Corbion NV

Good morning, everyone, and welcome to Corbian's first half 2025 results conference call. This morning, we published our half-year 2025 results, press release, and presentations. These can be found on our website, www.CorbianRelationsFinancialPublications. Before we begin, please note that today's discussion will include forward-looking statements based on current expectations and assumptions. These statements involve risks and uncertainties that may cause actual results to differ materially from those expressed. Factors beyond our control, including market condition, economic changes, and regulatory actions, can impact outcomes. Corbian does not undertake any obligation to update statements made in this call or contained in today's press release and presentation. For more details on our assumptions and estimates, please refer to our annual reports. With me on the call today are Olivier Rigaud, Chief Executive Officer, and Peter Casius, Chief Financial Officers. Now, I would like to hand the call over to Olivier.

Thank you, Alex, and good morning. And thank you all for joining us today. corbin's half year 2025 earning calls let's start with some key highlights from our latest results i'm pleased to report for the half year we achieved an increase in sales driven by robust demand and delivering on our strategic initiatives we achieved an organic sales of 645 million euros for the half year results corresponding to a plus 2.9 organic sales growth rate As anticipated at Q1 2025 reporting back in April, phasing of sales into Q1 resulted in a lower sales level in Q2. Our volume mix growth came in at plus 3.3% for the half year, with a Q2 growth at minus 1.3%, again, reflecting the phasing effects. In terms of EBITDA development, we've seen significant improvements. Our adjusted EBITDA reached 106.6 million for the half year, with a Q2 number of 52.2 million euros. This represents an adjusted EBITDA growth of almost 24%. Our adjusted EBITDA margin improved by plus 300 basis points to 16.5%, demonstrating our operational efficiencies and cost measurement, as well as growth in higher margin product categories. Free cash flow was positive for an eight consecutive quarter. We feel very confident and reaffirm our fiscal year 2025 outlook, which I will discuss in more details when we cover the outlook section. So now diving a bit deeper into our segments and starting with our functional ingredients and solution. In this business unit, we showed positive volume mix in two of the three businesses, our specialty food ingredients and the lactic acid to the P&L agent venture. The healthier volume mix growth in food ingredients was in meat, dairy, and culinary markets as demand for Corbion's natural preservation solutions remained healthy. Our focus on strong customer collaboration and leveraging our broad natural portfolio is paying off there, whereas in the biochemical businesses, some demand softness persists. Looking at our growth initiatives, continued success in focused areas like food ferments, natural mold inhibitors, and their stabilizers continues. We also experience strong growth in adjacent culinary applications with our natural mold inhibitor portfolio. Another interesting growth driver has been in high-protein bread fortification in the U.S., driven by strong consumer demand for high-protein diets and also for fortified foods. As recently announced, Corbion is participating in the Ferment for Health project, A research initiative focused on understanding the health benefit of fermented foods and postbiotics, particularly their impact on gut health and inflammation. So Corbion's involvement there will leverage our expertise in fermentation-based ingredients to contribute to the development of functional food solution. From the operational and manufacturing front, our circular thylactic acid plant is wrapping up gradually. And looking forward, we are confident about delivering the full value creation from these investments. Next, our new vinegar plant in Montgomery, Alabama, is also ramping up, bringing substantial insourcing benefits as we are backward integrating this critical building block in our portfolio of natural preservatives. Nonetheless, we continue to positively impact Arabida with cost savings benefit from other initiatives, such as operational excellence and complexity reduction, and volume mix growth in higher margin categories. Now, turning to our health and nutrition segments and our three businesses therein, starting with nutrition and omega-3s. Despite quarterly fluctuations, there's been continued strong demand for algae-derived omega-3 DHA in aquaculture, pet nutrition, and we have some promising new contracts in human nutrition as well. Additionally, there is also positive momentum in our biomedical polymer business in the two important key sub-markets being drug delivery and orthopedics. Also, our pharma business containing our high purity lactic acid derivatives has shown strong double-digit volume mix growth, mainly in the kidney dialysis market in China. As for our exciting growth initiatives, starting first with our biomedical polymers, Our products are increasingly being used as a biostimulatory treatment agent to support tissue growth and natural collagen production in the aesthetics markets. This is next to the two historical subsegments of orthopedics and drug delivery. Secondly, about omega-3 DHA, referencing and first contracted volume in human nutrition and markets will materialize in the course of the second half of the year. and finally on omega-3 we continue to pursue opportunities to broaden our customer base in aquaculture in penetration but also recently in some attractive new terrestrial categories a highlight for the nutrition business in the quarter was recent carbon's announcement that the company successfully secured multiple regulatory approvals for china general administration of customs this is paving the way for offering carbons, high-quality, sustainable, algae-derived omega-3 DHA solutions in the Chinese fast-growing human and animal nutrition and market. This is opening great opportunity for us going forward into 2026. Last but not least, on efficiencies initiatives, our investment program is delivering the expected capacity increase to secure growth into omega-3s for 2026 and beyond, but also in the biomedical polymer business. Through the microalgae strain optimization, we can further increase yields from the existing asset in Brazil. And with that, I'd like to give the stage to Peter to present our outfield results in more detail.

