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

• 1 Organic growth defined as volume growth + mix growth, excluding price impact

Net sales

In 2022, net sales rose 36.2% to € 1,457.9 million, compared to € 1,070.8 million in 2021, driven by an 24.6% organic increase and an 11.5% beneficial currency impact. The core business saw a volume/mix growth of 5.6%, while the 18.7% price increase was the result of successfully passing on additional input costs.

Full year 2022 compared to full year 2021

Net sales 2022

Raw materials

Carbohydrates, fats, oils, and others show minimal % spend changes versus sales. The other category shows a slight increase in energy and chemicals spend due to the war between Russia and Ukraine.

Raw materials break-down

EBITDA

In 2022, adjusted EBITDA grew 35.8% to € 184.4 million, with an organic increase of 17.9%, a positive currency effect of +18.3%, and a net impact of acquisitions and divestments of -0.4%.

• * Adjusted EBITDA (margin) has been restated due to reallocation of G&A costs over the business units following the carve out of Algae Ingredients.

Sustainable Food Solutions

• * Adjusted EBITDA (margin) has been restated due to reallocation of G&A costs over the business units following the carve out of Algae Ingredients.

Net sales in the Sustainable Food Solutions business unit increased organically by 21.5% in 2022. The growth was driven by volume/mix growth of 3.6% and full year price increases of 17.9%.

Functional Systems maintained a favorable positive volume/mix momentum, driven by positive mix effects with volumes being flat. We have been increasingly supporting our customers with reformulations addressing their raw material availability and cost issues.

The growth in Preservation has been driven by both volume/mix and price increases. Volume growth was slightly negative in the second half of the year, after substantial market share gains over the past two years. Even though our largest end-market (US processed meat) was in decline in 2022, the trend to natural preservatives continues to gain ground.

Single Ingredients grew via price improvements, whilst volumes were substantially down due to the deliberate shedding of some of the lower margin beverage (acidification) business.

The adjusted EBITDA margin decreased from 12.9% to 12.3% due to the lagging effect (in the early part of the year) of implementing higher prices, the dilutive impact on margin from price increases, and increased fixed costs due to investment in organizational capabilities (Advance 2025 related).

Lactic Acid & Specialties

• * Adjusted EBITDA (margin) has been restated due to reallocation of G&A costs over the business units following the carve out of Algae Ingredients.

In 2022, Lactic Acid & Specialties net sales grew organically by 20.4%, driven by price with volume/mix being flat.

The flat volume/mix sales growth was due to a decline in deliveries to the TotalEnergies Corbion JV because of the PLA market weakness previously reported in the first half of 2022. Sales volumes of esters (solvents) increased on a full year basis due to higher demand from the semiconductor market. The medical biopolymers segment continued to grow strongly in line with expectations.

The adjusted EBITDA margin decreased from 18.2% to 16.7% due to the lagging effect (in the early part of the year) of implementing higher prices and the dilutive impact of price increases on margin as well as headcount increase related to lactic acid capacity expansion.

Algae Ingredients

• * Adjusted EBITDA (margin) has been restated due to reallocation of G&A costs over the business units following the carve out of Algae Ingredients.
• ** Adjusted EBITDA excluding new allocation of G&A costs amounts to: +€ 0.2 million

Algae Ingredients delivered organic sales growth of 115.3% in 2022, driven by the strong growth of AlgaPrime™ DHA (algae-based omega-3). The adoption of AlgaPrime DHA grew significantly among multiple leading aquaculture feed companies, who are turning to algae-based omega-3 to reduce their dependency on wild fish stocks. Investments to enhance production capacity and flexibility at our Brazil plant are progressing well and as planned.

The adjusted EBITDA has been positive as of June 2022. The adjusted EBITDA in the newly reported segment 'Algae Ingredients' does include a fair share of allocated G&A costs of € 3.5 million in 2022. In 2021, a significant share of the algae related R&D efforts focused on algae-based omega-3 development, and consequently these costs have been allocated to the Algae Ingredients segment.

Incubator

• * Adjusted EBITDA (margin) has been restated due to reallocation of G&A costs over the business units following the carve out of Algae Ingredients.

Currently, there are no sales within the Incubator segment following the carve out of Algae Ingredients into a separate reporting segment. The adjusted EBITDA reflects investments in various programs as outlined in the December 2022 Capital Markets Day. These programs include: Algae portfolio expansion, Biopolymers, Natural preservation, Circular raw materials and Net zero. The increasing costs are related to a step up in the overall program and managed in line with the ambition investment level between 0.5~1.5% of core net sales. The investment level reported in the Incubator in 2021 was relatively modest (compared to 2022) due to a significant share of R&D efforts being focused on the algae-based omega-3 development (and thus were allocated to the Algae Ingredients segment in that year).

Non-core activities

• * Adjusted EBITDA (margin) has been restated due to reallocation of G&A costs over the business units following the carve out of Algae Ingredients.

