Financial performance

Key figures

• 1 Adjusted EBITDA is the operating result before depreciation, amortization, and (reversal of) impairment of (in)tangible fixed assets and after adjustments.
• 2 Per ordinary share in euros after deduction of dividend on financing preference shares.
• 3 Market capitalization is calculated by multiplying the number of ordinary shares with dividend rights by the share price at the closing date.
• 4 Free cash flow comprises cash flow from operating activities and cash flow from investment activities.
• 5 Equity per share is equity divided by the number of shares with dividend rights.
• 6 Return on capital employed (ROCE) is defined by Corbion as adjusted operating result, including adjusted operating results from joint ventures and associates, divided by the average capital employed x 100. Starting 2023, the ROCE calculation has changed. The change was initiated to reflect the same pre-tax numerator basis for Corbion and joint ventures result, being adjusted operating profit. In previous periods, the Corbion share in annualized adjusted net result of joint ventures was included. Starting 2023, the Corbion share in annualized adjusted operating profit of joint ventures is included. Comparative figures have been adjusted to reflect this change.
• 7 Adjusted EBITDA margin % is adjusted EBITDA as defined above divided by net sales x 100
• 8 Covenant EBITDA is adjusted EBITDA as defined above, increased by cash dividend of joint ventures received and annualization effect of newly acquired and/or divested subsidiaries.
• 9 Interest cover is covenant EBITDA as defined above divided by net interest income and charges.
• 10 Covenant net debt position comprises borrowings (excluding subordinated loans), and lease liabilities less cash and cash equivalents, including third-party guarantees which are required to be included under the debt covenants.
• 11 Total net debt position comprises borrowings and lease liabilities less cash and cash equivalents, including third-party guarantees which are required to be included under the debt covenants.
• 12 Capital employed and average capital employed are based on balance sheet book values.

Results

Financial guidance Advance 2025

• 1 Organic growth defined as volume growth + mix growth, excluding price impact
• 2 ROCE was below WACC

Net sales

Sales in 2023 were € 1,443.8 million (FY 2022: € 1,457.9 million) driven by an organic increase of 1.2% and a negative currency impact of -2.2%. The currency impact was due to depreciating US Dollar and Japanese Yen.

Core sales in 2023 were € 1,264.0 million (FY 2022: € 1,254.4 million) driven by an organic increase of 3.0% and a negative currency impact of -2.2%.

Full year 2023 compared to full year 2022

Net sales 2023

Raw materials

Carbohydrates, fats, oils, and others show minimal % spend changes versus sales. Due to our hedging policy, we could limit the negative impact of sugar prices in 2023.

Raw materials break-down

EBITDA

Adjusted EBITDA increased by 4.0% to € 191.8 million in 2023 (organic growth 10.3%). Core Adjusted EBITDA increased to € 163.7 million, an increase of 9.1% versus FY 2022 (organic growth 16.2%), driven by strong performance of the Algae Ingredients business unit and the biomedical polymers business.

Sustainable Food Solutions

In 2023, Sustainable Food Solutions saw a 0.7% organic sale increase, driven by a positive price impact of 5.4% more than offsetting volume/mix changes of -4.7%. The pricing impact was the result of our initiatives to compensate for additional input costs mainly impacting the first half year 2023. We have seen a slight decline in pricing in some areas following the relaxation of input costs in the fourth quarter.

For the year 2023, volume/mix was driven by supply chain destocking (a process which we now believe to have concluded), soft consumer demand in line with macro conditions and volume/mix losses in the less specialized part of our portfolio as we maintained pricing discipline. We have seen growth in the product and market adjacencies, like dairy stabilizers, natural antioxidants, and natural food ferments.

Functional Systems sales demonstrated mid-single digit growth, primarily driven by price increases, partly offset by a volume/mix decrease. Growth was realized in a soft US bakery end-market (US Bakery -2%)¹, which represents a substantial portion of our Functional Systems segment. During 2023, we observed positive momentum in our dairy segment following the successful implementation of our expansion program in this adjacent market.

Sales growth in Preservation was modest, primarily attributed to price increases which were almost fully offset by volume losses in processed meat due to lower customer demand and market softness. The US processed meat market, one of the largest end-market for our preservation solutions, exhibited a decline in 2023 (US processed meat -4%)¹.

Single Ingredients sales declined in 2023 due to reduced volumes driven by losses attributable to pricing and soft consumer demand.

The Adjusted EBITDA margin for 2023 stood at 11.0%, marking a decrease compared to the previous year, due to reduced volumes (negative operational leverage) as well as the dilution effect of pricing actions to compensate for higher input costs.

• 1 IRI/Circana

Lactic Acid & Specialties

In 2023, sales in Lactic Acid & Specialties declined organically by -2.0%, driven by a volume/mix decline of -7.4%, partly offset by a positive price impact of 5.4%.

