Financial performance

Key figures

• 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 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

Net sales

Net sales in 2021 increased by 8.5% to € 1,070.8 million (2020: € 986.5 million), due to a 14.7% organic increase, a currency impact of -4.1%, and net divestments of -2.1%. 

Full year 2021 compared to full year 2020

Net sales 2021

Raw materials

Carbohydrates share as % of the total raw material spend was flat compared to 2020. The relative share of fats, oils and waxes increased due to a rapeseed oil increase in our Algae business and relatively strong price increase in the oils in the US (renewable diesel). Due to a strong increase in oils, the other category became a relative smaller bucket compared to 2020.

Raw materials break down

EBITDA

Adjusted EBITDA decreased by 14.5% to € 135.8 million in 2021. Organic growth of -7.6%, the currency effect was -4.0%, and the net divestment effect was -2.9%.

Sustainable Food Solutions

Net sales in Sustainable Food Solutions, increased organically by 10.8% in 2021. 

For Preservation, 2021 was yet another strong year. Even though our largest end-market, the US processed meat market, was in decline, the trend to natural preservatives continues to gain ground. The strongest growth was seen in newer solutions such as vinegar powders and natural mold inhibitors for bread. We have begun to expand production capacity for natural ferments in Peoria, US.

Functional Systems was the fastest growing segment within Sustainable Food Solutions. Growth was driven by a higher than historic average win-rate. Growth was seen across categories at both existing customers and new customers. Innovation initiatives such as dough conditioning systems Pristine have also added to the growth rate.

Single Ingredients grew substantially in markets such as beverages and confectionery.

The Adjusted EBITDA margin decreased substantially from 17.0% to 11.9% due to higher input costs not yet reflected in the sales price, and increased fixed costs due to an investment in organizational capabilities (Advance 2025 related).

Lactic Acid & Specialties

Net sales in Lactic Acid & Specialties in 2021 increased organically by 17.0%. 

All product segments grew. Most of the growth was driven by sales of lactic acid to the Total Corbion PLA joint venture. Biopolymers started to recover as from the second quarter with double digit growth rates and finished the year strongly. We partially impaired the FiberLive technology due to slower than expected technological developments. We continue to see strong growth in pharma-grade lactates for the renal and IV markets, primarily driven by home hemodialysis. Esters (solvents) increased as the higher demand from the semiconductor market more than offset the decline in the agrochemicals market. 

The Adjusted EBITDA margin decreased from 22.1% to 19.4% due to higher input costs not yet reflected in the sales price and an increase in fixed costs (especially related to investments in organizational capabilities in medical biopolymers, in-line with our Advance 2025 strategy.

Incubator

Net sales in Incubator increased organically by 147.8% in 2021 driven by significant growth in AlgaPrime DHA (algae-based omega-3). The adoption of AlgaPrime DHA grew significantly with multiple leading aquaculture feed companies. We were able to deliver gains in algae strain efficiency and higher volumes that helped to offset the higher costs of materials and transport. In addition to the salmon market, we expanded into new categories including shrimp and pet food.

The Adjusted EBITDA loss in 2021 improved to € -11.7 million (2020: € -18.4 million) due to the growth in sales.

Non-core activities

Non-core activities (Emulsifiers) organic growth was 12.8% in 2021. As our plants remained operational during the COVID-19 pandemic we were able to gain market share. Frozen Dough was divested on 11 January 2021. Due to lack of strategic fit, the FDCA program was terminated in 2021. The Adjusted EBITDA margin decreased from 15.5% to 12.3% as input costs (mostly soybean oil related) accelerated rapidly during 2021.

Total Corbion PLA joint venture

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

Sales increased by 23.6% in 2021 (organic growth of 28.1%). Demand for PLA continues to be robust. The EBITDA margin decreased from 36.9% to 34.2% as higher plant utilization rates were offset by higher lactic acid costs, higher freight rates, and investments in organization.

Depreciation, amortization, and impairment

Depreciation, amortization, and impairment of fixed assets amounted to € 89.4 million compared to € 61.6 million in 2020.

Operating result

Adjusted operating result decreased by € 26.8 million to € 71.7 million in 2021 (2020: € 98.5 million).

