Safety is and remains Adisseo’s priority: 12-month rolling TRIR as of 30 June 2023 at 0.56
Adisseo sustainability ambition: Nanjing steam recycling project well on track
H1 2023: net profit attributable to shareholders estimated CNY 30 to 35 mil, given sharp price erosion, raw material costs still at a high level even though progressively reducing
Business highlights
Despite weak demand in the context of high inflation,
+24% volume growth in liquid methionine
Double-digit growth in specialties notably in ruminant
Nor-feed acquisition synergies in progress, especially in China
Specialty Expansion and Optimization project in Europe on track with expected start up in H1 2024
Innov’ia Capacity expansion project completed in June 2023
Action plan to protect margins
Raw material and energy cost decrease starts to impact positively variable and distribution costs
Extra cost-cutting program on top of ongoing competitiveness program, starting to deliver savings in Q2
Strict control of resources, nearly flat vs. 2022
One-China Strategy
Double-digit revenue growth in China, led by accelerated liquid methionine penetration in Chinese market
Strategic alliance agreements signed with universities for joint study on disruptive new technologies
Chinese specialty capacity expansion project: land purchase completed, entering detailed design phase
Calysseo: trial production progressing step by step, expected to launch FeedKind@ into Chinese market by the end of 2023
Positive Free Cash Flow after tax (around CNY350mil) reflecting tight working capital and cash management
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
Zhigang HAO, Chairman and CEO of Adisseo, said: “In H1 2023, facing with extremely challenging market conditions, we managed to achieve a strong volume growth (+24%) in liquid methionine, notably in China, supported by the successful acceleration in the installation of new liquid methionine spraying equipment as well as double-digit revenue growth in specialty business mainly led by ruminant business.
H1 2023 net profit attributable to shareholders estimated landing at around CNY30-35mil, due to the sharp price erosion and raw material costs still at a high level even though progressively reducing.
Q2 2023 net profit attributable to shareholders grew by ca. 30mCNY compared to Q1 2023 reflecting the progressive positive impact arising from decreasing raw material and energy costs.
Swift and agile action plans to protect margins, including price optimization, product volume allocation, proactive cash management and extra cost-cutting programs, start to deliver positive impacts on net results.
Nor-feed acquisition, completed in Feb 2023, starts to provide synergies especially in China.
One-China Strategy is progressing on all fronts with accelerated penetration of liquid methionine, development of our research and innovation capabilities, extension of our production capabilities in specialties and on-going digital transformation.
2023 is a difficult and transitional year. Despite limited visibility on market demand, we expect the business performance to gradually bounce back, benefiting from volume growth, prices stabilization and cost reduction as well as on-going margin protection measures. We continue to invest for the future and are confident to deliver mid-to-long-term growth.”
I. Business Review: Net Profit Attributable to Shareholders*
Unit: CNY (100mil) | H1 2023 (Estimated) | H1 2022 | YoY variance (Estimated) |
Net profit attributable to the shareholders of the Company | 0.3-0.35 | 8.7 | 96%-97% |
*Reviewed by Bluestar Adisseo Company (“Adisseo” or “the Company”) Audited Committee on 13th July 2023.
Safety is and will remain Adisseo’s priority. The safety performance for 12-month rolling TRIR as of 30 June 2023 landed at 0.56.
Adisseo is on track towards its sustainability ambition. GHG emissions intensity increased in Q2 in line with expectation given the turnaround in European plants.
Steam recycling project, one of the strategic plans to improve energy consumption in Nanjing plant, is well on track with expected go-live around Oct 2023.
Adisseo issued its 2022 Sustainability Report (CN version) during Chinese National Safety Month, echoing national promotion of ESG and illustrating the Company’s strong commitment to the sustainable development.
In H1 2023, in the context of significant macro-environment challenges, net profit attributable to shareholders landed at around CNY30-35mil, mainly due to the sharp price decrease in performance products.
Regarding the methionine business, Adisseo achieved strong volume growth (+24%) in liquid methionine driven notably by China. This positive dynamic is supported by the acceleration in the installation of new liquid methionine spraying equipment.
Pricing has been under ongoing downwards pressure globally, but some signs of stabilization are emerging.
Decrease in raw material and energy costs are starting to impact positively variable and distribution costs in Q2.
Adjustment measures, including the temporary shut-down of a European powder plant are being continued to optimize costs.
On Vitamins, thanks to the careful management of volumes and prices, profitability starts to stabilize despite significant pricing pressure on Vitamin A business.
Specialties revenues recorded continued double-digit growth, mainly driven by:
Double-digit growth in ruminant business despite headwinds and the difficult market conditions especially in China
Continued growth in Health by Nutrition driven by excellent performance of Selisseo® across all regions and in particular in Latin America and North America
Partly offset by monogastric business impacted mainly by difficult swine market
Specialties Capacity Expansion and Optimization Project is progressing well in Spain with start-up expected in H1 2024.
The acquisition of Nor-Feed, a French group that designs, produces and markets plant-based specialty ingredients and plant extracts for animal nutrition, was closed in February 2023. During Q2, Nor-Feed and Adisseo are progressing on synergies especially in China, while Nor-Feed is well on track on its business development.
Construction of New industry platform of Innov’ia was completed by the end of June. A new production facility with more capacity to meet long term customer demand and in line with new European standards in terms of Security & Quality has been established,
In H1 2023, One-China Strategy progressed successfully with tangible benefits delivered:
Double-digit revenue growth (+18%) in China driven by extraordinary penetration of liquid methionine in China market
Nanjing Plant (BANC360) operates at competitive cost and excellent safety performance; Detailed Engineering Design of new China Specialty blending facility in progress with land purchase completed
“Smart Plant” Digitalization Project in Nanjing plant accelerating its speed with promising return on yield improvement, energy consumption as well as higher-level safety and sustainability
Joint Research & Innovation cooperations have been established between Adisseo and Beijing University of Chemical Technology and Tianjin University to develop disruptive technologies and product development in bioengineering and new crystallization technology.
Calysseo Chongqing plant, the world’s first commercial FeedKind® facility, pursues its trial production. The product is expected to be launched in Chinese market by the end of the year.
H1 2023 net profit attributable to shareholders sharply decreased compared with last year due to the significant decrease in gross profit and increased depreciation and amortization.
Around CNY30mil quarter-to-quarter increase in net profit attributable to shareholders has been achieved thanks to the benefits from raw material and energy costs decrease as well as operational excellence programs, which include on-going competitiveness enhancement program with expected recurring saving of CNY138mil and extra cost-cutting plans with expected additional savings of CNY200mil in 2023.
The programs are global and transversal, which are implemented across the group with cost control measures at most rigorous level, including optimization of distribution costs, drastic reduction of external expenses and scrutinized resources allocations focused on business growth and market penetration.
Higher financing costs has been partially offset by positive FX impact mainly driven by appreciation of Euro and USD vs CNY in H1 2023.
Positive free cash flow after tax (around CNY350mil) has been achieved thanks to signi
You are in Europe region
