Acomo N.V.

Good afternoon and welcome to the Okomo Investor Call for the 2024 full year results. We would like to thank you all for joining the call today to elucidate the main drivers of the financial and ESG related results next to a number of other topics. My name is Jean-Marie Pretorius and I'm Okomo's Group Risk and Internal Audit Manager and I'm happy to be the moderator for this investor call today. The Q&A session will take place at the end of the presentation. The platform is already open and available, so you are invited to submit your questions during or after the presentation using the functionality available on the ACOMA website. Analysts will be allowed to raise questions verbally via phone during the Q&A session. Today, our Acoma Group CEO, Alar Goldsmaning, and CFO, Mirjam van Til, will guide you through our 2024 journey. I would like to state that this call may contain forward-looking statements. These statements, however, do not guarantee future performance, and therefore no reliance can be placed upon them. The company undertakes no obligation to publicly correct or update any forward-looking statement made during today's call, except as may be required under the applicable securities laws. We will now continue with the 2024 results. Firstly, we give the word over to the Okomo Group CEO, Alart Goldsmering.

Thank you, Jeannie. Good afternoon. And thank you for joining us on today's call, in which we will cover several topics. I will start with the 2024 highlights, which includes the Q4 sales, the second half-year profit, and the full-year performance of the Group. I will also touch upon the progress we made in a number of areas, and will give more information on the individual segments. Mirjam will cover in more detail the financial performance. At the end, I will summarize the key takeaways. Quarter 4 was a strong quarter. All segments, except for one, achieved double-digit sales growth, resulting in an overall increase of plus 18% for the group compared to Q4 2023. Edible seeds was impacted by the lack of export opportunities for US-grown sunflower seeds. The strong Q4 contributed to a record H2. Adjusted EBTA for the second half year amounted to an impressive 72 million, which is an increase of plus 71% versus the same period a year before. Especially the COCO results had a rebound and more than recovered the negative results of the first six months. If we exclude the strong COCO improvement, the adjusted EBTA increased by plus 13%. When reflecting on the full year 2024, let me start by saying that I'm very happy with the overall performance of the group. We made further progress in several areas, operationally, managerially, and through business development. All segments increased their results and made further improvements in managing market challenges and related risks and opportunities. I'm especially happy with the full year performance because our first half year results were below the year before. One of the main drivers impacting the H1 results was the COCO market price development. Through a record second half of the year, we not only covered the gap, but ended with a full year sales and adjusted EBITDA for the total group that are both materially above 2023. These results were achieved in a year that was marked by high inflation supply chain disturbances like the Red Sea, and major regulatory developments in the EU. The spices and nuts segment achieved all-time high sales and profits. To underline the strategic importance of this segment and our business development efforts, which we communicated during the AGM last April, we acquired a very promising nuts business in the Nordics in August 2024. which has become part of our existing deadliness organization. In our organic segment, the cocoa business achieved a full-year profit due to the strong turnaround in the second half of the year. Next to cocoa, Trident Organic reported increased results for other product groups as well, and the organization is back on track. Our edible seed segment reported lower results and was impacted by several factors, but especially by restrictions for US-grown sunflower seeds in export markets. Mirjam will come back later in the presentation on the financial impact. Our tea business achieved a double-digit EBITDA growth for the full year. And our food solutions business reported growth in the strategic dry and wetlands business. We are making strategic investments to expand the production capacity for the wetlands as we are currently facing capacity constraints and we are determined to further develop this business. Our annual report includes CSRD sustainability statements. This is a significant portion of the total report, and during 2024, a lot of people within ACOMO worked very hard to take all the necessary steps to get to these statements. I'm extremely thankful for their commitment and endurance, and they can be proud that we obtained limited assurance of our excellent audit at EY on this part of our annual report. During 2024, we made further progress in filling key positions within the group, including our new group CFO and the new CEO for Tradin. In addition, a new non-exec board member was appointed during the EGM in December 2024, which completes the board. For the total group, sales increased by plus 8% to 1.4 billion. The increase came from spices and nuts, organic ingredients and tea, partly offset by lower sales for edible seeds. The growth was largely autonomous through both higher volumes and higher prices. Adjusted EBITDA increased by plus 18% to 109 million, which brings us back to the historic high levels of 2022. Adjusted earnings per share increased by plus 32% to two euros, showing the recovery made during especially the second half of 2024. To take a closer look at what the underlying performance of the group drives, I will now discuss the five individual segments, spices and nuts, edible seeds, organic ingredients, tea, and food solutions. I will start with the spices and nuts segment. Our spices and nuts business continued its growth trajectory of previous years during 2024 and had again a record performance. Sales increased versus prior year by a very strong plus 30% to 486 million. Volume grew robust across key categories, signaling the rising demand for plant-based food, catering to the needs of the growing health-conscious