StockCode:000553(200553) Stockabbreviation:ADAMAA(B)
AnnouncementNo.:2019-7
ADAMALtd.
FullYear2018PerformanceEstimation
TheCompanyandallthedirectorsconfirmthattheinformationdisclosedistrue,accurate,completeandwithnofalserecording,misleadingstatementormaterialomission.
I.PerformanceEstimation
1.Estimationperiod:January1,2018–December31,2018
2.Estimatedperformance:Stronggrowth
Item Currentreportingperiod Sameperiodlastyear
JanuarytoDecember JanuarytoDecember
2018 2017
aspreviouslyreported
Netprofitattributabletothe Profit:2,367.6–2,505.9
shareholdersofthelisted Profit:1,545.9
company(RMBinmillions) Percentageofincrease
YoY53.15%-62.10%
Basicearningspershare(RMB) Profit:0.9677–1.0243 Profit:0.6601
II.Pre-auditoftheestimatedperformance
TheestimatedresultsofthisperiodarethepreliminaryestimationoftheCompanyandhavenotbeenauditednorreviewedbycertifiedaccountants.
III.ExplanationsforPerformanceVariation
Whencomparedtothereportednetprofitin2017,thesignificantincreaseintheestimatednetprofitintheconsolidatedpreliminary2018reportisduetothefollowingreasons:
1. TheCompanyisexpectingtodeliveranotherfourthquarterofrecordsales,with
double-digitgrowthinthequarterdrivingalsodouble-digitgrowthoverthefullyear.
Theextremelystrongperformanceinthefourthquarterisexpectedtoresultinthe
CompanysignificantlyexceedingallofitsQ42017recordsalesandadjustedprofit
metrics,withsomeprofitmetricsuptensofpercentswhileothersmorethandoubled.
TherobustfourthquarterisalsoexpectedtodrivetheCompanyoverthefullyear
2018toexceedall2017recordsalesandadjustedprofitmetrics,otherthanNet
Incomewhichisexpectedtobesomewhatlowerthantherecordachievedin2017,
duetounusuallylowtaxexpensesin2017ontheonehand,comparedtohighertax
expensesin2018ontheother.
2. Inthefourthquarter,thestrongdouble-digitrevenuegrowthwasdrivenbya
combinationofsignificantbusinessgrowthaswellashigherprices,somewhatoffset
byadversecurrencyheadwinds.Especiallynoteworthyperformancewasdeliveredin
Brazil,drivenbytherecentlaunchoftheCompany’sdistinctivethree-way
combinationCRONNOS®fungicide,aswellasinotherpartsofLatinAmerica,
NorthAmericaandNorthernEurope.Thestrongsalesgrowthinthequarterwas
furthercomplementedbyacontinuedimprovementinportfoliomix,somewhat
offsetbytheimpactofincreasedprocurementcosts,leadingtodouble-digitgrowth
ingrossprofit.TightmanagementofoperatingexpensesensuredthattheCompany
deliveredastrongincreaseinadjustedOperatingProfitandEBITDAinthequarter,
bothinabsolutetermsandasapercentageofsales.Thisstrongoperating
performance,alongsidefinancialexpensesinlinewiththoseofthesamequarterlast
year,drovesignificantlyhigherPre-taxProfitandNetIncome.Thisstrongincrease
inNetIncomewasachieveddespitetheincurringoftaxexpensesinthequarter,
comparedtoataxincomeinthesamequarterlastyeardue,mainlytothecreationin
Q42017ofdeferredtaxassetsinrespectoflossescarried-forwardandtiming
differences,inanticipationoftheirexpectedutilization.
3. Overthefullyearperiod,theCompanyisexpectingtodeliveranotheryearof
all-time high sales, recording double-digit revenue growth. Outstanding
performanceswereachievedinBrazil,NorthAmericaandtheIndia,MiddleEastand
Africaregion,alongsidestrong,double-digitgrowthintheCompany’sbranded,
formulatedsalesinChina,aswellasmostothergeographiesworldwide.European
revenueswereinlinewithlastyear’s,despiteaslowstarttotheseasonfollowedby
extremedroughtconditionsinthethirdquarter.TheCompanysawrobustgrowthof
itsdifferentiatedportfolio,complementedbyincreasedprices,whichoffsetthe
increaseinprocurementcostsandthenegativeimpactofcurrencies.TheCompany
expectstoreportEBITDAslightlyabovelastyear’sall-timerecordhigh.Duetothe
highertaxexpenseswhencomparedtolastyear’srelativelylowtaxexpenses,
adjustednetincomefortheyearisexpectedtobebetweenRMB1,351.1million–
RMB1,669.5million($253.7million-$233.7million),comparedtolastyear’s
recordadjustednetincomeofRMB1,909.3million($280.1million).
4. TheCompany’sreportedearningsin2018willbepositivelyimpactedbythe
recognitionofaone-timeprofitinthefirstquarterof2018onthedivestitureof
severalcropprotectionproductsinEuropeinconnectionwiththeapprovalbythe
EUCommissionoftheacquisitionofSyngentabyChemChina.Theproceedsofthis
divestiture,netoftaxesandtransactionexpenses,werepaidtoSyngentainreturnfor
thetransferofaportfolioofproductsinEuropeofsimilarnatureandeconomic
value.
5. Partiallyoffsettingthisone-timeprofit,theCompany’sreportedearningsin2018
willbeimpactedbycertainone-time/non-cashitems,includingthelegacy
amortizationofthe2011PPAfortheacquisitionofAdamaAgriculturalSolu
