ADAMA Reports Second Quarter and First Half 2022 Results
Continued strong momentum as record top line results are translated into bottom
line income
Second Quarter 2022 Highlights:
Sales up 21% to an all-time quarterly record-high of $1,479 million (+24% in RMB terms; +25% in
CER1 terms), driven by 22% higher prices and 3% volume growth
Improvement of Opex/Sales ratio of 18.1% vs. 19.7% in Q2 2021
Adjusted EBITDA up 29% to $240 million (RMB: +32%), representing an improvement of EBIT DA
margin from 15.2% in Q2 2021 to 16.2% in Q2 2022
Adjusted net income up 20% to $76 million; Reported net income up 36% to $46 million (RMB:
+39%)
First Half 2022 Highlights
Sales up 24% to an all-time half-year record-high of $2,899 million (+25% in RMB terms; +28% in
CER terms), driven by 20% higher prices and 8% volume growth
Improvement of Opex/Sales ratio of 18.9% vs. 19.9% in H1 2021
Adjusted EBITDA up 29% to $441 million (RMB: +29%), representing an improvement of EBIT DA
margin from 14.7% in H1 2021 to 15.2% in H1 2022
Adjusted net income up 31% to $151 million; Reported net income up 100% to $113 million (RMB:
+99%)
BEIJING, CHINA and TEL AVIV, ISRAEL, August 30, 2022 – ADAMA Ltd. (the “Company”) (SZSE
000553), today reported its financial results for the second quarter and six-month period ended June
30, 2022.
Ignacio Dominguez, President and CEO of ADAMA, said, "ADAMA delivers another strong record
quarter and half year period, with continued top line growth translating into bottom line value. Farmer
fundamentals continue to be positive as crop commodity prices remain elevated, despite some easing
of prices towards the end of the quarter, currently driving the demand for crop protection products.
"In a world of surmounting challenges, ADAMA is committed to providing farmers with the solutions
they need and want for feeding the world, while continuously introducing to the market new products
with unique ADAMA added value formulation technologies."
1 CER: Constant Exchange Rates
1
Table 1. Financial Performance Summary
As Reported Adjustments Adjusted
USD (m) Q2 Q2 Q2 Q2 Q2 Q2
% Change % Change
2022 2021 2022 2021 2022 2021
Revenues 1,479 1,220 +21% - - 1,479 1,220 +21%
Gross profit 386 340 +13% 52 25 437 365 +20%
% of sales 26.1% 27.9% 29.6% 29.9%
Operating income (EBIT) 143 90 +58% 27 35 170 125 +36%
% of sales 9.6% 7.4% 11.5% 10.3%
Income before taxes 57 36 +59% 31 35 88 71 +24%
% of sales 3.9% 3.0% 6.0% 5.8%
Net income 46 34 +36% 30 30 76 63 +20%
% of sales 3.1% 2.8% 5.1% 5.2%
EPS
- USD 0.0198 0.0145 0.0326 0.0272
- RMB 0.1307 0.0938 0.2152 0.1759
EBITDA 224 164 +36% 16 21 240 186 +29%
% of sales 15.1% 13.5% 16.2% 15.2%
As Reported Adjustments Adjusted
USD (m) H1 H1 H1 H1 H1 H1
% Change % Change
2022 2021 2022 2021 2022 2021
Revenues 2,899 2,329 +24% - - 2,899 2,329 +24%
Gross profit 746 645 +16% 106 42 852 687 +24%
% of sales 25.7% 27.7% 29.4% 29.5%
Operating income (EBIT) 267 156 +72% 36 68 303 223 +36%
% of sales 9.2% 6.7% 10.4% 9.6%
Income before taxes 129 65 +98% 40 68 168 133 +27%
% of sales 4.4% 2.8% 5.8% 5.7%
Net income 113 57 +100% 37 59 151 115 +31%
% of sales 3.9% 2.4% 5.2% 5.0%
EPS
- USD 0.0487 0.0244 0.0648 0.0496
- RMB 0.3142 0.1575 0.4197 0.3207
EBITDA 427 302 +42% 14 41 441 343 +29%
% of sales 14.7% 13.0% 15.2% 14.7%
Notes:
“As Reported” denotes the Company’s financial statements according to the Accounting Standards for Business Enterprises and the
implementation guidance, interpretations and other relevant provisions issued or revised subsequently by the Chinese Ministry of Financ e
(the “MoF) (collectively referred to as “ASBE”). Note that in the reported financial statements, as a result of recent changes in the ASBE
guidelines [IAS 37], certain items as of Q4 2021 (specifically certain transportation costs and certain idleness charges) have been reclassified
from Operating Expenses to COGS. Please see the appendix to this release for further information.
Relevant income statement items contained in this release are also presented on an “Adjusted” basis, which exclude items that are of a
transitory or non-cash/non-operational nature that do not impact the ongoing performance of the business, and reflect the way the
Company’s management and the Board of Directors view the performance of the Company internally. The Company believes that exc luding
the effects of these items from its operating results allows management and investors to effectively compare the true underlying financial
performance of its business from period to period and against its global peers . A detailed summary of these adjustments appears in the
appendix below.
The number of shares used to calculate both basic and diluted earnings per share in both Q2 and H1 2021 is 2,329.8 million shares. The
number of shares used to calculate both basic and diluted earnings per share in both Q2 and H1 2022 is 2,329.8 million shares.
