China XLX Fertiliser (1866) H1 2024 earnings summary

Executive summary

• Revenue for 1H2024 was RMB12,061 million, nearly flat year-over-year, while net profit rose 21% to RMB938 million, driven by higher gross profit and other income.

• Gross profit increased 12% YoY, supported by lower raw material costs and improved production efficiency.

• Urea, compound fertilizer, and methanol sales volumes saw significant increases, offsetting price declines in some segments.

• Wholly-owned subsidiaries' performance improved, with profit attributable to owners up 26% YoY.

Financial highlights

• Urea revenue up 9% YoY to RMB3,834 million; sales volume up 25%, average price down 13%.

• Compound fertilizer revenue up 6% YoY to RMB3,410 million; sales volume up 13%, average price down 6%.

• Methanol revenue up 32% YoY to RMB1,291 million; sales volume up 31%, average price up 1%.

• Melamine and medical intermediate revenues declined due to lower prices and volumes, with medical intermediate margins turning negative.

• Gross profit margin improved in urea (31%), compound fertilizer (18%), and methanol (8%).

• Earnings per share rose to RMB0.564 (basic) from RMB0.448 YoY.

• Finance costs decreased 18% YoY to RMB266 million.

Outlook and guidance

• Domestic economy expected to recover further in 2H2024, with balanced fertilizer supply-demand and stable coal prices.

• Industrial demand for urea to rise due to regulatory requirements; compound fertilizers expected to outperform 1H2024.

• Company to focus on technical upgrades, digital transformation, and integrated value-added services for farmers.

• Anticipates downward trend in leading products due to policy adjustments, potentially impacting cash flow.