consumer base. Adjusted EBITDA increased with an even more impressive plus 26% to 59 million. It is proof of the strength of this business and the professionalism and commitment of our people that all companies in this segment contributed to this record performance. This segment is an important part of our group and our future. We want to further expand our presence and that's why we made the earlier mentioned acquisition in the Nordics during 2024. First indications are that this business is a good fit and the team that manages this business is very committed and feels at home in our organization. The edible seeds results were impacted by unfavorable performance of the North American business and sales declined by minus 6% to 241 million and full year adjusted EBTA decreased by minus 37% to 18 million. Their performance was impacted by several factors. The unfavorable weather conditions in the US at the start of 2024 had a negative impact on our bird feed sales. But more importantly, restrictions for US-grown sunflower seeds in export markets, especially in the EU, had a significant impact. On the positive side, in Q4, the North American business regained not only momentum for bird feed, but also for contract manufacturing due to stronger market demand. Sunbutter, the leading brand for non-peanut allergen-free spreads in the US, improved volumes, sales, and profitability, supported by the launch of Jemmys, a convenient, ready-to-eat frozen sandwich. The European business, with its main focus on poppy, sesame, and pumpkin seeds, reported double-digit growth in revenue, attracting new customers and suppliers. However, due to its smaller size, this could not offset the slow performance of the North American business. Organic ingredients showed a good turnaround versus 2023. Four-year sales are up plus 10% to 482 million and adjusted EBITDA improved by 15 million to 22 million. The year started challenging for the cocoa business with unprecedented high cocoa prices and extremely volatile market price developments, materially impacting the financial performance as discussed during our H1 investor call. However, in line with the expectations we expressed during that call, the cocoa business delivered a strong turnaround in the second half of the year, resulting in an overall solid result for this category. Other product groups also performed well, with strong results in especially the North American region. Trident Organic made substantial progress towards further expansion of the business under the leadership of Floris Westling as our new CEO of Trident Organic. During 2024, Trident Organic also took various sustainability sourcing initiatives and made great progress together with farmers and suppliers, to prepare for the European Deforestation Regulation, called EUDR, that will come into force at the end of 2025. Trine Organic was, is and will be the leading organic supplier in its field. Royal Van Rys, our tea business, achieved higher volumes and sales. Full-year sales increased by plus 10% to 133 million through improved margins, and through improved margins, EBITDA increased with plus 20% to 6 million. The North American market remains important to Fenris, and the fruit and herbs business expanded in response to evolving consumer trends and remains a key focus for future growth. Meanwhile, improving business conditions contributed to higher export volumes in key origin markets such as Kenya and Sri Lanka. Food Solutions delivered solid profitability growth for the fourth consecutive year with adjusted EBITDA at 6 million, which is plus 4% over 2023. Sales was at a similar level compared to prior year. The blends business showed full year growth fueled by continued innovation in culinary solutions. The expansion with the new production facility to facilitate further growth of the wet blends business is on track and is planned to be operational in Q2 this year. In November 2024, SNIC Euro Ingredients was awarded the SDG Pioneer Certificate. This certificate recognizes companies that actively contribute to the United Nations Sustainability Development Goals. 2024 is the first year in which we included the ACOMO Sustainability Statement in our annual report, in accordance with the Corporate Sustainability Reporting Directive called CSRD. Sustainability is an integral part of our business model, and we use this next step in reporting for further strategy development and execution. Within the sustainability statements, ACOMA discloses its status and progress on the identified material sustainability matters. There are a number of key reporting areas. The first area is climate change. Our reporting includes not only Scope 1 and 2, in which we made significant improvements, but we also included for the first time Scope 3 greenhouse gas emissions calculations. Another one is biodiversity. In 2024, we saw various biodiversity initiatives within the group. We started to prioritize and assess high risk and high impact products to better understand their specific impacts on biodiversity and ecosystems. Trident Organic will work on its EU project to scale up the sustainability cocoa initiative in Sierra Leone aimed at preventing deforestation and improve in improving cocoa farmers' livelihoods through regenerative agroforestry systems. Third area is called Own Workforce. As part of CSRD, ACOMO defines impacts around sustainability matters of talent attraction, retention, and development. Another area is workers in the value chain. In 2024, ACOMO started using the CDEX platform. This system enables Acoma companies to assess their supplier base on social and environmental criteria and further mitigate potential negative impacts. Consumers and end users is an important area as well. As we are a food ingredients company, food safety is a fundamental area of attention. In 2024, the Acoma companies further developed robust food safety programs and systems. to be a frontrunner on food safety, quality and integrity. The majority of ACOMO's own and third-party operations is certified, according to one of the GFSI-recognized food safety systems. Now we have covered the overall and segment performance, as well as the developments in the sustainability area, I would like to hand over to Mirjam van Tiel, our Group CFO, to take us in more detail through the financial performance.

