Indian agrochemical companies are in focus after ADAMA Ltd, a leading crop protection company, said it expects a decline in sales for the first half of the calendar year 2019. The agrochemical major attributed the fall in sales to delays in planting on the back of adverse weather conditions and reduced crop protection applications in many parts of the world.

The Israel-headquartered company said its revenues in constant currency are likely to come in at $2 billion, which is in line with last year’s constant currency growth. However, the company said US dollar revenues may decline due to flooding in North American markets and extremely dry weather in Europe and Asia.

The company expects adjusted EBITDA to be lower by $9-19 million in 1HCY19 compared to 1HCY18. Profits may come in at $123-133 million, as against $157 million last year.

ADAMA said contributions from the Latin American, Indian and Middle Eastern markets are likely to remain strong. The company expects its performance to strengthen in H2CY19 as the southern hemisphere regions, which are performing strongly, move into their peak season, and as output increases from the Jingzhou old site.

Impact on Indian agro chem companies

Most of the Indian agrochemical companies have big exposure to these global markets. UPL earns 18 percent of revenues from North American markets and 14 percent from Europe. The contribution from Europe might go higher due to Arysta acquisition as it has greater exposure in those markets. Latin America accounts for 36 percent of UPL's total revenues. India and the rest of the world contribute around 17 percent each.

Sharda Cropchem gets around 47 percent of revenues from Europe and 7 percent from Latin America.

The weakness in the global markets will definitely impact companies with high exposure. BASF had already issued profit warning due to trade war and Auto sector slowdown. This also was expected to impact some specialty chemical companies.

First Published:Jul 16, 2019 3:14 PM IST