ADAMA Posts Stronger Results on Brazil, Higher Pricing
ADAMA reported sharply stronger fourth-quarter results, boosted by improved business in Brazil and higher pricing.
Net income in the fourth quarter was a record $46 million, up by 79% compared to the $26 million achieved in the corresponding period last year. Over the full year, net income was $249 million, lower than the record $280 million achieved last year, reflecting the unusually low tax expense incurred in 2017.
ADAMA reported revenue grew by 17.3% in the quarter to a record $963 million and by 10.2% in the full year to a record $3.9 billion, compared to the corresponding periods last year. In constant currency terms, revenues grew by 22.8% in the quarter and by 12.4% in the full year.
This robust performance was driven by strong business growth of the company’s increasingly differentiated product portfolio, with volumes up by 15.8% in the quarter and 8.1% in the full year. In the quarter, the company recorded particularly strong performance in Latin America, led by Brazil, as well as in North America, Europe and Asia-Pacific, while sales in India were impacted by severe drought.
In China, ADAMA continues to prioritize the sale of branded, formulated products through its domestic commercial network as well as their export and distribution through the company’s global commercial network, and is shifting away from selling unformulated technical product to other intermediaries.
In addition to the strong business growth, improved demand conditions facilitated a stronger pricing environment, compensating for the softer currencies and allowing the passing on of some of the impact of the constrained supply and higher procurement costs.
ADAMA said the global crop protection market grew somewhat in 2018 due to stronger demand conditions and normalized inventory levels, alongside higher procurement costs emanating from China. This growth was partially offset by challenging weather conditions, especially in Europe, as well as uncertainty surrounding the US-China trade tensions, which weighed on agricultural commodity prices, continuing to impact farmers’ incomes for the fourth consecutive year.
“The company continues to maintain manufacturing cost discipline and mitigate the impact of shortages in certain raw materials and intermediates, mostly owing to increased environmental focus in China. The supply-constrained environment further contributed to overall stronger pricing,” according to ADAMA’s earnings statement.
Chen Lichtenstein, President and CEO of ADAMA, added, “We delivered the strongest fourth quarter results to date, driving double-digit sales growth over the full year, despite continued subdued agricultural commodity prices and challenging weather conditions in key regions. We continue to strengthen our core business by investing in our pipeline of new and differentiated products, executing on our growth strategy.”