Good afternoon. I am Guo Zhi, Corporate Secretary of ADAMA Ltd. You are most welcome to join in this session of ADAMA Ltd. to present to you our full year and Q4 performance of 2024. You will see a channel selection function at the right bottom side of your screen to choose the language you would like to listen to our session. You can see on the screen all the distinguished guests today. First, our CEO and President, Mr. Gaël Hili, then our Madam CFO, Efrat Nagar, then Mr. Geming, Mr. Jeff Wang, and Professor Yang Guangfu, who are all our independent directors. We have Alex Mills, who is responsible for our funding side business globally. We also have our global investor relations, Mr. Joshua Phillip. They all join us online, and they are based overseas.
In this session, you will see the performance presentation, and then it will be followed by a Q&A session. You can raise up your questions through the communication platform on the right-hand side of your screen. You are kindly reminded to read carefully the legal disclaimer at the beginning of our presentation. Now, without more further ado, I will give the floor to our President and CEO, Mr. Gaël Hili, to walk you through the tour of ADAMA's performance.
Thank you, Guo Zhi. It's my pleasure. Good evening, everyone. Good afternoon. It's my pleasure to be here with you to talk about ADAMA's 2024 result that we published a few days ago. I'll start by giving you a bit of an overview of the situation of the market, the crop protection industry as a whole, when we look at 2024 as a year. There are a few things that you've been hearing from me, for those of you who have attended previous calls, that remain true in the market. The first one is that the grower profitability across the world continues to be pressured and below average level for the last few years. That's the first factor that is affecting the market. The other thing which remains true that you've heard, we've seen in the previous quarters, is the overcapacity in terms of production from Chinese producers.
The market continues to be in an overcapacity situation for active ingredients. This is obviously affecting the prices globally. In terms of crop quality, the prices have been softening. That explains also it's one of the factors that explains the pressure that is on the grower P&L globally. We see continuous purchasing behavior from the channel to just-in-time. We've been seeing that for the last few quarters. It continued toward Q4. For the full year at the end, we saw purchasing behavior from channels across the world, very attentive, very careful on their working capital, just-in-time type of behavior. The thing that has changed toward the second half of the year in 2024 versus the first half is the amount of inventory in the channel. This inventory has been easing, has been reducing, is now back most of the market. Not all of them.
There's still a little bit more inventory in the channel than average in Brazil. For the rest of the important market in the world, whether it's North America or Europe or Australia or India, the channel inventory are now back to normal level compared to historical averages. Next slide, please. I will now share at a high level, and Efrat, the CFO of ADAMA, will give you more details, but at a high level, how Q4 and the full year number look like. I think there are a lot of good news in there for 2024. First of all, starting with the quarter, we see both the gross profit for Q4 and the EBITDA significantly up, the quarter by 14% and the EBITDA by 45% versus the same period in the previous year.
Now, I would say even more importantly, if we look at the full year, we also see some significant achievement. Full year EBITDA is 15% above last year. ADAMA will be in 2024 one of the few companies in the industry who will be showing a growth in EBITDA, probably from the data we have so far, probably the only one with a double-digit growth of EBITDA in 2024 versus 2023. This is a proof that what we've been doing all across 2024, our Fight Forward transformation is starting to pay off. It's real. It's showing in the EBITDA. It's also showing in the cash flow performance, which was significantly stronger than previous year. Both the operating cash flow and the free cash flow performance are significantly higher than 2024. This is on the back of very careful inventory management.
We've reduced significantly our inventories, both the value of those inventories and the quantity of these inventories versus previous year. This has been a trend that was continuous toward the year. We've been very attentive also in terms of credit to the markets and managing both our account payables and account receivables. All this has transformed into a very, very strong performance on cash flow. Last but not least, 2024 was also a year of a very strict OpEx discipline. We have reduced the number of employees of the company, and we've also been very careful how to spend our OpEx. This resulted in overall an EBITDA performance, as I was saying before, that is significantly better than last year. Next slide, I think it's for Efrat.
Yeah, thank you, Gaël. Okay, thank you, Gaël. Gaël gave us some information or high-level information of our results. Looking on Q4 P&L, we can see that our sales were down by 2% to $1.1 billion. However, at CER, they are up 2%. The main reason behind this reduction is, although we see in the fourth quarter high volume, this is as it continued from Q3, we see still pressure on prices, 4% lower prices, and a negative FX, mainly due to the strengthening of the dollar versus the BRL, the Brazilian currency. This brings us to gross profit. Although sales have reduced by 2% in dollar terms, the gross profit is increased by 14%. It reflects the better quality of business in Q4 2024, 25.2% gross margin versus 21.5% in Q4 2023. This is mainly because of the improvement on our costing.