Thank you, Allard. Let me now take a moment to take you through our key financials of 2024. On the left side, you see the second half year numbers, and on the right side, the full year. We had a record performance in the second half year, with sales close to 700 million euros, which is 16% higher than last year, and adjusted EBITDA at 72 million, improving 71% over last year. Part of this strong performance in the second half is driven by the cocoa business as expected. In the first half of the year, the group was impacted by hedge results that have been offset by margins on the physical sales in the second half. Besides cocoa, also strong results in the second half were achieved by the other product groups of Trident Organics and also for spices and nuts, tea and food solutions. This resulted in full year sales of close to 1.4 billion euro, which is 8% ahead of last year. Driven by the higher sales and improved margin, gross profit increased with 11%. Higher general and administrative expenses are mainly driven by inflation and investment in professional fees related amongst other to CSRD and the acquisition of DailyNerds Nordics. Adjusted EBITDA was 109 million, which is an increase of 18% versus prior year. Looking in more detail at the EBITDA performance, the spices and nuts reported an all-time high performance. This was mainly the result of organic growth. EBITDA for this segment increased with an impressive 26% versus last year. Then looking at edible seeds. It has been a challenging year, mainly caused by two factors. Firstly, there were restrictions in export markets for US sunflower seeds. This resulted in lower sales and decreasing market prices, which put pressure on high-priced inventory. Secondly, the wildlife business was impacted by the mild winter in the first half of the year, resulting in lower demand for bird feed. On the other hand, we saw a solid performance for the sun butter and contract manufacturing business in the US, as well as for the European seed businesses. More than half of the EBITDA downfall of edible seeds relates to one of the impacts in 2024 specific to the before-mentioned headwinds. Following restrictions for US sunflower seeds in some export markets, there's been a drop in the market price, which had a consequence on high-priced inventory. we are not sourcing those specific seeds anymore. We see enough opportunities over time to mitigate the loss of this export business. Also, we see this year already a much stronger winter, which has a positive impact on the wildlife business. The other EBITDA downfall is a mixed basket, but it's mainly coming from other seeds that we were buying and selling, not so much what we are processing ourselves. With the potential we see for sunflower seeds in the US, and then specifically for sun butter, wildlife, and our contract manufacturing, we believe that edible seeds should be back on its growth trajectory in the years to come. Looking at organic ingredients, the phasing between H1 and H2 was heavily impacted by the timing difference between hedge results and the moment of physical sales of cocoa. Overall, for the year, it was a solid performance for the cocoa and travel business. The organization is fully geared towards growth to continue this momentum. Let me take a moment to go in more depth on the price development of cocoa and the impact that this has had on our results. The graph shows the cocoa market price development during 2023 and 2024. During 2023, the cocoa prices increased in a straight line by more than 60%. That materially impacted market behavior and the financial results as explained at our last AGM. In 2024, the situation became even more extreme when the price development accelerated exceptionally fast, leading to unprecedented level of $11,000 per ton. Also, what you can see in the graph is that the volatility is extreme. We see market changes of more than 10% plus and minus in a single day, showing the high uncertainty in the market about crop development, availability and expected bean processing volumes. These changes in market prices have a direct impact on the revaluation of outstanding