Q3 2021: Double-digit growth in revenues and net profit

Release time:2021-10-29

Safety and Sustainability: continuous encouraging performance

  • Safety is and remains Adisseo's priority: 2021 TRIR at 0.61, zero accident remains our target, COVID-19 impact well under control
  • Encouraging environment performance achieved in Q3

Q3 2021: double-digit growth in revenue (+12%) and net profit contributed to shareholders (+15%) vs Q3 2020:

  • Continued strong volume growth in liquid methionine (+11%)
  • Accelerated growth in specialties (+15%) reaching historic-high level
  • Proactive pricing management as well as continuous cost competitiveness enhancement offsetting rise in raw material costs

Key projects

  • European Methionine Debottlenecking project executed on schedule and started running on full capacity
  • One-China Strategy keeping the momentum with +58% growth in specialty business
  • 2nd Nanjing unit (BANC2 project) progressing well
  • Research & Innovation Center in Nanjing continue to progress as planned for an expected operation by the end of 2021
  • Calysseo: Construction of 1st commercial FeedKind® plant on track

FY2021 outlook

  • In an environment where volatility and uncertainty are more than ever prevailing, Adisseo is pursuing its sustainable growth strategy. Safety remains the first priority.
  • Facing the challenges from raw material supply and cost increase in addition to on-going supply chain disruptions, Adisseo is engaged in managing the business development and prices in a proactive and agile way.

Jean-Marc Dublanc, CEO of Adisseo, said: "In Q3 2021, our positive momentum continued with another quarter of strong results, achieving double-digit topline and bottomline growth. Thanks to our proactive and agile management ensuring safety and business continuity, tactical pricing, handling supply chain disruption and raw material shortage as well as cost optimization, our business is well on track."

I am also pleased to see that our one-China strategy rolls out smoothly and continues to deliver tangible benefits: on-going penetration of liquid methionine in China market and significant growth in specialty businesses. With the coming official go-live of our new Nanjing R&I Center, our China business growth is expected to further accelerate supported by strong innovation capabilities.

Looking at Q4 2021, we are facing major challenges due to sharp increase in raw material and energy costs.We are endeavored to continue the strong growth momentum while managing carefully the rise in raw material and energy costs to ensure a solid profitability level."

Bluestar Adisseo Company ("Adisseo" or "the Company") Board of Directors disclosed its Q3 2021 results.

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

Unit: CNY (100mil)

Q3 2021

Q3 2020

YoY variance

Operating revenue

33.6

30

+12%

24.2

21.8

+11%

7.7

6.7

+15%

1.7

1.5

+19%

Gross profit

(in % of operating revenue)

12.7

38%

11.6

39%

+10%

-1ppt

8.2

7.8

+5%

3.9

3.3

+20%

0.62

0.5

+23%

Net profit contributed to the shareholders of the Company

4.3

3.8

+15%

Adisseo is engaged towards its long-term sustainability and environment target. Safety is and will remain Adisseo's priority. 2021 TRIR as of 30th September reached 0.61. Zero accident remains our target. Encouraging environment performance continued in the 3rd quarter.

In Q3 2021, Adisseo recorded double-digit yoy growth in revenue (+12%, CNY3.36 billion) and gross profit (+10%, CNY1.27 billion) thanks to +11% volume growth in liquid methionine, +15% revenue growth in specialties, proactive price management and continuous cost competitiveness program, allowing to offset partly the rise in raw material costs.

Regarding the methionine business, the strong market demand led to robust volume growth in liquid methionine in main regions including Asia, Latin America, Europe & Middle East, African region.

Thanks to the mobilization of all resources, Nanjing plant (BANC) production already came back to its full capacity in early October.

Methionine prices are firming up and partly offset the increase in key raw material costs.

The new 180KT liquid methionine plant (BANC2 project) is progressing well. Civil work was completed and over 80% construction completion with pre-commissioning phase started. The project has achieved excellent safety results with more than 4 million hours without accident.

