Cresud SA :CRESY-US: Earnings Analysis: 2016 By the Numbers : September 19, 2016

Cresud SA reports financial results for the year ended June 30, 2016.

We analyze the earnings along side the following peers of Cresud SA – Adecoagro S.A., Alico, Inc., SLC Agricola S.A. and Bunge Limited (AGRO-US, ALCO-US, SLCE3-BR and BG-US) that have also reported for this period.


  • Gross margins narrowed from 43.82% to 27.65% compared to the same period last year, operating (EBITDA) margins now 15.15% from 28.59%.
  • Year-on-year change in operating cash flow of 238.68% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • Narrowing of operating margins contributed to decline in earnings.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income growth:

2012 2013 2014 2015 2016
Relevant Numbers (Annual)
Revenues 800.9 714.43 677.02 654.19 3012.59
Revenue Growth (YOY) N/A N/A N/A N/A N/A
Earnings 18.13 -5.45 -130.64 13.2 -119.37
Earnings Growth (YOY) -65.82 -130.05 -2297.94 110.1 -1004.45
Net Margin 2.26 -0.76 -19.3 2.02 -3.96
EPS 0.32 -0.1 -2.6 0.24 -2.41
Return on Equity 1.81 -0.61 -17.88 2.44 -15.74
Return on Assets 0.75 -0.24 -6.15 0.71 -1.86

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Earnings Growth Analysis

The company’s year-on-year decline in earnings was influenced by a weakening in gross margins from 43.82% to 27.65%, as well as issues with cost controls. As a result, operating margins (EBITDA margins) went from 28.59% to 15.15% in this time frame. For comparison, gross margins were 43.82% and EBITDA margins were 28.59% in the previous period.

Gross Margin Versus EBITDA Margin

Cash Versus Earnings – Sustainable Performance?

CRESY-US‘s change in operating cash flow of 238.68% compared to the same period last year is about the same as its change in earnings this period. Additionally, this change in operating cash flow is about average among its peer group. This suggests that the company did not use accruals or reserves to manage earnings this period, and that, all else being equal, the earnings number is sustainable.

Operating Cash Flow Growth Versus Earnings Growth


The company’s decline in earnings has been influenced by the following factors: (1) Decline in operating margins (EBIT margins) from 24.02% to 7.33% and (2) one-time items that contributed to a decrease in pretax margins from 26.48% to -7.07%

EBIT Margin Versus PreTax Margin
EBIT Margin History
PreTax Margin History

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Company Profile

Cresud SA engages in the production of basic agricultural commodities. It involves in farming activities which include grain and sugarcane production, cattle raising, and milk production. It operates through the following segments: Grains and Sugarcane; Finance and Milk; Acquisition, Sale, and Conversion of Land; and Other Segments. The Grains and Sugarcane segment includes production of crop mainly based on grains, oilseeds, and sugarcane. The Finance and Milk includes beef cattle production and milk business. The Acquisition, Sale, and Conversion of Land involves land sale and acquisition and farmland development. The Other Segments covers leases, agricultural services, grain trading, and agro-industrial activities. The company was founded on December 31, 1936 and is headquartered in Buenos Aires, Argentina.

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