Dsm Firmenich Ag

Good morning and thank you for joining today's call. I'm sitting here with Dimitri de Vreese, our CEO, and Ralf Smijts, our CRO. This morning we published our full year 2025 results on a restated basis, together with a presentation to investors, which you can find on our website. Here you can also find our disclaimers about forward-looking statements. Following Dimitri's and Ralf's opening comments, we will open the line for questions. And as usual, as a reminder, the sell side analysts who want to ask questions will need to register via the questioners link, which they can find on the website in the financial calendar. Dimitri, the floor is yours.

Thank you, Dave. And welcome to everybody here in this call. Nice to see you yet again. Busy week for us, busy week for you. The NH call last Monday, now the full year results. And you've seen that there are a lot of numbers there. So, Ralph, we'll lead you through in a minute. And then next week, our integrated annual report. And as you've seen in the press release, we're also looking forward to host our investor event on March 12th. the next phase of DSM3 as a consumer company. Now, let me go through a few of the highlights of the divestment of ANH to CVC. We explained that on Monday, but it was an important piece of our journey. And I think it's clear to say that it's really focusing on these amphibians to become a key player in nutrition, health and beauty. And that's also where the value creation is. So an important point was the signing of the divestment of ANH to CVC. And we constructed a deal where we have mitigated the downside risks in the ANH business, as well as the volatility. One of the strategic reasons that we announced that we wanted to divest and we have implemented on that. Now, we have created a deal structure that is not only mitigating those risks on downsides, but also creates an opportunity on upside. And that is also what we have announced last Monday, together with a favorable long-term supply agreement on Biden. The 2.2 billion, we found a fair value for the A&H business. I think it's a great business, but it has its volatility. We'll get proceeds at closing of 1.2 billion and remained at 20% retained stake because we wanted to cater for a possible upside. The solutions core business, the specialty business, is a really good resilient business going forward. So that whole multiplier on value we'd like to capture, as well as the essential core, which is predominantly the vitamins business. where I think CBC Capital Partners are a partner we work on different businesses with and they are very much catered to make that business grow and add value and want to capture that 20% as well. In the grand scheme, I think 20% of a 2.2 is around a half a billion. So it is also in terms of risk mitigation, not the biggest number. So please don't see the 20% as something where there's a direct link to our business. Not anymore. It's deconsolidated. It has been out of our numbers. The 9 billion is the decent fee and the consumer scope that we're talking about. Now, the Earn out, the earn out is linked to business on solutions call, very good business. So in that sense, I think the earn out is pretty much the core and the part of the earn out is linked to a central call. And then if that's half of the earn out, I think it's all been mitigated with the GVC to bring that business up to thrive. And I think there are lots of opportunities with normalization over the business as we speak. Now, what are we going to do with the money? Although let's make that very clear, the money only comes in towards the end of the year. As a sign of confidence, we will start our share buyback already in quarter one, in addition to the 1 billion that we have started and executed and completed for the feed enzyme business. And at the same time, not resetting the dividend. It remains stable also after the carve out of ANH at 250. Now, if we then go to the next slide that shows with ANH out of the way, we are on our journey where we merged the company, we delivered on the synergies. We have tuned our portfolio and we have assigned the deal to the best ANH. We're now into the next phase of the ISM family, have when I think of what we do and going to deliver on our promises on March 12th we will give you that accelerate route with our view presidents to get a bit of a feel on what we what we growing and how fast we were growing under that journey we've grown organic sales growth of 6% in 24 in the scope of these and family consumer related and this year we have announced the three years full on 2025 for that business in the environment we are in so we're we're surely showing the resilience of that portfolio going forward now we then go to the next slide a little bit the financials of that decent female consumer scope if you move to the next slide i'm going to show you a few numbers yep here we go so here are the numbers um here you can see we're a nine billion company We have grown that company 3% in 25, as we said, 6% in 24, if you go through the restate apples with apples comparison. An adjusted EBITDA of 1.7, 1.8 billion, which was a 5% setup, like for like. By the way, that's the same from 23 to 24. So it shows the resilience of that portfolio that we've built with a trajectory of EBITDA margin. I think many of you asked the question, how do you come to the 22-23 mid-term targets? Well, we started with 18. We moved it up to 19, 19.6 for 2025. If you take the last two quarters, we're more closer to 20. So also that trajectory will continue with a good generation of cash flow, the 10.5% conversion over sales in 2025. Now, I already alluded on the dividend and on the share buyback and on the investor event on March 12th, where we're going to give you some insight on what the next phase of the ISMFIM is all about. Now, last slide before I hand over to Rolf. In that whole trajectory, we stay true to our sustainability program. If you can go to the next slide, please. Then it's clearly that we... also have made quite some progress on sustainability. It's important for our customers. Some people will say, oh, why do you still work on sustainability? But apart from the fact that it's part of who we are, it is in the market we play in with customers important, 100% renewable ahead of plan, and also some reasoned ratings of a CDP AA for climate and water, but also a platinum medal for Ecofathers. It does matter. It is the company we're building and we are proud that we also continue that during that merger. So we will position to go into the next phase, which we call internally the accelerate phase with growing what we have, anchor what we do and deliver. But before we go there, Maybe let's look back for one more time in what we've done on 2025 before we move forward. And with that, I hand over to Rob.

