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 ter ms) 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, wi th 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 suppor tive weather later in the quarter, saw a positi ve 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 deli ver pleasing growth across Latin America, with
the high crop prices driving strong demand as the region star ts 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 inter mediates 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 positi ve 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 volati le 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 acti ve ingredients, ser ving
to further exacerbate the i mpact 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-dri ven growth of the business and the addi tional
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
currencies against the US dollar.
Similar ly, 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 quar ter of 2021 when
compared to the same quarter in 2020.
The predicted loss in the third quarter is expe
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