Carve-out of DSM-Firmenich ANH business progressing at pace

Nov 01, 2024

31-Oct-2024 - Last updated on 31-Oct-2024 at 15:28 GMT

CEO Dimitri de Vreeze highlighted the company's positive third-quarter momentum, with robust contributions from the perfumery and beauty and taste, texture and health divisions.

Driven by strong organic sales growth and operational synergies, DSM-Firmenich’s adjusted EBITDA in the quarter rose by 32%, reaching an adjusted EBITDA margin of 16.7%. Despite a foreign exchange headwind of approximately €15m, the company reported a notable increase in adjusted gross operating free cash flow, which reached €879m (US$954.3m) for the first nine months of 2024, reflecting its ongoing commitment to cash flow optimization.

The company said the separation of its ANH business, announced in February 2024, is advancing at pace.

This planned carve-out aims to enable the ANH division to maximize its potential under a new ownership structure and to reduce DSM-Firmenich’s exposure to earnings volatility in the vitamin sector. The company expects to announce a deal for this portfolio separation by next year.

It has also been refining its strategic scope through the sale of non-core assets, including marine lipids and yeast extracts.

The incident at the BASF site in the summer resulted in price increases for several key vitamins, particularly vitamins A and E. Though the Q3 impact was limited due to pre-contracted volumes and scheduled plant maintenance, the full financial effect will emerge in Q4, outlined DSM-Firmenich. It anticipates a temporary profit gain of approximately €80m in the fourth quarter, raising its full year adjusted EBITDA forecast to approximately €2.1bn.

This market disruption aligns with DSM-Firmenich’s ongoing vitamin transformation program, initiated last year to reduce earnings volatility, and enhance service reliability in its vitamins business.

DSM-Firmenich said its ANH division posted a 7% organic sales increase in Q3, driven by higher volumes, particularly in the premix business.

Growth was fueled by strong demand for products such as Bovaer and Veramaris, offsetting weaker animal protein demand in China’s pork industry. Poultry and beef export growth from Latin America also contributed to the ANH division’s solid performance.

In response to the expanding demand in animal nutrition, the company recently inaugurated a new production facility in Sete Lagoas, Minas Gerais, Brazil. The 40,000-square-meter plant, strategically located in Brazil’s agricultural heartland, will produce 100,000 tons of supplements annually for beef and dairy cattle, enabling the company to strengthen its foothold in the Latin American market.

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