Well, thanks, Dimitri, and good morning, everybody. Before diving in into all of the numbers, every number presented is, as Dimitri said, in accounting terms, continuing operation. It represents the company we've been building over the past two years. And it's all about perfumery and beauty, taste, texture and health and our health, nutrition and care business. As you'll see, A&H is not very much coming forward in the slides. It's now part of discontinued. And Dimitri and myself will be managing that business for cash until the closing has finalized, which we anticipate towards the end of the year. It will be positive in cash flow generation as well. And that's what we'll steer upon and we'll continue to report on the cash performance going forward. Now, a few things. Happy with the announcement on Monday, where obviously triggered the whole event of all of the restatements and we've been releasing the new numbers on Monday afternoon. So it is a lot to take in. We appreciate that. I think also if you look at our press release, we have been as elaborate as possible, giving you the full P&L, the balance sheet and the cash flow ahead of our annual report. In the Annex, we've tried to bridge also between the total group and the continuing operations and show you all of the moving pieces. But we also appreciate that in a busy reporting season, maybe not everybody has restated it. In the Annex on page 21 and 22, we've basically also included a reporting as per the old world, including the divisions before restatement to accommodate you as much as possible. Now, Dave and the team are happy to take your questions. The annual report next week that Dimitri alluded to will also be based on continuing operations that will allow you also to all adjust to the new world and then we move from there. Now, let's dive in a bit how that new world has performed. But before we move there, I think this slide is an important one for me where overall you've seen the work and the outcome of all the activities around tuning of the portfolio where on a group perspective, We've developed the group towards a 22% margin. It's very much in line with the trajectory that we envisage. But also you see the three BUs with P&B, TTH coming towards the lower end of our guidance. Also very nice progress on those fronts. And H&C really showing a strong recovery towards that trajectory as well. And I'm happy, although that the restatement is a lot to take in, it does show. And then also going into 26, we've got the right reference on how we're doing as a company. Now, let's dive in on the next page, please. Overall, the group, Dimitri already highlighted it. For full year, overall, 3% organic sales growth in... Not the easiest environment with a stronger H1 than H2, but encouraging growth throughout the year with the leverage in EBITDA. So a 5% step up in EBITDA and as set the margin of 19.6. Very nice. But for me, it's more relevant as we're on a trajectory that the second half is at 20%. So and that's something that will continue to improve on. If we look at Q4 specific for the group overall, a 2% organic growth and 3% step up in EBITDA and a margin very much in line with prior. But I think it's more relevant to zoom in into the business units. But before we go there, also a highlight on cash. We delivered overall. Remember that when we guided for a 10% target that that was for the group. We've delivered upon that for the total group. So the total group was just over 10%. but also in the continuing operations we've delivered upon that, and I'll comment that towards the end of my voiceover. Another metric that I want to call out is that we talk about our capital returns. Overall, the core roadsheet for continuing operations stood just over 11%, showing also the quality improvement on that front over the period. Now, let's zoom in on the next slide, please, into the businesses, starting with perfumery and beauty. Overall, a 3% organic sales growth. Keep in mind that throughout 25, we obviously had the Edwin and Sun filters where we've seen some softer conditions. Overall, adjusting for that, the sales growth is 1% to 2% higher throughout the year. And going into Q4, we've seen an improvement in sequential conditions with an overall 4% organic sales growth with a strong contribution of fine fragrance with a high single digit growth. more mid single digit growth in our consumer fragrance and ingredients business whilst the recovery in bnc did not come through yet overall delivering a solid performance in our perfumery and beauty business margin overall uh slightly