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.

shareholder return with that I would like now to hand over back to Olivier for the outlook so looking ahead to 2026 we expect organic sales growth of three to six percent and adjusted a bit the margin of around 17 percent and free cash flow between 85 and 90 million euros capital expenditure is expected to be around 80 million and and we target double-digit growth in adjusted earnings per share. Adjusted EBITDA growth will be second-half weighted, reflecting phasing effects in the first quarter. Overall, we remain confident in our strategy, our portfolio, and our ability to deliver sustainable value creation. Now, Peter and I are happy to take your questions. Operator?

No, me. Thank you, Olivier. Call participants. If you'd like to ask a question this morning, please press star 1 1 on your telephone, and you'll be placed in the queue. Our first question this morning comes from Robert Jan Bos from ABN AMRO AutoBHF. Robert Jan, please go ahead.

Yes, hi. Good morning, all. Thanks for taking my questions. I have a few questions on the H&M division. Pricing, far more negative than expected. You mentioned temporarily lower official price and also more exposure to shortened contracts. So first question is, since you mentioned a temporary impact, how is the pricing situation currently and what should we expect for pricing in the division in 2026? That's my first question. Second, Peter, you rightfully said that EBITDA profitability in the division remains quite stable in Q4 despite this pricing effect. Is that purely the volume leverage impact because the volume growth was very strong? And related to this, do you expect to be able to maintain EBITDA profitability of the levels that you've shown in the full year 2025? And last question. At the CMD, the 3 to 6% organic sales growth guidance through 2028 was including 8 to 10% for H&M. Is that also a range that we can anticipate in 2026, knowing what you said about Q1? And my final question is on PLA. Can you provide a bit more color on the progress that you made since the CMD when you announced that you were looking to sell your stake. Thank you. Okay.

Thanks, Robert-Jan, for the question. And let me do them one by one. And let's start with the outlook. So the outlook, we reiterate indeed the CMD, which is an organic sales growth of 3% to 6%. as well as the growth we anticipated both in functional ingredients and solutions, as well as health and nutrition. If you look in terms of H and N in the fourth quarter, we've seen indeed a negative pricing impact, which is driven by a high share of home-contracted business following fish oil prices. which, as you know, went down during the course of this year. And the good news, by the way, if you look to the last year, is nicely going up. If you look to the expectation for next year in the aggregate, I anticipate a mild decline in terms of pricing of H&N. But in terms of the total margin, I anticipate still an EBDA margin of around 30% for the full year. And this is driven by the combination on the one hand of mildly lower prices, but on the other end, the main input cost also in H&N is sugar related. which is on a positive kind of journey. And positive means lower prices, so positive impact in terms of EVDA. In terms of your question on PLA, we started to execute a plan to sell our interest in the joint venture. I would say we are fully on track with this plan in executing it, and I anticipate to share more news by mid-2026.

I think I answered the question.

Yeah, I think you addressed them all. Thank you.

Thank you. Thank you. Our next call this morning comes from Setu Sharda of Barclays. Setu, please go ahead.

Yeah, hi. Thanks for taking my question. So again, a question on the three to six percent guidance. So basically, what are the key variables you think for achieving whether it's going to be three percent or six percent? So what would be the key sensitivity over here? And my second question would be about the first division, like how much of the slowdown and first division is your end market weakness, or which is cyclical, or there might be some structural reasons because of the GLP-1 penetration.

Yeah, okay. Thanks. I will answer the first one and then Peter on the second. So, yeah, when you look at the 3% to 6% key variables, obviously two different things. Peter just mentioned, you know, our confidence into the H&M for the year. So when we see a continued momentum despite the high company we mentioned in Q1. On fees, as you know, it's really, I think, related to, of course, our high exposure to the North American market where we've seen some softness into some of the key markets as they create the meat last year and we see two different dynamics in the market also relating to your point on GLP-1. One is on one side following the cancellation of the of course financial support by the administration for you know lower income people. We've seen really our customers asking for more affordable recipes and reformulation asking to you know, as to help them reduce cost in use. But you see that basically there is a reduction in demand also on the more, let's say, bulky categories as bakery and meat on one side. And that is something, obviously, that, again, we are tracking very closely, but we see really some decline in terms of overall consumption in the US market on the low end. And there is, I mean, the other angle on the more indeed sophisticated product and the nutritious product backed on the GLP-1 trend, but also on the Maha trend in the US where we have a lot of requests to reformulate more nutritious products, higher protein, higher fibers. We see also more supplement in terms of mineral salts related to our calcium lactate, magnesium lactate type of products. So we see a strong demand. So this is a part where we are feeling pretty confident and have a good pipeline. Now, I have to say the US is still lacking visibility with basically a lot of volatility coming from the discussions around tariff. We've said a few times that basically we do not have a large impact coming from tariffs, but this is where we have the lowest visibility. On the rest, I think we have good momentum primarily in regions like Asia Pacific and LATAM as well. So this is a bit what we see happening as market dynamics there. On the FIS, Peter, maybe you take this one?

