TEL AVIV, Israel, May 28, 2017 /PRNewswire/ --
- Sales of $843 million, in line
with Q1 last year in constant currencies:
-
- 1.2% lower, in USD terms
- Volumes up 3.7%, commencing another consecutive year of
growth
- Gross profit up 5.2% to $311
million:
-
- 2.2 percentage point increase in gross margin to 36.9%
- Driven by strong improvement in portfolio mix and continued
cost reduction
- All-time record high operating income of $136 million, up 5.8%:
-
- Operating margin up 1.1 percentage points to 16.2%
- All-time record high net income of $114 million, up 13.3%:
-
- Net income margin up 1.8 percentage points to 13.6%
- All time record-high EBITDA of $180
million, up 4.5%:
-
- EBITDA margin up 1.1 percentage points to 21.3%
- Improvement of $97m in working
capital:
-
- Driven by $74 million reduction
in inventory
- Significantly reduced leverage:
-
- Balance sheet net debt of $953
million, $248 million below Q1
last year
- Reduced financial expenses
- Net debt / EBITDA ratio of 1.8x vs. 2.5x in Q1 last year
- Combination with Sanonda:
-
- Following recent approval by a significant majority of
Sanonda's public shareholders, now awaiting final CSRC consent
ADAMA Agricultural Solutions Ltd. today reported its financial
results for the first quarter ended March
31, 2017.
|
|
|
%
Change
|
%
Change
|
Adjusted,
US$m
|
Q1
2017
|
Q1
2016
|
CER
|
USD
|
Revenues
|
843
|
853
|
-0.60%
|
-1.20%
|
Gross
profit
|
311
|
296
|
|
5.20%
|
Gross
margin
|
36.90%
|
34.70%
|
|
|
Operating income
(EBIT)
|
136
|
129
|
|
5.80%
|
EBIT
margin
|
16.20%
|
15.10%
|
|
|
Net
income
|
114
|
101
|
|
13.30%
|
Net income
margin
|
13.60%
|
11.80%
|
|
|
EBITDA
|
180
|
172
|
|
4.50%
|
EBITDA
margin
|
21.30%
|
20.20%
|
|
|
CER: Constant
Exchange Rates. Q1 2016 items include adjustment for the value
redeployment of employee
options granted in 2014 in the amount of $3
million.
|
|
Commenting on the results, Yang Xingqiang, Chairman of
Adama's Board of Directors, said, "This is a strong first
quarter for Adama, commencing another year of consecutive progress,
with solid execution of our strategy yielding tangible results. We
continue to significantly enhance our commercial and product
development platforms globally, while our build up and integration
in China are in full swing. We are
looking forward to reaching a key milestone with the completion of
Adama's combination with Sanonda."
Chen Lichtenstein, President
and CEO of Adama, added, "This quarter saw us achieving record
profits, driven by the enhancement of our portfolio while reducing
costs and maintaining working capital discipline. We capitalize on
launches of differentiated products as a powerful growth engine,
driving our continued market growth across all key agricultural
markets, and positioning us well going forward."
First Quarter Financial Highlights
Revenues were lower by 0.6% in constant currency terms
compared to the corresponding quarter last year. Volumes grew by
3.7% in the quarter, driven in large part by launches of new
products. Alongside this increase in volumes, a portion of the
significant reduction in cost of sales was passed on to customers
in a number of markets.
In US dollar terms, the net impact of the weakening of the Euro
and the strengthening of the Brazilian Real compared to the
corresponding quarter last year, as well as the lower contribution
of currency hedging, saw revenues end lower by 1.2%.
Gross profit increased by a marked 5.2% to $311 million, with gross margin up by 2.2
percentage points to 36.9%, compared to the corresponding quarter
last year. This significant increase resulted from a combination of
the strong improvement in portfolio mix towards a differentiated
offering and notable cost reduction. These factors were partially
offset by the passing on to customers of a portion of these reduced
product costs, as well as by the lower contribution of currency
hedging.