The debottlenecking of European plant (+30KT) was completed at the end of September with zero accident through the whole project and it is running at full capacity.

DISPLAY 4.0 project, an industrial 4.0 project of Adisseo, has been awarded at the Chemistry Initiative 2021 in the category of "Digitalization of Production Processes". With Display 4.0, it will enable Adisseo's industrial activities to gain cost competitiveness, operation efficiency and better anticipation on future process development.

On Vitamins, Vitamin A and E selling price remained firm. Portfolio vitamins volume increased but selling prices were at their low level, but with limited impact on profitability.

In Q3 2021, specialty business reached best-ever quarterly revenues at CNY770mil representing +15% growth yoy and to reach +20% growth yoy in gross profit, driven by FRAmelco acquisition and robust performance in major business:

  • Continued high-double-digit growth in ruminant business (+17%) in the context of milk prices in the US market progressively stabilizing
  • Strong growth in feed digestibility business (+22%)
  • Solid growth in Health by Nutrition (+7%)
  • Strong palatability business growth (+23%) in main regions with strong dynamics in China and Latin America

Thanks to great contribution from ruminant business and effective cost improvement plan, gross margin realized a +3pptincrease from 48% in Q3 2020 to 51% in Q3 2021 despite fierce pressure and cost increase in supply.

Business synergies from FRAmelco integration are underway.

Adisseo also continues to develop its innovation pipeline of products and services. Rovabio Phyplus, Adisseo's new enzyme product will be launched at the end of Oct, representing a new cornerstone after 25-year continuous improving on feed digestibility solutions.

To meet the ever-increasing customer demands, a review of capacity expansion on specialties was started both in Europe and in China.

One-China Strategy initiated in 2020 has been progressing steadily. Tangible benefits are delivered with continued accelerated penetration of liquid methionine in China market and significant growth of specialty business in China (+58%) in Q3 2021 led by significant growth in ruminant business. Feasibility study of local blending facility is in progress.

The new Adisseo Research & Innovation Center in China (Nanjing) continue to progress as planned for an expected operation by the end of 2021. It will allow Adisseo to establish another global R&I center, aiming to become an "innovation engine" and accelerator in Asian markets. China R&I Center received Grant of Jiangsu Provincial Engineering Research Center, an important governmental recognition of Adisseo's China R&I capacity.

The first commercial FeedKind® Chongqing plant of Calysseo, Adisseo's joint venture with Calysta, is progressing well with 70% completion rate and reached the milestone of 500,000 safe working hours. Key equipment fermentation reactor has been transported to the site and installed in place. The start-up preparation of the project is progressing as planned.

Q3 2021 net profit contributed to shareholders (CNY430 million ) achieved +15% growth yoy, thanks to strong growth in gross profit and improvement in FX result.

Competitiveness enhancement program continued to deliver recurring savings of around CNY117mil partially offset with investment in sales & marketing and research & innovation to support accelerated sustainable development.

  1. Cash-flow and Net Debt

Cash position as of 30th September 2021 stood at CNY1.94 billion, a reduction of CNY0.1 billion compared to 30th June 2021.

The positive cash-flow generated from operating activities in Q3 2021 was largely invested in CAPEX.

  1. Corporate Governance & Shareholder Structure

A new board has been elected at shareholder's meeting in Sept with two new independent directors.

The conversion window of the exchangeable bonds issued by Bluestar started on 21st October 2020 till 2024. No conversion occurred in Q3. As of 19th October 2021, still around 22% of total EB was converted with floating reaching 14.2% of Adisseo market capitalization.

  1. FY2021 outlook

In an environment where volatility and uncertainty are more than ever prevailing, sustainability becomes the most important driver for growth strategy with safety remaining to be priority.

Facing the challenges from raw material supply and cost increase in addition to on-going supply chain disruptions, Adisseo is engaged in managing the business development and prices in a proactive and agile way to compesnsate the negative impact and it will apply on all product categories.

-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

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Blue Star Adisseo Co. Ltd. published this content on 29 October 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 29 October 2021 03:27:04 UTC.