Stock Code: 000553(200553) Stock Abbreviation: ADAMA A (B) Announcement No. 2020-3
ADAMA Ltd.
Full Year 2019 Performance Estimation
The Company and all the directors confirm that the information disclosed is true,
accurate, complete and with no false recording, misleading statement or material
omission.
I. Performance Estimation
1. Estimation period: January 1, 2019 – December 31, 2019
2. Estimated performance: lower compared to last year
Item Current reporting Same period last year
period January to December
January to December 2018
2019 as previously reported
242 – 327
Net profit attributable to the 2,402
shareholders of the listed
company (RMB in millions) Percentage decrease
YoY 86.4% - 89.9%
Basic earnings per share 0.0991 – 0.1336 0.9820
(RMB)
II. Pre-audit of the estimated performance
The estimated results of this period are the preliminaryestimationof the Company
and have not beenaudited nor reviewed bycertified accountants.
III. Explanations for Performance Variation
Sales
The Company is expecting sales in the quarter to grow over 9% to reach an
all-time fourthquarter record of over RMB 7 billion, driving full year sales to nearly
significant headwinds seen during the year.
In the fourthquarter, the expected revenue growth was drivenbya combinationof
robust b usi ness growth alongside certain price increases, which more than offset
the impact of missing sales of keyproducts manufactured at the Jingzhou old site
stemming from the site disruption there during the year, as well as currency
headwi nds. The Companyis expecting to report strong growthinEurope, where it
saw an early start to the 2020 season, as well as in North America and
Asia-Pacific. Noteworthy results are also seen in Brazil, led by a strong
performance from CRONNOS®, and across Latin America, where the Company’s
differentiated product offering continues to grow.
Over the full year period, the Company is expecting to deliver another year of
record-high sales, with growth of approximately 8%, nearly reaching RMB 28
billion, drivi ng continued market share gains despite the impact of significant
supply constraints, in particular the missing sales of Jingzhou old site products.
The Company grew strongly in Brazil and the rest of Latin America, while the
strong performance in Europe in the fourth quarter managed to mitigate some of
the impact of the weather and supply constrai nts experienced in the region earlier
inthe year. The Companycontinues its robust growthinChina, where its branded,
formulated sales are expected to record another strong, double-digit increase.
Gross Profit
In the fourth quarter, the robust business growth, alongside higher prices and
improved portfolio mi x are expected to more than offset the impact of missing
sales of the Jingzhou old site products, as well as higher procurement costs and
generally weaker currencies, resulting in slightly higher gross profit compared to
the same period in2018.
Similarly, o ver the full year, the solid growth of the Company’s differentiated
portfolio, complemented by significantly higher prices, are expected to more than
offset the impact of missing Jingzhou old site products sales, higher procurement
costs and weaker currencies, bringing gross profit slightly above that of 2018.
Continued Progress on China Facilities Upgrade and Relocation ;
Associated Impairments and Provisions
The Company has made significant progress on the upgrade and relocation of its
production and environmental facilities at both its Jingzhou (Hubei Province) and
Huai’An (Jiangsu Province) sites, a process in which it expects to realize
significant operational efficiencies from upgrading of processes and technology,
as well as the terminationof less profitable production lines.
As the Company is reaching the final stage of relocation of the old sites, and
expecti ng to commence production of the relocated products at the new Jingzhou
site in Q3 2020, inits fourthquarter fi nancial reports the Company is expecting to
record a one-time, non-cash asset impairment related to terminated facilities at
the old sites in both Jingzhou and Huai’An and related implementation costs of
approximately RMB 355 million. In addition, the upgraded sites and their level of
automation will allow for a more skilled, smaller workforce, a process which is
expected to be largely completed by the end of 2020. As such, the Company is
expecti ng to record a one-time provision for employee severance costs of
approximately RMB 243 millioninthe fourthquarter.
Going forward, these actions are expected to deliver ongoing annual savings of
up to RMB 235-330 million per year, commencing in
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