--- title: "ADAMA turned a profit in the first quarter report, but it does not dare to smile: cost pressures loom, and the turning point is still early" type: "News" locale: "en" url: "https://longbridge.com/en/news/286553714.md" description: "ADAMA A achieved operating revenue of 7.2 billion in the first quarter of 2026, a year-on-year increase of 0.46%, and a net profit attributable to the parent company of 569 million, a year-on-year increase of 277%. Despite the growth in performance, cost pressures and rising oil prices may affect future performance. The significant increase in net profit is partly due to one-time gains, with core driving factors including a recovery in sales volume, optimization of product structure, and cost reduction and efficiency enhancement plans. The management expense ratio decreased to 4.1%, but concerns about insufficient supply remain" datetime: "2026-05-15T10:49:37.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/286553714.md) - [en](https://longbridge.com/en/news/286553714.md) - [zh-HK](https://longbridge.com/zh-HK/news/286553714.md) --- # ADAMA turned a profit in the first quarter report, but it does not dare to smile: cost pressures loom, and the turning point is still early **Rising oil prices are bearish, and future cost pressures are difficult to pass on downstream.** * * * ![Image](https://imageproxy.pbkrs.com/https://inews.gtimg.com/om_bt/OcPhaet2fMRrKM93dMUkidRJYzSaLHn9GL80761pND8NwAA/1000?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg)![Image](https://imageproxy.pbkrs.com/https://inews.gtimg.com/om_bt/O4nujtBDwHXuyAEOkbxU9flyAeSVYzqolUWKPVtfVcdcEAA/641?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg) Author | Mu He Editor | Xiao Bai ADAMA (000553.SZ) experienced significant losses from 2023 to 2025, but saw performance growth in the first quarter of 2026: operating revenue of 7.2 billion, a year-on-year increase of 0.46%; net profit attributable to shareholders of 569 million, a year-on-year increase of 277%. ![Image](https://imageproxy.pbkrs.com/https://inews.gtimg.com/om_bt/OPVJx6OkYSz2x1nQ7H3FM0LDN8-HnrAanVUpxSGvtawA0AA/641?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg) (Wind data) After disclosing the first quarter report on the evening of April 29, the stock price hit the daily limit for two consecutive trading days (April 30 and May 6). ![Image](https://imageproxy.pbkrs.com/https://inews.gtimg.com/om_bt/OPNTilu4tBuMxYkE_pIIeNXfJOuLA4Cks1JN8cjc4BnxcAA/641?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg) (Valuation Cloud APP) What interests Fengyun Jun is whether the significant increase in net profit in the first quarter is sustainable? ![Image](https://imageproxy.pbkrs.com/https://inews.gtimg.com/om_bt/OIq_eZXttFo6SE22xBn-3qhLkoiCwtI9Oc6Nfrr3iJ0ysAA/641?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg) # Performance Has Certain Sustainability First, let's look at the core reasons for the explosive growth in ADAMA's net profit in the first quarter of 2026. The net profit attributable to shareholders was 569 million, which included a portion from one-time gains and core business improvements. The one-time asset disposal gain from selling the Israeli logistics center contributed approximately 257 million in investment income, accounting for 45% of the net profit for the period, which is considered non-recurring. Excluding this portion, the net profit attributable to shareholders would be 300 million, representing a real improvement in the core business with a year-on-year increase of 195%. Considering the non-recurring impacts of asset disposal gains and income tax benefits, the adjusted net profit is approximately 59 million USD, a 35% increase compared to 44 million USD in the first quarter of 2025, indicating an improving trend in the company's fundamentals, driven by three main factors. The first is the recovery in global sales and the clearing of inventory cycles, with sales growth in North America, Europe, and the Middle East, particularly strong in Europe, leading to a 3% year-on-year increase in global sales ![Image](https://imageproxy.pbkrs.com/https://inews.gtimg.com/om_bt/OyOvd-oe1-_GxYFi-4hZEShVtLfPMGKDK8vh-3I9tVGgcAA/641?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg) (Data source: Q1 2026 financial report) The second is product structure optimization. The company has actively cut down on the production and sales of some basic chemicals and low-profit products, leading to an increase in gross margin. The gross margin for Q1 2026 was 27.72%, reaching a three-year high. ![Image](https://imageproxy.pbkrs.com/https://inews.gtimg.com/om_bt/OLDweE741BsFbEMZMgSAwO5HUu02hiPkaNUIVeRPilLisAA/641?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg) (Data source: Market Value Dynamics) The third and more obvious point is the cost reduction and efficiency improvement plan (2024-2026 three-year strategy). The management expense ratio for Q1 was 4.1%, down 1.1 percentage points from 5.2% in Q1 of last year, with management expenses of 298 million, which is 75 million less than the same period last year. Based on the above three reasons, the final net profit margin after deducting non-recurring items successfully turned positive on a quarter-on-quarter basis. ![Image](https://imageproxy.pbkrs.com/https://inews.gtimg.com/om_bt/OlQgHoek7-XYy59TWa7-r5Wsr9l0S-NmHL_RHHOBif0wUAA/641?