Continued growth in revenue (+20%) and net profit (+6.5%) despite challenging macro-environment

Release time:2022-07-29

Safety and Sustainability

• H1 2022 TRIR at 0.44, an improved safety result
• A reinforced sustainability organization in place
• On-going sustainability projects launched in Chinese and European plants

 

H1 2022: +20% growth in revenue and +6.5% net profit contributed to shareholders, with stabilized gross margin (32%) despite dramatic increase of raw material, energy and freight costs, thanks to:

• Strong revenue growth in performance products (+26%) led by methionine
• Continuous proactive pricing management of all product lines
• Specialties driven by monogastric, aqua, ruminant business in China and exceptional growth in regions including Latin America, Asia and Middle East 

 

Key projects

• European operations sustained and optimized
• Nanjing plant achieved excellent production reliability after 45-day shut-down and realized high production level since then
• Pursue its success effort to develop its business and increase its growth in China

1. 2^nd Nanjing Plant (BANC2 project) commissioning at full speed, heading for expected start-up in the following month
2. Feasibility study of new China Specialty blending facility obtained approval

• Calysseo launched commissioning as planned
• Specialty capacity expansion project is progressing both in Europe and China

 

H2 2022 outlook

• Safety and sustainability remain Adisseo’s top priorities.
• Volatility and uncertainty are more than ever prevailing in the context of historically high inflation level and the persistent pandemic. Facing the challenges from raw material supply shortage and cost increase in addition to on-going supply chain disruptions, Adisseo is engaged in delivering sustainable profitable growth while pursuing long-term value-creating investments.
• In H2 2022, revenue growth is expected to continue and to offset dramatic raw material cost increase.

 

 

Jean-Marc Dublanc, Vice Chairman and CEO of Adisseo, said: “Since early 2022, when we thought we were finally seeing the light at the end of the pandemic tunnel, various headwinds have arisen – from the surge-in of new COVID variants, continued worldwide supply chain disruptions and levels of inflation not seen for decades, last but certainly not least, the Ukraine crisis.

 

Despite these major complications, Adisseo managed to pursue its activities and the business performance was in line with our initial expectations in H1 2022, thanks to our proactive pricing management across the product lines to maintain our margin at a solid level and continuous competitiveness enhancement program to keep our costs under control.

 

The global demand was weakening in the 2^nd quarter in the context of huge pressure from high agriculture raw material costs. Thanks to our global presence, proactive pricing management amid supply chain disruption with a strong commitment to fulfill customers’ demand, we were able to capture strong positive market dynamics in key regions such as Latin America and Middle East Regions. With the start-up of BANC2 in the following month, our expanded capacity across the globe will allow Adisseo to optimize volume allocation in the context of fluctuated raw material and energy costs.

 

Looking at H2 2022, we recognize the difficulties in the environment that we are facing. However, we will remain resilient as always, and this makes us confident to achieve our target. We will continue the execution of our major projects fueling our growth to build Adisseo future.”

 

Bluestar Adisseo Company (“Adisseo” or “the Company”) Board of Directors disclosed its H1 2022 results.

 

 

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

 

Unit: CNY (100mil)	H1 2022	H1 2021	YoY variance
Operating revenue	72.0	59.8	+20%
Performance Products	52.2	41.4	+26%
Specialty Products	15.4	15.4	+0%
Other Products	4.4	3.0	+48%
Gross profit* (in % of operating revenue)	22.7 31.5%	21.1 35.2%	+8% -4ppt
Performance Products	14.5	13.1	+11%
Specialty Products	7.4	7.6	-2%
Other Products	0.7	0.4	+98%
Net profit contributed to the shareholders of the Company	8.7	8.2	+6.5%

*For comparable basis, 2021 figures restated per 2022 policy

Safety is and will remain Adisseo’s priority. The safety performance for H1 2022 was improved as illustrated by the half-year TRIR landing at 0.44. Safety audit of all plants has been completed followed by associated corrective action plans performed to keep improving the safety performance.

 

Adisseo is mobilized to keep people safe first and minimize the negative business impact despite resurgence of COVID-19 in many regions.

 

A reinforced organization is in place to combine sustainable development and strategy into one single function and to guarantee in a more systematic way that all strategic decisions should integrate the considerations of safety, environment, and sustainable development.

 

On-going sustainability projects were launched both in Chinese and European plants to contribute to the sustainability development and competitiveness enhancement.

 

In H1 2022, Adisseo achieved high double-digit growth in revenue (+20%, CNY7.2 billion) and solid growth in gross profit (+8%, CNY2.27 billion) with a stabilized gross margin at 32% compared with H1 2021 (on a proforma basis), thanks to:

• Strong revenue growth in performance products (+26%) led by methionine
• Continuous proactive pricing management of all product lines
• Specialty business driven by

• Double-digit growth of monogastric business
• Double-digit growth of aqua business
• Outstanding ruminant business in China
• Exceptional specialties growth in regions including Latin America, Asia and Middle East

 

This allowed to partially offset the dramatic increase of raw material, energy and freight costs.

 

Regarding the methionine business, both the liquid and powder methionine recorded double-digit revenue growth, contributing to the extraordinary revenue growth in methionine (+44%).

