26 slides from Adama Ltd. Class A's earnings presentation, Oct 31, 2017
Slide 1: Business Update Q3 and 9M 2017
Business Update Q3 and 9M 2017 October 31, 2017 Adama Agricultural Solutions Ltd., one of the world's leading crop protection companies, and Hubei Sanonda Ltd. have combined, creating the only integrated, publicly traded Global-China crop protection company. The Combined Company is to be renamed ADA
Slide 2: Legal notice
Legal notice This presentation is for marketing and information purposes only. By this presentation, Hubei Sanonda Co., Ltd. (the “Company” or “ListCo”) and Adama Agricultural Solutions Ltd (“Adama Solutions”) (together, “ADAMA” or “the Combined Company”) does not intend to give, and the presentatio
Slide 3: Newly combined ADAMA group reports net income up 70%
Newly combined ADAMA group reports net income up 70% First combined record results of listed global crop protection leader Robust differentiated volume growth drives profit and profitability Q3 Sales $844m Q3 Gross Profit $299m +5.4% +10.6% 9M Sales +3.7% to $2,702m Q3 gross margin +1.6 pp Q3 Volume
Slide 4: Financial highlights
Financial highlights Adjusted, ($ million) Q3 2017 Q3 2016 % Change 9M 2017 9M 2016 % Change Sales 844 800 +5.4% 2,702 2,605 +3.7% Gross Profit 299 270 +10.6% 962 856 +12.3% As % of Sales 35.4% 33.8% 35.6% 32.9% Operating Expenses 188 184 565 540 Operating Income (EBIT) 111 86 +28.0% 397 316 +25.7%
Slide 5: Strong contribution of each entity results in record first quarter for the Combined Company
Strong contribution of each entity results in record first quarter for the Combined Company Q3 2017 Sales Gross Profit EBITDA Net Income Sales +5.4% Gross profit +10.6% EBITDA +15.3% Net income +69.4% Volumes +7.4% Gross margin +1.6pp EBITDA margin +1.7pp Net margin +2.6pp 844 Q3 2017 Q3 2016 800 29
Slide 6: Strong contribution of each entity results in record results for the Combined Company 9M
Strong contribution of each entity results in record results for the Combined Company 9M 2017 Sales Gross Profit EBITDA Net Income Sales +3.7% Gross profit +12.3% EBITDA +15.7% Net income +33.2% Volumes +7.1% Gross margin +2.7pp EBITDA margin +2.1pp Net margin +2.2pp 2,702 9M 2017 2,605 9M 2016 962
Slide 7: Further significant improvement of working capital, robust cash flow, reduced leverage
Further significant improvement of working capital, robust cash flow, reduced leverage Ongoing reduction in working Drives strong cash flow Sharply reduced leverage capital levels generation -$76m -$192m 1,590 1,515 47.8% 954 44.2% 1.7x 762 374 244 1.2x Sep-16 Sep-17 Operating Cash Flow Free Cash Fl
Slide 8: Adama-Sanonda Combination
A Adama-Sanonda Combination ADAMA
Slide 9: Combination between Adama and Sanonda successfully completed
Combination between Adama and Sanonda successfully completed Creating the only integrated Global-China player Accomplishing our two key strategic objectives in one coordinated step Integration Flotation Appointment of Combined Company Board of Directors Adama’s management team leads the Combined
Slide 10: Forming our eighth geographical commercial cluster, our China Cluster
Forming our eighth geographical commercial cluster, our China Cluster President & CEO Chen Lichtenstein EVP, Global Legal & CSR CCO CCO CFO Strategy & Resources Operations Michal Arlosoroff Shaul Friedland Ignacio Dominguez Aviram Lahav Dani Harari Eli Abramov Executive Committee China North America
Slide 11: Regional Update
A Regional Update ADAMA
Slide 12: Regional sales performance Q3 2017 vs. Q3 2016
Regional sales performance Q3 2017 vs. Q3 2016 Sales change by region USD terms Region Constant currency terms Europe (1.9)% (3.6)% North America 7.1% 7.0% Latin America 5.8% of which China: 5.1% USD: +67.9% CER: +67.9% Asia Pacific 21.7% 20.0% India, Middle East & Africa 2.8% 12.4% Adjusting for In
