Dsm Firmenich Ag

Good morning. Thank you for joining today's call. I'm sitting here with Dimitri de Vreese, our CEO, and Ralph Smites, our CFO. We published this morning a press release with our 2024 full-year results, together with a presentation to investors, which you both can find on our website. Here you can also find the disclaimers about forward-looking statements. Following Dimitri's and Ralph's presentations, we will open the line for questions. Important to remind, the sell-set analysts who want to ask questions have to register via the questioner's link, which they can find on our website in the financial calendar. And with that, Dimitri, you can start.

Thank you. Thank you, Dave. And welcome to all 2024. But I would like to put that into perspective. And I think this slide you've seen before from all of us, and it is our journey slide. It started with the dream. We merged two iconic companies together. Do I need to mute myself? Can you hear me? All right. So we merged the companies and then we decided to focus to be a consumer oriented company, finding a new owner for animal nutrition and health. Come back to that in a minute. We also took the opportunity to tune in portfolio and look at the high growth, high margin segments and then have the accelerate bit where we really are growing what we have, anchor what we do and deliver on our promises. And before we give you a bit of color, and I will ask Ralph to really join and give some color on the 2024 numbers, I would like to lead you through some of the elements and the components of that journey. Where are we on that journey? You can go to the next slide. These are a few elements which you all have asked me and Ralph and Dave several times. And I just want to give you a bit of a progress track where we are on that journey. Those are elements in our journey frequently asked by you, also share sometimes a bit of concern. I want to be very transparent on how we look at that. So we started with... the dream and the merger and bringing the essential, the desirable and the sustainable together. And I think we all got really the positive connotation that that is something what could add value. We started the execution of the merger in May 2023, and there were some concerns about mergers. How do you integrate it? And I think we made a deliberate choice to do that very focused on taste, texture, and health, and then take that along in a phased and a controlled way. I'm very happy to say that I think we've done that pretty smoothly, and we've landed the integration target also in our businesses. I'm very happy to see that these businesses took that very seriously and are delivering accordingly. Then after the whole merger part, we presented the liver of the synergies. Remember the 350 million EBITDA of which half were cost synergies and half from top line synergies. I hope you agree with me that we are delivering on the cost synergies. I think the last bit is in our 2025 outlook where we deliver on the cost synergies nicely on track. Top-line synergies are gaining momentum. Ralph will say a little bit more about it later. But we have a full pipeline, over 300 million, filled with top-line synergies, towards the 500 million top-line, which we've promised you with a bottom line of 175. During that process, in the beginning of the process, we had our vitamin volatility. We've launched our transformation program to counteract that. We are full on track in delivering that. We delivered 100 million last year. We will deliver another 100 million in 2025. With the vitamin volatility at hand, we took the opportunity to accelerate the upgrade of portfolio discussion, the tuning. As you've seen, we represented during the Capital Markets Day a little bit of view of the segments, and there were a few segments that we wanted to deprioritize. In the meantime, in 2024, we've announced the deal with yeast extracts, with marine lipids, and we have capitalized on our Robert Day stake. We still have left the agro-intermediates, which is on track, although not fully green, because we hoped we would do a little bit earlier. But it's on track for delivery in 2025. And the aroma ingredients and the non-differentiated vitamins are in the perimeter of the A&H scope, where we have announced Tuesday we will start the commercial transaction process. We've also announced last year in February the investing of Animal Nutrition and Health in line with the portfolio review. We have carved out Animal Nutrition and Health. It is separated from DSM Firmenich. It is ready for the commercial transaction. This is done in 24. We are on track. That's also why we could announce that we will start a commercial transaction process next week. And we have, as announced on Tuesday, sold the stake in our feed enzyme alliance for 1.5 billion. So divesting ANH at the right value, I consider to be fully on track. Then there was a second concern you have shared with us quite from the beginning. So, Dimitri, how are you going to organize that people remain focused on the business, on the growth? And I think I'm very happy to say, to announce the 2024 four-year results with an organic sales growth of 6%. a step up in EBITDA with good cash to sales conversion with a cash generation of more than 1.5 billion. And that we were also very confident on the outlook for 2025 with an outlook of at least 2.4 billion. And we bring DSM Feminic in an area of more consumer, customer-focused businesses. The three business units, perfumery and beauty, taste, texture, and health, and health, nutrition, and care, are really fueling growth with their innovation pipeline based on two trends. One is more attention for preventative healthcare. you know that 80% currently is spent on curing. That will move to more preventative healthcare. We are in the midst of that. We have the competence to capitalize on that. The trend for more healthier food. Everything we do, lower sugar, lower fat, lower salt, is into healthier food. We have the competence to capitalize on that trend. And then last but not least, the focus on well-being. I mean, the world today is at an enormous pace of change. People look for their well-being, their own identity, also the younger generation, and I think in our well-being, personal care, and fragrance segments. A few of you also asked, what is the impact on the ultra-processed fruit and GLP-1? We can spend a little bit more time on Q&A, but we do see that our customers requiring more innovation in that field. And with our fantastic toolbox of ingredients, our fantastic creation centers with perfumers, flavorists, and application specialists, we really see the innovation pipeline is ramping up quite a bit around those changes. So the whole context of market trends, I think we are uniquely positioned to take advantage of that. Strength and leadership for people and planet. We are a company where sustainability is in the heart of what we do, not only for us, but also because our customers require it. Therefore, we have set ambitious climate targets validated by SBTI. We are working quite a bit on employee engagement because you can have a fantastic toolbox, a fantastic engine, but the people make that happen. And I'm very happy to say that throughout this whole journey, the employee engagement remained very high. The last test was 79% where people were really engaged in what we were building. with safety as one of our foundation efforts. It is safety performance. We want to make sure that people work in a safe environment. And I'm super proud that for 2024, we made huge step ups and we have improved our safety performance quite a bit. With that context, with the integration well on the way, with the engines brought together where we are bigger, smarter, tuned engine, we are very confident on the future. You've seen that in the cash flow generation. You've seen that in the outlook. Coupled with a strong balance sheet, coupled with the deals we're making, we've decided to go for a share buyback of 1 billion, and that we also announced this morning. Then on M&A, I've frequently been asked, Dimitri, are you still considering big M&A? And is that not too early, too soon? Let me make it very clear. We are on a journey to build a fantastic company and grow what we have. In 2025, we have no priority to any big M&As. We will focus on what we have. We focus on the consumer part, the focused human part of our business, the three business units, perfumery and beauty, health, nutrition, and care, and taste, texture, and health. And we accelerate that core. We grow what we have, we anchor what we do, and we deliver on our promises. And before I hand over to Rolf, maybe a bit of background on, I think, one of the deals which we made on Tuesday. So to bring you fully up to speed with the sale of the stake in the Feed Enzyme Alliance, maybe the next slide. It's clearly that this is part of the ANH divestment process. This was a stake where we had an alliance with Novo Nises. We agreed to sell it for 1.5 billion. It is about 300 million of sales, which is... originally reported in performance solutions remember we had premix we had vitamins and we have performance solutions the 300 million fitted in that and we got 1.5 billion for it together with other tuning elements like marine lipids yeast extracts and the robertay steak we have valorized around 2 billion and i think that is also an encouragement of the value of the businesses which we are deprioritizing And with that, I hand over to my dear CFO. And as you've known, he has a peculiar interest and a secret passion on numbers. And with that secret passion revealed, Ralph, on to you for 2024 full year results.

