ADAMA Reports Results of Third Quarter and First Nine Months of 2021
Strong Q3 and 9M sales growth driven by continued robust volume increase;
profits impacted by continued margin pressure
Third Quarter 2021 Highlights
Sales up 17% to a Q3 record-high of $1,147 million (RMB: +10%), driven by robust 14% volume
growth
Adjusted EBITDA lower by 11%, reaching $122 million (RMB: -17%)
Reported net income of -$57 million; Adjusted net income of -$30 million
First Nine Months 2021 Highlights
Sales up 16% to a 9M record-high of $3,476 million (RMB: +8%), with volumes up 14%
Adjusted EBITDA up 1%, reaching $464 million (RMB: -7%)
Reported net income of -$1 million; Adjusted net income of $85 million
BEIJING, CHINA and TEL AVIV, ISRAEL, October 27, 2021 – ADAMA Ltd. (the “Company”)
(SZSE 000553), today reported its financial results for the third quarter and nine-month period
ended September 30, 2021.
Ignacio Dominguez, President and CEO of ADAMA, said, “The third quarter was a challenging
one for the global crop protection industry, including our company. While our sales continue to grow
strongly, supported by continued high crop prices and robust farmer demand for our products, we
are facing significant challenges on the cost and supply side. Global logistics and supply lines
remain severely constrained, exacerbating the already stretched supply situation in many key
products, further driving up raw material and intermediate procurement costs. These market
imbalances continue to weigh on our profit margins, as the ever-competitive global market is proving
slow to pass on the increased costs through price rises. Despite the challenges, our company is
continuing to grow, raise prices, improve our portfolio and the quality of our business, and keep a
tight rein on expenses, as we navigate through this volatile and uncertain time."
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Table 1. Financial Performance Summary
As Reported Adjustments Adjusted
USD (m) Q3 Q3 Q3 Q3 Q3 Q3
% Change % Change
2021 2020 2021 2020 2021 2020
Revenues 1,147 978 +17% - - 1,147 978 +17%
Gross profit 287 266 +8% 27 14 313 281 +12%
% of sales 25.0% 27.2% 27.3% 28.7%
Operating income (EBIT) 26 49 -47% 33 28 59 78 -24%
% of sales 2.3% 5.0% 5.1% 7.9%
Income before taxes (27) 2 33 28 6 31 -81%
% of sales (2.4)% 0.2% 0.5% 3.1%
Net income (57) 3 27 26 (30) 29
% of sales (5.0)% 0.3% (2.6)% 2.9%
EPS
- USD (0.0246) 0.0012 (0.0130) 0.0120
- RMB (0.1592) 0.0086 (0.0839) 0.0832
EBITDA 103 137 -25% 19 0 122 137 -11%
% of sales 9.0% 14.0% 10.6% 14.0%
As Reported Adjustments Adjusted
USD (m) 9M 9M 9M 9M 9M 9M
% Change % Change
2021 2020 2021 2020 2021 2020
Revenues 3,476 2,987 +16% - - 3,476 2,987 +16%
Gross profit 932 844 +10% 68 45 1,000 888 +13%
% of sales 26.8% 28.2% 28.8% 29.7%
Operating income (EBIT) 182 188 -3% 101 99 282 287 -2%
% of sales 5.2% 6.3% 8.1% 9.6%
Income before taxes 38 66 -43% 101 100 139 166 -17%
% of sales 1.1% 2.2% 4.0% 5.6%
Net income (1) 32 86 92 85 124 -31%
% of sales 0.0% 1.1% 2.5% 4.1%
EPS
- USD (0.0003) 0.0131 0.0366 0.0511 -28%
- RMB (0.0017) 0.0946 0.2367 0.3583 -34%
EBITDA 405 438 -8% 59 22 464 461 +1%
% of sales 11.6% 14.7% 13.4% 15.4%
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”). 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 Q3 2020 and 9M 2020 Adjusted Income Statements have been amended from that presented at the time to include additional
adjustments in order to consistently reflect largely the treatment of China Relocation & Upgrade Program-related costs amongst other
adjustments that the Company has deemed non-operational and one-time in nature, as well as to reflect a change in allocation of certain
costs between those impacting Operating Expenses and those impacting Gross Profit.
The number of shares used to calculate both basic and diluted earnings per share in Q3 and 9M 2020 is 2,378.3 million shares and
2,423.8 million shares, respectively. The number of shares used to calculate both basic and diluted earnings per share in Q3 and 9M 2021
is 2,329.8 million shares, reflecting the repurchase and cancellation of 102.4 million shares from CNAC in July 2020 and repurchase and
cancellation of 14.3 million B shares during the second half of 2020.
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The general crop protection market environment
During the third quarter of 2021, crop prices of most of the major commodity crops remained
elevated, supporting strong crop protection demand in most regions. Demand was further aided by
positive weather conditions in various regions, including Australia, Europe and most of China. Dry
conditions in the US, Brazil and Canada restrained production of some crops and posed challenges
for farmers in those regions.
Farmer incomes are generally expected to continue to improve as a result of high crop prices.
However, farmers are experiencing broad inflationary pressures across most of their inputs,
including seeds, fertilizers, crop protection, fuel and machinery.