We took a decision already in Q1 2023 to manage our inventory in a very strict way. This enables us to start the year with a low level of inventory while we are benefiting from market cost, and we see the benefit versus 2023. Also, very important, positive mix of product. We sold more profitable product and less non-profitable product, which also contributes to our gross margin, which is basically the quality of business. With a very tight OpEx management, as mentioned by Gaël, we are succeeding to finish Q4 2024 with $137 million EBITDA, which is 45% higher than what we achieved last year, which is 12.3% quality of business EBITDA to sales ratio versus 8.3%. We significantly better financial expenses that we will see also for the full year, mainly due to our very tight cash and loan management.
We are succeeding to decrease our net loss by 43% from losses of $101 million to $58 million only in Q4 2024. Next, please. If we are looking on the full year, we can see here that our sales down by 11% to $4.1 billion. In CER, it's 8%. It's due to 8% lower prices and stable volume, more or less. As I mentioned, in H1, we see negative volume impact, and in H2, we see some movement in the market, which is reflected by higher volume, but for the full year, they are flat. From a gross profit perspective, although our sales reduced by 11%, we are succeeding to achieve, more or less in dollar terms, the same gross profit, $1.06 billion. This is again because of our better cost management and better mix.
We'll see it later on in the bridge, which resulted in a 25.6% gross margin in 2024, significantly higher than the 22.7% gross margin in 2023. Also for the full year, because we started with our tight OpEx management already at the beginning of 2024, we see this benefit of OpEx management also for the full year, which is reflected in our EBITDA, $469 million EBITDA in 2024, 15% more than 2023. As mentioned by Gaël, probably we are the only player in the industry that is presenting in 2024 higher EBITDA dollar. It's also reflected in our EBITDA margin, 11.3% versus 8.7% last year. From net losses, we are losing $206 million versus $236 million last year, 13% low.
This is mainly because of our lower financial expenses, which are due to the improvement of efficiencies on the way that we are managing our cash, and of course, as a result from our positive cash flow in 2024. Next, Gaël.
Yeah, this is the picture that shows Q4 2024 versus Q4 2023 with the regional split on sales. Efrat was saying, I think sometimes the quarter picture is a bit misleading. On an annual basis, just as a reminder, the overall company was down 11% on sales. We'll come in a moment with Efrat on where this is coming from. You'll see an analysis between volume, price, currency. What I can say is that you can see that for the full quarter, we were up 2% in local currency and - 2% in dollar, which is much better than the average of the year, because we started seeing some recoveries in terms of volume in some markets already in Q4. These markets, you can see them on the slide. Europe was flat to previous year. There was a significant increase in North America.
Now, North America, we have a relatively small market share, so we're a bit disconnected from the market there compared to other regions. In Latin America, you see it's a very interesting phenomenon there because we were up 4% in local currency, and our volumes were up in Latin America in Q4, but our sales in dollar were down 8%. This shows the significant impact of the currency. There is also a price impact. We'll show that in a moment. You can see here the negative impact of currency in Brazil really didn't help our sales in Q4 2024. In Asia-Pacific, we were down 6% or 7%, depending if you look at local currency or dollars. There, it's more a phasing thing, especially in India, where we decided for good strategic logical reasons, we decided to get our sales closer to the point of use by the grower.
We were having too many returns in India. And some of these returns were actually returned as counterfeit products. We took the decision to actually voluntarily limit the sales we were doing in Q4 in order to get our sales closer to the actual agricultural season, which was more end of Q1 and Q2. That is overall the situation by region for Q4. Next slide, please. I think it's back to you, Efrat.
Yes, thank you. Okay, how it looks on the bridge point of view. We can see here that, as I mentioned, we achieved $1.1 billion sales in Q4, 2% lower than what we sold in 2023. 7% are coming from volume. We see some recovery in the market. This is although we took a decision to defocus from selected low profit product that will be translated into better mix when we will discuss about the gross profit. Unfortunately, as I mentioned, still pressure on prices, 4% down. This is mainly due to the lower crop protection and active ingredient market prices and the AI capacity, active ingredient overcapacity, and of course, the interest rate that created all the market to procure just in time.
