Sinofert Holdings Limited Announces 2009 Annual Results

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• USA - English

Hong Kong, March 18 /PRNewswire-Asia/ -- The board of directors (the "Board") of Sinofert Holdings Limited ("Sinofert" or the "Company", stock code: 0297.HK) today announced audited annual results of the Company and its subsidiaries (the "Group") for the year ended 31 December 2009.

    Financial Highlights

    -- Turnover decreased by 40.50% to RMB 27,011 million from 2008.
    -- Loss attributable to shareholders was RMB 1,444 million.

Overall Performance

Global demand for fertilizers remained weak in 2009 under the impact of the financial crisis. As the largest fertilizer producer in the world, China suffered from severe problems of over-production. Competition in the market was very intense and fertilizer prices remained on a downtrend. In the face of the difficult operating environment, the Group adopted prudent measures in business operation and actively pushed forward the development strategy of "centering on marketing and distribution and expanding into both production and network distribution." This strategy enabled it to benefit from a synergy between upstream and downstream operations and to expand both its customer base and market. The Group's sales volume was 15.23 million tons last year, representing a decrease of 6.07% from 2008. Turnover was RMB 27,011 million, a decrease of 40.50% from 2008. It reported a loss of RMB 1,444 million, and loss per share was RMB 0.2059. This was the first time the Group's financial performance declined after ten years of continuous growth, which was primarily due to the losses derived from the sale of high-cost potash inventories imported by the Group in 2008 and the write-down of inventories.

During the period under review, the Group sold 6.19 million tons of nitrogen fertilizers, 3.69 million tons of phosphate fertilizers and 2.06 million tons of compound fertilizers, representing an increase of 3.15%, 25.63% and a decrease of 18.90%, respectively. It retained a leading position in the high-end compound fertilizer market in China. Meanwhile, sales volume of potash fertilizers fell by 41.36% year-on-year to 2.36 million tons. The Group's sales performance of potash fertilizers was negatively affected because their high prices dampened market demand and demand from compound fertilizer producers slackened due to the underproduction problems. Nevertheless, it retained the largest market share of the potash fertilizer sector in China. Pesticide operations were mainly carried out through its network distribution, with emphasis put on distributors at the grass-roots level. Farm operators and big grain-grower were also actively explored to enhance pesticide marketing capacity.

Mr. Du Keping, Chief Executive Officer of Sinofert, said, "Despite a downturn in the Group's operating results in 2009, we still remain the largest fertilizer distributor and service provider in China. After ten years of strategic transformation, we have established a solid industrial base and an extensive distribution network. They are important assets to us. The distribution network is particularly essential to us because of its strategic value, which is increasingly apparent. With a global procurement network and strong brand power, we are confident about maintaining our competitive advantages. All of our board members, management and staff are fully confident about our future development."

Production and Supply

In 2009, the Group made no acquisitions or new production facility development. Nevertheless, the production facilities which the Group had interests were expanded. As a result, total production capacity of the Group increased to 10.34 million tons. Moreover, the Group enhanced its management and technological know-how and implemented the low-cost strategy to ensure its sustainable growth.

In order to take advantage of opportunities arising amidst the financial crisis, the Group actively recruited technology-savvy staff with upstream production experience, further improving its specialties in the areas of research and development, production technology and corporate management. Moreover, it strengthened its competitiveness through innovation. For example, Sinochem Fuling generated revenues from the transfer of its technology. At the same time, it sped up development of national technology centers. The Group vigorously improved its operating efficiency and strove to conserve more energy during the production process and to ensure safe production. Despite the severe environment, the operating performance of the enterprises in which the Group had a controlling stake was above the industry average.

Network Distribution

After establishing a nationwide distribution network, the Group's focus shifted towards the enhancement of the quality of the network and operating performance in 2009. During the year, 26 distribution centers were added, increasing the total number of its distribution centers to 2,036.

With an aim to expand the customer base in townships and to strengthen operations in these areas, the Group stepped up efforts in the intrinsic development of its distribution network. As a result, the customer base increased to over 40,000 in 2009 with 11,000 new customers added. The proportion of township-level customers rose further. The Group achieved sales volume of 11.30 million tons through the distribution network, accounting for 74.24% of total sales. The growing importance of the distribution network was clearly demonstrated by its increasing contribution to total sales.

The Group vigorously promoted an integrated approach to its distribution centers. They provide "one-stop shopping" services to customers, including the sale of fertilizers and agricultural pesticides. This business model proved to be very efficient and helped the Group further strengthen its integrated sales platform.

Outlook and Strategies

The operating environment in 2010 will brighten as the Chinese economy emerges from the influence of the financial crisis and the global economy gradually picks up. The Chinese government has persistently increased efforts in tackling the "three rural issues". As a result, China has experienced bumper crops for many years and famers' incomes have continued to rise. China will also initiate a national program to increase its annual grain output by 50 billion kg this year. All these favourable conditions will provide ample room for growth of the fertilizer sector. We believe that domestic fertilizer demand in coming years will bounce back from the ebbs seen over the past two years and continue to climb.

Mr. Liu Deshu, Chairman of Sinofert, commented, "In 2010 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 industrial base and enhance the cost competitiveness of our products. Meanwhile, we will further promote an integrated operation through our extensive distribution network and explore new models for network expansion so as to better prepare for sustainable growth for the Group. We will strive to get the most from the synergy between upstream and downstream operations and augment our market share, thereby strengthening our leading position in the market. We are determined to achieve our goals for this year in order to create greater value for shareholders, greater wealth for society and help secure the 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.

    For more information, please contact:

    Investor and media enquiries:
     Ma Yan
     Sinofert Holdings Limited
     Tel:   +86-10-5956-9192
     Fax:   +86-10-5956-9627
     Email: [email protected]

     Cindy Cheung
     Sinofert Holdings Limited
     Tel:   +852-3656-1510
     Fax:   +852-2850-7229
     Email: [email protected]

     Henry Chik
     PRChina Limited
     Tel:   +852-2522-1838
     Fax:   +852-2521-9955
     Email: [email protected]

     David Shiu
     PRChina Limited
     Tel:   +852-2522-1368
     Fax:   +852-2521-9955
     Email: [email protected]

Disclaimer

This press release distributed herewith includes forward-looking statements. All statements, other than statements of historical facts, that address activities, events or developments that Sinofert Holdings ("Sinofert") expects or anticipates will or may occur in the future (including but not limited to projections, targets, estimates and business plans) are forward- looking statements. Sinofert's actual results or developments may differ materially from those indicated by these forward-looking statements as a result of various factors and uncertainties, including but not limited to price fluctuations, actual demand, exchange rate fluctuations, exploration and development outcomes, estimates of reserves, market shares, competition, environmental risks, changes in legal, financial and regulatory frameworks, international economic and financial market conditions, political risks, project delay, project approval, cost estimates and other risks and factors beyond our control. In addition, Sinofert makes the forward-looking statements referred to herein as of today and undertakes no obligation to update these statements.

SOURCE Sinofert Holdings Limited