Sales in India declined over the full year period following high channel inventory, creating pressure on pricing in the market.
ADAMA Ltd. reported its financial results for the fourth quarter and full year ended December 31, 2023. Company reported that 13 per cent drop in sales to $1,136 million (-13 per cent in RMB terms; -14 per cent in CER [1] terms), mainly reflecting a 15 per cent decrease in prices and a 1 per cent increase in volumes. Company’s Adjusted EBITDA amounted to $95 million vs. $129 million in Q4 2022. Company posted Adjusted net loss of $101 million; Reported net loss of $79 million. Company reported Operating Cash Flow of $293 million in Q4 2023 vs $352 million in Q4 2022 and Free Cash Flow of $130 million vs $204 million in Q4 2022.
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.”
Asia-Pacific (APAC):
In China, the market is still experiencing high channel inventories and pricing pressure especially in commodities impacting both the branded formulation and non-ag sales. Sales were supported by the branded business, driven by recent and new launches of differentiated products, and ADAMA’s active ingredient business which recovered substantially, benefiting from the Sanonda Jingzhou site reaching high utilization after relocation.
In the Pacific region, sales in the full year and fourth quarter were impacted by high channel inventories and pricing pressure, combined with just in time purchasing patterns. In Australia, dryer weather also impacted sales. Despite this, sales benefited from the launch of the differentiated product Grindstone® and the Company’s biologicals portfolio.
Sales in India declined over the full year period following high channel inventory, creating pressure on pricing in the market. Moreover, the erratic weather did not support the consumption of such inventory. Despite this, it is noteworthy that differentiated product TrassidTM was well accepted in the market and along with increased focus on farmer demand generation, the Company’s sales increase in Q4.
Sales in the wider APAC region continued to experience pricing pressure, particularly from commoditized products. Despite this, particularly noteworthy was the performance of the Company’s sales in South Korea resulting in market share gain, supported by positive weather conditions.
Full Year 2023 Highlights:
Sales down 16 per cent to $4,661 million (-12 per cent in RMB terms; -15 per cent in CER terms), mainly reflecting a 8 per cent decrease in prices and a 7 per cent decrease in volumes.
Adjusted EBITDA amounted to $407 million vs. $740 million in the full year of 2022
Adjusted net loss of $236 million; Reported net loss of $225 million
Operating Cash Flow of $356 million vs $106 million in 2022
Free Cash Flow of -$147 million vs -$417 million in 2022