As I mentioned, also exchange rate impact significantly in Q4, mainly due to the depreciation of the Brazilian currency versus the dollar. If we look on the gross profit bridge and the EBITDA bridge, I will jump to the EBITDA bridge. You can see here that the volumes contribute $41 million to our EBITDA, while cost contributes $87 million in Q4, which are higher than the $50 million reduction in prices as we saw in the sales bridge. Together with the OpEx management, which you can see here that more or less the same OpEx, we are succeeding to get to $137 million, 45% higher than last year, which also 12.3% EBITDA to sales ratio is higher than what we achieved last year.
If you are looking in the next slide on the full year picture, we can see here that we have reached to $4.1 billion sales in 2024, 11% lower than 2023. Main impact is prices, as we mentioned, just-in-time approach together with the low prices and the overcapacity of product in the market. Again, some impact on the strong dollar during 2024, $131 million and more or less flat volume versus 2023. H1, we had negative, but now H2, because we see some relief on the market on the level of inventory, we see positive volumes. In the next slide, we can see the gross profit bridge and the EBITDA bridge. More or less the same bridge, although our sales are significantly lower, 11% lower. As you can see here, it's because of quantity.
What we cannot see here, and I can tell you that this higher quantity, including also better mix, as I mentioned, we are selling more profitable product, which generates higher gross margin and less non-profitable product, and this is also supporting our gross margin. High pressure on sales, $369 million. Fortunately, because of our decision already in 2023 to have tight procurement management, which continued also in 2024, our cost benefit is higher than the prices. Again, FX also impacts us, but all in all, we are keeping the same gross profit on lower sales, which means that we are selling more profitable product, 25.6% versus 22.7% in 2023. If we are looking on the EBITDA bridge, it is more or less the same. However, here we can see OpEx reduced by $31 million.
This is due to our tight OpEx management, as already explained, part of our Fight Forward plan in order to make sure that we are adjusting the company to the market conditions. This has led us to reach to $469 million EBITDA, 11.3% EBITDA to sales ratio versus $407 million, 8.7% EBITDA to sales ratio in 2023. We spoke about the cash flow, which is one of our, I think, proud in 2023, 2024. Bottom line, we succeeded, although it was another challenging year in the industry, we succeeded to generate free cash flow of $364 million higher than last year, $270 million free cash flow generated in 2024 by ADAMA. This supported our lower financial expenses, as I explained before. This is although our lost sales, sorry, our net losses are higher by $182 million.
We are succeeding together with a better operating cash flow of $172 million. This is mainly because of our inventory management, which we will see in the next slide, but also due to better supplier management. No, no, go back, go back. Better supplier management and better collection, tight and close management of collection. We are succeeding to generate operating cash flow of $172 million higher than last year, which is $528 million. As I mentioned, free cash flow, positive cash flow, although higher losses of $270 million. One last sentence about the free cash flow. We succeeded to achieve it also because our focusing and prioritization of CapEx in investment, CapEx in planned production sites, but also on intangible assets. We are really trying to focus in only on the best product, which will bring us the maximum ROI.
Now we can go to the inventory slide, and we can see here that this is going to be the second year in a row that we are significantly reducing our inventory. On $2.4 billion end of 2022, it reduced to $101 billion in 2024. This is $300 million lower than what we started at 2023. If you're looking on the days, it also reflected in our inventory days, 177 days, which is significantly lower than what we faced in the last quarters. This is to demonstrate how efficient our inventory management is in order to maximize our working capital and our cash flow management. I think we finish here with the financial slide, and we are going to move to the Fight Forward, Gaël.
Yes, thanks, Efrat. Look, the Fight Forward is going to be a bit of a reminder of everything we're doing to get the company fit, both to succeed in the short term, but also in the mid to long term. There is one slide I'm usually using with many audiences to summarize what is the strategic endeavor we've embarked into with ADAMA. This is the next slide. There are basically two parts to our transformation here as a company. The first part, and these two parts add, by adding those two parts, that's how we will be able as a company to be competitive in a market that has changed over the last years and that became in our space, the space where ADAMA is present, which is the space of off-patent high-value chemicals that became much more competitive than before.
The first pillar, the one on the left, is getting financially fit. If you see even in the result of 2024, we see better EBITDA, we see lower operational costs, we see better cost of products. We really put a lot of emphasis over all the year of 2024, and we will continue in 2025 to go after any possible opportunity either to reduce costs or to both operational costs or cost of our products we sell. We went after any opportunity in the market to increase prices or decrease them less than the market wherever it was possible. This is nearly a thousand initiatives. They are called the Fight Forward transformation or the Fight Forward plan that across the company that we've been working on. You heard me talking about them already last quarter.
