Sinofert Holdings Limited Announces 2009 Interim Results

August 18, 2009
    HONG KONG, Aug. 18 /PRNewswire-Asia/ --

    Summary 2009 Interim Results (six months ended June 30th)
    -- Turnover was RMB 12,505 million, down by 44.0% over the same period
       of 2008.
    -- Net loss attributable to shareholders was RMB 828 million. Excluding
       write-down of inventories and change in fair value of derivative
       component of convertible loan notes, net profit attributable to
       shareholders was RMB 118 million, representing a decrease of 90.7%
       YoY decrease.

The board of directors (the “Board”) of Sinofert Holdings Limited
(“Sinofert” or the “Company”, stock code: 0297.HK) today announced the
reviewed interim results of the Company and its subsidiaries (the “Group”) for
the six months ended 30 June 2009.

Global demand for fertilizer slackened further in the first half of 2009
amid the impact of the global financial tsunami. Fertilizer prices continued
to fall, and competition remained intense. In the first half, the Group
generated sales volume of 6.35 million tons, a decrease of 34.7% over the same
period of last year. It achieved turnover of RMB 12,505 million, down 44.0%
YoY. Net loss attributable to shareholders was RMB 828 million. Excluding a
write-down of inventories and the change in fair value of a derivative
component of convertible loan notes, the Group reported net profit
attributable to shareholders of RMB 118 million, representing a 90.7% YoY
decrease. The Group reported its first operating loss mainly due to the
decline in sales volume and gross profit as a result of worsening operating
environment amidst the financial crisis.

While the operating environment worsened, the Board adjusted the company’s
strategies to increase production through sales enhancement and to secure
sales through increased production. Management took advantage of its value
chain, integrating upstream and downstream operations, to strengthen synergies
under the guiding principles of “prudent management, fast stock turnover and
stringent risk control”. The Group stepped up its efforts in promoting network
distribution and creating more value for customers by improving services. As a
result, Sinofert remained the largest fertilizer distributor in China. During
the period under review, the Group sold 2.63 million tons of nitrogen
fertilizers, 1.68 million tons of phosphate fertilizers and 1.01 million tons
of compound fertilizers. Sales volume of potash fertilizers dropped by 71.4%
YoY to 0.6 million tons because market demand remained subdued because of high
prices for potash fertilizers relative to competing/substitute products. Lower
production of compound fertilizers substantially slashed demand for potash
fertilizers and led to higher potash fertilizers inventory. Thus, the sales
performance of the Group’s potash fertilizers was severely affected.

Production and Supply

In the first half of 2009, the Group did not build any new production
facilities or make any significant acquisitions. Total fertilizer production
capacity of the Group’s subsidiaries and affiliated production enterprises
remained at 10.16 million tons. However, the Group exercised better management
controls and made full use of technological advances to keep costs under
control and to enhance its capacity for sustained growth.

In order to take advantage of opportunities arising amidst the financial
crises, 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 and 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 safer production.

Network Distribution

A nationwide distribution network that was essentially completed in 2008
was extended to major agricultural counties in the PRC. From the beginning of
2009, the focus of the distribution network’s development shifted to the
enhancement in the quality and efficiency of the network. In the first half,
12 distribution centers were added, expanding the number of distribution
centers to 2,022. The volume of fertilizers sold through the distribution
network amounted to 4.61 million tons, accounting for 72.6% of the Group’s
total sales volume. The proportion of sales sold through the distribution
network continued to increase. Distribution through the group’s network
assumed greater importance as market demand decreased.

The distribution centers provide “one-stop shopping” services to customers,
including the sale of various agricultural materials, fertilizers and
agricultural pesticides. This one-stop shopping business model worked well and
helped boost sales, margins and profits.


While the global economy faltered, the Chinese economy started to recover
in the first half of 2009. Meanwhile, the economic data of the United States
for the second quarter demonstrated that the country’s economy was close to a
trough and might recover in the near future. Improvements in the economies of
China and the United States should help the global economy rebound.

The Chinese government has attached great importance to agriculture and
continued to initiate favorable policies to spur rural development. Incentives
for rural residents were thus greatly improved, leading to the stable
development of rural areas and bolstering rural income growth. In 2009, the
Chinese government formulated the “Plan for increasing national crop
production capacity by 50-billion kg (2009-2020)”. It should provide a strong
boost to the fertilizer sector. Domestic demand for fertilizers is expected to
increase in the coming years. Meanwhile, as the agricultural sector is under
increasing pressure to restructure, the Group, as a leading player in the
market, will play an important role in the restructuring process, providing it
invaluable opportunities to expand its operational base and to enhance its
ability to provide sustained development.

Mr. Du Keping, Chief Executive Officer of Sinofert, commented, “The
Group’s operating results were adversely affected in the first half of 2009
amidst the financial crisis. However, its fundamentals were unscathed.
Sinofert remains the largest fertilizer distributor in China. Although the
fertilizer market suffers from severe oversupply and keen competition, the
Group’s distribution network, fundamentals and its well-honed business model
forged from 10 years’ efforts in implementing strategic transformations,
remain its most important assets. With an ability to tap into global resources
and its strong brand recognition, Sinofert maintains a competitive edge over
its peers. The Board, management and the entire workforce are confident that
the Group has a bright future.”

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.

    For more information, please contact:

    Investor and media enquiries:

     Ma Yan                           Cindy Cheung
     Sinofert Holdings Limited        Sinofert Holdings Limited
     Tel:   +86-10-5956-9192          Tel:   +852-3656-1510
     Fax:   +86-10-5956-9627          Fax:   +852-2850-7229
     Email: mayan@sinochem.com        Email: cindy.cheung@sinochem.com

     Jane Liu                         Henry Chik
     PRChina Limited                  PRChina Limited
     Tel:   +852-2522-1838            Tel:   +852-2522-1368
     Email: jliu@prchina.com.hk       Email: hchik@prchina.com.hk

SOURCE Sinofert Holdings Limited

Source: newswire

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