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.