Thanks, Dimitri. You always make me smile when you say I like the numbers, and I do, especially when they're good and easy to present in that sense. You already covered quite a few headlines, but I think it's important to dive a little deeper as well. I think here you see a slide where it basically holds the key metric relevant for the performance. Overall, a very strong performance in 2024. An absolute step up in EBITDA of well over 300 million, a strong organic growth. And what is nice to also see, not only that the EBITDA step up, the absolute EBITDA step up translates into... and nicely flows through into our EBIT, resulting in a significant step up in the core ROCHI. It's not on the page here, but that moved up to 7.6% in line with Acosta Capital, up almost 2.5% versus prior. And also the flow through into net profit, where you see a step up in the core earnings per share of over 50%. Dimitri alluded to a strong cash performance, well above our initial target. We are maintaining a dividend of 250 for the year and a 1 billion share back, reflecting our confidence in earnings. But let's zoom a bit deeper and let's start with the group on the next page. So on a full year basis, overall 6% volume growth with the adjustment for ethics and the carved out entities, both marine lipids and yeast extracts were deconsolidated in the fourth quarter, bringing the total growth to 4%. a strong volume growth throughout the year and reflecting not only in a significant step up in the organic step up in EBITDA, but there we also see the overall improvement in the performance and the benefits from the synergies and the vitamin improvement program flowing through. driving an almost 20% step up in EBITDA, fueled further with the impact of the temporary vitamin effect, which clearly impacted Q4 positively in line with our guidance, but also offsetting a negative headwind from FX and divestment of over 60 million in the year. When we look at the margin itself overall, a very nice step up for the full year. But what is more encouraging, and that's a consistency in the story that we've been sharing with you, is the continued buildup of that margin throughout the year, starting at a level of 15% and growing that consistently every quarter with more than a percent to over 18% at the end of the year. Speaking of the end of the year, on the next page, a few comments around our Q4 for the group. Overall, you see the same growth, 7% organic growth in the quarter itself and a very significant step up in EBITDA. We just topped the 600 million in Q4. with a very strong organic growth reflecting the overall positive dynamic in all of the businesses and a step up from the temporary vitamin effect. Also here you see a continuation of the momentum in the different BU's reflected in the overall strong growth. I think overall with these results, a very strong performance for the group for 2024. Strategic initiative positioning us very well and setting ourselves up for yet another successful 2025, which is reflected in our outlook. But let's zoom in into the BUs. And on the next page, let's start with P&B. P&B had an excellent year in 2024. You can see that from the top left part of the slide. Overall, a 9% growth in the year, fully volume driven, with an even stronger performance into double digits in fragrance, with a very strong performance in fine fragrance and consumer fragrance. Also, consumer ingredients saw a good growth throughout the year, very consistent. And beauty and care had a strong 2024 as well, albeit a somewhat softer finish of the year, predominantly on the back of lower demand for our sun care products. Now, that strong growth obviously translated into a very good step up in EBITDA as well. Overall, a 13% step up in EBITDA and a consequential improvement in margin as well to well above 20-22% for the year. And that's something that's in line with also the journey we envisaged on We've seen that momentum also at the end of the year in a perfumery and beauty business with an overall growth of around 5%. Again here, a stronger performance in our fragrance space, somewhat offset by a lower performance in beauty and care on the back of that weaker demand for sun care. But overall, if you look at P&B, a fantastic year in 2024, and that is translating into a continued good start in 2025 with a good sales pickup in January. Moving on to our second business unit on the next page, Taste, Texture & Health. Yeah, it almost sounds a repetitive story, but also here a very, very strong performance, 9% volumes consistently in the first half and the second half. You see a somewhat negative impact from FX and divestment in the top chart as well, but a very strong growth and Both the taste and the ingredient division are contributing to that growth equally. And also here you see a very nice flow through in the organic EBITDA step up. Also here 13% to well above 600 million and also a continued margin improvement in the TTH business. The year landed at 19% and with the divestment at the end of the year of the yeast extract business We'll step up further in 2025. But keep in mind that we're still supplying Le Saffre with the product whilst they go through the regulatory approvals before they take it over fully. I want to mention here that on the EBITDA step up, the absolute step up is very encouraging to see in TTH as well. And there's about a headwind of around 10-15 million from FX and the divestment of that Least Extract business. Then moving on to health, nutrition and care on the next page. Here is a story of two tales. And we've been also sharing that before is that it's a story of recovery. And we're very pleased that the return to growth in Q3 continued into Q4. The performance in H2 is very encouraging while we go into 2025. Overall, a 6% volume increase in the second half. We've seen that same performance into the fourth quarter, and that translates also into a good step up in EBITDA in H&C. If you look at it on an annual basis, an organic growth of about 5%, but when you adjust for that with all of the FX and the divestment of the marine lipids business you see that the overall EBITDA is somewhat below prior year again here it's relevant to look at the second half and the fourth quarter fourth quarter EBITDA is up 9% however if you adjust for that negative impact from FX and the divestment of the marine lipids the EBITDA is actually up over 20% and also the margin quality is improving sequentially. Also in H&C, we started the year at 15%. We've been gradually improving that and we landed the year also above 18% in health, nutrition and care. In Q4, at the beginning of Q4, we completed the sale of the marine lipid business that has an annualized impact on a top line of about 170 million. We'll