Corbion Nv Unsp/Adr

Good morning and welcome to the Corbion full year and fourth quarter 2024 conference call and webcast. This morning we published our full year results and the press release and presentation can be found on the website at www.corbion.com, investor relations, financial publications. Before we begin, please note that today's discussion will include forward-looking statements based on current expectations and assumptions. These statements will involve some risks and uncertainties that may cause actual results to differ materially from those expressed. Factors beyond our control, including market conditions, economic changes, and regulatory actions can impact outcomes. Cormian does not undertake any obligation to update statements made in this call or contained in today's press release and presentation. For more information on assumptions and estimates, please refer to our annual reports. This is Alex Sokolevski, Head of IR, and with me on the call are Olivier Rigaud, Chief Executive Officer, and Peter Kazius, Chief Financial Officer. I would like to now hand over the call to Olivier.

Good morning, everyone, and thank you for joining Corbeon's full year 2024 earning call. I'm pleased to share that in 2024, Corbeon successfully met its upgraded targets for sales and adjusted EBITDA while significantly surpassing our free cash flow targets. We achieved organic sales growth and double digit increases in both adjusted EBITDA and adjusted operating profit. Our strong volume mix performance, our focus on operational efficiencies, the successful implementation of our research program and our CAPEX discipline resulted in this significant increase in free cash flow. Taking a closer look at our 2024 highlight, we achieved positive organic sales growth of 2.2% driven by a volume mix increase of 5.2% and a pricing decline of 3%. Our organic adjusted EBITDA grew by an impressive 23.3% and we generated a free cash flow of 98.3 million euros from continued operations. In our health and nutrition segment, we saw strong growth in both sales and adjusted EBITDA driven primarily by our nutrition business. Our functional ingredient solution segment also experienced positive volume mix growth, particularly from our food ingredients and the lactic acid cells to the joint venture businesses. Looking ahead to 2025, we remain really confident in our strategic targets and expect to continue delivering strong performance. More on that later when we present our 2025 outlook. Now, let's move on to the opportunities for differentiation in key markets. We've made significant strides in differentiating ourselves in key markets. Our sales into the mature bakery and meat markets have grown thanks to our innovative and differentiated solutions as food ferments and clean label preservatives. By targeting these growing market subsegments, we've been able to capture new opportunities and grow with trends in food markets. Additionally, our value proposition in the strongly growing health and nutrition market has been confirmed with strong sales and earning growth. This success underscores our commitment to delivering value to our customers and stakeholders. Turning to the challenges we face, raw material and freight prices were volatile over 2024. While we've seen some relaxation in input prices, such as sugar, On the other side, freight and energy costs remain unpredictable in the near term. However, we anticipate an improvement in overall input costs in 2025, which should provide some relief. We're also obviously closely monitoring the potential impact posed by tariffs on goods into the US. Health and sustainability continue to be at the forefront of our strategy. The trend towards clean labels and natural preservatives is accelerating, outpacing the overall food market growth. The proliferation of GLP-1s, the increased scrutiny on ultra-processed foods, and latent regulation in both the European and the US ingredient space could create increased demand for natural and healthful food ingredients. Furthermore, our sustainable omega-3 solutions offer structural growth driven by higher adoption in aquaculture and the supply constraint long-term outlook for fish oil. We're really well positioned to capitalize on these trends and drive sustainable growth. Before I turn things over to Peter to present our financial performance in 2024,

