Our Advance 2025 strategy builds on Corbion’s fundamentals and strengths by bringing further focus to the business portfolio in alignment with global market trends. This will be achieved by increased investments in key growth areas such as natural food preservation, algae-based ingredients, lactic acid derivatives, and natural polymers. Given our purpose, “preserving what matters: 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 (UN 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.
After reaching EBITDA break-even in June 2022, algae-based omega-3 matured into the new Algae Ingredients business unit and was carved out from the Incubator. Our business and reporting structure now comprises four lines of business.
Sustainable Food Solutions
Sustainable Food Solutions comprises three segments: Preservation Solutions, Functional Systems, and Single Ingredients.
In Preservation Solutions, we brought to the bakery industry our third-party certified authentic natural mold inhibition technology, delivering customer value by extending product freshness, reducing food waste, and enhancing the consumer’s sensory eating experience. We introduced the first ever predictive modeling tool that can be used to accurately predict the success rate of mold inhibition technology in baked goods, allowing customers to improve the quality of ingredient analysis to jump-start innovation and improve their speed to market. We continue to grow our preservation platform in the meat and savory food segments with natural preservation offerings that respond to market demands for safe food products with natural labeling. We expanded our sustainable preservation portfolio, introducing the Origin® range of plant-based extracts, mainly used as antioxidants including concentrates obtained from the acerola fruit grown in northeastern Brazil and the rosemary plant grown in the Atlas Mountains in Morocco. Solutions from our Origin line will bring exciting new value opportunities in a wide array of applications.
In Functional Systems, we leveraged our ability to rapidly adapt, combining applied science and technical support to provide customers with novel blends that help them mitigate cost volatility, functionality challenges, and raw material scarcity. Despite continued market disruptions over the past year, we stepped up our strategic focus on delivering bakery dough conditioning and extended shelf-life solutions through our Pristine® and Ultra Fresh® portfolios. In addition, we stepped into the dairy market, leveraging our blending proficiencies and sophisticated expertise in shelf life and stabilization technologies to develop Corbion SMART™ Solutions, a portfolio of functional blends to improve texture, stability, and consistency in dairy applications.
We also initiated the process of divesting our non-core emulsifier business.
Lactic Acid & Specialties
Lactic Acid & Specialties encompasses Biochemicals (lactic acid, salts, esters, and other specialties), Biomaterials (polymers for medical and pharmaceutical applications), and TotalEnergies Corbion (our joint venture with TotalEnergies 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, scale and breadth of portfolio, and geographic coverage. We fuel our customers’ success by creating specialties for many markets and applications, through tuning the functionality of our products to specific customer requirements in their applications.
To further strengthen our position in attractive growth markets, we are building a new circular lactic plant at our existing site in Rayong Province, Thailand. The new plant is expected to be completed by the end of 2023 as anticipated, with a production capacity of 125,000 metric tons of lactic acid annually. It will be using state-of-the-art technology to the highest sustainability standards, and will be our most competitive plant, using circular technology to reduce cradle-to-gate CO2 emissions per metric ton of lactic acid by 19% compared to conventional technology.
In Biomaterials, the Advance 2025 strategy enables us to expand and contribute to a sustainable and accessible healthcare system. We work with leading medical and pharmaceutical players on advancing technologies such as cardiovascular devices, orthopedic implants, tissue regeneration scaffolds, wound management, and novel drug delivery systems. Our strategy is focused on safe and resorbable polymers and aligns well with current trends in healthcare that point to continued opportunities in this sector.
TotalEnergies Corbion is our 50/50 joint venture with TotalEnergies for the production and marketing of Luminy® PLA. With this business, Corbion is able to capture further value from its leading lactic acid platform and secure a key role in the development of new, safe, and sustainable polymers for the materials market.
In 2020, Corbion and TotalEnergies announced their intention to build a new PLA bioplastics plant in France, as a further sign of their commitment to this market. In 2022, Corbion announced that together with our partner TotalEnergies, we are working on the Final Investment Decision, which is expected in the second half of 2023.
Our Algae Ingredients business unit produces algae-based ingredients that deliver high levels of essential nutrients in human and animal diets, such as long-chain omega-3 fatty acids (omega-3).
With our omega-3 platform, we will keep expanding our sustainable nutrition offerings beyond aquaculture. Within aquaculture, we continue to bring omega-3 DHA, collaborating with producers and stakeholders to develop more sustainable feed for salmon, shrimp, and other species, helping de-bottleneck this essential nutrient supply as the oceans will not be able to provide sufficient omega-3 without adverse impacts. We expect significant development potential for omega-3.
