Adama’s Earnings Grow on Higher-Value Products
23 May 2016 Adama Agricultural Solutions Ltd. posted a higher first-quarter profit, as it grew sales in higher-value products, despite a dip in overall revenue due to the strong U.S. dollar.
Adama said reported sales fell 1.6% to $853 million, from $867 million a year ago on the strong U.S. dollar. It posted revenue growth of 6.9% in constant currency terms, driven by significant volume growth of 6.7% across all geographies, as its product mix improved despite the ongoing difficult agricultural market conditions.
Net income rose 6.8% to $101 million from $94 million a year earlier.
Sales in North America increased by 12.0% in the first quarter at constant exchange rates compared to the corresponding period in 2015, due to increased engagement with key customers, focus on key regions and high value-added crops, and the launch of new products. In U.S. dollar terms, and despite a further depreciation of the Canadian dollar, sales in North America increased by 10.8% in the quarter compared to the corresponding period last year.
Sales in Europe increased by 1.2% in the first quarter at constant exchange rates compared to the corresponding period in 2015, due to significant volume growth driven by the launch of new products and the deepening of commercial activity.
Commenting on the results, Yang Xingqiang, Chairman of Adama’s Board of Directors, said, “We are pleased with the strong results of the first quarter, despite the many ongoing market challenges and the currency pressure. We are particularly satisfied with the launch of our activities in the Chinese market and the clear progress we are making in this market.”
Chen Lichtenstein, President and CEO of Adama, added, “This quarter saw Adama deliver robust sales growth in constant currencies, driven by increased volumes across all regions, alongside growth in sales of higher-value products, which allowed us to weather the tough market conditions and drive growth in all our profit and profitability measures. Our performance is the result of the continuous execution of our strategy, with an emphasis on the strengthening of our commercial reach and the evolution of our differentiated portfolio.”
Build-up and integration in China
Adama continues to progress towards the realization of its strategic goals in China, especially the establishment of its commercial and operational activities.
During the first quarter, Adama launched its direct sales in China, appointed its management team and was joined by dozens of new sales personnel in ten provinces. The Company’s performance in the country in the first quarter has exceeded its plan. In addition, Adama has become the sales platform of formulated products of several CNAC companies, selling higher volumes than planned.
On the operational side, the construction of its new, state-of-the-art formulation and packaging center in the city of Huai’an is progressing, and the plant is expected to come on-stream in the next 12 months.
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