2
The general crop protection market environment2
Crop prices remain elevated above historic averages despite decreasing somewhat in Q2 2022 after
reaching historically high levels in Q1 2022. Prices are, however, expected to remain elevated into H2
2022 and beyond, supported by key fundamentals including very low stocks, unfavorable weather
conditions in the Americas and parts of Europe and continued supply and logistics disruptions
exacerbated by the conflict in Ukraine.
The high crop prices incentivize another year of increases in global planted areas. As a result, the
global demand for crop protection remains strong as farmers strive to maximize yields in this high crop
price environment. Farmers continue to face high production costs, mainly from higher fertilizer
prices resulting from disruption to supply and tight availability caused by the conflict in Ukraine, yet
their farming activities are nevertheless still very profitable in most regions.
Global energy prices remain inflated while the challenging cost environment is expected to extend
throughout 2022. Despite this, global energy prices have decreased recently mainly due to concerns
regarding recession, but are expected to remain elevated into H2 2022, due to tight supply and
concerns regarding supply outages following sanctions on Russian energy exports combined with
pockets of increased demand as economies recover from COVID.
Global freight and logistics costs are declining as a result of reduced demand in light of COVID
lockdowns in China as well as high inflation rates, but remain high after reaching record highs in
February 2022. Prices are expected to remain elevated well into H2 2022, due to high fuel costs,
prolonged supply chain disruptions while the availability of shipping resources continues to be limited.
Additionally, global freight volumes are expected to increase as the lockdown in Shanghai Port has
eased and production has resumed.
Despite some easing in global procurement prices for raw materials, intermediates and active
ingredients during the quarter, most products are expected to keep fluctuating at elevated levels in
H2 2022. This overall trend is impacted both by the general softening of prices in China and by the
increase in prices of such products in other geographies. In China, an increase in production capacity
and an ease in logistic disruptions led to softening of prices, while in other geographies cost inflation,
energy prices, supply shortages and logistic challenges are driving prices upward and impacting
availability. With strong global crop protection demand, transportation disruptions and supply
shortages driven by the ongoing conflict in Ukraine, as well as the "Zero COVID" policy in China,
prices are expected to remain high.
Portfolio Development Update
During the second quarter of 2022 ADAMA continued to register and launch multiple new products in
markets across the globe, adding on to its differentiated product portfolio. Differentiated products
include a variety of product characteristics and may include products with (i) unique proprietary
formulations, (ii) products with more than one mode of action, (iii) recently off-patented active
ingredients (AI's) that have been classified as high commercial potential - "Core Leap" AI's and (iv)
biologicals. Among these were:
Launch of Novali in Australia, a herbicide for use in grasses on cereals and pulses, containing
Pyroxasulfone, a "Core Leap" AI produced in-house by ADAMA.
2Sources: Agbio Investor; Rabobank, ACMR monthly June 2022; Morgan Stanley, Freight Transportation, June 2022; JP Morgan
Agricultural Markets Weekly, June 2022
3
Registration of Nimitz in South Africa, an innovative nematicide for potatoes containing
proprietary AI Fluensulfone.
Registration of Jumbo in Brazil, a dual mode broad spectrum herbicide for all year-round use
in sugarcane.
Launch in Brazil of Cheval, a premium dual mode pre-seed and post-emergent herbicide,
powered by ADAMA’s proprietary T.O.V. Formulation Technology, for use in soybean and
other crops.
Initiation of in-house production of "Core Leap" AI, Indoxacarb, through a new proprietary
synthesis process.
Launch of Suprado for the Consumer and Professional sector in the US, an insecticide with
a unique mode-of-action for the treatment of Annual Bluegrass weevil on turf powered by
ADAMA's proprietary AI Novaluron.
Registration in France of Goltix Silver, a dual mode herbicide for sugar beets.
Registration in Guatemala of Expert Grow, a triple mode-of-action bio-stimulant for the
increase of yield in a variety of F&V (fruit & vegetables) as well as in Soybean, based on a
unique fermentation process developed by ADAMA improving the plant's photosynthetic
thereby reducing abiotic stress, improving fruit/pod retention and plant growth. This product
complements LATAM's sustainable offering of biological products and is expected to be rolled-
out to additional key countries in the region in coming years.
Financial Highlights
Revenues in the second quarter grew by 21% (+24% in RMB terms; +25% in CER terms) to $1,479
million, driven by a significant 22% increase in prices, a trend which started in the third quarter of 2021.
The markedly higher prices were complemented by continued volume growth (+3%), including the
contribution of a newly acquired company, achieved despite supply challenges in the market, and the
adverse impact of exchange rate movements.
The accelerated growth in the quarter brought half-year sales to a record-high of $2,899 million, an
increase of 24% (+25% in RMB terms; +28% in CER terms) driven by a 20% increase in prices and
an 8% growth in volume.
Table 2. Regional Sales Performance
Q2 2022 Q2 2021 Change Change H1 2022 H1 2021 Change Change
$m $m USD CER $m $m USD CER
Europe 293 261 12.4% 20.9% 650 605 7.4% 12.2%
North America 278 256 8.3% 8.5% 562 445 26.1% 26.0%
Latin America 379 271 39.9% 35.0% 613 449 37.0% 33.6%
Asia Pacific 332 242 37.3% 42.5% 720 483 49.1% 52.6%
Of which China 213 135 57.2% 60.2% 449 259 73.2% 73.4%
India, Middle East & Africa 197 190 4.0% 15.4% 354 347 2.0% 15.6%
Total 1,479 1,220 21.3% 24.8% 2,899 2,329 24.5% 27.9%
4
Europe:
In Europe, the Company presented strong sales, despite the negative impact of exchange rates,
loss of sales due to the Ukraine-Russia conflict and some supply challenges. The Company
continued to gain market share in the key countries France and Italy, presenting strong sales
across most countries in the region and particularly in France, Germany, Hungary as well as in
Scandinavian, BENELUX, Baltic and Balkan countries, while negative seasonal conditions
impacted the sales in Spain and Italy.
