Aug. 18, 2017
Operating income increased 16.6% in the quarter to a record high $115 million, with an increase of 1.7 percentage points in operating margin to 13.9%, compared to the corresponding period last year. In the half-year, operating income rose by 10.4% to a record high $252 million, with an increase of 1.3 percentage points in operating margin to 15.0%.
EBITDA increased 11.8% in the quarter to a record high $159 million, with an increase of 1.6 percentage points in EBITDA margin to 19.2%, compared to the corresponding period last year. In the half-year, EBITDA rose by 7.8% to a record high $339 million, with an increase of 1.4 percentage points in EBITDA margin to 20.3%.
Net income in the quarter increased by a significant 19.8% to $68 million, with an increase of 1.1 percentage points in net income margin to 8.2%, compared to the corresponding period last year. In the half-year, net income grew by 15.6% to a record high $183 million, with an increase of 1.4 percentage points in net income margin to 10.9%.
Commenting on the results, Yang Xingqiang, Chairman of Adama’s Board of Directors, said, "These exceptional results, both over the quarter and in the year-to-date, stand out in an overall challenging agricultural market, and once again demonstrate the resilience of Adama's business as well as the dedication and determination of its people. With the combination of Adama and Sanonda now completed, we are looking forward to an enormously promising future for the combined group."
Chen Lichtenstein, President and CEO of Adama, added, “In this quarter, our last before returning to the public equity market, we have delivered double-digit increases in all profit and profitability metrics, reaching record highs. Our profitable growth trajectory, driven by our increasingly differentiated portfolio, is resulting in strong cash flow generation and reduced leverage, allowing us to continue to invest in the development of our business globally. We are in a strong business and financial condition, ready to capitalize on the many growth opportunities that lie ahead."
Europe: Sales increased by 4.4% in the quarter and by 0.3% in the half-year period in constant currency terms, compared with the corresponding periods last year. This increase was driven by strong volume growth of an increasingly differentiated portfolio, despite low disease and insect pressure as a result of the cold and wet conditions in the first part of the quarter, as well as the lingering high levels of inventory in the distribution channels, which have led to slower demand and a decrease in the overall European crop protection market. The volume growth was partially offset by the passing on to customers of a portion of the reduction in costs.
Adama continues to capitalize on the increased sugar beet acreage across the continent, with its strong sugar beet product portfolio driving increased market share.
The Company grew markedly in Romania, where its multiple farmer-centric initiatives, such as SimpliCultura™ field events showcasing its leading crop protection solutions, reach farmers directly. These efforts, complemented by a variety of digital and social media programs serving to raise brand-awareness, are delivering tangible business growth.
In the Ukraine, strong demand for Adama’s differentiated portfolio, including CUSTODIA®, SUPREME® and RACER® for sunflower, as well as MAVRIK® in oilseed rape, saw the Company record sharply increased sales. The focus on digital services providing farmers with support and decision-making tools, such as the Adama Lab, Adama iMeteo and Adama Fin apps, also contributed to sales growth.
KANTIK®, a unique mixture of three active ingredients for disease control in wheat and barley, was registered in France, and is expected to be launched later this year. In addition, Adama obtained a number of new registrations in Germany, including MERCURY®, a differentiated mixture for fungal diseases in sugar beet, and CRAWLER, a unique oilseed rape herbicide for the control of a wide range of grasses.
In US dollar terms, reflecting the weaker exchange rates in the quarter and half-year period, and the lower contribution of currency hedging compared with corresponding periods last year, sales increased by 2.8% in the quarter and were 2.8% lower in the half-year.
North America: Sales increased by 2.1% in the quarter, and by 5.7% in the half-year period, both in constant currency and in US dollar terms, compared with the corresponding periods last year. This increase was a result of robust volume growth, partially offset by the passing on to customers of a portion of the reduction in costs.
Adama's US crop protection business grew strongly in the quarter, with volume-led revenue expansion, as well as an improvement in portfolio mix and improved pricing driving markedly improved profitability. Adama continues to grow sales of key backward-integrated products sourced from Sanonda and ChemChina entities, building strategic positions in these key molecules. Leveraging its leading cotton portfolio and demand creation activities on increasing cotton acres in the US, the Company continues to grow its share in this crop.
