ADAMA Reports First Quarter 2021 Results

ADAMA Ltd. (the “Company”) (SZSE 000553), reported its financial results for the first quarter ended March 31, 2021.

Financial Highlights

Revenues grew 14% (+6% in RMB terms) to hit a first quarter record-high of $1,109 million, driven by a robust 15% increase in volumes. This strong volume-driven growth was somewhat mitigated by a softer pricing environment in a number of key regions.

ADAMA delivered particularly strong performances in the Asia Pacific and India, Middle-East & Africa regions, benefiting from strong demand and favorable seasonal conditions. The Company also grew strongly in North America, driven by its Consumer and Professional business, as well as in Latin America. Sales in Europe were somewhat lower due to a slow start to the season in the northern and eastern parts of the region.

Gross Profit in the first quarter was $305 million (27.5% of sales), up 10% compared to $277 million (28.5% of sales) reported in the corresponding period last year.

Operating expenses in the first quarter were $239 million (21.6% of sales), compared to $226 million (23.3% of sales) reported in the corresponding period last year.

Operating income in the first quarter was $65 million (5.9% of sales), compared to $51 million (5.2% of sales) reported in the corresponding period last year. Excluding the impact of the abovementioned extraordinary and non-operational charges, adjusted operating income in the quarter was $98 million (8.9% of sales), compared to $97 million (10.0% of sales) in the corresponding period last year. The slightly higher operating income in the quarter was driven by the higher gross profit, but reflects also the growth-driven increase in operating expenses.

EBITDA in the first quarter was $138 million (12.4% of sales), up 3.5% compared to $133 million (13.7% of sales) reported in the corresponding period last year. Excluding the impact of the abovementioned extraordinary and non-operational charges, adjusted EBITDA in the quarter was $157 million (14.2% of sales), up 2.4% compared to $153 million (15.8% of sales) in the first quarter of 2020.

Portfolio Development Update

In the first quarter, ADAMA continued to advance the development of its differentiated product portfolio. The Company obtained multiple new product registrations in the quarter, including VERITAS^®, a unique broad-spectrum fungicide for control of foliar disease in Australia, as well as HEYDAY^®, a herbicide for control of broadleaf and grass weeds in Thailand.

New product launches in the quarter included BARROZ^®, a uniquely convenient granular solution for rice growers to gain effective control of stemborer in India, as well as EMPHASIS™, an innovative herbicide co-pack that provides a versatile and effective pre-seed burn-off solution in Canada.

Regional Sales Performance Review

Europe: Sales were lower by 4.1% in the first quarter, in CER terms, compared with the corresponding period last year.

Growth in the southern part of the region, where favorable market conditions drove good demand, was outweighed by a slow start to the season in the northern and eastern parts of the region, especially when compared to Q1 2020 which then saw strong orders from distribution in anticipation of the COVID-related shutdowns that soon followed.

In US dollar terms, sales in Europe were lower by 3.5% in the quarter, compared to the corresponding period last year.

North America: Sales grew by 11.8% in the quarter, in CER terms, compared with the corresponding period last year.

Growth in the region was driven by a strong performance from the Company’s Consumer and Professional business, benefiting from the reopening of the economy after COVID-19 related restrictions in 2020. This more than offset a somewhat softer performance in the US crop protection business.

In US dollar terms, sales in North America grew by 12.4% in the quarter, compared to the corresponding period last year, reflecting a moderate strengthening of the Canadian Dollar in the quarter.

Latin America: Sales grew by a robust 22.1% in the quarter, in CER terms, compared to the corresponding period last year.

The Company continues its growth trajectory in Latin America, driven by solid volume growth and good performance from recent product launches in the region.

In US dollar terms, sales in Latin America grew by 11.3% in the quarter, compared to the corresponding period last year, as the robust business growth was partially offset by weaker currencies in the region, in particular the Brazilian Real.

Asia-Pacific: Sales grew by 39.3% in the quarter, in CER terms, compared to the corresponding period last year.

The strong growth in the Asia-Pacific region was seen both in China and beyond. In China, ADAMA saw significant growth in the quarter both from its branded, formulated portfolio, which was driven by higher cereal demand due to an increase in field crop planted areas and an early start to the Q2 season, as well as from its sales of raw materials and intermediates. Sales in the country were further bolstered by the inclusion of the Company’s recent acquisition of Jiangsu Huifeng’s domestic commercial crop protection business.

In the rest of Asia-Pacific, the Company benefited from favorable seasonal conditions and delivered strong growth, despite a slower recovery from COVID-19 challenges in Asia.

In US dollar terms, sales in Asia-Pacific grew by 52.7% in the quarter, compared to the corresponding period last year, reflecting mainly the strengthening of the Chinese Renminbi and the Australian dollar against the US dollar.

India, Middle East & Africa: Sales grew by 23.0% in the quarter, in CER terms, compared to the corresponding period last year, driven by strong volume growth alongside price increases amid continued positive weather conditions.

During the quarter, ADAMA launched a new pilot formulation R&D facility in India, complementing the Company’s leading formulation development capabilities in its main R&D hubs in Israel, China and India. The new facility, equipped with state-of-the-art technologies, will bridge the path from the R&D lab to commercial stage production, developing processes for the scale-up of liquid and solid formulation.

In US dollar terms, sales in the India, Middle East & Africa region grew by 20.4% in the quarter, compared to the corresponding period last year, reflecting mainly the weaker level of the Turkish Lira, partially offset by a stronger Israeli Shekel.

Revenues by operating segment

Read the full report here.