Notably, the Company benefited from the sale of Folpet in Germany, which was granted an
emergency registration3 in Barley for 2022.
North America:
In the US Ag market, sales increased as the Company focused on the quality of business and
despite drought conditions across western Texas and California that impacted demand.
Very strong growth in sales and gain of market share in Canada due to seizing market opportunity
to supply increased demand for cereal herbicides in light of general market supply shortages.
ADAMA initiated in-house production of cereal herbicide MCPA to meet this demand.
The Consumer & Professional business presented very strong sales achieved through
capturing market opportunities and driven by steady demand mainly attributed to the commercial
business (hotels, restaurants, etc…) coming back to full strength after COVID shutdowns as well
as very successful new launch of Suprado, strengthening ADAMA's position as an innovator in
the C&P arena. This is despite softening of demand in the consumer market and with
homeowners as inflation rises and recreational activities decrease post-COVID.
Latin America:
Significant growth in sales in Brazil as ADAMA continues to reinforce its position in this market
while demand remains strong supported by elevated crop commodities prices.
The Company's innovative herbicides Araddo, Cheval and Arremate and fungicides Armero
and Across continued to be well received in the market.
Higher sales were also achieved in other LATAM countries, particularly in the key countries
Colombia, Argentina and Mexico, despite some supply challenges.
Asia-Pacific: The Company's strong growth in Asia Pacific was led by the exceptionally strong
sales of raw material, intermediates and fine chemicals in China, driven both by volumes and
prices, in light of the strong global demand for crop protection and achieved despite logistic
challenges related to COVID. The sales in China of ADAMA's branded portfolio also grew
significantly as the Company gains market share, despite the negative impact of some seasonal
conditions and the strong competition in the market.
In the wider APAC region, strong sales were delivered in the Pacific region, which continued to
benefit from the favorable La Nia season, that has now potentially ended after an extended two-
year season.
India, Middle East & Africa: The growth in sales was mainly led by Turkey and Israel following
favorable weather conditions and was negatively impacted by the depreciation of the Turkish Lira
and by a decline in sales in India.
3 Despite not having received yet full label registration in Germany, Folpet was granted "Nationwide emergency registration for FOLPAN
500 SC against Ramularia collo-cygni in barley" allowing it to be used only for this specification.
5
Gross Profit reported in the second quarter was up 13% to $386 million (gross margin of 26.1%)
compared to $340 million (gross margin of 27.9%) in the same quarter last year and was up 16% to
$746 million (gross margin of 25.7%) in the half year period compared to $645 million (gross margin
of 27.7%) last year.
Adjustments to reported results: The adjusted gross profit includes all idleness costs and
excludes transportation costs to third parties and its marketing subsidiaries (classified
under operating expenses).
In the reported results, as of Q4 2021, following recent changes in the guidelines in China,
the aforementioned transportations costs and OPEX idleness have been reclassified from
operating expenses to costs of goods (not impacting the operating results), while these
expenses were not recorded in the cost of goods in the second quarter and first half period
in 2021, but rather in the operating expenses.
Additionally, certain extraordinary charges related largely to a temporary disruption of the
production of certain products, were adjusted in the second quarter and first half period in
2021. These charges have significantly declined since the first quarter of 2022, as the
relocation and upgrade of the manufacturing Jingzhou site in China has been completed
and is now at a high level of operation.
Excluding the impact of the abovementioned extraordinary items, adjusted gross profit in the second
quarter was up 20% to $437 million (gross margin of 29.6%) compared to $365 million (gross margin
of 29.9%) in the same quarter last year and was up 24% to $852 million (gross margin of 29.4%) in
the half year period compared to $687 million (gross margin of 29.5%) last year.
In the quarter and half year period, the significantly higher gross profit and improvement in the adjusted
gross margin were mainly driven by the markedly higher prices, complemented by continued volume
growth, which more than offset higher logistics, procurement and production costs as well as the
negative impact of exchange rates.
Operating expenses reported in the second quarter were $243 million (16.4% of sales) and $479
million (16.5% of sales) in the half year period, compared to $250 million (20.5% of sales) and $489
million (21.0% of sales) in the corresponding periods last year, respectively.
Adjustments to reported results: please refer to the explanation regarding adjustments to the gross
profit in respect to certain transportation costs and idleness.
Additionally, the Company recorded certain non-operational charges within its reported
operating expenses amounting to $22 million in Q2 2022 in comparison to $10 million in
Q2 2021 and $28 in H1 2022 in comparison to $26 in H1 2021. These charges include
mainly (i) non-cash amortization charges in respect of Transfer assets received from
Syngenta related to the 2017 ChemChina-Syngenta acquisition, (ii) charges related to the
non-cash amortization of intangible assets created as part of the Purchase Price Allocation
(PPA) on acquisitions, with no impact on the ongoing performance of the companies
acquired and (iii) incentive plans - share-based compensation. For further details on these
non-operational charges, please see the appendix to this release.
