ADAMA REPORTS Q4 SALES UP 17%, NET INCOME UP 79%
Record-high fourth quarter caps best annual Sales and EBITDA ever for
the Company
Q4 Sales increased 17.3% to a record high $963 million, up 22.8% in constant currency
terms
Record Q4 sales driven by robust business growth, led by significant outperformance in Brazil,
as well as increased prices, somewhat offset by softer currencies
Full year sales grew by $358 million, or 10.2%, to a record high $3,881 million (up 12.4%
in constant currency terms), driven by 8.1% growth in sales of an increasingly differentiated
portfolio, as well as increased prices
Best-ever performance in most territories, with significant market share gains
40% increase in sales of formulated, branded products in China
Q4 Gross Profit increased 17.6% to a record high $312 million
Gross margin of 32.4%, in line with last year
Continued differentiated portfolio growth and price increases partially offset by higher
procurement costs and softer currencies
Full year Gross Profit up 4.4% to a record high $1,291 million; gross margin of 33.3%
Strong business growth and increased prices more than offset increases in procurement
costs and adverse currencies impact; capitalizing on increased backward integration in key
products
Operating cost discipline yields improved cost/sales ratio, driving higher operating profit
Q4 EBITDA increased 34.5% to a record high $134 million vs. $100 million in Q4 last year
EBITDA margin of 13.9%, up 1.7 percentage points over last year
Full year EBITDA reaches all-time record high of $653 million (margin of 16.8%), beating
last year’s record
Q4 Income before Tax up 279.4% to $47 million
Full year Income before Tax above last year’s
Q4 Net Income increased 97% to a record high $46 million
Full year Net Income of $249 million (margin of 6.4%) vs. $280 million last year (margin of
8.0%)
2017 saw relatively low tax expenses, benefiting from tax income from expected utilization of
tax loss carry forwards; normalized taxes would have put FY Net Income above 2017 record
Continued meaningful cash flow generation, while supporting strong growth and
absorbing higher procurement costs
Operating Cash Flow of $305 million in the full year
Free Cash Flow of $79 million
Balance sheet net debt of $457 million
Net debt / EBITDA ratio of 0.7x, in line with the lowest ever same point last year
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BEIJING, CHINA and TEL AVIV, ISRAEL, March 20, 2019 – Leading global crop protection
company ADAMA Ltd. (the “Company”) (SZSE 000553), today reported fourth quarter and full year
2018 financial results.
FY 2018
% %
Adjusted, US$m Q4 2018 Q4 2017 FY 2018 FY 2017 (ex. ‘17
Change Change
EU hedge)
Revenues 963 821 17.3% 3,881 3,523 10.2% 3,920
Gross profit 312 265 17.6% 1,291 1,237 4.4% 1,331
Gross margin 32.4% 32.3% 33.3% 35.1% 33.9%
Operating income (EBIT) 81 45 79.6% 441 436 1.1% 481
EBIT margin 8.4% 5.5% 11.4% 12.4% 12.3%
Income before Tax 47 12 279.4% 310 308 0.6% 350
Pre-tax margin 4.9% 1.5% 8.0% 8.7% 8.9%
Net income 46 26 78.6% 249 280 -11.2% 289
Net income margin 4.7% 3.1% 6.4% 8.0% 7.4%
EBITDA 134 100 34.5% 653 646 1.1% 693
EBITDA margin 13.9% 12.2% 16.8% 18.3% 17.7%
Earnings per share – USD 0.0186 0.0109 0.1017 0.1196
– RMB 0.1290 0.0720 0.6657 0.8153
All income statement items contained in this release are presented on an adjusted basis. For a detailed description and
analysis of the differences between the adjusted income statement items and the items as reported in the financial
statements, see “Analysis of Gaps between Adjusted Income Statement and Income Statement in Financial Statements” in
the appendix to this release.
Revenue growth in constant currencies in the fourth quarter was 22.8%, and 12.4% in the full year.
Earnings per share are the same for basic and diluted. The number of shares used to calculate earnings per share in Q4
2017 is 2,341.9 million shares. The number of shares used to calculate earnings per share in Q4 2018 is 2,446.6 million
shares, reflecting the issuance of shares in the private placement equity offering in December 2017.
Commenting on the results, Yang Xingqiang, Chairman of ADAMA’s Board of Directors, said,
“Our robust performance, reaching all-time record highs of nearly $3.9 billion in sales and $653
million in EBITDA, continues to demonstrate our ability to overcome challenging market conditions
and grow our market share worldwide. ADAMA’s vast portfolio of differentiated products and global
commercial presence enables us to continue our significant growth momentum.”
Chen Lichtenstein, President and CEO of ADAMA, added, “We delivered the strongest fourth
quarter results to date, driving double-digit sales growth over the full year, despite continued
subdued agricultural commodity prices and challenging weather conditions in key regions. We
continue to strengthen our core business by investing in our pipeline of new and differentiated
products, executing on our growth strategy.”
Performance in Context of Market Environment
The global crop protection market grew somewhat in 2018 due to stronger demand conditions and
normalized inventory levels, alongside higher procurement costs emanating from China. This growth
was partially offset by challenging weather conditions, especially in Europe, as well as uncertainty
surrounding the US-China trade tensions, which weighed on agricultural commodity prices,
continuing to impact farmers’ incomes for the fourth consecutive year.
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In some regions, inventory levels in the crop protection distribution channels were lower compared
to 2017, which allowed customary market activity levels to resume.
Softness of many currencies in the fourth quarter, when compared to the same quarter last year,
most notably in Brazil and India, impacted sales and profit contribution, yet was more than offset by
volume growth and price increases.
As previously communicated, the negative impact of 2017 European hedge positions largely ended
in the first half of the year, and had negligible impact on the second half of 2018. There was still,
however, a marked effect over the full year period, with a negative impact of almost $40 million on
sales and profits.
The Company continues to maintain manufacturing cost discipline and mitigate the impact of
shortages in certain raw materials and intermediates, mostly owing to increased environmental
focus in China. The supply-constrained environment further contributed to overall stronger pricing.