see that having an impact as an M&A effect in the three quarters that are ahead of us, similar as TTH. Then, last but not least, from the businesses on the next page, we've got our animal nutrition and health business. Obviously, as a CFO, also very pleased with the deal that we announced two days ago. I think it's a reconfirmation that we're well on track with the Carvat process on that. But nonetheless, the animal nutrition and health team is very much focused on continuously improving the business dynamics as well. And you've seen that every quarter, a step up in the underlying EBITDA. Q4, we have realized a very high EBITDA overall. We came in. At 176 million of EBITDA, obviously supported by the temporary vitamin effect of 85 million, somewhat above our guidance in the fourth quarter. But if you back that out, you see the continued buildup of and restoration of the EBITDA performance. of the animal nutrition and health. We're back to growth on the back of a normalized conditions and the contribution of the programs. Overall, Dimitri said that the programs have contributed about 100 million in 2024, which of course is largely benefiting the animal nutrition and health business. Margin in Q4, almost 19%. So I think a very strong performance of the team in the midst of all of the transactions. So when you talk about keeping the eye on the ball, I think the team has done an excellent job on that front as well. If you look at the segments within animal nutrition and health, performance solutions continuing at a high single digit pace throughout the year. So the momentum keeps on going. The team is doing an excellent job and continuously growing that business. across all segments. So both the enzymes alliance that now is divested to NovoNesis, but all the other elements, it is very strong product portfolio, and that continues to grow across the board. And the dynamics in the vitamins space and the premix are known, continued normalization, improved pricing, and obviously positively impacted by the vitamin impact. If we then look at the next page, it's again a summary of the key financial metric, and here you can actually see the nice flow-through of the step-up in our overall performance, supported and fueled by the contribution of synergies of 100 million, the vitamin improvement program of 100 million, and the organic growth, bringing the absolute EBITDA step-up to 350 million and you see that nicely flowing through resulting in that step up in EBIT, ROCHI and earnings per share. Cash flow well above the 1.5 billion. I didn't want to make the same mistake as last year where my CEO was upset that I missed a million to make it a billion round. So this time we took good care and made sure that it was well above the 1.5 billion. With all jokes aside, I think 12% is a very nice performance. And I'll zoom in in the details and the drivers of that a bit because it's a sustainable performance as well. Net debt came in very nicely as well at 2.5 billion, about 500 million better than the last guidance that we gave. Of course, largely driven by the capitalization of our robotic stake, which gave us about 400 million. of cash in the fourth quarter. And on the back of that, we continue our dividend and obviously very pleased with the share buyback. You had me talk about it last time, I'm not a fan of a lazy balance sheet. So we maintain our discipline around our capital allocation policy and in line with that, happy to start that program as well. Now, zooming in on cash, because I think it is a very good performance for us as a group on the next page. Some of the key drivers, so mainly driven by a step up in business performance. So very good to see that EBITDA translated into a significant performance. step up in our cash performance. So that is one of the key drivers. At the same time, we maintain our investment pace and we continue to invest in future proof in our growth. So our cash capex came in at 6% of sales in line with guidance and our ambition. and that is largely invested in securing the growth in predominantly our P&D and TTH business. At the same time, we maintain a good discipline around working capital. We continue to have a good performance at the receivables and payables side. Overdue is under control, the DSO is under control, and also inventory came down despite the significant growth that we've witnessed in our business. Fully happy where we are at the inventory level as an absolute number and the month on hand. To some extent also deliberate choice because we also wanted to make sure that we had the right level of inventory to make sure that we can deliver on our Q1 growth ambition. But overall, with working capital dropping to 28% and almost 3% step down versus prior, I think that continues to move in the right direction in line with the ambition that we also had on that front. So financially, very strong year, very pleased as a CFO with that performance. Now, if we go to the next page, not only good news on the financial side, also on the sustainability side. Dimitri commented already on that around our safety and our engagement index. You see that on the page as well. The 0.24 was every incident is one too many. I think that's also the attitude that we have within the company. Overall, this is a low for the group and we're very pleased with that performance as well because it's important that everybody gets home safe at the end of the day. That obviously translates into a continued engagement that contributes and that remains high at around 80% level. Our ambitious targets around climate have been defined in 2024 as well, which we said are vetted and validated by SBTI. We see a good reduction in our scope, one and two emissions as well as the three, and we're comfortable in the journey towards 2030 that we set ourselves. And also on the relevant metric, we're doing well on the sustainability front. We'll come back to that a little later with the invitation for the event a little later this year. Let me wrap up the finance, so we also have enough time for Q&A. On the next page, our outlook for the year. Our strong performance in 2024 made us also confident around 2025. We have a positive outlook for the year, backed by continued growth in our businesses, a continued contribution from synergies of about 100 million, A continuation of the vitamin improvement program. We'll finish that off next year with another 100 million contribution to the EBITDA. And in that guidance, there's about 100 million for the vitamin price effect from the force majeure. We also included some housekeeping to allow you to model. Should there be any further questions, we're happy to take those. And let me pause there and see what's on your mind and give it back to you, Dej.

