Category: News

• Consolidated revenues in the first nine months of 2020 reach € 48.2million (vs. € 43.2mn in the first nine months of 2019, +11.5%)
• In particular, there was significant growth in the biostimulants business to € 29.3mn (vs. € 23.4mn, +25.0%) and in the animal fat business to € 5.0mn (vs. € 4.6mn, +8.4%); on the other hand, confirmed the contraction of the retardants business to € 11.1mn (vs. € 12.3mn, -8.8%), slowed down by the Covid emergency, especially in the third quarter
• All the main geographical areas grew significantly: Europe (including Italy) at € 24.9mn (vs. € 23.7mn, +5.1%); Asia-Pacific at € 13.8mn (vs. € 11.4mn, +21.6%); Americas at € 5.7mn (vs. € 4.6mn, +25.6%). The Middle East and African market also recovered the decrease recorded in the first half, at € 1.4mn (vs. € 1.3mn, +8.3%)

SICIT Group announces that consolidated revenues in the period 1 January – 30 September 2020, if compared to the same period of 2019, recorded an overall increase of about € 5.0 million, reaching € 48.2 million (+11.5%).

The growth result concerns almost all geographical areas: from Europe (including Italy, +5.1%; of which Italy +8.6% and other countries in Europe +2.7%), to APAC (+21.6%); from the Americas (+25.6%) to the Rest of the World (Middle East and Africa, +8.3%).

This result benefited, in particular, from the growth in the biostimulants business for agriculture (+25.0%) which continues to record sustained demand; and animal fat for biofuel production (+8.4%) which more than recovered the slight drop (-1.0%) recorded in the first half of the year; while retardants for the plaster industry (-8.8%) continued to slow down, mainly due to the effects of the Covid emergency on the world construction market. Finally, revenues from withdrawals of animal by-products and tanning waste (+0.1%) recovered the delay recorded in the first half of the year (-7.4%), due to the lockdown of tanneries during last spring.

Foreseeable revenues trend also in view of the Covid emergency
With reference to the Covid emergency and its potential impact in the coming months, the Company is well aware that the uncertainty about the timing of the end of the pandemic emergency and the seriousness of the consequences it will have on the world’s major economies is still high. A possible renewal or extension of the restrictive measures against Italian tanneries could have negative effects on the supply of its raw material inputs and, consequently, on its production capacity and commercial activity. Similarly, any renewal or extension of the lockdown in countries where the Company markets its products could weaken demand for the Company’s products, particularly in the construction sector, to which retardants are addressed to (agriculture, on the other hand, seems to be much less affected by emergency dynamics).

Said so, however, the Company remains confident – also thanks to the initiatives undertaken, such as, among others, the increase in sales prices to meet the extraordinary costs link to the management of the pandemic and an August of increased operations and production – that it will continue to grow and that it will be able, if not to achieve the budget targets, at least to minimize any deviations.

Massimo Neresini, CEO of SICIT Group, commented: “In light of the health emergency, which seems to be hitting the world economy again, we are satisfied. We enter the last quarter of the year with a double-digit growth performance in the first nine months (+11.5%), further improved, thanks to the sustained demand for biostimulants and the complete recovery of animal fat production for biofuels and revenues from tanning waste withdrawing services; and despite the foreseeable decline in retardants for construction. In these times, it is a particularly valuable result, despite the fact that our sales team has not been able to travel; and always guaranteeing, on the one hand, the productive and commercial continuity necessary to serve our customers in the best way and, on the other hand, the highest safety standards to our collaborators. Moreover, our industrial investment plan has recovered the delay in the building works, due to the spring lockdown; as well as the development of new products has continued, creating tailor-made products, able to meet the different needs of agricultural (biostimulants) and industrial (retardants) companies. Although the Covid pandemic, these results support us about the possibility, even in a very difficult economic context, to pursue the targets set for the current year”.

