Results

Blue Star Adisseo Co. Ltd.

10/30/2020 | News release | Distributed by Public on 10/29/2020 20:02

9M 2020: net profit contributed to shareholders up +35% vs 9M 2019

9M 2020: net profit contributed to shareholders up +35% vs 9M 2019

Release time:2020-10-30

During COVID-19, safety is and remains Adisseo's first priority while ensuring business continuity.

Safety: Q3 2020 TRIR at 0.32, leading to the 12-month rolling TRIR at 0.51

9M 2020: sustainable growth vs 9M 2019 in revenue CNY8.88 billion (+7%) and net profit contributed to shareholders CNY1.1 billion (+35%) thanks to:

  • Continuous volume growth in liquid methionine
  • Solid contribution from Vitamin business
  • Continued strong revenue growth in Specialties, notably driven by dairy market
  • Improved gross profit margin thanks to decreased raw material prices and proactive margin management

Key projects:

  • Methionine plants: high reliability and reinforced cost competitiveness
  • 2nd Nanjing plant (BANC 2 project) entered into construction phase
  • Calysseo Chongqing, the Chinese entity of the first commercial FeedKind┬« plant created recently and the project is on schedule
  • French innovative formulation unit, Innov'ia, obtained its permit for capacity expansion
  • Share purchase agreement to acquire FRAmelco signed on 30 July and the transaction expected to be closed by end of 2020
  • Competitiveness enhancement program: recurring savings of more than Euro 22 million expected in 2020

2020 outlook

  • In a volatile environment reinforced by the COVID-19 pandemic, Adisseo is confident and engaged to deliver sustainable profitable growth and continue to pursue investment opportunities for future growth thanks to:
    • Continued volume growth in liquid methionine
    • Solid growth in specialties
  • Catching market opportunities in vitamin business
  • Continued positive benefit arising from low-level raw material prices as well as proactive margin and cost management
  • Ability to catch external growth opportunities

Jean-Marc Dublanc, CEO of Adisseo, said: 'The COVID-19 pandemic continues to challenge our businesses, industries and communities. I am extremely proud of our team's dedication and efforts that helped Adisseo to sustain the profitable growth amidst the unprecedented challenges.

We have delivered a strong performance for the first nine months in 2020 with a +35% increase in the net profit contributed to shareholders, which evidences our business resilience and effectiveness of our business continuity plan. At the same time, Adisseo continued to seize external cooperation and acquisition opportunities to invest for future growth. Calysseo, the joint venture with Calysta, and the recent acquisition of FRAmelco are examples of our ambition to providing innovative and sustainable feed solutions to improve animal health and performance, thus creating more values to customers and accelerating the growth of our business.

The demand outlook for future remains uncertain, characterized by volatile markets. Our demonstrated resilience this year instills confidence in our ability to continue delivering for our customers and well positions us to achieve sustainable profitable growth for the full year 2020 and beyond.'

Bluestar Adisseo Company ('Adisseo' or 'the Company') Board of Directors disclosed its financial results for the first nine months of 2020.

I. Business Review: Revenues & Net Profit Contributed to Shareholders

Unit: CNY (100mil)

9 months 2020

9 months 2019

YoY variance

Operating revenue

88.8

83.1

+7%

63.7

60.7

+5%

20.9

17.7

+18%

4.2

4.7

-11%

Gross profit

(in % of operating revenue)

34.9

39%

28.6

34%

+22%

+5ppt

23.4

18.5

+26%

10.6

8.8

+21%

0.92

1.26

-27%

Net profit contributed to the shareholders of the Company

11

8

+35%

During COVID-19, safety is and will remain Adisseo's first priority while ensuring business continuity. Adisseo's Q3 2020 TRIR stood at 0.32, leading to the 12-month rolling TRIR at 0.51 (vs 0.70 in 2019).

Despite the most challenging macro-environment in 2020, Adisseo realized sustainable growth in both operating revenue at CNY8.88 billion (+7%) and gross profit at CNY3.49 billion (+22%), which was mainly attributed to continued volume growth in liquid methionine, solid contributions from vitamin business, strong revenue growth in specialties, notably driven by dairy market.