We will further extend our AlgaPrime™ DHA portfolio to meet pet food manufacturers’ needs advancing sustainability and health for companion animals and opening exciting opportunities to deliver value for the industry. In addition, for our AlgaVia™ offerings, our line of algae oils for human nutrition, we will keep looking into ways of expanding our impact on human diets.
Meanwhile, we stay committed to investing in initiatives with a longer time horizon. Internal efforts are underway to develop new algae-based solutions based on our innovation platform, applications, and industry knowledge.
In our Incubator, where we develop early-stage initiatives, we work on five selected programs: Algae portfolio extension, Biopolymers, Natural preservation, Circular raw materials, and Net zero. These long-term platforms are all linked to one of the three business units and embedded in their innovation programs.
Developments in 2022 on our Advance 2025 strategy
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 have refocused in-house R&D to support accelerated execution of Advance 2025 and increasingly pursue new opportunities via innovation partnerships. Several opportunities for outside-in innovation have been identified in the six focus areas of Advance 2025.
Our strategy for 2020-2025 projects R&D spend at approximately 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 our differentiated position. Increased demand for lactic acid, mainly driven by its crucial role in PLA production, will lead us to invest in expansions of several of our existing lactic acid facilities and to construct a new lactic acid plant in Thailand that uses our new circular production technology. These investments also support the realization of our climate action plan. Next to that, together with TotalEnergies we have announced the intention to build a new 100,000 metric tons per annum PLA bioplastics plant in France through the TotalEnergies Corbion joint venture. In 2022, Corbion announced that together with our partner TotalEnergies, we are working on the Final Investment Decision, which is expected in the second half of 2023. Our Algae Ingredients business will also require further investment to cater to further growth as we continue to improve existing products and to develop new products. 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 supplied through partners who can make this available. We will strengthen our workforce capabilities to advance key strategic initiatives, such as continuing to develop and implement our solutions model in food in existing and adjacent markets and delivering on our medical biomaterials and biochemicals initiatives. The strategy period also encompasses a significant 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
Preserving what matters
Net sales contributing to the SDGs (SDG 2, 3, 12, 13, 14)2
Preserving food and food production
Verified responsibly sourced cane sugar3
Verified deforestation-free key agricultural raw materials4
Total Recordable Injury Rate5
Preserving the planet
Scope I & II emissions reduction (SBTi-approved target)6
Scope III emissions reduction (SBTi-approved target)6,7
Recycling of by-products8
Landfill of waste
Measuring what matters
Products covered by Social Value Assessment9
Products covered by Life Cycle Assessment10
- 1 Targets based on current manufacturing footprint; to be reviewed in case of acquisitions/major changes.
- 2 Net sales of products for which there is evidence that the product contributes to the SDGs. See our Measuring what matters whitepaper for more details.
- 3 Bonsucro-certified or meeting the requirements of Corbion’s cane sugar code verified by third-party audits, by quantity. See our Cane Sugar Policy for more information.
- 4 Key agricultural raw materials include cane sugar, dextrose derived from corn, palm oil and derivatives, soy-bean oil and derivatives, and wheat, by quantity. 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.
- 5 Based on OSHA guidelines. Including contractors.
- 6 Scope II emissions from purchased energy (electricity and purchased steam, market-based). Absolute reduction compared to 2021 as the base year.
- 7 Scope III emissions related to key raw materials, waste and transport, per ton of product. Progress is reported compared to 2021 as the base year.
- 8 By quantity.
- 9 The Social Value Assessment is done according to the methodology described in the Handbook for Product Social Impact Assessment, published by the Social Value Initiative and applies to products manufactured at Corbion sites (cradle-to-gate). Outsourcing is excluded. 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 (cradle-to-gate). Outsourcing is excluded. By quantity.
During our Capital Markets Day in December 2022, we presented an update of our financial targets.
Our Advance 2025 strategy aims to deliver organic net sales growth in the 2023-2025 growth period of between 5 and 8 percent annually for Corbion’s core activities.
Capital Markets Day 2020
Organic net sales growth1
4 - 7% p.a.
5 - 8% p.a.
Organic adjusted EBITDA growth
15 - 20% p.a.
Sustainable Food Solutions
Organic sales growth1
Lactic Acid & Specialties
Organic sales growth1
Organic sales growth1
Break-even by 2022
Adjusted EBITDA investment
0.5 - 1.5% of Corbion core sales
0.5 - 1.5% of Corbion core sales
Adjusted EBITDA margin
>17% from 2025
>17% from 2025
€ 115M - 125M avg. p.a.
€ 160M avg. p.a.
Covenant net debt/covenant EBITDA
~2.0x; peak at 2.5x
- 1 Organic growth defined as volume growth + mix growth, excluding price impact