During the quarter, availability of intermediates and active ingredients sourced from China was more
constrained, contributing further to the already high procurement prices amid strong global demand.
Beginning in mid-September, production of active ingredients and intermediates in China was further
disrupted as a result of production suspensions due to power rationing for industrial customers due
to a power shortage in the country, as well as the "Dual Control" policy measures to ensure the
country’s energy reduction targets are met. Energy prices have been increasing outside of China as
well, with prices of natural gas, coal and oil all rising considerably.
Global freight and logistics costs remained significantly elevated during the third quarter of 2021, as
COVID-19 continues to disrupt port activity, resulting in container shortages, while demand for
container shipping remains high. Similarly, in-land logistics remain challenged as pandemic-related
restrictions continue to create frictions in domestic supply lines. Taken together, these constraints
have impacted both availability of shipping and transportation resources, as well as significantly
increased their costs, a dynamic widely observed across all international trade-related industries.
The Company continues to actively manage its procurement and supply chain activities in order to
mitigate these higher procurement and logistics costs. It also endeavors to adjust its pricing
wherever market conditions allow, to compensate for these increased costs. Although intense
competition in certain key markets continues to restrain the Company's ability to do so in an effective
and timely manner, the Company is starting to see positive price movements in certain regions,
most notably in China, as well as in North America and Latin America.
China Operations Update
The Company's manufacturing site in Jingzhou, Hubei (ADAMA Sanonda) continues on its path of
gradually ramping up production following the completion of the Relocation & Upgrade program at
the site. This return to production at Sanonda will progressively reduce the need for incurring
additional procurement costs which the Company had endured while the plant was previously
suspended, and is expected to gradually reduce idleness charges as production and utilization
levels steadily rise over the coming months.
As a result of the recent institution of China's "Dual Control" energy restrictions, the Company's
manufacturing facilities in Huai'An (ADAMA Anpon) and in Dafeng (ADAMA Huifeng), both in
Jiangsu province, were suspended for a number of weeks in September and October 2021 in
advance of the Chinese Golden Week festival. As the restrictions have started to be loosened in
recent weeks, operations at these sites have since resumed, albeit at a more limited capacity. This
temporary suspension caused an increase in idleness costs during the quarter, and is expected to
contribute to further idleness charges in the coming quarters, until the power restrictions are lifted
and production is able to resume fully.
The energy restrictions and resulting widespread production suspensions have contributed to a
significant increase in procurement costs of raw materials and intermediates, on top of the already
high costs seen in recent months in the face of strong underlying demand and relatively constrained
supply. These costs are expected to remain elevated, and will continue to impact the Company's
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profitability in the coming months. The Company endeavors, wherever possible and supported by
market conditions, to increase prices in order to mitigate the impact of the higher costs. 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 in the sales of its raw materials and intermediates, where it is
seeing strong demand.
Financial Highlights
Revenues in the third quarter grew by 17% (+10% in RMB terms) to $1,147 million, driven by a
combination of continued robust 14% volume growth, including the contribution of newly acquired
companies, as well as moderately higher prices and favorable exchange rate movements.
In the quarter, ADAMA delivered significant growth in Europe, with strong demand driven by high
crop prices being aided by supportive weather conditions in certain areas. The Company continues
to grow strongly in China, where sales of its branded, formulated portfolio were supported by new
product launches and further bolstered by the contribution of newly acquired companies. The
Company also benefited from strong demand and higher prices for the sales of its raw materials and
intermediates in the country. ADAMA delivered a strong performance in North America, driven by a
combination of significant volume growth and higher prices, as well as in Latin America, led by Brazil,
which saw robust demand and higher prices.
The accelerated growth in the quarter brought nine-month sales to a record-high of $3,476 million,
an increase of 16% (+8% in RMB terms).
Gross Profit reported in the third quarter was up 8% to $287 million (gross margin of 25.0%), and
up 10% to $932 million (gross margin of 26.8%) in the nine-month period, compared to $266 million
(gross margin of 27.2%) and $844 million (gross margin of 28.2%) in the corresponding periods last
year, respectively.
The Company recorded certain extraordinary charges within its reported cost of goods
sold, totaling approximately $27 million in the third quarter (Q3 2020: $14 million) and
$68 million in the nine-month period (9M 2020: $45 million). These charges were largely
related to its continuing Relocation & Upgrade program, and include mainly (i) excess
procurement costs, both in quantity and cost terms, 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 (ii)
elevated idleness charges largely related to suspensions at the facilities being relocated
and upgraded, as well as to the temporary suspension of the Jingzhou site in Q1 2020 at
the outbreak of COVID-19 in Hubei Province. For further details on these extraordinary
charges, please see the appendix to this release.
Excluding the impact of the abovementioned extraordinary items, adjusted gross profit in the third
quarter was up 12% to $313 million (27.3% of sales), and up 13% to $1,000 million (gross margin of
28.8%) in the nine-month period, compared to $281 million (gross margin of 28.7%) and $888
million (gross margin of 29.7%) in the corresponding periods last year, respectively.
