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Continued growth (+14% yoy) in H1 2021 Net Profit Contributed to Shareholders

Release time:2021-07-31

Safety and health remain Adisseo’s first priority while ensuring business continuity: a solid safety result achieved in H1 2021 with TRIR at 0.49.

 

Sustainability & Environment: encouraging performance towards long-term target:

  • GHG emission, energy and water use intensity progressively reduced
  • The newly acquired plant (FRAmelco Alcala plant) switched to renewable energy

 

H1 2021: despite continued supply chain difficulties, stabilized YTD revenue CNY5.98 billion (+2%) and continued growth in net profit contributed to shareholders CNY816 million (+14%) comparing to the strong H1 2020 driven by:

  • Continued strong volume growth in liquid methionine
  • Continued growth in specialties
  • Positive impact from 15% buy-back
  • Proactive margin management offsetting rise in raw material costs

 

Key projects:

  • One-China Strategy in progress with tangible benefits
  • 2nd Nanjing plant (BANC 2 project) and construction of 1st Commercial FeedKind® plant well on track as well as the European methionine debottlenecking project
  • FRAmelco integration on-going with commercial and industrial synergies underway
  • Investment of a minority stake in PigChamp, a key milestone in Precision Livestock Farming

 

Shareholder structure:

  • As of 20th July 2021, around 22% of the total exchangeable bonds issued by Bluestar had been converted into shares. Floating thus reached around 14.2% of Adisseo market capitalization

 

H2 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 while pursuing investment in sustainable growth

Adisseo will accelerate growth in sales in H2 at a solid margin level despite increased pressure on raw material costs thanks to:

      • Continued volume growth in liquid methionine and an improved volume increase in powder methionine
      • Proactive price management
      • Accelerated robust growth in specialties
      • Seizing of market opportunities in vitamins sector
      • Proactive margin and cost optimization thanks to competitiveness enhancement program
      • Expanded innovation capabilities and external growth opportunities

 

Jean-Marc Dublanc, CEO of Adisseo, said: “There is still significant uncertainty regarding COVID-19 pandemic. I am extremely proud to see the resilience and adaptability of our teams in this difficult environment, supporting our communities and customers and ensuring business continuity and continued net profit growth. Sustainability is one of our key performance indicators with encouraging performance realized in H1 2021 towards our long-term target.

 

I am also pleased of the dynamic of our business in China with tangible benefits delivered. We are fully mobilized to grasp the great potential of the local market and become the leader in both methionine and specialty business in China. The first FeedKind® Chongqing plant to start up in Q4 2022 will become an important booster for Adisseo in alternative protein and aqua market in China and Southeast Asia. 

 

‘In Science, We Trust’ mindset is deeply rooted in Adisseo. Investment on Research & Innovation (R&I) is being intensified by the establishment of China R&I center and two European R&I centers. The record-high number of applications received after the launch of Adisseo Research Grant in H1 2021 proves our thought leadership in the industry. Recently, the minority investment in PigChamp, a 20-year service company focused on providing digital transformation in swine industry, represents a key milestone of Adisseo’s investment in Precision Livestock Farming.

 

Looking at the second half of 2021, Adisseo will ensure its employees’ safety and business continuity while dealing with the market volatility and uncertainty. Benefiting from the continuous strong market demand in all segment including in swine market, we are expecting an accelerated growth with a solid margin level. Furthermore, in this challenging context, we are willing to pursue our profitable growth ambition.”

 

Bluestar Adisseo Company (“Adisseo” or “the Company”) Board of Directors disclosed its H1 2021 results.

 

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

 

Unit: CNY (100mil)

H1 2021

H1 2020

YoY variance

Operating revenue

59.8

58.9

+2%

  • Performance Products

41.4

41.9

-1%

  • Specialty Products

15.4

14.2

+9%

  • Other Products

3.0

2.7

+9%

Gross profit

(in % of operating revenue)

23.6

39.4%

23.3

39.6%

+1%

-0.2ppt

  • Performance Products

14.9

15.5

-4%

  • Specialty Products

8.2

7.3

+11%

  • Other Products

0.6

0.4

+31%

Net profit contributed to the shareholders of the Company

8.2

7.2

+14%

 

In the context of COVID-19 pandemic, safety is and will remain Adisseo’s first priority while ensuring business continuity. Adisseo achieved a solid safety TRIR result in H1 2021 at 0.49,  zero accident remains the objective.

 

Adisseo is engaged towards its long-term sustainability and environment target. Encouraging performance has been achieved this semester, notably on-going reduction of greenhouse gas emission and energy and water use intensity. The newly acquired FRAmelco Alcala plant also switched to renewable energy.

 

In H1 2020, results were strong as customers were building some inventories to secure their supply in the context of COVID-19 outbreak

 

Compared to the strong H1 2020, Adisseo recorded a stable performance in H1 2021 with a yoy +2% revenue growth (CNY5.98 billion) and +1% gross profit growth (CNY2.36 billion) with a solid gross margin at 39% thanks to +11% volume growth in liquid methionine, continued revenue growth in specialties despite supply chain difficulties arising from COVID-19, and proactive price management leading to the increased prices of main performance products allowing to offset partly the rise in raw material costs.

 

Regarding the methionine business, the strong market demand led to double-digit volume growth in liquid methionine in main regions including Latin America, Indian Sub-continent, Europe and Middle East Africa. Agile management with good results contributed to overcome the supply shortage of some key raw materials like sulfur, allowing the stable supply of liquid products.