i like really to emphasize that we are confident in our strategy direction and in our ability to continue delivering strong performance in 2025. peter the flow is yours thank you olivier and good morning all in 2024 our sales increased by 1.9 compared to 2023 this growth includes an overall growth rate of 2.2 percent Currency impacts, particularly due to the depreciation of the Japanese yen and Brazilian reais, slightly countered the sales growth, while the US dollar remained flat year over year at $1.08 per euro. Our health and nutrition segment drove our organic sales growth, with an impressive 18.5% increase. In the functional ingredients and solutions segment, we saw positive volume mix growth, although this was offset by price declines following input cost relaxations. Turning now to our adjusted EBDA, we achieved a remarkable growth of 24.8% year over year, with 23.3% of this growth being organic. The key contributor to this strong performance was our health and nutrition segment, which benefited from robust volume growth as well as favorable pricing. On the other hand, our functional ingredients and solutions segments experienced a slight negative impact. It's important to note that our EBDA was affected by some phasing of cost SQ4, as earlier indicated, including delayed transport cost increases from mid-year, maintenance expenses, as well as variable compensation. Looking at our profit and loss from continued operation, our depreciation and amortization increased year over year. This is primarily due to the completion of our ERP implementation and several capital expenditure projects. Moving on to adjustments, these have been mainly driven by the restructuring program, which resulted in a reduction of approximately 180 FTEs compared to the end of 2023. It's important to note that the adjustments in 2023 were influenced by the reversal of an impairment of our algae fermentation assets in the nutrition business. Regarding financial income and expense, we've observed a decrease compared to last year. This is attributed to the divestment of our emulsifier business, as well as some non-cash foreign exchange items. In terms of our joint venture, the results have been negative. Although we achieved a positive EBITDA of €12 million, this was offset by depreciation, as well as interest paid to shareholders and tax obligations. Our effective tax rate stands at 26.6%, which aligns with the jurisdictions in which we operate. Finally, our results after tax have seen a positive impact of 6.5%. Looking at the functional ingredients and solutions business, for the full year, we experienced a positive volume mix growth of 3.3%, and we achieved 3.4% in Q4. This growth was primarily driven by our food business, particularly in bakery, meat, and dairy markets, as well as key products and market adjacencies. Additionally, we observed growth in lactic acid volumes to the joint venture, driven by increased PLA demands. Moving on to our biomedical segments, this segment was down compared to last year, primarily driven by weaker demand in agrochemicals and softness in the semiconductor market. Regarding pricing, we faced a negative impact of 4.9% for the full year and 4.1% for Q4, following the relaxation of input costs. Our EBDA margin for the full year stood at 8.8%, with Q4 at 7%. The adjusted EBDA includes the absorption of the stranded cost from the emulsifier divestment, which impacted margins by approximately 200 basis points. Compared to Q3, the Q4 margin was softer as expected. due to seasonality and the phasing of expenses, including the mentioned temporary freight costs, maintenance costs and variable compensation. Looking ahead to 2025, we see continued positive growth and margin improvement as of Q1, as we fully compensate for the standard costs. We're implementing a series of initiatives to achieve that as earlier communicated, including process efficiency, complexity reduction, procurement saving, further insourcing, as well as savings from the lactic acid plant entirely. Moving on to health and nutrition and starting with our organic sales growth, we achieved an impressive 18.5% for the full year, with Q4 contributing 8.8%. This growth was driven by a strong performance in our nutrition business, particularly in the aquaculture and pet food markets. Our volume mixed growth for the full year was 13.9%, with Q4 showing a modest increase of 0.2% due to strong phasing effects in Q3. The substantial growth was primarily due to robust demands for our algae fermentation DHA products, which supports both aquaculture as well as pet nutrition markets. in the pharma business we experienced volume mix growth although this was partly offset by reduced sales prices despite this we continue to see positive momentum in this segment our biomedical polymers for the year remains flat with slight sales degrowth of one percent however we anticipate sales growth in 2025 driven by business development mainly in drug delivery Moving on to our EBDA margin, we achieved a full year margin of 29.9%. We've maintained high EBDA margins consistently throughout the year. The increase compared to last year is attributed to a combination of increased operational leverage, strain optimization, as well as a favorable product mix. In summary, our health and nutrition segment has demonstrated strong performance with double-digit volume and mixed growth, sustainably high EBDA margins, and positive momentum across our key businesses. We remain confident in our ability to continue this growth trajectory into 2025 and beyond. Moving now to the performance of the Total Energy Scorpion joint venture. The JV achieved an organic sales growth of 13.2% for the full year, with Q4 contributing 7.1%. This growth was driven by continuous recovery in volumes. However, the business faced significant pricing headwinds, which partially offset their volume growth. Despite these challenges, the robust, long-term drivers for the PAA market remain intact. Moving on to the APDA margin, the joint venture achieved a full year margin of 8.7%, with Q4 being at 2.1%. The margin contraction versus last year was primarily driven by negative pricing dynamics and commoditization in certain applications, which impacted regional and product mix. It's important to note that we anticipate high single-digit EBDA margins for 2025. I'm pleased to report that we have achieved our seventh consecutive quarter of positive free cash flow. This positive free cash flow generation is a testament of our EBDA development and disciplined approach to capital expenditures. We've continued to invest in our key priorities while carefully managing our overall capital expenditure levels. In 2024, we spent around 80 million and we anticipate maintaining this level of investment for 2025 as well through our CapEx discipline in both maintenance and expansion CapEx. Our free cash flow in 2024 has been partly impacted by other working capital factors. These include the phasing of customer rebates, the monetization of VAT receivables in Brazil, and variable compensation. While we've made progress in reusing our operating working capital, it has not yet reached our target levels. This had been partly driven by ongoing challenges in the Red Sea region and an increase in inventory in anticipation of the potential harbor strike in the US, which ultimately did not materialize. Looking ahead, we plan to further reduce our working capitals in 2025 and we're confident that our strategic initiatives and disciplined financial management will enable us to achieve this goal. In summary, our continued positive free cash flow generation, disciplined capital management and strategic investments position as well for future growth. Our dividend policy is designed to be progressive, with the ambition to annually pay out a stable to gradually increasing absolute dividends. This year, following our positive net results and strong free cash flow developments, we're proposing a 5% increase in the regular dividend, bringing it to 64 euros per share. This proposal reflects our commitment to delivering consistent and growing returns for our shareholders. The proposal is subject to approval at the annual general meeting, which is planned for May 15th. If approved, the ex-dividend date will be May 16th, with the record date set at May 19th. And then cash dividends will be payable at May 27th. In summary, our proposed dividend increase underscores our confidence in the company's financial health and our dedication, providing value to our shareholders. We believe this approach aligns with our long-term strategic goals and support our ambition to maintain a progressive dividend policy. For now, a bit on ESG accomplishments and ambitions, starting with revenue contribution to sustainable development goals. We've seen a notable increase in 2024. in 2024 74 of our revenue contributed to sdgs 2 3 and 12 which was up from 2023 this improvement is partly due to the divestment of our emulsifier business which did not align with our sustainability goals related to preventing food waste health circular economy and biodiversity our commitment to the life cycle assessment has also been strengthened In 2024, 92% of our products were covered by LCA, compared to 79% in 2023. This comprehensive assessment ensures that we are continuously improving the environmental impact of our products. Our scope 3 CO2 emissions increased in 2024 compared to 2023, but are still down from the 2021 levels. The increase relates to higher inputs and supplier mix. We're proud to have received high ratings from CDP, recognizing our implementation of best practices in climate change and a gold score from EcoVadis for our leadership in sustainability, both achieved in 2024. And now back to you, Olivier, for the outlook.