Despite these uneven AgChem market conditions, the Company delivered record sales in the fourth
quarter and full year, significantly exceeding all of its fourth quarter 2017 record sales and adjusted
profit metrics, driven by a combination of robust business growth as well as higher prices and the
introduction of new and differentiated products, which have supported penetration and continued
clear share gains in markets across the globe.
The Company continues to advance collaboration opportunities with other ChemChina group entities,
as well as other entities in China, to make the most of its positioning.
Financial Highlights
Revenues grew by 17.3% in the quarter to a record $963 million and by 10.2% in the full year to a
record $3,881 million in US dollar terms, compared to the corresponding periods last year. In
constant currency terms, revenues grew by 22.8% in the quarter and by 12.4% in the full year.
This robust performance was driven by strong business growth of the Company’s increasingly
differentiated product portfolio, with volumes up by 15.8% in the quarter and 8.1% in the full year. In
the quarter, the Company recorded particularly strong performance in Latin America, led by Brazil,
as well as in North America, Europe and Asia-Pacific, while sales in India were impacted by severe
drought. In China, ADAMA continues to prioritize the sale of branded, formulated products through
its domestic commercial network as well as their export and distribution through the Company’s
global commercial network, and is shifting away from selling unformulated technical product to other
intermediaries.
In addition to the strong business growth, improved demand conditions facilitated a stronger pricing
environment, compensating for the softer currencies and allowing the passing on of some of the
impact of the constrained supply and higher procurement costs.
Gross profit in the quarter increased by 17.6% to $312 million (gross margin of 32.4%), and by 4.4%
to $1,291 million (gross margin of 33.3%) in the full year, compared to the corresponding periods
last year.
The higher gross profit in both the quarter and the full year was achieved due to the strong growth
and an improved product mix as well as higher pricing, which more than offset the impact of higher
procurement costs of raw materials and intermediates, supply shortages and the softer currencies,
most notably the Brazilian Real and the Indian Rupee, as well as the impact of missed high-margin
sales in Europe in the third quarter as a result of the extreme drought in the region.
Operating expenses. The Company continues to maintain strong operating cost discipline while
accommodating significantly higher sales, with total operating expenses of $231 million (24.0% of
sales) in the quarter and $850 million (21.9% of sales) in the full year, compared to $220 million
(26.8% of sales) and $800 million (22.7% of sales) in the corresponding periods last year,
respectively.
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Sales and Marketing expenses in the quarter were $163 million (16.9% of sales), in line with $163
million (19.9% of sales) in the corresponding period last year. Sales and Marketing expenses in the
full year were $626 million (16.1% of sales), compared to $595 million (16.9% of sales) in the
corresponding period last year. The moderate increase over the full year reflects primarily an
increase in sales, marketing and product development teams in growing geographies and higher
other variable expenses as a result of the increased sales.
General and Administrative expenses in the quarter were $36 million (3.7% of sales) compared to
$32 million (3.9% of sales) in the corresponding period last year. General and Administrative
expenses in the full year were $135 million (3.5% of sales) compared to $133 million (3.8% of sales)
last year.
R&D expenses in the quarter were $16 million (1.6% of sales) compared to $14 million (1.8% of
sales) in the corresponding period last year. R&D expenses in the full year were $66 million (1.7% of
sales) compared to $53 million (1.5% of sales) in the corresponding period last year, reflecting
higher spend on strategic research and development projects.
In addition to these factors, operating expenses in the fourth quarter and the full year benefited
somewhat from the softer currencies against the US dollar.
Operating income in the quarter was $81 million, increasing by a significant 79.6% over the
corresponding period last year, bringing operating income over the full year to an all-time high of
$441 million, above last year’s record.
EBITDA in the quarter was $134 million, a strong 34.5% increase over the corresponding period last
year, bringing EBITDA over the full year to an all-time high of $653 million, exceeding last year’s
record.
Financial expenses and investment income. Total net financial expenses and investment income
in the quarter were $34 million compared to $33 million in the corresponding period last year. This
moderate increase reflects the adoption of a new accounting standard which classifies interest
income on sales as revenue. Adjusting for the impact of the change in accounting standard, financial
expenses decreased, driven by lower interest costs due to reduced debt levels and a decrease in
costs of the shekel-denominated bonds as a result of the depreciation of the currency over the
quarter, compared to the corresponding quarter last year. These savings were partially offset by an
increase in hedging expenses related to balance sheet positions.
Total net financial expenses and investment income in the full year were $131 million compared to
$128 million last year. The moderate increase over the year reflects the adoption of the new
accounting standard. Adjusting for the impact of the change in accounting standard, financial
expenses decreased over the year, reflecting reduced interest costs due to lower debt levels, as well
as foreign exchange income related to balance sheet positions, somewhat offset by an increase in
costs of the CPI-linked bonds as a result of an increase in the Israeli CPI over the period.
Income before Tax in the quarter was $47 million, almost four times the corresponding period last
year, bringing pre-tax income over the full year to an all-time high of $310 million, above last year’s
record.
Tax expenses. Net tax expenses were $2 million in the quarter. This compares to a $13 million tax
income recorded in the corresponding period last year, which benefited from the creation of deferred
tax assets in 2017 in respect of losses carried-forward and timing differences, in anticipation of their
expected utilization in subsequent periods, as well as lower taxable income generated in that period.
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Net tax expenses in the full year were $61 million compared to $28 million last year. The increase
reflects higher taxable income worldwide, most notably in Brazil, as well as the impact of the
devaluation of net, non-cash tax assets as a result of the weakening of the Brazilian Real against the
US dollar. The relatively low tax expenses recorded last year reflect the mentioned creation of
deferred tax assets in respect of losses carried-forward in the fourth quarter of 2017.
Net income in the quarter was a record $46 million, up by 79% compared to the $26 million
achieved in the corresponding period last year. Over the full year, net income was $249 million,
lower than the record $280 million achieved last year, reflecting the unusually low tax expense
incurred in 2017.
Working capital at December 31, 2018 was higher by $258 million compared to the corresponding
point last year, supporting the significant momentum generating a $358 million increase in sales
over the year.
