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Financial performance

Key figures

Millions of euros

2020

2019

Net sales

986.5

976.4

Operating result

104.1

61.3

Adjusted EBITDA 1

158.8

145.9

Result after taxes

73.1

25.8

Earnings per share in euros 2

1.24

0.44

Diluted earnings per share in euros 2

1.23

0.43

Number of issued ordinary shares

59,242,792

59,242,792

Number of ordinary shares with dividend rights

58,871,671

58,819,590

Weighted average number of outstanding ordinary shares

58,851,367

58,819,590

Price as at 31 December

46.15

28.12

Highest price in calendar year

46.70

29.96

Lowest price in calendar year

22.54

24.26

Market capitalization as at 31 December 3

2,717

1,654

Other key data

  

Cash flow from operating activities

109.0

114.4

Cash flow from operating activities per ordinary share, in euros 2

1.85

1.94

Free cash flow 4

32.1

9.6

Depreciation/amortization (in)tangible fixed assets

60.3

61.5

Capital expenditure on (in)tangible fixed assets

89.7

82.6

Equity per share in euros 5

8.76

9.00

Regular dividend in euros per ordinary share (reporting year)

0.56

0.56

Ratios

  

ROCE % 6

12.9

9.9

Adjusted EBITDA margin % 7

16.1

14.9

Result after taxes/net sales %

7.4

2.6

Number of employees at closing date (FTE)

2,267

2,138

Net debt position/covenant EBITDA 8

1.7

2.0

Interest cover 9

16.5

22.2

Statement of financial position

  

Non-current assets

689.4

718.6

Current assets excluding cash and cash equivalents

333.5

326.8

Non-interest-bearing current liabilities

173.8

161.4

Net debt position 10

284.2

303.3

Other non-current liabilities

18.5

24.1

Provisions

30.4

27.5

Equity

516.0

529.1

Capital employed 11

818.7

856.5

Average capital employed 11

841.8

841.7

Balance sheet total : equity

1:0.5

1:0.5

Net debt position : equity

1:1.8

1:1.7

Current assets : current liabilities

1:0.6

1:0.9

  • 1 Adjusted EBITDA is the operating result before depreciation, amortization, 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 results from joint ventures and associates, divided by the average capital employed x 100.
  • 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 subsidiaries.
  • 9 Interest cover is covenant EBITDA as defined above divided by net interest income and charges.
  • 10 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.
  • 11 Capital employed and average capital employed are based on balance sheet book values.

Results

Financial guidance Advance 2025

Financial targets (on Core activities)

 

Target

Results 2020

Corbion

Organic net sales growth

4 - 7%

7.0%

Corbion

EBITDA margin

>17% from 2025

16.2%

    

Underlying ambitions

   

Sustainable Food Solutions

Organic sales growth

~3%

6.8%

Lactic Acid & Specialties

Organic sales growth

~7%

6.2%

    

Incubator: omega-3

EBITDA

Break-even by 2022

€ -15.4 mln

Incubator: other

EBITDA investment

0.5 - 1.5% of Corbion sales

0.4%

    

Corbion

Capex recurring

€ 60 mln - 70mln

€ 79.9 mln

Corbion

Capex new plants

2020-2022 avg. € 55 mln p.a.

€ 9.8 mln

Corbion

ROCE

>WACC 

12.9%

Net sales

Net sales in 2020 increased by 1.0% to € 986.5 million (2019: € 976.4 million), due to a 5.6% organic increase, a currency impact of -3.9%, and net divestments of -0.7%.

Full year 2020 compared to full year 2019

Net sales

Total growth

Currency

Total growth at constant currency

Acquisitions / Divestments

Organic

Price/Mix

Volume

Core

3.5%

-4.3%

7.8%

0.8%

7.0%

-1.5%

8.6%

- Sustainable Food Solutions

3.1%

-4.9%

8.0%

1.2%

6.8%

-0.1%

6.9%

- Lactic Acid & Specialties

4.5%

-1.7%

6.2%

0.0%

6.2%

-3.9%

10.5%

- Incubator

0.8%

-33.1%

33.9%

0.0%

33.9%

-9.3%

47.6%

Non-core

-10.8%

-1.9%

-8.9%

-7.8%

-1.1%

0.3%

-1.4%

Total

1.0%

-3.9%

4.9%

-0.7%

5.6%

-1.2%

6.9%

Net sales 2020

Raw materials

Carbohydrates share increased as % of the total raw material spend driven by capacity expansion and increased lactic acid output. The relative share of fats and oils was flat versus 2019 and the decrease in percentage in other raw materials is the result of the fact that the spend of this category was comparable to 2019, the total raw material spend increased and therefore the relative share of this category decreased.

