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Our strategy: Advance 2025

Our Advance 2025 strategy builds on Corbion’s fundamentals and strengths by bringing further focus to the business portfolio well aligned with global market trends. This will be achieved by increased investments in key growth areas such as natural food preservation and lactic acid, while at the same time reducing the breadth of our business portfolio. Given our purpose “Championing preservation in all its forms: preserving food and food production, health, and the planet,” sustainability is at the heart of what we do and hence we are very well positioned to benefit from the worldwide drive for more sustainable products and solutions. We have aligned our Advance 2025 strategy with the United Nations Sustainable Development Goals (SDGs), specifically with SDG 2 Zero hunger, SDG 3 Good health and well-being, and SDG 12 Responsible consumption and production. These are the goals where we believe we can create the most significant impact, given our footprint, the nature of our business, and the environment in which we operate.

Our business and reporting structure has three business units.

Sustainable Food Solutions

Sustainable Food Solutions comprises three segments: Preservation, Functional Systems, and Single Ingredients.

In Preservation, we will expand our natural preservation offerings beyond the meat industry into other markets, including the bakery and savory foods segments. Within the meat segment, we continue collaborating with producers to develop better plant-based meat alternatives, which present safety and freshness challenges similar to more traditional meat products. New, patented natural ferments based on vegetables and fruits will further extend and diversify our already strong portfolio and open up exciting opportunities to deliver value in a wider array of applications.

In Functional Systems, we will focus on delivering more natural solutions, such as natural mold inhibition in bakery, and texture and stability enhancers in other markets like savory foods and dairy. Corbion is well-known in this area for its leadership, expertise, and capabilities. Nevertheless, in any of these segments, bolt-on acquisitions may prove to be strategically advantageous in expanding our reach. Meanwhile, internal efforts are underway to develop new functional systems that build on our applications, enzymes, and industry knowledge.

From this point forward, our emulsifiers portfolio will be managed for value, while we will exit other non-core activities, such as blend co-packing and frozen dough manufacturing.

Lactic Acid & Specialties

Lactic Acid & Specialties comprises Biochemicals (lactic acid, lactate salts, esters, and other specialties), Biomaterials (polymers for medical applications), and Total Corbion PLA (our joint venture with Total for the production and marketing of Luminy® PLA).

In Biochemicals, we enable brand owners to commercialize safe performance products using our lactic-acid-based products and technology. Corbion leads the global lactic acid market in terms of technology, production, breadth of portfolio, and geographic coverage. We fuel our customers´ success by creating specialties for a wide range of markets and applications, based on deep knowledge and advanced capabilities.

In Biomaterials, the Advance 2025 strategy enables us to expand and work toward a sustainable and accessible healthcare system. In support of implantable technologies such as cardiovascular devices, orthopedic implants, tissue regeneration scaffolds, drug delivery, and wound management systems, we offer a proven family of resorbable polymers. Our strategy, focused on safe and resorbable polymers aligns well with current trends in healthcare that point to continued opportunities in this sector.

To further strengthen our position in attractive growth markets, we announced plans to build a new lactic acid plant at our existing site in Rayong Province, Thailand. The new plant is expected to be operational in 2023, producing 125,000 tons of lactic acid annually. It will be built using state-of-the-art technology to the highest standards of sustainability, and will be our most competitive plant to date. This additional investment in lactic acid demonstrates our continuing commitment to supporting both our existing customers as well as the Total Corbion PLA joint venture, which is experiencing a surging demand for PLA bioplastics. Corbion and Total announced in September 2020 the intention to build a new 100,000 tons per annum PLA bioplastics plant in France. This in combination with the offering of an innovative portfolio of high-heat Luminy PLA resins and extensive application development will help to establish Total Corbion PLA as market leader in PLA bioplastics.

Incubator

Our three main product categories in Incubator are algae-based omega-3 (starting with fish feed applications), algae proteins (in cooperation with Nestlé), and our new co-polymer platform. In our Incubator we plan to bring omega-3 DHA to break-even in 2022 with the objective to realize further profitable growth beyond 2022, while we stay committed to investing in initiatives with a longer time horizon. The co-polymer platform is a lactic-acid-based, controlled-release co-polymer technology, which expands on our (medical) polymer expertise. Due to lack of strategic fit, the FDCA program is being managed for exit while our consumer brand Thrive algae oil activities were terminated in 2020.

Research and development initiatives

We live in a rapidly changing world, where critical success factors include agility to respond to change, strong collaborative networks, and (open) innovation. Increasingly, business development is executed with partners in the value chain that rely on their suppliers for innovation and provision of R&D services. In addition, there is a strong desire in multiple markets to provide scientific evidence for functionality claims. Similarly, increased awareness in society and the marketplace of the burden we place on our planet has fueled the demand for science-based proof and solutions to reduce the environmental impact of manufacturing and use of products.

Both the trend toward collaborative innovation and the need for evidence of functionality and sustainability provide an opportunity for Corbion. To capture these opportunities we will refocus in-house R&D to support accelerated execution of Advance 2025 and pursue more open innovation, both spin in (e.g. venturing, academic) and spin out.

