H1 2024: strong profitable growth to be pursued in H2

Safety and Sustainability
o Safety is and remains Adisseo’s first priority: H1 2024 TRIR landed at 0.11
o Adisseo on track towards sustainability ambition thanks to tight management of environmental KPIs and investments

H1 2024: revenue recorded a yoy double-digit growth (+15%, CNY 7.3 billion) and achieved a solid gross margin level (31%). Positive momentum in Q1 continued in Q2:
o Continuous growth in methionine driven by continuous penetration in liquid methionine, double-digit growth in powder methionine as well as pricing increase
o Sustained specialty business dynamics thanks to solid growth in monogastric and aqua business offsetting struggling dairy market in the North America
o Successful restructuring of methionine footprint in Europe
o Decreased raw material and energy costs contributing to gross margin improvement
o Continuous optimization of supply chain, transportation and duties to best serve customers across the world
o Cost competitiveness program and strict cash management

Key projects on track
o 150KT powder methionine plant in Quanzhou: Basic Engineering Design completed, pipe and piling started
o Specialty Blending Facility in Nanjing: first equipment installation started; mechanic completion expected by the end of 2024
o European Specialties Expansion and Optimization Project in Spain: start-up rolled out successfully in May and expected to be fully operational by Q3 2024
o Project to internalize esterification process to produce the key ruminant product: started the groundbreaking work in Q2
o Successful management of restructuring European methionine footprint

One-China Strategy continues its successful track
o Double-digit revenue growth in Chinese market thanks to continuous penetration of liquid methionine and strong growth in Aqua and ruminant despite difficult swine market in H1 2024
o New liquid acidifies product tailor made for Chinese market is in commercializing phase
o Calysseo: first sales of FeedKind® delivered in April 2024. Operation KPI of Chongqing plant achieved tangible improvements in the last five trials

FY2024 outlook
o Safety and sustainability remain Adisseo’s top priorities
o Market demand is progressively recovering. The good operating dynamics in H1 2024 is expected to be pursued in H2 2024
o Adisseo is fully engaged in delivering growth, improving margins, and pursuing strategic investments for the future. Meanwhile, Adisseo is exploring all possible solutions and implementing the defined action plans in a swift and agile way to mitigate potential headwinds.

Zhigang HAO, Chairman and CEO of Adisseo, said: “The positive market dynamics in Q1 2024 has continued in Q2. We continue to invest in capacity expansion, research and innovation, and digitalization, while pursuing cost competitiveness efforts. Our commitment to safety and sustainability resulted in a highly improved TRIR at 0.11 for H1 2024.

We delivered very solid results with a +15% yoy growth in revenues. The gross profit and gross profit margin increased by +71% yoy and +10ppt respectively, thanks to the strong growth in methionine and continued business dynamic in specialty products.

Adisseo is pursuing its path on its strategic roadmap. Our commitment is to meet the ever-growing customer demand by expanding our best-in-class and competitive production capacity and to provide customized solutions to customers with innovative products and services.”

Bluestar Adisseo Company (“Adisseo” or “the Company”) Board of Directors disclosed its H1 2024 results.

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

Unit: CNY (100mil)	H1 2024	H1 2023	YoY variance
Operating revenue	72.6	63.3	+15%
- Performance Products	53.9	44.8	+20%
- Specialty Products	18.7	18.5	+1%
Gross profit (in % of operating revenue)	22.8 31%	13.3 21%	+71% +10ppt
- Performance Products	15.1	6.0	+152%
- Specialty Products	7.7	7.3	+6%
EBITDA (EBITDA margin)	16.2 22.2%	8.5 13.4%	+91% +8.8ppt
Net profit attributable to shareholders (Net margin)	6.1 8.4%	0.33 0.5%	+1,719% +7.9ppt
Recurring net profit attributable to shareholders (Recurring net margin)	7.0 9.7%	0.11 0.1%	+6,522% +9.6ppt

*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,Norfeed, Innovia (drying formulation services) and FeedKind. H1 2023 figures were restated per the new categorization.

Safety is and will remain Adisseo’s priority. In Q2 2024, Adisseo continued its excellent safety performance with the H1 2024 TRIR landing at 0.11. Adisseo experienced a significant reduction of process safety events driven by its targeted actions on specific units.

Adisseo is on track towards its sustainability ambition thanks to tight management of environment KPIs and investments. In H1 2024, Adisseo consistently decreased its GHG emissions per ton produced and water consumption, and successfully met its reduction targets. As an illustration of Adisseo’s sustainability projects, the Nanjing plant wastewater treatment project started its construction in April. The piling has been completed and civil construction has started.

In H1 2024, revenues recorded a yoy double-digit growth (+15%) to CNY7.3 billion and gross margin improved by +10ppt yoy to 31%, with the positive momentum in Q1 continued in Q2. In the first half of 2024, Adisseo has delivered:

Continuous growth in methionine driven by continuous penetration in liquid methionine, double-digit growth in powder methionine as well as pricing increase
Sustained specialty business dynamics thanks to solid growth in monogastric and aqua business offsetting struggling dairy market in the North America
Decreased raw material and energy costs also contributed to gross margin improvement
Continuous optimization of supply chain, transportation and duties to best serve our clients across the world
Strict cash and working capital management as well as cost competitiveness program

Regarding the methionine business, a very strong performance was achieved in Q2 2024 with strong increase in revenue (+34%) and gross profit (+238%), driven by continuous penetration of liquid methionine globally thanks to conversion of powder customers, reliable plant production and supply agility between China and European production platforms. In addition, the powder methionine business experienced good volume and profitable growth thanks to the reliable and competitive production in the European plant.

