Corbion NV

Yes, good morning, everyone. Welcome to the Corbion full year 2022 results call. With us today are Olivier Rigaud, our CEO, and Eddy van Rijde van der Kloot, our CFO. My name is Pieter Casius, Head of Investor Relations. As usual, there is a slide deck available from our website if you go to corbion.com, Investor Relations Financial Publications. I would now like to hand over to Olivier.

Thank you, Peter, and good morning, everyone. So welcome again to this 2022 Corbion's results. So I will start with the first slides on our company purpose. At Corbion, we feel very strong about what we are standing for, preserving what matters. And today, 65% of our business is aligned behind three sustainable development goals. This is up from 60% in 2021 with an ambition to be at 80% by 2030. So now moving on to the next slide on fiscal year 22 key points and key results. We delivered in 2022 a record year in organic sales growth and adjusted EBITDA delivery. All key financial metrics were within the earlier provided guidance, with an organic sales growth for core of 24.3%, and this was driven by all three business units. The volume mix was 5.6%, and the price impact of 18.7%. The total adjusted EBITDA was close to $185 million, So an organic growth of 17.9%. And last but not least, we delivered on our commitment to reduce our net debt EBITDA ratio down to three times. Moving on to the second slide on key points, we made significant progress in delivering on our advance 2020. And I'm feeling very confident of delivering updated initiatives and target that we presented at our last capital market day in December. On sustainability, we've made progress and we are really ahead of schedule. I will come back on one major development, having our science-based target commitment increased to 1.5 degrees C later in the deck. We also successfully implemented price increases to mitigate rising input cost inflation. And here, we speak about over 240 million euro over 18 months, achieving unprecedented level of price increase. Algae. Algae omega-3 is another point worth highlighting. As you might remember, we set a target to get into a break-even situation in the course of 22. back in the advanced 2025 original target. And we delivered on that promise. And this led to the creation of an algae ingredient business unit, and also as a new reporting segment. And last but not least, we initiated the divestment of our non-core emulsifier business. Now let's dive on the next slide on the three business units and primarily on some of the business developments. First of all, starting with a sustainable food solution. In preservation, we see a continuous momentum in terms of natural ingredients replacing synthetic and artificial preservatives. We also launched a new antioxidant platform, which is a very close adjacencies to the current business by establishing key partnerships and seeding the market over 2022 to have an impact as from second half of 23 and beyond in 24. Whilst in functional systems, we focused on shelf-life extension, on food ferments as natural mold inhibitors, but also being very active in reformulation driven by some raw material shortages where our customers have been really asking to support them in reformulating their recipes. And we've done that as well, you know, in some reformulations driven by cost inflation. Another adjacency we launched in terms of shelf life extension in the functional systems is a launch of a new dairy stabilizer systems, being the first inroad from Corbion into the dairy category, opening also new growth opportunities. Moving now to the lactic acid and specialties. We saw continued very strong growth in the medical biopolymers segment. The lactic acid cells to the PLA declined in H2-22 due to the PLA market weakness that we previously reported. We'll come back to that at a later stage. The growth in the semiconductor market continued, although Q4 saw some signals of temporary softness in the market. And finally, we've made and are still making very good progress in line with our plans to complete the buildup of our new circular lactic acid plant in Thailand. As a reminder, this is planned to be commissioned by the end of 23. On our third newly created business unit, Algae Ingredients, we've seen across 22 a significant traction in new customer adoption of our solutions, and June, was the first time we were breakeven on EBITDA and we've been profitable since then in that division. We've been busy to invest to enhance our production capacity to allow growth on 2023 and beyond, but also to create flexibility in that plant in Brazil to address new categories as pet nutrition, thus diversifying from aquaculture and also, I think, a way to also optimize our margin. Now, moving to the next slide and coming back to the sustainability of value proposition of Corbion, I mentioned, I mean, the commitment to the 1.5 degree, and this is the most ambitious goal of the Paris Agreement, if you might remember. We are