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Sustainable business growth in Q1 2021

Release time:2021-04-30

Safety and health are and remain Adisseo’s first priority while ensuring business continuity: a solid safety result achieved in Q1 2021 with TRIR at 0.45.

 

Sustainability & Environment performance: Continuous progress towards its long-term target:

  • 100% clean energy in Nanjing plant
  • Increase of renewable part in steam production at Roussillon platform
  • New water treatment station finalization in Commentry with its start-up in April

 

Q1 2021: sustainable growth in revenue CNY2.99 billion (+5%) and net profit contributed to shareholders CNY367 million (+25%) thanks to:

  • Strong volume growth in liquid methionine
  • Continued growth in specialties
  • Cost effectiveness program
  • Positive impact from 15% buy-back

 

Key projects:

  • European methionine debottlenecking project on track
  • The 2nd Nanjing plant (BANC 2 project) is progressing well
  • Calysseo Chongqing plant obtained environment related approval and completed its piling work  
  • FRAmelco integration is progressing well with operational synergies underway

 

Shareholding structure:

  • The conversion window of the exchangeable bonds issued by Bluestar has a 4-year period until 2024
  • Up to April 22nd, around 22% of total EB has been converted into shares, representing more floating of Adisseo shares  

 

2021 outlook

In an environment where volatility and uncertainty will still prevail, Adisseo is confident and engaged to:

    • ensure its employees’ safety and business continuity
    • keep investing in sustainable growth
    • accelerate growth in sales and solid margin level despite increased pressure on raw materials

Main drivers are:

    • Continued volume growth in liquid methionine
    • Accelerating robust growth in specialties
    • Seizing market opportunities in vitamins sector
    • Proactive margin and cost optimization thanks to competitiveness enhancement program
    • Leveraging of innovation capabilities and external growth opportunities

 

Jean-Marc Dublanc, CEO of Adisseo, said: “Our long-standing commitment to safety and health helped us get through the COVID-19 pandemic without sacrificing business continuity. Our businesses are very well positioned to help our customers overcome the unprecedented challenges and prepare them for the recovery. This strength is reflected in the sustainable growth we achieved in FY2020, which clearly demonstrated our resilience when facing crisis. The growth in Q1 2021 is a further improvement on an already solid FY2020 result, showcasing our ability to turn challenges into opportunities.

 

This quarter, we recorded a sustainable growth in revenue (+5%) and a +25% increase in net profit contributed to shareholders, thanks to a strong volume growth in liquid methionine, continued growth in specialties, positive impact from 15% buy-back and continuous cost saving program across the whole group.

 

For the rest of the year, we will continue to focus on our safety priority while ensuring business continuity. The demand is there and Adisseo is well positioned to address its customers’ needs and capture business opportunities. We expect to accelerate growth in sales with solid margin level despite increased pressure on raw material costs.”

 

Bluestar Adisseo Company (“Adisseo” or “the Company”) Board of Directors disclosed its Q1 2021 results.

 

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

 

Unit: CNY (100mil)

Q1 2021

Q1 2020

YoY variance

Operating revenue

29.9

28.5

+5%

  • Performance Products

20.9

19.9

+5%

  • Specialty Products

7.5

7.2

+5%

  • Other Products

1.5

1.4

+6%

Gross profit

(in % of operating revenue)

11.2

38%

11.0

39%

+2%

-1ppt

  • Performance Products

7.2

6.6

+9%

  • Specialty Products

4.0

3.8

+6%

  • Other Products

0

0.6

-97%

Net profit contributed to the shareholders of the Company

3.7

2.9

+25%

 

In the context of COVID-19 spreading over across the world, safety is and will remain Adisseo’s first priority while ensuring business continuity the second. Adisseo achieved a solid safety TRIR result in Q1 2021 at 0.45.

 

Adisseo is engaged towards its long-term sustainability and environment performance target. The Nanjing plant has achieved the application of 100% clean energy since the beginning of 2021. Positive environment impact is expected from the increase of renewable part in steam production in the powder methionine platform in Roussillon and the finalization of the new water treatment station in Commentry with its start-up in April 2021.

 

In Q1 2020, customers were building some inventories to secure their supply in the context of COVID-19, which resulted in a strong quarter last year.