This continues, is not over, but it's already having a real impact on our P&L. By the way, it's also having a real impact on our cash flow. As Efrat was saying, we've been tracking two types of initiatives this year, initiatives that improve the EBITDA and initiatives that improve the cash flow. On the EBITDA side, you saw that we grew the EBITDA by 14% this year. Now, a big part or a major part of that is coming from all this effort that we did as part of this Fight Forward transformation, which triggered more than $200 million of value in our 2024 P&L. Now, this has been offset by some headwinds coming from the market.
I told you earlier that 2024 was still, and you saw it also on the bridge that Efrat showed a few minutes ago, 2024 was still a year very much of price pressure where we lost on price. You saw it on the previous graph. We have more volume, but more volume, better costs, but a significant price downside. This is something that without those headwinds, the result would have been even more adverse. This more than $200 million of EBITDA contribution coming from the Fight Forward transformation is there, is on our P&L. It's real money. It's been audited, and we're controlling each and every of these initiatives to make sure that the numbers are real and they're truly impacting our P&L.
Now, the second pillar of the transformation is more the structural one, the one that is necessary, as I was saying before, to compete for ADAMA, to be a competitive company in the years to come in a market that is tougher and we believe is meant to remain tougher than what we've seen in the last five or ten years. There are four pillars to that structural transformation of the company. The first one is that we are recentralizing some of the activities in our company, especially when it comes to corporate functions like finance, like HR, like supply chain. These were very decentralized in ADAMA, and we are recentralizing them to create more excellence, functional excellence in finance, in HR, in supply chain to support better our businesses.
By doing that, we also want the general managers in the countries, ADAMA general managers all over the world in the countries to spend more time and more focus on the commercial part of their role, okay, leaving it to professionals in finance, in HR, in legal, in supply chain to support the business. That's the first pillar. It's an operating model transformation. Then we're optimizing our geographical presence. If you've been attending some of these calls in the past, you've heard that over 2024, we've decided to exit some markets that were either too small or not profitable enough or both. We're doing that actually optimization both on the geographical footprint in order to focus in the future our resources, especially our innovation resources onto a few big country and markets. We call them the anchor countries or anchor markets. And we're doing the same on our product.
We did the same in 2024 on our product portfolio by cleaning up from a lot of products that were commodities and not really bringing value, or at least not enough return on the investment and resources we're putting to market them. We exited a significant number of products. I think it's more than 400 globally in order to improve the profitability of our business and also improve the focus of our teams on a smaller number of products, bigger ones, and more profitable. Last but not least, in order to be successful in the future, ADAMA needs to be competitive on costs. No secret, as an off-patent company, chemical company, we do not have any choice but to be competitive versus the market. The market became much more competitive over the last years.
Certain AIs that we are producing and we have been producing for years, we were competitive against the buy option or the buy options available in the market until a couple of years ago. For some of them, we're not competitive anymore. We need to solve that. That means that we—and we did it already in the second half of 2024—we re-looked at all our assets across the globe. ADAMA is a company with a real global asset footprint, industrial footprint. We have assets in Brazil. We have assets in China, in Israel, in Poland, so in Europe. We looked at all our assets when it comes to active ingredient production. For the ones who are not competitive anymore, we are looking at various options, some of them being improving those assets to bring them back into competitiveness.
For some of them, it's not possible. We'll go from a make strategy to a buy strategy. In order to, at the end, end up with an optimized asset footprint that will make us competitive with our key produced AI in the future. Now, all this, these two pillars, the one which is getting financially fit and the one of evolving some of our structural ways of working in the company, all this is meant to be able as a company to win in the value innovation segment. This value innovation segment is the segment where growers are looking for innovation, but at an acceptable price, at a good return on investment. This is where we, with ADAMA, with our history and our capabilities, we can really continue to bring value to growers. We want our portfolio in that part of the market to grow.
In order to do that, we're doing what I said before, getting the company financially fit and evolving our operating model. I think now it's Alex who's taking over, correct?
