Dsm-firmenich Ag · EURONEXT:DSFIR
Dsm-firmenich — H1 2024 Earnings Presentation
33 slides from Dsm-firmenich's earnings presentation, Jul 30, 2024
Slide 1: Presentation to Investors H1 2024 results
Presentation to Investors H1 2024 results July 30, 2024
Slide 2: Forward-looking statements disclaimer
This presentation contains forward-looking statements with respect to dsm-firmenich’s future (financial) performance and position. Such statements are based on current expectations, estimates and projections of dsm-firmenich and information currently available to the company. dsm-firmenich cautions
Slide 3: Highlights
Highlights H1 2024 Strong improvement of financial results Synergies and vitamin transformation program on track, with €95 million delivered in the first six months Mid-term strategy defined, including financial targets and sustainability ambitions Portfolio fine-tuning progressing with dive
Slide 4: H1 2024 Group financial highlights
H1 2024 Group financial highlights Improving business momentum Key financials Actual Pro forma % in €m H1 2024 H1 2023¹ Change • P&B: strong performance Sales 6,298 6,152 2 • TTH: good performance Organic sales growth (%) 4 Adj. EBITDA 976 929 5 • HNC: gradually improving business conditions Adj. EB
Slide 5: Q2 2024 Group financial highlights
Q2 2024 Group financial highlights P&B and TTH: strong performance HNC and ANH: improved momentum Key financials Actual Pro forma % in €m Q2 2024 Q2 2023¹ Change • Overall: strong organic sales growth Sales 3,227 3,030 7 ✓ P&B: very strong results across all its three business Organic sales growth (
Slide 6: Q2 2024 Perfumery & Beauty
Q2 2024 Perfumery & Beauty Exceptionally strong, including good contribution from recovery in Ingredients Key financials Actual Pro forma % Organic sales growth of 13%, with 17% higher volumes in €m Q2 2024 Q2 2023¹ Change (including a 2% negative effect from Pinova), partly offset by Sales 1,021
Slide 7: Q2 2024 Taste, Texture & Health
Q2 2024 Taste, Texture & Health Strong results, further acceleration following a good Q1 Key financials Actual Pro forma % in €m Q2 2024 Q2 2023¹ Change Sales 834 761 10 Organic sales growth (%) 11 • Organic sales growth: 11% with volumes were up 12%, and double-digit growth in both Taste and Ingred
Slide 8: Q2 2024 Health, Nutrition & Care
Q2 2024 Health, Nutrition & Care Improvement in demand for dietary supplements. Continued customer destocking in ELN Actual Pro forma % in €m Q2 2024 Q2 2023¹ Change Sales 565 562 1 Organic sales growth (%) 1 • Organic sales growth: turning positive (+1%), with 2% volume growth. The quarter saw impr
Slide 9: Q2 2024 Animal Nutrition & Health
Q2 2024 Animal Nutrition & Health Significantly improved results with strong growth in Performance Solutions & higher vitamin profitability Key financials Actual Pro forma % in €m Q2 2024 Q2 2023¹ Change Sales 790 786 1 Organic sales growth (%) 2 • Organic sales growth: turned positive in the quarte
Slide 10: Strong step-up in H1 Core Adj. EPS
Strong step-up in H1 Core Adj. EPS Actual Pro forma % in €m H1 2024 H1 2023¹ Change Commentary Sales 6,298 6,152 2 • Core Finex was positively Adj. EBITDA 976 929 5 impacted in H1 2024 by the effect -/- D&A (451) (470) of energy derivatives Core Adj. EBIT 525 459 14 • 2024 H1 Core tax rate was 25% w
Slide 11: Continued commitment to our cash ambitions
Continued commitment to our cash ambitions Pro forma Commentary in € millions H1 2024 H1 2023 • In H1 2024, the Adj. gross Adj. gross operating free cash flow 460 285 operating free cash flow was up €175m versus prior year H1, representing a cash conversion Operating working capital (OWC) 3,968 4,08
Slide 12: Outlook for FY 2024 increased
Outlook for FY 2024 increased 2024 ‘housekeeping’ The company increases its full year outlook based on the • D&A – around €235m/quarter positive business momentum continuing into the third quarter and our commitment to deliver a €200 million • PPA adjustments - around €290m/year Adj. EBITDA contribu
Slide 13: Net Debt increased due to Buy-out and dividend
Net Debt increased due to Buy-out and dividend. Expected to reduce to around €3.0bn by YE 2024 Commentary €bn • Large outflows in H1 2024: ✓ dividend payment 0,1 0,4 3.4 ✓ Buy-out former DSM shareholders ✓ APMs Merger + Vitamin 0,2 €bn transformation program: €0.2bn 0,7 2,2 0,5 0,2 • Seasonal increa
Slide 14: Sustainability as business driver and core responsibility
Sustainability as business driver and core responsibility Aiming for best-in-class ESG performance with our own operations & maximum positive impact on people & planet, together with our customers and partners New progress commitments Engagement, DE&I and safety key elements to be launched of remune
Slide 15: H1 2024 Highlights on Sustainability (ESG)
H1 2024 Highlights on Sustainability (ESG) H1 2024 2023 Safety Frequency index of recordable incidents - all 0.28 0.31 People Engagement Progress Impact at work and Employee Engagement 80% 82% Value Awareness 83% 77% across our value chain strong ESG ratings gained H1 2024 2023 GHG Absolute reductio
Slide 16: Strategy
Strategy
Slide 17: Our journey towards bringing progress to life
