Adama’s Profit, Revenue Climb in Third Quarter
21 November 2016 Adama posted higher revenue and profit in the third quarter, driven by significant volume growth and an improved portfolio mix.
The company said revenue totaled $741 million, up 6.5% in U.S. dollar terms from $696 million a year earlier, with growth across all regions. Net income was $33 million, reversing a $5 million loss in the same period a year ago.
Sales in Latin America in the quarter were lower by 3.1% in constant currencies, compared to the corresponding period last year, with the company performing strongly in Brazil, while containing sales due to credit considerations and partly passing on to customers some of the benefit of products’ significantly reduced cost. Sales in the nine-month period increased by 2.9% in constant currencies, with stable volumes and increased prices.
Adama obtained new registrations for a number of differentiated products, including BANJO, a fungicide for use in potatoes, and FUNGINIL, a fungicide for vegetables, both in Brazil, as well as BREVIS, an innovative, proprietary product that promotes growth of bigger and more uniform fruit, in Chile. In Mexico, Adama’s proprietary nematicide NIMITZ has performed well following its launch late last year.
Sales in Europe increased by 4.8% in the quarter, in constant currencies, with significant higher-margin volume growth aided by expectation of good harvests in Eastern Europe as well as increased demand for fungicides in southern Europe, which offset the impact of the late season droughts and generally poor harvests in southern Europe. Sales in the nine-month period were lower by 0.8% in constant currencies, reflecting the extended cold and rainy weather in the first half of the year, as well as a certain decrease in selling prices in several countries in the region, partly passing on to customers some of the benefit of the products’ significantly reduced cost.
TRINITY, a unique mixture of three active ingredients for weed control in cereals, and a product that provides reduced AI content whilst addressing resistance issues, performed well in eastern European markets.
The company obtained registrations for several unique products, among which are TOUAREG, a herbicide for early post-emergence weed control in cereals in Spain, AFAENA, a herbicide for oil-seed rape and potatoes in France, and QUANTUM R-OK, a fungicide for grapes and other crops in Italy.
In U.S. dollar terms, sales in Europe increased by 1.7% in the quarter, and were lower by 7.2% in the year-to-date reflecting the lower contribution of currency hedging, primarily in the first half of the year, and the weaker exchange rates prevailing in both the quarter and the nine-month period compared with the corresponding periods last year.
Sales in North America increased by 5.8% in the quarter and by 7.5% in the nine-month period, in constant currencies, driven by significant higher-margin volume growth, with the business continuing to realize the benefits of its focus on higher value-added products and increased engagement with farmers.
Adama saw strong demand from cotton growers, including for DIAMOND, an insect growth regulator for broad-spectrum insect control, REDI-PIK, a defoliant and regrowth inhibitor that provides consistent foliage drop for higher quality harvest, and SETUP, a growth regulator used to boost overall recoverable yield.
Adama noted that it continues to bring to market key effective products of Sanonda.
In U.S. dollar terms, sales in North America increased by 5.9% in the quarter and by 6.8% in the nine-month period, compared with the corresponding periods last year.
Commenting on the results, Yang Xingqiang, Chairman of Adama’s Board of Directors, said, “The strong third quarter results achieved by Adama add another record chapter to the company’s sector-leading performance, and reinforce our confidence in the strength of our business, our people worldwide, and our company’s significant potential going forward. During the quarter we announced the combination with Sanonda, through which Adama will achieve its public flotation, and we are pleased with the market reception thus far.”
Chen Lichtenstein, President and CEO of Adama, added, “Our third quarter results reflect our focused execution of Adama’s strategic direction – engaging with our customers and farmers, enhancing the quality of our business and further differentiating our offering, while building up our China presence and integration. Our record performance resulted in continued generation of significant cash flow, which positions us well to drive our next phase of growth.”
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