hedge contracts, which is the unrealized impact. Due to an increase in the cocoa market price towards the end of the year, the reported result includes a negative impact of this revaloration of outstanding hedges. Once we close a hedge, the realized result of the hedge is booked. In normal circumstances, at the same time, the physical sale takes place with the offsetting effect and we lock in the margin we make on the sales. What we see is that there are sometimes time differences between the moment that the hedge is closed and the moment that the physical sales is taking place. This is where you see that in the first half, our results were impacted by hedge results that were offset by margin on the physical sales in the second half. We are monitoring closely to aim to minimize these timing differences, but based on market circumstances, this cannot be fully avoided. The hedging mechanism that we are using is not dissimilar to how others are using it in the market. With cocoa prices at historically high levels, we anticipate some potential impact on demand, particularly in the mass market segment, as price sensitivity increases. However, demand for premium and sustainably sourced cocoa products remains strong. We are focusing on value added and organic offerings to meet consumer preferences and sustain growth in this dynamic market. On this slide, you see a bridge between the reported and adjusted numbers. To provide a clear view of our financial performance, we exclude two elements in our adjusted number. First, the unrealized FX and SAIX hedge results, which relate mainly to COCO. And second, the amortization charges relating to the acquisition of Tradon and DailyNet Nordics. This approach highlights the strength of our core operations. You can see that adjusted for these impacts, EBITDA increases by 18% and earnings per share with 32% compared to 2023. Then looking at the cash flow development. Cash flow excluded working capital movements improved year-on-year by 15% to 106.8 million euros. During the last two years, our working capital decreased significantly. This was mainly driven by inventory volume reductions. Besides volumes, the inventory value on the balance sheet is also impacted by the purchase price development of our products. Higher prices result in higher value, which is the case for a number of our products. Our inventory levels also play an important role in our commercial policy. We have long and short positions based on our expectation of market developments and, for example, supply chain disruptions. Working capital remains an important area of attention. However, as stated, it is also an important instrument of our commercial policy. When looking at the ratios per year end, it shows that both the solvency ratio at 51% and the net debt to EBITDA at 2.3% are healthy and within the sweet spot of where we want it to be. It is important to note that the headroom in our financing facility is large and provides sufficient availability of funds for growth. With the extension of our revolving credit facility, the Group maintains to have sufficient financial capacity available for further expansion in the coming years. Based on the underlying performance and the financial fundamentals of the Group, the Board proposes a final dividend of €0.85, which together with a €0.40 interim dividend gives a combined €1.25 full-year dividend. As Allard already mentioned, sustainability is an important building block of our strategy. So I'm happy to report that for our greenhouse gas emissions, we realized a decline of 30% compared to the baseline for scope one, our direct emissions, and scope two, which are indirect emissions from purchased electricity. We also did a full scope three calculation, which includes our best estimates on indirect emissions that occur throughout our value chain. In 2024, we worked extensively to prepare our sustainability statements in line with the Corporate Sustainability Reporting Directive, or the CSRD standards. These statements are published as part of our annual report 2024. With that, I would like to hand it over back to Alarq for closing remarks.

