ADAMA Reports Full Year and Fourth Quarter 2022 Results.

BEIJING: ADAMA Ltd. (the "Company") (SZSE: 000553), today reported its financial results for the fourth quarter and twelve-month period ended December 31, 2022.

Ignacio Dominguez, President and CEO of ADAMA, said, "As we enter the year of 2023, we reflect on the remarkable year that was 2022. This was a year in which the crop protection market experienced exceptional growth, both in volumes, and especially in prices largely aimed to offset increases in costs. I am happy to say that ADAMA grew with the market reaching record sales and EBITDA in 2022.

"As 2022 proceeded, crop commodity prices came down from their peak, maintaining historically elevated levels. This has continued into 2023, while fertilizer and energy prices declined at a slower pace, leading to lower but still historically high farmer profitability. With high inventories in the market, we anticipate a gradual return to normalization in the crop protection market towards the second half of 2023.

We believe that in 2023 farmers will continue to invest in crop protection products that bring them incremental value. In 2022 ADAMA introduced many differentiated products to the market, optimizing its offering to farmers around the globe while maintaining simplicity in doing business, and intends to continue to do so in 2023.

Table 1. Financial Performance Summary

USD (m)

As Reported

Adjustments

Adjusted

Q4

2022

Q4

2021

% Change

Q4

2022

Q4

2021

Q4

2022

Q4

2021

% Change

Revenues

1,312

1,337

(2 %)

-

-

1,312

1,337

(2 %)

Gross profit

304

343

(11 %)

36

69

341

412

(17 %)

% of sales

23.2 %

25.6 %

26.0 %

30.8 %

Operating income (EBIT)

26

110

(76 %)

28

33

55

143

(62 %)

% of sales

2.0 %

8.2 %

4.2 %

10.7 %

Income before taxes

(20)

47

(18)

34

(39)

81

% of sales

(1.6 %)

3.5 %

(2.9 %)

6.0 %

Net income

(22)

25

(19)

29

(42)

54

% of sales

(1.7 %)

1.9 %

(3.2 %)

4.0 %

EPS

- USD

(0.0096)

0.0108

(0.0178)

0.0231

- RMB

(0.0681)

0.0692

(0.1265)

0.1476

EBITDA

127

188

(33 %)

2

19

129

207

(38 %)

% of sales

9.6 %

14.1 %

9.8 %

15.5 %

USD (m)

As Reported

Adjustments

Adjusted

2022

2021

% Change

2022

2021

2022

2021

% Change

Revenues

5,570

4,813

+16 %

-

-

5,570

4,813

+16 %

Gross profit

1,403

1,183

+19 %

162

229

1,565

1,412

+11 %

% of sales

25.1 %

24.6 %

28.1 %

29.3 %

Operating income (EBIT)

389

291

+34 %

68

129

458

425

+8 %

% of sales

7.0 %

6.0 %

8.2 %

8.8 %

Income before taxes

118

85

+40 %

25

134

144

219

(34 %)

% of sales

2.1 %

1.8 %

2.6 %

4.6 %

Net income

96

25

+292 %

21

115

118

139

(15 %)

% of sales

1.7 %

0.5 %

2.1 %

2.9 %

EPS

- USD

0.0413

0.0106

0.0505

0.0596

- RMB

0.2616

0.0676

0.3177

0.3843

EBITDA

731

593

+23 %

9

79

740

671

+10 %

% of sales

13.1 %

12.3 %

13.3 %

13.9 %

Notes:

"As Reported" denotes the Company's financial statements according to the Accounting Standards for Business Enterprises and the implementation guidance, interpretations and other relevant provisions issued or revised subsequently by the Chinese Ministry of Finance (the "MoF) (collectively referred to as "ASBE"). Note that in the reported financial statements, as a result of recent changes in the ASBE guidelines [IAS 37], certain items as of Q4 2021 (specifically certain transportation costs and certain idleness charges) have been reclassified from Operating Expenses to COGS. Please see the appendix to this release for further information.

Relevant income statement items contained in this release are also presented on an "Adjusted" basis, which exclude items that are of a transitory or non-cash/non-operational nature that do not impact the ongoing performance of the business, and reflect the way the Company's management and the Board of Directors view the performance of the Company internally. The Company believes that excluding the effects of these items from its operating results allows management and investors to effectively compare the true underlying financial performance of its business from period to period and against its global peers. A detailed summary of these adjustments appears in the appendix below.

The number of shares used to calculate both basic and diluted earnings per share in both Q4 and FY 2021 and 2022 is 2,329.8 million shares.

In this table and all tables in this release numbers may not sum due to rounding.

The general crop protection market environment[2]

Crop prices reached record levels in May 2022, driven by tight stocks, adverse weather conditions and the Ukraine-Russia conflict which disrupted the supply of commodities. Prices have since declined but are expected to remain above pre-pandemic levels[3]. The high crop prices drove strong farmer income, despite the higher cost environment (fertilizer, chemicals, labor, energy) faced by farmers. As a result, crop protection demand stayed strong in 2022 and farmers were able to absorb crop protection price increases. Going into 2023, crop protection channel inventories in some regions are above average, which may dampen demand in the near future.

The cost environment has improved throughout the second half of 2022, as raw material and active ingredient prices in China continued to decline, logistic prices normalized and energy prices eased. However, costs are still higher than pre-pandemic levels, with some areas still experiencing especially high costs, like European co-formulants and inland transportation.

Sustainability

Promoting sustainability in agriculture by providing a solution that enables farmers to switch to a crop that requires less water:

Double Team Sorghum Cropping Solution provide farmers with FirstAct, a post-emergent grass weed control and a herbicide-tolerant DT trait hybrid seed, providing them the tools to switch to Sorghum, a drought tolerant crop that requires less water, enabling regenerative farming practices.

The Double Team Sorghum Cropping Solution is a joint effort between ADAMA US and S&W Seed Co.

Sustainability in Products:

ADAMA's high-load formulations in Australia have led to substantial savings in energy/water consumption, usage of co-formulants, amount of packaging used, storage and accompanying materials as well as transportation.

ADAMA's new proprietary high-load formulation technology platform Sesgama, has been granted a patent.

Sustainability in manufacturing:

Carbon footprint reduction of a high-margin leading insecticide by lowering energy usage and reducing CO2 emissions, while increasing production output and capacity.

Portfolio Development Update

Formulation Mastery progress:

Araddo(r), a dual mode herbicide for use in soybean won the award for "Best Formulation Innovation" in the IHS Markit's 2022 Crop Science Forum & Awards, November 2022. Araddo(r) is the first product to combine ACC'ase Inhibition and Auxin herbicidal modes of action, overcoming the chemical degradation between the two active ingredients.

Patent granted for Sesgama, 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 year.

Product Launches & Registrations:

During 2022 ADAMA continued to register and launch multiple new products in markets across the globe, adding on to its...