In Canada and in the Consumer and Professional Solutions business, Adama's continued shift towards more differentiated and higher-margin products drove improved profitability.
Latin America: Sales were lower by 10.8% in the quarter and by 10.2% in the half-year period in constant currency terms, compared with the corresponding periods last year. This is a reflection of the ongoing challenging industry conditions in the region, causing lower volumes and prices in the quarter in Argentina and Brazil, which was offset by volume growth in other countries. Volumes over the half-year period were stable.
Despite the overall decline in the Brazilian agrochemical market, Adama’s sales in the country in the first half of the year remained stable, with volume growth complemented by an improved portfolio, a particularly noteworthy performance.
Adama is working with its customers in Brazil to navigate through the tough market conditions. The Company has expanded the SOMAR program for distributors, including financial services, as well as SOMAR PESSOAS, its unique human capital development program. In recognition of these and other initiatives, Adama Brazil was ranked, for the second year in a row, as one of the top five innovative agribusiness companies in the country.
Adama delivered strong results in Colombia and Mexico, driven by an improved portfolio mix, as well as pricing initiatives. These performances were supported by generally positive weather conditions.
Notwithstanding the challenging conditions in many countries across the region, Adama continues to invest in the development of its differentiated portfolio, with the launch in Chile of the proprietary product BREVIS® in apples as well as ACADIA BIO™, a unique anti-stress fungicide formulation, launched in Argentina.
In US dollar terms, sales in Latin America were lower by 7.7% in the quarter and by 4.0% in the half-year period compared with the corresponding periods last year, benefiting from the appreciation of local currencies, primarily the Brazilian Real, against the US dollar.
India, Middle East & Africa: Sales increased by 13.2% in the quarter and by 6.3% in the half-year period in constant currency terms, compared with the corresponding periods last year, due to substantial volume growth, most notably in India, supported by favorable weather conditions.
The outstanding performance in India was driven by significant volume growth of an increasingly differentiated portfolio, while benefiting from the early start of the monsoon season. Adama is establishing leading positions in products based on molecules sourced from Sanonda, such as ACEMAIN® and TAPUZ®, a differentiated mixture for insect control.
In Turkey, its leading sugar beet portfolio continues to perform well. Sales in South Africa were negatively impacted by drought conditions.
In US dollar terms, sales increased 17.1% in the quarter and 7.8% in the half-year period, compared to the corresponding periods last year, reflecting the strengthening of several currencies, including the South African Rand and the Indian Rupee.
Asia-Pacific: Robust growth of 6.6% in the quarter and 4.6% in the half-year was recorded in this region in constant currency terms, compared with the corresponding periods last year. This increase was driven by significant volume growth, primarily in the Pacific and parts of South East Asia, supported by new product launches, improvement of portfolio mix and positive weather conditions.
Adama continued the global rollout of its innovative nematicide NIMITZ®, with the registration of NEMASHOT in Japan, and obtained a registration for PALMERO® TX, a proprietary herbicide mixture for chickpea in Australia. CUSTODIA®, a differentiated mixture for fungus control, was launched successfully in Thailand.
The Company delivered a particularly noteworthy performance in South East Asia, with strong results in Thailand, Vietnam and Indonesia, driven in part by increased sales of its rice portfolio.
In China, Adama continued to expand its product portfolio, with launches of a number of new products, including LONGCHUANG® and LIANGGONG®, both insecticides for rice, as well as APROPO®, a broad-spectrum systemic fungicide, and JICHU™, a differentiated herbicide for wheat.
In US dollar terms, sales increased by 7.2% in the quarter and by 5.8% in the half-year compared to the corresponding periods last year, benefiting from the appreciation of local currencies, primarily the Australian Dollar, against the US dollar.
More from AgroNews
- Interview Series 2: Quimetal Industrial increases presence of copper-based fungicides in the African and Asian market
- Sharing information and building business connectivity, 2018 CPEW ended with great success
- Xinnong grants BASF the franchise of its patent bactericide Zinc Thiazole in Chinese market
- Interview Series 1: Nufarm offers excellent copper-based fungicide solutions