Sinofert Holdings Limited Announces 2010 Interim Results

    2010 Interim Results Highlights
    -- Turnover increased by 5.92% year-on-year to RMB 13,246 million.
    -- Profit attributable to shareholders was RMB 340 million as compared to 
       a loss of RMB 828 million for the same period last year.
    -- Earnings per share were RMB 0.05 (1H 2009: loss of RMB 0.12).

    HONG KONG, Aug. 26 /PRNewswire-Asia/ -- The board of directors (the "Board") of Sinofert Holdings Limited ("Sinofert" or the "Company", HongKong: 0297) today announced the reviewed interim results of the Company and its subsidiaries (the "Group") for the six months ended 30 June 2010.

    Financial Results

    The Group recorded revenue of RMB 13,246 million for the six months ended 30 June 2010, an increase of 5.92% over the same period last year. It achieved a turnaround in profitability with profit attributable to shareholders reaching RMB 340 million as compared to a loss in the same period last year.

    Product Operations

    The operating environment in the first half was full of challenges as frequent occurrence of extreme weather events dampened the market demand. The Group strengthened market analysis and made use of proactive forecasting to enhance marketing efforts and expand customer base to meet the changing market demand. As a result, it achieved satisfactory operating performance in the first half of 2010, with its total sales volume increasing by 17.15% year-on-year to 7.44 million tonnes. The Group's position as the largest fertilizer distributor in China was hence further strengthened. During the period under review, it sold 3.26 million tonnes of nitrogen fertilizer and 1.18 million tonnes of potash fertilizer, representing a substantial increase of 24.01% and 97.06% respectively. Sales volume of phosphate fertilizer increased by 8.64% year-on-year to 1.82 million tonnes while that of compound fertilizer slightly decreased to 0.95 million tonnes.

    Production and Supply

    In the first half of 2010, the Group did not develop or acquire new production facilities, nor expand its existing facilities. As a result, its total production capacity remained at 10.34 million tonnes. Nevertheless, it vigorously promoted lean management and technological development at its production facilities and implemented the low-cost strategy to ensure its sustainable growth. 

    The Group's subsidiary Sinochem Fuling further improved its production technology after completing the waste heat recovery project from acid-making process and the wet-method phosphoric acid technology project, making it one of the most resource and energy efficient producers in the market. Meanwhile, Sinochem Pingyuan finished the upgrading of moulded coal, flue-gas desulphurization, urea-unfolded polypeptide and ammonium sulphate facilities. They are among the most resource and energy efficient technologies in China.

    In March 2010, Sinochem Group, the Company's controlling shareholder, entered into a cooperation framework agreement with the Ningxia Autonomous Region government for the development of a nitrogen fertilizer production project. The Group would undertake the task of developing the project and push forward the work provided that the coal resource needed for the project is secured.

    Network Distribution

    The Group continued to improve the quality and operating performance of its distribution network. During the period under review, 69 distribution outlets were added, increasing the total number of its distribution outlets to 2,105.

    It adhered to the strategy of "expanding customer base at townships and continuing to enhance operations" and actively developed its distribution network. In the first half, it made transactions with 29,000 customers, of which 25,000 came from townships and villages. The distribution network generated sales volume of 5.64 million tonnes, accounting for 76% of total sales volume of the Group. It played an important role for the increase in the Group's market share.

    The Group explored new business models according to the developments of domestic agriculture. It established the first "Fert-Mart", the first agricultural supermarket in China, in June in Pingdu City, Shandong Province, providing one-stop services to customers newly emerged in recent years, including grain growers, agricultural organizations, farmers' cooperative societies for bulk procurement and dealers at township. The shop ran smoothly.

    Outlook

    The central government addressed the "three rural issues" for the seventh consecutive year in its No. 1 central document in 2010. According to it, the government will enhance efforts in developing agriculture, increasing the revenue from this sector and improving infrastructure in rural areas, thereby promoting the stable development of agriculture and raising farmers' income. In the first half, the country sustained stable growth in agriculture and the summer harvest was the third highest since the establishment of the PRC. Moreover, the government has initiated the "50-Billion-Kg Grain Production Capacity Expansion Program". These favourable factors offset the negative impacts from the economic downturn on the fertilizer sector and provided a strong foundation for the persistent growth of the sector. As the macro economic conditions in China and overseas are improving, the domestic fertilizer sector will stage a rebound and resume growth momentum.

    On the other hand, the domestic fertilizer sector faces excessive capacity problems. Fragmentation of market participants will lead to the further consolidation of the industry. According to the "Twelfth Five-Year Plan', China will encourage the consolidation and restructuring of fertilizer enterprises and promote large-scale production. As a leading player in the market, Sinofert will actively get involved in this process.

    Mr. Feng Zhibin, CEO of Sinofert, commented, "The Group will continue to forge ahead with the strategy of 'centering on marketing and distribution and expanding into both production and network distribution'. We will strengthen our value chain by extending the upstream operations. We will enhance our product competitiveness and ensure sustainable profitability by lowering costs and enhancing production efficiency. We will continue to explore ways of developing distribution network, innovate business models to provide a variety of products and services to end users and persistently improve the quality and profitability of distribution network. We will continue to increase the synergies between our operations and distribution network, make the most from our overall competitive advantages to ensure our sustainable growth, thereby creating values for shareholders and contributing our efforts to secure food supply and agricultural development of China."

    Background of Sinofert Holdings Limited

    Listed on the Stock Exchange of Hong Kong Limited on 28 July 2005, Sinofert Holdings Limited specializes in businesses of agriculture related products including fertilizers. As the largest fertilizer enterprise integrating production, supply and sales in China, Sinofert Holdings Limited's operating fields extends through the whole industry chain of fertilizer including R&D, production, import & export, distribution and retail as well as agrochemical service of the products through the growth strategy of "centering on marketing and distribution and expanding into both production and network distribution". Sinofert is the flagship company of Sinochem Corporation. Established in 1950, Sinochem Corporation is one of the largest state-owned enterprises in the PRC in terms of turnover. Sinochem Corporation is also one of Fortune 500 enterprises, globally dealing in business in petroleum, fertilizer and chemicals.

    This press release is distributed by PRChina Limited on behalf of Sinofert Holdings Limited.

    Investor and media enquiries:

     Ma Yan
     Sinofert Holdings Limited
     Tel:   +86-10-5956-9192
     Fax:   +86-10-5956-9627
     Email: mayan@sinochem.com

     Henry Chik
     PRChina Limited
     Tel:   +852-2522-1838
     Fax:   +852-2521-9955
     Email: hchik@prchina.com.hk

     Cindy Cheung
     Sinofert Holdings Limited
     Tel:   +852-3656-1510
     Fax:   +852-2850-7229
     Email: cindy.cheung@sinochem.com

     David Shiu
     PRChina Limited
     Tel:   +852-2522-1368
     Fax:   +852-2521-9955
     Email: dshiu@prchina.com.hk

     Eric Song
     PRChina Limited
     Tel:   +852-2522-1368
     Fax:   +852-2521-9955
     Email: esong@prchina.com.hk