Adjustments

In 2021, total adjustments of € 18.6 million were recorded (at Result after tax level), consisting of  the following components:

0. 1. Gain of € 18.4 million related to the sale of a plot of land in the Dutch municipality of Breda

   2. Gain of € 11.3 million related to the sale of the Frozen Dough activities

   3. Gain of € 6.1 million related to recognition of VAT receivable positions in Brazil

   4. Gain of € 2.9 million related to received insurance proceeds for inventory write-down in prior years

   5. Loss of € 16.6 million related to an impairment on the FiberLive development

   6. Loss of € 3.7 million related to an impairment on the FDCA development

   7. Loss of € 2.9 million related to incremental cost as a result of the production outage in our Blair facility

   8. Loss of € 1.3 million related to settlement of a tax claim in the US and to de-risk a defined benefit pension scheme.

   9. Loss of € 0.9 million related to the acquisition of Granotec Mexico

   10. Loss of € 0.8 million related to restructuring costs

   11. Loss of € 0.7 million as a result of a litigation claims

   12. Loss of € 0.6 million related to demolition costs

   13. Fair value adjustment of € 0.2 million on the contingent consideration payable related to the Algae acquisition

   14. Tax effects on the above of € 7.6 million

Financial income and charges

Net financial charges decreased with € 6.7 million to € 14.2 million, mainly as a result of decreased exchange rate differences.

Taxes

The tax charge on our operations in 2021 amounted to € 8.2 million compared to a charge of € 14.6 million in 2020. In 2021, the effective tax rate of 9.5% was mainly the result of the application of the participation exemption on the positive results of the Total Corbion PLA joint venture which are not taxable under the provision of the Dutch participation exemption, as well as the recognition of a previously unrecognized deferred tax asset which materialized as a result of the sale of a plot of land in the Dutch municipality of Breda.

For 2022, 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 increased, compared to year-end 2020, by € 213.3 million to € 1,032.0 million. The movements were:

Major capital expenditure projects were investments related to our new 125kt lactic acid plant in Thailand, our lactic acid capacity expansion, and capex amounts related to our new SAP ERP platform.

Operating working capital increased by € 76.1 million, mainly driven by an operational increase of € 61.9 million This increase was mainly caused by higher inventories as a result of higher raw material prices, higher safety stocks, and longer lead times in the supply chain. Additional components were spare parts reclassification from tangible fixed assets to inventory of € 2.6 million, acquisition and divestment effects related to Granotec Mexico and Frozen Dough of € 1.8 million, and currency effects of € 9.8 million.

Shareholders' equity increased by € 38.1 million to € 554.1 million. The movements were:

• • The positive result after taxes of € 78.3 million;

  • A decrease of € 33.0 million related to the cash dividend for financial year 2020;

  • Positive exchange rate differences of € 5.3 million due to the translation of equity denominated in currencies other than the euro;

  • Positive movement of € 3.6 million in the hedge reserve;

  • Negative remeasurement effect of defined benefit arrangement of € 20.1 million;

  • Net share-based remuneration movement of € 0.4 million;

  • Negative tax effects of € 3.6 million.

At year-end 2021 the ratio between balance sheet total and equity was 1:0.4 (2020 year-end: 1:0.5).

Cash flow/Financing

Cash flow from operating activities decreased compared to year-end 2020 by € 86.6 million to € 22.4 million. This is the balance of the lower operational cash flow before movements in working capital of € 11.6 million, a negative impact of the movement in working capital and provisions of € 58.6 million, and higher taxes and interest paid of € 16.4 million.

The cash flow required for investment activities increased compared to 2020 by € 42.5 million to € 119.4 million. Capital expenditures (€ 148.7 million) accounted for most of this cash outflow together with the acquisition of the assets of Granotec Mexico, partly compensated by dividend from the Total Corbion PLA joint venture, the proceeds from the sale of our Frozen Dough activities, the sales of a plot of land in the Dutch municipality Breda 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 total net debt position at year-end 2021 was € 461.0 million, an increase of € 176.8 million compared to year-end 2020, mainly caused by the dividend payment, capital expenditures, and increased working capital positions, partly compensated by the positive cash flow from operating activities. The covenant net debt (excluding the subordinated loan) was € 361.6 million at year end 2021.

At year-end 2021, the ratio of covenant net debt to covenant EBITDA was 2.6x (end of 2020: 1.7x ). The interest cover for 2020 was 14.6x (end of 2020: 16.5x), well within the limits of our financing covenants. 

Subsequent events

On 11 January 2022, Corbion sold a warehouse in Totowa (US), classified as held for sale in the 2021 Consolidated financial statements. The sales price amounted to $ 11.5 million (€ 9.7 million) and the expected pre-tax result on the transaction amounts to around $ 10.2 million (€ 8.6 million) to be recognized in the 2022 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 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 an unchanged, regular dividend in cash of € 0.56 per ordinary share (2020: € 0.56) will be submitted for approval to the annual General Meeting of Shareholders, to be held on 18 May 2022. This represents 43% of our 2020 Adjusted result after taxes. The dividend will be charged to the Corbion reserves.