Yep. Thanks, Gaël. Now I'll take you through some great portfolio examples of what value innovation looks like in ADAMA at the moment. Next slide, please. In 2024, ADAMA launched 16 new products. The colors here indicate the sectors, the green being herbicide, purple being insecticide, and blue being fungicide. Also, the font size represents the magnitude relative of the size. Next slide, please. Let's talk about a couple of key products in these key anchor markets that I'll mention. Almada is a triple-mode fungicide powered by POD formulation technology, a premium soybean fungicide, and also the winner two times of the Embrapa soybean fungicide evaluation trials. Next slide, please. POD technology delivers three attributes, the first being better rainfastness, reduced contact angle, and reduced droplet surface tension, reduced the droplet roll, or ultimately improved the product or the active ingredient staying where it counts on the leaf.
Next slide, please. The second being better penetration. POD formulation technology has an increased ability to dissolve the leaf cuticle and facilitate a rapid diffusion of the active ingredient into the leaf. Here we see over 72 hours, Almada's penetration to the target is over 80% compared to 62% with the tank mix without POD technology. Next slide, please. The third being less filter clogging. Filter clogging is a major issue for farmers in Brazil because of one of the active ingredients that is core to the fungicide spray program. Almada shows less filter clogging. It does this due to the POD technology. Compared to tank mixes, the active ingredients stay freely in solution as opposed to coming together and thus improves the spray solution quality for the farmer, less clogging. Next slide, please. The next product is Trisad. Again, a key product in an anchor market.
Trisad is powered by AOLON formulation technology. Next slide, please. AOLON also has three attributes we can talk about. The first is better spreading. Increased spreading equals a higher opportunity for interaction between Trisad and its intended targets on the leaf. Next slide, please. Again, better penetration in a different way and a different formulation, the combination of the active ingredients and AOLON formulation technology. Here in the graph, you can see better penetration of over 25% compared to the tank mix in a 24-hour period. Next slide, please. Here we have a great photo of our Indian team in the field with their farmers. AOLON technology in Trisad creates a physical or a greening effect, which again is an interaction between the active ingredients and the AOLON technology to create a greener, healthier-looking crop. Next slide, please. The last for today is a future-looking MPI.
ADAMA's Folpet 500 SC novel is a new formulation that will form one of the building blocks of ADAMA's fungicide portfolio in Europe. Following the success of re-registration of both Folpet and Catpan, we will be launching a new Folpet with increased usability, increased preventative and protective efficacy. Next slide, please. Value innovation in summary, the unique space between new active ingredients and commodity products and ADAMA's products, Almada, Trisad, and Folpet novel will form just a part of ADAMA's portfolio success into the future. There I hand back to you.
Next slide, please.
We're supposed to go to Q&A.
Yeah. I think we're supposed to go to Q&A.
Thanks for all our speakers to take us finish this tour of performance. Now let's enter into the Q&A session, and we have seen multiple questions. The first one, question number one, is about the recent price of pesticides. It says CP products have been under pressure in terms of pricing, but there has been significant increase of some AI, such as chlorothalonil and chlorpyrifos. On one hand, it is because of the decrease of supply. On the other hand, do you think it reflects the current market demand is strong or growing stronger? How do you see the demand of crop protection markets in various regions around the world?
Okay, thanks for the question. I think it's a great question. I think the important word in the question is some. Yeah, there are a few, but it's only a few AIs in prices out of China that saw an increase recently. The vast majority of AIs produced and marketed out of China are still at historical low. Okay? We've been seeing that for the whole of 2024. As we speak today, we're still in that situation. What is also true, and you've seen it also in a number we shared today, is that in terms of volume, the grower consumption has continued to be healthy in 2024, with even in some markets of significant increases like Brazil. What is eating all this good news on the side of volumes in the markets is being eaten by prices. Why?
Because the market continued to be flooded with product. Honestly, I'm not aware of a lot of reduction in production from China in 2024 or so far. Long story short, we see the market, which continues to be healthy from a volume point of view at a grower level. At a distributor level, it's also getting healthier in most places, with one exception for now, which is Brazil, which is an important exception because it's the biggest market in the world and very, very important for ADAMA. From a price point of view, we don't see the pressure releasing at all. We didn't see it releasing at all in 2024. Opposite, okay? We saw a downward trend all along 2024. We don't see that changing anytime soon because those capacities of production continue to flood the market with cheap products.
Thank you. The second question, according to the company's annual reports for 2023 and 2024, the MPI rate for both years was 22%. Compared to 2023, the rate of 2024 did not increase. Considering the sales reduction in 2024, it means that the corresponding sales of new products were also declining. Does this mean the differentiated portfolio of your company is not performing as your expectation? What additional efforts have you done in promoting these differentiated products?
