Dsm-Firmenich Ag S/Adr

Good morning and thank you for joining today's call. I'm sitting here in our new Maastricht offices with Ralf Smijts, our Chief Financial Officer. We published this morning our first quarter trading update together with a short presentation to investors, which you can find both on our website. Here you can also find our disclaimers about forward-looking statements. Ralf will start by making some introductory comments on our trading update before we will open the line for questions. We've planned today for about 45 minutes for this call, realizing, of course, that for everybody, this is going to be a very busy earnings day. Sell-set analysts who want to ask questions, as usual, have to register via the questioner's link, which they can find on the website. It's the same as we always do. So for those who are familiar with it, it's the same procedure. By the way, those who have not done yet can still do that. And with that, let me hand it over to Ralf. Ralf, go ahead.

Well, good morning and thank you, Dave. And welcome to all on what appears to be a beautiful day, at least here in the Netherlands. Pleasure that you're taking the time this morning to spend some time with us. It's a bit short a call, as Dave alluded to. It's a trading update, so we want to just give you our perspective on how the business is doing. And at the same time, we're gearing up for Capital Markets Day, which is just only a couple of weeks away. And I look forward to seeing many of you on that day. Now, as said, the purpose of today's call is the trading update. So let's look at how our Q1 results have developed. And let me first zoom out before we go into the businesses. So overall, we had a very good start to the year. We saw the business overall return back to growth after a somewhat difficult 2023. That's very encouraging. But what's even more encouraging is the good sequential step up, both in absolute EBITDA and EBITDA margin. And that is what we've been guiding you for and been managing towards. So we're very pleased to see that that come come through. Also, what is very helpful in the whole context is that we're seeing an improvement market environment and that that you'll see reflected in our numbers and in our comments there, too. Perfumery and Beauty had a very good start of the year with a very strong sales in both fragrances and personal care. And as I said in the introduction comment, if you look at TTH after a lot of destocking in 2023, we're pleased to see good growth back in our taste division and also in our ingredient solution. HNC and ANH, there you see still a vitamin impact, especially comparing to Q1 last year. Now that should fade out going into Q2, where the combs are different, but that is very much reflected in the number set that you've been looking at since this morning. Correcting for that vitamin effect, Q1 shows a very encouraging picture with an about 5% volume growth and a 7% step up in the underlying EBITDA on a like-for-like basis. We're well on track also with our improvement program. Remember that we had twice 100 million underpinning our outlook for the year. We're well on track with that. And as included in the press release, we have a contribution of about 45 million. Remember that we already had some benefit in the second part of last year, which was estimated around 20, 25 million. And you can see that step up to about 45 million in the quarter. quarter and also since April 1 we're starting to prepare for the animal separation we announced that at the year end we also said that we're forming a team and that has meanwhile kicked off so that process has started as well Now let me zoom in into a couple of the business and moving to the next slide. We start with perfumery and beauty. We're very happy with the performance as highlighted of our perfumery and beauty business. The business saw a very strong volume growth in our fragrance business. particularly in the consumer fragrance. Overall, we recorded in this segment a high single-digit growth in our fragrance space with volumes even slightly higher because there was a negative pricing effect of about 1% to 2% on that. When you look at our reported growth, you have to factor into account our ingredients. plus the effect of Pinova. Remember that we had the fire in the plant in April last year, so Q1 is still very much impacted. Overall, that has about a 2% impact on perfumery and beauty in total, but the growth as reported is very much driven by ingredients, which is actually reflecting a negative growth, a double digit negative growth, because they were steering the business to value and not to volumes. And that is actually very nicely reflected in the margins and the absolute step up of EBITDA. Compared to a run rate of a little over 200 in the second half and Q1 last year, we actually see an absolute