ADAMA Provides Net Income Estimate for the Third Quarter
and First Nine Months of 2020
Continued strong business growth moderated by weaker currencies
TEL AVIV, ISRAEL and BEIJING, CHINA, October 14, 2020 – ADAMA Ltd. (the “Company”) (SZSE
000553) today provided an estimate regarding its financial performance for the third quarter and first nine
months of 2020.
The Company is expecting to deliver record third quarter sales, in both USD and RMB terms, driven by solid
volume growth, resulting in higher sales over the nine-month period. While global currencies recovered
somewhat against the US Dollar during the third quarter, they generally remained weaker than in the
comparative periods in 2019, which continued to restrain sales growth and significantly impact profitability in
USD terms in the quarter and nine-month period.
Sales
Sales are expected to grow by 12% in the quarter and by 8% in the nine-month period, in CER terms,
compared to the corresponding periods last year, driven by strong, double-digit increase in volumes.
ADAMA is expecting growth in the quarter to have been led by a strong performance in Latin America, driven
by robust volume growth across the region, most notably in Brazil, Argentina, Colombia, Mexico and
Paraguay, and bolstered by the Company’s acquisition in Peru, and despite widespread COVID-19 related
restrictions in the region. Continued growth was seen in the India, Middle East & Africa region, led by India
which benefited from above-average monsoon rains and good cropping conditions. The Company is
expecting to deliver strong growth in Asia-Pacific with noteworthy performances in Australia alongside solid
growth in New Zealand and Korea. In China, the Company is expecting to deliver moderate growth, with a
strong performance from its branded, formulated sales being partially offset by lower prices received for its
raw materials and intermediates due to increased supply generally from Chinese producers. A strong
contribution is expected to be recorded from the Company’s Consumer and Professional Solutions business
which continues its strong recovery from the COVID-19 related challenges seen earlier in the year.
The solid growth in the quarter in these regions more than compensated for the somewhat lower sales
expected in Europe, with widespread extreme drought conditions significantly impacting application in key
crops, partially offset by the contribution of the Company's recent acquisition in Greece. Crop protection
sales in North America are expected to be markedly lower, largely due to disruptive weather conditions in the
US which saw windstorms damage corn fields in the mid-west, fires raging in the orchards and vineyards of
California and Oregon, and a heatwave challenging cotton farmers in Texas already contending with reduced
demand due to the COVID-19 impact on the apparel industry, alongside low insect pressure impacting sales
of insecticides.
In US dollar terms, sales are expected to grow by a more moderate 3% in the quarter and 1% in the nine-
month period (2% and 3%, respectively in RMB terms), compared to the corresponding periods last year, as
the strong business growth was heavily impacted by the generally weaker currencies against the US dollar
when compared to the same periods last year.
Gross Profit, Operating Profit and EBITDA
In the third quarter, the Company is expecting to report lower gross profit, with the strong volume growth and
lower procurement costs more than offset by the continued impact of the materially weaker global currencies.
This in turn is expected to translate into lower Operating Profit and EBITDA, which saw only partial
compensation by a reduction in operating expenses.
Similarly, over the nine-month period, the significant currency weakness is expected to outweigh the
Company’s robust business growth, resulting in reduced profit metrics when compared to the same period
last year, reflecting the strong growth in emerging markets which were among the most significantly impacted
by the global currency weakness.
Net Income
Net income in the third quarter and nine-month period is expected to be below that reported in the same
periods last year, driven by the lower operating income over both periods, and further impacted by higher
financial expenses in the third quarter due to an increase in financing costs on the NIS-denominated, CPI-
linked bonds due to a higher CPI in Israel, and the effect on balance sheet positions of the strengthening of
the RMB when compared to 2019. The Company also saw markedly higher tax expenses in the first quarter
of the year due to the significant weakening of the Brazilian Real.
Reported Net Income Estimated 9M 2019 Estimated Q3 Q3 2019
i.
9M 2020 2020
Net income attributable to 30.3 – 33.3 116.4 1.5 – 4.5 29.5
shareholders (USD millions)
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