 

The U.S. market anti-dumping measure had a limited impact thanks to Adisseo’s global business footprint. While still serving the customers in the U.S., Adisseo has stopped serving powder methionine in the U.S. which has been reallocated to other regions. For other products, Adisseo is optimizing supply chain. In the meantime, prices have rebounded, which is also protecting margin.

 

Methionine prices were increased to the highest level over the past 12 months which partly offset the increase in key raw material costs.

 

The new 180KT liquid methionine plant (BANC2 project) is progressing well. 50% of the construction work has been achieved with all main civil work completed. All key equipment will be delivered onsite before the end of July 2021. The initialization of the main substation in mid-July started a new phase of the project.

 

The debottlenecking of European plant (+30KT) is well on track. The upstream part in Les Roches plant started successfully in the beginning of June and the downstream part in Burgos plant will start in August 2021. 

 

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

 

Specialty business was disrupted by several factors:

•   Lower-than-expected demand due to squeezed profit arising from sharp increase of raw material cost for feed industry, reducing margins of the poultry business

•   Pork business still negatively impacted by African Swine Fever

•   Difficulties to explore new businesses due to restrained visits in the context of COVID-19

 

Despite those factors and supply chain challenges, specialty business achieved continued growth in H1 2021 in both revenue (+9%) and gross profit (+11%) mainly driven by FRAmelco acquisition and sustained good performance in some business lines:

  • Ruminant business continued its strong growth thanks to steady dynamics in the U.S. dairy market
  • The aqua business achieved a strong +24% revenue growth
  • Sustainable growth realized in Healthy by Nutrition mainly supported by good performance in Selisseo and Alterion which has recorded a +29% volume growth
  • Palatability business was back to growth despite the difficulties due to African Swine Fever

With the normalization of market condition in the coming quarters, Adisseo is confident in its ability to meet the market demand and resume the acceleration in business development of all specialties.

 

An encouraging contribution from FRAmelco is under-way thanks to the on-going business and organizational integration.

 

After obtaining environment related permit in Q1 2021 of the first commercial FeedKind® plant of Calysseo, Adisseo’s joint venture with Calysta, the Calysseo Chongqing project is progressing well with 50% completion rate. The project is on cost and on schedule and confirmed to be started in Q4 2022. Positive feedback from customers has been received.

 

Adisseo made a minority stake investment in PigChamp, a Spanish company with 20-year history, focusing its service on digital transformation of the swine sector addressing every topic including health, production, reproduction and biosecurity. This represents a key milestone for Adisseo in the Precision Livestock Farming (PLF). Adisseo aims to invest and bring innovative solutions to the market to support the sustainability of the animal production industry and offer efficiency, welfare, biosecurity and traceability at the same time.

 

One-China Strategy initiated in 2020 is coming into its implementation phase. Tangible benefits are delivered with +63% specialties revenue growth in China market in H1 2021 thanks to strong growth across all main categories in specialties including significant growth in Health by Nutrition and palatability contributed by local customized solutions as well as a highly robust growth in aqua business preparing for FeedKind® launch in China market. The positive signals of rebounding in swine business are appearing, which could trigger accelerated growth.

 

The new Adisseo Research & Innovation Center in China (Nanjing) is in the final stage of its construction, targeting to open by 2021. It will allow Adisseo to establish another global R&I center, aiming to become an “innovation engine” and accelerator in Asian markets.

 

In addition, two new R&I Centers in France are being established. One is in Lyon to regroup all chemistry, engineering, nutrition and analytical capabilities and the other is in La Rochelle to regroup and develop product formulation capabilities including encapsulation, drying, additives protection which is to be operational by the end of 2021.

 

During H1 2021, Adisseo has launched the Adisseo Research Grant (ARG) worldwide, an initiative for collaborative research projects addressing feed industry challenges and a reinforcement of Adisseo thought leadership.

 

Adisseo also continues to develop its innovation pipeline of products and services. A new online tool called Adict which facilitates the utilization of data generated by Adisseo’s PNE (Precise Nutrition Evaluation) is being launched and one new enzyme product is in the final stage of the development as well as several services.

 

H1 2021 net profit contributed to shareholders increased by +14% yoy to CNY816 million, thanks to the positive impact from 15% buy-back.

 

Competitiveness enhancement program delivered additional recurring savings partially offset with investments in sales & marketing and research & innovation to support accelerated sustainable development.

 

  1. Cash-flow and Net Debt

 

Cash position as of 30th June 2021 stood at CNY2.0 billion, a reduction of CNY0.7 billion compared to 31st December 2020 and a reduction of CNY0.5 billion compared to 31st March 2021.

 

The positive cash-flow generated from operating activities in H1 2021 was largely invested in CAPEX and dividend payment to shareholders.

 

  1. Shareholder Structure

 

The conversion window of the exchangeable bonds issued by Bluestar started on 21st October 2020 till 2024. As of 20th July 2021, around 22% of total EB has been converted into shares. Floating thus reaches around 14.2% of Adisseo market capitalization.

 

  1. H2 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.

 

Thanks to the continuous strong market demand especially in swine market and improved global supply chain situation in the coming quarters, Adisseo is confident to accelerate growth in sales in H2 at a solid margin level, driven by the following factors:

    • Continued volume growth in liquid methionine and an improved volume increase in powder methionine
    • Proactive price management
    • Accelerating robust growth in specialties
    • Seizing market opportunities in vitamins sector
    • Proactive margin and cost optimization thanks to competitiveness enhancement program
    • Expanded 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: Yun CAI, yun.cai@adisseo.com