Non-core activities (Emulsifiers) saw organic sales growth of 26.1% in 2022. Sales growth was driven by a 29.0% increase in pricing, partly offset by volume/mix of -2.9% due to supply chain challenges. The adjusted EBITDA margin improved from 12.5% to 16.9% as the business recovered input costs through the year.

TotalEnergies Corbion joint venture

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

Sales increased by 3.8% in 2022 (organic growth of -7.6%) due to Chinese lockdown measures and elevated freight rates from China to the US, which negatively impacted the PLA market and led to decreased volumes in the second half of the year. The EBITDA margin declined from 34.2% to 25.8% due to a number of factors, including increased input costs and deleveraging of fixed costs.

Depreciation, amortization, and impairment

Adjusted depreciation, amortization, and impairment of fixed assets reached € 76.4 million, up from € 64.1 million in 2021.

Operating result

The adjusted operating result increased by € 36.3 million to € 108.0 million in 2022 (2021: € 71.7 million), with total adjustments of € 1.3 million at post tax results level.

These adjustments consist of:

1. A gain of € 9.7 million related to the sale of the Totowa warehouse.

2. A negative fair value adjustment of € 2.3 million on the contingent consideration payable related to the Algae acquisition.

3. A loss of € 1.7 million related to incremental cost as a result of the production outage in our Blair facility in the fourth quarter of 2021.

4. A loss of € 1.3 million related to strategic portfolio optimization in the Algae Ingredients and Lactic Acid & Specialties businesses.

5. A loss of € 0.7 million related to write down of receivables as a result of the conflict in Ukraine.

6. A loss of € 0.7 million related to an earn-out payment related to the acquisition of certain assets of Granotec Mexico S.A. de C.V.

7. A loss of € 0.2 million related to an adjustment of the sales price for a plot of land in the Dutch municipality of Breda.

8. Tax effects on the above of € -1.5 million.

Financial income and charges

Net financial charges fell by € 8.9 million to € 5.3 million, primarily due to favorable exchange rate differences.

Taxes

In 2022, the tax charge on operations was € 26.4 million compared to € 8.2 million in 2021, resulting in an effective tax rate of 22.6%. The low rate of 9.5% in 2021 was mainly due to the recognition of a deferred tax asset from selling a plot of land in Breda, the Netherlands.

For 2023, Corbion projects an effective tax rate (excluding tax-exempt joint venture results) of approximately 25%, in line with the tax rates in its main operational areas.

Statement of financial position

Compared to year-end 2021, capital employed increased by € 310.5 million to € 1,342.5 million. The movements were:

The major capital expenditure projects in 2022 are related to lactic acid capacity expansion in existing plants, and the new 125kt lactic acid plant in Thailand (scheduled to be completed by the end of 2023). Operating working capital rose by € 128.2 million, with € 114.8 million from non-currency effects and € 13.4 million from currency effects.

Shareholders' equity increased by € 71.6 million to € 625.7 million, due to:

• Positive result after taxes of € 90.0 million.

• A decrease of € 33.0 million for the 2021 cash dividend.

• Positive exchange rate differences of € 11.4 million from non-euro activity.

• A negative movement of € 7.0 million in hedge reserve.

• Positive remeasurement effect of € 1.2 million for defined benefit arrangements.

• Net share-based remuneration movement of € 3.3 million.

• Positive tax effects of € 5.7 million.

At year-end 2022, the ratio between balance sheet total and equity was 1:0.4 (2021 year-end: 1:0.4).

Cash flow/Financing

Cash flow from operating activities rose to € 39.0 million, a € 16.6 million increase over 2021. The increase was due to a higher operational cash flow before movements in working capital of € 37.7 million, offset by a negative impact from changes in working capital, provisions of € 23.9 million, and higher taxes and interest payments of € 2.8 million.

The cash flow required for investment activities rose to € 199.1 million in 2022, an increase of € 79.7 million from 2021. Capital expenditure (at € 235.8 million) was the main source of cash outflow, partly offset by dividends from TotalEnergies Corbion JV, proceeds from the sale of the Totowa warehouse, and payments received from the sale of a plot of land in Breda, the Netherlands.

The net debt position at the end of 2022 was € 701.0 million, a rise of € 240.0 million compared to the previous year, mainly due to capital expenditure, increased working capital and dividend payments, partially balanced by positive cash flow from operations. The covenant net debt (excluding the subordinated loan) was € 601.5 million at the end of 2022.

The covenant net debt to covenant EBITDA ratio was 3.0x at the end of 2022 (2.6x at the end of 2021). The interest cover was 14.2x in 2022 (14.6x in 2021), comfortably within the financing covenant limits.

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 (2021: € 0.56) will be submitted for approval to the annual General Meeting of Shareholders, to be held on 17 May 2023. This represents 37% of our 2022 adjusted result after taxes. The dividend will come from Corbion’s reserves.