Yeah, thank you, Ralph. Indeed, time to start with the Q&A. As I said at the beginning of this call, that the cell set analysts who want to ask questions in the Q&A session have to be registered via the questioner's link, which you can find on our website in the financial calendar. If you have not done so yet, you can still switch. All other participants can listen into this Q&A session via the Zoom meeting. With that operator, we can start.

We will now begin our Q&A session. If you have a question, we ask that you please use the raised 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 raised hand function in the Zoom app. Thank you. Our first question comes from Nicola Tang at BNP Paribus Ixane. Please unmute your line.

Hi everyone. Morning and thanks for taking the questions. Firstly, congratulations on the feed enzyme steal. I appreciate it's still early in the process for the rest of ANH, but I was wondering whether the nice valuation for the enzyme steal and the timing changes your views at all in terms of valuation and the timing for the exit process for the rest of ANH. And you talked about no big M&A in 2025, and you have a CFO that likes numbers and dislikes lazy balance sheets. So I was wondering if you could talk a little bit about potential use of proceeds for the rest of ANH beyond this buyback related to the feed enzymes deal. And then the second question, looking at your outlook, at least 2.4 billion, If I adjust for the temporary vitamins effect, the restructuring and the synergies, I think it implies only sort of low single digit kind of underlying organic growth synergies. I was wondering if you could give us some color on your expectations by division, you know, besides seasonality, any notable changes and trends that you've seen in Q4 or that you're seeing so far in Q1. Thank you.