Operating income: The higher gross profit, together with
containment of operating expenses, resulted in a 5.8% growth
in operating income to an all-time record high of $136 million, with an increase of 1.1 percentage
points in operating margin to 16.2%.
EBITDA increased by 4.5% to reach an all-time record high
of $180 million, with an increase of
1.1 percentage points in EBITDA margin to 21.3%.
Net income increased by 13.3% to an all-time record high
of $114 million, with an increase of
1.8 percentage points in net income margin to 13.6%.
Working capital improved by $97
million, driven by $74 million
reduction in inventory.
Cash Flow: Operating cash flow was a negative
$3 million compared to a positive
$8 million in the corresponding
quarter last year. Due to the seasonality of activities, the
Company does not generally generate positive operating cash flow in
the first quarter. Free cash flow was a seasonal negative
$42 million, compared to a negative
$25 million in the corresponding
quarter last year. The change in operating and free cash flow
recorded in the quarter results primarily from the reflection in
the Company's consolidated financial reports of an $18 million non-cash write-off performed at the
end of 2016 in the financial statements of a non-consolidated joint
venture which is not in the Company's core business.
Leverage: Debt levels have been significantly reduced,
with balance sheet net debt of $953
million, an improvement of $248
million over the last 12 months, resulting in a net debt/
EBITDA ratio of 1.8x, compared to 2.5x this time last year.
Regional Sales
Performance
|
US$m
|
|
Q1
2017
|
Q1
2016
|
%
Change
|
%
Change
|
CER
|
USD
|
Europe
|
|
398
|
425
|
-2.30%
|
-6.40%
|
North
America
|
|
169
|
153
|
10.10%
|
10.00%
|
Latin
America
|
|
115
|
114
|
-9.30%
|
1.10%
|
India, Middle East
& Africa
|
|
74
|
77
|
-2.70%
|
-4.20%
|
Asia
Pacific
|
|
87
|
84
|
2.50%
|
4.50%
|
Total
|
|
843
|
853
|
-0.60%
|
-1.20%
|
|
|
|
|
|
|
Europe: Sales were lower
by 2.3% in constant currency terms, compared with the corresponding
quarter last year. This is primarily due to soft demand as a result
of weaker yields in 2016 and a delayed start to the agricultural
season in western Europe, as well
as high inventory levels in the distribution channels in a number
of countries, and the passing on to customers of some of the
benefit of the products' significantly reduced cost.
Adama saw a strong performance from its broad sugar beet
portfolio in all major markets in the region, capitalizing on an
increase in planted areas.
In Ukraine, Adama continues to
launch new products and expand its commercial reach throughout the
country, while benefiting from the improvement in economic
conditions.
In the UK, the Company is seeing significantly increased
engagement, also through its digital platforms, including its
WaterAware™ app which provides farmers with insights on safe use of
crop protection around fresh water sources.
Despite a challenging economic environment, Adama grew well in
Greece and further expanded its
comprehensive portfolio with products like COTTONEX®, a
differentiated pre-emergence herbicide.
In France a number of products,
including LEGACY® DUO and PROTUGAN®, lost
their registration ahead of the launch of alternative products,
which resulted in lower sales.
In US dollar terms, sales in Europe were lower by 6.4% in the quarter,
reflecting the weaker exchange rates and the lower contribution of
currency hedging.
North America: Sales
increased by 10.1% in constant currency terms, compared with the
corresponding quarter last year, driven by a significant 15.6%
increase in volumes of higher margin products, which was partially
offset by the passing on to customers of a portion of the
significant reduction in cost of sales.
The US crop protection business continued its strong momentum,
building on an improved portfolio mix. Sales of Adama's cotton
portfolio increased, benefiting from growth in the cotton market
with products such as COTORAN® and DIREX®,
herbicides for broadleaf weeds, and DIAMOND®, a
differentiated insect growth regulator. CORMORAN™, a distinctive
mixture insecticide for apples and pears, was launched in the
quarter, and has had an encouraging start in advance of the
upcoming season. Adama is deepening its relationship with customers
across the channel, through such programs as the NIMITZ University
campaign in which field specialists work together with farmers to
understand their nematode-related problems, finding ways to
maximize their benefit from the flagship NIMITZ®
product.