Raw materials break down

EBITDA

Adjusted EBITDA increased by 8.8% to € 158.8 million in 2020. Organic growth of 13.4% was partly offset by a currency effect of -3.7% and a net divestment effect of -0.9%.

 € million

2020

2019

Net sales

  

Core

835.0

806.5

- Sustainable Food Solutions

545.8

529.4

- Lactic Acid & Specialties

275.8

263.8

- Incubator

13.4

13.3

Non-core

151.5

169.9

Total net sales

986.5

976.4

   

Adjusted EBITDA

  

Core

135.3

121.5

- Sustainable Food Solutions

92.7

89.1

- Lactic Acid & Specialties

61.0

56.7

- Incubator

-18.4

-24.3

Non-core

23.5

24.4

Total Adjusted EBITDA

158.8

145.9

   

Adjusted EBITDA margin

  

Core

16.2%

15.1%

- Sustainable Food Solutions

17.0%

16.8%

- Lactic Acid & Specialties

22.1%

21.5%

- Incubator

-137.3%

-182.7%

Non-core

15.5%

14.4%

Total Adjusted EBITDA margin

16.1%

14.9%

   

Total Adjusted EBITDA excl. acquisitions/divestments, at constant currencies

165.5

145.9

Sustainable Food Solutions

 € million

2020

2019

Net sales

545.8

529.4

Organic growth

6.8%

 
   

EBITDA

92.4

89.9

Adjusted EBITDA

92.7

89.1

Adjusted EBITDA margin

17.0%

16.8%

Net sales in Sustainable Food Solutions, increased organically by 6.8% in 2020. Preservation has performed well throughout 2020. Even though our customers in the meat processing sector in the US had to deal with temporary closures in the first half of the year, our volumes have generally not been impacted by this. The shift from food service to food retail has also supported growth. The trend to natural preservatives continues to gain ground. We are making good progress in the development of natural ferments, mold inhibitors for bakery, antioxidants, and antimicrobial solutions. As part of our Advance 2025 strategy to enhance our application capabilities, a new application lab in China was started in 2020, while a Singapore lab is expected to become operational in 2021.

Functional Systems showed mixed results in the first half as customers were securing supply in the onset of the COVID-19 pandemic, but stabilized in the second half of the year with low single-digit growth. We are making solid progress in expanding our business into close adjacencies such as dairy, and have opened an application lab in Lenexa, US.

Single Ingredients grew overall in 2020 with a strong close of the year in the fourth quarter. Growth had been limited in the first half of the year due to internal lactic acid allocation decisions.

The Adjusted EBITDA margin increased slightly from 16.8% to 17.0%.

Lactic Acid & Specialties

 € million

2020

2019

Net sales

275.8

263.8

Organic growth

6.2%

 
   

EBITDA

74.2

56.9

Adjusted EBITDA

61.0

56.7

Adjusted EBITDA margin

22.1%

21.5%

Net sales in Lactic Acid & Specialties in 2020 increased organically by 6.2%. All product segments grew, with the exception of medical biopolymers. Biopolymers have been under pressure due to global postponements in elective surgeries (COVID-19 related). We continue to see good growth in pharma-grade lactates and also in esters, driven by growing demand, mostly in the semiconductor markets.

Incubator

 € million

2020

2019

Net sales

13.4

13.3

Organic growth

33.9%

 
   

EBITDA

-19.4

-6.2

Adjusted EBITDA

-18.4

-24.3

Adjusted EBITDA margin

-137.3%

-182.7%

Net sales in Incubator increased organically by 33.9% in 2020 driven by significant growth in AlgaPrime DHA. We changed our pricing strategy (closer to fish oil) and concluded several projects on production improvements and strain development/implementation to further reduce the production costs of AlgaPrime DHA. Customer development in the first half of the year was slower than expected due to COVID-19 but picked up in the second half of the year. The lower EBITDA loss compared to last year is mainly related to a reduction in fixed costs. Due to our new strategy we expect to make significant further progress in 2021 in both sales growth and EBITDA loss reduction.