Strong supply chain discipline allowed maintaining best-ever inventory days for this time of year,
while building a higher inventory level in preparation for the upcoming season, as well as absorbing
the higher procurement costs.
The significant increase in sales over the quarter and the full year saw trade receivables higher in
comparison to the same point last year, despite ongoing tight control of credit ensuring receivable
days remain close to their record-best levels for this time of year. The higher receivables were
partially offset by increased trade payables.
Cash Flow. Despite the strong sales growth and associated need for higher working capital, the
Company generated robust operating cash flow of $79 million in the fourth quarter. This compares to
$217 million in the same period last year, during which the Company grew at a somewhat more
moderate rate. Over the full year, a significant operating cash flow of $301 million was generated,
compared to $586 million generated in the corresponding period last year.
Net cash used in investing activities was $57 million in the quarter and $142 million in the full year,
compared to $67 million and $192 million invested in the corresponding periods last year,
respectively.
Additions to assets include investments in product registrations and other intangible and fixed assets,
including the transfer of products in Europe from Syngenta in the first quarter of 2018. Proceeds
from disposal of assets include the divestment of certain products in Europe in the first quarter of
2018 in connection with the approval of the European Commission for ChemChina’s acquisition of
Syngenta, while in 2017 similarly includes one-time proceeds resulting from the divestment of
certain products in the US in the second quarter of 2017 in connection with the approval of the US
FTC for ChemChina’s acquisition of Syngenta, as well as the sale of non-core assets. Investments
in fixed assets, net of investment grants, amounted to $32 million in the quarter and $109 million in
the full year, compared to $38 million and $115 million invested in the corresponding periods last
year, respectively.
While free cash flow of $14 million was consumed in the quarter compared to the $115 million
generated in the corresponding period last year, the Company generated continued free cash flow of
$79 million in the full year compared to $310 million last year, despite the Company’s strong growth
and higher cost environment.
Leverage: Balance sheet net debt at the end of the quarter was $457 million compared to net debt
of $442 million as of December 31, 2017, keeping the Company’s net debt/EBITDA ratio contained
at 0.7x, in line with that of a year ago.
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Business Update
Marketing and Product Strategy
To support the Company’s implementation of its go-to-market strategy in key markets, and to
facilitate more direct contact with farmers, ADAMA together with a leading US academic institution
developed a tailor-made development program, providing the Company’s marketing and sales
teams with systematic methods and customized approaches for each market.
ADAMA developed a new design for its 5-liter packaging, based on input from farmers, aimed at
addressing customer pain points. The new and improved series of product packaging will be
released in markets across the globe in 2019.
Operations
The Company continues to improve its supply reliability and long-term cost competitiveness by
strengthening its manufacturing platform and expanding its supply network to include strategic
contract manufacturing partners. This approach is supported by the recruitment of key talent.
Innovation, Development, Research and Registrations
The opening in January 2019 of ADAMA’s advanced global R&D Center in Neot Hovav,
complements the Company’s recently inaugurated, state-of-the-art R&D Center in Nanjing. Together,
these two R&D hubs will focus on the development of innovative products through the application of
advanced technologies, while also improving existing manufacturing processes with the aim of
securing ongoing competitive advantage.
During 2018, the Company obtained 245 new product registrations, including 27 new product
launches worldwide. Highlights include CRONNOS TOV, a novel solution for soybean rust in Brazil
and POSTSCRIPTTM, a herbicide for control of rice weeds and grasses in FULLPAGETM Rice
varieties in the US. The Company registered its proprietary nematicide NIMITZ in India, China and
South Africa, as well as in Brazil and a number of additional countries in Latin America, and on a
range of new crops in the US and Asia Pacific. Other notable product registrations included AGIL, a
systemic herbicide for selective weed control of a wide range of grasses in many broadleaf crops in
China and in several European markets, and BREVIS a differentiated post-bloom fruit thinner in
apples to optimize fruit load and size in Australia.
AgTech
In 2018, the Company entered into several AgTech partnerships and launched more than 30 related
projects in key markets:
Chile: TrapView, which utilizes revolutionary technology in a fully integrated system to
provide a simplified solution for growers, agronomists and researchers needing to monitor
insect populations
Thailand: ADAMA partnered with SupPlantTM, to introduce innovative systems to support and
enhance farmers’ decision-making and productivity
Argentina: Tierra Digital, a mobile app developed by ADAMA, contains extensive information
on crops, including threats to their health and protective solutions for farmers
Brazil: ADAMA established a partnership to develop ADAMA Air, aimed at significantly
reducing drift and improving quality of aerial application
ADAMA also developed in Brazil an intelligent system for optimizing operation in sugarcane
mills, simplifying decision-making processes and increasing business productivity and
profitability through the ADAMA SagresTM platform
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Corporate Development
The Company continues with its track record of making and integrating selective acquisitions.
Bonide: In January 2019, ADAMA acquired Bonide Products Inc., a US provider of pest-control
solutions for the consumer Home & Garden market, allowing the Company to bring its advanced
technologies and differentiated portfolio of pest-control and turf solutions directly to the benefit of the
consumer.
Anpon: On 19 March 2019, the Company signed an agreement for the acquisition of Jiangsu Anpon
Electrochemical Co., Ltd. (Anpon). With 2018 sales of approximately $230 million and located in
Huai’An, Jiangsu Province, Anpon is a backward-integrated manufacturer of key active ingredients
used in crop protection markets worldwide, most notably Ethephon, Pymetrozine and Buprofezin, as
well as intermediates such as chlor-alkali, with advanced membrane production technology.
In recent years, ADAMA benefited from Anpon’s strong manufacturing position, enhancing its
portfolio with products and differentiated mixtures based on Anpon’s molecules. The Company has
been able to build leading positions in major markets such as the US, India and Australia. In China,
Anpon brings a portfolio of product registrations to the ADAMA offering, as well as a domestic sales
force.
Anpon is becoming a key part of ADAMA’s global business, adding significant synthesis and
formulation capabilities to the Company’s China operations. Anpon’s advanced synthesis site is
located adjacent to ADAMA’s new global formulation facility, facilitating improved utilization and
exchange of expertise. ADAMA’s state-of-the art R&D center in Nanjing already contributes to key
process improvements at Anpon.