EBITDA of 234 million and also a very nice 2% step up in margin to close to 24%. Again, coming from a 22% level in both Q1 and the second half of last year. Overall, a very strong performance in perfumery and beauty, and we see a good momentum continuing into Q2. Then if we move to the next page, our TTH business. Also, they had a strong start of the year with good volume growth, both in taste and in ingredient solutions, with taste even being a bit better, reflecting high single digit growth. And I think both businesses benefited from an improved environment, but also with destocking effects fading away. Also here, a very good sequential step up in EBITDA. If you look back at the previous three quarters, we were at around 135 million level. we're back at 150 million level, more or less in line with Q1, but we're offsetting a small negative vitamin effect and a negative foreign exchange effect in these numbers as well. So we're very much encouraged, also reflecting in our EBITDA margin. So if you look at it, H1 2023 was around the same level as we now currently see back, and that's a percentage step up also versus the second half of last year. Very encouraged and very good results in taste, texture and health as well. Then on the next, moving to our H&C business. H&C had a bit of a soft Q1. Sales growth was negatively impacted with the vitamin effect, of course, versus prior year. You see that back both in our top line and into our EBITDA. But also we... We were impacted by the shortage of fish oil in the market on the back of the El Niño storm. Overall, the fishery harvest is low and that is obviously impacting on availability, but it also has a pricing impact. If you look at the overall fish oil, the pricing is up and we're trying to pass that on, but obviously it does have an impact on the overall business. If you look at some of the other segments as well, early life nutrition is still very much impacted by destocking, especially comparing to prior year. Dietary supplements, on the other hand, we reported a bit of a stabilization of growth at the end of last year. We see that momentum kind of continuing in Q1. But what is encouraging to see that towards the end of the quarter, we actually saw an improved momentum on that front as well. Now, you heard me already say that top line impacted by vitamins, and you actually see that back in EBITDA, especially comparing to prior year, the step down in EBITDA is fully driven by the ethics and the vitamin effect, whereas the benefits from the programs and the vitamin improvement program is somewhat offset by these costs that I highlighted. Then last but not least on the next page, our animal nutrition business. It's still a tale of vitamins where we saw them bottoming out in the beginning of Q1, but still impacting the quarter. And notably, the performance solution is keeping up. uh last year 2023 on average we had a high single digit growth and we actually see a good growth continuing in in q1 in this uh in this space as uh as well um and like i said the ebida impacted by those ethics and vitamins effect offset by an organic performance which is largely driven by our step up in in cost in improvements Now, summarizing that all together, that brings us to the outlook. The outlook is unchanged. Let me repeat what we said at the beginning of the year. We're guiding for at least 1.9 billion and very much driven by our self-help action, well on track, contributing 45 million in Q1. So the right moment for us to once more look at our outlook is at the half year. Then we have seen whether the current positive momentum in our markets and the recovery in demand is robust and continues in Q2. But moreover, it will give us good visibility on the second half. So we'll be looking at that later in the year. Now, for modeling purposes as well, we've included in this slide also our housekeeping rules. We communicated them at the beginning of the year. They haven't unchanged. And Q1 came in line with that. And especially on the net debt, because I think that is important as well. We guided you on the key elements impacting our net debt position in 2024. We do want to point out that some of these have or actually will materialize in the first half, where we are about to complete the squeeze-out process for the minority shareholders, having an impact of around 0.7 billion. We issued already a press release earlier in the year where we already bought back 4 million shares and we're completing that in H1. And the same thing is around the dividend payment and we've got our AGM coming up next week and following that we will be paying that in the first half as well. And we concluded our share buyback to underlying the management share plans. And I think that covers the overall note. So a very good start of the year for for us. And with that, Dave, maybe over to Q&A.

