Expected strong growth was primarily driven by a significant, double-digit increase in prices
ADAMA Ltd. has provided an estimate regarding its financial performance for the second quarter and first half of 2022.ADAMA is expecting to report sales growth of approximately 22 per cent in USD terms (24 per cent in RMB terms) in the second quarter of 2022 compared to the same quarter last year. Sales in the first half of 2022 are expected to grow approximately 25 per cent in USD terms (25 per cent in RMB terms), compared to the same period last year.
The expected strong growth over the quarter and first half period was primarily driven by a significant, double-digit increase in prices, a trend which started in the third quarter of 2021, complemented by volume growth and despite the negative impact of exchange rates and supply challenges. This growth is a reflection of the robust demand in the market resulting from the elevated global crop prices during the first half of 2022. The Company’s performance was particularly strong in Brazil, where the Company continues to work to strengthen its position within this growing market, while the Company’s sales of raw material and intermediates in China continued to grow strongly.
In the second quarter and first half period, the Company is expecting to report an increase in adjusted EBITDA and its margin, in comparison to the corresponding periods in 2021. The strong top-line growth more than compensated for the impacts of higher procurement, production and logistics costs, exchange rate impacts as well as higher operating costs, which were impacted amongst other factors by higher inflation.
It should be noted that certain relocation and upgrade charges have significantly declined since Q1 2022, as the relocation and upgrade of the manufacturing Jingzhou site in China has been completed and is now at a high level of operation.
Net Income
The Company is expecting to report an increase in Adjusted & Reported Net Income in the second quarter and first half period, compared to the same periods last year following achieving higher Operating Profit and despite a significant increase in financial expenses due to the high Israeli CPI, elevated securitization expenses attributed to increased exposure to Brazil and higher hedging costs on exchange rate.
