ADAMA Agricultural Solutions Ltd., an Israel-based company affiliated to ChemChina Agrochemical Corporation, announced the results for the first six months of 2016, achieving continuing increases in profit, profitability and cash flow, due to volume-driven growth.
Sales increased by 3.5% in the first half-year at constant exchange rates and remained stable in the second quarter. Robust volume growth of 4.5% in the half-year and 2.2% in the second quarter were driven by continuing portfolio differentiation and increased market penetration.
Strong growth was made in profit and profitability. H1 gross margin rose by a full percentage point to 34.1%; EBITDA in the half-year rose by 2.8% to $315 million, an increase of 1.1 percentage points in margin; net income grew by 6.2% to $158 million, an increase of 0.9 percentage point in margin, compared with the corresponding period last year.
With manufacturing, procurement and other operating costs markedly reduced, strong cash flow generation was driven by significant reduction in inventory levels, and continued collection focus. With inventory levels down $127m year-on-year, H1 free cash flow amounted to $114m, an improvement of $123m over H1 2015.
Results continue to demonstrate Adama's sector-leading performance, in the face of tough market conditions.
Commenting on the results, Yang Xingqiang, General Manager of China National Chemical Corporation and Chairman of Adama’s Board of Directors, said, "We are gratified to see Adama continue its strong momentum, as it weathers the market challenges, grows its business and increases its profitability and cash generation. The Company's proven ability to navigate confidently through the market storm is a reflection of the resilience of Adama's strategy and business model, as it intensifies its build-up and integration in China, becoming the first China-global crop protection player."
Chen Lichtenstein, President and CEO of Adama, added, “The Company's focus on execution of the key elements of its strategy continues to bear fruit despite the challenges in the agricultural markets and currency headwinds, as we are able to markedly improve our business and access to farmers and customers. Our continued investment in the enhancement of our product offering is driving the launch of many new and differentiated products in markets around the world, which positions the Company well to capture significant growth opportunities going forward."