ADAMA Reports Third Quarter and First Nine Months 2022 Results
Q3 and 9M sales growth driven by continued price increases and volume
growth led by Brazil
Third Quarter 2022 Highlights:
Sales up 18% to $1,359 million (+25% in RMB terms; +24% in CER1 terms), driven by 18% higher
prices and 6% volume growth
Improvement of Opex/Sales ratio of 20.1% vs. 22.2% in Q3 2021
Adjusted operating income up 70% to $100 million (RMB: +79%), representing an improvement
of operating income margin from 5.1% in Q3 2021 to 7.4% in Q3 2022
Adjusted EBITDA up 40% to $171 million (RMB: +48%) vs. Q3 2021, representing an improvement
of EBITDA margin from 10.6% in Q3 2021 to 12.5% in Q3 2022
Adjusted net income of $8 million; Reported net income of $5 million
First Nine Months 2022 Highlights
Sales up 22% to a nine-month record-high of $4,258 million (+25% in RMB terms; +26% in CER
terms), driven by 19% higher prices and 7% volume growth
Improvement of Opex/Sales ratio of 19.3% vs. 20.6% in the first nine months of 2021
Adjusted operating income up 43% to $403 million (RMB: +45%), representing an improvement
of operating income margin from 8.1% in first nine months of 2021 to 9.5% in the first nine months
of 2022
Adjusted EBITDA up 32% to $611 million (RMB: +34%), vs. the first nine months of 2021
representing an improvement of EBITDA margin from 13.4% in first nine months 2021 to 14.4%
in the first nine months of 2022
Adjusted net income up to $159 million; Reported net income up to $119 million
BEIJING, CHINA and TEL AVIV, ISRAEL, October 26, 2022 – ADAMA Ltd. (the “Company”) (SZSE
000553), today reported its financial results for the third quarter and nine-month period ended
September 30, 2022.
Ignacio Dominguez, President and CEO of ADAMA, said, "ADAMA presents another quarter of
strong sales, led by our business in Brazil, reflecting solid demand for crop protection products and
positive farmer profitability. Crop commodity prices are expected to maintain historically elevated
levels supported by underlying economic fundamentals, continuing to drive the demand for crop
protection products.
"We are committed to serving farmers, wherever they may be, despite the many challenges we see
in the market today. Food security is increasingly under pressure with extreme weather conditions and
disruptions in the global trade of crop commodities. Especially in such times of uncertainty, crop
protection remains an invaluable tool for farmers to maximize yields and ADAMA is consistently there
to support farmers in feeding the world."
1 CER: Constant Exchange Rates
1
Table 1. Financial Performance Summary
As Reported Adjustments Adjusted
USD (m) Q3 Q3 Q3 Q3 Q3 Q3
% Change % Change
2022 2021 2022 2021 2022 2021
Revenues 1,359 1,147 +18% - - 1,359 1,147 +18%
Gross profit 322 287 +12% 50 27 373 313 +19%
% of sales 23.7% 25.0% 27.4% 27.3%
Operating income (EBIT) 96 26 +269% 4 33 100 59 +70%
% of sales 7.1% 2.3% 7.4% 5.1%
Income before taxes 10 (27) 4 33 14 6 +142%
% of sales 0.7% (2.4%) 1.0% 0.5%
Net income 5 (57) 3 27 8 (30)
% of sales 0.4% (5.0%) 0.6% (2.6%)
EPS
- USD 0.0023 (0.0246) 0.0036 (0.0130)
- RMB 0.0155 (0.1592) 0.0245 (0.0839)
EBITDA 177 103 +72% (7) 19 171 122 +40%
% of sales 13.0% 9.0% 12.5% 10.6%
As Reported Adjustments Adjusted
USD (m) 9M 9M 9M 9M 9M 9M
% Change % Change
2022 2021 2022 2021 2022 2021
Revenues 4,258 3,476 +22% - - 4,258 3,476 +22%
Gross profit 1,068 932 +15% 156 68 1,224 1,000 +22%
% of sales 25.1% 26.8% 28.7% 28.8%
Operating income (EBIT) 363 182 +100% 40 101 403 282 +43%
% of sales 8.5% 5.2% 9.5% 8.1%
Income before taxes 139 38 +267% 44 101 182 139 +32%
% of sales 3.3% 1.1% 4.3% 4.0%
Net income 119 (1) 41 86 159 85 +87%
% of sales 2.8% 0.0% 3.7% 2.5%
EPS
- USD 0.0510 (0.0003) 0.0684 0.0366
- RMB 0.3297 (0.0017) 0.4442 0.2367
EBITDA 605 405 +49% 7 59 611 464 +32%
% of sales 14.2% 11.6% 14.4% 13.4%
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 Finance
(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 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. 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 Q3 and 9M 2021 and 2022 is 2,329.8 million
shares.