In the quarter, the higher gross profit was driven by a combination of strong top-line growth,
improved portfolio mix, moderately higher prices and the strengthening of local currencies against
the US dollar. In the nine-month period, the increased gross profit reflects the strong and consistent
volume increases seen in each of the three quarters of this year, as well as a net positive impact
from portfolio mix, alongside favorable currency movements.
However, the Company continues to see pressure on its gross margins, both in the third quarter and
in the nine-month period, impacted by higher logistics, procurement and production costs, as well as
the effect of the strong RMB and ILS, the Company's main production currencies. The recent
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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.
Operating expenses reported in the third quarter were $261 million (22.7% of sales) and $750
million (21.6% of sales) in the nine-month period, compared to $217 million (22.2% of sales) and
$656 million (22.0% of sales) in the corresponding periods last year, respectively.
The Company recorded certain non-operational, mostly non-cash, charges within its
reported operating expenses, totaling approximately $6 million in the third quarter (Q3
2020: $14 million) and $32 million in the nine-month period (9M 2020: $55 million).
These charges include mainly (i) $4 million in Q3 2021 (Q3 2020: $8 million) and $19
million in 9M 2021 (9M 2020: $23 million) in non-cash amortization charges in respect of
Transfer assets received from Syngenta related to the 2017 ChemChina-Syngenta
acquisition, (ii) $2 million benefit in Q3 2021 (Q3 2020: $3 million) and $1 million charge
in 9M 2021 (9M 2020: benefit of $8 million) in non-cash impacts related to incentive
plans, and (iii) $4 million in Q3 2021 (Q3 2020: $3 million) and $11 million in 9M 2021
(9M 2020: $8 million) in 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. The higher aggregate amount of non-operational charges in Q3 and 9M
2020 then also included $11 million and $34 million, respectively, in non-cash
amortization charges related to the legacy PPA of the 2011 acquisition of Adama
Agricultural Solutions, which have now largely finished, and $1 million and $10 million,
respectively, in early retirement expenses. 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 $254 million (22.2% of sales) and $718 million (20.6% of
sales), compared to $203 million (20.8% of sales) and $601 million (20.1% of sales) in the
corresponding periods last year, respectively.
The higher operating expenses in the quarter and the nine-month period largely reflect the strong
volume-driven growth of the business and the additional operating expenses of the newly acquired
companies, together with significantly higher global logistics and shipping costs, as well as the
impact of generally stronger global currencies against the US dollar. In addition, alongside the many
benefits ADAMA enjoys from the collaboration with other companies in the Syngenta Group, most
notably in commercial cross-sales as well as in the areas of procurement and operations, ADAMA
recorded certain related expenses and charges.
Operating income reported in the third quarter was $26 million (2.3% of sales), and $182 million
(5.2% of sales) in the nine-month period, compared to $49 million (5.0% of sales) and $188 million
(6.3% of sales) in the corresponding periods last year, respectively.
Excluding the impact of the abovementioned non-operational, mostly non-cash items, adjusted
operating income in the third quarter was $59 million (5.1% of sales) and $282 million (8.1% of sales)
in the nine-month period, compared to $78 million (7.9% of sales) and $287 million (9.6% of sales)
in the corresponding periods last year, respectively.
The lower operating income in the quarter and nine-month period reflects the impact of the higher
operating expenses, which more than offset the increase in gross profit that resulted from the strong
growth but lower gross margin.
EBITDA reported in the third quarter was $103 million (9.0% of sales) and $405 million (11.6% of
sales) in the nine-month period, compared to $137 million (14.0% of sales) and $438 million (14.7%
of sales) recorded in the corresponding periods last year, respectively.
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Excluding the impact of the abovementioned non-operational, mostly non-cash items, adjusted
EBITDA in the third quarter was $122 million (10.6% of sales) and $464 million (13.4% of sales) in
the nine-month period, compared to $137 million (14.0% of sales) and $461 million (15.4% of sales)
in the corresponding periods last year, respectively.
Financial expenses and investment income were $53 million in the third quarter and $144 million
in the nine-month period, compared to $47 million and $121 million in the corresponding periods last
year, respectively. The higher financial expenses in the quarter and the nine-month period were
mainly driven by the net effect of the increase in the Israeli CPI on the ILS-denominated, CPI-linked
bonds, as well as higher non-cash charges related to put options in respect of minority interests.
These increases were partially offset by benefits on hedges in respect of the RMB.
Taxes on income in the third quarter were $36 million and $52 million in the nine-month period,
compared to $2 million and $42 million in the corresponding periods last year, respectively. The
significantly higher tax expenses in the third quarter, and the resulting increase over the nine-month
period, reflects the incurring of higher taxes by the Company's high-growth selling entities in end-
markets, as well as the largely non-cash 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. By contrast, over the nine-month period, the deterioration of the BRL in 2020 was more
significant than in 2021, resulting in a relatively lower impact over the nine-month period in 2021.
Net income attributable to the shareholders of the company reported in the third quarter was
$(57) million (-5.0% of sales) and $(1) million (0.0% of sales) in the nine-month period, compared to
$3 million (0.3% of sales) and $32 million (1.1% 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 third quarter was $(30) million (-2.6% of sales) and $85 million (2.5% of sales) in
the nine-month period, compared to $29 million (2.9% of sales) and $124 million (4.1% of sales) in
the corresponding periods last year, respectively.