impacted by fx and the mix effect as a result of that on a full year basis very much in line 22 on average despite a difficult exchange rate environment um Moving then on to the next page, please, to taste, texture, and health. um overall here uh is very strong uh year again four percent organic growth keep in mind uh the comms of of last year on the back of a very strong 2024 that translated again in a very nice step up inhibitor of seven percent year over year when adjusting for the fx and also here the margin is something uh we continue to improve margin uh positively um as set towards the 21 percent the lower end of the range, and we continue to progress from there. If we look at Q4, a bit impacted by softer conditions in the US mainly. Overall, a 2% organic sales growth. Still reflecting the contribution of synergies and very well positioned in the market. But we see, especially with our key accounts in the US, a bit of a weaker overall. If you look at it from a segment basis, beverage a bit softer, but dairy, baking, pet very strong and that continues. EBITDA quality, very profound Q4, a very nice step up overall, a 10% step up in EBITDA when adjusting for currencies and also the margin showed a very strong step up versus prior in line with the ambition that we have for this business overall. Then moving to health, nutrition and care on the next page, please. Overall there, we often talk about the journey of health, nutrition and care and also that journey continued. So on a full year basis, continued growth of around 3% organic, continued strong performance at the EBITDA side, a 4% step up when adjusting for currency. and also the margin continues to improve. You also see that in Q4, we again delivered a 20% margin for the business. The growth was somewhat impacted by timing of a big, more lumpy order in our pharma business. There is a bit of a shift there that overall adjusting for that, the organic sales growth stood at 1% for the quarter, where we see a continued strong environment for early life nutrition. and our HMO business, but we also see the uncertain consumer behavior impacting a bit our Thai Dairy Supplements and iHealth business in the fourth quarter. Overall, margin more or less flat as set in Q4, but overall a continued trajectory of growth also in health, nutrition, and care. Maybe then last but not least, looking at cash, overall important on the next page, please. Our cash performance, sorry, before we go there, there was one more slide. I think here, a lot of detail. I did want to come back on the overall performance of the group as well, because I think that's important. It's a bit of a busy slide, but it's coming out of the press release. I think the key highlight here, Two things on the one hand, our adjusted EBITDA for the group overall, we landed just below 2.3 billion in line with the guidance that we gave, set aside for a bit of weakness in animal nutrition in the fourth quarter and a deteriorating ethics environment. Overall, we came in at 2280 for the total group. So very much in line from an overall perspective as well. And also on the tax side, you see that our rate is normalizing at 21% for the continuing operations, where we aim to improve it a bit further. I think that's relevant going forward. Then to the next page, to our cash conversion. So overall, I think looking at a few drivers, overall working capital was below 29%. A little up versus prior when we talked about cash and the unwind of inventory in the second half. I'm pleased to report that our second half performance was very strong. Remember that we came out with the half year numbers with a softer performance in the first half. So happy to see that rebound. However, in the current environment, we were not able to fully absorb the uplift of inventory on the back of the tariffs and the carve out activities that we've done. So that is to further unwind in 26 and causing us a bit of a percent in working capital. Overall, our sales to cash conversion for the continuing operations was also well above 10. And there we alluded to that in the first half, a bit of a shift where in 24, you had a bit of a benefit from some timing of payments, including incentives, which is obviously then impacting 25. But across the two years, a 12% performance, and we'll come back on that in the March 12th event, where we will be stretching ourselves a bit further in terms of target setting on that front. But overall, an encouraging performance. And a good momentum going into 26. Maybe with that, Dave, we pause with the voiceover and move to Q&A.