Okay. I will take the first one on A&H, give some call on M&A, and then I hand over to Rolf for the numbers, and he can immediately correct me on M&A if he wish. And then you can say something about the outlook, and then maybe already jumping in to give some color on the businesses, but let's leave other goes. So A&H, maybe you do remember that... We were questioned on the ANH car vow because we said it doesn't fit the journey which we're going to create for DSM Firmik. Be more consumer, customer-focused, and the volatility and the capital intensity of ANH is better suited in a new owner. That doesn't mean that this business is not a good business. And I've said that many, many times before. There's more volatility than we have in the core of DSM Firmik. And I hope that with the enzyme alliance valorizing of the 1.5, it shows a little bit the confidence we have that we get good value for the A&H business. Maybe just go back a little bit. Remember, we said A&H is a 3.5, around 3.5 billion business of which one third is vitamins related. It has volatility. Vitamin is a great category of product, but it has volatility into it. One third of the day and age business is premix, which is an unparalleled premix infrastructure which we have, which creates synergies for end of vitamins as well as performance solutions. And that performance solution part is the third bit we have depicted. The enzyme alliance was part of that performance solution business. So 300 million out of that one third, we now have valorized. And it was also an alliance. So we also simplified the way forward. So I hope you see that it's a proxy of the value of A&H. And it didn't change our timeline. We basically said, we're going to carve out A&H. We're going to build the house, which is separate, which we can invite people to look at this beautiful house. And secondly, we will make that ready at the end of 24. We've done that. And therefore, the announcement on Tuesday, aligned with the Novanese's feed enzyme alliance sale, we also announced that we will start the commercial process. So I think it's nicely in line, and we're going to execute that throughout 2025. I hope you appreciate it. I will not give detailed milestones. Obviously, we have a plan with detailed milestones, but you also know in these type of processes, which Ralph and myself have done several times, you never know exactly which milestone will be hit, but we're definitely on schedule with the plan to execute it throughout 2025. M&A, Yeah, let me make it very clear. I think I was asked several times and maybe had to do a little bit with the concern what we would do with the money, that we would do silly things on M&A. Well, doing silly things is never a good thing. But we also said that we need some time to anchor the merger. So remember, we are just two years on the go. We have merged two engines. We made this engine bigger. We made it faster. We made it more agile. We tuned part of the engine. We made deliberate choice which component we would like to have in the engine. And this engine is delivering the growth, the results in 2024. So we need to anchor that engine. So we're not jumping into other elements to strengthen that engine yet, although the engine is already very, very strong. So we'll also take time to anchor it and to show what this engine can deliver. And we've given you a bit of a sneak preview on what it delivered in 24 with the results. We are full confident that we'll do that in 25 as well. So no big M&A was also a bit to take away your concern that we hope you understand we'll not do silly things. But even if we were doing intelligent things, we're also aware that we need to anchor it. um with the share buyback um obviously it was linked to some of the valorization of the businesses we've done not only on the enzyme alliance but also the the tuning segment and where we made quite some progress but it's also coupled with the fact that we have seen really good cash flow generation in 2024 and we're competent and we're confident that we continue that cash flow generation engine for the next years to come coupled with a conservative balance sheet i think we we we decided to go for that share buyback. I think it's too early to anticipate on what we'll do with the money on A&H. We just opened the house for visitors. But I just wanted to make it very clear that we focused on growing what we have and show the beauty in nutrition, health and beauty of that engine. And with that, maybe, Ralph, a little bit on the outlook and if you have any other ideas to do, what to do with the money.

I think that summarizes it well. Let's see whether there's further questions around that. But I think it's very consistent in line with our capital allocation policy. And that's something that is important to us is that we make promises and then we do what we promise. I think that is absolutely key in this journey. Now, back to the outlook question. Thanks for that, Nicola, and good morning. Overall, at least 2.4. I think the underlying question is, what is the performance of the other three business units, P&B, TTH, and H&C? And the short version of the story is that we see a mid-single-digit growth going into 2025, each with their own dynamics and their own dynamics in the segments that they operate in. Across the board, at this point, we have the momentum coming in from the end of the year. We made a strong start in January, again, with 2025. And we're confident that we will see a mid-single-digit growth in all of the three business units with the corresponding flow through in EBITDA. So the current outlook is assuming around single digit step up in EBITDA in all these three business units as well.

Thanks so much. Our next question comes from Charles Eden at UBS. Please unmute your line.

Hi, good morning. Just checking. You can hear me.

Okay.

Super. Thanks. Both morning. Both. Yeah.

So two questions from each division.

Can you just help us understand you've got 85 million sort of one-off benefit from the higher vitamin prices is that, are you saying you got an incremental hundred in 2025 or So another hundreds of this 200 million total. And if so, can you help us sort of follow that through in terms of by quarter, you're expecting 100 in Q1, 100 in Q2, and then the Q4 reverses. So just a bit of clarity on that, if that's okay. And then just on the transaction you announced on Tuesday, what is left is it fair to say it's easier to sort of market that as a single unit now that the alliance is not involved in that or is it still sort of a all options open if you could just give some color on that be helpful thank you

Shall I take the vitamin? I'll comment on the transaction as well. So in the guidance that we said, 100 million vitamins, it's basically not incremental. It's our guidance now. It largely reflects the vitamin effect into the quarter. in line with the comment that we made last year. It's very difficult to predict how long it will be lasting and we'll update you as we go. So what we've done in the outlook is that we said, look, we will deliver at least 2.4 billion with 100 million temporary vitamin effect. In the previous discussions, we guided that the impact in Q1 will be similar as what we've seen in Q4, and that's now baked into the guidance. If we see a prolonged impact from the vitamin effect, then that contribution could be above 100 million for next year. So it's not incremental, it's not phased over the years, it's largely reflecting the vitamin effect that we expect in the first quarter. Then on the transaction side, I mean, there's a few things that played into this. Obviously, as a partner, you always have a conversation. So we did also with NovoNesis around the impact on the alliance in the transaction. And they actually approached us with the desire, given that they have also changed as a company, to actually take full ownership of that. We continue to source enzymes from them. So that is something that we will continue to be able to blend in. Now, the reality is also with a part carved out, the overall deal size might be somewhat lower and in that sense always more accessible to more players. But we're confident in the asset that we overall have. I think it plays nicely into the valuation of our A&H business. Remember when we talked about the A&H? And Dimitri commented that earlier that we had these three distinct buckets, which all come with their own valuation. I think it underpins the overall performance solutions. Now, if you look at that performance solutions piece, that remains a high quality part of the A&H assets. So overall, we were close to a billion in sales. Take the 300 million of the deal out, that drops to about 700. But even that quality is exactly the same for the remaining part. So in that sense, I think it will be beneficial. It also shows that there's good appetite for the asset itself. So we feel that this is also positive to the overall transaction in terms of time and

Brilliant. That's very clear as always. Thanks, Ralph.

