ADAMA Reports Second Quarter and First Half Year 2024 Results
ADAMA Ltd. has reported its financial results for the second quarter and first half of 2024 that ended June 30, 2024.
Steve Hawkins, President and CEO of ADAMA, said, “While the crop protection market remains challenging, we are focused on our transformation plan aimed at improving the quality of our business and strengthening our position in the fast-growing Value Innovation customer segment. We continue to launch a wide array of advanced, differentiated products with strong ROI for farmers in our largest and most important markets. The agriculture industry is cyclical in nature and ADAMA is taking the necessary steps to maximize our ability to capture opportunities when the market turns around. We believe that our value innovation portfolio is exactly the right fit for the large segment of growers who are looking for innovation but will be pressured by declining commodity prices and seeking cost effective solutions.
“Our transformation plan is already showing initial positive results with higher EBITDA achieved in the second quarter, as well as an improvement in the gross and EBITDA margins in both the second quarter and the first half of 2024. This improvement was driven by efficient inventory management, better product sales mix as well as a steady reduction in operating expenses. Steps taken in working capital and CAPEX management have brought a significant improvement in cashflow in the first half of 2024.
“We are still in the first phase of our transformation in ADAMA and as the market eventually turns around, we expect to see significant acceleration of the plan’s impact on our financial results.”
The General Crop Protection (CP) Market Environment
Key commodity crop prices continued to decline through the second quarter of 2024, although remain above average historical levels. Farmer income is pressured by the declining crop commodity prices, however, there has been some ease in the prices of inputs such as fertilizers.
The channel inventory situation continues to ease but the high interest rate environment coupled with ample product supply continue to drive a just-in-time purchasing approach by the channel. Active ingredient prices from China remained low during Q2 with some molecules even experiencing further price declines. Container shipping costs climbed higher during Q2 due to the combination of the red sea disruptions coupled with higher global trade demand
Update on the War Situation in Israel
ADAMA is headquartered in Israel and has three manufacturing sites in the country. Following October 7th, 2023, the Company continued the production in its global manufacturing sites and in Israel, with certain non-significant restrictions (which have been lifted in February 2024). This situation did not have a material impact on the Company’s ability to support its markets or on ADAMA’s consolidated financial results.
On the 14th of April, Israel was under an attack from Iran, with no consequences to the Company’s ongoing activities.
Update on Impact of Shipping Obstructions
In January 2024 some major shipping lines announced that they will suspend shipping to Israel through Israeli ports and through the Suez Canal due to tensions in the Red Sea. This has led to longer transportation times, with shipping lines being diverted around Africa.
As of the date of publication of this report, shipping time and costs have increased significantly, mainly in the China-Israel/Europe; China-America routes in comparison to before January 2024. Currently, the Company does not anticipate this to have a significant impact on its financial results or on the ongoing supply of materials to its production facilities, due to the Company’s strict inventory management, although this situation might impact the company’s ability to respond quickly to changing market demand.
“Fight Forward” Transformation Plan
As announced in the ADAMA’s full year 2023 financial results report, it initiated a plan in the first quarter of 2024 to revalue ADAMA through improving the quality of the business to turnaround the Company. The Company-wide transformation plan is aimed at gradually delivering profit and cash targets over a period of 3 years (2024-2026).
Portfolio Development Update
Product Launches, Registrations:
During the second quarter of 2024 ADAMA continued to register and launch multiple new products in markets across the globe, adding on to its differentiated product portfolio.
Differentiated products address specific grower needs through innovative formulation technology and/or novel mixing concepts of Active Ingredients.
Select launches of differentiated products during the second quarter of 2024 include:
- Launch of Prothioconazole based products, part of ADAMA’s comprehensive portfolio of innovative solutions for cereal fungicides
- Protadis® and Magan® in Turkey, powered by ADAMA’s proprietary Asorbital® Formulation Technology
- Maxentis® in Australia
- Vinergy® in Italy and France – a unique combination of folpet, a protectant fungicide with multi-site contact activity and potassium phosphonate, a systemic fungicide rapidly distributed in the whole plant. The combination of both active ingredients ensures long lasting plant protection against downy mildew.
Selected registrations of differentiated products during the second quarter of 2024 include:
Registration of Prothioconazole based products, part of ADAMA’s comprehensive portfolio of innovative solutions for cereal fungicides in Europe, including:
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- Soratel® in Spain, Hungary, Moldova, Slovenia and Slovakia & Morocco powered by ADAMA’s proprietary Asorbital® Formulation Technology
- Avastel® in France, Poland and Latvia, powered by ADAMA’s proprietary Asorbital® Formulation Technology
- Maganic® in Italy and Slovakia, powered by ADAMA’s proprietary Asorbital® Formulation Technology
- Forapro® in Slovakia and Lithuania, powered by ADAMA’s proprietary Asorbital® Formulation Technology
- Maxentis® in Spain, Italy, Hungary, Romania and Greece & Moldova, a dual mode broad spectrum fungicide
- Registration of Edaptis® in Poland. EDAPTIS® is a ready-to-use solution that provides broad-spectrum control of grassy weeds and improved efficacy in combating resistant populations.
- Registration of Bazak® in India. BAZAK® is a new strong solution helping farmers controlling brown plant hoppers in rice thanks to the combination of 2 systemic molecules (Pymetrozine and Dinotefuran) having different mode of actions.
- Registration of Forpido® in India – FORPIDO® is an innovative insecticide combining Chlorantraniliprole, Fipronil and Zinc that controls resistant rice stem borer and improves early crop establishment.
- Folpet & Captan active ingredient renewal in Europe, supporting the ongoing marketing of Folpan® 500SC, Folpan® 800WG and Merpan® 800WG
Select patent granted during the second quarter of 2024 includes:
- Patent granted for Sesgama® in EU, a proprietary formulation technology platform for high-load and other challenging formulations, enabling less use of co-formulants, transport and packaging materials per acre treated with a resulting improved product sustainability profile. First products expected to be launched in the coming years in EU.
- Patent of Upturn® in India
- Patent of Forabaz® in India
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