ADAMA: Dynamic tracking and sales performance analysis during 2016-2020

• ADAMA’s merger with Sanonda
  

• ADAMA’s affiliation to Syngenta Group
  

• ADAMA under the COVID-19 pandemic

In April 2014, Makhteshim Agan Industries (MAI), an agrochemical company born in Israel, with nearly 70 years of business development, changed its name to ADAMA. The name ADAMA is taken from the Hebraic word “mud” and “soil”, reflecting the company’s farmer-centric corporate philosophy and commitment to agricultural development. Hence, after 18 months of business transformation, ADAMA consolidated more than 40 of its global brands into one unified ADAMA brand.

Since 2016, ADAMA continued its global business development, adhering to the company’s “serving farmer” aspiration. The business development of the company could maintain good growth undergoing following big events, which attracted the attentions the industry players.

(1)In July 2017, ADAMA merged with Sanonda successfully;
(2)From 2018 to 2019, ADAMA acquired some of the world’s characteristic agrochemical enterprises;
(3)In January 2020, ADAMA joined Syngenta Group;
(4)The outbreak and continued spread of COVID-19 since early 2020.

Figure 1. ADAMA Group’s Sales from 2016 to 2020 (in US$100 million)

In the last five years, the global plant protection industry has been not very optimistic. In 2016 and 2017, the continuous decline in the prices of bulk agricultural products and the depressed demand from different global market regions led to high level of stocks in many agrochemical enterprises. Since 2018, the demand side improved to certain degree while the prices of bulk agricultural products continued to rise, but the ensuing unstable factors such as Sino-US trade friction, regional extreme climate and the outbreak of the COVID-19 brought great challenges to the world’s agrochemical industry. It is noted that even in an uneasy business environment, ADAMA could still achieve positive and stable market performance in the last five years.

ADAMA’s merger with Sanonda

Before its merger with Sanonda, ADAMA used to lay stress on establishment of global business network and the market entry strategy while continuing enhancement of differentiation of product portfolio. In 2016, ADAMA consolidated its marketing and product resources to facilitate implementation of product programs via assurance of product life cycle. ADAMA’s R&D facilities were built up and expanded thereafter.

On the other side, during the period before the merger with Sanonda, ADAMA continued promotion of integration with Sinochem’s China National Agrochemical Co., Ltd. In terms of product distribution in Chinese domestic market, the sales team of ADAMA and China National Agrochemical Co., Ltd worked hand in hand. Moreover, ADAMA’s global business network provided the enterprises within China National Agrochemical Co., Ltd with more sources of procurement, resulting in a doubled procurement in 2016. The integration of the production and supply chain and the reduction of cost of procurement were important factors for ADAMA’s high profitability and significant profit growth in the fiscal year of 2016.

In July 2017, ADAMA was merged with Sanonda smoothly. The products sold in the Asia-Pacific region used to be produced mostly in Israel. With the merger with Sanonda and the running of the advanced formulation plant in Jiangsu, more and more products sold in China and Asia Pacific market have been produced in China. This is a continued optimization of ADAMA’s production and supply chain.

Additionally, ADAMA’s merger with and Sanonda enabled successful fundraising from equity investors for an amount of Yuan15 billion, which is used by the merged company to further develop its global product portfolio, project construction and extension of advanced operation facilities. The investment and extension projects include: Nanjing R & D Center, Israel Neot Hovav Global R&D Center and Huai'an’s global formulation and packaging center.

The merged company is added with 223 product registrations, including 22 novel products launched to the global market, thus further expanding the company’s territory of trade. One good example is ADAMA’s novel non-fumigating nematode, NIMITZ^®, which has been approved in more and more market destinations, including Canada, Japan, Chile and Brazil. 

Development after the merger with Sanonda

In 2018 and 2019, ADAMA made significant improvement in marketing and strategic product development. ADAMA implemented a “go-to-market” strategy in key regions to promote establishment of a more direct social network linking with farmers. The company’s marketing and sales teams are trained on systematic approach and specific market routing. At the same time, according to the feedback of farmers, farmers’ exact needs are identified and customers’ pain points are targeted for a solution. For example, a product packaging with desired quantity was worked out and released to the global market in 2019.  

At the end of 2018, ADAMA’s Nanjing R&D Center was put into operation; in early 2019, ADAMA Israel Neot Hovav Global R&D Center was opened to service. These two R&D centers are designated to develop innovative products via application of advanced technologies, meanwhile to improve the existing production processes to ensure continuation of the company’s competitive edge. In the last two years, ADAMA has made remarkable progress in product innovation, research and development, registration and digital agricultural development. Typical examples include:

Table 1. ADAMA Product Development 2018 - 2019

Table 2. ADAMA’s Digital Agricultural Products 2018-2019

In 2019, ADAMA Group conducted a series of acquisitions according to its product differentiation and market targeting initiatives. The specific acquisitions are as follows:

Table 3. ADAMA’s Acquisitions in 2019

ADAMA’s affiliation to Syngenta Group

In January 2020, ADAMA joined Syngenta. Since 2016, ADAMA has completed mergers with Sanonda, Jiangsu Anbang, Jiangsu Huifeng, French and Swiss SFP and the US Bonide Products, which laid a solid foundation for its management of production and research until being affiliated to Syngenta in early 2020.

Joining Syngenta Group has led to a significant synergy between ADAMA and Syngenta Group and its member companies, in respect of production and supply chain development.  Syngenta Group has an obvious volume effect in production, research and marketing; ADAMA is able to grow its business through the resources within Syngenta Group and proper business planning. ADAMA is fully capable of developing its complete and differentiated product portfolio, as well as a fast and easy business model. Thanks to the business features of the two companies, Syngenta and ADAMA can achieve significant synergies in product research and development, market deployment and the logistic supply chain. A scrutiny of the financial data in the last two years, it is noted that the sales growth of Syngenta Group and ADAMA is quite similar.

