DSM-Firmenich AG

Good morning and thank you for joining today's call. I'm sitting here with Dimitri de Vreeze, our CEO, and Ralf Schmeitz, our CFO. We published our third quarter trading update earlier this morning. We trust you've had the opportunity to review this press release, which is also available on our website and includes the disclaimers regarding forward-looking statements. Following opening remarks from Dimitri and Ralf, we will open the line for questions. And as a reminder, as always, sell-side analysts who want to ask questions have to register via the questionnaires link, which can be found on our website in the financial calendar. And with that, Dimitri, please go ahead.

Yes, thank you, Dave, and a warm welcome to everyone else on my behalf. I will begin with a few introductory remarks and then hand over to Ralf to give you a bit more color on the financial performance. Now, let me start with the key highlights, as you've seen on this slide. For the third quarter, it represented another important step. created an important step for delivering the action plan as we have presented to all of you at the Capital Markets Day earlier this year. We have a plan and we are consistently executing on it. Our cook performance has been marked by this consistency with a volume-led like sales growth of 5% in the quarter, which is in line with the first half, despite still a volatile operating environment the world we're living in. At the same time, For our EBITDA, our margin improved sequentially to 20.4% in the quarter, as you've seen. That is up from 19.5% in the previous quarter. And if I remind you that the currency had an impact on that 20.4%, if you're correct, for the currency, or if you report at constant currency, that 20.4% would have been 21.2%. Now, we saw a good performance across all our businesses and also geographical areas during the quarter, once again highlighting the strength and resilience of the portfolio that we have chosen. Looking ahead, business conditions entering Q4 remain similar to those we've seen in the previous quarter, supported by a solid order book could start of October and we therefore expect our consistent performance to continue and therefore have increased our outlook for the organic sales growth for 2025. We then go to the next slide. These results year to date, but also for quarter three, are a good stepping stone for 27 and 28. Remember, we have the starting point for 26 at around 5%. We've indicated our business and our portfolio should grow between the 4% to 6% during the strategic period and the announcement we made in the CMD. So I think that is nicely aligned. EBITDA quality, we expect around 20% for 2026. The 20.4% for Q3 at constant currencies 21.2. Also the sequential improvement from EBITDA from 19.5 previous quarter to now at 20.4 shows the trajectory towards the 21% for 2027 and then another step up in 2028. So it is a good platform for implementing consistently our plan. Now, good to know that our cost and restructuring program is According to plan, this basically means that we will see next to the cost restructuring program, which will help us in 27 and 28, maybe a little bit also already in Q4, with the ongoing pricing actions, with the portfolio mix, with leverage. I think you will see that we are well posed for delivering on our action plan, not only for 26, but also for 27 and 2028. And with that, let me hand over to Ralf.

Well thank you Dimitri and good morning everyone as well. Dimitri already made a few comments around the total group so let me keep that short and go through the business units in a bit of a moment later. Overall looking at this, looking at the continued operation, Top left, a nice 5% organic growth, as said, fully volume-driven, with a nice leverage in EBITDA, with a like-for-like step-up of 8% in the quarter. Also, from a margin perspective, it was important to set the first step into the direction for the 27-28 plan. We wanted to deliver well over 20%, and we've done so in the third quarter with a nice 20.4%, The headwind that Dimitri alluded to from FX and a nice sequential step up as we communicated and planned for throughout the year. Overall, the EBITDA hit 482, as said, an 8% step up, and we've seen a nice growth in both top line and profitability, both in Q3 and Q3 year-to-date, so that is fairly consistent. But as I said, let's spend more time on the business units, so maybe on the next slide, let's start with perfumery and beauty. There we've seen a continued good momentum, as we've seen throughout the year. A very nice 8% step up, again, all volume driven in the quarter, with a step up in EBITDA on a like-for-like basis of 10%. also coming through nicely. If we look at the segments, fine fragrance continued good momentum at a high single digit growth and consumer fragrance continued at a double digit pace as we've seen throughout the year. Largely driven by innovations, reformulations and the fact that fragrance is a clear differentiating element in the growth. Both businesses have delivered a double-digit growth year to date, both fine and consumer fragrance, reflecting the very good momentum and strong performance that we've seen consistently throughout the year. Looking at the other businesses, ingredients very much in line with what we guided for at the beginning of the year. We've seen in Q3 a mid-single-digit performance in both businesses. Throughout the year, we're steering more towards a low single-digit business as we indicated that growth would normalize in our ingredients business. From a margin perspective, margin stable at a 22%. Again, it reflects a 50% negative effect from FX. But as we communicate consistently, we embrace that and we need to navigate through that. But margin continues to progress from that side very well as well. Maybe then moving to the next slide, please, to taste, texture and health. Here we've seen a solid performance in the quarter with some phasing across the quarters. As Dimitri said, we've seen some business slip into October with a very good start of the quarter. Overall, if we look at taste, texture and health, we basically see around 4-5% across Q2-Q3. Remember that we've seen some additional water intake at the end of the second quarter. But the way we look at it is that if you look at the H1 performance of around 4%, we also expect that to continue for the second half with a good Q4 ahead of us. If we look at the allocation between the main divisions, taste and ingredients, it's a bit boring, but we see consistently performance across the two, both contributing to the growth and also synergies continue to find its way back into the top line. In the third quarter, a nice leverage as well. The 3% volume led to a step up of a 6% step up in like-for-like EBITDA performance and margin, largely stable versus prior, reflecting largely a 90% basis point impact from currency. Also here, what we wanted to see is a continued progression of margin, starting with a little over 19% in Q1 to 20% in Q2 and now nicely towards the 20%. Thank you very much. Also here, a very consistent performance throughout the year, reflecting a 5% organic growth in the quarter, 4% volume, 1% price, where we basically see the rounding tilt nicely to the 1%. with a very strong flow through into EBITDA, driven by good focus on pricing and cost and obviously mix. If we look at the segments in health, nutrition and care, growth continues to be supported by a strong early life nutrition performance, obviously fueled by continued strength in our HMO business, but also biomedical continues to perform well. If we look at dietary supplements, iHealth, also there we see a continued cautious behavior in the US impacting that business reflected in a low single-digit business performance or growth performance for those businesses. A very strong margin development on health, nutrition and care, as said, a combination of pricing, mix and good focus and cost discipline. Also here we've seen a very nice sequential margin improvement, similar as we've seen and Taste, Texture and Health moving from 19% to 20% to 22% now in the quarter despite a very strong headwind from FX as a good portion of this business is exposed to US markets. I think that summarizes the three businesses looking across all of the business units that we have. Basically the quarter is a continuation of the story so far in the quarter. We're focused on the execution of the delivery of the results and throughout the quarters we've seen continued growth and continued market progression in line with plan. And maybe that's a good moment to leave it at that, Dave, and move to Q&A.