Our strategy for 2020-2025 projects R&D spend at 4% of net sales.

Investments over strategy period

Having established a leading global position in lactic acid and lactic acid derivatives, it is of strategic importance that we maintain a differentiated position. Increased demand for lactic acid, driven largely by its key role in PLA production, will lead us to invest in expansions of all our existing lactic acid facilities and to construct a new lactic acid plant in Thailand that uses our gypsum-free production technology. Next to that we have the intention to build a new 100,000 tons per annum PLA bioplastics plant in France through the Total Corbion PLA joint venture. This additional PLA investment will accelerate plans to further expand lactic acid production, with Europe being the likely site of a future facility. Our Algae Ingredients business will also require further investment as we continue to improve existing as well as develop new products with this platform. Other technology investments will enable us to enhance our readiness to use next-generation feedstocks such as second-generation sugars from agricultural residues as soon as they become available. We will strengthen our workforce capabilities to advance key strategic initiatives, such as continuing to develop and implement our solutions model in food, expanding our bakery operations in Latin America, and delivering on our medical biomaterials and biochemicals initiatives. The strategy period also encompasses a major multi-year investment in a new Enterprise Resource Planning platform (SAP S/4HANA) which, in concert with the execution of various Excellence Programs, will help drive progress toward our strategic objectives.

Targets Advance 2025

Sustainable development targets

 

2025 1

2030 1

Preserving food and food production

  

% of cane sugar verified responsibly sourced2

100%

100%

% of verified deforestation-free key agricultural raw materials3,4

100%

100%

% of Product Social Metrics5 coverage for products contributing to preserving food and food production6

50%

100%

Preserving health

  

Total Recordable Injury Rate7

< 0.5

< 0.25

% of Product Social Metrics5 coverage for products contributing to preserving health6

50%

100%

Preserving the planet

  

Renewable electricity

90%

100%

Reduction of Scope I, II, III emissions (SBTi-approved target)8

20%

33%

% recycled by-products9

100%

100%

Landfill of waste

0 kT

0 kT

% of Life Cycle Assessment10 coverage for products contributing to preserving the planet6

100%

100%

Preserving what matters

  

% of products11 contributing to preserving food and food production, health, and/or the planet6

> 70%

> 80%

  • 1 Targets based on current manufacturing footprint; to be reviewed in case of acquisitions / major changes.
  • 2 Bonsucro-certified or meeting the requirements of Corbion's cane sugar code verified by third-party audits, by quantity.
  • 3 Key agricultural raw materials include cane sugar, dextrose derived from corn, palm oil and derivatives, soy-bean oil and derivatives, and wheat, by quantity.
  • 4 Through Bonsucro certification, RSPO certification or other certification covering deforestation; or demonstrated to be deforestation-free based on satellite data, third party audits (e.g. Corbion cane sugar code audit), and/or country of origin statements, by quantity.
  • 5 The Product Social Metrics assessment is done according to the methodology described in the Handbook for Product Social Impact Assessment, published by the Roundtable for Product Social Metrics and applies to products manufactured at Corbion sites (outsourcing is excluded). By quantity.
  • 6 Products for which there is evidence that the product contributes to the identified impact categories. See Sustainability statements for more details.
  • 7 Based on OSHA guidelines. Including contractors.
  • 8 Per metric ton of product. Our Science Based Target includes Scope I emissions from direct production (from natural gas), Scope II emissions from purchased energy (electricity and purchased steam, market-based), and Scope III emissions related to key raw materials and transport. Our 2030 target is approved by the Science Based Targets initiative. Progress is reported compared to 2016 as base year.
  • 9 By quantity.
  • 10 Life Cycle Assessment (LCA) is peer reviewed according to the ISO 14040/44 standards for Corbion’s core products (such as lactic acid) or done according to the “LCA Approach for Corbion’s Product Portfolio: Lactic acid derivative plants, Corbion 2017,” which has been externally reviewed against and is considered to be in line with the principles of the ISO 14040/44 standards. Applies to products manufactured at Corbion sites (outsourcing is excluded). By quantity.
  • 11 By revenue.

Financial guidance

The Advance 2025 strategy aims to deliver organic sales growth of between 4 and 7 percent annually for Corbion's core activities.

Financial targets (on Core activities)

 

Target

Corbion

Organic net sales growth

4 - 7%

Corbion

EBITDA margin

>17% from 2025

   

Underlying ambitions

  

Sustainable Food Solutions

Organic sales growth

~3%

Lactic Acid & Specialties

Organic sales growth

~7%

   

Incubator: omega-3

EBITDA

Break-even by 2022

Incubator: other

EBITDA investment

0.5 - 1.5% of Corbion sales

   

Corbion

Capex recurring

€ 60 mln - 70 mln

Corbion

Capex new plants

2020-2022 avg. € 55 mln p.a.

Corbion

ROCE

>WACC