January 22, 2025

Fight Forward' Transformation Plan: Early Success Reflected in Certain 2024 Metrics

ADAMA Ltd. (the “Company”) (SZSE 000553), today provided an estimate regarding its financial performance for the full year of 2024. In early 2024, ADAMA launched 'Fight Forward', a strategic transformation plan aimed at gradually delivering improved profit and cash-targets over a three-year period. Improvements in certain key metrics, including free cash flow and adjusted financial results in 2024, reflect the plan's initial impact.

Sales

For the full year of 2024, ADAMA is expecting to report a decline in revenues of approximately 7% to 16% in USD to $3,934 million to $4,348 million (28 billion to 31 billion RMB), compared to the full year of 2023. The lower revenues mainly reflect lower prices in 2024, due to just-in-time purchasing patterns of the channel in light of price volatility and a higher interest rate ‎environment, despite improved channel inventory levels.

Volumes in Q4 2024 were up compared with Q4 2023 despite the Company’s shift away from selected low‑profit products, marking the second consecutive quarter of volume growth.

Adjusted EBITDA and Net Loss

For the full year of 2024, the Company is expecting to report an increase in adjusted EBITDA and in its margin, in comparison to the full year of 2023. Despite the decrease in revenues, adjusted EBITDA and its margin improved due to an increase in the gross margin, mainly reflecting the positive impact of lower costs of new inventory sold, an improved sales mix towards higher‑margin products, and continued control of operating expenses, all following implementation of the Fight Forward plan.

The Company expects to report an adjusted net loss in the range of USD 151 million to 261 million for the full year of 2024, compared to a loss of USD 236 million for the full year of 2023. The loss is attributable to higher adjusted operating profit and a decrease in financial expenses, in light of lower interest paid on loans, lower put option revaluation, as well as the net impact of a lower Israeli CPI on the ILS‑denominated CPI‑linked bonds, despite higher tax expenses.

Adjusted Net loss excludes the impact of transitory, non-operational or non-cash items, mainly including:

1. Non-cash amortization charges in respect of transfer assets received from Syngenta related to the 2017 ChemChina-Syngenta acquisition;
2. Non-cash amortization net charges related to intangible assets created as part of the Purchase Price Allocation (PPA) on acquisitions, with no impact on the ongoing performance of the companies acquired;
3. Restructuring costs incurred as part of the implementation of the Fight Forward transformation plan;
4. Fixed asset impairment related to improvement of operational efficiency, as part of the Fight Forward plan;  
5. Provisions such as legal claims, registration impairment and ‎update of registration depreciation;
6. Soil and water cleanup and remediation;
7. Financial expenses including non-cash adjustments related to revaluation of put options attributed to minority stakes in subsidiaries, and expenses deriving from tax claims surcharges and inflation.

Reported EBITDA and Net Loss

The Company expects lower reported EBITDA and deepened reported net loss (which include the impact of the above adjusted items) for the full year of 2024 compared to 2023. This expectation is mainly due to lower reported operating profit and a higher tax burden, despite a decrease in financial expenses as explained above. 

The estimated results of the Company are a preliminary estimation of the Company and have not been audited or reviewed by certified accountants. However, the Company and the external auditor have preliminarily communicated regarding relevant matters of the performance estimation and have no material disagreement. These estimations may change as a result of the further processing and analysis of the financial data that the Company will perform for the preparation of its financial statements, which are expected to be released after trading hours on March 13, 2025.

Investors are reminded to exercise caution when making investment decisions.

Website: http://www.adama.com/en/

Published: January 23, 2025