Yeah, if you look in terms of FIS Q4 CETU, and if you look a bit on the dynamics and the build-up, then there is underlying positive volume mix in the food business. If you look to lactic acid in the joint venture, they are actually, although full year we've seen a positive volume momentum, their Q4 is negative. So if you look into the kind of underlying businesses specifically for food, I think there where we do plan to grow and also plan to grow into next year, those businesses are actually nicely and nicely.

okay thank you our next question this morning comes from vim hosta from kbc securities vim please go ahead yes sir good morning everybody thanks for taking my questions i have three please uh can you maybe co comment on the overall raw material cost outlook for you in 26 That's the first question. Second one is on the omega-3 business. There was a certain degree of spot or shorter-term contracts in 2025 that played a role in the pricing. Can you comment on the duration or the average duration of your contracts for 2026? and the overall pricing levels in a bit more detail. And then third question is on PLA. I think you mentioned to expect an improvement in EBITDA margin in 26, and you explained the leverage there on cost efficiency, et cetera, but can you maybe comment a little bit more on also the volume outlook for the PLA business? How do you see that evolving?

Okay. Thanks. So we, so I will answer, I mean, uh, uh, the, the omega three, uh, and Peter, the, the remote outlook and the PLA margin. So, um, but let me start with omega three short term contractor, as we discussed, uh, in the past, uh, you know, we have roughly a two third of our business that is on a longer term contract where there, you know, uh, we have, um, good visibility on pricing and these are prices. that we are not tying up to any, let's say, monthly or weekly fish oil price variations. We have more stability and visibility on that part. On the non-contracted, usually, the market rules there range from either monthly to quarterly contracting on that part. And what we've seen last year is that we initially booked some deals for Q4 prior to the increase in fish oil price that the market saw starting in October, November. So levels, again, if I give you high level numbers of fish oil pricing used to be around the $3,000 in the course of Q3, went up close to 4,000 in the course of Q4. And the latest one, if you look to the trend over the last two, three weeks, is more around 4,000, 4,200. But at the time, we had some contracted business on the short-term type of customers in Q4 that we agreed at the previous official price. So going forward, we are feeling really good because we see the current trend on official dynamic. And we are waiting for further news on these famous fishing quotas from Peru. All indications have been confirmed that these quotas are going to be much lower than a year ago. And obviously, when you look at the supply gap, these are all very difficult metrics to get in aggregate. But speaking with the major industry actors, people do believe that the supply gap by the end of 2026 is going to be around 50,000 tons of fish oil deficit. Now, these are assumptions, so we have to be cautious with that. but but it just i think to me confirms what we have basically also communicated a few times that uh structurally this market is getting into structural shortage now let's see how price going to develop on these short-term contracts for 26 uh but on the contracted we have good visibility on raw material peter yep so if you win overall look raw material then then

as you can follow the New York 11 prices, which are coming down or did come down quite substantially over the last, let's say, two years. That's slowing into our P&L, also continues to flow into our P&L next year. So sugar is a clear benefit. If you look to all the other raw materials, on average, they're around stable. And where we have seen some minor increases, we actually passed that through. So I anticipate that if you look from a pricing perspective, a bit of positive impact, of course, there is one assumed negative one, which is the pass-through of the joint venture, because the sugar prices, we basically hedge together with the joint venture. So if I look overall, raw materials on a downward curve. That also brings me to your margin question on PLA. If you look to the margin this year around 8%. Then there are indeed two key levers bringing that up, which are the reduced input prices and input prices raised as our price to the joint venture, as well as cost reduction measures which were taken in the joint venture during Q4. If you go back to kind of the volume price dynamics, we've seen price erosion in the joint venture And I assume that we are roughly at the kind of curve that we don't see further price erosion. And I do expect a volume increase in the joint venture, also following the volume increase in this year, basically in 2020, 2025. I hope that answers the questions, Wim.