Thank you, Mirjam. To recap, our main messages of today's call were the following. the group delivered a strong overall 2024 performance. Trana is back on track and cocoa was profitable for the full year. Edible Seeds US was impacted by restrictions in export markets, and we made strategic investments in spices and nuts and food solutions. We also obtained limited assurance on our CSOD reporting, and you saw that the group continues to have a very healthy balance sheet. Finally, the proposed full year dividend of €1.25 reflects the strong underlying performance. I do like to make one additional comment. Where we are obviously very happy with the extremely strong results of the second half of the year, the percentage increase in performance in this period versus 2023 should, however, not be considered to be the basis for the full year 2025. as it includes an offset of the COCO losses in H1. It is more likely that the results during 2025 will be better balanced between H1 and H2. Finally, I want to refer to our Capital Markets Day on April 7th for investors, analysts and banks, where we will focus in more detail or where we'll discuss in more detail the strategy of the group and the ambitions. The Capital Markets Day will be recorded and will be made available on our website afterwards. As we have now covered all topics of the agenda, I would like to hand back to Jean-Marie.

Thank you, Alar de Miriam. As we have now covered all topics of the agenda, we will now start with the Q&A session. We open this call for all questions submitted either via the ECOMO website or for those doing so by phone. The first question we have for today is, can you elaborate on the reasoning behind the acquisition in the Nordics? And do you see any more acquisitions in the near future? Alart, will you take this one?

Yes, Jeannie, thank you. Yes, like I already said before in my presentation, is that we highly believe in the spices and nuts segment. And for us, the Nordics market is a very attractive market to be in. We already had customers over there. And for us, it was important to get the foothold in an area or in a market geographical area where customer demand is high and where it's fully on trend. So we believe that this is a good step forward. And we will continue to look further how we can grow the spices and nuts segment.

Thank you, Alart. The next question for today is with respect to the unrealized losses as per end of 2024 regarding cocoa. How certain are you that you will make up the unrealized loss of 2024 with physical sales in 2025? Mirjam, will you take this one?

Yeah, thank you, Jeanne. Well, I think what you have seen and what I've tried to explain is that the second half of 2024 was a very strong bounce back, resulting in solid margins for the full year of 2024. So what you would expect that on the normal circumstances, we will recover this unrealized loss with physical sales, where some variations always could happen is in the case of defaults. And what we are doing, we're making very detailed assumptions of possible default risks. But because if the physical beings that we are receiving are a little bit more or less than what we have assumed, then that could be an impact. But again, as you have seen in the year 2024, we are quite good in estimating that we have strong relations with our suppliers and customers to really minimize that. So yes, we are expecting that we will recover this in 2025.

Thanks, Maria. Another question we have for today, knowing the recent U.S. import tariff announcements by the U.S. government, how do you perceive the impact for Okomo in the U.S.? And will this impact profits in U.S.? Alar, will you please take this one?

Well, obviously, it develops every day. We do believe that because we're in food, the impact will be limited. Where we are confronted with tariffs on imports into the US, we will be able to charge it on to our customers. Obviously, we have different types of business. First of all, we have Red River Commodities, which is based in the US, which to a big extent sells products that are grown into the US, so they are not impacted by these tariffs. They do, however, import part of their products from overseas. and we will need to see what the implications are but so far we feel that we can control that our trotting organic business in the us obviously imports the majority of their their products um and also there we will charge on the expenses um but for example if you look at the product like uh like cocoa um for cocoa it's import tariffs maybe maybe there but the price changes that we have seen lately basically over the last year and a half have been far in excess of the import duties, the tariff rates that are now announced. So let's see how it develops. Thirdly, we have our Van Rys tea business in North America, which is based in Toronto, Canada. There we do believe that the impact will be limited because the majority of the products are not stored in the US, but are sold directly into the US. So it's food, so we hope that the impact will be limited.

Thank you, Alart. On the phone line, we now have a call from Reg Watson from ING Bank. Reg, please go ahead.

Afternoon. Apologies if you handled this in your preamble, but we missed the first 20 minutes of your presentation. But I'll go ahead and ask the question anyway. I'd like to focus on the second half margins in a couple of segments, please, most notably seeds and trad-in. and what we can extrapolate from those going forwards. I think in seeds, we normally see a decline in margin second half versus first, but it's much more severe this year than it has been in previous years. So I'd like to understand the reason for that and what you think the outlook could be for margin there. And then similarly in Tradin, I think you've highlighted at length the turnaround in CACA, the physical versus the hedge losses. If I look at the margin there, it's back up to historic levels that you've achieved for Tradin. So does this mean that Tradin is now fully recovered and we should expect to see this sort of margin level going forwards? Those are the two questions. Thank you.