• The independent operator based in New York suggests a fair market value between €  252.8mn and € 326.7mn, equal to a fair share value (fully diluted) between € 15.02 and € 16.23.
• The target price would correspond to an increase in the value of the stock from 41% to 52%
• Resilience of SICIT in the face of COVID-19, development of new product formations and set up of a new plant in China the factors behind the view

SICIT Group (the “Company”) announces that Arrowhead Business and Investment Decisions (“Arrowhead”), appointed by the Company, initiated coverage of the SICIT Group’s security.

Arrowhead is a New York-based, independent research and advisory firm which engages with select companies to profile and connect them to its investor network. Arrowhead will provide SICIT Group with investor relations and marketing services to communicate and participate in non-deal roadshows with interested international investors, expanding the company’s investor footprint into North America and other global capital markets.

The Arrowhead coverage initiates with a fair share value (fully diluted) between € 15.02 and € 16.03. This value is based on a fair market value between € 258.2mn and € 326.7mn*. Compared to the share price on October 15, 2020, the target price would correspond to an increase in value of 41-52%. According to the Due Diligence and Valuation Report, the reasons behind the view are to be found mainly in three factors.

First, the resilience of SICIT to the impact of the COVID-19 pandemic in the first half of 2020. In the period, in fact, the Company’s business did not suffer any significant impact, as shown by consolidated revenue up 9.4% YoY to € 35.5mn (vs € 32.5mn), adjusted consolidated EBITDA increased by 9.5% YoY to € 13.2mn (vs € 12.1mn) and an adjusted consolidated net profit increased by 14.5% to € 8.2 million (vs € 7.2 million). These results were in line with management expectations, although restrictions on mobility, transport and production, both upstream and downstream, inevitably affected some of the Company’s reference sectors**.

The second element is the development of two new product formations – granules and tabs – which will allow SICIT to enter new markets. These could represent a new sources of revenue, as the Company could also sell these products to new consumers, avoiding competition within its existing business and customer base.

The last factor is the identification of an opportunity to set up a new plant in China, which would enable SICIT to expand its manufacturing base close to other tanning industry districts. The new plant would be dedicated to the completion of finished products, using (as semi-finished product) hydrolized proteins that would be produced only in the production sites in Arzignano and Chiampo, Italy.

The full initiation report is available to download by clicking here. Future updates to Arrowhead’s research and other SICIT news can be accessed by subscribing to SICIT Group’s profile page on ABID’s proprietary platform at www.abid.co/BIT.SICT.

 

*Coverage initiated on October 16, 2020. The share price was € 10.65 on October 15, 2020, for a market capitalization of € 217.3mn.

**Although the biostimulant area grew by 19.4% YoY to € 21.7mn in H1 2020, retardants fell by 2.1% YoY to € 8.5mn and fat by 1% YoY to € 3.38mn.

• Consolidated revenues of approx. € 35.5 million (approx. € 32.5 million in the first half of 2019, +9.4%)
• Adjusted consolidated EBITDA of approx. € 13.2 million and equal to 37.2% of revenues (€ 12.1 million in the first half of 2019, +9.5%)
• Adjusted consolidated net profit of approx. € 8.2 million (€ 7.2 million in the first half of 2019, +14.5%)
• Consolidated NFP/available funds at 30 June 2020 of approx. € 19.8 million (€ 29.3 million at December 31st, 2019)

SICIT Group’s Board of Directors approved today the Consolidated Interim Financial Report at 30 June 2020.