The lower adjusted net income in the quarter, and the resulting decline over the nine-month period,
is largely a reflection of the lower operating income and significantly higher taxes, alongside
somewhat higher financial expenses.
Trade working capital at September 30, 2021 was $2,489 million compared to $2,332 million at the
same point last year. The Company is holding somewhat higher inventory levels due mainly to a
shift in geographic and portfolio sales mix, the anticipation of further volume growth in coming
quarters in the face of uncertain supply conditions, the increase in procurement and production costs,
as well as the inclusion of recent acquisitions. The Company also saw an increase in trade
receivables, driven largely by its strong growth over the nine-month period in emerging markets,
most notably in Latin America and Brazil, where customer credit terms are generally longer. These
increases were partially offset by higher trade payables.
Cash Flow: Operating cash flow of $107 million was generated in the quarter and $338 million in the
nine-month period, compared to $23 million and $196 generated in the corresponding periods last
year, respectively. The stronger operating cash flow generated in the third quarter and nine-month
period reflects improved collections and the relatively modest increase in inventory levels, and was
achieved despite the lower operating income.
Net cash used in investing activities was $96 million in the quarter and $388 million in the nine-
month period, compared to $84 million and $200 million in the corresponding periods last year,
respectively. The higher levels of cash used in investing activities in the periods largely reflect an
increase in investments in fixed assets, mainly driven by the payments for the upgrading of facilities
in Israel and the relocation of manufacturing facilities in China, as well as the payments for
acquisitions.
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Free cash flow of $1 million was generated in the third quarter and $115 million consumed in the
nine-month period compared to net free cash outflows of $68 million and $56 million in the
corresponding periods last year, respectively, reflecting the aforementioned operating and investing
cash flow dynamics.
Portfolio Development Update
In the third quarter, ADAMA continued to advance the development of its differentiated product
portfolio. The Company obtained multiple new product registrations in the quarter, including
ARMERO, ADAMA's unique, self-produced prothioconazole-based mixture for the control of Asian
soybean rust in Brazil, as well as GALIL, a mixture insecticide in Cambodia and SKOPE, a mixture
insecticide in Korea. In addition, the Company launched many new products in the quarter, including
SUPRADO, an insecticide with a unique mode of action targeting the US golf market, EXCEL
AMINO PLUS, a biostimulant for the reduction of stress in cereals in France, BARROZ, a unique
granular mixture formulation for rice crops which is enjoying a strong launch in India, and XUAN
CHU, a mixture herbicide for wheat in China.
Table 2. Regional Sales Performance
Q3 2021 Q3 2020 Change Change 9M 2021 9M 2020 Change Change
$m $m USD CER $m $m USD CER
Europe 220 181 +21.8% +20.3% 825 790 +4.5% +2.9%
North America 183 145 +26.3% +26.0% 628 518 +21.4% +20.6%
Latin America 372 335 +11.1% +9.2% 820 714 +14.8% +15.8%
Asia Pacific 194 148 +31.6% +26.7% 677 497 +36.3% +26.0%
Of which China 121 82 +46.6% +41.6% 380 250 +52.0% +43.5%
India, Middle East & Africa 178 170 +4.6% +2.9% 525 468 +12.2% +10.9%
Total 1,147 978 +17.3% +15.3% 3,476 2,987 +16.4% +14.2%
CER: Constant Exchange Rates
Europe: Sales were up by 20.3% in the third quarter and by 2.9% in the first nine months of the year,
in CER terms, compared with the corresponding periods last year.
In the third quarter, the Company saw significant growth across most of Europe, with strong demand
driven by continued high crop prices. Noteworthy performances were delivered in most markets of
Central, Eastern and Northern Europe, where supportive weather later in the quarter ensured a
positive start to the autumn season, especially in oilseed rape, winter cereals and sunflower.
In US dollar terms, sales were higher by 21.8% in the quarter and by 4.5% in the first nine months,
compared to the corresponding periods last year, reflecting the net impact of the strengthening of
regional currencies.
North America: Sales were up by 26.0% in the third quarter and by 20.6% in the first nine months
of the year, in CER terms, compared with the corresponding periods last year.
The especially strong performance in the third quarter was driven by a combination of significant
volume growth and higher prices, as the Company sees robust demand in both the Agriculture as
well as Consumer & Professional arms. This pleasing result was achieved despite supply concerns
in certain products. In Canada, the Company delivered a pleasing performance, as higher
insecticide applications compensated for reduced fungicide usage as a result of drought in the
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prairies.
In US dollar terms, sales were higher by 26.3% in the quarter and by 21.4% in the first nine months,
compared to the corresponding periods last year, reflecting the strengthening of the Canadian Dollar.
Latin America: Sales grew by 9.2% in the third quarter and by 15.8% in the first nine months of the
year, in CER terms, compared to the corresponding periods last year.
The pleasing performance in the quarter was led by strong growth in Brazil, driven by robust
demand and higher prices, and benefiting from strong performance of newly launched products, as
the country starts to reopen after the recent improvement in the COVID situation in the country,
allowing resumption of normal commercial activities.