Excluding the impact of the abovementioned non-operational charges, adjusted operating expenses
in the quarter and half year period were $268 million (18.1% of sales) and $549 million (18.9% of
sales), compared to $240 million (19.7% of sales) and $463 million (19.9% of sales) in the
corresponding periods last year, respectively.
The higher operating expenses in the quarter and half-year period reflect the strong growth of the
business, an increase in expenses attributed to company success-based employee compensation,
higher transportation and logistics costs driven by both an increase in freight costs and volumes
6
transported, the inclusion of a recent acquisition and moderated by the positive impact of exchange
rates.
In addition, in the first quarter the Company recorded a doubtful debt provision for trade receivables
in Ukraine.
Operating income reported in the second quarter was up 58% to $143 million (9.6% of sales)
compared to $90 million (7.4% of sales) in the same quarter last year and was up 72% to $267 million
(9.2% of sales) in the half year period compared to $156 million (6.7% of sales) last year.
Excluding the impact of the abovementioned non-operational items, adjusted operating income in
the second quarter was up 36% to $170 million (11.5% of sales) compared to $125 million (10.3% of
sales) in the same quarter last year and was up 36% to $303 million (10.4% of sales) in the half year
period compared to $223 million (9.6% of sales) in the same period last year.
EBITDA reported in the second quarter was up 36% to $224 million (15.1% of sales) compared to
$164 million (13.5% of sales) in the same quarter last year and was up 42% to $427 million (14.7% of
sales) in the half year period compared to $302 million (13.0% of sales) last year.
Excluding the impact of the abovementioned non-operational items, adjusted EBITDA in the second
quarter was up 29% to $240 million (16.2% of sales) compared to $186 million (15.2% of sales) in the
same quarter last year and was up 29% to $441 million (15.2% of sales) in the half year period
compared to $343 million (14.7% of sales) last year.
Financial expenses and investment income were $82 million in the second quarter and $134 million
in the half year period, compared to $54 million and $91 million in the corresponding periods last year,
respectively. The higher financial expenses were mainly driven by the net effect of the high Israeli CPI
on the ILS-denominated, CPI-linked bonds, higher hedging costs on exchange rates and the valuation
of put options attributed to minority stakes.
Taxes on income in the second quarter were $12 million and $18 million in the half year period,
compared to $7 million and $16 million in the corresponding periods last year, respectively.
Net income attributable to the shareholders of the Company reported in the second quarter was
$46 million (3.1% of sales) and $113 million (3.9% of sales) in the half-year period, compared to $34
million (2.8% of sales) and $57 million (2.4% of sales) in the corresponding periods last year,
respectively.
Excluding the impact of the abovementioned extraordinary and non-operational charges, adjusted
net income in the second quarter was $76 million (5.1% of sales), and $151 million (5.2% of sales)
in the half-year period, compared to $63 million (5.2% of sales) and $115 million (5.0% of sales) in the
corresponding periods last year, respectively.
Trade working capital as of June 30, 2022, was $2,664 million compared to $2,499 million at the
same point last year. The increase in working capital was due to an increase in the value and levels
of inventory held by the Company to support expected future sales, in light of anticipated supply
shortages, logistic challenges and inventory costs increases. This increase in inventory levels was
moderated by higher trade payables. Trade receivables increased only slightly in comparison to the
growth in sales reflecting good collections across the board.
The trade capital/last twelve months sales ratio of 49.5% as of June 30, 2022, in comparison to 56.2%,
as of June 30, 2021, demonstrates the improved efficiency in the Company's management of its
working capital.
Cash Flow: Operating cash flow of $71 million was generated in the quarter and $215 million
consumed in the half year period, compared to $361 million and $231 million generated in the
corresponding periods last year, respectively. The lower cash flow generated in the quarter was
7
primarily due to an increase in payments for goods procured in previous quarters supporting the
increase in inventory levels.
Net cash used in investing activities was $107 million in the quarter and $197 million in the first half
period, compared to $184 million and $292 million in the corresponding periods last year, respectively.
The cash used in investing activities in the second quarter of 2022 and the half year period is largely
related to investments in "Core Leap" manufacturing capabilities in Israel and Brazil as well as
investments in intangible assets relating to ADAMA's global registrations. In the corresponding periods
in 2021, cash was also used for the completion of the payment related to the acquisition of Huifeng’s
domestic commercial crop protection business and the acquisition of the Huifeng Dafeng
manufacturing site towards the end of the second quarter in 2021, as well as for the relocation and
upgrade of the manufacturing Sanonda Jingzhou site, which was completed towards the end of the
second quarter of 2021.
Free cash flow of $83 million was consumed in the second quarter and $469 million consumed in the
half-year period compared to $132 million generated and $116 million consumed in the corresponding
periods last year, respectively, reflecting the aforementioned operating and investing cash flow
dynamics.
Table 3. Revenues by operating segment
Sales by segment
Q2 2022 Q2 2021 H1 2022 H1 2021
% % % %
USD (m) USD (m) USD (m) USD (m)
Crop Protection 1,327 89.7% 1,104 90.5% 2,598 89.6% 2,111 90.7%
Intermediates and
152 10.3% 116 9.5% 301 10.4% 218 9.3%
Ingredients
Total 1,479 100% 1,220 100.0% 2,899 100.0% 2,329 100.0%
Sales by product category
Q2 2022 Q2 2021 H1 2022 H1 2021
% % % %
USD (m) USD (m) USD (m) USD (m)
Herbicides 702 47.4% 473 38.7% 1,362 47.0% 947 40.8%
Insecticides 393 26.6% 393 32.2% 743 25.6% 706 30.3%
Fungicides 232 15.7% 239 19.6% 493 17.0% 455 19.5%
Intermediates and
152 10.3% 116 9.5% 301 10.4% 218 9.3%
Ingredients
Total 1,479 100% 1,220 100.0% 2,899 100.0% 2,329 100.0%
Note: the sales split by product category is provided for convenience purposes only and is not representative of the way the Company is
managed or in which it makes its operational decisions.
