Rainbow Agro increases raw material inventory to ensure delivery, rapid response driving third-quarter performance

Date:11-04-2021

On 29th October, Rainbow Agro held an online investors meeting. The company executives introduced Rainbow’s business operations and third-quarter performance for 2021, as well as answered questions raised by representatives of investors. 

1. Is Rainbow’s market positioning and development direction similar to ADAMA’s? How do you compare Rainbow to ADAMA? 

A: Rainbow’s vision is “to be a leading international crop protection company.” As a multinational crop protection company that was launched in China, Rainbow is working hard to achieve its goal of “worldwide manufacturing and Chinese brand globalization.” ADAMA is a global crop protection industry leader and is a model from which we have based our strategic planning and performance gap analysis.

We believe good multinational crop protection companies, especially generic product manufacturers, must have the following five advantages: 

(1)Efficient decision-making and rapid response mechanism.

(2)Flexible structure and low-cost operations structure.

(3)Varied and comprehensive product portfolio.

(4)Extensive market coverage.

(5)Advanced manufacturing of leading active ingredients to support global market expansion.

Compared to current industry players ranked ahead of Rainbow, I can say we have obvious advantages in terms of items 1 and 2 listed above. In terms of Item 3 we are not bad, for Item 4 there are still a lot of markets to be developed, and for Item 5 we need to intensify our R&D and innovation efforts to develop more dominant and superior active ingredients for international marketing. 

Rainbow will continue to focus on two directives, which are to further improve our advanced manufacturing based on global marketing, research and innovation to establish a complete industrial chain, as well as to gradually advance towards a higher value chain.

2. What are you views about your business performance in the first three quarters of this year? What are your expectations for your whole-year performance?  

A: Rainbow’s operations team is satisfied at the accomplishment of scheduled key tasks for 2021. From a financial perspective, the results for the first half of the year were not expected by our operations team, due to the sharp rise the costs of sea freight and raw materials. However, it fully utilized our “light structure and rapid response” advantage, which effectively reduced business risk and helped achieve a rapid performance recovery in the third quarter. 

Regarding our full-year results, despite uncertainties, such as restricted power supply and the significant rise in the cost of raw materials in the fourth quarter, our operations team is fully prepared and confident in terms of accomplishing all key tasks for the year.

3. Rainbow held an inventory valued at Yuan1.5 billion in the third quarter, so are there major risks involved if prices drop? Currently, the prices of many products are fluctuating with major rises and falls. How does your company avoid these risks? 

A: We held a larger inventory in the third quarter because many products were in shortage. We made a timely and proactive decision to increase our raw material stocks, so we can honor contracts, make deliveries and even take new orders, to support our market expansion during difficult times.

Rainbow has more than 50 subsidiaries worldwide, serving customers in 70 countries and regions around the world. Our global business locations enable us to be more sensitive to industry changes and make more accurate judgments of market trends. Moreover, our long-standing “flexible structure and rapid response” advantage allows us to better avoid fluctuations and risks, and can help us effectively turn risks into opportunities. 

4. What are your future performance growth prospects? Do you have any development plans?

A: There is still a lot of room for further growth, including as follows:

(1)Rainbow currently has only 50-plus overseas subsidiaries. Many markets, such as India, Russia, Turkey, the European Union and many African countries, are not fully covered by us yet, due to the absence of registrations.

(2)Rainbow’s market share in prime international crop protection markets, such as Brazil, the United States, Vietnam, Indonesia, Pakistan, Nigeria and Ukraine, is still at a low level, leaving considerable room for further growth.

(3)Rainbow’s market development in the Chinese market has not started yet.

(4)Since 2019, Rainbow has increased its investment in R&D and innovation. We are prepared to attain a dominant position in global markets for key active ingredients through our advanced manufacturing, therefore, better facilitating the smooth development of the international market.

Based on our strategic planning, Rainbow will concentrate on providing crop protection services worldwide by focusing on two directives, which are to further improve our advanced manufacturing based on global marketing, R&D and innovation to establish a complete industrial chain, and to gradually advance towards a higher value chain to realize our corporate vision of “to be a leading international crop protection company” as soon as possible.