In US dollar terms, sales in the region grew by 11.1% in the quarter, reflecting a strengthening in
regional currencies during the quarter compared to the parallel quarter in 2020. In the nine-month
period, sales in the region grew by 14.8% in US dollar terms, compared to the corresponding period
last year, reflecting the somewhat weaker average currency levels that prevailed during the first
quarter of 2021 compared to the parallel quarter in 2020, which saw currency weakness against the
USD only late in the quarter at the outbreak of COVID-19.
Asia-Pacific: Sales grew by 26.7% in the quarter and by 26.0% in the first nine months of the year,
in CER terms, compared to the corresponding periods last year.
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 in the sales of its raw materials and intermediates where it is seeing strong
demand.
In the rest of APAC, the Company delivered a noteworthy performance in the Pacific region,
enjoying positive seasonal conditions and healthy demand as farmers benefit from the high crop
prices. This more than offset somewhat softer performance in South East Asian countries, where
ongoing COVID restrictions continued to impact commercial activities, and were further exacerbated
by poor seasonal conditions in many countries, including floods in parts of Thailand.
In US dollar terms, sales in the region grew by 31.6% in the third quarter and by 36.3% in the first
nine months of the year, compared to the corresponding periods last year, reflecting the impact of
the strengthening of regional currencies, most notably the Australian Dollar and Chinese Renminbi.
India, Middle East & Africa: Sales grew by 2.9% in the quarter and by 10.9% in the first nine
months of the year, in CER terms, compared to the corresponding periods last year.
The moderate growth in the region in the quarter was led by a noteworthy performance 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.
In US dollar terms, sales in the region grew by 4.6% in the quarter and by 12.2% in the first nine
months of the year, compared to the corresponding periods last year, reflecting the impact of the
strengthening of regional currencies compared to the USD, most notably the Israeli Shekel.
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Table 3. Revenues by operating segment
Third quarter sales by segment
Q3 2021 Q3 2020
% %
USD (m) USD (m)
Crop Protection 1,041 90.7% 881 90.0%
Intermediates and Ingredients 106 9.3% 98 10.0%
Total 1,147 100% 978 100%
Third quarter sales by product category
Q3 2021 Q3 2020
% %
USD (m) USD (m)
Herbicides 441 38.4% 345 35.2%
Insecticides 360 31.4% 329 33.6%
Fungicides 241 21.0% 207 21.1%
Intermediates and Ingredients 106 9.3% 98 10.0%
Total 1,147 100% 978 100%
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.
Nine-month sales by segment
9M 2021 9M 2020
% %
USD (m) USD (m)
Crop Protection 3,152 90.7% 2,706 90.6%
Intermediates and Ingredients 324 9.3% 280 9.4%
Total 3,476 100% 2,987 100%
Nine-month sales by product category
9M 2021 9M 2020
% %
USD (m) USD (m)
Herbicides 1,390 40.0% 1,231 41.2%
Insecticides 1,066 30.7% 859 28.8%
Fungicides 696 20.0% 617 20.6%
Intermediates and Ingredients 324 9.3% 280 9.4%
Total 3,476 100% 2,987 100%
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.
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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.
Contact
Wayne Rudolph Zhujun Wang
Global Investor Relations China Investor Relations
Email: ir@adama.com Email: irchina@adama.com
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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 2021 Q3 2020 Q3 2021 Q3 2020
Adjusted1
USD (m) USD (m) RMB (m) RMB (m)
Revenues 1,147 978 7,425 6,769
Cost of Sales 829 691 5,366 4,785
Other costs 5 6 32 40
Gross profit 313 281 2,027 1,943
% of revenue 27.3% 28.7% 27.3% 28.7%
Selling & Distribution expenses 181 155 1,174 1,071
General & Administrative expenses 54 30 352 208
Research & Development expenses 18 17 114 116
Other operating expenses 1 2 5 11
Total operating expenses 254 203 1,645 1,406
% of revenue 22.2% 20.8% 22.2% 20.8%
Operating income (EBIT) 59 78 382 537
% of revenue 5.1% 7.9% 5.1% 7.9%
Financial expenses and investment income 53 47 344 325
Income before taxes 6 31 38 212
Taxes on Income 36 2 233 14
Net Income -30 29 -195 198
Attributable to:
Non-controlling interest 0 0 0 0
Shareholders of the Company -30 29 -195 198
% of revenue -2.6% 2.9% -2.6% 2.9%
Adjustments -27 -26 -175 -177
Reported Net income attributable to the
-57 3 -371 20
shareholders of the Company
% of revenue -5.0% 0.3% -5.0% 0.3%
Adjusted EBITDA 122 137 788 950
% of revenue 10.6% 14.0% 10.6% 14.0%
2
Adjusted EPS – Basic -0.0130 0.0120 -0.0839 0.0832
– Diluted -0.0130 0.0120 -0.0839 0.0832
2
Reported EPS – Basic -0.0246 0.0012 -0.1592 0.0086
1
For an analysis of the differences between the adjusted income statement items and the income statement items as reported in the
financial statements, see below “Analysis of Gaps between Adjusted Income Statement and Income Statement in Financial Statements”.