In this table and all tables in this release numbers may not sum due to rounding.
2
The general crop protection market environment2
Preliminary projections estimate the global crop protection industry to increase by 14.5% in 20223.
High crop prices incentivized another year of increases in global planted areas, which drove higher
crop protection volumes as well as by higher pricing.
Crop prices remain elevated above historic averages despite decreasing somewhat in the last two
quarters, after reaching historically high levels in Q1 2022. Prices are expected to remain elevated
into 2023, supported by key fundamentals including very low stocks, unfavorable weather conditions
in the Americas and parts of Europe and continued supply disruptions exacerbated by the conflict in
Ukraine as well as the energy crisis in Europe. However, weaker economic conditions and broad-
based monetary tightening could weigh on consumer demand, softening prices further.
Farmer profitability continues to face pressures from high production costs, mainly from high fertilizer
prices, driven by a surge in energy costs and the application of international economic sanctions to
Russia and Belarus (both large fertilizer exporters), as well as supply disruption and tight availability
caused by the conflict in Ukraine. Despite this, farming activities are nevertheless still very profitable
in most regions.
Crude oil prices continued to decline in the third quarter of 2022 from the peak levels reached in the
first quarter of 2022, mainly due to concerns regarding the global economic outlook. Prices are,
however, expected to remain elevated into the fourth quarter of 2022 and beyond, due to low global
inventory levels, uncertainty of Russia’s oil exports as well as the OPEC+ decision to further limit oil
production.
European gas prices and indirectly Asian spot LNG prices reached record highs in the third quarter
of 2022 following the sharp decline in Russian gas flows to Europe and a tight energy market.
Meanwhile, prices in the United States reached their highest summer levels since 2008.
Global container freight rates have dropped significantly in the third quarter of 2022, driven by a
further weakening in demand in the light of high inflation and slower-than-expected economic growth,
easing port congestion. A large amount of scheduled new deliveries of container vessel capacity,
starting from the end of 2022, is expected to further soften port congestion and put container shipping
rates under pressure.
Prices for raw materials, intermediates and active ingredients reached peak levels towards the
end of 2021; however, since then there has been a general softening of prices in China and an
increase in prices of such products in other geographies. With strong global crop protection demand,
and supply shortages driven by the energy crisis in Europe and the ongoing conflict in Ukraine, as
well as the ongoing "Zero COVID" policy in China, overall prices are expected to remain above levels
in recent years. In China, an increase in production capacity and an ease in logistic disruptions led to
softening of prices of many key raw materials, intermediates and active ingredients from China. In
other geographies cost inflation, energy prices, supply shortages and logistic challenges are driving
procurement prices upward and impacting availability of raw materials and intermediates.
Portfolio Development Update
During the third 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
2Sources: Rabobank, Agri Commodity Markets Research, Sep 2022; AgbioInvestor-Quarterly-Briefing-Service-PLUS_Q3-2022;
JPM: Global Economic Research, Global Data Watch, September 2022; JPM: Agricultural Markets Weekly, Sep 2022
3 Source: AgbioInvestor-Quarterly-Briefing-Service-PLUS_Q3-2022
3
ingredients (AI's) that have been classified as high commercial potential - "Core Leap" AI's and (iv)
biologicals. Among these were:
Launch in Brazil of APRESA, pre-emergent dual mode herbicide, powered by ADAMA’s
proprietary T.O.V. Formulation Technology, for use in a variety of crops.
Launch of Nimitz in South Africa, an innovative nematicide for potatoes containing proprietary
AI Fluensulfone.