Non-core activities

 € million

2020

2019

Net sales

151.5

169.9

Organic growth

-1.1%

 
   

EBITDA

18.5

23.7

Adjusted EBITDA

23.5

24.4

Adjusted EBITDA margin

15.5%

14.4%

The largest component in our non-core activities is Emulsifiers which declined slightly in 2020. Frozen dough was divested on 11 January 2021. We have phased-out of the co-packing blending activities and, we terminated the Thrive algae oil activities in 2020. We have begun to investigate whether the FDCA project can be excited in the course of 2021.

Total Corbion PLA joint venture

 € million *

2020

2019

Net sales

129.3

75.6

EBITDA

47.7

8.1

EBITDA margin

36.9%

10.7%

  • * Results on 100% basis. Corbion owns 50% of Total Corbion PLA

Sales increased by 71% in 2020, due to a combination of price and volume growth, partly offset by a negative currency effect. The EBITDA margin increased from 10.8% to 36.9%.

Depreciation, amortization, and impairment

Depreciation, amortization, and impairment of fixed assets before adjustments amounted to
€ 60.3 million compared to € 60.9 million in 2019.

Operating result

Adjusted operating result increased by € 13.5 million to € 98.5 million in 2020 (2019: € 85.0 million).

Adjustments

In 2020, total adjustments of € 3.8 million were recorded (at Result after tax level), consisting of the following components:                                

  1. Gain of € 6.9 million related to the remeasurement of the sales price of the subsidiary Total Corbion PLA (Thailand) Limited to the joint venture Total Corbion PLA bv. The amount consists of a gain of € 12.9 million positive reported in Other proceeds, partly offset by a loss of € 6.0 million reported in Results from join ventures and associates.

  2. Loss of € 4.6 million related to a write-down of inventory in our Algae Ingredients business

  3. Loss of € 4.4 million as a result of a provision for a tax claim after a US tax audit

  4. Loss of € 1.3 million related to an impairment of assets for preparation of the new lactic acid plant in Thailand

  5. Loss of € 1.3 million related to restructuring costs

  6. Loss of € 0.9 million related to advice costs for US tax audit and to de-risk a defined benefit pension scheme

  7. Loss of € 0.3 million related to inventory write-down in the US

  8. Tax effects on the above of € 2.1 million.

Financial income and charges

Net financial charges increased with € 6.3 million to € 20.9 million, mainly as a result of increased interest charges and exchange rate differences.

Taxes

The tax charge on our operations in 2020 amounted to € 14.6 million compared to a charge of € 18.9 million in 2019. In 2020, the effective tax rate of 16.6% was reduced due to the application of the participation exemption on the positive results of the joint venture with Total as well as the upward adjustment of the selling price of the subsidiary Total Corbion PLA (Thailand) Limited to the joint venture Total Corbion PLA bv, which are not taxable under the provision of the Dutch participation exemption. For 2021, we expect a normalized effective tax rate (excluding the joint venture results which are exempt under the participation exemption) of approximately 25% in line with the tax rates in the main jurisdictions where Corbion has its operations.

Statement of financial position

Capital employed decreased, compared to year-end 2019, by € 37.8 million to € 818.7 million. The movements were: 

€ million

 

Capital expenditure on (in)tangible fixed assets

89.7

Lease contract movements

3.6

Depreciation / amortization / impairment of (in)tangible fixed assets

-61.6

Change in operating working capital

14.4

Change in provisions, other working capital and financial assets/ accruals

7.3

Movements related to joint ventures

0.2

Taxes

-4.4

Exchange rate differences

-87.0

Major capital expenditure projects in 2020 were investments related to lactic acid capacity expansion in Thailand, our new SAP ERP platform, and the first capex amounts related to our new 125 kt lactic acid factory in Thailand based on the new gypsum-free technology.

Operating working capital increased by € 4.0 million. This increase is the balance of an operational increase of € 14.4 million and currency effects of € -10.4 million. 

