TEL AVIV, ISRAEL,  2016 – ADAMA Agricultural Solutions Ltd. have reported its financial results for the first quarter ended March 31, 2016.

Adama delivered solid growth in the first quarter, with revenues up by 6.9% in constant currency terms. This growth was driven by significant volume growth of 6.7% across all geographies, of an improved product mix, and despite the ongoing difficult agricultural market conditions, including low grain prices, high inventory levels in the distribution channels and tough weather conditions, all of which led to overall weak demand for crop protection products. 

The strong volume growth was offset by the significant depreciation of local currencies against the dollar, causing US dollar- denominated sales in the first quarter to be lower by 1.6% versus last year's level.

Despite the tough market conditions and the slight decline in reported sales in the quarter, Adama delivered marked growth in all profit and profitability metrics compared to the parallel period last year. The Company reported adjusted gross profit of $296m, which reflects an increase of 0.7 percentage points in gross margin to 34.7%, and represents the highest quarterly gross margin Adama has achieved in the last eight years. 

Operating income increased by 2.6% to reach $129 million, an increase of 0.6 percentage points in operating margin to 15.1%, while net income grew by 6.8% to reach $101 million, an increase of 0.9 percentage points in net margin to 11.8%. EBITDA increased by 3.2% to $172 million, reflecting an EBITDA margin of 20.2%, a full percentage point increase from the first quarter of 2015.

Free cash flow improved in the first quarter. In addition, the Company markedly reduced its inventory levels.

Commenting on the results, Yang Xingqiang, Chairman of Adama’s Board of Directors, said, "We are pleased with the strong results of the first quarter, despite the many ongoing market challenges and the currency pressure. We are particularly satisfied with the launch of our activities in the Chinese market and the clear progress we are making in this market.”

Chen Lichtenstein, President and CEO of Adama, added, “This quarter saw Adama deliver robust sales growth in constant currencies, driven by increased volumes across all regions, alongside growth in sales of higher-value products, which allowed us to weather the tough market conditions and drive growth in all our profit and profitability measures. Our performance is the result of the continuous execution of our strategy, with an emphasis on the strengthening of our commercial reach and the evolution of our differentiated portfolio.”

Build-up and integration in China

Adama continues to progress towards the realization of its strategic goals in China, especially the establishment of its commercial and operational activities.

During the first quarter, Adama launched its direct sales in China, appointed its management team and was joined by dozens of new sales personnel in ten provinces. The Company's performance in the country in the first quarter has exceeded its plan. In addition, Adama has become the sales platform of formulated products of several CNAC companies, selling higher volumes than planned.

On the operational side, the construction of the Company’s new, state-of-the-art formulation and packaging center in the city of Huai’an is progressing, and the plant is expected to come on-stream in the next 12 months.