Yeah, let's time for Q&A. I already said at the beginning of the call had the cell set analyst basically can ask the questions via the questioners link and all the other participants are in the listen only mode. So I think we can start. Operator, can you pass the first questions through?

Ladies and gentlemen, we now begin our Q&A session. If you have a question, we ask that you please use the raise hand function at the bottom of your Zoom screen. Once your name has been announced, you can ask a question. If you want to withdraw your question, please lower your hand using the raise hand function in the Zoom app. Our first question comes from Charles Eden at UBS. Please unmute your line and ask your question.

Hi, good morning. Just checking you can hear me. Yeah, loud and clear, Charles. Good morning. Thanks, Ralph. Thanks, Dave. So just two questions for me, please. Firstly, on the value over volume strategy and ingredients in P&B, can you just comment on whether that's something historically Fermanish was doing anyway, or is that a sort of change in strategy post-merger that you've implemented? That was my first question. And then the second one, just in terms of EBITDA progression from here, obviously you've Penova goes into the base from Q2. But how are you thinking around sort of step up in cost savings restructuring? So any comments you can give us in terms of sequential EBITDA progression versus that just over 460 in Q1? Thank you.

Yeah, thanks, Charles, for that. Very relevant questions. Let me let me take take those. Let me start with the ingredients question. Obviously, things evolve over time and with with a lot of moving products. places and the development of our raw materials, etc. We also looked at our performance in ingredients and there you can focus better on values than volumes, because in the end also it's consistent in how we look and manage our business going forward. We also looked at it on the one hand, we focus on organic growth because we want to grow our business, but at the same time it also needs to be profitable growth. And within that, we're clearly doing that. And it's also part of the overall segment strategy that we're unfolding where we're saying, okay, where do we get the best return on our investment? And with that, we're also focusing on growing this business, but growing it in a profitable way. And hence, we're focusing on the value rather than just the volumes. because a good part of the production is actually used internally for captive use. And at the same time, we're then focusing on those markets where we have a good position and that actually drives a good bottom line performance as well. And you see that reflected in Q1 in our margins and EBITDA step up, but also already dripping through in the numbers in the second half last year. That may be pivoting to the EBITDA progression, very consistent with the way we manage the business. We want to continuously show a step up in absolute EBITDA and margin. Let me remind you, because I think that is something that you can see coming through. If you circle back a few quarters at Q3, we landed around 410. Q4, we landed around 440. And now we landed at 460. The same for the margin. Q3 was around 13, Q4 14. We're now reporting a 15% margin. So we continue to build that. And that will basically is also the direction that we're managing towards in the coming quarters. We said that you can expect a gradual build up from the contribution of those programs. And that is what we're managing towards in the periods to come.

Thank you.

Our next question is from Lisa Deneuve at Morgan Stanley. Please unmute your line and ask your question.

Hi, good morning. Thank you so much for taking my question. I just had a question on the fish oil shortage you quoted in HNC. And I'm sorry if I joined the call late and missed that. But could you sort of quantify the impact?

on on the sales and the margin and and how long this shortage may last and and how we should think about the impact in the future quarters from that yeah no thank you for that that question uh no overall fish oil is is used in in the dietary supplement space and marine lipids that that's a key ingredient there overall there is this shortage now we do anticipate that shortage to be more frequent and that's why also our Vera Mares venture plays in very nicely where we're converting the marine lipids more into an algae-based lipids and that is one of the reasons why we also communicated early that that is a part of the group going forward now circling back to the situation today fish oil is an ingredient going into those marine lipids there is a shortage you try and overcome that And it's predominantly a lack of availability, but also an increase in pricing. Now, our pricing, we normally pass on, but we do have to highlight here as well that it's continuing moving up. So the overall marine lipid space is around 150 million in size on an annual basis. And the cost impact is about 25 million-ish number for the year. Now, obviously, that had some impact in Q1. I think the impact in Q1 on the EBITDA is around 5 million and top line a little more on that front. So that's what we currently see.

Thank you very much.

Our next question is from Matthew Yates at Bank of America. Please unmute your line and ask your question.

Yeah, like this.

Hey, morning, everyone. I'd like to talk about the animal business for a bit, where profits actually have gone backwards sequentially. Can you help me understand whether that is driven by the revenue evolution and that you've got contract pricing still averaging down? and why we haven't seen more benefit from the cost savings or the restructuring come through. And related to that, I think you say you've done 45 million at the group level. Can you disaggregate that into vitamins versus fermentation, if I keep it simple like that? Thank you.