The purchase price of the transaction, which is now being closed, is approximately $62 million (RMB
415 million), with a potential additional payment of up to approximately $60 million, depending on
the realization of benefits from the future relocation of some of Anpon’s manufacturing facilities.
Huifeng: On January 10, 2019, the Company signed a memorandum of understanding with Jiangsu
Huifeng Bio Agriculture Co., Ltd (Huifeng), a chemical manufacturer located in Dafeng, Jiangsu
province, for the potential acquisition of most of its crop protection business. With this potential
acquisition, ADAMA will gain access to backward-integrated and competitive positions in key
molecules, which it intends to use to drive significant growth through its China and worldwide market
reach.
Collaboration
ADAMA has been working together with Syngenta and other key agriculture-related businesses in
China, to identify opportunities for closer collaboration. In this context, the companies are exploring
various initiatives, including the potential provision of reciprocal access to certain products in specific
territories, as well as exploiting opportunities aimed at optimizing the utilization of the companies’
operational facilities.
Company Name Change
In December 2018, the name of the Company was changed to ADAMA Ltd., achieving the final
milestone in the combination between Adama Agricultural Solutions Ltd. and Hubei Sanonda Ltd.
While the stock abbreviations of the Company’s A-shares and B-shares have changed to ADAMA (A)
and ADAMA (B), the stock codes (tickers) remain the same – 000553 and 200553, respectively.
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Jingzhou Old Site
At the end of January 2019, preceding the Spring Festival, the Company voluntarily suspended
operations at Sanonda’s old site in Jingzhou, which is in the process of being relocated to a nearby
advanced site, due to recording of higher than permitted levels of wastewater compounds. The
Company was subsequently instructed by the local government not to resume operations before
rectification. The Company is working to rectify the discharge levels and resume operations at the
old site as soon as possible.
In recent years, the Company has already invested $125 million in the relocation of the Jingzhou old
site, and has installed advanced production and environmental facilities at a new and already
operational site, including an investment of $16 million in a state-of-the-art wastewater treatment
facility, which is ready to commence operation.
According to the rectification plan underway, the Company began commissioning of the new
wastewater treatment facility at the new site, which will also serve the old site, and expects to
commence gradual resumption of operations at the old site around the end of March.
Notwithstanding that the old site produces only a small number of products for the group, and the
fact that ADAMA has significant production and procurement capabilities elsewhere in China and
worldwide, the suspension is expected to have a negative impact on the Company’s performance,
mostly in the first and second quarters of 2019. In the first quarter, the Company foresees an impact
of low double-digit millions of dollars on its performance.
Regional Sales Performance
Q4 2018 Q4 2017 Change Change FY 2018 FY 2017 Change Change
$m $m USD CER $m $m USD CER
Europe 188 154 +22.4% +24.1% 1,058 1046 +1.1% -0.7%
North America 204 159 +28.3% +28.4% 735 646 +13.8% +13.4%
Latin America 347 254 +36.5% +48.9% 935 751 +24.5% +36.6%
Asia Pacific 124 141 -12.2% -9.6% 610 584 +4.5% +2.8%
Of which China 43 68 -36.3% -33.6% 275 255 +7.5% +4.5%
India, Middle East & Africa 100 113 -11.4% -4.9% 543 496 +9.3% +13.3%
Total 963 821 +17.3% +22.8% 3,881 3,523 +10.2% +12.4%
CER: Constant Exchange Rates
Europe: Closed 2018 in line with 2017, a significant achievement in the face of several challenges
during the year – severe drought, 2017 hedge loss, supply shortages and a notable change in
portfolio due to the completion of the divestments and transfers of products related to
ChemChina’s acquisition of Syngenta.
Sales increased by 24.1% in the quarter and were flat in the full year in constant currency terms,
compared with the corresponding periods last year.
The strong increase in the quarter was driven by significant business growth of 23.8% and modest
price increases, which more than offset the negative impact of currency moves.
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This strong result in the quarter brought the performance in Europe over the full year to modest
growth, despite the challenging weather conditions that persisted for significant parts of the year.
This performance over the year, against the backdrop of a decline in the overall European market,
saw ADAMA continue to grow its market share in the region.
Following the unprecedented drought earlier in the year, Northern Europe grew strongly in the
fourth quarter. The late sowing and favorable rainfall, which started in early October, facilitated
continuous planting, extending the herbicide treatment period and allowing for the recovery of
herbicide sales mainly in wheat, cereals and oilseed rape.
ADAMA saw particularly strong performance in the Ukraine, where it launched a number of new
products including KARNEOL, a distinctive fungicide for orchards combining a high-strength
fungicide with complementary phosphoric-potash plant nutrition, CALMA, a differentiated, fast-
acting plant growth regulator for use in cereals, and TRIMBITA, a three-way mixture seed
treatment for the combined management of both insects and disease in cereals. The Company
also grew strongly in Germany and the Czech Republic, as well as in Russia where its
comprehensive sugar beet portfolio performed well.
In Southern Europe, sales grew in the quarter compared with the corresponding period last year
despite ongoing challenging weather conditions, with the summer drought only breaking in early
November. This resulted in delayed herbicide consumption and reduction of grass treatment due to
lower oilseed rape planted areas, as well as lower demand for insecticides due to the late
emergence of wheat.
ADAMA performed well in the southwestern markets, especially in Spain and Italy, as well as in
France where it saw demand leading into the upcoming season.
The Company received several product registrations in the fourth quarter in France, Spain,
Portugal, Greece and Italy, all planned for launch in the 2019 season.
In US dollar terms, sales in Europe grew by 22.4% in the fourth quarter and by 1.1% over the full
year compared with the corresponding periods last year.
North America: Sales increased by a strong 28.4% in the quarter in constant currency terms,
compared with the corresponding period last year, driven by significant business growth and higher
prices. The marked performance in the quarter brought growth in the full year to 13.4% in constant
currency terms.