Our journey towards bringing progress to life Accelerate Tune Focus Innovation and Merge Prioritization of Creation-led Dream Full focus on high growth, high growth, backed 2 iconic building a leading margin segments by science & Bringing progress companies coming consumer with a calibrated sustaina
Slide 18: Challenging macro environment and decisive actions
We have been … and we took decisive operating in a and immediate actions challenging macro environment… Unprecedented dynamics Integration Vitamin Portfolio in vitamins acceleration transformation review High inflation environment Changing geopolitical dynamics Seamless operations Simpler ‘Go-to Mar
Slide 19: Cost synergy delivery with target of €175+ million
Cost synergy delivery with target delivery of €175+ million Cumulative cost synergies, Cost synergy implementation ahead of € million planning Direct Indirect G&A 175+ Examples include G&A: remove role duplications, leverage GES Remove management roles duplication, leverage Global Enterprise Service
Slide 20: Strong progress on revenue synergy with customers
Strong progress on revenue synergy with customers TTH HNC P&B Strong pipeline of … translates into confidence to revenue synergies… reach targets according to plan HNC Revenue growth synergies, € m P&B 500 TTH GROUP 350+ Pipeline of revenue synergies, € m 150+ 70 25 2023 24 25 26 2026+ Q2’23 Q3’23 Q
Slide 21: Vitamin Transformation with €200m profit improvement
Vitamin Transformation with €200m profit improvement, well under way Cumulative profit improvement, € million Optimization Streamlined Improved cash 200 of site network organization management Vitamin B6 plan More focused and agile Inventories reduced Xinghuo closed organization model by ~€100m thro
Slide 22: ANH transaction in the course of 2025
ANH transaction in the course of 2025. With ANH team focusing on delivering strong results 2024 H2 2025 H2 Preparation Phase 2 Transaction phase 2024 Feb • Develop operational separation blueprint • Transaction , subject to customary • Prepare first steps of separation execution, Announcement of int
Slide 23: Macro-trends give rise to holistic well-being
Macro-trends give rise to holistic well-being, fueling market opportunities Increasing focus on Lifespan vitality 50% Driven by growing older population Of global consumers attribute high importance to a healthy, (“>60s" from 12% to 22% by 2050) as well as Nutrition space by younger population natur
Slide 24: We are a Category of One
We are a Category of One We bring progress to life We are innovators and creators in well-being Nutrition Health Beauty Desirable Essential Sustainable Fueled and backed by Science 24
Slide 25: Leadership position in Nutrition, Health and Beauty post separation
Post separation, we will strengthen our leadership position in Nutrition, Health and Beauty Well-being Nutrition Health Beauty Fueled and backed by Science €9 bn 3 ~21,000 ~5% Sales Complementary BUs BUs Employees OSG CAGR1,2 ~20% ~7% 60 15 Adj. EBITDA margin2 Sales in R&D Countries Research hubs 1.
Slide 26: Focus on high growth, high margin segments
We focus on high growth, high margin segments with proven capability to add value Calibrated portfolio steering • Accelerated portfolio review to focus on high growth, high margin segments • Thorough assessment of Market Attractiveness, Right to Win and Capital Efficiency • Cornerstone of differenti
Slide 27: We deprioritize several businesses across our portfolio
We deprioritize several businesses across our portfolio Non-differentiated Aroma Agro Yeast Marine Vitamins Ingredients Ingredients Extracts Lipids >€100m ~€170m ~€40m ~€120m ~€170m Total sales Organic Sales Growth Adj. EBITDA Margin >€600m Low growth ~10% 27
Slide 28: A focused group of 3 complementary Business Units
A focused group consisting of 3 complementary Business Units dsm-firmenich, building a company with over €10 bn sales 28
Slide 29: Committed to our mid-term objectives
Committed to our mid-term objectives • Mid-single digit percentage of organic sales growth moving to a 5-7% Sales range, supported by revenue synergies and innovations • Adjusted EBITDA margin moving to the 22-23% range, supported by Mid-Term Financial EBITDA synergies and innovations Objectives Cas
Slide 30: Pathway to achieve 5-7% Organic Sales Growth
Pathway to achieve 5-7% Organic Sales Growth Overview • Historically, Group has been delivering sustainable organic growth of 4-5% • Delivery of revenue synergies will contribute ~1pp to yearly organic sales growth in foreseeable future • Tune and acceleration growth will contribute additional ~1pp
Slide 31: Pathway to achieve 22-23% Adj. EBITDA Margin
Pathway to achieve 22-23% Adj. EBITDA Margin Overview • Historically, Group has been delivering 19-20% Adj. EBITDA margin % • 2023 margin of 18% will benefit from Vitamin transformation to gain ~1pp, mainly in HNC and to lesser extent in TTH • Delivery of synergy will add benefits and is expected to
Slide 32: Accelerating growth as a Category of One
Accelerating growth as a Category of One Where? Why? How? What? In the right space We bring progress to life Unique business model Our mid-term targets The rise of holistic well-being We capture these as a We operate from a common, We have confidence in fuels new market opportunities consumer compan
Slide 33: We bring progress to life
We bring progress to life™ dsm-firmenich ese