Release Date: February 27, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Corbion NV (CSNVF) achieved organic sales growth of 2.2% in 2024, driven by a volume mix increase of 5.2%.
• The company reported a significant organic adjusted EBITDA growth of 23.3% year-over-year.
• Free cash flow from continued operations reached 98.3 million, surpassing targets.
• The health and nutrition segment saw strong growth, with an 18.5% increase in organic sales.
• Corbion NV (CSNVF) maintained a high EBITDA margin of 29.9% in the health and nutrition segment, reflecting strong operational leverage and favorable product mix.

Negative Points

• Raw material and freight prices were volatile throughout 2024, impacting cost predictability.
• The functional ingredients and solutions segment experienced a negative impact on margins due to price declines following input cost relaxation.
• The biomedical segment faced challenges with weaker demand in agrochemicals and softness in the semiconductor market.
• The PLA joint venture faced significant pricing headwinds, resulting in a low EBITDA margin of 2.1% in Q4.
• Corbion NV (CSNVF) anticipates potential impacts from tariffs on goods into the US, which could affect future pricing strategies.

Q & A Highlights

• Warning! GuruFocus has detected 6 Warning Signs with CSNVF.

Q: Health and nutrition volumes were flat in Q4, contrary to the expected growth. What factors contributed to this slowdown, and how has Q1 started for this segment? A: (CFO) The flat volumes in Q4 were due to a phasing of orders, as indicated in the Q3 call. The overall performance for H2 aligns with our strategic ambitions. Q1 has started in line with our commitments and outlook.

Q: Despite volume growth in food functional ingredients and solutions, margins have declined. What is the impact of fixed costs, and what is the outlook for margin development next year? A: (CFO) The margin decline was expected due to seasonality and phasing of fixed costs, including inventory movement and maintenance. We anticipate margin improvement in 2025, supported by cost-saving initiatives and operational efficiencies.

Q: What is the outlook for pricing in the functional ingredients and solutions unit in 2025? A: (CEO) We expect less pricing erosion in 2025, with some markets seeing price increases. We are prepared to adjust pricing strategies as needed, considering potential tariffs and market conditions.

Q: The PLA joint venture had a low margin in Q4. Why do you expect a high single-digit margin in 2025, and why is this business still attractive? A: (CEO) The plant is filling up, leading to better operational leverage. Lower input costs, particularly sugar, are also favorable. Despite current pricing challenges, long-term drivers, especially in Asia, remain intact, supporting volume recovery.

Q: Why is Corbion staying in the PLA business despite challenges? A: (CEO) We are reviewing our strategic options as part of our upcoming strategic exercise. The PLA business will be evaluated alongside other portfolio components, with more updates expected by year-end.

Q: Can you provide more details on the status and growth potential of product adjacencies in food, such as dairy stabilizers? A: (CEO) Product adjacencies, including natural antioxidants and mold inhibitors, contributed approximately 10% of sales in 2024. We see significant growth potential, particularly in food ferments and mold inhibitors, and plan to accelerate these initiatives.

Q: What is the outlook for the biochemicals segment, particularly in semiconductors and agrochemicals? A: (CEO) The semiconductor market has stabilized, with no further decline expected. However, agrochemicals face negative regulatory impacts, and we are not prioritizing this sector for growth or investment.

Q: How has the underlying volume growth in the food segment developed over the last few years? A: (CFO) Since 2020, volume growth has been driven by both volume and mix improvements. The strategy has been to enhance both aspects to achieve overall growth.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.