Q1 2024: double-digit growth in revenues and recurring net profit

Positive dynamics to be pursued in Q2

Private placement to raise no more than CNY3bn launched to fuel future growth

Safety and Sustainability
o Safety is and remains Adisseo’s first priority: Q1 2024 TRIR landed at 0 with no recordable accident
o Adisseo on track towards sustainability ambition thanks to tight management of environmental KPIs and investments

Q1 2023: Q1 Revenues of CNY3.5bn (+11% vs Q1 2023), and strong recurring net profit of CNY379mil, representing a 10.8% margin, thanks to:
o Strong volume growth in methionine driven by +13% volume growth in liquid methionine
o Continued growth in specialties, notably in monogastric and aqua offsetting difficult dairy market in the U.S.
o Positive impact from decreased raw material and energy cost as well as continuous monitoring and optimization on global supply chain, distribution and duties management

Key projects on track
o European Specialties Expansion Project construction completed, the start-up is expected in early May this year
o Internalization of protected methionine production, allowing both cost improvements and capacity expansion, is well on track
o New Innovia plant built in France, a drying formulation unit for specialties, is in the industrial ramp-up phase

One-China Strategy continues its successful track
o Continuous penetration of liquid methionine in China market
o Nanjing Plant continues to improve its competitiveness. Turnaround is being successfully completed
o The new 150KT powder methionine plant in Quanzhou obtained all permits and groundbreaking ceremony organized at the end of March
o The first Chinese specialty manufacturing plant on track targeting to complete construction by the end of 2024
o The first sales of FeedKind® were delivered in April 2024

Ongoing cost competitiveness enhancement program continues with expected recurring savings of CNY111mil in 2024.

Cash position as of 31 March 2024 stood at CNY1.1 billion, an increase of CNY0.1 billion compared to 31 December 2023.

Adisseo will launch a private placement of no more than RMB3 billion in April to support business growth and strategy implementation.

FY2024 outlook
o Safety and sustainability remain Adisseo’s top priorities
o Market demand is progressively recovering. The good operating dynamics in Q1 2024 is expected to be pursued in Q2 2024.
o Adisseo is fully engaged to deliver growth, improve margins, and pursue strategic investments for the future.

Zhigang HAO, Chairman and CEO of Adisseo, said: “The start of this year is showing encouraging signs of rebound. In Q1 2024, we delivered very solid results with a double-digit yoy growth in revenues and net profit and reached back at a good margin level (10.8% for recurring net profit margin) thanks to continuous growth in liquid methionine and main specialties, ‘and the implementation of the strictest cost control measures.

We expect the good operating dynamics to continue in the following quarter and the market demand to progressively recover.

At the same time, we are pursuing our investment path in innovation and strategic projects, and we are happy to announce that we will pursue a private placement to raise no more than CNY3 billion to support our business growth and strategy implementation.”

Bluestar Adisseo Company (“Adisseo” or “the Company”) Board of Directors disclosed its Q1 2024 results.

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

Unit: CNY (100mil)	Q1 2024	Q1 2023	YoY variance
Operating revenue	35.0	31.5	+11%
- Performance Products	25.8	22.8	+13%
- Specialty Products	9.1	8.7	+4%
Gross profit (in % of operating revenue)	11.2 32%	6.7 21%	+68% +11ppt
- Performance Products	7.3	3.4	+118%
- Specialty Products	3.9	3.3	+17%
EBITDA (EBITDA margin)	7.6 22%	4.1 13%	+85% +9ppt
Recurring EBITDA (Recurring EBITDA margin)	8.6 25%	3.9 12%	+121% +13ppt
Net profit attributable to shareholders (Net margin)	2.77 8%	0.01 0.03%	n/a +8ppt
Recurring net profit attributable to shareholders (Recurring net margin)	3.79 10.8%	-0.23 -0.7%	n/a +11.5ppt

*Note: Since 2024, Adisseo streamlined its business units and recategorized all the products into performance and specialty products business units. Performance products include methionine, vitamins, ammonium sulfate, sodium sulfate, and sulfur products. Specialty products include monogastric, ruminant and aqua products, of which Norfeed, Innovia (drying formulation services) and FeedKind are also included. Q1 2023 figures were restated per the new categorization.

Safety is and will remain Adisseo’s priority. For Q1 2024, the safety performance is excellent and very encouraging. The Q1 2024 TRIR landed at 0 with no recordable accident.

Adisseo is on track towards sustainability ambition thanks to tight management of environment KPIs and investments.

The steam recycling project in Nanjing has been put in use since early 2024, aiming to enjoy energy consumption efficiency as well as cost competitiveness.

Nanjing plant wastewater treatment project started its construction in April and is expected to start up in 2025.

In Q1 2024, the revenue recorded a yoy double-digit growth (+11%) to reach CNY3.5 billion and gross margin improved by +11ppt yoy to 32%, thanks to:

Strong volume growth in methionine driven by continuous volume penetration in liquid methionine (+13%)
Continued specialty business growth in monogastric (+5%) and aqua business (+16%) offsetting struggling dairy market in the U.S.
Gross margin improvement, thanks to decreased raw material and energy costs as well as improved yield and tolling terms.
Positive impacts arising from global supply chain, distribution, and duties management.

Regarding the methionine business, continued strong penetration in liquid methionine led to a strong +13% volume growth, contributed by China, Europe/CIS, Middle East Asia, Latin America.

Methionine prices increased in Q1, and the upward momentum is being pursued in Q2.

Nanjing and European liquid methionine plants continued to improve production costs, thanks to lower raw material and energy costs, yield, and operational efficiency improvements.

