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Sinofert Announces 2020 Interim Results

Date:2020-08-20     source:Sinofert

2020 Interim Results Highlights:

1.Sales volume grew by 2.44% year-on-year to 7.15 million tons.

2.Revenue decreased by 11.37% year-on-year to RMB12.549 billion.

3.Profit attributable to owners of the Company amounted to RMB448 million, remaining broadly flat year-on-year.

(20 August 2020, Hong Kong) Sinofert Holdings Limited ("Sinofert" or the "Company", together with its subsidiaries collectively known as the "Group") (stock code: 297.HK) announced the interim results for the six months ended 30 June 2020(the "Period").

During the Period, sales volume of the Group recorded 7.15 million tons, up by 2.44% year-on-year. Affected by the decline in the prices of major products, the Group’s revenue was RMB12,549 million, down by 11.37% compared to the same period last year. Period expenses were lowered by 18.49% year-on-year, reflecting an obvious effectiveness of cost saving brought by organizational restructuring. Profit attributable to owners of the Company was RMB448 million, flat on a year-on-year basis, maintaining stable profitability in severe market conditions.

In the first half of 2020, faced with an extremely severe, complex and unstable external environment due to factors such as the spread of the COVID-19 Pandemic around the world, drastic fluctuations in international financial markets, continuous heavy rainstorms in some southern provinces of China as well as significant decline in the price of fertilizers, the Group was steadfast in carrying out its strategies set forth at the beginning of the year by actively adopting effective measures, striving to overcome difficulties and grasping market opportunities, and achieved stable results. In the fight against COVID-19, the Group fully shouldered its responsibility as a central enterprise, put employees’ life and health first and realized “zero infection case”. Through early planning and deployment, the Group constantly innovated business models to provide a strong guarantee for spring ploughing. Except for the factories in Hubei, the epicenter of the pandemic, other holding factories maintained stable operation.

During the Period, the Group’s three business segments—Basic Fertilizer, Distribution and Production all achieved profits. Among them, the Basic Fertilizers Segment made a profit of RMB319 million, down by 7.54% compared to the same period last year; the Distribution Segment made a profit of RMB143 million, up by 36.19% compared to the same period last year; and the Production Segment made a profit of RMB109 million, down by RMB24 million compared to the same period last year, mainly attributable to the production suspension of Sinochem Chongqing Fuling Chemicals Co., Ltd. (“Sinochem Fuling”).

During the Period, the Basic Fertilizers Division strengthened scientific research and judgment of the market, realized the integration of procurement and sales, and enhanced the synergy of upstream and downstream businesses. These led to steady growth in proportion of strategic procurement, continuous optimization of the inventory structure, enhanced cooperation with key customers and continuous upgrading of business transformation. During the Period, sales volume of the Basic Fertilizers Division was 5.55 million tons, up by 3.93% year-on-year. The Distribution Division continued to make all efforts, centering on planting structure and customers’ demand, firmly implemented the DTS in-depth channel building strategy and focused on the development of differentiated products with high gross margin, thus steadily improving the contribution of volume and profit. In the first half of 2020, sales volume of the Distribution Division was 1.54 million tons, up by 11.59% year-on-year; sales volume of new fertilizers was 0.06 million tons, up by 200% compared to the same period last year. The operating scale of environmentally friendly water-soluble fertilizers with high efficiency, liquid fertilizers and foliar fertilizers increased rapidly, and became a new source of profit growth for the Group. The Production Division maintained stable operation. Changshan solved the problem in labor, optimized resources allocation and ensured safe production at full capacity through the optimization and deployment of internal personnel. Yunlong carried out the door-to-door factory shipment plan to offset the pressure of insufficient port handling capacity, also keeping stable production at full load. Fuling actively cooperated with the government and relevant departments to promote the progress of factory relocation.

Fertex, an industrial chain service platform invested and built by the Group, provided consumers and enterprises in the industry with the most authoritative fertilizer market information and updated price index. Fertex also integrated offline logistics resources to provide convenient and efficient online transaction services as well as financial services for relevant supply chains to empower the traditional business of agricultural inputs. At present, Fertex, with more than 150,000 professional users, has provided online transportation for 336,000 tons of goods, with a transaction volume of RMB83 million.

As of 30 June 2020, the Group’s current ratio was 1.25 and its debt-to-equity ratio was 33.05%. In view of the Group’s relatively high credit lines with banks, it was reaffirmed its AAA credit rating. The Group was able to access to a variety of funding channels and took various measures to maintain a sound financial structure.

Looking ahead, Mr. Qin Hengde, Executive Director and Chief Executive Officer of Sinofert, said, "In the second half of 2020, the economy will continue to be affected by COVID-19 and uncertainties exerted by the ongoing China-US trade friction, and the Chinese fertilizer industry will continue to be under severe pressure. However, as the government actively promotes the implementation of Rural Revitalization Strategy and the transformation of agriculture towards green and sustainable development, new fertilizers that are efficient and environmentally friendly have greater development space thanks to the clear requirements for green development. With the development of digitalization and the popularization of smart phones, the application of information technology will become an important driving force for future agricultural development. All these will bring new opportunities for the Group to innovate operation and deepen transformation.”

Mr. Qin Hengde said, "On 17 June 2020, the controlling shareholder of the Company was changed to CNAC (HK) Holdings Company Limited, a subsidiary of Syngenta Group Co., Ltd. (“Syngenta Group”). In the future, on the new development platform, the Group will practice the value of "Science First", promote the sustainable development of agriculture, lead scientific and technological progress in the industry with technological innovation as the core and empower new business entities with comprehensive solutions to improve quality and efficiency, so as to create great value for customers and shareholders and contribute to China's agriculture. In addition, the Group will also continue to strengthen its HSE management and carry out containment of the pandemic, so as to ensure the smooth and orderly progress of production and operation.”

~End~

About Sinofert Holdings Limited

Sinofert Holdings Limited is China's largest fertilizer distributor and supplier of imported fertilizer products and one of the largest fertilizer producers in China. With an emphasis on distribution operation, Sinofert integrates its upstream and downstream value chain, produces and markets fertilizer products such as nitrogenous fertilizer, phosphate fertilizer, potash fertilizer and compound fertilizer. It offers the widest range of fertilizer products in China. Sinofert has the largest agricultural resources distribution network in China and a complete agrochemical service system. It has established strategic partnerships with various international suppliers and become the exclusive distributor of their products. The Company possesses the richest phosphate resources in China, with its feed-grade calcium production capacity ranks the top in Asia. As a flagship fertilizer arm of Syngenta Group Co., Ltd. (“Syngenta Group”). Sinofert was listed on the Hong Kong Stock Exchange on 28 July 2005.

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