Slide 13: Regional sales performance 9M 2017 vs. 9M 2016
Regional sales performance 9M 2017 vs. 9M 2016 Sales change by region USD terms Region Constant currency terms (2.8)% Europe (0.7%) 6.1% North America 6.2% Latin America 0.2% of which China: (3.5%) USD: +36.0% CER: +39.7% Asia Pacific 18.1% 18.7% 7.2% 12.8% Adjusting for Indian tax India, Middle Eas
Slide 14: Regional highlights Europe
Regional highlights Europe • Sales volumes in Europe increased over the nine-month period, despite generally challenging conditions • In the quarter, unfavorable weather conditions, combined with continuing high levels of inventory in the distribution channels, impacted demand across Europe, keeping
Slide 15: Regional highlights North America
Regional highlights North America • Volume growth drove increased sales in the quarter and the nine-months, despite the violent hurricanes in southern US which impacted farmers and the Consumer and Professionals Solutions business • Strong performance of the cotton portfolio capitalizing on increase
Slide 16: Regional highlights Latin America
Regional highlights Latin America • Sales increase driven by significant volume growth, despite extreme weather conditions across the region (hurricanes in Central America, excessive rainfall in Argentina, drought in Brazil) and earthquakes in Mexico • Brazil: − Strong Q3 performance from soybean po
Slide 17: Regional highlights Asia Pacific
Regional highlights Asia Pacific • Strong 22% increase in Q3 sales, and 18% in the 9-month period, driven by significant volume growth, primarily in the Pacific, China and parts of south-east Asia, supported by: − New product launches, improvement of the portfolio mix, increased farmer engagement −
Slide 18: Regional highlights India, Middle East & Africa
Regional highlights India, Middle East & Africa • Robust increase in volumes driving 12% growth in the quarter and 13% growth in the nine-month period, adjusting for the negative impact of the tax regime change in India • India: − The insecticide TAPUZ®, a unique combination of two active ingredient
Slide 19: Bridge Analysis
A Bridge Analysis ADAMA
Slide 20: Q3 sales bridge analysis
Q3 sales bridge analysis 60 (29) 13 844 800 Excluding India GST Impact +7.4% P. Var: ($14m) Q3 2016 Quantity Price FX Q3 2017 Variance Variance NOTE: Price variance inflated due to India GST change 20
Slide 21: Q3 gross profit bridge analysis
Q3 gross profit bridge analysis 22 9 299 14 (16) 270 35.4% India GST impact of $15m 33.8% on Price & Cost Var Q3 2016 Quantity Price Cost FX Q3 2017 Variance Variance Variance NOTE: Price variance inflated due to India GST change 21
Slide 22: Q3 EBITDA bridge analysis
Q3 EBITDA bridge analysis 14 (16) 22 (4) 5 163 142 19.4% India GST impact of $15m 17.7% on Price & Cost Var Q3 2016 Quantity Price Cost Operating FX Q3 2017 Variance Variance Variance Expenses NOTE: Price variance inflated due to India GST change 22
Slide 23: 9M sales bridge analysis
9M sales bridge analysis 185 (92) 4 2,702 2,605 Excluding India GST Impact +7.1% P. Var: ($72m) 9M 2016 Quantity Price FX 9M 2017 Variance Variance NOTE: Price variance inflated due to India GST change 23
Slide 24: 9M gross profit bridge analysis
9M gross profit bridge analysis 110 8 962 856 43 (55) 35.6% India GST impact of $20m 32.9% on Price & Cost Var 9M 2016 Quantity Price Cost FX and 9M 2017 Variance Variance Variance Hedging Gap NOTE: Price variance inflated due to India GST change 24
Slide 25: 9M EBITDA bridge analysis
9M EBITDA bridge analysis 111 (26) 2 553 43 (55) 478 20.4% India GST impact of $20m 18.3% on Price & Cost Var 9M 2016 Quantity Price Cost Operating FX 9M 2017 Variance Variance Variance Expenses NOTE: Price variance inflated due to India GST change 25
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