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Sinofert Announces 2019 Annual Results

Date:2020-03-27     source:Sinofert

2019 Annual Results Highlights:

 

 

l   Sales volume amounted to 11.51 million tons, and revenue was RMB23 billion, remaining broadly flat year-on-year.

l   Sales volume of differentiated products increased by 31.87% year-on-year to 763,900 tons.

l   Gross profit advanced by 9.03% year-on-year to RMB2,086 million.

l   Business performance remarkably improved with profit attributable to owners of the Company surged by 33.91% to RMB616 million.

l   The Board of directors recommended the payment of a final dividend of 2.94 HK cents per shares, up by 31.25% year-on-year.

 

 

(26 March 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 annual results for the twelve months ended 31 December 2019 (the "Period”).

During the Period, the Group recorded revenue of RMB22.951 billion, which was relatively steady compared with the corresponding period in 2018. Gross profit increased by 9.03% year-on-year to RMB2,086 million. Business performance remarkably improved with profit attributable to owners of the Company surged by 33.91% to RMB616 million. Taking into account the Company’s profitability, return on equity and funding requirements for future development, the Board of directors recommended the payment of a final dividend of 2.94 HK cents per share, up by 31.25% year-on-year.

In 2019, China abolished export tariffs on fertilizers and reduced import value-added tax. As a result, the import and export volume of fertilizers increased, and the connection between domestic market and overseas markets became closer. The government vigorously promoted the supply-side reform and fertilizer application reduction and efficiency improvement, which accelerate the adjustment of the planting structure of agricultural industry, and the planting area of major crops decreased, resulting in an oversupply in fertilizer industry. The market price of various major fertilizers continued to decrease, brought challenges to the operation of fertilizer industry. Domestic enterprises were accelerating transformation and upgrading, reducing quantity and enhancing quality, expanding their presence in upstream and downstream industrial chains, and providing farmers with new comprehensive agricultural services to achieve sustainable agricultural development and green development of the fertilizer industry. In order to ensure its leading position in the industry, the Group continued to deepen strategic transformation and organizational reform, took root in modern agriculture, optimized its business structure, innovated its business model, and was committed to becoming China’s leading technology-based marketing and service provider of crop nutrition.

During the Period, with the continuous readjustment of crop planting structure, the market demand for fertilizer had changed profoundly. The Group implemented the government’s call for “fertilizer application reduction and efficiency improvement” through innovation, and with the product structure transformed to environmentally-friendly and high-efficiency fertilizers, and formed an echelon of differentiated products. In 2019, sales volume of differentiated products was 763,900 tons, up by 31.87% over the corresponding period in 2018. In particular, sales volume of differentiated compound fertilizer was 538,000 tons, up by 37.70% year-on-year; sales volume of differentiated nitrogen fertilizer was 169,100 tons, up by 9.38% year-on-year; sales volume of new phosphate fertilizer was 56,800 tons, up by 67.06% year-on-year.

The breakdown of the revenues of major fertilizer products by type is as follows: the revenue of potash fertilizers amounted to RMB3,842 million, accounting for 16.74% of the total revenue; the revenue of nitrogenous fertilizers amounted to RMB5,337 million, accounting for 23.25% of the total revenue; the revenue of compound fertilizers amounted to RMB5,852 million, accounting for 25.50% of the total revenue; the revenue of phosphate fertilizers amounted to RMB5,005 million, accounting for 21.81% of the total revenue; the revenue of monocalcium/dicalcium phosphate amounted to RMB879 million, accounting for 3.83% of the total revenue.

During the Period, the three operating segments of the Group, namely, Basic Fertilizers Segment, Distribution Segment and Production Segment all achieved profits. In particular, the Basic Fertilizers Segment continued to strengthen strategic partnership with core suppliers both at home and abroad, secured constant and steady supply of competitive products, and by promotion of new technology-based products, enhanced the downstream customer stickiness. It recorded the revenue of RMB15,561 million and profit of RMB494 million, up by 5.94% year-on-year, representing a continued major contribution to the total revenue of the Group.

During the Period, the Distribution Segment firmly implemented the technical marketing model, concentrated on building a crop-oriented product system and accelerated to expand diversified channels, which led to the revenue of RMB6,256 million and profit of RMB108 million, up by 56.60% year-on-year. Major fertilizer production enterprises of the Production Segment continued to strengthen the fundamental work, realized safe, continuous and stable operation, achieved cost reduction and efficiency improvement and enhanced operation efficiency, which led to the revenue of RMB3,531 million and profit of RMB265 million, representing a significant improvement.

As at 31 December 2019, the Group’s current ratio was 1.21, and the debt-to-equity ratio was 31.48%. The Group enjoyed relatively high limit credit lines. Its credit rating by Fitch Ratings was maintained at A-, and it had smooth financing channels and diversified fund-raising methods. The Group maintained a stable financial structure through actively taking various operating measures while domestic funding conditions remained tight.

In early 2020, the outbreak of the novel coronavirus pandemic (“the Pandemic”) posed a great challenge to the Group’s business operation. Each production subsidiary of the Group on the one hand focuses on the prevention and control of the Pandemic, while on the other hand prepares for resumption of work and production. In closely following the development of the Pandemic, the Group will continue to adjust relevant reactive measures for unremitting prevention and control of the Pandemic. The Group will also cautiously prevent operational risk, proactively pursue preferential benefits such as exemption of tax and social insurance, arrange issuance of short-term commercial paper among banks to secure adequate liquidity of the Group, and promote business transformation by providing fully integrated online and offline services with the use of the new digital marketing system.

Looking ahead, Mr. Qin Hengde, Executive Director and CEO of Sinofert, said, “The latest Circular No.1 entitled “Opinion on Doing a Better Job in the Key Work Concerning Agriculture, Rural Areas and Farmers to Achieve Moderate Prosperity in All Respects on Schedule” being the 17th of such documents since the beginning of the new century will create important opportunities for the Group’s innovative operations and business transformation. the Group will continue to focus on business transformation and upgrading, follow the trend of agricultural supply-side reform and the rapidly changing fertilizer industry, take root in modern agriculture, streamline the operational structure and renovate our business model so as to achieve stable and sustainable growth.”

Mr. Qin Hengde pointed out: “As China’s leading technology-based marketing and service provider of crop nutrition, the Group will actively shoulder the tasks of promoting the agricultural modernization and the sound development of the fertilizer industry in China. Under the strategic framework of Syngenta Group China, the Group will consolidate its leading advantage in domestic sales scale, strengthen its voice in the supply chain, promote the crop-oriented strategy of product differentiation, and improve its profitability. The Group is committed to innovating the business model and integrating high-quality resources so that the investors can get greater returns, and Chinese farmers can get real benefits, and China’s agricultural sector can get improvement in competitiveness.”