Good morning Matthew and thank you for the question. Now if you look at the animal nutrition space, momentum is turning there. You heard us say before that the current vitamin pricing is unsustainable and we have a good momentum there. However, at the same time, we're saying that the momentum should improve further because especially in the vitamin A, we're seeking a much deeper increase in terms of pricing in order for us to turn back production fully on. If you look at Q1, we've continued to manage the business for cash, very much controlling our inventory levels in the animal space. Now, when comparing sequentially, you have to take into account a few things. First of all, vitamin prices were still bottoming out. you still see a negative vitamin impact versus Q4 in the animal nutrition space, especially earlier in the year, January, February. Like I said, the momentum is better in March, and that will go into Q2. Especially then also with that improving momentum, you'll appreciate that we haven't been aggressively chasing up volumes because we have also an opinion that pricing still needs to go up more aggressively. especially around vitamin A, to be attractive. Another impact versus Q4 is avix. We still benefited from some tailwind from beneficial hedges in muting the negative avix effect that we noticed in 2023. Now, obviously, that still has an impact then also into the quarter. So if you look at it sequentially, there is a seasonal effect in animal nutrition. In general, it's coming back every year where H2 of any year is stronger than H1. So you see that actually coming back. And that coupled with the negative VIX impact and the vitamin benefit bottoming out, it basically overshadows the impact of the program. when you look at the programs we recorded about 25 million last year a few million in q3 about 2025 in q4 and now you actually see a step up of of 20 million now of that 45 million a good part of that more than half is actually in the animal nutrition space in in terms of allocation. You'll appreciate that we don't break it down. Then it becomes an exact science on the millions per BU, but that is roughly the split. And that also explains the effects from Q4 to Q1. But like I said, the momentum in animal nutrition is better and we should see a step up going into the second quarter.

And Ralph, sorry, I can follow up. You said the emphasis in running the business has been on cash, right? Today, you haven't given us much information about cash conversion at the group, but specifically in Animal, can you give us a sense of where you are in getting your inventory, your own inventory stocks back down to a more normal or low level?

Yeah, no, it's a great question. And yeah, we don't include it because it's a trading update, but happy to give some color on the working capital as well. Overall, working capital, let me immediately break it down into components because I think that is easy. when you look at inventory our inventory is more or less in line with the end of the year you usually see some seasonal effect in q1 you have to take that into account where on one end there's the harvest season on on a few of the things that you typically buy in the beginning of the year and you also build up some inventories ahead of the stops that are typically occurring in the in the summer However, when you zoom in specifically on animal nutrition there, we managed to keep our inventories flat as well, because you heard me say earlier that we're not aggressively seeking to take volume now, especially when there's a positive momentum occurring around vitamins. But overall inventory, so a little up, not out of worry. And we continue to work on that trend to bring that down. That hasn't changed. We have to take into account those seasonal effects. When you then look at receivables, very much in line, DSO very much in line. What is encouraging on the receivables is that the overdue for the first time is below 5%. You heard that was my ambition. I want to be closer to four. So we're moving into that direction. At the end of the year, we were slightly above six because of some delays, but we're to below level, the 5% level, which is good. And on the payables, actually no news very much in line. So we continue to monitor and manage working capital as well. in terms of our cash performance, and especially in animal nutrition. Now, with the positive momentum picking up, if volumes then start coming through as well, that obviously should help from an inventory ramp down as well, Matt.

Thank you, Ralph.

Our next question is from Isha Sharma at Stiefel. Please unmute your line and ask your question.

Good morning. I have two left, please. On perfumery and beauty, could you please explain why you continue to underperform your peers on top line growth, please? And related to that, could you explain to us or remind us what the seasonality in Q2 is on perfumery and beauty? If I remember correctly, it's a little bit of a weaker quarter. So just setting expectations, right? And the second question is on health, nutrition and care. You already called end of destocking in dietary supplements in Q3 last year with improvement in Q4. So what has changed now in Q1 and what should we expect here going forward? Because it was quite below expectations, both on top line and EBITDA. Thank you.