Methionine business margin was improved thanks to positive price dynamic, lower cash cost driven by high yield, accelerated volumes and continuous optimization of competitiveness and logistics, transportation and duties leveraging the two production platforms.

The new 150KT powder methionine plant in Quanzhou has completed Basic Engineering Design, and the pipe and piling work has started.

In H1 2024, the vitamins business has seen great resilience in the business in the context of stabilizing vitamin A prices and strong demand in vitamin E and portfolio business.

In Q2 2024, specialties business recorded strong growth for both monogastric and aqua business lines. Selisseo®, the high-end organic selenium, recorded the best monthly sales ever in June 2024. The solid business dynamics in palatability confirmed its growth path and the double-digit growth in mycotoxin management (+11%) is expected to be pursued supported by the potential synergies arising from partnering with a leading agriculture company focused on crop protection and seeds.

Market conditions are still difficult for dairy products especially in the U.S. due to lasting low milk prices. Nevertheless, milk prices slightly rebounded at the end of June while the market demand for the new product RumenSmart is strong.

In Q2 2024, despite the difficult ruminant business and thanks to strict cost control measures, notably on tolling costs, the gross margin of specialties has been maintained at a relatively similar level as Q1 2024.

The construction of the European Specialties Expansion and Optimization Project in Spain was completed with the start-up rolled out successfully in May and expected to be fully operational by Q3 2024.

The project to internalize the esterification process to produce the key ruminant product started groundbreaking work in Q2.

The new Innovia plant built in France, a drying formulation unit for specialties, has completed industrial ramp-up phase with tangible improvements achieved on the operational performance of the plant.

In H1 2024, One-China Strategy progressed successfully with tangible benefits delivered:

Double-digit revenue growth in Chinese market thanks to the continuous penetration of liquid methionine as well as strong growth in aqua and ruminant despite difficult swine market in H1 2024
New product tailor made for Chinese market is in commercializing phase
Nanjing Plant thanks to its excellent safety performance and high utilization rate continues to improve its competitiveness
The first Chinese Specialty Blending Facility in Nanjing is on track, with first equipment installation started and mechanic completion expected by the end of 2024
The first sales of FeedKind®, the innovative single-cell protein, were delivered in April 2024. Operation KPI of Calysseo Chongqing plant achieved tangible improvements in the last five trials.

FeedKind® is a promising new business for Adisseo. Calysseo Chongqing plant is the first world-wide disruptive technology demonstration unit and is in still the research & innovation exploration stage. Given the path to reach full capacity is longer than initially planned, the project requires financial support from both partners. Adisseo is closely monitoring and supporting the progress. The fair value of related investment has been adjusted accordingly.

The ongoing cost competitiveness enhancement program is being pursued. The recurring savings of CNY156 million are expected for 2024, which is more than the initial target. The main cost saving contributors are:

Optimization of distribution route
Renegotiation of freight cost and tolling fee
Leverage of digitalization capabilities
Yield improvement
Improvement of the purchasing power thanks notably to synergies with Sinochem, which covers raw material, energies and insurance

Successful restructuring of European methionine footprint reinforced Adisseo’s overall competitiveness, especially that of European platform. Operational excellence program is progressing with good dynamics across the globe, in all plants and all workstreams, which is expected to further boost the competitiveness of both Chinese and European production platform.

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

Thanks to positive momentum in Q2 following a strong performance in Q1, the recurring EBITDA ratio rebounded in H1 2024 (23.4%), compared to that in H1 2023 (13.1%), largely supported by the improved gross margin (+10ppt).

H1 2024 net profit attributable to shareholders increased significantly to CNY610 million, thanks to improved operational performance offsetting non-recurring restructuring costs and on-going investment in R&I, liquid dosing installations, business development in specialties to support future growth and innovation.

II. Cash-flow and Net Debt

Cash position as of 30 June 2024 stood at CNY1 billion, which remains flat compared with the end of December 2023.

In H1 2024, Adisseo recorded a positive cashflow from operating activities (CNY1.2 billion), which has been invested for CAPEX and has allowed to reimburse debt.

The annual dividend proposal was voted at the annual shareholders' meeting in June and the dividend distribution was completed in August. The dividend pay-out ratio for 2023 is more than 300%. Except under special circumstances, the annual dividend pay-out ratio for future will be increased from 30% to 40%.

Adisseo is launching a private placement to raise up to CNY3 billion to finance some key investments and onboard strategic investors in our capital. The private placement has been approved by SASAC and Shareholder meeting in June.

III. FY2024 Outlook

Safety and sustainability remain Adisseo’s top priorities.

Market demand is progressively recovering. The good operating dynamics in H1 2024 is expected to be pursued in H2 2024

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

Strong growth in methionine by continued penetration in liquid methionine
Extra profit contribution expected from price increase of Vitamin A and E
Sustained specialties dynamics leveraging the full range of services and product offerings to allow serving all species
Continuous optimization of supply thanks to the global set-up allowing to capture global market demand & local opportunities
Contribution from the operational excellence and cost control measures

Adisseo is exploring all possible solutions and implementing the defined action plans in a swift and agile way to mitigate potential headwinds which could arise from commercial sanctions between Europe and Russia as well as longer-than expected industrialization of disruptive FeedKind® technology.

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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