Thank you, Peter. So I'm excited to share ambitions for 2025, which are in line with our previously shared objectives. These targets reflect our commitment to driving growth, enhancing profitability, and delivering value to our shareholders. So first, let's discuss our organic sales growth. We are targeting a volume mix growth between 2% and 6%. This growth will be driven by our continued focus on expanding our market presence and leveraging our strong product portfolio. Moving on to our organic adjusted EBITDA growth, We're aiming for an impressive growth rate of over 25% from our continued operations. This target underscores our confidence in our ability to optimize operations, improve efficiencies, and capitalize on market opportunities. And this is in line with the guidance shared previously at the Capital Market Day. Our capital expenditures for 2025 is projected to be between 80 and 90 million euros. And this investment will support our maintenance and growth initiatives. probably including capacity expansions for algae fermentation, the biomedical polymer business, and also some product in sourcing. In terms of free cash flow, we're targeting a figure of over 85 million euro, excluding divestments and acquisition. So this positive cash flow will enable us to reinvest in our business, pursue strategic initiatives, and return value to our shareholders. Finally, We anticipate a Covenant Net Debt to Covenant EBITDA ratio of approximately 1.6 times by the end of the year. This target reflects our commitment to maintaining a strong balance sheet. So we are confident in our strategies and our ability to achieve these ambitious goals. And we really look forward to share our progress with you throughout the year. Now, Peter and I are happy to take your questions.