2
The number of shares used to calculate both basic and diluted earnings per share in Q3 and 9M 2020 is 2,378.3 million shares and
2,423.8 million shares, respectively. The number of shares used to calculate both basic and diluted earnings per share in Q3 and 9M
2021 is 2,329.8 million shares, reflecting the repurchase and cancellation of 102.4 million shares from CNAC in July 2020 and
repurchase and cancellation of 14.3 million B shares during the second half of 2020.
11
– Diluted -0.0246 0.0012 -0.1592 0.0086
Abridged Consolidated Income Statement for the First Nine Months
9M 2021 9M 2020 9M 2021 9M 2020
Adjusted3
USD (m) USD (m) RMB (m) RMB (m)
Revenues 3,476 2,987 22,488 20,890
Cost of Sales 2,459 2,082 15,909 14,565
Other costs 17 16 110 111
Gross profit 1,000 888 6,469 6,213
% of revenue 28.8% 29.7% 28.8% 29.7%
Selling & Distribution expenses 545 465 3,528 3,253
General & Administrative expenses 125 89 811 624
Research & Development expenses 53 51 341 354
Other operating expenses -6 -4 -37 -28
Total operating expenses 718 601 4,643 4,203
% of revenue 20.6% 20.1% 20.6% 20.1%
Operating income (EBIT) 282 287 1,827 2,010
% of revenue 8.1% 9.6% 8.1% 9.6%
Financial expenses and investment income 144 121 930 844
Income before taxes 139 166 897 1,166
Taxes on Income 52 42 338 298
Net Income 86 124 559 868
Attributable to:
Non-controlling interest 1 0 7 0
Shareholders of the Company 85 124 552 868
% of revenue 2.5% 4.1% 2.5% 4.2%
Adjustments -86 -92 -556 -643
Reported Net income attributable to the
-1 32 -4 225
shareholders of the Company
% of revenue 0.0% 1.1% 0.0% 1.1%
Adjusted EBITDA 464 461 3,004 3,224
% of revenue 13.4% 15.4% 13.4% 15.4%
4
Adjusted EPS – Basic 0.0366 0.0511 0.2367 0.3583
– Diluted 0.0366 0.0511 0.2367 0.3583
4
Reported EPS – Basic -0.0003 0.0131 -0.0017 0.0946
– Diluted -0.0003 0.0131 -0.0017 0.0946
3
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”.
4
The number of shares used to calculate both basic and diluted earnings per share in Q3 and 9M 2020 is 2,378.3 million shares and
2,423.8 million shares, respectively. The number of shares used to calculate both basic and diluted earnings per share in Q3 and 9M
2021 is 2,329.8 million shares, reflecting the repurchase and cancellation of 102.4 million shares from CNAC in July 2020 and
repurchase and cancellation of 14.3 million B shares during the second half of 2020.
12
Abridged Consolidated Balance Sheet
Sept 30 Sept 30 Sept 30 Sept 30
2021 2020 2021 2020
USD (m) USD (m) RMB (m) RMB (m)
Assets
Current assets:
Cash at bank and on hand 764 842 4,956 5,733
Bills and accounts receivable 1,553 1,420 10,071 9,668
Inventories 1,749 1,631 11,345 11,110
Other current assets, receivables
266 323 1,723 2,200
and prepaid expenses
Total current assets 4,332 4,216 28,095 28,712
Non-current assets:
Fixed assets, net 1,504 1,152 9,755 7,844
Rights of use assets 73 74 472 504
Intangible assets, net 1,498 1,441 9,713 9,815
Deferred tax assets 129 130 839 883
Other non-current assets 99 78 640 535
Total non-current assets 3,303 2,875 21,419 19,581
Total assets 7,635 7,091 49,514 48,293
Liabilities
Current liabilities:
Loans and credit from banks and
446 487 2,893 3,314
other lenders
Bills and accounts payable 822 739 5,331 5,032
Other current liabilities 809 782 5,247 5,326
Total current liabilities 2,077 2,008 13,471 13,672
Long-term liabilities:
Loans and credit from banks and
556 319 3,609 2,169
other lenders
Debentures 1,259 1,234 8,167 8,402
Deferred tax liabilities 52 57 335 387
Employee benefits 116 102 751 693
Other long-term liabilities 312 147 2,027 1,004
Total long-term liabilities 2,295 1,859 14,889 12,657
Total liabilities 4,373 3,866 28,359 26,329
Equity
Total equity 3,262 3,225 21,154 21,964
Total liabilities and equity 7,635 7,091 49,514 48,293
13
Abridged Consolidated Cash Flow Statement for the Third Quarter
Q3 2021 Q3 2020 Q3 2021 Q3 2020
USD (m) USD (m) RMB (m) RMB (m)
Cash flow from operating activities:
Cash flow from operating activities 107 23 691 157
Cash flow from operating activities 107 23
691 157
Investing activities:
Acquisitions of fixed and intangible assets -96 -72 -624 -498
Proceeds from disposal of fixed and intangible assets - - - -3
Acquisition of subsidiaries - -14 - -96
Other investing activities - 2 5 18
Cash flow used for investing activities -96 -84 -619 -579
Financing activities:
Receipt of loans from banks and other lenders 92 149 593 1,030
Repayment of loans from banks and other lenders -50 -134 -326 -926
Interest payment and other -10 -7 -65 -50
Dividends to shareholders -6 -1 -37 -5
Other financing activities 11 -0 73 -0
Cash flow from (used for) financing activities 37 7 237 49
Effects of exchange rate movement on cash and cash
- 6 17 -189
equivalents
Net change in cash and cash equivalents 47 -48 325 -562
Cash and cash equivalents at the beginning of the period 714 884 4,615 6,256
Cash and cash equivalents at the end of the period 762 836 4,940 5,694