Yes, very clear.

Thank you very much. Okay, thank you, Vim. Our next question this morning comes from Reg Watson of ING. Reg, please go ahead.

Thank you. Morning, all. So I have three questions, if I may. The first one is the inventory adjustments, Pete. I think in the press release, the margin in FINS was impacted by inventory adjustments. I'm wondering if you could elaborate on that a little more, please, and quantify the hit there. That's the first question. The second question is on the EPS guidance range for 2026. I think you mentioned double digit EPS growth. Now, I think it doesn't take a mathematician to work out the double digits is 10 to 99. And I'm wondering if you could narrow that range for us a little, please. And then the final question I have is this phasing of customer buying in Q4 in H&N versus Q1 this year. So, again, you've highlighted that there is a shift from one quarter to the other. I'm wondering if you could also quantify that for us as well, please, because clearly 40% volume mix growth in Q4 is exceptional. It would be useful to know how much of that was phasing. Thank you.

Let me pick the inventory adjustment and the EPS, and then Olly J. will comment on the phasing part. If you look to inventory adjustments, and happy to quantify a bit, if you look in terms of the element in terms of inventory, I mean, as I said, a reduction of 50 million, of which the vast majority is in Q4. And if you look to the impact of inventory movement, how we call it, it's a couple of millions. So from that perspective, it's quite substantial. If you look in terms of EPS growth, and if you look to double digits, I don't anticipate to be at 99, Reg, frankly speaking. If you look to the kind of shape in terms of earnings per share, I would be more on your lower part of the range of 10 to 99%.

On the phasing, Reg, so basically two things. The first one is the phasing we spoke about before was really phasing between Q3, which you remember was low, into Q4. and not, you know, getting anticipated sales in Q4, although indeed it was really good, but we benefit from a lot of these non-contracted deals that we had at that time in Q4. What's important is what do we see in Q1? Because, you know, we are still basically have some customer concentration, as you know, in aquaculture. This is a market that is quite concentrated, and this is why also we are pushing really hard to grow beyond aquaculture as well into pet, nutrition, and human. But still, you are dependent on a few large contracts. So what we see happening in Q1 is that some customers, you know, probably anticipating further fish oil price increase have increased their inventory in Q1. You know, and although we are contracting, we feel very well, you know, for our contracting position for Q26. What they have told us is that it's going to be really more of a load from Q2 going forward. And this is what we see, knowing that you play in aquaculture primarily, which is where the big volume lies still today, on a few large customers. And it's exactly the same phenomenon we have seen to some extent in Q3, between Q3 and Q4. that we anticipate now for Q1 and we see happening in Q1.

Okay, so just to be clear then, so the Q1 phasing is more delay later into the year rather than a shift of demand from Q1 to Q4, is that correct?

Exactly correct, yeah.

Okay, thank you, thank you. And if I may be really cheeky and ask one final question, a technical one for Peter. Just on the gypsum-free lactic acid plant ramp-up, you mentioned that you started depreciation increased for 25. How is that expected to unfold in 26? Do you expect the depreciation charge overall to increase year-on-year, and by how much?

So I anticipate depreciation to indeed increase a bit in 2026, because we started that and we are slowly ramping it up. And also here, I would say, Luke, a couple of milieus, but not an overall significant impact on that.

That's great. Thank you very much.

Okay. Thank you, Reg. Our next question this morning comes from Fernand de Boer from the Grof Petercam. Fernand?

Yes, good morning. Most of my questions have been answered, but one is on the PLA joint venture. I saw you moved it now to assets for sale with being 69 million. Does that mean 65 million for the loan provided to the PLA joint venture and then only a book value for the equity of 4 million? That's the first one. And just to be clear, because I had this discussion this morning and I thought that the The phasing of Q1 was indeed to Q4, but that's not okay, of 25, but that's not okay. So it's later in the year that I heard that correctly from the previous question.

Yes, correct, Fernand. On Q1, just confirmed my comments, just made to Reggie.

Okay. And then maybe one question. You opt for a special dividend. What's the reason behind that and not to go for a share buyback?

Let me answer the two questions. One is asset health for sale, which is the 69.2 million. And asset health for sale is really because we are in the process to selling it. And that is the combination of the equity and the loan part of the portfolio. So if you look into last year, part of our kind of financing in the joint venture was in loan and partner and equity. The 69.2 million is the book value, which is the combination of the loan as well as the equity stake in the joint venture. And it's the book value from that perspective.

