Q2 2020: net profits contributed to shareholders +78% (yoy) thanks to solid business growth and continuity

Q2 2020: net profits contributed to shareholders +78% (yoy) thanks to solid business growth and continuity

Release time:2020-07-31

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

Safety: H1 2020 TRIR at 0.55, leading to the 12-month rolling TRIR at 0.60 (vs. 0.70 for 2019).

Q2 2020: revenue (CNY3.03 billion) and gross profit (CNY1.23 billion) recorded a yoy increase of +16% and +38% respectively in the context of challenging macro-environment, thanks to:

• Double-digit volume growth in liquid methionine (+11%)
• Firm Vitamin prices in the context of supply concern
• Continued strong revenue growth in Specialties (+21%) notably driven by dairy market
• Gross profit margin improved to 41% thanks to decreased raw material costs in addition to price and volume positive impact

The net profit contributed to shareholders (CNY425 million) recorded a yoy increase of +78% .

The completion of 15% buy-back allowed 100% consolidation of Adisseo's business into the listed entity.

Innovation and projects:

• Nanjing new plant (BANC2):
  • Preparatory work on site for construction completed
  • Permit in place and construction work continues as expected
• Calysseo: investment agreement signed with Chongqing Changshou District Economic Development Area in June, a major step to develop FeedKind® business to capture major aqua market opportunities in Asian market
• AVF (venture fund in which Adisseo is a cornerstone investor): Investment in ViroVet, dedicated to the development of disruptive technologies for the control of viral diseases in livestock
• Competitiveness enhancement program: recurring savings of more than Euro 15million realized in H1 2020

H2 2020 outlook

• In a volatile environment reinforced by the COVID pandemic, Adisseo is confident and engaged to deliver accelerated profitable growth thanks to:
  • Better-than-market volume growth in liquid methionine
  • Accelerated growth in specialties
• Market opportunities in Vitamin
• Continued positive benefit arising from decreased raw material costs as well as proactive margin and cost management

Jean-Marc Dublanc, CEO of Adisseo, said: 'With COVID-19 becoming a new norm, businesses need to demonstrate high level of resilience and continuity to respond swiftly to an extremely challenging environment that can change on a daily basis. I am very proud that Adisseo made it and achieved strong top-line and bottom-line growth without compromising the health and safety of our employees.

Despite the economic uncertainty, Adisseo's strategy of diversifying its business portfolio remains unchanged. With the launch of FeedKind® plant in Chongqing, we took a solid step forward to tap into Asian aqua feed market, presenting a strong addition to our current business portfolio.

The second half of 2020 is full of uncertainty linked to a possible second wave of COVID-19. Adisseo will continue to implement first its policy to ensure safety and protection of its employees, and second its business continuity and competitiveness enhancement plan and sharpen its ability to achieve continuous profitable growth. '

Bluestar Adisseo Company ('Adisseo' or 'the Company') Board of Directors disclosed its H1 2020 results.

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

Unit: CNY (100mil)	Q2 2020	Q2 2019	YoY variance	H1 2020	H1 2019	YoY variance
Operating revenue	30.3	26.2	+16%	58.9	53.6	+10%
	22.0	18.9	+16%	41.9	39.0	+8%
	7.0	5.8	+21%	14.2	11.5	+24%
	1.3	1.5	-15%	2.7	3.1	-13%
Gross profit (in % of operating revenue)	12.3 41%	8.9 34%	38% +7ppt	23.3 39.6%	18.9 35.3%	+23% +4ppt
	8.9	5.5	+62%	15.5	12.0	+30%
	3.6	2.9	+24%	7.3	5.8	+26%
	(0.2)	0.5	-136%	0.4	1.1	-62%
Net profit contributed to the shareholders of the Company	4.25	2.38	+78%	7.19	5.33	+35%

During COVID-19, safety remains first priority to Adisseo while ensuring business continuity. Adisseo's H1 2020 TRIR stood at 0.55, leading to the 12-month rolling TRIR at 0.60, a further improvement from 0.70 in 2019.

In Q2 2020, the Company recorded operating revenues of CNY3.03 billion and gross profits of CNY1.23 billion, representing an increase of +16% and +38% respectively in the context of challenging macro-environment, which was mainly driven by double-digit volume growth in liquid methionine (+11%), firm Vitamin prices in the context of supply concern, and continued strong revenue growth in Specialties (+21%) notably driven by dairy market.

The gross profit margin was improved by +7 ppt from 34% to 41% thanks to decreased raw material costs, positive impacts from pricing and volume as well as accelerated growth in dairy products with higher profitability level.

Regarding the methionine business, liquid methionine achieved a +11% volume growth.

Manufacturing and supply chain continuity were achieved in all plants worldwide all along COVID-19 pandemic. Nanjing plant restarted smoothly after its annual maintenance shutdown in June, now entering full-capacity production.

On-site preparatory work for construction of the new 180KT liquid methionine plant project (BANC2) has been completed with the permit in place and construction work continues as expected.

On Vitamins, in a context of supply concern, Vitamin A enjoyed a strong positioning with prices remaining at high level, and Vitamin E business benefited from the increased prices.

In Q2 2020, the specialty business continued its strong growth momentum in both revenue and gross profit with an increase of +21% and +24% respectively. The strong growth is mainly driven by accelerated growth in dairy business (+55%). Smartamine ® achieved record sales in the US market, Aqua business had best quarter ever (+67%) despite negative COVID-19 impact on fish and shrimp market, palatability business was back to growth (+19%) driven by sales in the US and Latin America, and Selisseo® business achieved strong penetration in US and Latin America with a growth of (+76%) in volume.

Calysseo, the joint venture with Calysta signed an investment agreement with Chongqing Changshou District Economic Development Area at the end of June, a major step to develop Feedkind® business to capture aqua market opportunities in Asian market. The initial plant of 20kt capacity will start up in 2022 and the innovative product FeedKind® will first enter the China market.

AVF Professional Private Equity Investment Fund with Adisseo as the cornerstone investor completed another new investment in ViroVet, which is dedicated to the development of disruptive technologies for the control of viral diseases in livestock with potential to reduce the use of antibiotics and significantly improve the livestock industry worldwide.

Competitiveness enhancement program continued its successful implementation, with recurring savings of more than Euro 15mil realized in H1 2020.

In Q2 2020, the net profit contributed to shareholders recorded CNY425 million, representing an increase of +78%thanks to the completion of 15% buy-back which allowed 100% consolidation of Adisseo's business into the listed entity upon the closing.

II. Cash-flow and Net Debt

Cash position as of 30 June 2020 stood at CNY3.3 billion and recorded a decrease of -CNY1.8 billion compared to Q1 2020. The positive cash-flow from operating activities generated was invested in CAPEX & Calysseo, payment of 15% buy-backas well as dividend distribution.

III. H2 2020 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 accelerated profitable growth thanks to:

• Better-than-market volume growth in liquid methionine
• Accelerated growth in Specialties
• Market opportunities in Vitamin business
• Continued positive benefit arising from decreased raw material costs as well as proactive margin and cost management

15% buy-back operation was completed at the end of April and will contribute to the increase of net profit contributed to shareholders.

-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: [phone]; [e-mail]