Adama Ltd has reported its financial results for the second quarter and six-month period ended June 30, 2020.

 

Revenues in the second quarter were $1,036 million, up by 12% in CER terms, driven by robust 12% volume growth, alongside generally stable prices. This performance was achieved despite the various impacts of COVID-19, which continued to pose numerous challenges to the way the Company conducts its business, as well as materially impacting global currencies. 

 

Growth in the second quarter was fueled by a strong performance in emerging markets, most notably in Latin America, with strong volume growth overcoming the material depreciation of regional currencies, as well as in the India, Middle East & Africa region, which benefited from favorable weather. The second quarter also saw a return to growth in China, with a strong recovery from the first quarter’s COVID-19 pandemic-related impact on operations at the Company’s Jingzhou site in Hubei province. ADAMA also delivered solid growth in Asia-Pacific (outside China), led by a strong performance in Australia.

 

Gross profit in the second quarter was $306 million and $595 million in the first half, compared to $327 million and $673 million in the corresponding periods last year, respectively.

 

In the second quarter, the strong volume growth alongside somewhat higher prices and an improved product mix were more than offset by the material depreciation of global currencies and slightly higher manufacturing costs. Similarly, over the half-year period, the significant currency weakness and somewhat higher manufacturing costs outweighed the company’s strong volume growth.

 

The widespread currency depreciation resulting largely from the COVID-19 outbreak constrained gross profit by an estimated $70 million in the quarter. The pandemic impacted H1 gross profit by an estimated $16 million, in addition to an estimated $109 million in currency headwinds.

 

Net income in the second quarter was $47 million and $74 million in the first half compared to $51 million and $131 million in the corresponding periods last year. The company estimates the net impact of the global currency headwinds on Net Income to be $55 million in the second quarter and $117 million in the half year period, in addition to the impact from COVID-19 of an estimated $12 million over the half year period.

 

EBITDA in the quarter was $163 million and $306 million in the first half, compared to $177 million and $365 million recorded in the corresponding periods last year, respectively. The impact of global currency weakness constrained EBITDA in the second quarter by an estimated $61 million. The COVID-19 pandemic constrained H1 EBITDA by an estimated $15 million, in addition to an estimated $94 million in currency headwinds. 

 

During the first half of 2020, the global agrochemical market, amongst many others, was impacted by the unprecedented COVID-19 pandemic. As a result, farmers’ incomes have been, and continue to be, negatively impacted in most regions by lower crop prices, reduced demand due to the relative shutdown of the food sector, and labor shortages owing to mobility restrictions, all leading to increased costs for farmers. Governments across the world continue to include farmers in extensive support programs, partially offsetting lost income due to the pandemic.

 

The ongoing spread of the COVID-19 pandemic is expected to continue to impact the performance and profitability of the company in the coming months. ADAMA continues to actively manage its response to the pandemic in order to ensure the safety of its employees and limit its impact on the company’s business and financial performance.

 

Ignacio Dominguez, President and CEO of ADAMA, said, “In these challenging times, we have delivered a second quarter marked by strong underlying business growth, despite the many headwinds posed by the persistent COVID-19 pandemic which has continued to disrupt lives and economies around the globe. While some countries have been able to emerge from pandemic-related shutdowns, many parts of the world continue to see new infections and deaths rising tragically on a daily basis. During this troubling and uncertain period, I am proud of the response of our teams across the world to ensure the health and safety of our employees, and not only to mitigate the impact of the pandemic on our business, but to keep us on a growth trajectory and delivering solutions to farmers. Their efforts have enabled the company to maintain more than $2 billion in sales in the first half of 2020, despite the challenges posed by COVID-19, including its significant impact on global currencies.”