Financial Highlights
Revenues in the third quarter grew by 18% (+25% in RMB terms; +24% in CER terms) to $1,359
million, driven by a significant 18% increase in prices, a trend which started in the third quarter of 2021.
The markedly higher prices were complemented by continued volume growth (+6%), and achieved
despite supply challenges in certain markets, and the adverse impact of exchange rate movements in
many regions. The Company achieved growth in sales in constant exchange rates across most
regions.
The accelerated growth in the quarter brought the first nine months sales to a record-high of $4,258
million, an increase of 22% (+25% in RMB terms; +26% in CER terms) driven by a 19% increase in
prices and an 7% growth in volume.
Table 2. Regional Sales Performance
Q3 2022 Q3 2021 Change Change 9M 2022 9M 2021 Change Change
$m $m USD CER $m $m USD CER
Europe 211 220 (4.0%) 8.2% 861 825 4.3% 11.2%
North America 174 183 (4.7%) (4.2%) 736 628 17.2% 17.2%
Latin America 548 372 47.3% 47.1% 1,161 820 41.7% 39.7%
Asia Pacific 238 194 22.4% 27.9% 958 677 41.4% 45.5%
Of which China 156 121 28.9% 34.4% 605 380 59.1% 61.0%
India, Middle East & Africa 187 178 5.3% 18.1% 542 525 3.1% 16.4%
Total 1,359 1,147 18.4% 23.7% 4,258 3,476 22.5% 26.5%
Europe: Increase in sales in the third quarter in constant exchange rate terms attributed mainly
to distributors securing inventory for the autumn season in the UK, Czech Republic, France,
Romania, Benelux and Baltics. This growth in constant exchange rate terms was achieved despite
drought conditions across European countries such as Spain, France, Italy and Germany
impacting demand, as well as supply issues, high channel inventories in some countries and a
loss of sales due to the Ukraine-Russia conflict.
North America: In the US Ag market, sales decreased in the third quarter as the Company was
negatively impacted by the record low harvest of cotton as farmers abandoned non-irrigated fields
due to extreme drought conditions across Texas and other southwest regions. Drought in
California continued to impact demand. With the North American market in the midst of harvest
season, renewed demand for crop protection is expected in anticipation of the upcoming Q1 2023
planting season.
Very strong growth in sales in Canada enabled by the in-house production of cereal herbicide
which supported the cereal season before harvest.
The Consumer & Professional business presented slower sales in the quarter. On the
4
professional side, initial market price reductions, high levels of inventory in the channel and
anticipation of decreases in costs of goods led to a slowdown in the market. On the consumer
side, inflationary pressures are softening overall market demand.
Latin America: Strong growth in sales in Brazil, driven by prices and volume supporting the
anticipated soybean, corn, sugarcane and cotton fourth quarter crop seasons; sales which in 2021
were also included in the fourth quarter.
In other LATAM countries the higher sales reflect the strong demand across the region and were
achieved despite some adverse weather conditions and inventory in the channel.
Asia-Pacific: The Company's strong growth in Asia Pacific was led by the sales of raw material,
intermediates and fine chemicals in China, driven by continued strong demand, in light of the
strong global demand for crop protection and achieved despite an ease in fine chemical prices.
The sales in China of ADAMA's branded portfolio also continued to grow nicely, despite the strong
competition in the market.
In the wider APAC region, growth in sales in the quarter was also achieved led by strong sales in
Asian countries such as Thailand, Korea and Indonesia due to favorable seasonal conditions
and with the return of face-to-face business post-COVID. In the Pacific region fungicide sales
grew nicely following favorable seasonal conditions. This growth was achieved despite high
channel inventories in parts of Asia.
India, Middle East & Africa: Sales in the third quarter were led by India and represent the peak
season for sales in this country due to the monsoon season. Despite this, heavy rainfall negatively
impacted insecticide and fungicide sales in certain crops and overall sales were also impacted by
some supply constraints.
Gross Profit reported in the third quarter was up 12% to $322 million (gross margin of 23.7%)
compared to $287 million (gross margin of 25.0%) in the same quarter last year and was up 15% to
$1,068 million (gross margin of 25.1%) in the first nine month period compared to $932 million (gross
margin of 26.8%) last year4.
