Taste, texture and health lead the way in dsm-firmenich’s Q1 2024 growth
02 May 2024 --- The Swiss nutrition, health and beauty innovator dsm-firmenich has released its trading update for the first quarter of 2024, noting particularly satisfactory results in Taste, Texture & Health, underpinned by market recovery and a soft performance in Health, Nutrition & Care, with an improvement in momentum by the end of the quarter.
Dimitri de Vreeze, CEO, comments: “We are pleased to see a more positive market environment and the return of volume growth in our business, together with a further sequential step up in margin. This is most evident for Taste, Texture & Health and Perfumery & Beauty, while we also expect a better momentum developing for Health, Nutrition & Care.”
“Animal Nutrition & Health saw early signs of improving demand and vitamin prices. Overall, we remain cautious as to the robustness of the market recovery trends and maintain our current full-year guidance,” he adds.
The report further highlights that the company has achieved good progress in operational performance, synergies and strategic actions. Adjusted EBITDA is estimated to be at least €1.9 billion (US$2 billion), including a €200 million (US$230 million) step-up in adjusted EBITDA owing to a combination of synergy delivery and the vitamin transformation program.
Key figures
The newly unveiled data reveals that during the first quarter of the year, volumes increased by 3%, offset by lower prices resulting from lower input costs. The company states that if vitamin prices were not as low, organic sales for Health, Nutrition & Care and Animal Nutrition and Health would be up by 2%.
The adjusted EBITDA decreased by 11% to €463 million (US$495 million). What dsm-firmenich refers to as the “vitamin effect” has cost the company an estimated €80 million (US$85.6 million). Without the vitamin effect and the similarly negative FX effect — consisting of an estimate of €15 million (US$16 million) — adjusted EBITDA would have been up by 7%.
Meanwhile, improvement programs had a positive impact, contributing an estimated €45 million (€48 million) during the first quarter.
Taste, Texture & Health and Perfumery & Beauty experienced positive growth, with Health, Nutrition & Care expecting a better momentum in the coming months.“We are making good progress on our synergies and improvement actions, including the vitamin transformation program,” says De Vreeze.
“We have begun the process of carving out our Animal Nutrition & Health business, and we are finalizing the review of all our business segments. We look forward to our Capital Markets Day in Paris on Monday, June 3, which will be focused on our innovation-driven growth strategy.”
Taste, texture, health
The company’s Taste, Texture & Health products aim to provide nutritious, healthy and sustainable F&B solutions while accelerating the transformation of diets, maintaining appealing tastes and textures and minimizing food loss and waste.
https://www.nutritioninsight.com/news/dsm-firmenich-to-divest-animal-nutrition-business-and-focus-on-food-ingredients.html
The category includes dsm-firmenich’s flavors, natural extracts, sugar reduction and ingredient solutions, such as food enzymes, hydrocolloids, cultures, natural colorants, nutritional ingredients, yeast extracts and plant-based proteins.
The portfolio of such products delivered strong organic sales growth owing to improved end-market momentum and the fading of the destocking effect. Volumes were up by 6% as a result of the satisfactory demand for taste and ingredient solutions, in particular enzymes, cultures and texturants, while vitamins remained weak. Prices remained stable overall.
The adjusted EBITDA for this category was broadly in line with the prior year and “well above” the levels of the previous three quarters. The positive effects of good organic growth and merger synergies offset the higher costs of naturals, the vitamin effect and the foreign exchange rate effect. The adjusted EBITDA margin stands at 18.8%.
Nutrition categories
The company’s Health, Nutrition & Care products target consumers’ health by offering supplementation to their diets with critical nutrients while also working in the field of medical innovation to develop immunity, recovery and quality of life solutions.
The organic sales in this category fell by 9% (6% for volumes and 3% for prices) — a development driven by the vitamin effect. For the same reason, adjusted EBITDA for the category was down 34%.
Animal Nutrition & Health delivers healthy animal proteins while simultaneously aiming to make farming practices more sustainable, productive and transparent.
Sales in this category also decreased as a result of the low vitamin prices, as well as the high idle costs from production shutdowns. Volume growth of 3% was offset by 6% lower prices and adjusted EBITDA was down 65%.
By Milana Nikolova