Massimo Neresini, CEO of SICIT, said: “The first half of 2020 was characterized by two major challenges for the Group: at the beginning of the year the activities for the translisting to the MTA, which took place successfully and very quickly; from the second quarter the COVID-19 pandemic spread in many geographical areas where the Group operates. SICIT continued its production and business activities even in the periods of greatest crisis in Italy, being one of the essential activities, but the restrictions on mobility, transport and production in the upstream and downstream have inevitably affected some of our reference sectors, in particular due to the temporary closure of some clients operating in the construction sector and many suppliers of raw materials. In spite of all this, we have continued our production and distribution activities, in full compliance with regulations, positioning ourselves as a reference point for employees and partners. SICIT has demonstrated over the years its ability to adapt and, thanks to the availability and skills of its operating staff, has been able to react promptly even to the difficult situations that we experienced in this first half of the year. Our products and services remain fundamental for the growth and development of both the local industrial environment in which we produce and the global markets in which we sell our products, in particular biostimulants for agriculture. We therefore look to the future with confidence, despite the greater uncertainty that the COVID-19 has brought with it“.

Consolidated Revenues
SICIT Group’s consolidated revenues for the first half of 2020 amounted to € 35.5 million, up by € 3 million or +9.4% on the same period of the previous year (€ 32.5 million). The exchange rate effect, slightly positive, was approximately + € 0.1 million (0.2%).

This increase was mainly generated by the growth in agricultural products (+ € 3.5 million, +19.4%) partially offset by the slight decrease in revenues in other sectors, including collection services. In particular, plaster products were affected, especially in the second quarter, by the temporary closure of some clients (plaster plants). Revenues from the fat and collection services sector, on the other hand, were affected by the temporary closure of the main tanneries in the Vicenza district in March-April and the consequent slowdown in the transfer of animal by-products.

The growth affected almost all geographical areas: from Europe (including Italy, +3.2%; of which Italy +1.3% and other countries in Europe +4.6%) to APAC (+16.4%) and Americas (+42.3%). The only area in countertrend was the Rest of the World (Middle East and Africa, -2.8%). The growth of Europe, APAC and Latam was mainly driven by agricultural products, partially offset by the decline in plaster retardants. North American growth is entirely attributable to retardant products.

Adjusted consolidated EBITDA
Adjusted consolidated EBITDA amounted to € 13.2 million in the first half of 2020 (37.2% of revenues), up by € 1.1 million (+9.5%) compared to the first half of 2019 (€ 12.1 million, 37.2% of revenues).

The increase in absolute value was mainly due to the growth in revenues and the related industrial margin, partially offset by higher fixed costs linked to the translisting to the MTA (Italian Equities Market) and the adjustment of the post-listing governance structure, as well as higher production costs (employees and amortisations) partly incurred to ensure continuity of operations for clients even during the lockdown. Adjusted EBITDA remains stable as a percentage of revenues compared to the first half of 2019 (37.2%) mainly due to lower revenues from the contribution of materials and the slight increase in some costs mentioned above.

Adjusted EBITDA does not include non-recurring costs of € 1.8 million in the first half of 2020 for non-recurring taxes for the translisting from the AIM Italia to the MTA, STAR segment (€ 1.1 million, of which € 0.9 million for advice services and € 0.2 million for non-recurring bonuses to employees and directors), sanitization and safety costs following the health crisis linked to COVID-19 (€ 0.1 million) and non-recurring donations to health facilities linked to COVID-19 (€ 0.6 million). In the first half of 2019 non-recurring costs amounted to € 10.8 million, of which € 0.6 million for non-recurring advice services for the merger of SICIT 2000 S.p.A. into SprintItaly S.p.A. and listing at AIM Italia, and € 10.2 million as listing cost from the record of the merger of SICIT 2000 S.p.A. into SprintItaly S.p.A. as a “reverse acquisition” operation, in compliance with IFRS 2 (non-monetary costs and not relevant for tax purposes).

Adjusted consolidated net profit
The adjusted consolidated net profit grew substantially in line with adjusted EBITDA (+ € 1 million, +14.5%) and amounted to € 8.2 million in the first half of 2020 (€ 7.2 million in the first half of 2019).

