(22 March 2012, Hong Kong) Sinofert Holdings Limited ("Sinofert" or the "Company") (stock code: 00297) announced the audited annual results of the Company and its subsidiaries (the "Group") for the twelve months ended 31 December 2011 (the “Period”).
China’s fertilizer sector remained resilient in 2011 amid the continuous growth in domestic food demand and various supportive measures introduced by the government to promote agricultural development. The Group adhered to its principle of sound risk management and brought its complete value chain into full play. Turnover increased 25.33% year-on-year to RMB 36.685 billion during the Period. Benefiting from the implementation of product-specific strategies, gross profit soared 40.17% to RMB 2.090 billion from the previous year. Profit attributable to shareholders advanced 26.55% year-on-year to RMB 678 million, with basic earnings per share increasing 26.61% year-on-year to RMB 0.0966.
Outstanding Sales Performance of Potash Fertilizers, Nitrogen Fertilizers and Compound Fertilizers
During the Period, the Group forged closer strategic relationships with major suppliers both within China and overseas and reinforced its procurement systems. In addition, it actively expanded its customer base and strengthened marketing services. As a result, total sales volume for 2011 increased 6.15% year-on-year to 16.46 million tons, further enhancing the Group’s leadership in the domestic fertilizer industry. The sales volume of potash fertilizers, nitrogen fertilizers and compound fertilizers for the year increased 14.11%, 9.20% and 17.99% year-on-year, respectively, to 3.16 million tons, 7.45 million tons and 2.43 million tons. Nevertheless, as international prices of phosphate fertilizers climbed above domestic prices last year, in contrast to the traditional domestic to international price premium , sales volume of phosphate fertilizers in 2011 decreased 7.85% year-on-year to 3.05 million tons on slower imports.
The average selling prices of the Group’s products for 2011 improved 18.07% compared to those in 2010 due to rallying prices. During the Period, the Group achieved double-digit sales growth due to increased volumes and average selling prices in most fertilizer products. Turnover from potash fertilizers, nitrogen fertilizers and compound fertilizers was RMB 9.164 billion, RMB 12.446 billion and RMB 6.402 billion respectively, representing increases of 25.16%, 26.03% and 40.79% from a year ago. Meanwhile, turnover from phosphate fertilizers rose 16.59% year-on-year to RMB 7.439 billion on stronger selling prices.
Enriched Business Content, Enhanced Management and Profitability
Mr. Feng Zhi Bin, CEO of Sinofert, commented, “In the face of the complex market environment, the Group pursued established strategies in the past year according to our guiding principles to enrich business content, reinforce management and enhance profitability. We stepped up efforts to acquire natural resources and drove technological and scientific innovations to enhance our core competitiveness. In addition, we explored new development and operating models for our distribution network so as to provide value-added services to customers and to lay a solid foundation for our sustainable development.”
In 2011, the Group furthered the reform of its distribution network and optimized its network coverage to boost its efficiency. During the Period, 12 new distribution outlets were set up in Guangxi province and the southwestern region of China. The network coverage of 115 existing distribution outlets was adjusted. As at 31 December 2011, the Group owned a total of 2,110 distribution outlets. A total of 10.40 million tons of fertilizers were transacted through the network during the year. Meanwhile, the Group further expanded retail agri-resources operations through the development of Fert-Mart superstores and franchise stores. As at 31 December 2011, seven Fert-Marts and 146 franchise stores had been added. The Group transacted with 49,400 customers through the distribution network last year, including 23,900 customers at county and township level.
Production, Supply and Acquisition of Natural Resources
Phase 2 of the Yunnan Three Circles-Sinochem Fertilizer ammonium phosphate project came into operation last year. The Group’s total production capacity increased to 10.94 million tons per annum after new capacity of 600,000 tons was added. Moreover, the production enterprises that the Group controlled and in which it invested continued their lean management and technological advancement, leading to lower costs and greater production and capacity. The Group strengthened its value chain by prudently exploring upstream projects. As such, it completed the acquisition of phosphate resources in Xundian, Yunnan province, while acquisitions of other resources projects progressed well.
Outlook and Strategy
Looking ahead, Mr. Feng Zhi Bin said, “According to the No.1 Document, the central government will strengthen efforts to support agricultural development and budget more resources for the sector. With the completion of the nationwide program to expand grain production capacity, the domestic fertilizer market is expected to grow steadily this year. As the market leader, the Group will focus on strategy implementation in six areas, i.e., marketing, acquisition of resources, business expansion, technology, human resources and information. We will integrate our upstream and downstream operations by acquiring upstream resources, complementing the fertilizer business with chemical operations, boosting sales through greater production capacity and improved product and services. We will strive to maximize shareholder returns and make greater contributions to national food security and agricultural development.”
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Background of Sinofert Holdings Limited
Listed on the Stock Exchange of Hong Kong Limited on 28 July 2005, Sinofert Holdings Limited specializes in agriculture related business including fertilizers. It implements a strategy of “centering on marketing and distribution and expanding into both production and network distribution” to develop a complete value chain, which covers R&D, production, import & export, distribution and retail, as well as agrichemical services. Sinofert, the largest fertilizer enterprise integrating production, supply and sales in China, is the flagship company of Sinochem Corporation, one of the largest state-owned enterprises in the PRC in terms of turnover. Sinochem Corporation was established in 1950 and has been named one of the Fortune Global 500 for 21 consecutive years. Its ranking climbed to the 168th in 2011. It mainly engages in agriculture, energy, chemicals, property and finance operations.
This press release is distributed by PRChina Limited on behalf of Sinofert Holdings Limited.
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