ADAMA Provides Net Income Estimate for Q4 and FY 2021
TEL AVIV, ISRAEL and BEIJING, CHINA, January 28, 2022 – ADAMA Ltd. (the “Company”) (SZSE
000553), today provided an estimate regarding its financial performance for the fourth quarter and full year of
2021.
Sales
ADAMA is expecting to report sales growth of more than 17% in USD terms (13% in RMB terms) in the fourth
quarter compared to the same quarter last year. The strong growth over the quarter is being driven by a
significant, double-digit increase in prices, a trend which started in the third quarter and accelerated into the
fourth quarter. The markedly higher prices were complemented by continued volume growth, which together
are a reflection of the robust demand in the market resulting from the continued high crop prices being
enjoyed by farmers worldwide.
In the quarter, ADAMA is expecting to deliver significant growth in Latin America, both in Brazil and across
much of the rest of the region. In Brazil, the Company benefited from the good soybean planting season, as
well as the strong farmer demand which supported higher prices. The Company commenced local production
and commercialization in Brazil of ARMERO™, its new dual-mode fungicide containing the active ingredients
Prothioconazole and Mancozeb, benefiting from its new in-house production of Prothioconazole, a leading
broad-spectrum systemic fungicide. The Company is also expecting to deliver pleasing growth in Paraguay
following an acquisition in the country in the fourth quarter of 2020, as well as in Central America and many
other countries in the region.
The Company continues to grow strongly in Asia Pacific, led by a significant increase in sales in the quarter
in China. In China, the Company's sales of raw materials and intermediates, where it continues to see strong
demand, are also benefiting from the higher pricing environment resulting from general supply constraints. In
addition, ADAMA continues to grow sales of its branded, formulated portfolio, and was also bolstered by the
acquisition of Huifeng during the year. In the wider APAC region, the Company is expecting to report growth
in the quarter, with increases in the Pacific region being balanced by somewhat softer performances in some
east Asian markets, where commercial activities continue to be hampered by COVID-related restrictions and
supply constraints.
In North America, the Company is expecting to deliver a pleasing performance in the fourth quarter,
enjoying robust pre-season demand in both US and Canadian agricultural markets as farmers order early in
light of continued industry-wide concerns around availability later in the season.
Sales in the India, Middle-East & Africa region are expected to grow in the quarter, led by a strong
performance in India driven by new product launches in the country, including BARROZ®, a leading tool for
the control of stem borer in rice, as well as South Africa, where the Company continues to benefit from
favorable cropping conditions and new product launches.
In the fourth quarter, the Company is expecting to record moderate growth in Europe, achieved despite the
impact of the COVID-19 Omicron wave hampering regular commercial activities, with growth across most of
the region being partially offset by supply challenges, mainly felt in France and Germany.
Over the full year, the Company is expecting to deliver a similarly robust 17% top-line growth (9% in RMB
terms) in its global sales. This strong performance is being driven by continued double-digit volume growth,
for the second year in succession, alongside higher prices and favorable exchange rates.
Gross Profit, Operating Profit and EBITDA
In the fourth quarter, the Company is expecting to report significantly higher gross profit, driven by the strong
top-line growth and a marked improvement in its gross margin. This expected increase in gross margin in the
quarter is a reflection of higher prices seen in the quarter, which are more than compensating for the impacts
of higher procurement and production costs, and the effect of the strong RMB and ILS, the Company's main
production currencies. The increased gross profit in the quarter is expected to translate into significantly
higher Operating Profit and EBITDA, with operating expenses markedly lower as a percentage of sales,
although somewhat higher in absolute terms reflecting mainly the higher logistics costs, additions of new
companies and idleness in certain of the Company's production facilities in China as a result, amongst other
factors, of the temporary suspensions of sites during the country's Dual Energy Control restrictions in recent
months.
Over the full year, the Company’s robust business growth, coupled with the gross margin recovery in the
fourth quarter – which will bring the full year gross margin to be only somewhat below that of last year – are
expected to drive a marked increase in gross profit, operating profit and EBITDA.
Net Income
The Co
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