Corbion NV

Good morning, everyone, and welcome to Corbian's full year and fourth quarter 2025 results conference call. This morning, we published our full year 2025 results press release and presentation. These can be found on our website at www.corbian.com, investor relations, financial publications. Before we begin this morning, please note that today's discussion will include forward-looking statements based on current expectations and assumptions. These statements involve risks and uncertainties that could cause actual results to differ materially. Corbian does not undertake any obligation to update statements made during this call or in today's publications. For further details, please refer to our Annual Report 2024. With me this morning on the call are Olivier Rigaud, Chief Executive Officer, and Peter Kazius, our Chief Financial Officer. I would like to hand the call over to Olivier to present on the business performance. Olivier.

Thank you, Alex. And good morning, everyone. Thank you for joining us today to discuss Corbion's fourth quarter and full year 2025 results. I will start with our business performance, after which Peter will cover the financials in more detail. 2025 was a strong year for Corbion. We delivered solid organic growth a significant improvement in profitability, and strong free cash flow generation. Volume mix growth reached 3.4% for the full year, accelerating to 8.8% in the fourth quarter, reflecting healthy demand across our portfolio, particularly in health and nutrition and in natural preservation solutions. Profitability improved substantially. Adjusted EBITDA reached €204 million for the full year and €48 million in the fourth quarter, representing organic EBITDA growth of nearly 27% for the year and nearly 40% in Q4. Free cash flow generation was strong. We delivered €91 million of free cash flow in 2025, including €58 million in the fourth quarter, supported by higher earnings, disciplined CAPEX, and tight working capital management. As a result, earnings per share increased to 1.29 euros, up more than 60% year on year. We are proposing a special dividend of 0.34 euro per share in addition to regular dividend of 0.64, underscoring our commitment to consistent shoulder returns. Overall, we delivered strongly in the fourth quarter, met our full year's commitments, and enter 26 with a clear strategic direction and into execution of our Bright 2030 ambition. Bright 2030 defines Corbion's next phase of growth as a focused specialty ingredient leader in natural preservation and nutrition powered by fermentation. This is where we win and invest. We build on the strong progress of Advanced 2025, a streamlined company stronger margins and balance sheet, improved food ingredients performance, a profitable omega-3 DHA business, and a sharper portfolio after the emulsifiers' divestment. Corbion is now more focused and ready to grow. Our priorities are clear. Invest in natural preservation, nutrition, and biomedical polymers. Strengthen innovation, reduce non-cholactic acid exposures, and review strategic options for PLA. Our ambitions that we presented last November, 3% to 6% organic growth, 18% dividend margin by 2028, 270 million free cash flow over three years, 13% ROCHI and double the GDPS growth. Bright 2030 is focused, disciplined, and built on our strength. Let me now turn to functional ingredients and solutions. This segment delivered a solid performance in the mixed market environment. Our food business showed good momentum, driven by continued demand of natural and label-friendly preservation solutions. At the same time, some end markets remained soft, partly in North America, where inflation continued to impact demand. We also continued to expand in attractive adjacencies, including natural mold inhibitors and listeria control where we see strong long-term growth opportunities. Operational execution remains strong. Our circular lactic acid plant in Thailand is ramping up according to plan, and our sourcing initiatives are delivering benefits. Combined with input cost relief, primarily sugar, and structural cost improvement, this resulted in a 200 basis point improvement in adjusted EBITDA margin keeping us on track towards mid-teen margins by 2028. On the second segment, health and nutrition, we also delivered another outstanding year, and this remains a key driver of growth and profitability. We saw continued expansion of algae omega-3 DHA, with growth extending beyond aquaculture into pet food and into human nutrition. Biomaterials performed strongly, supported by demand in drug delivery, orthopedics, and aesthetics. Our pharma activities continue to grow, driven by medical grade lactic acid derivatives. Despite some quarterly pricing volatility, the segment delivered an adjusted EBITDA margin of 32.5% for the full year, reflecting the strength of our portfolio and the stability of long-term customer relationships. We also continue to strengthen our personal platform including the bottlenecking omega-3-DHA capacity and ongoing grain optimization. Looking forward, we will benefit from further relief in sugar input costs and increases of fish oil prices driven by the supply and demand gap. With that, I will hand over to Peter to walk you through the financial performance. Peter?

