Release Date: August 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Corbion NV (CSNVF, Financial) reported strong performance in H1 2024 with a 3.6% volume mix growth and a 5.5% organic growth in Q2.
- The company achieved an adjusted EBITDA of EUR 51.6 million in Q2, marking a significant improvement in EBITDA margin to 15.3%.
- The health and nutrition segment continues to grow at a double-digit rate with a high EBITDA margin, driven by strong demand for omega-3 in aquaculture and pet nutrition.
- Corbion NV (CSNVF) successfully divested its emulsifier business, resulting in a positive free cash flow and a net debt-to-EBITDA ratio of 2.2 times.
- The startup of the new lactic acid plant in Thailand is progressing well, expected to be a major value creation driver for the company in the coming years.
Negative Points
- The biochemicals segment is experiencing market softness, particularly in semiconductors and agrochemicals.
- Despite positive momentum, the company anticipates low single-digit negative pricing impact for the full year.
- The PLA joint venture, while showing sales growth, is still affected by high sugar prices impacting margins.
- The company faces challenges in fully compensating the stranded costs from the emulsifier divestment, with full compensation expected only by 2025.
- Freight rates have been volatile and are creeping up, which could impact margins in the near term.
Q & A Highlights
Q: You realized organic EBITDA growth of close to 22% in H1, 46% in Q2. Why is the guidance for H2 growth only above 14%?
A: Peter Kazius, CFO, explained that the strong outlook is based on prior year comparisons and strain optimization in health and nutrition, which already showed significant improvement from H1 2023 to H2 2023.
Q: Can you provide the absolute EBITDA base used for the guidance?
A: Peter Kazius, CFO, stated that the 2023 adjusted EBITDA was EUR163.7 million. The new base for the 18% guidance is lower due to the exclusion of stranded costs from discontinued operations.
Q: What is the expected EBITDA profitability for the PLA joint venture in 2024?
A: Peter Kazius, CFO, indicated that the anticipated EBITDA profitability for PLA in 2024 is between 10% and 15%, influenced by current price input cost dynamics, particularly sugar prices.
Q: Can you provide details on the recent acquisition in India?
A: Peter Kazius, CFO, described it as a bolt-on acquisition with a limited amount, between EUR1 million to EUR2 million. Olivier Rigaud, CEO, added that it serves as an anchor investment to support global key accounts in the region.
Q: What is the impact of the new lactic acid plant in Thailand on global production?
A: Olivier Rigaud, CEO, explained that the ramp-up is ongoing, with significant impact expected in 2025. The plant will optimize production costs and allow for higher-margin food ferments.
Q: What is driving the better market momentum for PLA, particularly in China?
A: Olivier Rigaud, CEO, noted that the recovery is driven by industrial 3D printing in China, with PLA being favored for its functionality. The company is also developing expanded PLA for more specialized applications.
Q: Is there a risk of a cliff edge in omega-3 contracts in 2025?
A: Olivier Rigaud, CEO, assured that contracts have staggered end dates, mitigating the risk of a cliff. The company is also expanding its customer base and exploring new categories like human nutrition.
Q: How will the company address the stranded costs from the emulsifier divestment?
A: Peter Kazius, CFO, confirmed that plans are in place to fully compensate for stranded costs by 2025 through procurement, pricing initiatives, and product portfolio optimization.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