The Company’s robust business growth in the quarter was driven by strong demand for ADAMA’s
increasingly differentiated portfolio from both distributors and retail customers. In the US, the
Company benefited from the stronger pricing environment, which continued in the face of industry-
wide supply shortages, compensating for the higher procurement costs.
Double-digit growth was recorded in Consumer and Professional Solutions, with continued strong
momentum in both professional pest and industrial vegetation management.
In US dollar terms, sales in North America increased by 28.3% in the quarter and by 13.8% in the
full year, compared to the corresponding periods last year.
Latin America: Sales increased by a significant 48.9% in the quarter and by 36.6% in the full year
in constant currency terms, compared with the corresponding periods last year.
The robust growth in the fourth quarter was driven by a strong performance in Brazil, alongside
growth in most other markets throughout the region.
ADAMA continues to develop its differentiated portfolio in the region. In Brazil, CRONNOS TOV,
the novel, three-way mixture fungicide for soybean rust, outperformed expectations in its first half-
year of launch and led a strong performance across the Company’s differentiated portfolio, with
noteworthy performances also from a number of key products, including GALIL, a unique mixture
insecticide and the EXPERTGROW range of biostimulants.
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ADAMA recovered strongly in Argentina in the quarter, despite the significant rainfall that delayed
the planting season in soybean and corn. The Company successfully launched BOOMER, a
three-way mixture insecticide providing an effective treatment for high insect pressure. The
Company also saw strong performances in the quarter in Colombia and Mexico.
Nimitz, the Company’s innovative nematicide was launched in Chile and registered in other
countries across the region, while CRONNOS TOV was also launched in Paraguay and
registered in Bolivia. In addition, the Company obtained several new registrations, including
vegetables mixture insecticide KADABRA in Ecuador and Colombia as well as TRIVOR, a
differentiated combination insecticide for rapid and extended control of sucking pests in Citrus in
Colombia.
In US dollar terms, sales in Latin America increased by 36.5% in the quarter and by 24.5% in the
full year compared with the corresponding periods last year, reflecting the softer local currencies.
Asia-Pacific: Sales were lower by 9.6% in the quarter in constant currency terms, compared with
the corresponding period last year, with a strong performance in the wider region being more than
offset by shifting away from lower-margin sales to intermediaries globally and in China towards
direct sales through the Company’s global network. Over the full year, sales increased by 2.8% in
constant currency terms.
With strong demand for the Company’s differentiated, formulated and branded products, ADAMA
continues to prioritize the sale of these products through its own channels by rapidly shifting away
from selling unformulated, technical product to intermediaries, and in so doing benefiting from the
full product positioning as well as end-to-end margin. This shifting reduces total sales in China;
however, sales of the Company’s branded, formulated sales in China continue their strong growth,
increasing by 40% over the full year.
In the rest of Asia-Pacific, ADAMA grew strongly in the fourth quarter, driven by solid business
growth and the introduction of new, differentiated products alongside higher prices. This growth
was achieved despite severe drought in Australia and Indonesia, and floods in Vietnam, with
strong performance from Thailand, Korea and Japan. ADAMA continues to gain market share
across the region.
During the quarter, the Company obtained a number of new registrations for differentiated products,
including FLAGSHIP, a new high-load herbicide for woody weed control, PLATINUM a new high-
load grass herbicide, WASP FORCE for outdoor wasp control in the Consumer & Professional
market, all registered in Australia, as well as NIMITZ, the Company’s proprietary nematicide for
use in Black Pepper in Vietnam, and GALIL, a differentiated insecticide mixture for rice in
Philippines.
In US dollar terms, sales were lower by 12.2% in the quarter, while sales increased by 4.5% in the
full year, compared to the corresponding periods last year.
India, Middle East & Africa: Sales were lower by 4.9% in the quarter in constant currency terms,
compared with the corresponding period last year, with extremely dry weather conditions in India
and South Africa negatively impacting sales.
However, despite the subdued performance in the quarter, the Company delivered strong double-
digit growth in the full year, with sales increasing by 13.3% in constant currency terms. This
significant growth was driven by continued business growth alongside higher prices, supported by
robust demand for the Company’s differentiated portfolio and generally favorable weather
conditions in the first nine months of the year. The Company grew strongly in most markets across
the region, most notably in India, Turkey, Israel and West Africa.
In the fourth quarter, the Company registered NIMITZ in India, to be launched during 2019. This
follows multiple product launches in the country in 2018, including BARAZIDE, an effective
combination solution for the control of a wide range of lepidopteran pests, SHAMIR, a novel dual
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mode of action fungicide and NIMROD a systemic fungicide with both protective and curative
activity against powdery mildew.
In US dollar terms, sales were lower by 11.4% in the quarter while sales increased by 9.3% in the
full year, compared to the corresponding periods last year, reflecting the softer local currencies,
most notably the Indian Rupee and Turkish Lira, against the US dollar.
Revenues by operating segment
Fourth quarter sales
Q4 2018 Q4 2017
% %
USD(m) USD(m)
Crop Protection 900 93.5% 748 91.1%
Intermediates and Ingredients 63 6.5% 73 8.9%
Total 963 100% 821 100%
Full year sales
FY 2018 FY 2017
% %
USD(m) USD(m)
Crop Protection 3,617 93.2% 3,259 92.5%
Intermediates and Ingredients 264 6.8% 264 7.5%
Total 3,881 100% 3,523 100%
Further Information
All filings of the Company, together with a presentation of the key financial highlights of the period,
can be accessed through the Company website at www.adama.com.
##
About ADAMA
ADAMA Ltd. is one of the world's leading crop protection companies. We strive to Create Simplicity
in Agriculture – offering farmers effective products and services that simplify their lives and help
them grow. With one of the most comprehensive and diversified portfolios of differentiated, quality
products, our 6,600-strong team reaches farmers in over 100 countries, providing them with
solutions to control weeds, insects and disease, and improve their yields. For more information,
visit us at www.ADAMA.com and follow us on Twitter at @ADAMAAgri.