Consolidated NFP/available funds
Consolidated NFP/available funds at 30 June 2020 amounted to € 19.8 million (€ 29.3 million at 31 December 2019). Operating cash flow, in the first half of 2020, was positive for € 8.7 million before outflows for net investments for € 5.1 million, income tax of € 3.8 million – of which € 3.7 million from the substitute tax on the greater carrying amount allocated to the Plastretard trademark and goodwill arising from the merger deficit following the merger by incorporation of Sicit 2000 S.p.A. into SprintItaly S.p.A. Moreover, in the first half of 2020, SICIT paid dividends worth about € 8.8 million and purchased treasury shares for a total value of about € 0.5 million.

Investments
Similarly to previous years, in the first half of 2020, SICIT Group continued its investing activities in order to improve processes and products and expand production capacity. The main investments related to:

• Expanding the agronomic, chemical and quality control laboratories at the Arzignano site, to improve and strengthen the research and development of new products, and quality control together with its customers
• Expanding the storage tanks and the new warehouses at the Arzignano site, to ensure greater flexibility and effectiveness in responding to growing customer demand
• Completing the plant for the production of protein hydrolysate from animal hair treatment
• Launching the investment in the new animal fat refining and re-esterification plant, to obtain high-quality biofuel

• Consolidated revenues in the first half of 2020 reached € 35.5 million (vs. € 32.5 million in the first half of 2019, +9.4%)
  In particular, there was significant growth in the biostimulants business to € 21.7 million (vs. € 18.2 million in 1H 2019, +19.4%); a slight contraction in the retardants business (to € 8.5 million – vs. € 8.7 million in 1H 2019, -2.1%) and the animal fat business (to € 3.38 million – vs. € 3.41 million in 1H 2019, -1.0%), both slowed down by the Covid emergency, especially in the second quarter
  All the main geographical areas grew significantly: Europe (including Italy) at € 19.5 million (vs. € 18.9 million in 1H 2019, +3.2%); Asia-Pacific at € 9.2 million (vs. € 7.9 million in 1H 2019, +16.4%); Americas at € 4.3 million (vs. € 3.0 million in 1H 2019, +42.3%). Only the Middle East and African market bucked the trend, at € 0.87 million (vs. € 0.9 million in 1H 2019, -2.9%)

SICIT Group‘s Board of Directors today today took note of the consolidated revenues for the period January 1 – June 30, 2020 which, if compared to the same period of 2019, recorded an overall increase of about € 3 million (+9.4%).

The growth result concerns almost all geographical areas: from Europe (including Italy, +3.2%; of which Italy +1.2% and other countries in Europe +4.6%), to APAC (+16.4%) and Americas (+42.3%). The only geography in countertrend is the Rest of the World (Middle East and Africa, -2.9%).

This result benefited from the growth in the biostimulant business for agriculture (+19.4%), which continues to achieve sustained demand; while both retardants for the plaster industry (-2.1%) and animal fat for biofuel production (-1.0%) decline slightly, as did revenues from withdrawals of animal by-products and tanning waste, essentially due to the more severe effects of the Covid emergency.

In fact, after a very good first quarter in which the Company recorded a strong increase in sales, also due to an advance on purchases in order to prevent a possible “shortage effect” from Covid, the second quarter was characterized: with regard to retardants, by the temporary closure of some plants of client companies for the production of plasterboard, as well as by a general slowdown in the construction industry; with regard to animal fat, by a reduction in residues withdrawn from Vicenza tanneries, due to lockdown, between the end of March and that of April, followed by a slow restart of all tanning activity, which is still ongoing.

Massimo Neresini, CEO of SICIT Group, said: “In light of the health emergency, we can only be satisfied. Confident that we have left the worst phase of the emergency behind us, we enter the second half of the year with a 9.4% increase in the first half: a particularly brilliant result, considering the times we are living. The level of appeal of our products remains generally very good, especially with regard to biostimulants. Our industrial investment plan is proceeding as planned, towards very promising objectives. Although the general economic environment remains unfavourable, the feedback we receive on a daily basis support us about the possibility of continuing the growth path we have undertaken“.

