Stock Code: 000553 (200553) Stock abbreviation: ADAMA A (B) Announcement No. 2021-31
ADAMA Ltd.
H1 2021 Performance Estimation
The Company and all the directors confirm that the information disclosed herein is true,
accurate, complete and contains no false recording, misleading statement or material
omission.
I. Performance Estimation
1. Estimation period: January 1, 2021 – June 30, 2021
2. Estimated performance: higher compared with the corresponding period last year
Item Current reporting period Same period last year
January to June 2021 January to June 2002
Net income attributable to the 330 – 394
shareholders of the listed
025
company
(RMB in millions) Percentage increase YoY
61.2% – 92.8%
Basic earnings per share
0.1416 – 0.1693 0.0836
(RMB)
II. Pre-audit of the estimated performance
The estimated results of this period are the preliminary estimation of the Company and have not
been audited nor reviewed by certified accountants.
III. Explanations for Performance Variation
Sales
The Company is expecting to report sales growth of more than 18% in USD terms and 7% in
RMB terms in the second quarter compared to the same quarter last year, driven by continued
robust volume growth in all key regions. This strong performance should drive sales growth of
16% in USD terms and 7% in RMB terms over the half-year period, compared to the
corresponding period last year.
In the second quarter, the Company is expecting to deliver robust growth in Asia Pacific, led by a
strong performance in China and the Pacific. In China, the Company is seeing strong growth ,
both from sales of its branded, formulated portfolio, supported by the acquisition of Huifeng’s
domestic commercial arm at the end of 2020, as well as from sales of its raw materials and
intermediates, similarly bolstered to some extent by the recent acquisition of Huifeng's
manufacturing assets at the end of May 2021. In the rest of APAC, the Company is expecting to
record continued growth, with a noteworthy performance to be delivered in Australia, more than
offsetting the challenging seasonal conditions in South-East Asia, and the lingering effects of
COVID-19 which continues to challenge local farmers throughout the region.
In North America, the Company is expecting to record continued robust growth from its
Consumer and Professional business, alongside a solid performance in the crop protection arm,
recovering from first-quarter headwinds seen there.
The Company is expecting to deliver pleasing growth in Latin America, driven by business
growth in Brazil supported by the strong crop prices, and despite ongoing drought conditions
which affected the corn planting season in the country, as well as growth seen in other countries
across the region.
The Company is expecting to report strong growth in the India, Middle-East & Africa region, led
by India which enjoyed favorable weather with a strong start to the monsoon season, enabling
good cropping conditions.
Sales in Europe are expected to grow, aided by a recent region-wide heatwave, causing higher
disease and insect pressure in most countries, following a prolonged cold spell. Noteworthy
performances are foreseen across eastern Europe, supported by favorable conditions in key
crops, as well as in Italy and Greece, bolstered by the Company’s recent acquisition there .
These are expected to more than compensate for softer performances in certain countries in the
western part of the continent.
Net Income
Net income in the second quarter is expected to be somewhat higher than reported in the same
quarter last year. Despite the exceptionally strong increase in sales, the Company is seeing
pressure on gross margins, impacted by higher procurement and production costs, as well as
the strengthening of the RMB and the ILS. The higher gross profit is expected to be partially
offset by increased operating and financial expenses.
The expected increase in operating expenses will largely reflect the strong volume-driven growth
of the business and acquisitions made, alongside a significant increase in global logistics and
shipping costs, as well as the weaker US dollar.
The expected increase in financial expenses is driven by the effect of the increase in the Israeli
CPI on the ILS-denominated, CPI-linked bonds. In contrast, the Company expects to see lower
tax expenses due to tax income resulting from the impact of the stronger BRL on the value of
non-monetary tax assets.
Over the half-year period, the Company is expecting to record marked net income growth when
compared to the corresponding period last year, driven by the strong growth in net income
recorded in the first quarter and further augmented by the increase in the second quarter net
income.
The Company’s reported net income in the second quarter and first half is expected to reflect
around RMB 193 million and RMB 381 million, respectively, of net expenses in respect of certain
transitory or non-operational and non-cash items, including mainly:
i. Approximately RMB 133 million in Q2 2021 (Q2 2020: RMB 53 million) and RMB 217
million in the first half (H1 2020: RMB 157 million), in net Relocation & Upgrade-related
costs, including mainly (a) higher 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; and (b)
idleness charges largely related to suspensions at the facilities being relocated;
ii. Approximately RMB 43 million in Q2 2021 (Q2 2020: RMB 53 million) and RMB 94
million in the first half (H1 2020: RMB 108 million), in non-cash amortization charges in
respect of Transfer assets received from Syngenta related to the 2017
ChemChina-Syngenta acquisition;
iii. Approximately RMB 21 million in Q2 2021 (Q2 2020: RMB 16 million) and RMB 41
million in the first half (H1 2020: RMB 32 million), in net charges 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.
Excluding the impact of the abovementioned transitory or non-operational and non-cash items,
the Company is expecting to deliver the following:
Adjusted net income in the first half is expected to be between RMB 711 – 775 million,
compared to RMB 670 million in the same period last year;
Adjusted basic earnings per share in the first half is expected to be between RMB 0.3051
– 0.3328, compared to RMB 0.2740 in the same period last year.
Note: The H1 2020 Adjusted Net Income shown above has been amended from that presented at the time to include additional
adjustments in order to consistently reflect largely the treatment of Relocation & Upgrade Program -related costs amongst other
adjustments that the Company has deemed non-operational and one-time in nature.
IV. Other Remarks
The estimated results above are only preliminary calculations performed by the finance team of
the Company based on initial financial data available to the Company, and have not been audited
or reviewed by the Company's independent auditors. These estimations may change, inter alia,
as a result of the further processing and analysis of the financial data that the Company will
perform for the preparation of its H1 2021 financial statements. Please refer to the H1 2021
Report to be duly disclosed by the Company on August 26, 2021 for specific and accurate
financial information.
Investors are reminded to exercise caution when making investment decisions.
Media for Information Disclosure of the Company: China Securities Journal, Securities Times, Ta
Kung Pao, and Cninfo (www.cninfo.com.cn).
By order of the Board
ADAMA Ltd.
July 15th, 2021