Free Cash Flow 1 -68 6 -471
14
Abridged Consolidated Cash Flow Statement for the First Nine Months
9M 2021 9M 2020 9M 2021 9M 2020
USD (m) USD (m) RMB (m) RMB (m)
Cash flow from operating activities:
Cash flow from operating activities 338 196 2,182 1,392
Cash flow from operating activities 338 196 2,182 1,392
Investing activities:
Acquisitions of fixed and intangible assets -279 -186 -1,803 -1,301
Proceeds from disposal of fixed and intangible assets 3 3 20 18
Acquisition of subsidiaries -101 -14 -655 -96
Other investing activities -11 -3 -73 -15
Cash flow used for investing activities -388 -200 -2,511 -1,394
Financing activities:
Receipt of loans from banks and other lenders 675 550 4,370 3,852
Repayment of loans from banks and other lenders -411 -240 -2,655 -1,672
Interest payment and other -70 -57 -453 -400
Dividends to shareholders -6 -2 -37 -11
Other financing activities 34 -34 222 -245
Cash flow from (used for) financing activities 223 217 1,446 1,524
Effects of exchange rate movement on cash and cash
1 4 -11 -148
equivalents
Net change in cash and cash equivalents 174 217 1,105 1,374
Cash and cash equivalents at the beginning of the period 588 619 3,835 4,320
Cash and cash equivalents at the end of the period 762 836 4,940 5,694
Free Cash Flow -115 -56 -745 -376
15
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, 2021 and 2020 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”).
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 this release certain idleness charges have been reclassified to impact gross profit, in line with
the approach taken by the Company with respect to idleness charges generally
“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
16
Income Statement Adjustments
Q3 2021 Q3 2020 Q3 2021 Q3 2020
USD (m) USD (m) RMB (m) RMB (m)
Net Income (Reported) -57.3 3.0 -371.0 20.4
Adjustments to COGS & Operating Expenses:
1. Amortization of Legacy PPA of 2011 acquisition of Solutions (non-cash) 0.3 11.5 1.6 79.2
2. Amortization of Transfer assets received and written-up due to 2017 ChemChina-
4.3 7.6 27.8 52.5
Syngenta transaction (non-cash)
3. Upgrade & Relocation related costs 26.7 7.8 172.5 54.1
4. Incentive plans (non-cash) -2.0 -2.5 -13.1 -17.6
5. Amortization of acquisition-related PPA (non-cash), other acquisition-related costs 3.8 2.9 24.6 19.8
6. Employee early retirement expenses - 0.6 - 3.8
8. Capital gain recognized on acquisition of control of an equity investee - -8.5 - -59.0
9. Non-core assets impairment - 9.0 - 62.6
Total Adjustments to Operating Income (EBIT) 33.0 28.3 213.3 195.5
Total Adjustments to EBITDA 18.7 0.1 120.8 0.8
Adjustments to Taxes
1. Tax shield on Legacy PPA of 2011 acquisition of Solutions 0.0 1.9 0.3 13.8
3. Taxes related to restructuring costs 5.2 0.3 33.7 2.0
5. Deferred tax due to amortization of acquisition-related PPA, other acquisition-related
0.6 0.4 3.9 2.4
costs
Total adjustments to Net Income 27.1 25.6 175.5 177.4
Net Income (Adjusted) -30.2 28.6 -195.5 197.8
9M 2021 9M 2020 9M 2021 9M 2020
USD (m) USD (m) RMB (m) RMB (m)
Net Income (Reported) -0.3 31.8 -1.7 225.1
Adjustments to COGS & Operating Expenses:
1. Amortization of Legacy PPA of 2011 acquisition of Solutions (non-cash) 0.8 34.4 4.9 239.6
2. Amortization of Transfer assets received and written-up due to 2017 ChemChina-
18.8 23.0 121.7 160.3
Syngenta transaction (non-cash)
3. Upgrade & Relocation related costs 66.9 31.3 432.5 218.8
4. Incentive plans (non-cash) 1.5 -7.7 9.8 -54.5
5. Amortization of acquisition-related PPA (non-cash), other acquisition-related costs 11.3 8.0 73.3 56.8
6. Employee early retirement expenses - 10.0 - 70.0
7. Provisions in tax expenses related to prior years’ activities 1.6 - 10.3 -
8. Capital gain recognized on acquisition of control of an equity investee - -8.5 - -59.0
9. Non-core assets impairment - 9.0 - 62.6
Total Adjustments to Operating Income (EBIT) 100.8 99.4 652,5 694.7
Total Adjustments to EBITDA 59.4 22.2 384.7 154.9
Adjustments to Financing Expenses
10. Revaluation of non-cash adjustment related to non-controlling interest - 0.8 - 5.6
Adjustments to Taxes
1. Tax shield on Legacy PPA of 2011 acquisition of Solutions 0.1 5.8 0.8 40.7
3. Taxes related to restructuring costs 11.9 1.3 77.0 9.2
5. Deferred tax due to amortization of acquisition-related PPA, other acquisition-related
1.8 1.0 11.6 7.1
costs
7. Provisions in tax expenses related to prior years’ activities 0.4 - 2.5 -
Total adjustments to Net Income 86.6 92.1 560.6 643.3
Net Income (Adjusted) 86.4 123.9 558.9 868.4
17
Total adjustments to Net Income attributable to the shareholders of the Company 85.9 92.1 555.5 643.3
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 & 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 are being relocated to the new sites, both in 2020 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 as well as to the temporary suspensions of the
Jingzhou site in Q1 2020 (at the outbreak of COVID-19 in Hubei Province).