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg) (Data source: Market Value Dynamics) ![Image](https://imageproxy.pbkrs.com/https://inews.gtimg.com/om_bt/OzkRPRPhEgPypTHiPxWdh_6DotY6QPH4ty41ALndajcA0AA/641?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg) # Three Major Concerns # (1) Insufficient Supply Reduction According to the annual report, the global crop protection industry is in the process of a recovery from the inventory cycle bottom, with channel inventories having basically returned to pre-2020 levels, and procurement volumes trending towards normal. However, the overall situation of excess production capacity for raw materials has not fundamentally changed, leading to continued pricing pressure on crop protection products. At the same time, low prices for bulk agricultural products have put pressure on farmers' profits, resulting in weak sales prices in most regions. The data in the financial report is very clear: in Q4 2025, ADAMA's product prices fell by 2%, and prices continued to decline by 4% in Q1, reflecting the overall market price decline and the weakening purchasing power of farmers. # (2) Short-term Negative Impact of Rising Oil Prices ADAMA is a downstream chemical enterprise of oil, with raw materials directly linked to oil prices, including freight costs, meaning that rising oil prices will directly increase operating costs. In the context of oversupply in the market and ongoing fierce price competition, even in the face of rising cost pressures, pricing remains constrained. Although the products corresponding to the company in Q1 were mainly produced or procured in the third and fourth quarters of the previous year, when the cost increase factors had not yet occurred, current costs are indeed rising ADAMA clearly stated during the investor communication on May 7: > It is uncertain to what extent agricultural protection companies can pass on the cost increases to farmers, especially since the current financial situation of farmers is not ideal. Whether a global trend of price increases will form to offset cost increases is still uncertain, and it is expected to become clearer in the third and fourth quarters, as the cost increases will only truly reflect in the profit and loss statements of most companies in the industry at that time. The company is currently also raising prices, with price increases in most regions effective from April 1 or May 1, depending on the country. The extent of the price increase depends on two factors: first, the company's ability to leverage its product line; second, the market conditions. Fengyunjun believes that geopolitical conflicts have led to rising oil prices, which, although ADAMA is a large player in agricultural protection, poses more downside risks than upside benefits for ADAMA. # (3) Damage to Israeli Warehouse Geopolitical conflicts also led to damage to ADAMA's warehouse at its Israeli factory in March, resulting in the company accruing expenses of $5.7 million. However, the impact is not significant, as it is expected to receive compensation from the Israeli government, along with related loss insurance. After the incident, the factory quickly began repairs and reconstruction, with 90% of the facilities restored to operation within two to three weeks after the incident, while the remaining facilities are still under repair. ![Image](https://imageproxy.pbkrs.com/https://inews.gtimg.com/om_bt/OVG9uM6GN-khd_z4ZR2gEz7QxncEr5ICvlrvbE-FiU4zAAA/641?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg) Although ADAMA's non-GAAP net profit in the first quarter increased by 195%, the net profit, after adjusting for non-recurring impacts such as asset disposal gains and income tax benefits, only grew by over 30%. The industry is currently only in a destocking cycle, with downstream demand not significantly improving, and rising oil prices due to geopolitical conflicts making it difficult to pass on cost pressures downstream. If companies cannot effectively offset costs through price increases, they will find themselves squeezed from both ends. Therefore, it is too early to discuss performance inflection points or entering an upward performance cycle. **Disclaimer:** This report (article) is based on the public company attributes of listed companies and the information disclosed by listed companies in accordance with their legal obligations (including but not limited to temporary announcements, periodic reports, and official interactive platforms) as the core basis for independent third-party research; Market Value Fengyun strives to ensure that the content and views contained in the report (article) are objective and fair, but does not guarantee their accuracy, completeness, timeliness, etc.; the information or opinions expressed in this report (article) do not constitute any investment advice, and Market Value Fengyun does not bear any responsibility for any actions taken based on the use of this report. 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