March 22, 2018
Strong dynamics in Q4 2017 allowing to deliver FY2017 above budget: Adisseo
Jean-Marc Dublanc, CEO of Adisseo, said: "We are thrilled to present our better-than expectation performance for 2017. The competitive landscape in 2017 was challenging with new comers and new capacities from existing players coming into the market. Thanks to the effective implementation of a customer-oriented business value, our 'two-business-pillar' strategy as well as our excellent operational performance combined with rigorous cost control initiatives, we successfully maintained our profitability and consolidated our market leadership."
Bluestar Adisseo Company ("Adisseo" or "the Company") Board of Directors closed its 2017 audited annual results on March 20.
I. Business Review: Revenues & Net Profit contributed to shareholders
For the year under review, the Company recorded an operating revenue of CNY10.4 billion, a minor decrease of 3%, compared to last year mainly driven by the significant decrease of methionine prices in 2017 which was partly compensated by significant volume growths for all product lines. The rebound of business over the last quarter where revenues were up +7% enabled the Company to achieve a better-than-expected full year operating revenues (+5% vs budget).
The net profit contributed to shareholders was CNY1.32 billion, -29% decrease compared with 2016, but better than the Company's original budget of CNY1.16 billion, thanks to the execution of a robust action plan that seized market opportunities and which was sustained by double-digit growth in main products volume, continuous processes improvements, rigorous cost control, innovation, commercial development and price management. In Q4 2017, net profits to shareholders were back to growth (+29% vs Q4 2016).
In 2017, Adisseo confirmed its leadership in liquid methionine, with a high sales volume growth of 11% on average - versus a global methionine demand growing by approximately 6%. This leading position will be further strengthened with the commercialization of Rhodimet A-Dry+ as well as the completion of capacity expansion
on the European platform in 2018.
The newly announced investment for the construction of a 180KT liquid methionine plant in Nanjing will enable Adisseo to meet ever-increasing customer needs and growth as well as to improve Adisseo costs efficiency.
Adisseo is uniquely positioned in vitamin business for the feed industry, which endeavors to provide a global offer of vitamin solutions with high quality and complete traceability of the products. Adisseo achieved very good results on its vitamin business in 2017 thanks to rigorous cost, proactive as well as operational pricing and purchasing management. The company has also taken all possible measures to minimize the impact of the accidental shutdown of its intermediate supplier of Vitamin A as regards its end customers.
Specialty products, consisting of enzymes, rumen-protected methionine, organic selenium and probiotics additives, are under active development as Adisseo's second business-pillar. This business segment recorded another year of strong growth of 27% in sales in 2017, with a gross profit margin increased from 50% last year to 56% in 2017. Notably, rumen-protected methionine product Smartamine® achieved a 50% volume increase, and the operating revenue of organic selenium product Selisseo® and probiotics product Alterion, which were launched in recent years, almost doubled that of last year.
The recently-completed acquisition of Nutriad, a global feed additives producer, is part of Adisseo' strategy to become one of the worldwide leaders of feed specialty additives. Nutriad's products range, the animal species addressed (poultry, swine, aquaculture, dairy and cattle), and its customers are highly complementary to Adisseo's and will allow the combined businesses to implement integrated solutions and to offer even further value to its customers.
2017 was also the year of the full implementation of the We Move project, designed to reorganize the company and its management practices in order to be more agile, customer centric and cost effective in a fast pace changing environment.
This includes reinforcing Adisseo's digitalization with its e-commerce platform in China, which will improve Adisseo customers access.
II. Free Cash Flow and proposed dividend
Free cash flow was CNY 2.51 billion for the full year 2017 and CNY 0.9 billion in Q4 mainly driven by an improvement in working capital management in second half 2017.
Thanks to the stable and solid profit business performance of the company in recent years, cash balance of the Company has amounted to CNY 7.7billion at the end of Y2017 generating healthy cash flow year over year. Accelerating growth and external acquisitions will strongly be supported by available financial means given by solid balance sheet.
In order to share the Company's operating achievement with all shareholders, the Board of Directors proposes to distribute a cash dividend of CNY 1.73 per 10 shares, representing a dividend payout ratio of 35% of current year net profit contributed to
shareholders, which is subject to the approval of 2017 Annual General Meeting.
III. 2018 Outlook
Looking forward, Adisseo targets to maintain its global leadership and market share by better capturing growth from the methionine market (liquid and powder forms) and delivering full value to its customers. Adisseo will also continue investing in Specialty products to bring innovative solutions to the main challenges facing the animal production markets and is dedicated to keep the pace of launching new products to the market every year.
Health, Safety & Environment are always Adisseo's top priorities. In 2018, it will pursue its zero accident objective and further improve its sustainable development ambition.
Leveraging on the dynamic of the last quarters and its strategic initiatives, growth momentum in Q1 2018 sales is expected to remain strong.