Yeah, no, I appreciate the questions. Let me start with P&B and the underperformance versus Peirce. No, I don't call the performance of P&B as an underperformance against Peirce. We're very happy with the performance that we see coming through. And I explained at the beginning of the call, when you look at the organic growth of P&B as a total, it's very much impacted by the ingredients where we focus on value and the effect of Pinova. When you look at the fragrance space, there we see a high single digit growth with volumes even being a bit stronger so we see a very strong performance and that is also reflected in the step up in absolute EBITDA because I think that is an important driver in this business and that is how we also stay our business. We see an 11% step up versus Q1 last year and when you look at it versus Q4 there's even a close to 20% step up in EBITDA performance and also The margin is very satisfactory. So overall, a strong performance in the fragrance space, if you ask me. Now the seasonality question, I appreciate that very much. That is something that we need to take into account when you look at the business in perfumery and beauty. then typically our Q1 and our Q3 are the better quarters in that sense. So you see a seasonality impact last year as well. It will probably not be as big as last year, but you have to take into account that there's some seasonal effects in the P&B business going into Q2. Then pivoting to H&C and dietary supplements. You're right, we called that out. We saw also then encouraging data coming through in Q4 that also was underpending. And if you look at the performance in Q4, we saw some growth there. Now, when you go into Q1, you see that growth stabilizing, but not yet picking up. But having said that, we did end the quarter with a much better momentum in the business, especially dietary supplement. And that is something that we expect to continue going into Q2. So we now have seen April results coming in. So there is a better momentum in that space going into the quarter. What the longer-term perspective is, is still to be seen, but we do see a better momentum starting Q2.

Thank you very much. Our next question is from Alex Sloan at Barclays. Please unmute your line and ask your question.

Yeah, hi, morning. Thanks for taking the questions. The first one, just on taste, texture, and health, obviously, Sorry, hopefully you can hear me. Thanks for taking the question. The first one on taste, texture and health, the strong volume growth that we've seen there. Is that a function of you're already benefiting from some early revenue synergies, which is helping market share gains? Or is this reflective just of a better end market demand? And then the second one, just going back. to the comments on EBITDA progression. So you outlined sort of 20 to 30 million sequential progress over the last few quarters. Is that the right way to think about the Q2 outlook from the Q2 base, which would, I guess, imply a 480 to 490 million sort of landing zones?

Yeah, Alex, good morning and thanks for questions. TTH, indeed strong volume, high single-digit growth in the taste space and it's on the back of good customer demand as well. And there you see the destocking effects fading out. Now there are some early synergies flowing through as well. When we met at the full year results, we also showed some insights in the pipeline development, especially in TTH, where the pipeline was building up to well above 100 million. And that is obviously something that continues. And there are some first benefits from that flowing through, not yet sizable that we call them out. But we will be giving some more insights also in a couple of weeks from now at Capital Markets Day, showcasing yet another project. live applications that we see with our customers. And that will give you a bit of a glimpse on the effects coming through. But I appreciate the question because it allows me also to once more reiterate that we're very pleased with the development of that pipeline and portfolio in TTH. Now, then when it comes down to the facing, we're not necessarily guiding for the quarters going forward. But I think that is the way to look at it. And we are managing towards a continued step up in performance from quarter to quarter. So I think directionally that is OK. So I would be disappointed if the second number would be an 8, though. So...

Thank you.

Our next question is from Nicola Tang at BMP Paribas. Please unmute your line and ask your question.

Hi there. Thanks for taking the questions. It was a few follow-ups on a few of the previous ones. Firstly, in terms of improved momentum into Q2, I think in the release you specifically highlighted HNC, but I think from your comments it sounded like you were talking about more broad-based across the different divisions. So perhaps could you just talk us through each of those divisions and some of the trends that you're seeing as we go into Q2? And the second question, I don't know if you mentioned it earlier, because I joined a little bit late, but Ralph, you just referenced the weekly sales pipeline that you've been tracking in TTH, and that as of Q4, it had gone above the 100 million euros. Could you perhaps give us an update on where you are today on this? Thanks.