8
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 a global leader in crop protection, providing solutions to farmers across the world to
combat weeds, insects and disease. ADAMA has one of the widest and most diverse portfolios of
active ingredients in the world, state-of-the art R&D, manufacturing and formulation facilities,
together with a culture that empowers our people in markets around the world to listen to farmers
and ideate from the field. This uniquely positions ADAMA to offer a vast array of distinctive mixtures,
formulations and high-quality differentiated products, delivering solutions that meet local farmer and
customer needs in over 100 countries globally. For more information, visit us at www.ADAMA. co m
and follow us on Twitter at @ADAMAAgri.
Contact
Rivka Neufeld Zhujun Wang
Global Investor Relations China Investor Relations
Email: ir@adama.com Email: irchina@adama.com
9
Abridged Adjusted Consolidated Financial Statements
The following abridged consolidated financial statements and notes have been prepared as described in Note 1 in this
appendix. While prepared based on the principles of Chinese Accounting Standards (ASBE), they do not contain all of the
information which either ASBE 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.
Relevant income statement items contained in this release are also presented on an “Adjusted” basis, which exclude items
that are of a one-time or non-cash/non-operational nature that do not impact the ongoing performance of the business, and
reflect the way the Company’s management and the Board of Directors view the performance of the Company internally.
The Company believes that excluding the effects of these items from its operating results allows management and investors
to effectively compare the true underlying financial performance of its business from period to period and against its global
peers.
Abridged Consolidated Income Statement for the Second Quarter
Q2 2022 Q2 2021 Q2 2022 Q2 2021
Adjusted4
USD (m) USD (m) RMB (m) RMB (m)
Revenues 1,479 1,220 9,780 7,877
Cost of Sales 1,012 848 6,693 5,474
Other costs 29 7 194 45
Gross profit 437 365 2,893 2,358
% of revenue 29.6% 29.9% 29.6% 29.9%
Selling & Distribution expenses 209 186 1,383 1,198
General & Administrative expenses 47 39 309 251
Research & Development expenses 22 18 143 117
Other operating expenses (10) )3) (66) (17)
Total operating expenses 268 240 1,770 1,549
% of revenue 18.1% 19.7% 18.1% 19.7%
Operating income (EBIT) 170 125 1,123 809
% of revenue 11.5% 10.3% 11.5% 10.3%
Financial expenses and investment income 82 54 540 350
Income before taxes 88 71 583 459
Taxes on Income 12 7 82 47
Net Income 76 64 501 412
Attributable to:
Non-controlling interest 0 1 0 2
Shareholders of the Company 76 63 501 410
% of revenue 5.1% 5.2% 5.1% 5.2%
Adjustments 30 30 197 192
Reported Net income attributable to the
46 34 304 218
shareholders of the Company
% of revenue 3.1% 2.8% 3.1% 2.8%
Adjusted EBITDA 240 186 1,585 1,199
% of revenue 16.2% 15.2% 16.2% 15.2%
Adjusted EPS5 – Basic 0.0326 0.0274 0.2152 0.1759
– Diluted 0.0326 0.0274 0.2152 0.1759
Reported EPS2 – Basic 0.0198 0.0145 0.1307 0.0938
– Diluted 0.0198 0.0145 0.1307 0.0938
4
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”.
5
The number of shares used to calculate both basic and diluted earnings per share in Q2 2021 and Q2 2022 is 2,329.8 million shares.
10
Abridged Consolidated Income Statement for the First Half
H1 2022 H1 2021 H1 2022 H1 2021
Adjusted6
USD (m) USD (m) RMB (m) RMB (m)
Revenues 2,899 2,329 18,796 15,064
Cost of Sales 2,002 1,630 12,975 10,543
Other costs 46 12 299 78
Gross profit 852 687 5,522 4,443
% of revenue 29.4% 29.5% 29.4% 29.5%
Selling & Distribution expenses 408 364 2,646 2,354
General & Administrative expenses 93 71 606 459
Research & Development expenses 42 35 274 227
Other operating expenses 5 (7) 29 (42)
Total operating expenses 549 463 3,555 2,998
% of revenue 18.9% 19.9% 18.9% 19.9%
Operating income (EBIT) 303 223 1,967 1,445
% of revenue 10.4% 9.6% 10.5% 9.6%
Financial expenses and investment income 134 91 875 586
Income before taxes 168 133 1,092 859
Taxes on Income 18 16 115 105
Net Income 151 117 978 754
Attributable to:
Non-controlling interest 0 2 0 7
Shareholders of the Company 151 115 978 747
% of revenue 5.2% 5.0% 5.2% 5.0%
Adjustments 37 59 246 380
Reported Net income attributable to the
113 57 732 367
shareholders of the Company
% of revenue 3.9% 2.4% 3.9% 2.4%
Adjusted EBITDA 441 343 2,862 2,216
% of revenue 15.2% 14.7% 15.2% 14.7%
Adjusted EPS7 – Basic 0.0648 0.0496 0.4197 0.3207
– Diluted 0.0648 0.0496 0.4197 0.3207
Reported EPS2 – Basic 0.0487 0.0244 0.3142 0.1575
– Diluted 0.0487 0.0244 0.3142 0.1575
6
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”.