Thank you, Olivier. Call participants, if you'd like to ask a question on the call this morning, please press star one one on your telephone and you'll be placed in the queue. If you'd like to remove yourself from the queue, press star one one again. Also, kindly mute your line while your question is being answered. Our first call this morning comes from Setu Sharda of Barclays Bank.

Setu, please go ahead.

My question, I have three questions. The first one is on the health and nutrition volumes. These are flat in Q4, contrary to the expected high single-digit growth expectation you guided in Q3. So what factors are contributing to this slowdown? And additionally, how has the Q1 started for health and nutrition? And in terms of my second question, despite the volume growth in functional ingredients and solutions, margins have declined sharply. So how significant is the impact of fixed cost phasing in that decline? And what is your outlook on the margin development for the next year? Can you share some insight on this? And the third one is on your cost-saving programs like you announced during the CMD, along with the recovery of stranded costs from the emulsifier deal. So in terms of progress, like how much of the absolute EBITDA growth of 35 million this year is attributed to the savings. And additionally, what is the expected contribution from these savings in FY25?

Thank you, Setu, for the three questions. And let me start answering them one by one. So first, health and nutrition. You're right that for this business unit, we got a double-digit growth for the full year. That's what we also delivered. If you look to Q3, Q4, there is really a phasing of order impact in that one. As we indicated, I think in the Q3 call as well. So if you look to the combination of H2, it's perfectly in line with our strategic ambition with some phasing. if you look to the opening um into q1 of this year actually that's in line with the the commitments which we which we did provided with the outlook so from that perspective cq4 really has a phasing another kind of starting of decline Your second is on margins in functional ingredients and solution. And there are a couple of things to note, which we also indicated in the Q3 call, because the effort is not unexpected. So if you compare Q3 to Q4, there is always a seasonality impact, meaning that the absolute sales level is lower in Q4. And if you look on variable margins, it's roughly at the same level. And then it's indeed, as you said, impacted by some phasing of fixed costs, including inventory movement, maintenance, and variable compensation. If you look margins going forward, then we're on the right trajectory. And that's also reflected in the comment that Olivier made on the outlook. And we see that margin uptake already happening earlier in the year. Now, if you then look on your question on the fixed cost savings and the strength of cost, a bit of color on that. And all these costs are really included in the guidances which we provided both for 2024 as well as for 2020. So a key part of the 35 million of fixed costs. has been driven by the the redundancy of of 180 people and you clearly can see in the fte development a decline from year end 2023 to year end 2024. the decrease is roughly the amount i just told and then on top of that we divested the emulsifier so therefore you see an even bigger reduction in The other significant item was the closure of peoria, or the mothballing of peoria, which we did by end Q1, early Q2. And also, as indicated, this reduction of FTEs have been done by starting the end of Q1 and then phase during, I would say, Q2 and a bit of Q3. um the the the projects articulated related to the the stranded cost will have an effect as of q1 next next year i hope that gives some color uh yeah that's helpful thank you

Okay, very good. Our next question comes from Robert Jan Vos from ABN AMRO, AutoBHF. Robert Jan, please go ahead.

Yes, I'm here. Good morning, all. Thanks for taking my questions. I have a few. To start with functional ingredients and solutions, pricing remained quite negative throughout the year, a very small uh improvement in q4 but still materially negative uh you you earlier you said that has also to do with the easing of input cost but what is your view on pricing for this unit in 2025 because if i recall correctly you also said probably at half year or q3 i don't remember that that going forward um you will focus more on your pricing towards your customers in order to to improve the profitability and the related question indeed is Year-on-year you reported an EBITDA decline modest to eight point eight percent Why are you still confident that you can achieve mid teens and what is the time? For achieving that can you remind us? My second question is on, and that's more positive, it's on health and nutrition, the EBITDA profitability, one notch shy of 30% in 2024. Taking into consideration the further plans for pet nutrition and also human nutrition for omega-3, is it fair to assume that there could be further upside in this margin or Are there other factors to take into consideration and maybe be a bit more cautious there? And my last question is on the PLA joint venture. Why do you expect a high single-digit EBITDA margin following the Q4 margin of just above 2%? What's the background of that expectation? And related also, why describe this business as long-term attractive following the recent steep trend towards commoditization that we are seeing? So those are my questions. Thank you.

