ADAMA Reports Fourth Quarter and Full Year 2023 Results
ADAMA Ltd. has reported its financial results for the fourth quarter and full year ended December 31, 2023.
Steve Hawkins, President and CEO of ADAMA, said, “The crop protection industry as a whole faced challenging market conditions throughout 2023, resulting from high channel inventory and ongoing destocking at the distributor level. In response, ADAMA took immediate steps that supported a significant improvement in cashflow in 2023, highlighting our strong execution ability.
“In addition to the significant improvement in cashflow, we improved the sales mix of higher margin products, reduced operating expenses and inventory. These, however, are only the first steps to ensure the Company is fully prepared to take advantage of anticipated market opportunities in 2024 and onwards. To fully respond to the long-term as well as short-term market challenges, we launched an intensive transformation plan aimed at improving the quality of the business and revaluing ADAMA. We will focus on winning in the largest growing segment of the market – the value innovation segment – with our outstanding pipeline of differentiated products powered by our proprietary formulation technologies. Coupled with resolute focus on improving our cost base and leveraging our strong commercial engine and customer driven culture, I am confident that we will succeed to revalue the Company going forward. I expect to share key milestones as the year progresses.”
The General Crop Protection Market Environment
Key commodity crop prices declined substantially during 2023 as weather conditions normalized and the global crop supply situation improved. However, key commodity crop prices were still relatively high through 2023, supporting planted area and investment in crops, leading to healthy demand, at the farmer level, of crop inputs, including crop protection products. However, due to very high channel inventory across all geographies, channel demand was weak during 2023. The high interest rate environment coupled with low prices of active ingredient from China, also encouraged the just-in-time purchasing approach adopted by the channel. As a result, sales into the channel declined sharply across the entire industry. Going into 2024, channel inventories have improved across most geographies but they have still not normalized everywhere. The cost environment further improved in 2023 as active ingredient prices in China continued to decline all through 2023 reaching low levels.
Update on the War Situation in Israel
ADAMA is headquartered in Israel and has three manufacturing sites in the country. Following October 7th, 2023, the Company continued the production in its global manufacturing sites and in Israel, with certain non-significant restrictions (which have been lifted in February 2024). This situation did not have a material impact on the Company’s ability to support its markets or on ADAMA’s consolidated financial results.
Update on Impact of Shipping Obstructions
In January 2024 some major shipping lines announced that they will suspend shipping to Israel through Israeli ports and through the Suez Canal due to tensions in the Red Sea. This has led to longer transportation times, with shipping lines being diverted around Africa.
As of the date of publication of this report, shipping time and costs have increased significantly, mainly in the Asia-Pacific Israel route in comparison to before January 2024. These cost increases impact only a small portion of the Company’s overall shipping costs and ADAMA has been ordering relevant materials ahead of time to ensure timely supply. Currently, the Company does not anticipate this to have a significant impact on its financial results or on the ongoing supply of materials to its production facilities, although this situation might impact the company’s ability to respond quickly to changing market demand.
For a closer look at ADAMA’s financial results, click here.
Get The Newsletter Today!