Our next question comes from Lisa Deneve at Morgan Stanley. Please unmute your line.

Hi, everyone, and thank you for taking my questions. I would just like to first and foremost come back to the 2025 adjusted EBITDA guide. So from the comments that were made on the previous questions, it seems that you got it to an incremental 100 million for the veteran optimization program. 100 million synergies, and 100 million price effect for vitamins in the first quarter. And given you've reported 85 million temporary vitamin effect in the fourth quarter of last year, it seems you're guiding to about 200 million underlying positive developments for this year. Can you just share... where you expect this to come from. Is it volume growth? Is it pricing? It would be helpful to shed a bit of light on that if that's possible. That's my first question. Secondly, can you provide what your expectations are for input inflation this year and how you expect to contribute to the like-for-like growth for this year, especially excluding the vitamin prices effect? And lastly, can you share how your 500 million revenue synergy program is evolving and how much of that pipeline synergies you've mentioned a number of times are sort of moving towards realized revenue synergies and maybe specifically in which segments you're seeing the most momentum? Thank you.

Let me guide through a few of them, and I should jump in later. I think synergy for Rolf. Just to repeat a little bit the components of the outlook, and I think those were questioned a few times. So let me start with the at least 100 million temporary vitamin effects. That's more or less in line with 24. It's also to make the comparison easy. And also on the temporary vitamin effect, we said at least 100. Because at the end of the day, I mean, we're not speculating on what's happening and we've been transparent on it as we speak. So therefore, the 100 vitamin temporary. So that compared to last year, I would say is more or less equal. Then you have the vitamin transformation program, and indeed we will deliver 100 million extra in 2025, and therefore delivering on the whole vitamin transformation project. Then we included 100 million for synergies, also what we promised. Remember, 100 million in 2024 and 100 million in 2025. And then you need to remember that we did some tuning. I said that in my initial slide. So that has a negative impact. If you tune, we sold off marine lipids and yeast extracts. I think that's about 40 million or so on EBITDA. So you need to take that into account. And then indeed, you have good organic sales growth around our midterm times, mid single digit, making the outlook at least 2.4 billion. That is a bit of a, most probably you had that, but just to confirm. Then on the input inflation, We are thinking about 1.5% to 2% for 2025 and as an assumption, that is without any consequences on the tariffs. The 1.5% to 2% is a little bit of an effect of the salary increases we've seen in the years before. If you look at the pricing on the input prices, we see an uptake. It's on naturals. But net-net, we see a bit of a stable portfolio going forward. You know our business well. I think if the input prices go up, we are able to increase that in our prices going forward with a bit of a delay. So if it's a plus, we'll benefit from it for a while. If it's a minus, we give it away for a while and we increase it in prices. So not too concerned on 2025 there, although the natural ingredient prices are going up. So we need to watch that a little. And then on synergy, maybe Ralph, you can give a little bit of highlight. I think the cost synergies we've ticked off, I think maybe a little bit of background on the revenue synergies.

Yeah, let's do that, because that will also, you'll see that my momentum flip over from costs, where it's merely a follow-through and an execution of the program. The revenue synergies will start contributing more in 2025 and beyond. Maybe one step back, what we initially said is that we continue to track that pipeline. We're regularly reviewing that every month we sit down with the BUs, how's that pipeline developing. What you also now see is that it starts contributing. And in the Q3 earnings call, I alluded to the strong performance in TTH and the contribution of synergies. That's something what we continue. With the lapsing of time and that we see more of that pipeline translating into contracts and invoices, we actually fine-tuned the overall tuning. So the pipeline remains well above the 300 million across all of the businesses. But for example, when I zoom in on TTH, where almost two-thirds of the synergies are coming from, we actually go one level deeper in terms of our tracking. So we not only look at the overall lead pipelines, which is overall 300. But within that, we actually start looking at how much is now contracted. The first time I talked about that was in the Q3 call. I think at that point we had about 60 million contracted. That meanwhile has evolved to 90 million contracted. And also the invoice synergies is increasing nicely. I made the reference back then to about 50 million a quarter. That is something that we see continuing. So what we now see very nicely is that pipeline translating into contracting and contracting That last piece is obviously what has my biggest interest because that is something that ultimately we can take to the bank. So a very positive development there. If you look at TTH, it's actually very nice. We included again some three new examples to continuously feed you with new things that we are bringing to market. But it's very strong across all of the regions and across all of the segments actually in TTH. And also the cross-sell is actually even going better than originally planned. The fact that we are one uniquely positioned company in the space that we operate is actually giving us quite good access. I think the performance in TTH throughout the year is showcasing that as well. So, yeah, we're looking at that number with very good confidence.