Thanks, Sorbatian. And we suggest to answer the fees pricing and the PLA, and Peter will take on the H&M as well. I think you're fully right. If you look at the trajectory of pricing in 2024, indeed, we've had this price erosion, basically related to input cost. What has been very important, of course, is the last pricing round. This happens usually for a big chunk of the business in the course of Q4 for 2025. And we see, of course, less erosion. We've been also even going for price increase in some markets. So, what you will see in the course of 2025 is a lot less erosion in pricing, actually, on the fees part. Obviously, we are scrutinizing, as we've said earlier, any potential tariffs impact that might happen and occur, but we are preparing for that. um so to that stage you know we still have i mean again some pricing round to be done for q2 and for h2 so there is also some flexibility to react in the course of the year on on pricing and movements on the on the on the fifth direction at the same time on the margin we have indeed this plan to really also compensate for the stranded cost as peter alluded to which is primarily impacting the fees division. So, you know, the compensation of the so-called stranded cost that we committed to will really favorably impact also the margin recovery for the fees BU. This is where the impact is going to be visible. So the initiatives we mentioned in the Q3 results related to not only pricing, but also procurement initiatives, but also product portfolio simplification, SKE reductions, uh as well as you know uh some operational efficiencies related to you know the the thai plant ramping up and the uh also in sourcing initiatives uh that we've uh put in motion will really contribute to the margin recovery uh into fees um you know towards the the minty now i'm not telling we're gonna achieve the meeting in 25 yeah So maybe I jump to the PLAGV and then we're going to come back on the health and nutrition. I think one of the way we see and why do we see a margin getting better than the Q4 one, which was really low, is that the plant is filling up. So we are seeing a partial leverage. you know, in the plant because you might remember, you know, the entire market and ours as well dropped by almost 50% back into mid to 22. And now we start to see and rebuild, you know, volume recovery. And we see that translated as a personal leverage into the plant on our cost. That's one thing that is important. The second element is that, yeah, the joint venture is also benefiting to some extent from lower input costs related primarily to sugar price. So as you can expect, it's also favorably impacting the joint venture. However, we mentioned that also in Peter's presentation, the PLA prices do remain depressed. So now when we say the fundamentals do remain intact, If you look at the drivers, we also discussed previously that most of the growth today is happening across Asia and partly China. And that is something we see continuing in 2025. Obviously, there is upcoming new regulation in China that we are expecting, you know, in the course of the year to really become official, to even strengthen you know, the usage of PLA in some categories on the Chinese market, which is a very big market. So this is something where basically most of the signals so far are positive on the volume recovery of the PLA market. The big question remains on on pricing. So, Peter, maybe you take over the H&M question.

Yeah. So, I mean, you're right, Robert Young, that if you look to health and nutrition, I mean, a great success in terms of EVDA margin with almost 30%, and also quite consistently throughout the different quarters. You're right that we are going to these nice, attractive markets. I see some growth areas in there. i would be conservative putting any numbers higher than 30 on that one so if you look to the ebda delivery into next year that's more as olivier alluded regarding this then it's a step up in margin in the health and nutrition part of the business that's uh that's clear i'm just wondering peter why

you advise to be conservative? Are there other factors that could have an impact? Because I understood that margins on human nutrition products can be significantly higher than the margins that you currently realize on the portfolio.

Yeah, so two things on that. The one is margins in kind of dollar per kilo, definitely. margins in percentage also higher from that perspective. What you might see at some moment in time is if you invest in additional capacity, you sometimes need some operators here and there. So do I anticipate a nice impact on that one? Yes. Will it be low? No, but I will be cautious. Thank you.

Okay. Thank you, Robert Yan. Also, next question comes from Vim Hosta from KBC Securities. Vim, whenever you're ready.

