2016 Annual Results Highlights:
Revenue dropped by 42.73% year-on-year to RMB14.959 billion.
Loss attributable to owners of the Company was RMB4.636 billion.
Basic loss per share was RMB0.6600.
(30 March 2017, Hong Kong) Sinofert Holdings Limited ("Sinofert" or the "Company") (stock code: 00297) today announced the annual results of the Company and its subsidiaries (the "Group") for the fiscal year ended 31 December 2016 (the “Period”).
The market conditions of China’s fertilizer industry was extremely tough in 2016. Given the “high inventories, high import volumes and high costs” problems facing domestic food market, the government vigorously promoted the agricultural supply-side structural reform in order to improve the quality of development of agricultural sector, enhance its efficiency and transform its development patterns while stabilizing grain output, increasing farmers’ income and ensuring the sustainable development of the sector. As farmers were less willing to make agricultural investments amid falling grain prices, the fertilizer sector as an input in agricultural production was under tremendous pressure. In addition, the abolition of a number of preferential government policies, including the resumption of value-added taxes, significantly dampened fertilizer imports. Meanwhile, persistent overcapacity in the fertilizer market led to acute oversupply problems and severely weighed on the profitability of market players.
The sales volume of the Group’s various major products dropped at different rates from a year amid weakness in the fertilizer industry. Sales of domestically-produced fertilizers declined by 24.70% year-on-year to 6.22 million tonnes. Meanwhile, sales of imported fertilizers retreated by 21.35% year-on-year to 2.91 million tonnes due to lower potash imports. During the Period, the Group recorded revenue of RMB14.959 billion, down 42.73% year-on-year. Loss attributable to owners of the Company was RMB4.636 billion and basic loss per share was RMB0.6600.
In the face of a combination of negative factors, the Group is implementing proactive measures to address them. It pushed ahead with strategic transformation and organizational reform, drove technological upgrading and enhance management standards so as to ensure its sustainable business development and retain its market leadership.
Dragged by intensified oversupply in the fertilizer market, the sales volume of compound fertilizers, potash, nitrogenous fertilizers and phosphorous fertilizers dropped by 30.08%, 24.45%, 44.35% and 23.40% respectively from a year ago. The sales value of compound fertilizers, potash, nitrogenous fertilizers and phosphorous fertilizers declined by 38.6%, 37.9%, 59.7% and 40.6% year-on-year respectively.
The Group took targeted strategies for different products to tackle the difficult market environment. As to potash operation, it reinforced strategic partnership with core domestic and overseas suppliers to secure stable supply of competitive products. For nitrogenous fertilizer business, it further strengthened the supplier system development and forged closer cooperation with core suppliers to improve its capability to secure resources supply and to enhance the foundation of their cooperation. Regarding phosphorous fertilizers business, it ensured stable of high-quality products at better terms through large-scale operation and centralized procurement. As to compound fertilizer operation, it continued to implement in-depth marketing and took advantage of its strong market presence and effective market management system to make the most from its integrated supply and marketing system.
Enhancement of Internal Control and Management
In the face of complicated and ever-changing market environment, the Group promoted a group-wide risk prevention culture through multi-channels in multi-dimensions so as to increase the risk awareness of entire staff. The internal control manual was further improved to streamline business process, while credit resources were optimized to enhance their efficiency. Enterprises with overdue payment were closely monitored and evaluated. Besides, the Group enhanced its inventory risk management and refined its internal control system, thereby protecting the interests of shareholders and the safety of its assets, ensuring the Company to achieve its operational targets and strategic transformation.
Looking ahead, Mr. Qin Hengde, Executive Director and CEO of Sinofert, said, “The Group will adapt to the agricultural reform, accurately identify customer needs and push for internal restructuring. While focusing on the development of our distribution network, we strive to deliver high-efficiency fertilizers and professional services to customers through enhanced research and development efforts. By strengthening our comprehensive service capability, the Group shall achieve stable and sustainable growth. Specifically, we will reform our business model, improve market analysis capability and forge closer strategic cooperation with suppliers so as to reinforce our strategic procurement capability. At the same time, greater marketing efforts will be made to attract industrial customers. Our resources will be focused on the expansion of distribution business to drive its fascinating growth, while efforts will be stepped up to advance technological innovations and our management capability. We will clearly define the Group’s business positioning and strive to narrow the loss of our production operations. Relentless efforts will be made to enhance compound fertilizers and specialty fertilizers production capability. Meanwhile, the Group will carry out internal restructuring in order to reduce the redundancy. We will map out a clear direction for our future business development and develop a marketoriented motivation mechanism to boost the vitality of our team.”