Last year, the book value of the loan was $65 million. Or do I have that wrong?

I need to double check. And of course, this is a dollar loan. So the dollar will have an impact on that one. So I think year over year, it should be the same. But it can be reduced driven by the US dollar. In terms of special dividends, I think this is really underscoring our commitment to shareholder returns and why special dividends has to do with execution and associated tax impacts.

So also going forward, that means that share buybacks is going to be difficult anyway. So if you would sell VLA, JV, then it's going to be difficult to allocate that money to those proceeds to a share by bet.

The answer is based on what we announced today, that will be not that difficult.

Will be not that difficult. Okay, thank you.

Okay, thank you, Fernand. We have two more analysts in the queue. The next question will come from Eric Wilmer of Kempen.

Eric, please go ahead. Thanks for taking my question. Good morning, all. I had a question on the margin expectation for this year. You're anticipating 100 base points year-on-year EBITDA margin improvement. supported by preservation and nutrition, which both seem subject to a certain degree of price erosion. If I'm not mistaken, you're also highlighting a 30% EBITDA margin for H&N this year. So this would imply quite a serious step up in FI&S profitability. Is the main component here sugar pricing? And I was also wondering with regards to the tough comps or the tougher comps in Q1 To me, it seems it would also apply to preservation, just looking at the margin you managed to print in Q1 last year. Is that correct? And last question. Some of your competitors are emphasizing rosemary extracts as a natural preservative, and it seems like end markets are broadly similar for this type of solutions. In which categories would you argue that lactic acid-based solutions screwing up for these rosemary extractors is really not apples to apples? Thank you.

Okay, let me pick a couple of questions. So the first one, you are fully right. So if you look to the margin stackup of 16.1%, which is the EVDA margin this year, to be around 70%, that is mainly driven by functional ingredients and solutions. Because in health and nutrition, I anticipate to be around the same margin level. If you look into functional ingredients and solution, it's indeed a combination of maintaining slash increasing prices in parts of the business whilst, as I explained, the electric acid to the PLA will be at lower prices, combined with lower sugar prices and some cost efficiency measures which we have taken and there is a bit of flow out. So all in aggregate, that's explaining that one. You're also right if you look in terms of FIS Q1, that if you look to the comparable last year in FIS, because you might recall that the volume mix growth Q1 2025 over Q1 2024 was 7.3%. So in FIS, indeed, the comparable is playing a role as well.

On your second question, Eric, so basically, we are also active in the Rosemary, but we are sourcing with basically strategic partners. And what we are doing is building solutions between rosemary and, for instance, our vinegars. Now, just maybe to explain how we see it to your question related to lactic acid, if you look at natural preservation, one approach for certain spoilages to acidify foods with natural organic acids, so this can be, indeed, lactic acid or other organic acids like propionic that you get through fermentation. Another is to prevent oxidation. in the different categories. And this is where rosemary is being used. And it could also be that it is used in combination with other natural antioxidants. And we see that as a nice opportunity because this is a bit what we explained in the CMD. We would really also like to add this technology of botanical extraction to our portfolio because we speak about rosemary as a big one. but you see also you have a lot of polyphenols coming from grape or green tea that are strong antioxidant, or ascorbic acid that is also a natural vitamin C coming from acerola berry. So there is a family that represents very nice adjacencies, which is highly complementary to lactic acid that provides a different functionality in terms of antioxidation versus acidification. Don't want to make it too technical there. But to your point, this is not competing, it's complementary.

That's very clear, both. Thanks very much.

Yeah. OK. And our last question this morning comes from Carl Zota from Kepler-Shavroot. Carl, please go ahead.

Yes, good morning. Good morning all. Thanks for taking the questions. A couple of follow-ups. But first thing, maybe the gap between the organic EBITDA growth and the reported growth was very big in the fourth quarter. Is this all currency related? And how should we think about that going into 2026 where currencies stand today? And then the other question is around the networking capital I already highlighted here. But what's really based on lower sugar prices and COGS if you look to the working capital and where you see the improvement from tighter or more strict working capital management? And then the third question is in relation to the pharma business. That's seen good growth this year, but what's driving the growth in pharma? Thank you.

Let's have Peter answering the first two and I will take the pharma.