Yes, I could hear you pretty well. Questions from my side. Can you talk a little bit on the outlook of the biochemicals part, agro-money markets, how do you see that evolving in 2025? And then also, can you provide a bit more granularity on the status of the product adjacencies in food markets

the dairy stabilizers etc how much are they contributing to revenue in 24 and how much growth you are still seeing in 25 and beyond for those products those were my questions thank you yeah thank you rim so um i will take that so on the biochem you know it's a quite many applications of course you mentioned agrochemicals and the semiconductors these are two big ones but there are also some businesses in green solvents in hpcs and so on so very different dynamic but a couple of things starting with semiconductors this has been indeed a down cycle you know category for now quite a long period because we we are used to down cycle of 12, 15 months max. Now we are almost 18 months to two years in the down cycle there. But it does stabilize. So we've seen, you know, in the last part of 24, really some good stabilization. And if we look to our forecast for H1, we don't see any further also decline. So there are some early signals now, which make things greener than what we've seen last year. in the semiconductor. Obviously, when you look at some of the announcements from the giant players in that space and thinking about the Samsung of this world, you could see that it's really uneven according to some geographies as well, but no further decline into that space. Agrochemical is of a different nature. Agrochemical, basically, we are facing also a lot of negative regulation moves into this segment. And these are, you know, really not a sector we are prioritizing, you know, anymore. So we do not expect any rebounds or making any major difference. And also, this is a space where we are not investing either in terms of resource, new products or capabilities. Now, back to FIS and the product adjacencies. We mentioned, you know, some initiatives around natural antioxidant, mold inhibitors. We have all the enzyme technologies around dough conditioning as well in there. So we came into, let's say, the total food roughly, you know, last year to approximately 10% of our sales into these initiatives. So which were a lot of them we started from scratch a few years ago. So I have to say that now we have confirmation on some of these product lines that it's time really to potentially accelerate. And this is primarily around what we call the food ferments and the mold inhibitors, where we see the biggest size of the price there. um and we are also looking whether we can source some of the products that we've been also uh promoting developing in in functional systems in the case of dairy stabilizers as dairy is becoming now a new emerging categories for us de-risking you know what we do in meat in the in bakery so um so these are really i think enabling us new area and and pocket of growth going forward So basically on these five adjacencies, we are just moving on, you know, on the current growth trajectory that we've seen in the last couple of years. So hopefully it helps, I mean, to answer your question, Erwin.

Yes, it does. Thank you very much.

Okay, thank you. Our next question this morning comes from Sebastian Rai from Barenberg. Sebastian, if you can hear me, please go ahead.

Yes, hello, hello, good morning and thank you for taking my questions. I would have two, please. Can I just ask about why Corbion is staying in PLA at all? Because the explanation given at the moment is, well, maybe Chinese regulation comes to the rescue, but it feels like this business has a problem and one that could get worse when Cargill, PTTC bring on new capacity in the late 2020, in the late this year. What stops the company turning around and tomorrow putting a press release out saying we are exploring options to exit this JVE? Why is it still an attractive business to be in? My second question is on the underlying volume growth in the food segment. How has this actually developed if we exclude mix over the last three or four years? Has there been any volume development? And my third one is just on the the outlook as you see it for the biochemicals area. So the health semiconductors and so on and 25, it all looks pretty positive, but any color on that is helpful. Thank you.

Yeah, thank you, Sebastian. So I will answer your PLA and the biochem and Peter will take the fish in the lake. So, no, it's a relevant question. If you remember a couple of years ago, we've asked ourselves and we had a strategy review of that business. Obviously, it was at the time the market was heavily depressed. So the only thing I can tell now at that stage is that, as you know, we are coming to the end of the current strategic cycle on advanced 2025 by the end of this year. So, Sebastian, are you still there? Can you still hear us?

Yes, indeed. I'm still here.

OK. Yeah. Sorry. Apologies for that. So technical issue. So, yeah, I was thinking about so saying about PLA. Actually, on this side, as I said, we are ending the strategy period. So obviously, we are getting into a new strategic exercise, you know, as from H2, and we are planning to come back to you by year end, where obviously PLA will be part as any other pieces of our portfolio, part of the review. So now it's a bit premature to make any statement on that. You know, we will, of course, work a lot over the coming month, you know, on our portfolio. to again come back to you by Q4 this year. So more to come on that front. On the biochemical outlook, I think, again, this is a part where we do not necessarily see a huge pocket of growth coming up from our portfolio. So again, in there, there are very sizable important pieces of business that we have, like this green solvent to the semiconductors. But on the other industries, we are small players. These are not necessarily industries we are prioritized or we intend to prioritize going further. So I would say where we're going to make really and we are looking to make a difference is in our food ingredient space or natural preservatives. This is where we are strongly committed to invest for growth and into our health and nutrition also. But this is where the priorities are today.