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 third quarter and first nine month
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 third quarter and first nine months 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 third
quarter was up 19% to $373 million (gross margin of 27.4%) compared to $313 million (gross margin
of 27.3%) in the same quarter last year and was up 22% to $1,224 million (gross margin of 28.7%) in
the first nine month period compared to $1,000 million (gross margin of 28.8%) last year.
4 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.
5
In the quarter and nine month period, the higher gross profit was mainly driven by the markedly higher
prices, complemented by continued volume growth, which offset the higher logistic, procurement and
production costs, as well as the negative impact of exchange rates.
Due to seasonality, the Company's third quarter is generally characterized by lower profitability.
Operating expenses reported in the third quarter were $226 million (16.7% of sales) and $705 million
(16.6% of sales) in the first nine month period, compared to $261 million (22.7% of sales) and
$750million (21.6% of sales) in the corresponding periods last year, respectively5.
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 $3 million in Q3 2022 in comparison to $6 million in Q3
2021 and $31 million in the first nine months of 2022 in comparison to $32 million in first
nine months of 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 nine month period were $273 million (20.1% of sales) and $821 million (19.3% of
sales), compared to $254 million (22.2% of sales) and $718 million (20.6% of sales) in the
corresponding periods last year, respectively.
The higher operating expenses in the quarter and first nine month period reflect the strong growth of
the business, higher transportation and logistics costs driven by both an increase in freight costs and
volumes transported, an increase in expenses attributed to company success-based employee
compensation, the inclusion of a recent acquisition (in the nine month period) and moderated by the
positive impact of exchange rates.
In addition, in the first quarter of 2022 the Company recorded a doubtful debt provision for trade
receivables in Ukraine.
Operating income reported in the third quarter was up 269% to $96 million (7.1% of sales) compared
to $26 million (2.3% of sales) in the same quarter last year and was up 100% to $363 million (8.5% of
sales) in the first nine month period compared to $182 million (5.2% of sales) last year.
Excluding the impact of the abovementioned non-operational items, adjusted operating income in
the third quarter amounted to $100 million (7.4% of sales) compared to $59 million (5.1% of sales) in
the same quarter last year and was up 43% to $403 million (9.5% of sales) in the first nine month
period compared to $282 million (8.1% of sales) in the same period last year.
EBITDA reported in the third quarter was up 72% to $177 million (13.0% of sales) compared to $103
million (9.0% of sales) in the same quarter last year and was up 49% to $605 million (14.2% of sales)
in the first nine month period compared to $405 million (11.6% of sales) last year.
Excluding the impact of the abovementioned non-operational items, adjusted EBITDA in the third
quarter was up 40% to $171 million (12.5% of sales) compared to $122 million (10.6% of sales) in the
same quarter last year and was up 32% to $611 million (14.4% of sales) in the first nine month period
compared to $464 million (13.4% of sales) last year.
5 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 .
6
Financial expenses and investment income were $86 million in the third quarter and $220 million
in the first nine month period, compared to $53 million and $144 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 and higher hedging costs on exchange rates.
In the nine month period in 2022, these expenses also included the valuation of put options attributed
to minority stakes of a subsidiary fully consolidated from Q3 2021.
Taxes on income in the third quarter were $6 million and $23 million in the first nine month period,
compared to $36 million and $52 million in the corresponding periods last year, respectively.
In 2022, the company recognized a higher deferred tax asset, related to inter-group sales, that led to
a decline in the tax on income.
The significantly higher tax expenses in the third quarter of 2021 reflected the high growth in end-
market sales, which incur higher tax rates, as well as the impact of a significantly weaker BRL on non-
monetary tax assets.
Net income attributable to the shareholders of the Company reported in the third quarter was $5
million (0.4% of sales) and $119 million (2.8% of sales) in the first nine month period, compared to a
net loss of $57 million and a loss of $1 million in the corresponding periods last year, respectively.
Excluding the impact of the abovementioned extraordinary and non-operational charges, adjusted
net income in the third quarter was $8 million (0.6% of sales) and $159 million (3.7% of sales) in the
first nine month period, compared to a loss of $30 million and an income of $85 million in the
corresponding periods last year, respectively.
Trade working capital as of September 30, 2022, was $2,832 million compared to $2,489 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 reflect good collections across the board.