 

However, Adisseo delivered continued growth achieved in both operating revenue at CNY2.99 billion (+5%) and gross profit at CNY1.12 billion (+2%) with a nearly flat gross margin at 38% thanks to +19% volume growth in liquid methionine, continued revenue growth in specialties. However, it is not yet fully reflecting the promising business dynamics arising from the good momentum on prices of main performance products, which is already happening in March and the full positive benefit is expected to come in the following months.

 

Regarding the methionine business, strong market demand led to on-going significant volume growth in liquid methionine across the world and especially driven by high double digit (>20%) increase in China, Latin America, Indian Subcontinent and Middle East.

 

Nanjing plant achieved a new production record in March 2021, and the new 180KT liquid methionine plant (BANC2 project) is progressing well with excellent safety performance illustrated by 2 million manhours without recordable accident. The piling work was completed, and all imported equipment has been delivered on site. The civil work is under completion and the total expected cost is under control and in line with the budget despite the increase in material prices, such as steel. The project is on track to start up by end of H1 2022.

 

The debottlenecking of European plant (+30KT) is being implemented on schedule despite COVID-19. For the upstream part in Les Roches plant, the mechanical completion is done, and the project is under commissioning. As to the downstream part in Burgos plant, the schedule is also under control with start-up expected in Aug 2021. 

 

On Vitamins, Vitamin A and Vitamin E selling prices are still at a high level in the context of other industry player’s production difficulties. Portfolio vitamins’ selling prices are still at their low level, but this had a limited impact on profitability.

 

The specialty business achieved continued growth in Q1 2021 in both revenue (+5%) and gross profit (+6%) despite global supply chain disruption and restrained abilities to visit customers in the context of COVID-19. Smartamine business delivered its best-ever quarter supported by the positive milk price trends. Health by Nutrition business, especially for Selisseo and Alterion, delivered sustainable growth especially for Aqua (+32%). Palatability business also realized growth despite difficulties in the China market due to the African Swine Fever. Other specialty business was unfortunately more seriously impacted by supply chain difficulties and limited capabilities in customer visits, which not showing the same dynamics in Q1 2021.

 

Encouraging contribution is expected from FRAmelco thanks to the positive business dynamics. The business and organizational integration with FRAmelco is progressing well with operational synergies underway according to plan.

 

Following the ground-breaking ceremony in December 2020 of the first commercial FeedKind® plant of Calysseo, the Adisseo’s joint venture with Calysta, the plant obtained environment related approval and completed its piling work. Even in the context of limited physical supervision from foreign expert due to COVID-19, the project is progressing well thanks to strong local management with expected start-up in Q4 2022.

 

French formulation capacity expansion project, which is expected to boost business development through its unique formulation technology, obtained its environment related authorization with expected start-up by the end of 2022.

 

Q1 2021 net profit contributed to shareholders increased by +25% yoy to CNY367 million, thanks to gross profit growth, the positive impact from 15% buy-back and the strict cost management ensuring a flat SG&A, despite continued investment in sales and marketing as well as in research & innovation.

 

II.Cash-flow and Net Debt

 

Cash position as of 31st March 2021 stood at CNY2.5 billion, a reduction of CNY0.27 billion compared to 31st December 2020.

 

The positive cash-flow generated from operating activities in Q1 2021 was largely invested in CAPEX.

 

III.Shareholder Structure

 

The conversion window of the exchangeable bonds issued by Bluestar started on 21st October with a 4-year period until 2024. As of 22nd April 2021, around 22% of total EB has been converted into shares, representing more floating of Adisseo shares on the market.

 

IV.2021 outlook

 

In an environment where volatility and uncertainty will still prevail, Adisseo is confident and engaged to ensure its employees’ safety and business continuity and to keep investing in sustainable growth.

 

Adisseo is confident that continuous strong market demand together with firming prices for key products will have their full positive impact starting from Q2 and accelerating in the second half of the year.

 

Key drivers to accelerate growth in sales and achieve solid margin level despite increased pressure on raw materials will be:

    • Continued volume growth in liquid methionine
    • Accelerating robust growth in specialties
    • Seizing market opportunities in vitamins sector
    • Proactive margin and cost optimization thanks to competitiveness enhancement program
    • Leveraging innovation capabilities and 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 2,345 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 20,800 employees and a turnover of CNY 57.5 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: grace.xu@first-avenue.com.cn