7
The number of shares used to calculate both basic and diluted earnings per share in H1 2021 and H1 2022 is 2,329.8 million shares.
11
Abridged Consolidated Balance Sheet
June 30 June 30 June 30 June 30
2022 2021 2022 2021
USD (m) USD (m) RMB (m) RMB (m)
Assets
Current assets:
Cash at bank and on hand 491 717 3,297 4,633
Bills and accounts receivable 1,606 1,570 10,780 10,144
Inventories 2,320 1,746 15,569 11,281
Other current assets, receivables and
351 323 2,357 2,088
prepaid expenses
Total current assets 4,768 4,357 32,003 28,146
Non-current assets:
Fixed assets, net 1,674 1,472 11,234 9,508
Rights of use assets 72 78 486 506
Intangible assets, net 1,488 1,509 9,984 9,751
Deferred tax assets 160 145 1,073 940
Other non-current assets 109 93 730 600
Total non-current assets 3,503 3,298 23,507 21,304
Total assets 8,271 7,655 55,510 49,450
Liabilities
Current liabilities:
Loans and credit from banks and other
488 457 3,273 2,954
lenders
Bills and accounts payable 1,271 833 8,528 5,383
Other current liabilities 855 823 5,739 5,314
Total current liabilities 2,614 2,113 17,540 13,651
Long-term liabilities:
Loans and credit from banks and other
640 506 4,292 3,272
lenders
Debentures 1,120 1,238 7,517 7,996
Deferred tax liabilities 58 56 392 363
Employee benefits 115 116 769 748
Other long-term liabilities 367 308 2,463 1,989
Total long-term liabilities 2,299 2,224 15,433 14,367
Total liabilities 4,913 4,337 32,973 28,018
Equity
Total equity 3,358 3,318 22,537 21,432
Total liabilities and equity 8,271 7,655 55,510 49,450
12
Abridged Consolidated Cash Flow Statement for the Second Quarter
Q2 2022 Q2 2021 Q2 2022 Q2 2021
USD (m) USD (m) RMB (m) RMB (m)
Cash flow from operating activities:
Cash flow from operating activities 71 361 468 2,329
Cash flow from operating activities 71 361 468 2,329
Investing activities:
Acquisitions of fixed and intangible assets (107) (91) (707) (591)
Proceeds from disposal of fixed and intangible assets 10 2 67 10
Acquisition of subsidiaries 0 (93) - (600)
Other investing activities (10) (1) (65) (7)
Cash flow used for investing activities (107) (184) (705) (1,188)
Financing activities:
Receipt of loans from banks and other lenders 222 296 1,466 1,915
Repayment of loans from banks and other lenders (150) )323( (992) (2,085)
Interest payment and other (53) (50) (353) (325)
Dividends to shareholders (3) - (19) -
Other financing activities (79) 22 (523) 123
Cash flow from (used for) financing activities (64) (58) (421) (372)
Effects of exchange rate movement on cash and cash
(4) 3 174 (47)
equivalents
Net change in cash and cash equivalents (103) 122 (484) 723
Cash and cash equivalents at the beginning of the period 579 592 3,674 3,892
Cash and cash equivalents at the end of the period 475 714 3,191 4,615
Free Cash Flow (83) 132 (551) 854
13
Abridged Consolidated Cash Flow Statement for the First Half
H1 2022 H1 2021 H1 2022 H1 2021
USD (m) USD (m) RMB (m) RMB (m)
Cash flow from operating activities:
Cash flow from operating activities (215) 231 (1,346) 1,491
Cash flow from operating activities (215) 231 (1,346) 1,491
Investing activities:
Acquisitions of fixed and intangible assets (199) (182) (1,292) (1,179)
Proceeds from disposal of fixed and intangible assets 11 3 70 20
Acquisition of subsidiaries 0 (101) - (655)
Other investing activities (9) (12) (57) (77)
Cash flow used for investing activities (197) (292) (1,279) (1,892)
Financing activities:
Receipt of loans from banks and other lenders 374 584 2,435 3,776
Repayment of loans from banks and other lenders (177) (360) (1,164) (2,329)
Interest payment and other (63) (60) (413) (388)
Dividends to shareholders (3) - (19) -
Other financing activities (144) 22 (934) 149
Cash flow from (used for) financing activities (12) 186 (94) 1,209
Effects of exchange rate movement on cash and cash
(4) 2 150 (29)
equivalents
Net change in cash and cash equivalents (428) 127 (2,569) 780
Cash and cash equivalents at the beginning of the period 903 588 5,759 3,835
Cash and cash equivalents at the end of the period 475 714 3,191 4,615
Free Cash Flow (469) (115) (2,999) (752)
14
Notes to Abridged Consolidated Financial Statements
Note 1: Basis of preparation
Basis of presentation and accounting policies: The abridged consolidated financial statements for the
quarters ended June 30, 2022 and 2021 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 (ASBE) 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 “ASBE”). Note that in the reported financial
statements, as a result of recent changes in the ASBE guidelines (IAS 37), certain items as of Q4 2021
(specifically certain transportation costs and certain idleness charges) have been reclassified from Operating
Expenses to COGS. See the notes to the financial statements for more details in this regard.