Thank you very much.

Our next question comes from Martin Rudiger at Kepler Shubrin. Please unmute your line.

Hello, good morning. First question is on animal nutrition. The organic sales growth in the fourth quarter was plus 16%, of which 50% was vitamin pricing and 1% was volume growth. Why was volume growth so low, although the vitamin-related feed additives market was rather tight? Did clients delay orders, or did they switch from short-term contracts to longer-term contracts with a later delivery? And if so, what is now the split between spot market business and longer-term duration contracts? And the second question is more a follow-up question on the upcoming disposal of the a remaining business of animal nutrition and health. Do you prefer to split up this remaining portfolio to get an even better price or a bit higher value? Because I guess the potential predators for the other group assets might be different versus the predators for the vitamin production assets. Or do you prefer to get rid of it in one go because it's easier to handle? Thank you.

Martin, thanks for that question. And indeed, animal nutrition and health, 16%. I'm super happy with that. Indeed, well spotted, the 1% volume. I'm pretty okay with it. At the end of the day, remember that we had in Q4 our extended shutdown in Sissel. And if you start up that plant, obviously you need to fuel a little bit the flow and the value chain of your supplies. So Q4 is low on volume, but pricing is absolutely in line with what we expected. So you will see a pickup of the volume in Q1. It's more linked to the supply. The sisal next time it's shut down and when you have that operation running, it will take a while. So it has nothing to do with the pricing or changing pricing system in itself from longer term or spot and as well. So just to reconfirm, pricing in animal nutrition is predominantly made on a quarterly basis, as you know. Then I think your second question was on finding a new owner for A&H. So we deliberately announced on Tuesday that having the alliance sold to Novo Nisis, it is simpler to go out and we have the house carved out and ready for visitors. So I think you need to be aware that the business model of pre-mixed vitamins and the specialty performance solutions is synergetic. So you were referring to the Uber business, the mycotoxin absorbers. The mycotoxin absorbers have shown fantastic growth because of the pre-mix infrastructure we have, very synergetic. I mean, Uber had any pre-mix, we added our pre-mix structure, very synergetic. And then adding with your vitamins into the pre-mix, really started off the growth of performance solutions. And I think you have seen the growth of performance solutions. And that really is because of the synergetic effect between vitamins, premix, and the performance solutions. So we think that that unit has a synergetic effect in itself. That's why we go out with the market as a whole. And it also, in terms of how we want to focus the company, it is easier to go forward in one go. So we feel that that value is reflected in the setup. And I hope you will appreciate that we can't give you any further details on the process, but we really have a timeline to exit that and to finalize that in 2025. Thank you.

Our next question comes from Alex Sloan at Barclays. Please unmute your line.

Yeah, hi, morning all. Thanks for taking the questions. Two from my side, please. Just the first one on the 100 million exceptional tailwind from vitamins. Sorry to label a point, but just to be totally clear, I think you said it's not incremental. So underlying, you're essentially guiding to 2.3 billion EBITDA, is that right? Can you share with us what sort of rough price levels you consider normalised for vitamin E and A in making that calculation? Or maybe another way, what do you see as the kind of normalised vitamin margin And how much of that tailwind, you know, if any, is expected to be in HNC versus ANH? That's the first one. Second one, very interested in your comments on, you know, innovation pipeline ramping on GLP-1 and UPF concerns. Is that specific to the US or is that, you know, kind of a broader dynamic? And, you know, be interested to hear, you know, within TT&H, you know, what solutions are seeing the most momentum on that front? Thanks.

All right, shall I take the vitamins and do the second question? So on the vitamins, no worries, Alex, and appreciate the question. So let's be clear. So a commercial would not be sensitive to start speculating on what I find a normalized valuation. or pricing for some of the vitamins. We've got three people around the table. You might get different answers. But let me be very specific. So we see a similar contribution in Q1 as in Q4. We have seen a restoring of the underlying conditions in vitamins and also the underlying EBITDA has improved on the back of that, supported by the vitamin improvement program. And that's what we continue to work on. So we will call out that special vitamin effect as we do expect over time things to normalize. So we want to provide you as much guidance as we can on how we see that business develop and how that underlying performance is developing. Also in light of the business unit is on the transaction. So in that sense, we want to be transparent on what is driven by the underlying business and what is coming from the vitamin impact. in the first quarter, but also the following quarters.

