Tough Conditions in Brazil Weaken Adama Results
10 November 2015 Adama Agricultural Solutions Ltd. swung to a net loss in the third quarter, hurt by the sharp depreciation of the Brazilian real and downgrades in the country’s credit rating.
“These factors have led Adama to take proactive steps to reduce the negative effects of the environment in Brazil on the company, including a decision not to fulfill certain outstanding orders and thereby partially limit sales in the country, in so doing reducing its exposure to currency and credit risks,” the company said in a statement.
In addition, Adama mentioned the overall challenging conditions in the agricultural markets in 2015, reflected by the significant depreciation of all currencies against the U.S. dollar, as well as low commodity prices. In addition, several markets have experienced exceptional weather conditions in the third quarter, such as drought in Europe, Canada and South Africa and a late start of the rain season in India, which impacted demand in those regions.
Adama posted a loss of $4.6 million in the period, compared with income of $24 million in the year-ago period. Revenue fell to $696.1 million from $761.5 million a year earlier.
Adama Chairman Yang Xingqiang said, “Our ability to grow our business, in both volume and constant currency terms, despite the difficult market conditions, demonstrates the resilience of our global and diversified business model and the determination of our people to continually deliver a strong performance despite the challenging times. The Company continues to invest in the future growth of the business, and remains well positioned to accelerate its growth trajectory once the market recovers.”
Chen Lichtenstein, President and CEO of Adama, commented, “Notwithstanding the tough currency conditions and subdued crop protection market, we have been able to increase our market share globally. Our preparedness and ability to respond quickly to a rapidly evolving environment saw us taking proactive steps to adjust our costs to the current situation. While remaining focused on addressing the dynamic global market environment, the building of our China sales force is currently in full swing as we intend to launch our direct sales in this significant market early in 2016.”
The company said it is now well-advanced in establishing its own sales force on the ground in China, with direct sales expected to commence in the 2016 season. Construction of its new state-of-the-art formulation and packaging plant in the city of Huai’an is proceeding and the facility is expected to come on stream next year.
Adama added that it is continuing to work with its shareholders to progress the contemplated reverse merger of the company with Sanonda, which was announced during the third quarter.
Source: Adama
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