Shareholders' equity decreased by € 13.1 million to € 516.0 million. The movements were:

  • The positive Result after taxes of € 73.1 million;

  • A decrease of € 33.0 million related to the cash dividend for financial year 2019;

  • Negative exchange rate differences of € 53.5 million due to the translation of equity denominated in currencies other than the euro;

  • Positive movement of € 5.3 million in the hedge reserve;

  • Negative remeasurement effect of defined benefit arrangement of € 5.1 million;

  • Net share-based remuneration movement of € 2.7 million;

  • Negative tax effects of € 2.6 million.

At year-end 2020 the ratio between balance sheet total and equity was 1:0.5 (2019 year-end: 1:0.5).

Cash flow/Financing

Cash flow from operating activities decreased compared to year-end 2019 by € 5.4 million to € 109.0 million. This is the balance of the higher operational cash flow before movements in working capital of € 11.1 million, a negative impact of the movement in working capital and provisions of € 9.8 million and higher taxes and interest paid of € 6.7 million.

The cash flow required for investment activities increased compared to 2019 by € 27.9 million to € 76.9 million. Capital expenditures (€ 88.9 million) accounted for most of this cash outflow, partly compensated by dividends from the PLA joint venture and payments received related to the sale (in 2017) of the subsidiary Total Corbion PLA (Thailand) Limited to the joint venture Total Corbion PLA bv.

The net debt position at year-end 2020 was € 284.2 million, a decrease of € 19.1 million compared to year-end 2019, mainly caused by the positive cash flow from operating activities before working capital and provisions, decreased lease liabilities and currency effects, partly offset by dividend payment and capital expenditures.

At year-end 2020, the ratio of net debt to EBITDA was 1.7x (end of 2019: 2.0x). The interest cover for 2020 was 16.5x (end of 2019: 22.2x). We continue to stay well within the limits of our financing covenants. 

Subsequent events

On 11 January 2021 Corbion announced it reached an agreement to sell its frozen dough business, classified as held for sale in the 2020 Consolidated financial statements, for an estimated sales price of $ 25 million (€ 20 million). The sales price is subject to adjustments, amongst others working capital adjustments, and the final sales price will be determined in the course of 2021. The expected result after tax on the transaction amounts to around $ 11 million (€ 9 million) to be recognized in the 2021 financial statements.

On 25 January 2021 Corbion signed an agreement with the municipality of Breda (NL) and the Dutch province of Noord-Brabant to sell a plot of land, classified as held for sale in the 2020 Consolidated financial statements. The agreed purchase price (to be paid in installments over the next 10 years) amounts to € 21.9 million, the expected result after tax amounts to around € 23 million to be recognized in the 2021 financial statements.

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 annual review of the outlook of the net debt/EBITDA ratio development. This review will be based on multiple criteria such as major investments, timing of M&A, or divestment initiatives.

Dividend proposal

As we are entering a multi-year phase of substantially higher capex spending, a proposal to distribute an unchanged, regular dividend in cash of € 0.56 per ordinary share (2019: € 0.56) will be submitted for approval to the annual General Meeting of Shareholders, to be held on 19 May 2021. This represents 43% of our 2020 Adjusted result after taxes. The dividend will be charged to the Corbion reserves.

COVID-19

It is difficult to be precise about the direct/indirect effects that COVID-19 pandemic has had on our financial results. Nevertheless, we estimate the impact on the 2020 EBITDA to have been positive € 4-5 million in aggregate. Travel expenses in 2020 were € 7.5 million lower compared to our regular travel pattern due to severe travel restrictions. The estimated impact on our added value has been approximately € -1 million; a limited amount, due to the broad range of end-markets Corbion is servicing. We saw negative impacts on our food service-related activities, and our biopolymers business, which suffered as a result of the postponement of elective surgeries. We also saw an increase in logistic costs towards the end of the year due to a shortage of sea-containers. These effects were only partially offset by the positive impact from a sales increase in both food retail- and hand-sanitizing businesses. In recognition of the extraordinary performance of our employees, we have awarded an additional one-off bonus to all of our employees in the fourth quarter of € 2 million in total. Corbion did not receive any COVID-19-related financial government support in 2020. COVID-19 also had an impact on the implementation momentum of our multi-year SAP ERP initiative, especially due to severe travel restrictions around the world. As a consequence, the planned implementations for Asia and Europe had to be postponed from 2020 to 2021. This also had an impact on the total program costs which are expected to be in € 50–55 million range (€ 10 million higher than communicated last year). We envisage to complete the program by end of 2022.