Expecting to report a decline in sales that reflect market dynamics of channel destocking.
Israel based ADAMA Ltd., has provided an estimate regarding its financial performance for the first half year of 2023.
Sales
For the first half year of 2023, ADAMA is expecting to report a decline in sales of approximately 14 per cent in USD terms (8 per cent in RMB terms), compared to the first half year of 2022, mainly reflecting lower volumes, as well as the negative impact of exchange rates and prices. The lower sales reflect market dynamics of channel destocking in light of high interest rates and a “wait and see” approach, given the high inventory in the channel and declining active ingredient pricing. Additionally, sales were also impacted by negative weather conditions in certain geographies. This is in comparison to H1 2022, in which the Company achieved record sales reflecting high demand due to supply uncertainty in the market.
Adjusted EBITDA
In the first half year of 2023, the Company is expecting to report a decrease in adjusted EBITDA and its margin, in comparison to the first half year of 2022. The decrease in adjusted EBITDA is due to the decline in sales, as described above, high-cost inventory, exchange rates and despite a decrease in operating expenses and improvement in the Company’s sales mix of higher margin products. In response to the market conditions the Company has taken certain measures to manage its COGS and OPEX.
Net Loss
In the first half year of 2023, the Company is expecting to report Adjusted & Reported Net Loss, compared to adjusted & reported net income in the first half year of 2022. This is due to lower Operating Profit and an increase in financial expenses in light of higher bank interest expenses due to an increase in short-term loans as well as the sharp increase in interest rates which also impacted hedging costs on exchange rates. These financial expenses were moderated by the lower Israeli CPI. The Company anticipates that once expensive market inventories have been depleted, the overall market dynamics should stabilize.