Peter, back to you. Thank you, Olivier. In the first half of 2025, our sales increased by 1.3% compared to H1 2024. This growth includes an organic growth of plus 2.9%. Currency impacts, particularly due to the depreciation of the US dollar in the second quarter, resulted in a negative minus 1.2% impact on sales. The organic sales growth was driven by volume mix growth in functional ingredients and solutions of plus 2.9%, and in health and nutrition of plus 5%. In the second quarter, mainly due to phasing effects, organic sales growth was minus 1.8% for functional ingredients and solutions, and minus 0.6% for health and nutrition. I will come back on the dynamics when presenting the individual businesses. Turning to our adjusted EBDA, we achieved a remarkable growth of plus 23.8% increase versus age one, with an organic growth of plus 29.3%. This increase was driven by sales growth, as well as cost-saving measures within functional ingredients and solutions. The adjusted EBDA margins improved overall by 300 basis points to 16.5%. This resulted in a 25 million benefit on an organic basis. The currency effect, largely deriven by depreciation of the US dollar in the second quarter, impacted the EBDA negatively by 2.2 million. The non-recurring transitionary service agreement benefit last year is minus 2.5 million. On an adjusted EBITDA, we've seen growth both in Q1 as well as in Q2. Looking further down the line in our profit and loss statements, depreciation and amortization decreased year over year following the depreciation of the US dollar as well as the Brazilian real. Some assets were fully depreciated, and this was partly offset by an increase of depreciation from our new direct asset plan. Adjustments were mainly driven by restructuring costs, as well as some costs related to the planned settlement of a defined benefit scheme. Financial income and expense came in higher than last year, mainly driven by translation effects of intercompany positions. The interest expense on our debt is 6.5 million, which is an interest rate of around 3%. The 50% of the net results of the total energy-scorium joint venture were 1.1 million negatively. The positive EBDA of 6.7 million is offset by interest paid to the shareholders as well as tax. Our effective tax rate stands at 18%, which is relatively low. This is due to tax effects related to currency results. For the full year 2025, we anticipate an effective tax rate between 23 and 25%. Finally, our results after tax have seen a positive impact of 86.8% versus H1 2024. Looking at the functional ingredients and solutions business units, we experienced a positive fully mixed growth of 2.9% for the first half and minus 1.2% for Q2. This growth was primarily driven by our food business units, particularly in meat and dairy markets, as well as growth in our key product and market adjacencies. Additionally, we observed growth in lactic acid volumes to our joint venture. In H1, our biochemical business unit was down compared to last year, primarily driven by weaker demand in some categories like agrochemicals, which especially impacted Q2, This was amplified by phasing of some key customer orders into the second half of the year. Regarding pricing, we saw a negative impact of minus 1% for the first half and minus 0.6% for Q2, following the decline of input costs mainly passed to the joint venture. Our EBDA margin for H1 stood at around 12%, with Q2 at 11.7%. This represents an increase of nearly 300 basis points versus the first half of 2024. Variable margin improved following the implementation of cost reduction measures and input cost decline. Offsetting negative mix from growth in lactic acid to the PLA joint venture. Moving on to health and nutrition and starting with our organic sales growth. We achieved plus 6.8% for the first half of the year, with Q2 contributing minus 0.6%. Our volume mixed growth for H1 was 5%, with Q2 showing a decline of minus 1.1%, due to customer phasing within the nutrition part of the portfolio. The H1 growth was driven by all three business units, nutrition, pharma, and biomedical polymers. In the pharma business, we deliver double-digit fully mixed growth, mainly due to addressing the kidney dialysis market in China. In the biomedical polymer business, sales grew high single-digit, supported by increased sales in our three key markets, orthopedic, drug delivery, and aesthetics. Moving on to EBDA, H1 adjusted EBDA grew from 41.5 million to 47.5 million, driven by volume mixed growth in all three businesses. The adjusted EBDA margin grew 240 basis points to 32.1%, driven by leverage of fixed cost and positive pricing. In summary, our health and nutrition segment was impacted by some phasing in Q2, whilst having a positive momentum across the three key business areas. And finally, If we look to the results of Total Energy Scorpion Joint Venture, the joint venture achieved an organic sales growth of 5.6% for the first half year, with Q2 showing a year-over-year decline of minus 9.3%. The growth in the first half of 2025 was driven by volume growth of banks at low PLA prices. The JV achieved a margin of 9.7% for H1, with Q2 at 11.7% in line with expectations. We continue to expect high single-digit EVDA margins for the full year 2025. And with this, I would like to hand over back to Olivier.