Thanks for the question. Stable MPI rate reflects ADAMA's consistent and strong commitment to R&D investment over time. 2024 also saw a mixed improvement. As the year went through, there was + $53 million sales in the full year and + $70 million sales in the last quarter alone. This reflects a commitment to focus on differentiated products bringing higher value. Strong launches are planned in 2024 with new product introductions and with the strategic focus on formulation platforms delivering differentiated products.
Let me, Alex, thanks for this. Let me add one element to this. The structural transformation of the company that I mentioned earlier in my strategy slide is also very much supporting the objective of launching more new products, but also getting better in terms of commercial capabilities by more focus of the commercial team on that market segment, getting better at selling these types of products versus selling commodities. Okay? This is a journey, let's be honest. We started in 2024. It's about raising the capability bar of our commercial organization to be even more competitive, even better at selling these types of products. We've done a lot. We're happy with our launches. We're happy with our portfolio. Can we do better? Yes, and we will do better.
Question number three, if we look at the regional sales, apart from North America, all the other regional sales are declining. If we see separately non-ag and ag, how do you see the CP business development of yours in North America?
Thanks for the question. First, I would like to, before I go specifically on North America, to make a comment regarding our overall sales in 2024. Yes, we saw a year-on-year sales decline in 2024, but the market declined by about the same amount. Those key markets where we saw sales decline, LATAM, APAC, Europe, the overall market decreased in value. We do not believe that ADAMA lost market share in 2024. I think it is important to understand that. Now, specifically in North America and in North America ag, we had actually, it is the only region, even if you exclude the non-crop business, that saw a growth in sales in 2024, which despite the fact, the market in North America also declined. To be completely transparent, this is also due to our relatively low position in terms of market share in North America.
We have a situation, a position in North America that is relatively opportunistic. In North America, there are five big distributors, and we managed to make the right deals in 2024 or some good deals with those five distributors, which resulted in this number that looks abnormal for North America. I would not get too excited about it because our market share, it is good news. I am not disliking it, but I would not get too excited because our market share in North America is the smallest amongst the big markets. The important message is ADAMA is at minimum holding share in 2024. We are not losing share. Where we lost it is in the market where we had small losses in market share is because of our own decision of walking away from some commodities, as I was saying earlier, and Efrat was saying too.
We decided consciously to stop some products, stop selling them. Okay? That is obviously having a negative impact on our sales too.
Thank you. Question number four. Recently, there has been news about Bayer. The news mentions that due to lawsuit, Bayer might withdraw from the glyphosate market in North America. What industrial trend does this reflect? Is it conducive to optimizing the competitive landscape of the industry?
Look, we do not comment on actions of this type with our competitors. What I can tell you is that, and sorry if it is a repetition, in ADAMA, we made the conscious decision to walk away from these highly volatile, which in the last two years have been very low-profit products. It is a strategic decision. It is not a tactical decision. We are very selective when deciding to sell commodities. It has to make sense for our overall global P&L, or we will not come back into those markets. When I mean it has to make sense, I will give you one example. If like in certain markets, you need a full portfolio in front of a grower that includes certain commodities, we will take a minimum amount of commodities to be able to be relevant in front of those growers.
Another example is when we produce ourselves the active ingredients, sometimes it makes sense. Some of these commodity active ingredients we produce, sometimes it makes sense to actually continue to sell them to better utilize our assets. We are being very, very careful strategically in what product we sell. Once again, when it's a commodity product, especially when we're not producing them, we're walking away from those markets to focus on value innovation products, on the type of innovation that Alex was presenting earlier.
Thank you. In Q4 2024, the decline of ADAMA's sales was significantly reduced. Can we see a rebound in the overall sales and profit of ADAMA in 2025? If yes, which quarter will be the expected turning point for ADAMA?
We do not give any guidance of 2025. However, looking specifically on Q4, and as rightly mentioned, excluding ethics impact, in CER terms, we are + 2% in terms of sales. We also saw our better quality of business reflected in higher EBITDA margin. This is not only for Q4, it is for the full year. This is, as mentioned, supported by our Fight Forward initiatives that we took during 2024. Looking on this improvement in our performance and numbers in 2024, this is providing us to believe on the momentum towards further success also in 2025.
Question number six. ADAMA's Fight Forward aims to optimize the financial health status and also to reduce costs as well as to streamline the business structure. However, from the P&L statements, the selling expenses, management expenses, and also other corresponding expenses all increased year on year. How can we evaluate the actual effectiveness of Fight Forward's plan from this perspective?