The trade capital/last twelve months sales ratio of 51% as of September 30, 2022, in comparison to
54%, as of September 30, 2021, demonstrates the improved efficiency in the Company's management
of its working capital.
Cash Flow: Operating cash flow of $31 million was consumed in the quarter and $246 million
consumed in the first nine month period, compared to $107 million and $338 million generated in the
corresponding periods last year, respectively. The cash flow consumed in the quarter and nine month
period was 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 $102 million in the quarter and $299 million in the first nine
month period, compared to $96 million and $388 million in the corresponding periods last year,
respectively. The cash used in investing activities in the third quarter of 2022 is largely related to
investments in "Core Leap" manufacturing capabilities in Israel, investments in intangible assets
relating to ADAMA's global registrations as well as the new production facilities in ADAMA Anpon. In
the first nine month period in 2022, cash was also used for investing in manufacturing capabilities in
Brazil.
In the third quarter of 2021, investments were attributed to Israel and China based manufacturing sites.
In the nine month period in 2021, cash was also used for the completion of the payment and acquisition
of Huifeng’s domestic commercial crop protection business and manufacturing site, as well as for the
relocation and upgrade of the manufacturing Sanonda Jingzhou site, both completed towards the end
of the second quarter of 2021.
Free cash flow of $154 million was consumed in the third quarter and $623 million consumed in the
first nine month period compared to $1 million generated and $115 million consumed in the
7
corresponding periods last year, respectively, reflecting the aforementioned operating and investing
cash flow dynamics.
Table 3. Revenues by operating segment
Sales by segment
Q3 2022 Q3 2021 9M 2022 9M 2021
% % % %
USD (m) USD (m) USD (m) USD (m)
Crop Protection 1,228 90.4% 1,041 90.7% 3,825 89.8% 3,152 90.7%
Intermediates and
131 9.6% 106 9.3% 432 10.2% 324 9.3%
Ingredients
Total 1,359 100% 1,147 100% 4,258 100% 3,476 100%
Sales by product category
Q3 2022 Q3 2021 9M 2022 9M 2021
% % % %
USD (m) USD (m) USD (m) USD (m)
Herbicides 571 42.0% 441 38.4% 1,933 45.4% 1,390 40.0%
Insecticides 381 28.0% 360 31.4% 1,124 26.4% 1,066 30.7%
Fungicides 276 20.3% 241 21.0% 769 18.1% 696 20.0%
Intermediates and
131 9.6% 106 9.3% 432 10.2% 324 9.3%
Ingredients
Total 1,359 100.0% 1,147 100.0% 4,258 100.0% 3,476 100.0%
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.
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.com
and follow us on Twitter at @ADAMAAgri.
8
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 Third Quarter
Q3 2022 Q3 2021 Q3 2022 Q3 2021
Adjusted6
USD (m) USD (m) RMB (m) RMB (m)
Revenues 1,359 1,147 9,282 7,425
Cost of Sales 966 829 6,594 5,366
Other costs 21 5 143 32
Gross profit 373 313 2,545 2,027
% of revenue 27.4% 27.3% 27.4% 27.3%
Selling & Distribution expenses 199 181 1,361 1,174
General & Administrative expenses 52 54 356 352
Research & Development expenses 21 18 142 114
Other operating expenses 0 1 2 5
Total operating expenses 273 254 1,862 1,645
% of revenue 20.1% 22.2% 20.1% 22.2%
Operating income (EBIT) 100 59 683 382
% of revenue 7.4% 5.1% 7.4% 5.1%
Financial expenses and investment income 86 53 587 344
Income before taxes 14 6 96 38
Taxes on Income 6 36 38 233
Net Income 8 (30) 57 (195)
Attributable to:
Non-controlling interest 0 - 0 0
Shareholders of the Company 8 (30) 57 (195)
% of revenue 0.6% (2.6%) 0.6% (2.6%)
Adjustments 3 27 21 175
Reported Net income attributable to the
5 (57) 36 (371)
shareholders of the Company
% of revenue 0.4% (5.0%) 0.4% (5.0%)
Adjusted EBITDA 171 122 1,165 788
% of revenue 12.5% 10.6% 12.5% 10.6%
Adjusted EPS7 – Basic 0.0036 )0.0130) 0.0245 (0.0839)
– Diluted 0.0036 (0.0130) 0.0245 (0.0839)
Reported EPS2 – Basic 0.0023 (0.0246) 0.0155 (0.1592)
– Diluted 0.0023 (0.0246) 0.0155 (0.1592)
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 both Q3 and 9M 2021 and 2022 is 2,329.8 million
shares.
