Q1 2023: Continued volume growth and Extra cost-cutting program launched to protect margins squeezed by market conditions

27.04.23
5 min read
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Safety and Sustainability

  • Safety is and remains Adisseo’s first priority: 12-month rolling TRIR as of 31 March 2023 at 0.54

  • 2022 Sustainability Report issued

  • Adisseo on track towards sustainability ambition: GHG emissions being reduced in line with the Company’s Science Based Target 2025 objective despite growth activities

 

Q1 2023: Revenues of CNY3.15bn (-9% vs Q1 2022), net profit attributable to shareholders landing at break-even position given sharp price erosion and raw material costs still at a high level even though reduced.

 

Business highlights

  • Accelerated penetration of liquid methionine especially in China

  • Continued double digit revenue growth in specialties across all species

 

Action plan to protect margins

  • Optimization of product volume allocation fully leveraging new BANC360 facility

  • Continuous temporary shut-down of 1 powder methionine production line and reduction of liquid methionine production in European plants

  • Extra cost-cutting program on top of ongoing competitiveness program, targeting to save additional CNY200mil on fixed costs

  • Strict control of resources focused on business development to pursue growth

 

One-China Strategy on track

  • BANC360 running at a high safety standards and reliability

  • Business revenue growth driven by liquid methionine strong penetration in China market

  • Adisseo R&I / RICA positioned by SinoChem as “SinoChem Animal Nutrition Central Institute”

 

Key Projects

  • Calysseo: ongoing trial production, expecting to launch FeedKind@ to Chinese market in the second half of 2023

 

Positive Free Cash Flow (CNY148mil) before M&A reflecting tight working capital and cash management

 

Management update:

  • Retirement of Jean-Marc Dublanc from CEO position on 30 June 2023 but retained as a Director

  • Nomination of Zhigang Hao, the Chairman to take over the role of CEO from 1 July 2023

 

FY2023 outlook

  • Safety and sustainability remain Adisseo’s top priorities

  • Low visibility on market demand but pricing is starting to stabilize and cost is going down. Throughout 2023, volume growth is expected to accelerate

  • In this uncertain context, Adisseo is fully engaged to implement all necessary actions to protect margins and to pursue investment for future

 

Jean-Marc Dublanc, Vice Chairman and CEO of Adisseo, said: “In Q1 2023, despite the weak market demand, we still managed to achieve a strong volume growth (+25%) in liquid methionine, driven notably by China, supported by the successful acceleration in the installation of new liquid methionine spraying equipment while the specialty business recorded continued double-digit revenue growth (+13%) across all species.

 

However, our Q1 2023 gross margin was sharply squeezed to 21%, negatively affected by price erosion and still relatively high raw material costs.

 

In order to further protect our margins, we have engaged into swift and agile action plans including price optimization, product volume allocation, proactive cash management and extra cost-cutting programs targeting to save additional CNY200mil on fixed costs.

 

Nor-feed acquisition was closed in Feb, allowing Adisseo to penetrate attractive segment of natural plant extracts.

 

One-China Strategy is being pursued successfully. Nanjing plant has become the most important liquid methionine producer with best-in-class technology and highest competitiveness. Calysseo Chongqing plant, the world’s first commercial FeedKind® facility, entered trial production phase.

 

In 2023, despite limited visibility on market demand, we expect the business performance to progressively bounce back, benefiting from volume growth, stabilization of prices, reduced costs and on-going margin protection measures.”

 

 

Bluestar Adisseo Company (“Adisseo” or “the Company”) Board of Directors disclosed its Q1 2023 results.

 

 

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

 

Unit: CNY (100mil)

Q1 2023

Q1 2022

YoY variance

Operating revenue

31.5

34.6

-9%

  • Performance Products

21.1

25.3

-17%

  • Specialty Products

8.3

7.3

+13%

  • Other Products

2.2

2.0

+8%

Gross profit

(in % of operating revenue)

6.7

21%

11.1

32%

-40%

-11ppt

  • Performance Products

2.8

7.3

-61%

  • Specialty Products

3.4

3.5

-3%

  • Other Products

0.4

0.3

+55%

    
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