Thank you for the question. A very important one. The Fight Forward plan, including, as mentioned, also streamlining our operational model, managerial processes, organization, and workforce. We are also in the process of optimizing our assets, fixed and intangible. All these activities, initiatives generate additional one-time expenses in our reported expenses. This is the reason that we see reported OpEx increase versus 2023. Specifically, we see the restructuring and advisory cost, which are $44 million for this 2024 year. In addition to this transformation initiative that causes more expenses, we also had the one-time claim from last year, which is the one-off product liability claim and the expense of $36 million that belongs to previous years, and we settled in this year.
If we are taking into consideration these one-time impacts on our P&L, some of them, of course, relate to our Fight Forward initiatives. Our OpEx are basically lower by $68 million versus 2023 to demonstrate that our Fight Forward is also reflected in our better OpEx dollar there.
Next question. With the tariff increase in the United States, the agrochemical AI supply chain in the U.S. may be reshaped. What is your view on ADAMA's future business in each of the regions against the background of higher U.S. tariffs?
Okay, so that's a very interesting and, in a way, difficult question. Difficult because, as you all know, as we all know, the situation is liquid. Okay? There are still moving parts all over the place. There's not really clarity around where this is exactly going to land. Now, the direction, though, is clear that we're going to see an era, a moment in business history of more tariffs than before. Yes, they could, they will, or they're affecting already chemical products from China going into the U.S. Now, it has an impact, obviously, on the U.S. market, on the U.S. value chain, as the question was alluding to, and on the U.S. grower competitiveness, which is going to become more challenging. Now, once again, am I worried about that, about how the U.S. market is going to shape because of those tariffs? Yes and no.
Yes, because it's still a very important market globally, and we need American farmers to be successful. No, in the sense that ADAMA, as I said before, is relatively small, has a relatively small market share in the U.S. This is not a market where we are the most exposed. Across the 10 biggest markets in the world, it is the market where we are the less exposed because of our small size. If something like this was happening in Brazil or in India or in Australia or in Europe, I would be more worried, obviously. Now, that's the first point related to U.S. only. Generally speaking, I would say that as ADAMA, I feel that, do I think that all these tariff wars are good news? Definitely not. Not for ADAMA, but not for anyone in the industry, or not for anyone in any industry to that extent.
I feel good about how we can and we will, and we have already mitigated those types of risks because of our industrial footprint, which is diverse. Okay? ADAMA has assets, production assets all over the world. In terms of active ingredients, which is the biggest part of the cost of our products, we have assets in China, true, but we also have assets, important one, in Israel. We have one asset in Brazil. We have one asset in Poland, as I said before. We are a bit more diversified in our geographical asset production asset footprint than some of our competitors. In a way, I feel that we are in a better position than several of our competitors to resist and to mitigate the type of risks that are coming our way because of tariffs.
Question number eight. You may have heard about the policy of one product or one registration. Will the aggressive implementation of this policy in China benefit the sales of ADAMA's formulations? What is your price outlook for formulated products?
Sorry, I'm using myself. The policy is not implemented yet in ADAMA China, but we're preparing. We've been preparing for the implementation of this policy. If you ask me about pricing in China, no difference, honestly, than anywhere else in the world, maybe sometimes even worse. The pricing pressure in China remains very, very, very high across product range. The branded business of ADAMA in China follows the same strategy as the rest of the company. China is one of our anchor markets. Anchor markets is the way we describe these six markets in the world, which will be our focus in the future. As such, we are investing in launching new differentiated products in China too. Our expectation is that there will be opportunities for us to grow in China through this renewed or strengthened focus on differentiated product innovation in China.
Question number nine. Any guidance on short and also mid-term targets for the decline of selling expenses?
As already mentioned, we do not give guidance. But as we discussed about the OpEx reduction in 2024, if we are taking out all the one-off and expenses which are more related to the Fight Forward, our ways of streamlining our operating model, optimizing our product portfolio, and regional layout, we will continue also to allocate resources to more profitable areas and products. We believe that this is a plan that we will benefit from it also in the next few years.
Question number. We are seeing many management structure adjustments. Has this kind of management structure adjustment been completed? What is the company's competitive strategy for the agrochemical market in different regions, as well as what is your KPI assessment strategy following all those adjustments?