10
Abridged Consolidated Income Statement for the First Nine Months
9M 2022 9M 2021 9M 2022 9M 2021
Adjusted8
USD (m) USD (m) RMB (m) RMB (m)
Revenues 4,258 3,476 28,078 22,488
Cost of Sales 2,967 2,459 19,569 15,909
Other costs 67 17 442 110
Gross profit 1,224 1,000 8,067 6,469
% of revenue 28.7% 28.8% 28.7% 28.8%
Selling & Distribution expenses 607 545 4,007 3,528
General & Administrative expenses 146 125 962 811
Research & Development expenses 63 53 416 341
Other operating expenses 5 (6) 32 (37)
Total operating expenses 821 718 5,417 4,643
% of revenue 19.3% 20.6% 19.3% 20.6%
Operating income (EBIT) 403 282 2,650 1,827
% of revenue 9.5% 8.1% 9.4% 8.1%
Financial expenses and investment income 220 144 1,462 930
Income before taxes 182 139 1,188 897
Taxes on Income 23 52 153 338
Net Income 159 86 1,035 559
Attributable to:
Non-controlling interest 0 1 0 7
Shareholders of the Company 159 85 1,035 552
% of revenue 3.7% 2.5% 3.7% 2.5%
Adjustments 41 86 267 555
Reported Net income attributable to the
119 (1) 768 (4)
shareholders of the Company
% of revenue 2.8% 0.0% 2.7% 0.0%
Adjusted EBITDA 611 464 4,027 3,004
% of revenue 14.4% 13.4% 14.3% 13.4%
Adjusted EPS9 – Basic 0.0684 0.0366 0.4442 0.2367
– Diluted 0.0684 0.0366 0.4442 0.2367
Reported EPS2 – Basic 0.0510 (0.0003) 0.3297 (0.0017)
– Diluted 0.0510 (0.0003) 0.3297 (0.0017)
8
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”.
9
The number of shares used to calculate both basic and diluted earnings per share in both Q3 and 9M 2021 and 2022 is 2,329.8 million
shares.
11
Abridged Consolidated Balance Sheet
September 30 September 30 September 30 September 30
2022 2021 2022 2021
USD (m) USD (m) RMB (m) RMB (m)
Assets
Current assets:
Cash at bank and on hand 524 764 3,720 4,956
Bills and accounts receivable 1,547 1,553 10,985 10,071
Inventories 2,448 1,749 17,381 11,345
Other current assets, receivables and
318 266 2,256 1,723
prepaid expenses
Total current assets 4,836 4,332 34,343 28,095
Non-current assets:
Fixed assets, net 1,666 1,504 11,829 9,755
Rights of use assets 82 73 582 472
Intangible assets, net 1,462 1,498 10,393 9,713
Deferred tax assets 185 129 1,314 839
Other non-current assets 105 99 746 640
Total non-current assets 3,501 3,303 24,864 21,419
Total assets 8,337 7,635 59,206 49,514
Liabilities
Current liabilities:
Loans and credit from banks and other
704 446 4,997 2,893
lenders
Bills and accounts payable 1,172 822 8,322 5,331
Other current liabilities 892 809 6,330 5,247
Total current liabilities 2,768 2,077 19,650 13,471
Long-term liabilities:
Loans and credit from banks and other
591 556 4,193 3,609
lenders
Debentures 1,120 1,259 7,952 8,167
Deferred tax liabilities 53 52 379 335
Employee benefits 117 116 827 751
Other long-term liabilities 371 312 2,636 2,026
Total long-term liabilities 2,252 2,296 15,986 14,889
Total liabilities 5,019 4,373 35,636 28,359
Equity
Total equity 3,318 3,262 23,570 21,154
Total liabilities and equity 8,337 7,635 59,206 49,514
12
Abridged Consolidated Cash Flow Statement for the Third Quarter
Q3 2022 Q3 2021 Q3 2022 Q3 2021
USD (m) USD (m) RMB (m) RMB (m)
Cash flow from operating activities:
Cash flow from operating activities (31) 107 (213) 691
Cash flow from operating activities (31) 107 (213) 691
Investing activities:
Acquisitions of fixed and intangible assets (99) (96) (677) (624)
Proceeds from disposal of fixed and intangible assets 0 0