 

European operations have been improved and optimized despite huge challenges in raw materials and energy sourcing thanks notably to the long-term contracts even though partially hedged. In addition, the price formula in the contracts allowed Adisseo to mitigate partially the impact on production costs arising from the huge rise in raw material and energy costs.

 

Nanjing plant achieved excellent production reliability after 45-day shut-down and realized high production level since then. The overall business performance benefited from the limited cost increase in Nanjing plant compared to European plant, which will bring more important competitive advantages in the future when BANC2 expansion starts its operation.

 

BANC2 project is progressing on schedule and on cost with excellent safety results (more than 7.25 million man-hours with zero accident record). Formal commissioning started at full speed, heading for expected start-up in the following month. The global set-up will allow Adisseo to optimize volume allocation in the context of fluctuated raw material and energy costs.

 

On Vitamins, vitamin A prices have unfortunately decreased sharply in the context of increasing market competition while vitamin E price remained at a solid level. Most portfolio vitamin prices are at a historically low level but with a limited impact on Adisseo’s global profitability.

 

Market demand has been softening mainly due to:

1. Sharp increase in agricultural raw materials, putting pressure on customer profitability
2. Global uncertainty of economic environment
3. Impact of diseases and disruptions in some regions, such as soft and disruptive market demand in the U.S. and avian flu in Europe

 

Despite this soft market demand, specialty business was back to growth in the 2^nd quarter with an improving margin trend, thanks to:

• Continued Double-digit growth in Feed Digestibility
• Ruminant business led by high double-digit ruminant growth in China and Latin America as well as continuous penetration of new ruminant products in US despite lower momentum in the market
• Sustained solid growth in Health by Nutrition driven by the continued penetration of new products such as Rovabio Phyplus, Alterion and Selisseo as well as Adimix
• Continued robust growth in aqua thanks to excellent performance in Europe, Asia Pacific (mainly to boost Thailand and Vietnam), Indian Sub-continent and Latin America regions with strong growth across main product lines
• Proactive price adjustment across the product lines

 

The simplification of the product range by region has been pursued. Product portfolios of feed preservation and mycotoxin management are being optimized to limit its exposure to volatile and commoditized markets and to refocus commercial efforts on higher value specialty additives.

 

Specialties Capacity Expansion Project is progressing both in Europe and China to support business growth, optimize industrial set-up, enhance competitiveness and sustainability as well as improve customer services.

 

Adisseo keeps pursuing its success effort to develop its business and increase its growth in China:

• Stronger specialty business growth was achieved in China despite COVID-19 resurgence driven by ruminant business. In the 2^nd quarter, specialty business in China accelerated its development, resulting in a yoy growth rate at +32%.  
• Feasibility study of new China specialty blending facility obtained approval.
• Adisseo China Digitalization Transformation journey continued and accelerated with priority projects focusing on Smart HSE, operation efficiency improvement, customer journey experience enhancement as well as optimization of back-bone systems including upgrading of information infrastructure and ERP system.

 

Calysseo Chongqing Plant, the world’s first industrial-scale FeedKind® facility, launched commissioning successfully heralding a new era of food safety for China with start-up expected before year-end. The plant recorded excellent safety results (1.5 million manhours without accident).

 

H1 2022 net profit contributed to shareholders (CNY869 million) achieved a +6.5% yoy growth thanks to growth in gross profit partly offset by the continued investment in research and innovation as well as sales and marketing in specialties to pursue business growth. The overall positive FX impact on business resulted from USD vs. Euro was partly offset by the appreciation of CNY vs. Euro.

 

 

2. Cash-flow and Net Debt

 

Cash position as of 30^th June 2022 stood at CNY0.8 billion, a reduction of CNY1.3 billion compared to 31^st December 2021, mainly driven by

• CAPEX financing notably capacity expansion and HSE investment
• Repayment of outstanding preferred shares (USD250 million) partially refinanced by low-cost financing
• Annual dividend payment at committed pay-out ratio of more than 30%
• Increased inventory level due to global supply chain disruption as well as cost increase due to the Ukrainian crisis

 

All these factors offset the positive cash flow arising from operating activities.

 

3. H2 2022 outlook

 

Safety and sustainability remain Adisseo’s top priorities.

 

Volatility and uncertainty are more than ever prevailing in the context of historically high inflation level and the persistent pandemic. Facing the challenges from raw material supply shortage and cost increase in addition to on-going supply chain disruptions, Adisseo is engaged in delivering sustainable profitable growth while pursuing long-term value-creating investments.

 

In H2 2022, revenue growth is expected to continue and to offset dramatic raw material cost increase thanks to:

• Strong growth in methionine supported by capacity expansion projects
• Robust growth in specialties
• Cost optimization arising from competitiveness enhancement program
• Leveraging innovation capabilities

 

Adisseo will continue the execution of the major projects fueling its growth to build its future.

 

-End-

 

 

 

 

 

 

 

About Adisseo

Adisseo is one of the world's leading experts in feed additives. The group relies on its 8 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 2,532 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 20,000 employees and a turnover of CNY 71.5 billion in2021.

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