This is many questions in one question. First of all, no, our transformation is not over as a company. I was mentioning earlier, the Fight Forward transformation is a two-year program that covered the whole of 2024 and will continue to cover 2025. Clearly, it's not over. We're in the middle of it. Now, what is our competitive strategy in the key markets for ADAMA to win in the future? I think I described it earlier. It's our value innovation strategy. It's also building a structure of a company, both in terms of production, commercial, and functional support that is able to compete in the market successfully against other players in that segment of value innovation. Okay? That's basically our strategy. Now, what KPIs we are looking at for that? Obviously, no surprise, no secret, market share is a KPI we're looking at. We're also looking at EBITDA.
We're looking at quality of the business, EBITDA percent. So EBITDA in dollar, EBITDA percent. We're looking at cash generation. And ultimately, we're also looking at net profit, which obviously is affected by the current period we're going through. In restructuring time, you're obliged to make certain investments that are affecting negatively your net income. But this is clearly a KPI we're also looking at and will continue to look at.
In 2024, ADAMA made a large sum of assets impaired. Is it likely that there will still be additional impairment of a similar amount in 2025?
This is a tricky question because, according to the accounting rules, when we are preparing our financial reports every quarter, if we see signs which require a warning sign around assets, if it's intangible assets or fixed assets, we need to check and to evaluate what is the value or what is the real value of an asset versus what we are having in the books. End of 2024, this made us to record those impairments around registration and fixed assets, and we will keep reviewing it every quarter in the next years.
The next question is about the gross profit of the company in 2024. The gross profits increased by 2.1 percentage points. Why did the loss do increase significantly?
Okay. If we are looking on the adjusted net losses, we are basically seeing lower losses of 13%. However, looking indeed on the reported losses, we see significantly higher losses. This is due to the Fight Forward initiatives, the impairment that we discussed, and one-off that we saw, one-off expenses that we saw in 2024 due to the product liability issue that we faced and signed some cleaning of soil on our factories in Israel. This is basically the one-off which is not specifically related to 2024 that impacts our reported net losses. Again, if we're looking on the adjusted net losses, we can see 13% lower, which reflects the higher margin that has mentioned.
The next question is also our last question we've received for today's session. The question is about the effectiveness of the Fight Forward plan. How can we see or feel the values of this transformation plan?
It is pretty simple. We see them because we measure them line by line. The Fight Forward plan, you remember the left part of my slides earlier, which is the getting financially healthy, is made of nearly 1,000 initiatives. These initiatives are audited by our finance organization before we validate the fact that they have or they have not impacted the P&L through dollars. Okay? For example, if it is a project that is about reducing the cost of a certain product by buying differently or producing differently, we go and check and make sure that this is actually happening before we report it as an impact of the Fight Forward plan. When you make the sum for 2024, the sum of all these projects in terms of EBITDA impact, you get to a number.
I think the right number is $236 million by summing all these hundreds of initiatives. It is real. It is audited. The impact is there of the financial part of the plan. It will continue in 2025 with incremental additional value hitting our bottom line. For the structural part of Fight Forward, which is all these organizational changes, cleaning our portfolio, cleaning our geographical base, reducing or optimizing our asset footprint, all this is work in progress. Have we seen all the impact of that second part, the second pillar, the second part of my slide earlier? No, probably we have seen 10% of the impact of that part. There is much more positive impact for the company to come because of all these structural changes. By definition, structural changes take more time and are more complex.
They are as important as the operational tactical changes we're making to generate EBITDA impact over the last year.
Okay. That's great. Thanks for all your answers. That concluded our Q&A session. We are about to reach the time, but we would like to give the floor to Gaël again to close our session today.
Thanks to all the speakers. Thanks, obviously, to all the attendees of the meeting today. I would like to conclude by saying that ADAMA in 2024 evolved in a market that was very challenging. In those very challenging conditions, I'm very pleased, proud to report that our Fight Forward transformation is starting to show up. The results are starting to come to our P&L. Do they come everywhere? Not yet. For example, net income is not the case yet. You look at cash. You look at EBITDA. You look at EBITDA percent. These are starting to move for several quarters in a row. We know why. Okay? We know why because behind all this financial impact, there is the Fight Forward transformation, which is tracked in a very disciplined way by the leadership team of the company.
Honestly, all the employees of the company are behind this transformation. I have a lot of trust in the fact that we're doing the right thing for this company, both in the short term, but also the medium and the long term in order to deliver on our value innovation strategy. Thank you very much.
For joining us. We are about to say goodbye. Your support is expected. Thanks very much. Let's see you in next session.