2 0
Acquisition of subsidiaries 0 0 - -
Other investing activities (3) 1 (22) 5
Cash flow used for investing activities (102) (96) (697) (619)
Financing activities:
Receipt of loans from banks and other lenders 216 1,474
92 593
Repayment of loans from banks and other lenders (24) (50) (161) (326)
Interest payment and other (20) (10) (140) (65)
Dividends to shareholders - (6) - (37)
Other financing activities
4 11 28 73
Cash flow from (used for) financing activities 176 37 1,201 237
Effects of exchange rate movement on cash and cash
(5) 0 161 17
equivalents
Net change in cash and cash equivalents 38 47 452 325
Cash and cash equivalents at the beginning of the period 475 714 3,191 4,615
Cash and cash equivalents at the end of the period 513 762 3,643 4,940
Free Cash Flow (154) 1 (1,050) 6
13
Abridged Consolidated Cash Flow Statement for the First Nine Months
9M 2022 9M 2021 9M 2022 9M 2021
USD (m) USD (m) RMB (m) RMB (m)
Cash flow from operating activities:
Cash flow from operating activities (246) 338 (1,559) 2,182
Cash flow from operating activities (246) 338 (1,559) 2,182
Investing activities:
Acquisitions of fixed and intangible assets (298) (279) (1,969) (1,803)
Proceeds from disposal of fixed and intangible assets 11 3
72 20
Acquisition of subsidiaries 0 (101) -
(655)
Other investing activities (12) (11) (80) (73)
Cash flow used for investing activities (299) (388) (1,976) (2,511)
Financing activities:
Receipt of loans from banks and other lenders 590 675 3,909 4,370
Repayment of loans from banks and other lenders (201) (411) (1,324) (2,655)
Interest payment and other (83) (70) (553) (453)
Dividends to shareholders (3) (6) (19) (37)
Other financing activities (140) 35 (906) 222
Cash flow from (used for) financing activities 164 223 1,107 1,446
Effects of exchange rate movement on cash and cash
(9) 1 311 (11)
equivalents
Net change in cash and cash equivalents (390) 174 (2,117) 1,105
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 513 762 3,643 4,940
Free Cash Flow (623) (115) (4,049) (745)
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 September 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 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:
“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
Q3 2022 Q3 2021 Q3 2022 Q3 2021
USD (m) USD (m) RMB (m) RMB (m)
Net Income (Reported) 5.3 (57.3) 36.0 (371.0)
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-
5.8 4.3 27.8
Syngenta transaction (non-cash) 39.5
3. Upgrade & Relocation related costs 1.6 26.7 10.7 172.5
4. Incentive plans (8.4) (2.0) (57.7) (13.1)
5. Amortization of acquisition-related PPA (non-cash), other acquisition-related costs 4.9 3.8 33.6 24.6
6. Transportation classification COGS impact (49.2) - (335.9) -
7. Transportation classification OPEX impact 49.2 - 335.9 -
Total Adjustments to Operating Income (EBIT) 4.1 33.0 27.8 213.3
Total Adjustments to EBITDA (6.8) 18.7 (46.6) 120.8
Adjustments to Financing Expenses
Revaluation of non-cash adjustment related to non-controlling interest - - - -
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 5.2 0.5 33.7
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 3.1 27.1 21.1 175.5
Net Income (Adjusted) 8.4 (30.2) 57.1 (195.5)
Total adjustments to Net Income attributable to the shareholders of the Company 3.1 27.1 21.1 175.5
9M 2022 9M 2021 9M 2022 9M 2021