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 af fect
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:
“Gross profit” in this release is revenue less costs of goods sold, taxes and surcharges, inventory
impairment and other idleness charges (in addition to those already included in costs of goods sold);
part of the idleness charges is removed in the Adjusted financial statements
“Other operating expenses” includes impairment losses (not including inventory impairment); gain (loss)
from disposal of assets and non-operating income and expenses
“Operating expenses” in this release differ from those in the formally reported financial statements in
that in the reported financial statements, as a result of recent changes in the ASBE guidelines (IAS 37),
certain items as of Q4 2021 (specifically certain transportation costs and certain idleness charges) have
been reclassified from Operating Expenses to COGS.
“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
15
Income Statement Adjustments
Q2 2022 Q2 2021 Q2 2022 Q2 2021
USD (m) USD (m) RMB (m) RMB (m)
Net Income (Reported) 46.1 33.8 304.4 218.4
Adjustments to COGS & Operating Expenses:
1. Amortization of Legacy PPA of 2011 acquisition of Solutions (non-cash) 0.3 0.3 1.7 1.6
2. Amortization of Transfer assets received and written-up due to 2017 ChemChina-
Syngenta transaction (non-cash) 5.7 6.7 37.5 43.2
3. Upgrade & Relocation related costs 2.0 24.8 13.3 160.3
4. Incentive plans 14.3 (0.6) 94.2 (3.9)
5. Amortization of acquisition-related PPA (non-cash), other acquisition-related costs 5.0 3.8 33.1 24.4
6. Transportation classification COGS impact (46.6) - (308.1) -
7. Transportation classification OPEX impact 46.6 - 308.1 -
Total Adjustments to Operating Income (EBIT) 27.2 34.9 179.8 225.6
Total Adjustments to EBITDA 15.9 21.4 105.3 138.4
Adjustments to Financing Expenses
Revaluation of non-cash adjustment related to non-controlling interest 3.6 - 23.8 -
Adjustments to Taxes
1. Tax shield on Legacy PPA of 2011 acquisition of Solutions 0.0 0.0 0.3 0.3
3. Taxes related to Upgrade & Relocation related costs 0.1 4.3 0.4 27.8
5. Deferred tax on amortization of acquisition-related PPA, other acquisition-related costs 0.9 0.6 6.0 3.9
Total adjustments to Net Income 29.8 30.0 196.9 193.7
Net Income (Adjusted) 75.9 63.8 501.3 412.1
Total adjustments to Net Income attributable to the shareholders of the Company 29.8 29.7 196.9 191.6
H1 2022 H1 2021 H1 2022 H1 2021
USD (m) USD (m) RMB (m) RMB (m)
Net Income (Reported) 113.5 57.1 732.1 369.2
Adjustments to COGS & Operating Expenses:
1. Amortization of Legacy PPA of 2011 acquisition of Solutions (non-cash) 0.5 0.5 3.2 3.2
2. Amortization of Transfer assets received and written-up due to 2017 ChemChina-
Syngenta transaction (non-cash) 11.3 14.5 73.2 93.9
3. Upgrade & Relocation related costs 3.9 40.2 25.3 260.1
4. Incentive plans 10.1 3.5 68.0 22.9
5. Amortization of acquisition-related PPA (non-cash), other acquisition-related costs 10.1 7.5 65.5 48.7
6. Transportation classification COGS impact 97.5 - 631.3 -
7. Transportation classification OPEX impact (97.5) - (631.3) -
8. Provisions in respect of prior years’ legal- and tax-related costs - 1.6 - 10.3
Total Adjustments to Operating Income (EBIT) 35.9 67.9 235.3 439.2
Total Adjustments to EBITDA 13.5 40.8 90.0 263.9
Adjustments to Financing Expenses
Revaluation of non-cash adjustment related to non-controlling interest 3.6 - 23.8 -
Adjustments to Taxes
1. Tax shield on Legacy PPA of 2011 acquisition of Solutions 0.1 0.1 0.6 0.5
3. Taxes related to Upgrade & Relocation related costs 0.1 6.7 0.9 43.3
5. Deferred tax on amortization of acquisition-related PPA, other acquisition-related costs 1.8 1.2 11.8 7.7
8. Provisions in tax expenses in respect of prior years’ legal- and tax-related costs - 0.4 - 2.5
Total adjustments to Net Income 37.5 59.5 245.8 385.2
Net Income (Adjusted) 150.9 116.6 977.9 754.4
Total adjustments to Net Income attributable to the shareholders of the Company 37.5 58.7 245.8 380.1
16
Notes:
1. Amortization of Legacy PPA of 2011 acquisition of Solutions (non-cash): Under ASBE, since the first combined reporting for Q3 2017, the
Company has inherited the historical “legacy” amortization charge that ChemChina previously was incurring in respect of its a cquisition of
Solutions in 2011. This amortization is done in a linear manner on a quarterly basis, most of which will have been completed by the end of 2020.
2. Amortization of Transfer assets received and written-up due to 2017 ChemChina-Syngenta transaction (non-cash): The proceeds from
the Divestment of crop protection products in connection with the approval by the EU Commission of the acquisition of Syngenta by ChemChina,
net of taxes and transaction expenses, were paid to Syngenta in return for the transfer of a portfolio of products in Europe of similar nature and
economic value. Since the products acquired from Syngenta are of the same nature and with the same net economic value as those divested,
and since in 2018 the Company adjusted for the one-time gain that it made on the divested products, the additional amortization charge incurred
due to the written-up value of the acquired assets is also adjusted to present a consistent view of Divestment and Transfer transactions, which
had no net impact on the underlying economic performance of the Company. These additional amortization charges will continue until 2032 but
at a reducing rate, yet will still be at a meaningful level until 2028.