Furthermore, ADAMA could save a series of procurement and operating costs via collaboration with Syngenta Group’s member companies, whist using market complementation and the differentiated pricing strategy to generate extra incomes without prejudice.

Recently, ADAMA held an online product launch ceremony to launch its Panlimei to the Chinese market. Panlimei is a brand-new fungicide mixture based on isopyrazam and difenoconazole, which is of broad fungicidal spectrum and is safe to crops. It is worthy of note that early back in 2014, Syngenta launched its first Lvfei, which is a fungicide mixture containing Syngenta’s patented isopyrazam. As a generic agrochemical enterprise, ADAMA’s research and development are targeting at pesticides which will go off-patent in a few years, trying to be the first to release off-patent technicals. The launch of Panlimei shows the well-coordinated development between Syngenta Group China and ADAMA. There are even readers of AgroPages saying that “Syngenta’s Lvfei is reborn in ADAMA.”

ADAMA under COVID-19 pandemic

The outbreak and continued spread of the COVID-19 in 2020 caused stagnation of global economic and social activities in the first half of the year. The demand covering some of the crops such as corn, cotton, sugar and some vegetables and fruits has decreased, whilst prices of most of the crops have declined. In the second half of the year, the food security concern caused by the pandemic, the rising oil prices (positive for corn and sugar prices) and the recovery of market demand in the textile industry contributed to the recovered demand for crops. So, crop prices rebounded significantly. Also, the drought in Latin America due to the La Niña pushed up the crop prices in the second half of 2020.  

Since 2020, the COVID-19 has been a big challenge to ADAMA’s production, supply and pricing management. The COVID-19 has had multiple impacts on ADAMA and the whole agrochemical industry. At the beginning of the outbreak, the prices of petroleum and related basic chemicals fell sharply, along with the falling prices of technicals in the Chinese market during 2020 for most of the time. However, at the end of the year, with the recovery of oil prices and the cost rise of raw materials, the prices of technicals began to rebound. Meanwhile, the demand for plant protection products became stronger. Also, the Chinese RMB appreciated against US dollar. Hence, these factors boosted up the cost of procurement of raw materials, intermediates and technicals, having lasted until 2021. The rising trend of the cost of raw materials, intermediates and raw materials continued, which posed a major challenge to ADAMA’s gross profit level in the coming quarters. Under such circumstance, the fierce competition in the global agrochemical market might cause difficulties to ADAMA in adding the full cost of procurement to its selling prices in a timely manner, thus resulting in a pricing crisis and difficulty in profitability.

Nevertheless, ADAMA could continue its growth and ended up in 2020 in a strongest performance in the fourth quarter. In response to the impact of the pandemic, ADAMA achieved sustained growth throughout 2020 and 2021 via proper price escalation, new product development, improvement of product portfolio and quality of operation as well as strict control of various expenses. For example, in Europe, ADAMA’s self-produced prothioconazole-based formulations have been granted registrations in the UK which have become a key driver to the future growth of the company; TIMELINE FX^® (a broad-spectrum herbicide for spring cereals) is registered in Lithuania, enabling the product entry to an important market segment of the region. In China, the formulation brand has greatly developed, as supported by new product releases, whilst the newly acquired companies have also started to contribute to the sales increase of the company.  

In 2020, ADAMA became the world’s 7th-largest crop protection company, with products being promoted to more than 100 countries, with annual sales of $4.1 billion, covering more than 270 technicals, which are the largest number of technicals among industry players worldwide. As of the third quarter of 2021, ADAMA achieved following year-on-year increases in sales:

1) 2.9% in Europe;
2) 20.6% in North America;
3) 15.8% in Latin America and
4) 26% in Asia Pacific.

The sales increase still continues.

Summary

Looking at ADAMA’s sales performance and profitability in the last five years, it can be seen that ADAMA has successfully sustained the series of major business restructuring and global market crisis events happened in the last five years, and could maintain a dynamic growth and profitability.

From 2016 to present, in just a few years, ADAMA completed mergers with Sanonda; established Nanjing Global R&D Center, Jiangsu Huai'an Formulation Plant, the production bases in Jingzhou of Hubei and Huai’an of Jiangsu; acquired Jiangsu Huifeng, the US Bonide Products and the Latin American Plant Protection Company AgroKlinge. These mergers and acquisitions paved the way for ADAMA’s performance in production, research and market development, which secures ADAMA’s leading position in the differentiated product development among the industry.

In the writers’ opinion, ADAMA’s every merger and acquisition serve as a supplementation and complementation to its research and development capacity, supply and marketing capacity. ADAMA’s merger with Sanonda enabled it to become a global company with complete industry chain; ADAMA’s affiliation to Syngenta enabled it to have a more complete competitive edge in respect of working capital and global supply chain management; ADAMA’s acquisitions conducted in various regions enabled it to be more competent in regional research and local supply management, which further expand ADAMA’s superiorities in differentiated product development. From R&D to product registration, launch of production, up to marketing, ADAMA is in a position to accomplish any tasks of the whole value chain. Today, ADAMA’s product portfolio covers more than 270 technical varieties, which are for sale and service to more than 100 countries, where ADAMA could continue its steady supply and service. In the meantime, ADAMA could achieve business growth of itself, even in the circumstance of the worldwide spread of the COVID-19 pandemic.

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Liao Wang

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