ADAMA’s Q12021 revenues grew 14% (+6% in RMB terms) to hit a first quarter record-high of $1,109 million, driven by a robust 15% increase in volumes. This strong volume-driven growth was somewhat mitigated by a softer pricing environment in a number of key regions.

ADAMA delivered particularly strong performances in the Asia Pacific and India, Middle-East & Africa regions, benefiting from strong demand and favorable seasonal conditions. The Company also grew strongly in North America, driven by its Consumer and Professional business, as well as in Latin America. Sales in Europe were somewhat lower due to a slow start to the season in the northern and eastern parts of the region.

Ignacio Dominguez, President and CEO of ADAMA , said, “In the first quarter, we continued our strong growth to achieve another Q1 record high sales performance, with robust demand for our crop protection products supported by generally higher crop prices. Although our growth was somewhat mitigated by a softer pricing environment in many regions, and further offset by higher procurement costs and a growth-driven increase in operating expenses, we nevertheless were able to deliver a pleasing improvement in our bottom line. Our strong Q1 performance reflects our continued ability to weather the ongoing pandemic-related challenges, and to provide much needed crop protection solutions to growers around the world.”

Gross Profit in the first quarter was $305 million (27.5% of sales), up 10% compared to $277 million (28.5% of sales) reported in the corresponding period last year.

The company recorded certain extraordinary charges within its reported cost of goods sold, totaling approximately $17 million in the first quarter (Q1 2020: $19 million). These charges were largely related to its Relocation & Upgrade program, and include mainly (i) excess procurement costs incurred as the Company continued to fulfill demand for its products in order to protect its market position, through replacement sourcing at significantly higher costs from third-party suppliers, and (ii) elevated idleness charges largely related to suspensions at the facilities being relocated as well as to the temporary suspension of the Jingzhou site in Q1 2020 at the outbreak of COVID-19 in Hubei Province. For further details on these extraordinary charges, please see the appendix to this release.

Excluding the impact of the abovementioned extraordinary items, adjusted gross profit in the quarter was $322 million (29.0% of sales), up 9% compared to $296 million (30.5% of sales) in the corresponding period last year. The higher gross profit was driven by the strong volume growth alongside positive seasonal changes in product offering, more than offsetting the impacts of the generally softer prices and higher procurement and logistics costs.

Operating expenses in the first quarter were $239 million (21.6% of sales), compared to $226 million (23.3% of sales) reported in the corresponding period last year.

The company recorded certain non-operational, mostly non-cash, charges within its reported operating expenses, totaling approximately $16 million in the first quarter (Q1 2020: $27 million). These charges include mainly (i) $8 million in Q1 2021 (Q1 2020: $8 million) in non-cash amortization charges in respect of Transfer assets received from Syngenta related to the 2017 ChemChina-Syngenta acquisition, (ii) $4 million in Q1 2021 (Q1 2020: $1 million) in non-cash charges related to incentive plans, and (iii) $4 million in Q1 2021 (Q1 2020: $3 million) in charges related mainly to the non-cash amortization of intangible assets created as part of the Purchase Price Allocation (PPA) on acquisitions, with no impact on the ongoing performance of the companies acquired, as well as other M&A-related costs.

In the first quarter of 2021, commodity crop prices continued to increase as global demand remained strong, fueled by pandemic-related food security concerns, a recovery in biofuel demand and higher feed demand, especially from China. Weather-related agricultural supply challenges also contributed to the high crop prices, which are expected to remain elevated throughout the rest of the year. The positive crop price environment, along with associated expectations of higher planted areas, are combining to drive global demand for crop protection products.

During the quarter, prices of intermediates and active ingredients sourced from China increased compared to the same period last year, due in part to the recovery of oil prices alongside higher raw material costs and stronger demand.As global economies start to reopen following pandemic-related shutdowns over the past year, global trade markets are experiencing scarcity of transportation resources leading to higher freight costs, a situation that has been exacerbated by the recent Suez Canal incident and other port congestions all over the globe.

The company actively manages its procurement and supply chain activities in order to mitigate these higher procurement and logistics costs, and endeavors to adjust its pricing wherever possible to compensate.