3. Upgrade & manufacturing facilities relocation-related costs: These charges all relate to the multi-year Upgrade & Relocation program in
China. As part of this program, production assets located in the old production sites in Jingzhou and Huai’An were relocated to new sites in 2020,
2021 and in the coming years. Since some of the older production assets may not be able to be relocated, some of these assets which ar e no
longer operational are being written off (or impaired), while for others, their economic life has been shortened and therefore will be depreciated
over a shorter period. Since these are older assets that were built many years ago and will be replaced by newer production facilities at the new
sites, and since the ongoing operations of the business will not be impacted thereby, the Company adjusts for the impact of all charges related
to the China Upgrade & Relocated program, which include mainly: (i) excess procurement costs incurred as the Company continued to fulfill
demand for its products, in order to protect its market position, through replacement sourcing at significantly higher costs from third-party suppliers
(ii) elevated idleness charges largely related to suspensions at the facilities being relocated These charges have significantly declined since the
first quarter of 2022, as the relocation and upgrade of the manufacturing Jingzhou site in China has been completed and is now at a high level
of operation.
4. Incentive plans: ADAMA granted certain of its employees, a long-term incentive (LTI) in the form of 'phantom' awards linked to the Company’s
share price. As such, the Company records an expense, or recognizes income, depending on the fluctuation in the Company’s sha re price,
regardless of award exercises. To neutralize the impact of such share price movements on the measurement of the Company’s performance
and expected employee compensation and to reflect the existing phantom awards, in the Company’s adjusted financial performanc e, the LTI is
presented on an equity-settled basis in accordance with the value of the existing plan at the grant date. During Q2 2022 the Company recorded
expenses due to an increase in the Company's share price.
5. Amortization of acquisition-related PPA (non-cash) and other acquisition-related costs: Related mainly to the non-cash amortization of
intangible assets created as part of the Purchase Price Allocation (PPA) on acquisitions, with no impact on the ongoing performance of the
companies acquired, as well as other M&A-related costs.
6. Transportation classification COGS impact – as a result of recent changes in the ASBE guidelines [IAS 37], certain items as of Q4 2021
(specifically certain transportation costs and certain idleness charges) have been reclassified from Operating Expenses to CO GS.
7. Transportation classification OPEX impact – as a result of recent changes in the ASBE guidelines [IAS 37], certain items as of Q42021
(specifically certain transportation costs and certain idleness charges) have been reclassified from Operating Expenses to CO GS.
8. Provisions in tax expenses related to prior years’ activities: Provisions in respect of tax expenses related to activities of prior years.
17
Exchange Rate Data for the Company's Principal Functional Currencies
June 30 Q2 Average H1 Average
2022 2021 Change 2022 2021 Change 2022 2021 Change
EUR/USD 1.040 1.189 (12.5%) 1.066 1.20 (11.4%) 1.094 1.205 (9.3%)
USD/BRL 5.238 5.002 (4.7%) 4.921 5.30 7.1% 5.077 5.384 5.7%
USD/PLN 4.483 3.804 (17.9%) 4.359 3.76 (15.8%) 4.239 3.768 (12.5%)
USD/ZAR 16.103 14.347 (12.2%) 15.570 14.12 (10.3%) 15.409 14.545 (5.9%)
AUD/USD 0.687 0.750 (8.4%) 0.716 0.77 (7.0%) 0.720 0.771 (6.7%)
GBP/USD 1.211 1.386 (12.6%) 1.211 1.40 (13.3%) 1.299 1.388 (6.5%)
USD/ILS 3.500 3.260 (7.4%) 3.500 3.27 (7.9%) 3.270 3.268 (0.1%)
USD LIBOR 3M 2.29% 0.15% 1468.4% 1.53% 0.16% 884.6% 1.03% 0.18% 476.0%
June 30 Q2 Average H1 Average
2022 2021 Change 2022 2021 Change 2022 2021 Change
USD/RMB 6.711 6.460 3.9% 6.611 6.458 2.4% 6.481 6.470 0.2%
EUR/RMB 6.977 7.678 (9.1%) 7.051 7.776 (9.3%) 7.088 7.797 (9.1%)
RMB/BRL 0.780 0.774 (0.8%) 0.744 0.820 9.2% 0.783 0.832 5.9%
RMB/PLN 0.668 0.589 (13.4%) 0.659 0.583 (13.2%) 0.654 0.582 (12.3%)
RMB/ZAR 0.417 0.450 7.4% 0.425 0.457 7.2% 0.421 0.445 5.4%
AUD/RMB 4.613 4.845 (4.8%) 4.731 4.967 (4.7%) 4.663 4.989 (6.5%)
GBP/RMB 8.125 8.952 (9.2%) 8.318 9.022 (7.8%) 8.416 8.982 (6.3%)
RMB/ILS 0.522 0.505 (3.3%) 0.505 0.506 0.0% 0.505 0.505 0.1%
RMB LIBOR 3M 2.000% 2.46% (18.6%) 2.139% 2.524% (15.3%) 2.276% 2.617% (13.0%)
18