The full year decline in volume/mix can be attributed to several factors including the lower lactic acid supply to the TotalEnergies Corbion joint venture. We also saw reduced sales to the semiconductor market as from the second quarter of 2023 following the ongoing cyclical market downturn. From the second quarter onwards, we experienced a soft demand in the agrochemical business driven by destocking and unfavorable weather conditions. Biomedical polymers continued its double digit growth trajectory and is in line with our Advance 2025 targets.

Adjusted EBITDA margin improved to 19.9%, marking a significant increase of 320bps year-on-year. This improvement was driven by growth in biomedical polymers and a favorable mix due to reduced sales to the joint venture.

Algae Ingredients

Sales in Algae Ingredients increased organically by 53.5% surpassing the € 100 million landmark, driven by strong volume/mix growth of 42.5% and sustainable price increases of 11.0%.

In 2023, the volume/mix growth was primarily driven by higher sales of AlgaPrime™ DHA (omega-3) within aquaculture. We successfully launched AlgaPrime™ DHA P3 (omega-3), addressing the demand for sustainable active nutrition in the petfood industry. In pet nutrition, we have realized sales to new customers and are successfully expanding our client base and pipeline. In human nutrition, we successfully built our product portfolio with customer approvals on DHA oil progressing.

Adjusted EBITDA was € 11.5 million, an EBITDA improvement of approximately € 15 million versus last year. This was mainly the result of sustainable price increases in aquaculture and higher volumes.

The Algae Ingredients business has achieved remarkable progress in terms of sales and EBITDA growth over the last couple of years. Algae-based ingredients have continued their growth momentum as a sustainable alternative to fish oil in the aquaculture industry. Concurrently, we have expanded our product portfolio and pipeline of high-margin products for the pet food and human nutrition segments. We have also increased the estimated potential output of the existing facility in Brazil, enabling anticipated growth until 2028 with attractive returns.

Incubator

Currently, there are no sales within the Incubator segment. The Adjusted EBITDA of € -8.5 million reflects investments in various programs as outlined in the December 2022 Capital Market Day. Costs associated with Incubator operations amount to 0.7% of core sales, and therefore are in line with our ambition of being in the range of 0.5% - 1.5% of core sales.

Non-core activities

In our non-core activities, sales declined organically by 9.3% to € 179.8 million. The decrease was primarily due to a negative volume/mix of -17.3%, partially offset by price increases of 8.0%. Adjusted EBITDA organically decreased by 15.2% to € 28.1 million following a strong performance last year (FY 2022: € 34.3 million).

On 26 January 2024, a binding agreement was signed with Kingswood Capital Management for the sale of Corbion's Emulsifier business. The sale, which is contingent upon the satisfaction of certain conditions, including regulatory approvals, will allow Corbion to sharpen its focus on fermentation-based technologies while providing customers and stakeholders of the Emulsifier business a trusted partner in navigating corporate divestitures. There will be service agreements in place to enable a smooth transition. The transaction is expected to close in the second quarter of 2024.

TotalEnergies Corbion joint venture

• * Results on 100% basis. Corbion owns 50% of TotalEnergies Corbion joint venture 

Sales in the TotalEnergies Corbion joint venture declined organically by 26.9%, largely driven by lower volumes as a result of continued weakness of the PLA market. The decline in sales of PLA has materialized since mid-2022 with recent quarters being stable. Given the current market circumstances Corbion remains cautious about the short-term outlook, although Corbion observes some early signs of recovery. The Adjusted EBITDA margin for the full year 2023 of 16.4% is lower than last year, attributable mainly to reduced operational leverage as well as negative pricing dynamics. 

Corbion announced in June 2023 that it will not pursue a new PLA bioplastics plant in Grandpuits, France, through its TotalEnergies Corbion joint venture. This announcement follows Corbion’s review of the investment case and demonstrates its capital allocation discipline. The TotalEnergies Corbion joint venture booked an impairment for the capitalized cost related to this investment of € 13.6 million during 2023.

Depreciation, amortization, and impairment

Depreciation, amortization, and impairment of fixed assets before Adjustments amounted to € 84.6 million compared to € 76.4 million in 2022. The reversal of a previously (in 2019) recorded impairment in the Algae Ingredients business unit has been recognized as a positive adjustment.

Operating result

Operating profit increased by € 6.4 million to € 117.2 million in 2023 (2022: € 110.8 million) due to a € 21.7 million gain related to the reversal of a previously (in 2019) recorded impairment in the Algae Ingredients business unit. Adjusted Operating profit decreased by € 0.8 million to € 107.2 million in 2023 (2022: € 108.0 million).

In 2023, a total of € 4.8 million of adjustments were recorded at the “Result after taxes” line, consisting of the following components:

0. 1. Gain of € 21.7 million related to the reversal of a previously recorded impairment (in 2019) in the Algae Ingredients business unit.