Manufacturing cost of powder methionine is also at good level thanks to the high reliability of the powder plant.

The new 150KT powder methionine plant in Quanzhou has obtained all permits and the groundbreaking was organized on 28th March. It will allow notably to leverage SinoChem local platform, and thus generate synergies in supply chain and operations. Strong cost competitiveness is expected. It will also allow Adisseo to optimize its industrial set-up, to produce locally for meeting global customers’ demands and to reinforce its leadership in methionine. The project is expected to start up in 2027.

The vitamins business demonstrated encouraging trend in Q1 2024.

On Vitamin A, the pricing continues to stabilize, and the Vitamin portfolio volumes are at a high level.

In Q1 2024, the specialty business continued its yoy revenue growth of +4% to CNY910 million, resulting from a combined effect of:

Growth in monogastric sales (+5%), led by good performance of Selisseo® (+16%), feed integrity (+27%), Framelco and palatability as well as overall good performance in Middle East Asia, Asia Pacific, Latin America, and North America
Continuous double-digit growth in aqua (+16%), with strong sales performance in most regions
Successful launch of a new solution leveraging Norfeed product in Q1

And this, despite low demand on dairy market in the U.S, resulting from continuous low protein prices.

The gross margin of the specialty business was improved to 42% in Q1 2024, thanks to the decrease in raw material, energy, and tolling costs.

The construction of the European Specialties Expansion and Optimization Project in Spain was completed, and the start-up is expected in early May this year.

The new Innovia plant built in France, a drying formulation unit for specialties, is in the industrial ramp-up phase.

The project to internalize esterification process to produce Metasmart®, the key ruminant product to enhance animal health level of dairy cow as well as increase the protein content in the milk production, is well on track. Thanks to a new innovative, eco-circular process, it allows both cost improvements and capacity expansion to support ruminant business in a more efficient and sustainable way.

In Q1 2024, One-China Strategy progressed successfully with tangible benefits delivered:

The continuous strong penetration of liquid methionine in China market.
Nanjing Plant continues to improve its competitiveness, thanks to its excellent safety performance, high yield as well as decreased raw material and energy costs. Turnaround is being successfully completed.
The first Chinese Specialty Blending Facility is on track, with construction expected to be completed by the end of 2024.
The first sales of FeedKind®, the innovative single-cell protein, were delivered in April 2024.

Q1 2024 net profit attributable to shareholders landed at CNY277million despite non-recurring restructuring costs. The recurring net profit attributable to shareholders landed at CNY379 million.

Recurring EBITDA ratio rebounded in Q1 2024 to 25%, compared to recurring Q1 2023 (12%), largely supported by the improved gross margin (+11ppt).

II. Cash-flow and Net Debt

Cash position as of 31 March 2024 stood at CNY1.1 billion, increased by CNY0.1 billion compared to 31 December 2023.

In Q1 2024, Adisseo recorded a positive cashflow from operating activities (CNY0.6 billion), mainly driven by improved profitability of the business.

Ongoing cost competitiveness enhancement program is well on track. Adisseo expects recurring savings of CNY111 million in 2024, leveraging digitalization capabilities, and purchasing power thanks notably to synergies with Sinochem including insurance program, energy, and continuous yield improvement.

Operational excellence program is progressing in European plants, notably the definitive shutdown of the powder methionine production line in Commentry (France), is expected to further boost the overall competitiveness of the European platform.

Adisseo continues its active monitoring and optimization of global supply chain, distribution, and duties costs, notably in the U.S. market.

III. Private Placement

To support its investment program, Adisseo is launching a private placement in April 2024.

The details of this private placement are:

Adisseo intends to raise no more than CNY3 billion from no more than 35 target investors.
Bluestar Group and related parties will not be involved.
The proceeds will mostly be used for project construction or capacity expansion including:

o 150KT powder methionine plant in Quanzhou

o 37KT specialties blending facilities in Nanjing

o Protected methionine internalization project in Burgos (Spain)

o Wastewater treatment project in Nanjing as a key contributor to Adisseo’s sustainability path

Remaining proceeds will be used for general purpose including working capital and debt repayment.
The private placement is expected to be completed by the end of 2024.

IV. FY2024 Outlook

Safety and sustainability remain Adisseo’s top priorities.

Market demand is progressively recovering. The good operating dynamics in Q1 2024 is expected to be pursued in Q2 2024.

Adisseo is fully engaged to deliver growth, improve margins, and pursue strategic investments for the future. This includes:

Continue to improve our operational excellence, while reinforcing cost leadership and delivering sustainability.
Accelerate methionine and specialties growth including turnover and volume.
Continuously accelerate innovation to deliver improvement on cost position and technical service to customers and new product offerings or solutions.
Pursue strategic investment to support sustainable and profitable business growth.

-End-

About Adisseo

Adisseo is one of the world's leading experts in feed additives. The group relies on its 6 research centers and its production sites based in Europe, the U.S., China and Thailand to design, produce, and market nutritional solutions for sustainable animal feed. With more than 2,730 employees, it serves around 4,200 customers in over 110 different countries and regions through its global distribution network. In 2023, Adisseo recorded an operating revenue of CNY13.18 billion.

Adisseo is one of the main subsidiaries of China National BlueStar, a leader in the Chinese chemical industry with more than 12,000 employees and a turnover of CNY41.5 billion in 2023.

Adisseo is listed on the Shanghai Stock Exchange.

Adisseo Corporate websites: www.adisseo.com; www.bluestar-adisseo.com

Adisseo’s press contact

In China: Yun CAI, yun.cai@adisseo.com