USD (m) USD (m) RMB (m) RMB (m)
Net Income (Reported) 118.7 (0.3) 768.1 -1.7
Adjustments to COGS & Operating Expenses:
1. Amortization of Legacy PPA of 2011 acquisition of Solutions (non-cash) 0.8 0.8 4.9 4.9
2. Amortization of Transfer assets received and written-up due to 2017 ChemChina-
17.1 18.8 112.6 121.7
Syngenta transaction (non-cash)
3. Upgrade & Relocation related costs 5.5 66.9 35.9 432.5
4. Incentive plans 1.7 1.5 10.4 9.8
5. Amortization of acquisition-related PPA (non-cash), other acquisition-related costs 15.0 11.3 99.2 73.3
6. Transportation classification COGS impact (146.7) - 967.3 -
7. Transportation classification OPEX impact 146.7 - (967.3) -
8. Provisions in respect of prior years’ legal- and tax-related costs - 1.6 - 10.3
Total Adjustments to Operating Income (EBIT) 40.0 100.8 263.1 652.5
Total Adjustments to EBITDA 6.7 59.4 43.4 384.7
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 0.8 0.8
3. Taxes related to Upgrade & Relocation related costs 0.2 11.9 1.3 77.0
5. Deferred tax on amortization of acquisition-related PPA, other acquisition-related costs 2. 7 1.8 17.9 11.6
8. Provisions in tax expenses in respect of prior years’ legal- and tax-related costs - 0.4 - 2.5
Total adjustments to Net Income 40.6 86.6 266.8 560.6
Net Income (Adjusted) 159.3 86.4 1,034.9 558.9
Total adjustments to Net Income attributable to the shareholders of the Company 40.6 85.9 266.8 555.5
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 acquisition 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 are 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 share 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 performance, the LTI is
presented on an equity-settled basis in accordance with the value of the existing plan at the grant date.
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 COGS.
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 COGS.
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
September 30 Q3 Average 9M Average
2022 2021 Change 2022 2021 Change 2022 2021 Change
EUR/USD 0.984 1.157 (14.97%) 1.008 1.179 (14.50%) 1.064 1.198 (11.24%)
USD/BRL 5.407 5.439 0.60% 5.249 5.229 (0.38%) 5.134 5.323 3.54%
USD/PLN 4.953 3.993 (24.07%) 4.706 3.873 (21.53%) 4.395 3.793 (15.89%)
USD/ZAR 17.953 15.060 (19.21%) 17.030 14.63 (16.42%) 15.950 14.460 (10.30%)
USD/AUD 0.652 0.719 (9.39%) 0.684 0.735 (6.93%) 0.707 0.761 (7.09%)
GBP/USD 1.118 1.344 (16.79%) 1.179 1.379 (14.50%) 1.256 1.388 (9.51%)
USD/RMB 7.100 6.485 9.47% 6.830 6.470 5.55% 6.597 6.470 1.97%
USD/ILS 3.543 3.229 (9.72%) 3.400 3.234 (5.13%) 3.313 3.259 (1.67%)
USD LIBOR 3M 3.75% 0.13% 362 bp 2.99% 0.13% 287 bp 1.69% 0.16% 153 bp
September 30 Q3 Average 9M Average
2022 2021 Change 2022 2021 Change 2022 2021 Change
USD/RMB 7.100 6.485 9.47% 6.830 6.470 5.55% 6.597 6.470 1.97%
EUR/RMB 6.985 7.504 (6.91%) 6.886 7.630 (9.75%) 7.017 7.740 (9.35%)
RMB/BRL 0.762 0.839 9.20% 0.769 0.808 4.90% 0.778 0.824 5.57%
RMB/PLN 0.658 0.616 (6.96%) 0.649 0.599 (8.39%) 0.649 0.588 (10.39%)
RMB/ZAR 2.529 2.322 (8.89%) 2.494 2.261 (10.30%) 2.418 2.252 (7.34%)
AUD/RMB 4.627 4.664 (0.81%) 4.671 4.755 (1.76%) 4.666 4.909 (4.95%)
GBP/RMB 7.939 8.716 (8.91%) 8.051 8.921 (9.75%) 8.286 8.961 (7.53%)
RMB/ILS 0.499 0.498 (0.23%) 0.498 0.500 0.40% 0.502 0.503 0.22%
RMB LIBOR 3M 1.67% 2.43% (76) bp 1.73% 2.39% (65) bp 2.09% 2.54% (45) bp
18