Yeah. So if you look to the currency impact in Q4, then it's related to the US dollars. It's around six and a half million. And if you look to the currency then, and if you look Q4 2025, the average is 1.17. And if you might recall, it's a long time ago, We talked almost about US dollar parity, I think, at that moment in time. But in Q4, the average one was 107. So there is a 10 cents difference. And if you do that 10 cents, then that explains it. If you now, I did mention the average US dollar rate is 1.30 in this year. And if you currently look to the US dollar, it's trading on the 118 kind of level. So that means that there is a further impact anticipated into 2026 as well, where it currently stands. If you look in terms of the reduction in net working capital, the majority is volume driven from that perspective. We ended at 24.2% in aggregate, which is indeed a reduction. In the capital market day, I did indicate that I anticipate operating working capital of around 24% for the coming year.

Okay, so on the pharma business, basically you have two key drivers there. So one is looking to the more traditional outlets of pharma in terms of dialysis and family kidney dialysis. But what you see, unfortunately, globally is still you know, increase in obesity rate and type two diabetes triggering at one point by end of life, you know, more kidney dialysis. So that's something we see as well, a lot happening in some of the emerging markets and developing markets. And the second that is also interesting that we've seen developing across 25 is also this similar type of products being used for electrolyte solution. where there is indeed a very good mineral balance you need also into some health condition. And we see that as a kind of adjacency growing now very nicely on top of the traditional dialysis business, so that is really also stimulating growth there. So that's the two drivers behind CARO.

Thank you.

Yeah. And actually, our queue is populated with a returning question from Robert Jan Vos. Robert Jan, please go ahead.

Yes, hi. Apologies for coming back, but I have a question on the special dividend. The words suggest that it is a one-time event, but your financial leverage is low. It's actually at the lower end of the optimal range that you guided earlier. at the CMB. On top of that, you guide for another year of strong free cash flow of 85 to 90 million. So my question is, and that is not even taken into consideration, some proceeds for the PLA business. So my question is, will you look at this on a yearly basis? Should we anticipate a special dividend more frequently than only for fiscal year 2025? Or as an answer to one of the previous questions, will you look more at share buybacks?

It's a great question, Robert-Jan. So if you look in terms of the dividends, I would see that as a yearly kind of dividend proposal. It's also subject to approval in the AGM. And in terms of your other question, I refer to that we have a balanced capital allocation policy and continuously review our cash position overall. I want to make one comment on your leverage one. You're absolutely right. We are on the low end if you look to governance, net debt, EBDA, which is the kind of leverage in our banking governance, we still will repay the kind of subordinated debts and we start doing that basically in the course of next year.

Yeah, that's a fair addition. Can you remind me what was the difference if the reported leverage is one and a half?

It's 100 million, which you talk on. And of this 100 million, by the way, 16 will need to be repaid into next year.

What is the difference on the leverage points? It's not one and a half, but it is then actually, if you add the subordinated loan, it's a bit higher.

0.5, you need to be divided by the EBDA of this 204. Yeah, clear. Thank you.

Thank you, Robert-Jan. We have one more returning question. This is from Fernand de Boer of De Groot-Peterkamp. Fernand, please go ahead.

Yes, thank you for taking my other question. In your outlook, I heard now several times that actually you will have the benefits coming in from the lower sugar prices. So that I understand. But from the other hand, sugar prices are also relatively volatile. So if you then look at your medium term target of 18%. How much does that depend on lower sugar prices?

No, it's a relevant question, Fernand, because you're right, it's volatile. However, you know, we have this edging policy that is a very strong governance where Peter and I, you know, have a risk committee on a monthly base and we decide our edging on some of the commodities and sugar is a big one. And of course we are fully covered for 26 and now we are almost really covered for three quarters of 27. So we have a great visibility going forward on that part of our cost. So that is also important to assess that you will not see quarterly volatility in input cost related to sugar going forward. We do that for sugar, we do that for corn and for energy. So, So although it's a part of our 18%, it is not the only part. We have these three levers on getting above 18% margin. One is this input cost, but the second one is really portfolio enhancement. So continue to, of course, grow much faster in the three specialty segments of H&M. That's, I think, quite important. And the rest is really benefiting from all the investments we've done over the last years where you need to see the return on, primarily thinking about the thylactic acid plant. If you remember, we committed to create quite a nice additional value from both in sourcing but also getting, you know, the thylactic plants running flat out, and this also going to contribute to our cost base.

Okay. Thank you very much.

Okay. It looks like there are no more questions this morning. I look forward to engaging with all of the analysts and investors at our upcoming roadshows and conferences. A replay of today's call will be available later today on our website. So thank you all, analysts for attending and webcast attendees for listening in.