The gross profit margin was up from 34% to 39% thanks to decreased raw material prices, positive impacts from volume increase and strong reliability of plant production, as well as proactive margin management.

Regarding the methionine business, liquid methionine achieved further penetration despite the negative impact to demand arising from COVID-19 pandemic.

Thanks to high reliability of production as well as low raw material prices, cost competitiveness of the manufacturing plants was further reinforced.

The new Nanjing plant (BANC2 project) entered construction phase.

In addition, the successful development of the liquid methionine business led to the decision of debottlenecking the European plants, which will enable Adisseo to meet demand for the liquid products and further enhance the cost competitiveness of the plants in the future.

On Vitamins, volume and price of Vitamin A remained at a very good level, and Vitamin E business benefited from increased prices.

The specialty business achieved a strong growth in both revenue and gross profit with an increase of +18% and +21% respectively in 9M 2020 vs 9M 2019 despite reduced demand in Q3 mostly due to difficulties to visit customers to proactively promote the specialties business. The gross profit margin was stabilized at 51% and a strong yoy 9M growth continued both in dairy business (+41%) driven by outstanding performance of Smartamine® in the U.S. market and in aquaculture business (+36%).

Despite COVID-19, Adisseo remained and will continue to be active in investments.

Innov'ia, Adisseo's formulation subsidiary, obtained the permit to proceed its capacity expansion recently, which will provide strong support to the business thanks to its unique formulation capabilities.

The acquisition of FRAmelco announced in early September will further boost the growth of specialty business and reinforce Adisseo's position as one of the worldwide leaders of specialty feed ingredients in health by nutrition. The transaction is expected to be closed by the end of 2020.

Calysseo, Adisseo's joint venture with Calysta, established its Chinese entity, the first commercial FeedKind® plant in Chongqing. The project is progressing on cost and on schedule.

Competitiveness enhancement program continued its successful implementation with expected recurring savings of more than Euro 22 million in 2020.

The 9M 2020 net profit contributed to shareholders increased by +35% yoy to CNY1.1 billion thanks to gross profit growth, successful implementation of the competitiveness enhancement program and the completion of 15% buy-back despite negative foreign exchange impact due to depreciation of US Dollar and currencies from emerging countries.

II. Cash-flow and Net Debt

Cash position as of 30 September 2020 stood at CNY3.3 billion, flat vs June 30 2020. The positive cash-flow generated from operating activities was invested in CAPEX as well as final settlement of 15% buy-back.

III. 2020 outlook

Shareholder structure:

Exchangeable bonds issued by Bluestar started its conversion from 21st Oct with a 5-year conversion window. Increasing liquidity is expected accordingly.

Business outlook:

In a volatile environment reinforced by COVID-19 pandemic, Adisseo is confident and engaged to ensure its employees' safety and business continuity and to deliver sustainable profitable growth and pursue investment opportunities for future growth thanks to:

  • Continued volume growth in liquid methionine
  • Solid growth in specialties
  • Catching market opportunities in vitamin business
  • Continued positive benefit arising from low-level raw material prices as well as proactive margin and cost management
  • Ability to catch external growth opportunities

-End-

About Adisseo

Adisseo is one of the world's leading experts in feed additives. The group relies on its 10 research centers and its production sites based in Europe, USA and China to design, produce and market nutritional solutions for sustainable animal feed. With more than 2,200 employees, it serves around 3,900 customers in over 110 different countries through its global distribution network.

Adisseo is one of the main subsidiaries of China National BlueStar, leader in the Chinese chemical industry with nearly 23,000 employees and a turnover of CNY 60 billion. Adisseo is listed on the Shanghai Stock Exchange.

Adisseo Corporate websites: www.adisseo.com; www.bluestar-adisseo.com;

ADISSEO press contact

In China: First Avenue - Grace Xu: [email protected]