In addition, the Consumer and Professional Solutions business
continued to grow markedly.
In US dollar terms, sales increased by 10.0% compared with the
corresponding quarter last year.
Latin America: Sales
were lower by 9.3% in constant currency terms, compared with the
corresponding quarter last year, despite an increase in volumes,
primarily in Brazil, which was
offset by lower volumes in Argentina and by the passing on to customers
of a portion of the significant reduction in cost of sales.
The Company saw robust sales growth in Brazil, with significant volume growth of an
improved portfolio. This strong performance is particularly
noteworthy when considered against the sluggish Brazilian
agrochemical market. Adama saw strong sales of its comprehensive
insecticide portfolio for corn, with products such as
VORAZ®, a novel formulation for caterpillar control,
which offers a solution in the face of increasing resistance in Bt
corn. The sugarcane and pasture portfolio also performed well in
Brazil, in particular
ARREIO®, a new advanced selective herbicide for the
control of a variety of weeds in pastures, and
PREMERLIN®, a distinctive pre-emergence herbicide for
sugar cane.
High levels of inventory in the distribution channels, alongside
low insect and disease pressure, impacted sales and pricing in
Argentina.
Adama grew and improved its business in Colombia, Ecuador, and Mexico, where its efforts to enhance its
portfolio are bearing fruit. The growth in these countries was also
supported by positive weather conditions.
In US dollar terms, sales increased by 1.1% compared with the
corresponding quarter last year, reflecting the impact of the
appreciation of the local currencies, primarily the Brazilian Real,
against the US dollar.
India, Middle East & Africa: Sales were lower by 2.7% in
constant currency terms, compared with the corresponding quarter
last year, with a moderate increase in prices being offset by lower
sales volumes, reflecting the negative impact of the weather in a
number of countries.
In India, farmers were faced
with unfavorable weather conditions as well as disruption to their
cash availability, putting pressure on sales in this market.
Adama achieved a robust performance in South Africa, benefiting also from positive
currency movements and favorable weather.
In Turkey, the Company
continues to expand its commercial platform through a widening
network of distributors, and also launched the ADAMA ARTI™ app for
smart farm management.
In US dollar terms, sales were lower by 4.2% compared to the
corresponding quarter last year.
Asia-Pacific: Sales
increased by 2.5% in constant currency terms, compared with the
corresponding quarter last year. This increase was driven by
significant volume growth, primarily in Australia and parts of south-east Asia which started recovering from El-Niño.
This volume growth was partially offset by the passing on to the
customers of a portion of the significant reduction in cost of
sales.
Adama obtained several new product registrations in the region,
among them COUNTDOWN™, a differentiated cereal herbicide for
resistance management in Australia, NARKIS®, a unique rice
herbicide in the Philippines, and
ALMAGOR®, a distinctive rice fungicide in Vietnam.
In China, Adama continued the
expansion of its commercial reach to four additional provinces,
bringing to growers its advanced product portfolio alongside
additional products from the CNAC entities.
In US dollar terms, sales increased by 4.5% compared to the
corresponding quarter last year.
Further Information
All financial and legal filings, together with a presentation of
the key financial highlights of the period, can be accessed through
the Company's website at www.adama.com.
About Adama
ADAMA Agricultural Solutions Ltd. is one of the world's leading
crop protection companies. We strive to Create Simplicity in
Agriculture – offering farmers effective products and services that
simplify their lives and help them grow. With one of the most
comprehensive and diversified portfolios of differentiated, quality
products, our 5,000-strong team reaches farmers in over 100
countries, providing them with solutions to control weeds, insects
and disease, and improve their yields. For more information, visit
us at www.adama.com and follow us on Twitter® at
@AdamaAgri.
Contact
Nina Zoukelman
Corporate PR Manager
Email: pr@adama.com
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/another-strong-start-of-year-for-adama-300464917.html
SOURCE ADAMA Agricultural Solutions Ltd.