   2. Loss due to fair value adjustment of € 5.2 million on the contingent consideration payable related to the 2018 Algae acquisition.

   3. Loss of € 4.6 million related to project costs for the planned divestment of the Emulsifier business.

   4. Loss of € 6.8 million on the “Results from joint ventures and associates” line as a result of an impairment on the capitalized development costs for the cancelled Grandpuits project at the TotalEnergies Corbion joint venture.

   5. Other losses of € 1.9 million related to various smaller adjustments.

   6. Tax effects on the above of € -1.6 million.  

Financial income and charges

Net financial charges increased by € 23.1 million to € 28.4 million (2022: € 5.3 million), mainly as the result of higher interest charges (driven by higher debt levels at increasing interest rates) and exchange rate differences effects.

Taxes

The tax charge in 2023 amounted to € 12.4 million compared to a charge of € 26.4 million in 2022, resulting in an effective tax rate of 14.5% (2022: 22.7%). For 2024, Corbion anticipates an effective tax rate (excluding tax-exempt joint venture results) of approximately 27%, in line with the tax rates in its main operational areas. The effective tax rate in 2023 is reduced by the recognition of a previously unrecognized deferred tax asset due to the reversal of the previously recorded impairment in the Algae Ingredients business unit.

Statement of financial position

Capital employed increased, compared to year-end 2022, by € 22.3 million to € 1,364.8 million. The movements in 2023 were as follows:

Major capital expenditure projects are related to the completion of the new 125kt lactic acid plant in Thailand (mechanical completed in December 2023), algae fermentation and lactic acid capacity expansion/debottlenecking in existing plants, and investment in the new ERP platform in the US and Brazil.

Acquisitions and capitalized borrowing costs include capitalized borrowing costs as well as the insourcing of vinegar fermentation capacity.

Operating working capital decreased by € 33.9 million, including € 9.6 million related to negative currency effects. The inventory position has been reduced by € 68.3 million following enhanced inventory management activities. Trade payables position has been reduced by € 44.0 million partially due to a reduced procurement activity level in the last quarter of 2023.

Shareholders' equity increased by € 10.5 million to € 636.2 million.

The movements in 2023 were as follows:

At year-end 2023 the ratio between balance sheet total and equity was 1:0.4 (2022 year-end: 1:0.4).

Cash flow/Financing

"Cash flow from operating activities" increased by € 126.4 million to € 165.4 million compared to 2022 (€ 39.0 million). This is the balance of the higher “operational cash flow before movements in working capital and provisions” of € 1.9 million, a positive impact of the “movement in working capital and provisions” of € 123.7 million, and higher taxes and interest paid of € 0.8 million.

The cash flow required for investment activities decreased by € 52.3 million to € 146.8 million compared to 2022 (€ 199.1 million). Capital expenditure (€ 149.3 million¹) was the main source of cash outflow.

The net debt position at the end of 2023 was € 715.3 million, an increase of € 14.3 million compared to year-end 2022 (€ 701.0 million), mainly the result of the dividend payment and capital expenditures, partially compensated by decreased working capital positions and the positive cash flow from operating activities. The covenant net debt (excluding the subordinated loan) was € 615.7 million at the end of 2023 (2022: € 601.5 million).

The covenant net debt to covenant EBITDA ratio was 3.1x at the end of 2023 (3.0x at the end of 2022). The interest cover was 7.9x in 2023 (14.2x in 2022). We continue to stay well within the limits of our financing covenants.

• 1 Reflecting cash-out of investments related to (in)tangible fixed assets adjusted for exchange rates.

Reservation and Dividend Policy

Corbion’s reservation policy is aimed at creating and retaining sufficient financial capacity and flexibility to realize our strategic objectives while maintaining healthy balance sheet ratios. Corbion intends to add the profit (or charge the loss) to the company reserves after deduction of the proposed dividend on ordinary shares. Events potentially impacting our financing requirements such as acquisitions, divestments, reorganizations, or other strategic considerations can lead to adjustments in the reservation amount and the reservation policy. As regards Corbion’s dividend policy, the amount and structure of dividend on ordinary shares that the company will pay to its shareholders depend on the financial results of the company, the market environment, the outlook, and other relevant factors. The dividend policy has the ambition to annually pay out a stable to gradually increasing absolute cash dividend amount per share (progressive regular dividend policy), subject to an annual review of the outlook of the covenant net debt/covenant EBITDA ratio development. This review will be based on multiple criteria such as major investments, timing of M&A, or divestment initiatives.

Dividend proposal

A proposal to distribute a regular dividend in cash of € 0.61 per ordinary share (2022: € 0.56) will be submitted for approval to the annual General Meeting of Shareholders, to be held on 15 May 2024, which is an increase of 9% versus prior year. This represents 53% of our 2023 Adjusted Result after taxes. The dividend will come from Corbion’s reserves.