Tel Aviv, Israel
March 15, 2016
Strong quarter sees Adama deliver market leading performance in a challenging year
- Sales of $650 million in the fourth quarter and $3,064 million in 2015
- ‒ Growth of 12.6% in the quarter and 7.4% in the full year at constant exchange rates
- ‒ US dollar sales declined by 3.6% in the quarter, 4.9% in the full year due to strength of the dollar
- Volumes up 7% in the fourth quarter and 5.3% in the full year, with growth driven by all regions
- Marked improvement in all fourth quarter profit and profitability metrics, despite tough market conditions, drives resilient margin performance in the full year
- ‒ Gross margin up 2.6 percentage points in the quarter
- ‒ Adjusted operating income tripled in the quarter, margin up 3.2 percentage points
- ‒ EBITDA in the quarter up 44.5% reaching $76m, margin up by 3.9 percentage points
- ‒ EBITDA in the full year of $474m, with margin increasing from 14.9% to 15.5%
- Continued evolution of the portfolio, with launches of differentiated, higher-margin products across all regions
- Launch of direct sales in China, with Adama becoming the sole Chinese commercial platform for formulated products of several CNAC companies
ADAMA Agricultural Solutions Ltd. today reported its financial results for the fourth quarter and full year ended December 31, 2015.
Adama delivered strong growth in both the fourth quarter and the full year, with revenues in constant currency terms up by 12.6% and 7.4% in the respective periods. This growth was driven by a significant increase in sales in growing markets and from geographical expansion, as well as from sales of new and differentiated products. These factors led to an increase in volumes across all regions, with overall volumes for the Company up by 7.0% in the fourth quarter and by 5.3% in the full year, despite the continued difficult conditions in agricultural markets and challenging weather conditions in many regions. The robust volume growth, as well as an increase in prices in local currencies, were more than offset by the significant depreciation of all currencies against the US dollar, causing US dollar-denominated sales to record modest declines of 3.6% in the quarter and 4.9% in the full year.
The Company presented significant improvement in all profit and profitability metrics in the fourth quarter. Gross profit in the quarter increased 5.8% by $10 million, reflecting a significant increase of 2.6 percentage points in gross margin to 30.0%, and resulting in a largely stable gross margin of 31.6% for the year. Adjusted operating income tripled in the quarter to reach $30 million, with a significant increase of 3.2 percentage points in EBIT margin to 4.7%, and resulting in an improvement in the EBIT margin to reach 9.9% for the year, reflecting the continued and determined reduction of operating expenses.
The strong fourth quarter performance saw EBITDA increase by 44.5% to $76 million, bringing total EBITDA for the year to $474 million, only 1% lower than the Company's all-time high, with the full year EBITDA margin increasing from 14.9% to 15.5%.
Net income improved in the quarter by 38%, yet lower for the year, due to increased hedging costs as a result of significant currency volatility during the year.
Reduced levels of both inventory and accounts receivables at the end of 2015 due to tight management, resulted in improved operating and free cash flow in the quarter, with stable cash flow over the full year.
Commenting on the results, Yang Xingqiang, Chairman of Adama’s Board of Directors, said, "Adama's strong fourth quarter capped a robust year for the Company, a year in which we delivered a sector-leading performance, notwithstanding the challenging currency and agricultural market conditions across the globe. We are extremely pleased with this result, which demonstrates the resilience of the business and the passion of our team. While 2016 looks to be yet another challenging year, we remain confident in our future, and are well positioned to grasp the opportunities in the market."
Chen Lichtenstein, President and CEO of Adama, added, “We are pleased with the way our business performed throughout the year in all key geographies, as reflected in the transformation of our differentiated portfolio and robust high-end volume growth. Even during these challenging times, we remain focused on the execution of our longer term strategy, continually improving the quality of our business, our engagement with farmers and customers, and the strength of our portfolio, alongside progressing towards the achievement of our goals in China."
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