Yeah, maybe on the innovation pipeline. Thanks for that question. Funny is, and I couple a bit the processed food discussion with GLP-1. So GLP-1 creates reduced appetite and has an impact on people who take GLP-1 on your good health situation. And the good health really is impacted by taking that. And it also has to do with muscle pickup. So proteins are absolutely key for people who use GLP-1, as well as gut health problems. And there we come into play with prebiotics, postbiotics, immune-improving ingredients. And we really see a request for products with probiotics going into it but also more protein and fiber going into it and a little bit coupled with but from a different angle the processed food discussion we already know and it's part of what we call the blue ocean strategy we have so we're not only growing the markets we are in we're also developing new markets with our customer with lower sugar lower fat lower salt on the lower side, but also the higher demand, the higher demand for fibers, higher demand for proteins, a higher demand for minerals and vitamins in those products linked to food. So that really is helping our innovation pipeline in the area where we're strong. And specifically, what we've seen over the period is that the dairy segment is benefiting from that, and especially yogurt. And if you go to the supermarket and you look at the yogurt, the category of yogurt, you see high-protein yogurt. You see low-sugar yogurt. You see yogurt with vitamins into it. You see yogurt with probiotics into it. So we really see product launches there. To your point, The innovation is started in the U.S., so that's definitely leading the innovation pack. But I'm very happy to say that we now see spillovers to Europe. So if you go to European supermarkets, you also see high-protein yogurts. You also see probiotic immune-improving yogurts. So specifically in those products, we do see that America started. What we now see for us, which is good news, also a spillover to Europe. And we do see that in our growth figures.

We're approaching 10 o'clock, so let's do one other question. Yeah, so basically one other person to ask questions before we round off. So we give ourselves a few extra minutes. Operator.

Our last question comes from Stefano Stefano at ABN AMRO Oddo. Please unmute your line.

Yes, hello, can you hear me? Yep. Yep. Yeah, good morning. A few questions left from me. One is on PMB. I was just wondering, we've seen 5% volume growth, obviously good, but quite a slowdown compared to the past few quarters. Are we seeing a little bit of normalization here in the end markets, which have been obviously really, really strong? Then another question related on the PMB, 5% organic performance on the adjusted EBITDA. what is going on here exactly. And then my last question, I mean, I have many left, but let me just one general one on the Q1 business conditions.

How are we doing so far? So we go to PMB specifically, right? So your question was more linked to PMB. Did I got that right?

Yes.

Okay. Yeah, so let me start with P&B. So what you need to understand is that we have fine fragrance, consumer fragrance, and we have our ingredients and our, what we call, beauty and care. So what we've seen on fine fragrance, very good growth in Q4, and we see that momentum continuing also in 2025 with a full breathing boost innovation pipeline. Consumer fragrance, very good performance in Q4 as well. But we do see that going into 2025, you will see some normalization on that pipeline because I think it's versus a very tough comparison going forward. So there we see some normalization of business condition, but it will mean that it goes more into the mid single digit growth. Then that is also applicable for our ingredients business. And then our fourth business is beauty and care, which is a considerable part of our business. So if you make comparison with others, beauty and care is an important business for us. It's over half a billion of it that has been soft in Q4, predominantly in Asia and specifically in the segment of sun care. That softness continues into 2025. Our customers are saying that they are seeing an improved measure in the second half, but let's see. We don't really see changed momentum of perfumery and beauty. We see a good start of the year for 2025 if you look at our order portfolio, but only beauty and care remain soft, certainly in the first half, and let's see what the second half will bring. I will give Ralph the word on the EBITDA leverage, but I want to close off on Q1 in general. So what we see on Q1 in general in terms of business momentum, we see no big change. If you look at our order portfolio, January is done. I'm not guiding you for month after month, but we see a continuing good business momentum. You need to be aware, and I think you will follow up with detailed questions with IR. There's some seasonality in the H&C business with iHealth, but overall, we don't see change of pattern. And if you look at our briefs, and if you look at our innovation pipeline, I think we can say we had a good start of the year. And Ralf, last for you, the EBITDA leverage. Why don't we see that coming back in an EBITDA leverage? Good question, by the way.

Yeah, no, absolutely. And it's something that we monitor as well. I mean, The margin is very much in line with prior. I think by the seasonal effects, usually Q4 is the lowest quarter within the year. And at the same time, we're making necessary investments, not only in terms of upgrading our cost and a commercial organization to make us ensure that we continue to fuel the growth and the momentum that we have, but also our asset base to make sure that we're well set for delivering the volumes that we plan to sell going into the new year. No concern there. It's not necessarily a quarter to quarter trend, but we overall see a continued improvement in the margin as well. And that is something that we will be working towards in 2025 again.

Okay, thanks, Alf. That concludes the Q&A session. So let's go. Maybe, Dimitri, you want to make a few closing remarks?

Yeah, I will make it brief, also to respect your time. So we will continue our journey for 2025. It's summed up in the next slide. We grow what we have, we anchor what we do, and we're going to deliver on our promises, as you are expecting from us. We'll focus on the synergies. We'll finalize the vitamin transformation program. We'll keep you up to date on the animal nutrition process. We'll start the process of returning a billion to shareholders as of April. We'll continue to strengthen our people and planet ambition because it's part of who we are. It's part of what customers expect from us. And we will work on our 2025 outlook to make that reality for at least 2.4. And now you will focus on the word at least. Me too, but at least 2.4. And before we close off, just a reminder that you are all invited, as well as your ESG experts, for our special event in Kaiser Augst in Basel on March the 25th, on 2025. And with that, I think we can close the call. And thank you, everybody, for your attention and your interest in DSM Firminis and its beautiful journey.

Yeah, and let me add that if you have any additional questions, you know how to reach out to the Investor Relations team. We're happy to take all your questions. And with that, let me hand back to the operator.

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