uh the rest of you we manage very efficiently we manage it for cash you know but uh that's that's a bit the the trajectory we have we are taking that's helpful thank you um let me pick up your question sebastian what you had on on volume slash mix development in in fish over the the last years or so um i mean if you look over the last year and let's pick 2020 like the early start of our advanced strategy then the volume mix which we achieved is indeed a combination of both volume as well as mix so it's not one negative and the other significantly positive it's really driving by by two uh two effects that that's that's helpful could i just quickly follow up on with one on on capex um

The number is down on what was guided in 2024. Where has the 30 million cut roughly come from? And can you make any comments on how you'd expect working capital to perform in 2025? It looks like it was pretty good in 2024. Yeah.

So if you look on the CAPEX one, it's a combination of both in maintenance as well as expansion. So what we have not done is reduce activities in expansion, but we put quite some discipline and regular process in that. So the reduction is basically driven by both of these elements. And as Olivier alluded to, we anticipate the same level also in 2025. If you look in working capital and then split a bit the operating working capital part and the other working capital part, in terms of operating working capital, I anticipate a further reduction in percentage of sales. If you look to operating or sorry, other working capital that has been impacted by some phasing, I would say so that one would would reverse a bit into two thousand twenty twenty five.

That's helpful.

Thank you. Thank you, Sebastian. Our next question comes from Fernand de Boer from the growth Peter Khan. Fernand, if you can hear us, please ask away.

Yes, I can hear you, but I think that I missed most of the calls. Since Robert-Jan's questions, I hardly heard anything. So no answers at all.

Okay.

So I don't know. I heard the question of Sebastian, but also didn't hear the answer. But fine, I'm not sure how you're going to solve that problem that we didn't get that information. In the meantime, and I look at your leverage guidance for 25 of the 1.6, and you say, okay, and your EBDA guidance of plus 25%, so that means an EBDA of at least, or let's say roughly 220 million. uh then i end up with an adept of around 350 million which is confident that that which is similar to what is now um so then the question is where is all those free cash flow going to because that's so that's my first question and i'm not sure um but did you pay the taxes for the uh

on the gain you had from the emulsifier disposal already yeah let me let me answer them um one by one so the tax on the emulsifier piece we did pay i think even in q3 so that's fully paid and nothing outstanding from that perspective if you look and happy to do it online but if you look to the ebda contribution, and then the working capital and the free cash flow, you end up with the positive free cash flow of this 85 million, then you should come to the guidance of roughly 1.6 in terms of government net debt.

My calculation is correct that your net debt is then expected to land at around 350 million.

And the only two factors after free cash flow, which can impact debt, is in financing free cash flow is this ifrs leases of roughly 50 million and there is the last outstanding boomy payment which is also in there that can be the only other factors how did you call that last one yeah the boomy payment so if you remember from the terra via acquisition we do pay uh there is an earn out mechanism and the last payment is into 2020 and 25. And that's also in the kind of financing and cashflow line. And otherwise happy to help Fernand on this one.

Yeah. Okay. Very good. Yeah.

And the other question, we are going to find a way, either we publish it or we do it via webcast, but there we need to, we need to see how we can help.

So I think that, cause I also had the question on the H and N growth in Q4 and going forward, but I think that's it. Okay.

Thank you.

I have another question in the queue. This is from Alex Sloan at Barclays. Alex, I hope you can hear me. Please continue with your question. Again, that's Alex Sloan at Barclays. You're on stage. all right currently i have no uh callers in the q a q um if you'd like to ask a question please press star one one things we have the audio working now all right there seems to be no further questions um thank you all for tuning in um we'll make the replay available uh with audio if uh if many participants did not hear um this concludes our conference call this morning thank you all for your attendance and questions and we look forward to having discussions in person on our upcoming road shows and conferences in the next weeks please note that we will report out our q1 2025 results on april 23rd and we will speak with you all then at the latest