Contact
Ben Cohen Zhujun Wang
Global Investor Relations China Investor Relations
Email: ir@adama.com Email: irchina@adama.com
11
Abridged Consolidated Financial Statements
The following abridged consolidated financial statements and notes have been prepared as
described in Note 1. While prepared based on the principles of PRC GAAP, they do not contain all
of the information which either PRC GAAP or IFRS would require for a complete set of financial
statements and should be read in conjunction with the consolidated financial statements of both
ADAMA Ltd. and Adama Agricultural Solutions Ltd. as filed with the Shenzhen and Tel Aviv Stock
Exchanges, respectively.
Abridged Consolidated Income Statement for the Fourth Quarter
Q4 2018 Q4 2017 Q4 2018 Q4 2017
Adjusted1
USD(m) USD(m) RMB(m) RMB(m)
Revenues 963 821 6,660 5,425
Cost of Sales 647 553 4,476 3,657
Business taxes and surcharges 4 2 27 13
Gross profit 312 265 2,157 1,755
% of revenue 32.4% 32.3% 32.4% 32.3%
Operating expenses 231 220 1,596 1,456
Operating income (EBIT) 81 45 561 299
% of revenue 8.4% 5.5% 8.4% 5.5%
Financial expenses and investment income 34 33 233 216
Income before taxes 47 12 328 83
Taxes on Income 2 -13 13 -86
Net income 46 26 316 169
% of revenue 4.7% 3.1% 4.7% 3.1%
EBITDA 134 100 928 656
% of revenue 13.9% 12.2% 13.9% 12.2%
Earnings per Share – Basic 0.0186 0.0109 0.1290 0.0720
– Diluted 0.0186 0.0109 0.1290 0.0720
The number of shares used to calculate earnings per share in Q4 2017 is 2,341.9 million shares. The number of shares used to
calculate earnings per share in Q4 2018 is 2,446.6 million shares, reflecting the issuance of shares in the private placement equity
offering in December 2017.
1
For an analysis of the differences between the adjusted income statement items and the income statement items as reported in the
financial statements, see below “Analysis of Gaps between Adjusted Income Statement and Income Statement in Financial Statements”.
12
Abridged Consolidated Income Statement for the Full Year
FY 2018 FY 2017 FY 2018 FY 2017
Adjusted2
USD(m) USD(m) RMB(m) RMB(m)
Revenues 3,881 3,523 25,615 23,820
Cost of Sales 2,577 2,277 17,018 15,393
Business taxes and surcharges 12 9 81 62
Gross profit 1,291 1,237 8,516 8,364
% of revenue 33.3% 35.1% 33.2% 35.1%
Operating expenses 850 800 5,629 5,399
Operating income (EBIT) 441 436 2,887 2,965
% of revenue 11.4% 12.4% 11.3% 12.4%
Financial expenses and investment income 131 128 862 862
Income before taxes 310 308 2,025 2,103
Taxes on Income 61 28 396 193
Net income 249 280 1,629 1,909
% of revenue 6.4% 8.0% 6.4% 8.0%
EBITDA 653 646 4,288 4,374
% of revenue 16.8% 18.3% 16.7% 18.3%
Earnings per Share – Basic 0.1017 0.1196 0.6657 0.8153
– Diluted 0.1017 0.1196 0.6657 0.8153
2
For an analysis of the differences between the adjusted income statement items and the income statement items as reported in the
financial statements, see below “Analysis of Gaps between Adjusted Income Statement and Income Statement in Financial Statements”.
13
Abridged Consolidated Balance Sheet
December 31 December 31 December 31 December 31
2018 2017 2018 2017
USD (m) USD (m) RMB (m) RMB (m)
Assets
Current assets:
Cash at bank and on hand 908 1,204 6,233 7,869
Bills and accounts receivable 1,068 801 7,330 5,237
Inventories 1,347 1,146 9,247 7,488
Assets held for sale - 62 - 403
Other current assets, receivables and
274 357 1,879 2,333
prepaid expenses
Total current assets 3,597 3,570 24,689 23,330
Non-current assets:
Fixed assets, net 1,029 1,063 7,063 6,945
Intangible assets, net 1,423 1,213 9,763 7,927
Deferred tax assets 107 136 733 891
Other non-current assets 82 80 564 521
Total non-current assets 2,641 2,492 18,123 16,284
Total assets 6,238 6,063 42,813 39,614
Liabilities
Current liabilities:
Loans and credit from banks and
127 418 875 2,729
other lenders
Bills and accounts payable 731 646 5,019 4,218
Other current liabilities 793 665 5,446 4,348
Total current liabilities 1,652 1,729 11,339 11,295
Long-term liabilities:
Long-term loans from banks and other
34 79 236 514
lenders
Debentures 1,115 1,190 7,649 7,777
Deferred tax liabilities 57 34 392 225
Employee benefits 85 93 580 611
Other long-term liabilities 49 63 336 413
Total long-term liabilities 1,339 1,460 9,193 9,540
Total liabilities 2,992 3,189 20,533 20,836
Equity
Total equity 3,246 2,874 22,280 18,778
Total equity 3,246 2,874 22,280 18,778
Total liabilities and equity 6,238 6,063 42,813 39,614
14
Abridged Consolidated Cash Flow Statement for the Fourth Quarter
Q4 2018 Q4 2017 Q4 2018 Q4 2017
USD (m) USD (m) RMB (m) RMB (m)
Cash flow from operating activities:
Cash flow from operating activities 79 217 548 1,437
Cash flow from operating activities 79 217 548 1,437
Investing activities:
Acquisitions of fixed and intangible assets -59 -67 -410 -442
Proceeds from disposal of fixed and intangible assets 1 - 8 2
Other investing activities 1 - 10 -
Cash flow used for investing activities -57 -67 -392 -440
Financing activities:
Receipt of loans from banks and other lenders 16 307 111 2,031
Repayment of loans from banks and other lenders -29 -86 -198 -571
Other financing activities -37 175 -247 1,159
Cash flow from (used for) financing activities -49 396 -334 2,619
Effects of exchange rate movement on cash and cash 1 3 -13 -88
equivalents
Net change in cash and cash equivalents -26 550 -191 3.528
Cash and cash equivalents at the beginning of the period 926 653 6,371 4,337
Cash and cash equivalents at the end of the period 900 1,204 6,180 7,864
Free Cash Flow -14 115 -99 763
15
Abridged Consolidated Cash Flow Statement for the Full Year
FY 2018 FY 2017 FY 2018 FY 2017
USD (m) USD (m) RMB (m) RMB (m)
Cash flow from operating activities:
Cash flow from operating activities 301 586 2,002 3,958
Cash flow from operating activities 301 586 2,002 3,958
Investing activities:
Acquisitions of fixed and intangible assets -523 -223 -3,376 -1,503
Proceeds from disposal of fixed and intangible assets 381 14 2,421 97
Other investing activities - 17 - 118
Cash flow used for investing activities -142 -192 -954 -1,288
Financing activities:
Receipt of loans from banks and other lenders 29 334 196 2,212
Repayment of loans from banks and other lenders -361 -185 -2,314 -1,247
Other financing activities -118 104 -773 671
Cash flow from (used for) financing activities -450 253 -2,892 1,636
Effects of exchange rate movement on cash and cash -12 3 159 -276
equivalents
Net change in cash and cash equivalents -303 651 -1,684 4,031
Cash and cash equivalents at the beginning of the period 1,204 553 7,864 3,834
Cash and cash equivalents at the end of the period 900 1,204 6,180 7,864
Free Cash Flow 79 310 528 2,097
16
Notes to Abridged Consolidated Financial Statements
Note 1: Basis of preparation
Basis of presentation and accounting policies: The abridged consolidated financial statements for the
years ended December 31, 2018 and 2017 incorporate the financial statements of ADAMA Ltd. and of all of its
subsidiaries (the “Company”), including Adama Agricultural Solutions Ltd. (“Solutions”) and its subsidiaries.