SICIT has been included in the portfolio of Italian Corporates for Sustainability (mid/small selection) in the latest report dedicated to Corporate Social Responsibility published by Equita SIM.

The portfolio selection includes those companies combining appealing fundamentals with the highest contribution to the achievement of the United Nations’ Sustainable Development Goals.

According to the report, SICIT is exposed to government’s initiatives aimed at fostering precision farming (UN SDG #2: end hunger, achieve food security and improved nutrition and promote sustainable agriculture) as 55% of its revenues stem from biostimulants produced through the recycling of waste from the tanning industry.

 

 

• As expected, the innovative production process developed by the Company will improve Arzignano’s plant overall capacity by 33%, equal to an increase in production of 4,000 tons/year of animal by-products protein hydrolysate, bringing the total to approx. 16,000 tons/year, compared to approx. 12,000 tons/year in 2019
• The operation will increase the characteristic value of biostimulants organic nitrogen, further qualifying SICIT’s offer on world agricultural markets
• The recent plant will contribute to the evolution of plaster retardant’s offer, further expanding the markets covered by the Company

SICIT has completed the production of animal hair protein hydrolysate, remaining from the Vicenza tanning business, at the Arzignano plant.

Animal hair is a product rich in keratin, an important protein suitable for producing agriculture biostimulants.

The innovative production process, developed internally by the Company, guarantees the complete safety of the operations and the possibility to obtain different types of final hydrolysate. A special system of reactors and grinding mixers (an exclusive SICIT’s technology) guarantees the complete hydrolysis of keratin, following the necessary hydrolysis treatment, as required by Regulation (EC) no 1069/2009, allowing to obtain an extremely safe and proven-effective product.
All keratin-based products have largely passed the tests: both in vitro, under controlled laboratory conditions, and according to randomized protocols in open field, allowing to assist clients with essential information to use these new formulations in the most effective way possible.

The production capacity of the new plant is approx. 40 – 60 tons/day of processed hair, for a total of over 10,000 tons/year, as originally planned. This will result in an additional production of about 4,000 tons/year of protein hydrolysates, bringing the total produced by SICIT Group at the Arzignano plant to approx. 16,000 tons/year, compared to 12,000 tons/year in 2019. Overall, therefore, the process innovation will increase the production capacity of animal by-products protein hydrolysate by 33%.

Moreover, thanks to this initiative, the Company expects: i) an increase in the characteristic value of organic nitrogen in biostimulants, which will further qualify SICIT Group’s offer on world agricultural markets; and ii) the evolution of plaster retardant industrial products, making SICIT Group’s technical offer even more performing and competitive.

Massimo Neresini, CEO of SICIT Group, said: “The circular economy has always led SICIT’s action: this plant makes it possible to implement a further recovery of a residue from the tanning industry, providing a fundamental service for an extremely-important area for the economy of our country. SICIT is constantly working to guarantee high standards of agronomic performance in all the protein hydrolysates it produces, using the most advanced screening techniques“.

Trading began today on the Mercato Telematico Azionario (MTA – STAR Segment) of Borsa Italiana for SICIT Group’s ordinary shares and warrants which, at the same time, were excluded from AIM Italia.

Massimo Neresini, CEO of SICIT Group, said: “The translisting on the MTA is an important showcase to reach a wider audience of investors and accelerate the path of growth and internationalization undertaken, in a medium-long term perspective. Granting the STAR qualification by Borsa Italiana is a further recognition of the quality and the resilience of SICIT which, even in a complicated period, has never stopped, consolidating its leadership in the circular economy“.

Ordinary shares and warrants maintain the same ISIN code: IT0005372344 and IT0005275034.

Also effective from today are the new articles of association of SICIT, which comply with the regulations for companies with shares listed on regulated markets; and some amendments aimed at strengthening the Company’s governance, in line with the regulations applicable to listed companies and the Code of Conduct of Borsa Italiana.