Yeah, good morning and thanks for joining and happy to give you some insights on the momentum per business. Let me start in the sequence that we always use, P&B, very encouraged by the order book that we started the quarter with, especially fine fragrance. So that momentum is continuing. We saw a very strong growth in Q1 and that momentum is continuing across the board. It's both in fine consumer and, like I said, ingredients we're managing for value, but also they're encouraged by the start of the quarter. Then if we tilt to TTH, yeah, I'm gonna be a bit repetitive here. Taste, good briefs coming through, good order book. So that is continuing on the back of a strong Q1. And we basically see similar conditions coming through in our taste business and also ingredients. which was back to growth and is continuing that path also now in April. So very much similar. Then I think in H&C, it is a bit more nuanced in the sense that we did see a much stronger Momentum at the end of the quarter so much was better and that is actually reflective of the start of the year in H&C. So dietary supplements especially has seen some good momentum at the end of the quarter. And that is also going into April. Early life was destocking very much in Q1. We don't necessarily see it there yet. But also our eye health business and biomedical business is showing actually a very good order book at the start of the quarter. So we see the momentum predominantly in these spaces. And animal nutrition is very much around vitamins. I think you look at the same charts as I do, and I commented earlier in the years that we're happy to see that they're turning green. That is continuing, but I do want to continue to stress, and that's also how we manage Q1. Vitamin A is not at the place where it needs to be. There is a continued step up needed, so we'll continue to be careful with that. Vitamin E is trending up a bitwards as well. But usually what you see is that if that positive momentum is coming towards the end of a quarter, then the impact in the following quarter is not necessarily immediately visible. And that is much more impacting the second half. But again, it's a little early to see how all of that will play out. So we need to see that that is actually continuing in terms of good momentum, but at the same time coupled with a good and strong demand. I must say the pharma economics are improving on the back of software commodities. So we'll have to see if that is coupled with good strong demand that could provide a further opportunity in that space. Performance Solutions is continuing, had a strong Q1 and is expected to continue on that growth path and growth momentum also into the second quarter. Then TTH Pipeline, yeah, it continues to track. It's a nice graph. It's a nice line up. Allow me to hold back a bit on the number. We also have some news to tell in Paris. But very encouraged about the pipeline. But I think what we also want to do is bring out those life examples and make it tangible. We did that both at the investor event in Geneva and Princeton earlier into this year. We see good traction with our customers. So we've got a few things to showcase there, which we're happy to do. And then also enlighten a bit on the strategic direction of those three businesses in a couple of weeks from now.

Thank you. Our next question is from Fernand Boer at DeGroove Petercam. Please unmute your line and ask your question. Fernand, please go ahead. Okay, I think we have lost him momentarily. Let's move on to Sebastian Bray. Your question is next. Please unmute your line and ask your question.

Hello, good morning, everybody, and thank you for taking my questions. I would have two, please. The first is on the businesses within nominally animal nutrition and health that DSM would like to keep. I'm referring to Bovair and Veramaris. I suspect Veramaris did quite well in the quarter because of the higher fish oil prices. As a very rough guess, Am I right in saying that these two businesses accounted for approximately half of the absolute EBITDA in Q1 of 24 million euro? I'm just trying to understand what the run rate of the business excluding what is going to be sold is. And my second question is on ingredients. Ralph, I think you've spoken of a value over volume strategy in that area. Are you holding on to this business because DSM Firmenich has to, in the sense that it's not possible to carve out? Or could there be some portfolio action in this area as well? Thank you.

Yeah, thanks for your questions, Sebastian. Now, ANH, we're not commenting on the performance of these businesses on a quarterly basis, but I think your question is the right one. What is the run rate for animal nutrition in terms of carved out EBITDA? And then we continue to improve the EBITDA overall for the group when we announced the separation. We highlighted the strategic rationale on why we're doing that, that it comes with a different financial profile. But at the same time, we also announced that we need to restore that profitability of that business. And that has to come through our self-help actions. That's something that we're very much managing towards. But at the same time, there will be a macro component to that. Now, we lost about 350 million throughout that period. And we want to claw back a good chunk of that. And that should then be reflective in the overall normalized margin. Now, when it comes down to Beauvoir and Vera Mars, Beauvoir, we're still very much building up in terms of business. We're selling our pre-marketing volumes and early commitments that we basically produced to a tolling agreement whilst we continue to build that plan, which will be operational next year. So the EBITDA contribution is limited at this stage because we're very much in investing mode. Vera Maris is rightfully saying benefiting from the fish oil shortages as well. Prices are good. And there we are actually investing in improving the overall productivity. It's been very much a business about building volume, gaining the traction in the market. We've got that momentum now going. That allows us also to continue to invest in bringing the overall production costs down, because you first need a sizable volume to continue to do that. But the momentum in that business is good. It turned to profitability towards the end of last year, and that is something that we see continuing into 2024. then to your question around ingredients and the value and in terms of carve out i always say everything is possible should one want to but here it's important that if you look at the overall space our ingredients business is about a billion in size but on top of that then and and within that space there's about a 700 750 million flowing into the the fragrant and flavor players and we have about a similar size that is actually used for captive purpose I think what is the less appealing part of that portfolio is the sales going into industrial applications. That's overall around 250 million. That is something that one can look at. But at the time, we're focused on running the operation as efficient as we can. and continue to develop also new ingredients that we can actually use in in that space and we want to basically improve the overall profitability of that business going forward and then around the strategic lens of around the perfumery and beauty and the outcome of that we'll share a bit more about that in in paris and in a couple of weeks from now yeah let us honor the promise of not taking more than 45 minutes so let's go for one last question so one