The Company has adopted the Accounting Standards for Business Enterprises issued by the Ministry of
Finance (the "MoF") and the implementation guidance, interpretations and other relevant provisions issued or
revised subsequently by the MoF (collectively referred to as "CASBE").
The abridged consolidated financial statements contained in this release are presented in both Chinese
Renminbi (RMB), as the Company’s shares are traded on the Shenzhen Stock Exchange, as well as in United
States dollars ($) as this is the major currency in which the Company’s business is conducted. For the
purposes of this release, a customary convenience translation has been used for the translation from RMB to
US dollars, with Income Statement and Cash Flow items being translated using the quarterly average
exchange rate, and Balance Sheet items being translated using the exchange rate at the end of the period.
The preparation of financial statements requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements, and the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimated.
Note 2: Abridged Financial Statements
For ease of use, the Financial Statements shown in this release have been abridged as follows:
Abridged Consolidated Income Statement:
“Operating expenses” includes selling and distribution expenses; general and administrative expenses;
research and development expenses; impairment losses; gain (loss) from disposal of assets and non-
operating income and expenses
“Financial expenses and investment income” includes net financing expenses; gains from changes in
fair value; and investment income (including share of income of equity accounted investees)
Abridged Consolidated Balance Sheet:
“Other current assets, receivables and prepaid expenses” includes financial assets held for trading;
financial assets in respect of derivatives; prepayments; other receivables; and other current assets
“Fixed assets, net” includes fixed assets and construction in progress
“Intangible assets, net” includes intangible assets and goodwill
“Other non-current assets” includes other equity investments; long-term equity investments; long-term
receivables; investment property; and other non-current assets
“Loans and credit from banks and other lenders” includes short-term loans and non-current liabilities
due within one year
“Other current liabilities” includes financial liabilities in respect of derivatives; payables for employee
benefits, taxes, interest, dividends and others; advances from customers and other current liabilities
“Other long-term liabilities” includes long-term payables, provisions, deferred income and other non-
current liabilities
17
Analysis of Gaps between Adjusted Income Statement and Reported
Income Statement in Financial Statements
Q4 Adjusted Adjustments Reported
USD(m) Q4 2018 Q4 2017 Q4 2018 Q4 2017 Q4 2018 Q4 2017
Revenues 963 821 - - 963 821
Gross profit 312 265 3 -9 309 275
Operating expenses 231 220 -52 -51 283 271
Operating income (EBIT) 81 45 55 41 26 4
Income before taxes 47 12 61 41 -14 -29
Net income 46 26 66 34 -20 -8
EBITDA 134 100 4 27 130 72
Earnings per share 0.0186 0.0109 0.0269 0.0144 -0.0083 -0.0035
Q4 Adjusted Adjustments Reported
RMB(m) Q4 2018 Q4 2017 Q4 2018 Q4 2017 Q4 2018 Q4 2017
Revenues 6,660 5,425 - - 6,660 5,425
Gross profit 2,157 1,755 18 -61 2,139 1,815
Operating expenses 1,596 1,456 -363 -334 1,959 1,790
Operating income (EBIT) 561 299 381 273 180 25
Income before taxes 328 83 422 273 -94 -191
Net income 316 169 455 222 -140 -54
EBITDA 928 656 27 181 901 475
Earnings per share 0.1290 0.0720 0.1862 0.0949 -0.0572 -0.0229
FY Adjusted Adjustments Reported
USD(m) FY 2018 FY 2017 FY 2018 FY 2017 FY 2018 FY 2017
Revenues 3,881 3,523 - - 3,881 3,523
Gross profit 1,291 1,237 11 2 1,280 1,235
Operating expenses 850 800 215 -63 636 864
Operating income (EBIT) 441 436 -203 65 644 371
Income before taxes 310 308 -197 65 507 243
Net income 249 280 -129 54 378 226
EBITDA 653 646 -307 20 959 625
Earnings per share 0.1017 0.1196 -0.0527 0.0232 0.1543 0.0964
FY Adjusted Adjustments Reported
RMB(m) FY 2018 FY 2017 FY 2018 FY 2017 FY 2018 FY 2017
Revenues 25,615 23,820 - - 25,615 23,820
Gross profit 8,516 8,364 77 10 8,440 8,354
Operating expenses 5,629 5,399 1,329 -424 4,300 5,824
Operating income (EBIT) 2,887 2,965 -1,252 435 4,139 2,530
Income before taxes 2,025 2,103 -1,211 435 3,236 1,668
Net income 1,629 1,909 -774 363 2,402 1,546