Thank you, Reg. Let me take all these questions. So first on edible seeds, what I explained is that we have basically two major headwinds. One of them is that We were restricted in selling some of the US grown sunflower seeds into the European market. And as a result of that, there was a change in the market price as well. And hence, we had to make a correction in our inventory. So in the second half of the edible seeds business, there is this more one of impact that you see reflected in our numbers. Going forward, that role of impact, of course, will not be there. And we really see a lot of opportunity to further grow our business, not then specifically this seed in Europe, but really within the US and with some of the other export markets we are seeing. So we really expect sales growth to come back and margins to restore back to what you have seen historically in the edible seeds business. And for Traden, as well, you have indeed the COCO impact there in the second half. So what Alart already said as well, don't extrapolate the full second half of your profit into a full year profit, right? Because then you only have one part of the equation. So you would need to normalize for that. But besides COCO, it is important indeed to really emphasize that the remaining trading business also really recovered and did actually very well in the second half. So normalizing for COCO, you really can assume that the second half performance rate will continue to deliver that.

I hope that answers your question. Can I just be clear? Alav said don't extrapolate the growth rates, which I can understand. But can we extrapolate the margin?

Yeah, I think if you look at the full year margin, Reg, like you said, they are back to historic levels where Trident used to be. What do we aim for? Our ambitions may be even a little bit different or a little bit more ambitious, let's say. But having said that, all things being equal, and obviously it's difficult to estimate market development circumstances, but in normal market circumstances, trading should be back to normal levels, yes.

Okay, thank you. And can I come back on the seeds issue then? So just so I have a clear picture of this, are you then sourcing your seeds for sale into Europe from other geographies than the U.S.? ? That's question one. And then the second thing, the volume you used to source in the US, are you now reducing that or are you still sourcing the same amount in the US but diverting it elsewhere?

Our exports were US-grown seeds. So we don't per se have other export markets where we sell foreign products rather than US-grown products. So that was very much focused on US edible sunflower seeds. The market circumstances have changed. First of all, price levels have changed. That made the US products less competitive than they used to be, because it's a high quality, but also high priced. And what we see in other regions of the world, like in Eastern Europe and China, and even Argentina to some extent, edible sunflower seeds have increased in quality. It's not the same as the US ones, but closer and at much lower prices. So that basically has changed the market dynamics. The other one is when we talk about export restrictions, it's much more... related to certain specifics of the US sunflower seeds that don't meet the criteria that allows us to import those products or export those products from the US into Europe. And that has basically closed down the European market as an opportunity for US grown sunflower seeds.

Okay. But are you still contracting then to take the same amount of US grown sunflower seeds from the farmers? Are you then forced to reduce the volume you take?

No, it was very much linked to a very specific type of seed. And indeed, and I know you were, due to technical issues, probably you were not able to hear the full story. But Mirjam alluded to that, is that we have stopped contracting the seeds that are subject to these restrictions. So yes, we have reduced that specific type of edible sunflower seeds to the US. So yes.

Okay, great. Thank you. Sorry about that. Sorry about asking the questions. No problem.

No problem.

Thank you, Rich. The next question we have that we received via the question submitted states, can you give us some insights in your capital allocation strategy? Maria, will you take it, please?

Yeah, thank you. Let me take that. Well, first of all, if you are not yet, for the people on the call, the investors and the banks who are not yet signed up, we have a Capital Market Day on April 7, where we will share more details on our capital allocation model. And what I can already say now is that we believe strongly in the potential of the growth in plant-based food ingredients. We really want to grow. It's a changing environment. Skill will become more and more important. So really our strategy also in our capital allocation is really focused on growth. Besides that, I think historically we have paid out solid dividends to our shareholders and really focusing on maintaining a strong balance sheet and at the same time continue to pay out that solid dividend to our shareholders. They'll continue to be part of our capital allocation strategy going forward as well. Thank you for the question.

Thanks, Mario. Thank you, everyone. We will now close the Q&A session. I am pleased that so many of you engaged with us through the call today and that we were able to answer all your questions. Soon, the webcast will be published on our Acoma website for ease of reference. Thank you once again for joining us today. Have a good weekend and see you next time.