugar, ethanol, and energy businesses on lower production, as well as in our crops and rice operations on lower prices.
In addition, results were also negatively impacted by higher costs in U.S. dollar terms in our farming division, together with one-off expenses incurred by the company in connection with Teva's tender offer. Now, please turn to slide five. Regarding our production figures on the bottom right chart, we can see that crushing volume in our sugar, ethanol, and energy business was 20% lower year-over-year due to a combination of less effective milling days during the second quarter and a selective slower milling pace adopted during the first months of the year.
On the other hand, total production in our farming business reported a 12% year-over-year increase explained by higher planted area, as well as a record productivity in our rice operations. In the case of crops, harvesting activities are almost complete for the 2024-2025 season, and the average yield obtained was below our initial expectations. We will describe this in more detail during the presentation.
Let's move to slide seven with the operational performance of our sugar, ethanol, and energy business. After experiencing below-average rainfall during 2024 and early 2025, precipitations received during April aided our sugarcane yields. Nevertheless, the distribution of rains led to a reduction in effective milling days and, consequently, a decrease in our crushing volumes during the quarter, which totaled 3.4 million tons. Although productivity indicators remain below the prior year due to the lagging effect of the dry weather explained before, this saw a significant improvement versus the first quarter of 2025 as anticipated. On a year-to-date basis, we have already crushed 4.9 million tons of cane, 20% less than the same period of last year. This was due to a selective, slower crushing done in early 2025, focused on cane with limited growth potential and a rainy second quarter that consequently slowed down our crushing phase.
In terms of mix, we continue to maximize sugar production throughout the year, given its attractive premium. Within our ethanol production, we are maximizing the production of hydrous ethanol, given the better margin. Let's please turn to slide eight, where we describe sales conducted throughout the period. Net sales amounted to $183 million during the quarter, while year-to-date, they reached $302 million. The overall increase in sales was fully explained by our commercial strategy to sell our carryover stock of ethanol from last year, as well as our dairy production, to profit from the recovery in prices and clear out our storage capacity. Consequently, we have already sold 320,000 cu m of ethanol at an average net selling price close to 2,700 Brazilian reais per cubic meter, 18% higher year-over-year.
Regarding sugar, the combination of lower prices and the decline in production, given the lower crushing, were the main drivers towards the decline in sales year-to-date. Nevertheless, we were able to profit from the sale of packed BHP during the quarter, which commanded a premium over spot prices. In the case of energy, higher selling prices more than offset the decline in volume exported, driven the lower milling year-to-date. Regarding carbon credits, we sold over 390,000 cebayos at an average price of $10 per cebayo, reaching $4 million in revenues. Please go to page nine, where we would like to present the financial performance of the sugar, ethanol, and energy business. Adjusted EBITDA amounted to $68 million during the second quarter and $98 million for the first half of the year.
Despite presenting higher sales, results were mainly offset by year-over-year losses in the mark-to-market of our biological assets on lower volume of harvested cane, together with year-over-year losses in the mark-to-market of our commodity hedge position due to less gains presented compared to the same period of last year. Finally, to conclude with the sugar, ethanol, and energy business, please turn to slide 10, where we would like to briefly talk about the current outlook. As explained in prior releases, our sugarcane plantation has gone through different weather events throughout the last year and a half. However, our annual crushing forecast remains unchanged thanks to, first, our continuous harvest model that enables us to flexibly advance or delay harvesting activities, together with higher cane availability due to the expansion planting made during the last years, as well as to higher sourcing of third-party cane.
This, in turn, will result in flat to slightly higher cash costs versus the previous year. From a commercial point of view, we are constructive on both sugar and ethanol prices for the upcoming months, as we still have the flexibility to switch our maximization strategy to always produce the product that offers the highest marginal contribution. In the case of sugar, we still have a portion of our 2025 sugar production still unhedged and no commitments for the next year in order to profit from any upside in spot prices, as the global supply and demand balance continues to rely on Brazil's production. In ethanol, inventory levels are considerably below the prior year, and the industry continues to prioritize sugar production due to its premium.
On the demand side, parity at the pump continues to favor ethanol consumption, and new demand has emerged with the implementation of the E30 ethanol mandate. Therefore, any decline in crushing volume could further pressure this tight scenario. Now, we would like to move on to the farming business. Please go to slide 12. As of the beginning of August, we harvested 97% of the total area and produced over 1.2 million tons of agricultural products. The remaining hectares are expected to be fully harvested during the rest of this month. Despite the precipitations received from February onwards, some of our crops were impacted by periods of dry weather and high temperatures, excess rainfall, or even below average temperatures. Therefore, average yields for this harvest season ended up below our initial expectations, in line to below historical average.
In rice, our work on seed genetics and the implementation of new technologies resulted in an average yield of 8 tons per hectare, a new record for this business. In the case of dairy, we are working on reversing the decline in cow productivity seen year-to-date. At the industry level, we continue to maximize the production of UHT milk for the domestic market, a product that offers the highest marginal contribution while developing our brand portfolio across several markets. To conclude, we began planting activities for our next campaign, starting with wheat and other winter crops. We are foreseeing a reduction in planted area of approximately 20,000 hectares versus the prior campaign due to our decision to reduce our exposure in the northern region of the country, as well as to diminish the amount of lease area to improve crops' margins.
On the following page 13, we present the financial performance of our farming business. Adjusted EBITDA for the farming business totaled $1 million during the quarter, whereas year-to-date amounted to $18 million. Starting with our crops segment, the year-over-year decrease in results was mainly driven by an uneven year-over-year comparison, as in April 2024, we sold La Pecuaria farm, which generated $15 million in adjusted EBITDA. Furthermore, results were also impacted by lower international prices, lower than expected productivity, and higher costs in U.S. dollar terms, which combined continued to pressure margins during the period, mainly for our peanut production. Moving on to rice, the decline in adjusted EBITDA during both periods was mostly explained by the outlier prices reported the prior year, coupled with higher costs in U.S. dollar terms, which in turn fully offset the record production at the farm level.
Lastly, adjusted EBITDA generation in our dairy business was impacted by higher costs in U.S. dollar terms, despite the increase in volumes sold, and our work towards improving the mix of higher value-added products and maximizing the production of fluid milk for the domestic market. Please turn to page 15 for a broader view of our debt position. Net debt amounted to $699 million, 11% higher year-over-year. This was due to higher short-term borrowings raised to finance working capital in our farming business, given the lower results presented at a consolidated level. Consequently, our net leverage ratio stood at 2.3x, one turn more than the same period of last year. Despite the increase, we continue with our disciplined capital allocation strategy, which also includes investing in growth projects with attractive returns and distributing cash to shareholders while keeping financial flexibility and a strong balance sheet.