EBITDA 4,288 4,374 -1,949 131 6,237 4,243
Earnings per share 0.6657 0.8153 -0.3163 0.1552 0.9820 0.6601
18
Income Statement Adjustments
Q4 2018 Q4 2017 Q4 2018 Q4 2017
USD (m) USD (m) RMB (m) RMB (m)
Net Income (Reported) -20.3 -8.1 -140.0 -53.6
Non-cash legacy amortization of 2011 PPA for acquisition of Solutions, net of tax 9.5 9.5 65.7 62.8
Non-cash amortization of Transfer assets received from Syngenta related to 2017 10.6 - 73.0 -
ChemChina-Syngenta acquisition
Combination Transaction – one-time professional fee; employee bonuses - 3.7 - 24.7
One-time capital gain from sale of EU and US registrations, related to 2017 ChemChina- 3.1 - 21.7 -
Syngenta acquisition, net of taxes
Jingzhou old facility fixed asset impairment, net of tax effect 28.3 9.1 195.6 58.6
Historical tax expenses resulting from the finalization of tax assessments 8.4 25.4 58.2 167.9
Reinstatement of depreciation expense due to classification of to-be-divested European - -3.5 - -22.8
registrations as “Held-for-Sale”, related to 2017 ChemChina acquisition of Syngenta
Creation of deferred tax asset on losses carried forward in anticipation of their expected - -28.7 - -190.0
utilization, due to expected capital gain on ChemChina-Syngenta related divestments
One-time non-cash provision for post-employment & early retirement of Sanonda - 11.7 - 79.4
employees
Adjustment of 2017 LTI provision made in Q4 to accrual over full year - 6.3 - 41.9
Revaluation of non-cash adjustment related to non-controlling interest 6.0 - 41.3 -
Total adjustments 65.9 33.6 455.5 222.5
Net Income (Adjusted) 45.5 25.5 315.5 168.7
FY 2018 FY 2017 FY 2018 FY 2017
USD (m) USD (m) RMB (m) RMB (m)
Net Income (Reported) 377.6 225.8 2,402.5 1,545.9
Non-cash legacy amortization of 2011 PPA for acquisition of Solutions, net of tax 38.0 38.0 251.4 256.8
Non-cash amortization of Transfer assets received from Syngenta related to 2017 30.9 - 207.0 -
ChemChina-Syngenta acquisition
Jingzhou old facility fixed asset impairment, net of tax effect 28.3 9.1 195.6 58.6
Combination Transaction – one-time professional fee; taxes; employee bonuses 1.5 9.5 9.4 63.2
One-time capital gain from sale of EU & US registrations, related to 2017 ChemChina- -241.7 -8.6 -1,535.0 -59.0
Syngenta acquisition, net of taxes
Reinstatement of depreciation expense due to classification of to-be-divested European -2.6 -4.9 -16.5 -32.8
registrations as “Held-for-Sale”, related to ChemChina-Syngenta acquisition; and other
Creation of deferred tax asset on losses carried forward in anticipation of their expected - -28.7 - -190.0
utilization, due to expected capital gain on ChemChina-Syngenta related divestments
Historical tax expenses from finalization of tax assessments, conclusion of tax claims 8.4 28.2 58.2 187.2
One-time non-cash provision for post-employment & early retirement of Sanonda - 11.7 - 79.4
employees
Revaluation of non-cash adjustments related to non-controlling interest 6.0 - 41.3 -
Non-core asset disposal 2.3 - 14.8 -
Total adjustments -128.9 54.3 -773.8 363.3
Net Income (Adjusted) 248.7 280.1 1,628.7 1,909.3
19
Exchange Rate Data for the Company's Principal Functional
Currencies
December 31 Q4 Average FY Average
2018 2017 Change 2018 2017 Change 2018 2017 Change
EUR/USD 1.145 1.198 (4.4%) 1.141 1.178 (3.1%) 1.180 1.127 4.7%
USD/BRL 3.875 3.308 (17.1%) 3.810 3.248 (17.3%) 3.655 3.192 (14.5%)
USD/PLN 3.760 3.481 (8.0%) 3.768 3.594 (4.9%) 3.612 3.779 4.4%
USD/ZAR 14.428 12.380 (16.5%) 14.284 13.580 (5.2%) 13.239 13.264 0.2%
AUD/USD 0.706 0.781 (9.6%) 0.717 0.769 (6.7%) 0.747 0.766 (2.5%)
GBP/USD 1.279 1.350 (5.3%) 1.287 1.328 (3.1%) 1.334 1.287 3.6%
USD/ILS 3.748 3.467 (8.1%) 3.705 3.507 (5.6%) 3.591 3.596 0.1%
USD LIBOR 3M 2.81% 1.69% 65.7% 2.62% 1.46% 79.7% 2.30% 1.26% 82.1%
December 31 Q4 Average FY Average
2018 2017 Change 2018 2017 Change 2018 2017 Change
USD/RMB 6.863 6.534 5.0% 6.916 6.611 4.6% 6.612 6.755 (2.1%)
EUR/RMB 7.859 7.826 0.4% 7.892 7.785 1.4% 7.806 7.612 2.5%
RMB/BRL 0.565 0.506 (11.5%) 0.551 0.491 (12.2%) 0.553 0.473 (16.9%)
RMB/PLN 0.533 0.533 0.0% 0.544 0.544 0.0% 0.559 0.559 0.0%
RMB/ZAR 2.102 1.885 (11.5%) 2.065 1.885 (9.6%) 2.002 1.878 (6.6%)
AUD/RMB 4.844 5.103 (5.1%) 4.960 5.083 (2.4%) 4.940 5.176 (4.6%)
GBP/RMB 8.777 8.906 (1.4%) 8.897 8.726 2.0% 8.821 8.670 1.8%
RMB/ILS 0.546 0.531 (2.9%) 0.536 0.531 (1.0%) 0.543 0.532 (2.0%)
RMB SHIBOR 3M 3.35% 4.91% (31.9%) 3.04% 4.61% (33.9%) 3.75% 4.37% (14.3%)
20
