ADAMA Provides Net Income Estimate for the First Nine Months of 2021
TEL AVIV, ISRAEL and BEIJING, CHINA, October 14, 2021 – ADAMA Ltd. (the “Company”) (SZSE
000553), today provided an estimate regarding its financial performance for the third quarter and first nine
months of 2021.
Sales
ADAMA is expecting to report sales growth of more than 17% in USD terms (10% in RMB terms) in the third
quarter compared to the same quarter last year, which should drive top-line growth of around 16% (8% in
RMB terms) over the nine-month period, compared to the corresponding period last year. The strong growth
over both the quarter and the nine-month period is being driven by a combination of continued robust volume
growth alongside moderate price increases in the quarter, with strong demand supported by continued high
crop prices, as well as favorable exchange rates and the contribution of newly acquired companies.
In the third quarter, the Company is expecting to record strong growth in Europe, where the continued high
crop prices, combined with supportive weather later in the quarter, saw a positive start to the autumn season,
especially in oilseed rape, winter cereals and sunflower.
In North America, the Company is expecting to deliver a strong performance driven by a combination of
significant volume growth and higher prices, enjoying robust demand in both the Agriculture as well as
Consumer & Professional arms. ADAMA is expecting to deliver pleasing growth across Latin America, with
the high crop prices driving strong demand as the region starts to reopen following the improvement of the
COVID situation in key markets, translating into solid volume growth and higher prices.
The Company is growing strongly in Asia Pacific, led by China where the Company continues to grow sales
of its branded, formulated portfolio, supported by new product launches and bolstered by the acquisition of
Huifeng’s domestic commercial arm at the end of 2020. In China, although industry-wide supply shortages
are causing increased procurement costs and posing challenges for the Company's margins, the Company is
also benefiting to some extent from the generally higher pricing environment, most notably in the sales of its
raw materials and intermediates where it is seeing strong demand. In the rest of APAC, the Company is
expecting to report continued growth, with a noteworthy performance expected to be delivered in the Pacific
region, enjoying positive seasonal conditions and healthy demand.
Sales in the India, Middle-East & Africa region are expected to grow, with a noteworthy performance being
seen in South Africa where the Company is benefiting from favorable cropping conditions and new product
launches. However, growth in India is slowing as farmers missed some applications due to volatile weather
conditions following a previously strong start to the monsoon season.
Gross Profit, Operating Profit and EBITDA
In the third quarter, the Company is expecting to report higher gross profit, driven by the strong top-line
growth. However, the Company continues to see pressure on its gross margins, impacted by higher
procurement and production costs, as well as the effect of the strong RMB and ILS, the Company's main
production currencies. The recent temporary plant suspensions in China resulting from the country's Dual
Control policy have further challenged supply of raw materials, intermediates and active ingredients, serving
to further exacerbate the impact of already high procurement costs. The increased gross profit is expected to
be more than offset by higher operating expenses, translating into lower Operating Profit and EBITDA. The
higher operating expenses largely reflect the strong volume-driven growth of the business and the additional
operating expenses of the newly acquired companies, alongside a continued increase in global logistics and
shipping costs which remain significantly elevated, as well as the impact of generally stronger global
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currencies against the US dollar.
Similarly, over the nine-month period, the Company’s robust business growth is being outweighed by the
contraction of the gross margin and the higher operating expenses, resulting in lower Operating Profit and
EBITDA.
Net Income
The Company is expecting to report a loss in Reported Net Income in the third quarter, compared to a
modest profit in the same quarter last year. The lower Operating Profit is expected to be further exacerbated
by higher financial expenses, driven by the effect of the increase in the Israeli CPI on the ILS-denominated,
CPI-linked bonds. In addition, the Company is expecting to report higher tax expenses, both due to the
incurring of higher taxes by the Company's selling entities in end markets as well as the impact on the value
of non-monetary tax assets of the more significant weakening of the BRL in the third quarter of 2021 when
compared to the same quarter in 2020.
The predicted loss in the third quarter is expected to bring the Company's Reported Net Income over the
nine-month period into slightly negative territory.
Reported Net Income Estimated 9M 2020 Estimated Q3 Q3 2020
9M 2021 2021
Net income attributable to (5) – 5 32 (62) – (52) 3
shareholders (USD millions)
(0.0021) – 0.0131 (0.0265) – 0.0012
Earnings per share (USD)
0.0021 (0.0222)
Net income attributable to (32) – 32 225 (399) – (335) 20
shareholders (RMB millions)
(0.0139) – 0.0929 (0.1715) – 0.0086
Earnings per share (RMB)
0.0139 (0.1437)
The Company’s reported net income in the third quarter and first nine months is expected to reflect around
$27 million (Q3 2020: $26 million) and $86 million (9M 2020: $92 million), respectively, of net expenses in
respect of certain transitory or non-operational and non-cash items, including mainly:
i. Approximately $21 million in Q3 2021 (Q3 2020: $7 million) and $52 million in the first nine months
(9M 2020: $27 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
and upgraded;
ii. Approximately $4 million in Q3 2021 (Q3 2020: $8 million) and $19 million in the first nine months
(9M 2020: $23 million), in non-cash amortization charges in respect of Transfer assets received from
Syngenta related to the 2017 ChemChina-Syngenta acquisition;
iii. Approximately $3 million in Q3 2021 (Q3 2020: $2 million) and $10 million in the first nine months
(9M 2020: $7 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.
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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:
Adjusted Net Income Estimated 9M 2020 Estimated Q3 Q3 2020
9M 2021 2021
Net income attributable to 81 – 91 124 (35) – (25) 29
shareholders (USD millions)
Earnings per share (USD) 0.0347 – 0.0390 0.0511 (0.0149) – (0.0106) 0.0120
Net income attributable to 523 – 588 868 (224) – (159) 198
shareholders (RMB millions)
Earnings per share (RMB) 0.2245 – 0.2523 0.3583 (0.0962) – (0.0684) 0.0832
Note: The 9M 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.
These estimations are preliminary and have not been audited or reviewed by the Company's 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 financial statements which will be released on October 28,
2021.
Investors are reminded to exercise caution when making investment decisions.
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About ADAMA
ADAMA Ltd. (SZSE: 200553) 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.
Contact
Wayne Rudolph Zhujun Wang
Global Investor Relations China Investor Relations
Email: ir@adama.com Email: irchina@adama.com
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