Thank you, Olivier, and good morning, everyone. I will now cover our financial performance for Q4 and the full year 2025. If we look to the full year sales and adjusted EBDA, we see that group sales for 2025 amounted to 1,267,000,000 for the full year. The organic sales growth was 2.2%, driven by positive volume mix in both segments. As anticipated, we had a stellar sales growth in the fourth quarter in H&M. The organic growth was more than offset by negative currency effects, mainly from the US dollar. As a consequence, full year results growth was minus 1.6%. The US dollar last year was on average 1.13, and prior year it was 1.08. The adjusted EBITDA increased to 204.3 million, representing a 26.7% organic growth. This improvement was driven by strong performance in both health and nutrition, as well as functional ingredients and solutions. The adjusted EBDA growth, including negative currency effects, was plus 16.7%. If we now look to the full year P&L below sales and EBDA, we can see that the adjusted EBDA margin went up with 250 basis points to 16.1%. Depreciation went up with 1.8%, which is the combination of the start of the depreciation of our new electric asset facilities, partly offset by currency impact. Adjustments in the year were very limited and mainly related to an impairment of a small asset. If we go to financial charges, overall there were 17.5 million. These increased year over year, mainly due to currency effects, partly offset by lower interest costs. These currency effects are mainly related to intercompany positions. The financial charges in the cash flow statements were 10.6 million. If we go to the results from joint ventures, it's negative minus 4.1 million, which consists of a positive EBDA of 10.1 million in the joint venture, which of course 50% is attributed to our results, offset by a depreciation of 8 million and interest paid to both shareholders of 10 million, of which 5 million is included in our financial income and The effective tax rates for the year was 21.2%, which was benefiting from currency-related tax effects. The anticipated effective tax rates for the coming years, as we disclosed in our capital market today, is around 27%, following the tax jurisdictions where we are present. As you can see, our earnings per share reached 1.29, which is an increase of 63.3% versus prior years. If we look into functional ingredients and solution, we see an organic sales growth of 1.1% for the full year. This is driven by a positive volume mix of 1.9%, driven by food and lactic acid to the joint venture. The volume growth in food is supported by momentum in natural preservation and shelf life extension. The growth to the joint venture is following the volume growth in the PLA market. The biochemical segment was slightly down following softness in some end markets. Pricing was minus 0.8%, which is following the input cost and a pass-through mechanism through the joint venture. If we go to adjusted EBDA, we've seen an improvement versus last year of 230 basis points. The full year EBDA is 11.1%. which is driven by cost savings and input cost relaxations. Q4 margins decreased sequentially, driven by inventory movement following reduced inventory levels during the quarter. You might have seen in our free cash flow statement that our inventory basically reduced by roughly 15 million in H2. The positive free cash flow in the quarter was therefore driven by a significant reduction in inventory. If we look to health and nutrition, organic sales growth was 6% for the full year and nearly 25% in Q4. Growth was driven by a strong volume mix across all the three segments, nutrition, biomaterials, and pharma. Biomaterials sales grew due to increased traction in drug delivery, orthopedics, and aesthetics. We see continued growth in pharma, driven by higher volumes with positive pricing. And organic sales growth in nutrition has been driven by volume growth, partly offset by reduced pricing. The adjusted EBDA increased to 96.6 million with a full year margin of 32.5%, which was up 260 basis points versus last year. Despite lower omega-3 prices in Q4, we've maintained our margin in the quarter. This pricing was due to a high share of non-contracted business. If we look to the results in the joint ventures, then the joint venture sales increased 4.8% in 2025, which is driven by increased volumes of partly offset by lower pricing. The lower pricing did have an impact on the full year margin, and you've seen a margin of 7.5% for the full year. The Q4 margin is also impacted by inventory movements related to a planned maintenance shutdown in the quarter. If we look into next year's, then we anticipate to come back to a double-digit EBDA margin for the full year. And this is driven by cost reduction measures in the joint venture, as well as lower anticipated input costs. Capital expenditure in 2025 amounted to 68.5 million, with maintenance being around 44 million and expansion around 24 million. The expansion capital was mainly supporting the nutrition capacity projects and the insourcing of vinegar, supporting the food business. Operating working capital improved to 24.2% of sales, which is the lowest level since 2021, with inventories being reduced with 100 basis points year over year, mainly impacting the second half of the year. Free cash flow therefore reached 90.8 million, which was reflecting the strong EBITDA delivery and our disciplined CapEx and working capital focus. Based on our results and the cash flow generation, we propose to distribute a dividend of one euro per share, consisting of a regular dividend of 64 cents per share and a special dividend of 36 cents per share.