4. Incentive plans (non-cash): The Company granted its employees, who are mainly non-Chinese residents, a long-term incentive (LTI) in the
form of 'phantom' options, due to the complexity of granting Chinese-listed, equity-settled options to non-Chinese employees. As such, the
Company records an expense, or recognizes income, depending on the fluctuation in the Company’s share price, even though the Company
will not incur any cash impact prior to exercise of the phantom options. 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 options, 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. Employee early retirement expenses: Provision for early retirement plan of employees at the Company’s Israeli manufacturing sites.
7. Provisions in tax expenses related to prior years’ activities: Provisions in respect of tax expenses related to activities of prior years.
8. Capital gain recognized on acquisition of control of an equity investee: On 1 July 2020, the Company acquired the remaining 51% stake
in Alfa Agricultural Supplies, S.A., and in so doing, gained control over the company which previously was accounted for as an equity investee.
As a result of the change of consolidation scope, the Company recognized a one-time, non-cash, capital gain.
9. Non-core assets impairment: One-time, non-cash charge due to closure or impairment of peripheral, non-material assets
10. Revaluation of non-cash adjustment related to non-controlling interest: Relates to put options issued to non-controlling interests as part
of historical business combinations which took place before January 1, 2010. The put options are presented as a liability at the present value of
the future exercise price. The revaluation of these put options in Solutions is recognized under IFRS to Goodwill, but due to the acquisition of
Solutions by the Company in 2017, which is treated from an accounting perspective as a “Business Combination Under Common Control”,
such revaluation is recorded as a profit or loss item in the financial reports of the Company. The revaluations of such put options have no
bearing on the ongoing performance of the Company and are therefore removed from the Adjusted performance figures.
18
Exchange Rate Data for the Company's Principal Functional Currencies
Sept 30 Q3 Average 9M Average
2021 2020 Change 2021 2020 Change 2021 2020 Change
EUR/USD 1.157 1.170 -1.11% 1.179 1.169 0.91% 1.198 1.123 6.74%
USD/BRL 5.439 5.641 3.57% 5.229 5.380 2.81% 5.323 5.076 -4.87%
USD/PLN 3.993 3.866 -3.28% 3.873 3.802 -1.86% 3.793 3.939 3.73%
USD/ZAR 15.060 16.920 10.99% 14.628 16.914 13.51% 14.460 16.747 13.66%
AUD/USD 0.719 0.712 1.08% 0.735 0.655 12.26% 0.761 0.675 12.84%
GBP/USD 1.344 1.282 4.84% 1.379 1.241 11.13% 1.388 1.270 9.27%
USD/ILS 3.229 3.441 6.16% 3.234 3.418 5.39% 3.259 3.477 6.28%
USD LIBOR 3M 0.13% 0.23% -44.38% 0.13% 0.25% -50.12% 0.16% 0.80% -79.79%
Sept 30 Q3 Average 9M Average
2021 2020 Change 2021 2020 Change 2021 2020 Change
USD/RMB 6.485 6.810 -4.77% 6.470 6.919 -6.49% 6.470 6.993 -7.47%
EUR/RMB 7.504 7.967 -5.82% 7.630 8.086 -5.64% 7.749 7.850 -1.28%
RMB/BRL 0.839 0.828 -1.26% 0.808 0.778 -3.94% 0.824 0.726 -13.55%
RMB/PLN 0.616 0.568 -8.45% 0.599 0.549 -8.93% 0.586 0.563 -4.10%
RMB/ZAR 2.322 2.485 6.54% 2.261 2.444 7.51% 2.236 2.395 6.64%
AUD/RMB 4.664 4.845 -3.74% 4.755 4.948 -3.90% 4.909 4.718 4.05%
GBP/RMB 8.716 8.729 -0.16% 8.921 8.935 -0.16% 8.976 8.883 1.06%
RMB/ILS 0.498 0.492 -1.14% 0.500 0.494 -1.18% 0.504 0.497 -1.34%
RMB LIBOR 3M 2.43% 2.69% -9.66% 2.39% 2.53% -5.87% 2.54% 2.22% 14.14%
19
