Adama delivered strong growth in both the fourth quarter and the full year, with revenues in constant currency terms up by 12.6% and 7.4% in the respective periods. This growth was driven by a significant increase in sales in growing markets and from geographical expansion, as well as from sales of new and differentiated products. These factors led to an increase in volumes across all regions, with overall volumes for the Company up by 7.0% in the fourth quarter and by 5.3% in the full year, despite the continued difficult conditions in agricultural markets and challenging weather conditions in many regions. The robust volume growth, as well as an increase in prices in local currencies, were more than offset by the significant depreciation of all currencies against the US dollar, causing US dollar-denominated sales to record modest declines of 3.6% in the quarter and 4.9% in the full year.
Commenting on the results, Yang Xingqiang, Chairman of Adama’s Board of Directors, said, "Adama's strong fourth quarter capped a robust year for the Company, a year in which we delivered a sector-leading performance, notwithstanding the challenging currency and agricultural market conditions across the globe. We are extremely pleased with this result, which demonstrates the resilience of the business and the passion of our team. While 2016 looks to be yet another challenging year, we remain confident in our future, and are well positioned to grasp the opportunities in the market."
Chen Lichtenstein, President and CEO of Adama, added, “We are pleased with the way our business performed throughout the year in all key geographies, as reflected in the transformation of our differentiated portfolio and robust high-end volume growth. Even during these challenging times, we remain focused on the execution of our longer term strategy, continually improving the quality of our business, our engagement with farmers and customers, and the strength of our portfolio, alongside progressing towards the achievement of our goals in China."
Sales by regions
Europe: Sales in Europe increased by 7.6% in the fourth quarter and by 2.9% in the full year, at constant exchange rates, compared to the corresponding periods in 2014. This growth was achieved despite the dry weather conditions in certain countries in the region, and was driven by the significant volume growth stemming from the launch of new products and deepening of commercial activities, which was somewhat offset by a decline in selling prices. In US dollar terms, sales in Europe decreased by 5.8% and 6.0% in the quarter and the year, respectively, compared with the corresponding periods in 2014, reflecting the impact of the depreciation of local currencies.
The results in Europe were negatively impacted by reduced sugarbeet quotas in northern Europe, as well as drought in parts of central Europe. However, Adama delivered a strong performance in South Eastern Europe and in Italy and Ukraine, due to increasing focus on differentiated products and key customers. The Company continued to improve its portfolio mix in the region and launched BREVIS™, an innovative, proprietary product that promotes growth of bigger and more uniform fruit, in selected key markets.
North America: Sales in North America increased by 9.7% in the fourth quarter and by 6.0% in the full year, at constant exchange rates, despite the challenging market conditions in the region, including the harsh drought in Canada. This increase stemmed from the continued focus on increasing engagement with key customers and from the launch of additional products, which led to significant volume growth in both the quarter and the full year. In US dollar terms, and despite the depreciation of the Canadian dollar by 16.3% in 2015, sales in North America increased by 9.4% in the quarter and by 5.2% in the year, compared to the corresponding periods in 2014.
The Company deepened its commercial activities in the United States to strengthen its engagement with, and demand-creation from, farmers of high value-added crops. Among other new products introduced into the US market, the Company launched NIMITZ™ a novel, proprietary product that significantly simplifies the control of nematodes. Also, the Company achieved continued positive momentum in its Consumer and Professional Solutions business in the US, driven by strengthening its direct access to the market, as well as the launch of differentiated products such as ENCLAVE®, an innovative and unique broad-spectrum fungicide.
Latin America: Sales in Latin America increased by 20.2% in the fourth quarter and by 16.6% in the full year, at constant exchange rates, compared to the corresponding periods in 2014, despite the challenging conditions in the region, including harsh weather conditions due to El Niño, and the macroeconomic crisis in Brazil, which deteriorated in the second half of 2015. The increase in sales stemmed both from growth in quality volumes as well as price increases. In US dollar terms, sales in Latin America decreased by 9.9% in the quarter and by 10.5% in the year, reflecting the impact of the significant depreciation of currencies in the region.
Adama saw particularly good performances in Colombia and the other countries of the Andean region, as well as in Mexico, despite the depreciation of the local currencies and difficult weather conditions.
The political and economic crisis in Brazil, which worsened in the second half of the year, resulted in a shortage of credit alongside the volatile depreciation of the Brazilian Real, an increase in the country's credit risk and in the costs of balance sheet hedges. These conditions led the Company to take proactive steps to reduce its exposure to the crisis, including the decision not to fulfill certain orders, and in so doing, to limit its sales in the country. By taking these steps, the Company succeeded in preserving and even slightly increasing its market share, while significantly reducing its exposure to currency and credit risks, ending the season with a lower level of receivables than in 2014. Alongside these steps, Adama continued to invest in strengthening its marketing activities in Brazil and in the further differentiation of its portfolio, and launched four unique products during the year.
India, Middle East & Africa: Sales in the region were stable in the fourth quarter, while sales for the full year increased by 5.8%, at constant exchange rates, compared with the corresponding periods in 2014. This increase stemmed from a significant growth in volumes, driven by the launch of differentiated products, as well as an increase in sales of products launched during the previous year, combined with expansion in main focus markets, and was achieved despite the drought in several key countries in the region, among them India and South Africa. This growth was partially offset by a decline in selling prices, especially of less differentiated products. In US dollar terms, sales in the region decreased by 5.7% in the quarter and by 2.1% in the year compared to the corresponding periods in 2014, reflecting the impact of the depreciation of the local currencies, such as the South African Rand which declined by almost 35%.
In India, Adama successfully launched CUSTODIA™, a dual-action fungicide effective against a wide range of diseases. The Company refocused its activities in all markets in the region, with an emphasis on more profitable sales and a reduction in the sale of less differentiated products, especially in the markets of West Africa. Also during the year, the Company successfully launched its activities in Turkey.
Asia Pacific: Sales in Asia-Pacific increased by 14.3% in the fourth quarter and by 4.1% in the full year, at constant exchange rates, despite the harsh El Niño-related drought in several countries of Southeast Asia, such as Thailand. The increase in sales was driven by increased marketing activity and the launch of new products which resulted in significant volume growth. In US dollar terms, sales in Asia-Pacific increased by 3.9% in the quarter and decreased by 7.0% in the year compared to the corresponding periods in 2014, reflecting the impact of the depreciation of the local currencies, most notably of the Australian dollar by 11% over the course of the year.
Adama has continued to further differentiate its portfolio across the region, and launched 10 unique products during the year, including the proprietary nematicide NIMITZ™, which was successfully launched in Australia. The Company refocused its businesses in several markets in the region, including Thailand, Vietnam and Korea, with an emphasis on building up marketing and distribution networks that improve access to end customers, as well as promoting higher value-added products. In Australia and New Zealand, the Company continued with its positive momentum, supported by its new brand, a range of differentiated products and increasing proximity to the farmers.
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