person to ask questions before we close off. So operator, can you give us the last person to ask questions?

Of course. Our last question is from Artem Chubirov at Redburn Atlantic. Please unmute your line and ask your question.

Good morning, Raoul, and thanks for taking my question. A quick one on the self-help measures. You're guiding for 200 million of total contribution from cost savings and synergies for this year. Could you give us how the 45 million number sits in the context of 200 million, just to make sure I understand which part comes from self-help investments and which part comes from synergies, if anything? And lastly, maybe could you quickly provide any examples of how you are switching from volumes to value in ingredients? Maybe some particular examples of what products are you probably deprioritizing towards others? Thank you.

Yeah, good. So like I said, overall, we see a 45 million contribution of that. When you circle back to Q4, we also said that we see a contribution, but obviously the synergies started to kick in a little earlier than the benefits from the vitamins, and that is something that you now see continuing. I think now if you look at the step up in the quarter, I think the contribution is around half-half. in terms of step up without being exactly but on track with both programs. And what we said is that you see a continued build up throughout the year in terms of benefits. Every time you basically bring new initiatives, you negotiate new contracts and you benefit from basically benefits, especially around also our cost position on inventory and products. to come through gradually when you also work through your inventories in the period. So roughly in Q1, about half-half in terms of contribution on that front. Now, the ingredients and value, you'll appreciate that I like to stay away from individual products also from a competitive point of view. But I think you're spot on in terms of is that when you look at your portfolio, there are portfolio where you're saying, hey, do I actually need to spend and invest money in order to generate them? And what kind of calories do they actually add to the bottom line? Or are you actually saying, hey, I'm actually repositioning some of those and I can actually upscale and focus less on the tail of that the product typically has. And that is basically the analysis that the PNB team has done, carefully looking at that and saying, overall, if you want to be part of DSM Feminist, you have to have a certain financial profile. And that's one of the elements that I remember when we explained the overall segmentation analysis that we were doing, financial performance was one of the metric and financial performance was in terms of EBITDA performance, in terms of growth potential and the like. We've basically applied that lens to every segment that we operate in of a certain size, including our ingredient space. And that is what we're doing. And within that, we looked at products. Where can we actually optimize? and basically take less volume, but focus on those value applications. And with that, basically also manage our production asset efficiently. So that's the approach that we've done. And we are happy that the first benefits of that are actually flowing through and we anticipate that to continue going forward. And with that, maybe...

Yes, go ahead, operator, but I think we're done with the Q&A session. So, Rolf, maybe some closing remarks before we close the call.

Yeah, thanks, Dave. Happy to do that. So, again, I want to repeat a very encouraging start of the year, especially with a good market dynamic and momentum in many of the spaces that we operate. So we continue to work on a sequential improvement throughout the year. Our priorities for 2024 are clear. It's about the synergy delivery. It's about improving the overall vitamin profitability. Teams are very much geared to that, whilst at the same time being disciplined around our working capital and our cash performance of the group. And with that, I really look forward to seeing many of you in a couple of weeks. We will be spending the majority of the time around three core businesses and we'll unfold the strategic plans around that. And with that, I think we go back to managing our business and focus on Q2. And we'll then see you in a couple of weeks.

Thank you, everybody, for listening in today. As we already mentioned, we're looking forward to see you in Paris. Actually, we have a very high interest from you, so we must see many of you in Paris. It's going to be busy. If you have any questions you need to ask before the CMD, but my team will be very busy with the CMD, please don't hesitate to reach out to us. With that, I wish you a good day. Operator, back to you. Bye.

This concludes today's call. Thank you for joining everyone. You may now disconnect.