pretty proud of that. We've been raising the bar over the last years, and the SBT's target approved our proposal by November, So we are now on a journey in the path to execute on that ambitious target, further reducing our emission and improving our sustainability profile. How does it translate? Let's look at the next slide, where basically we've been raising the bar on the first four bullets. I will not comment them all, but basically whether it is about indeed the percentage of net sales aligned behind the three SDGs that we have prioritized. but also we are moving to a strong reduction for the first time in absolute CO2 reduction on scope one and two, and realign our base versus 2021, raising the target on LCAs, and also, I mean, introduced social value assessments on our product. So quite a lot happening on that front as well. On this, let me hand over to Eddie to dive into the financial performance of 2022. Thank you very much, Olivier. Good day, everybody. I understand maybe the visuals come in a bit with the delays, so I will call out the page numbers I'm on. So let's start with the profit loss, which is page 10. We've been growing the top line very nicely last year, to a level to about $1.5 billion in terms of revenues. So that's a 36% increase versus 21%. And within that, the organic growth has been, for the total company, 24.6%. Also, Q4, we ended up with a very nice growth pace, organically growing close to 27% for the business. So that translated in an adjusted EBITDA growth of 36% for the full year. Again, looking on an organic basis, that's a 17.9% organic increase for the year. Margin profile for the total company has been relatively flat over the full year versus 2021. Then looking at the adjustment line, that's always where we are disclosing certain special elements. Last year, you see a $10 billion plus for the full year that was very much caused by divestment of the land we hold in the Netherlands and Veda, the book profit on that, and also the frozen dough activities that we let go in 2021. In 2022, we also had some special effects, and the most notable one is the total warehouse sale that we already communicated about earlier in 2022. That translates then to an operating result increase of 35% from 82 million to close to 111 million. Financial income has been less negative. Financial income on expense, I should say, has been less negative in 2022 versus 2021, and that's because we have quite some with support from stronger currencies on our intercompany loans that are also recorded in there. Results on joint ventures, so that's of course the results especially on the PLA joint venture, less positive than 21 and that is really reflecting the underlying operational developments in the business which we can talk about later. Texas, more negative than it was in 21, and it's not so much that 22 was special than the more normal tax level, I would say, with the operational results, but it's really that the 21 figures have been positively impacted by the deferred tax asset that we could record in conjunction with the sale of land in Netherlands. So a bottom line that translates to an 15, close to 15% increase on the result after tax from 78 million to 19 million. So then let's take a deeper dive on the different business components. Page 11 is our sustainable food solutions business. We've been growing that organically for the full year at the pace of 21.5%. But within that, a big part has been caused by increases of prices. We've talked about it on earlier occasions, the massive price increase that we have put through the market over the years. Underlying, if you look at the volume plus mix of dynamics, that has shown a pretty consistent pattern over the whole of 2022 to the comparable basis, of course, of 2021. And that's on the total of 3.6% increase of volume plus mix effects for the total SFS business. The EBITDA as an absolute amount has grown very nicely over the year from a 75 million level to 96, so 21 billion up. and the margin has been slightly coming down from 12.9% to 12.3, and that is also partly caused by this huge effort in passing through price increases, because then, mathematically, you will see some margin erosion as a consequence of that. Next page, Electric Assets and Specialties segment. I'm on page 12 now. Also, there are a nice growth, 20.4% organically for the full year. But that has been fully caused by pricing. If you look in the line to the volatilized mixed developments, that has exactly been coming in neutral at zero. And of course, the PLA related activities are also having an impact on that development for the full year. Also here, a nice step up in the absolute amount of the adjusted dividend by about 10 million. And then the margin profile, this similar pattern in terms for the full year, and a nice ramp up still at the last quarter for the year, with a slightly higher margin for the rest of the year, close to 80%.

Then we will move to the algae ingredients business, page 13.