Welcome to the Corbion Q1 Results 2025 Conference Call. Following the opening remarks, there will be an opportunity for questions. Please note that this call will be recorded. I would now like to give the floor to Mr. Alex Sokolowski, Head of Investor Relations. Please go ahead. Thank you, Operator. Good morning. Welcome to Corbion's first quarter 2025 Interim Management Statement Conference Call. This morning, we published our Q1 Results. The press release and presentation can be found on our website at www.corbion.com, Investor Relations, Financial Publications. Before we begin, please note that today's discussion will include forward-looking statements based on current expectations and assumptions. These statements involve risks and uncertainties that may cause actual results to differ materially from those expressed. Factors beyond our control, including market conditions, economic changes, and regulatory actions, can impact outcomes. Corbion does not undertake any obligations to update statements made in this call or contained in today's press release and presentation. For more details on our assumptions and estimates, please refer to our annual reports. This is Alex Sokolowski, Head of Investor Relations, Olivier Rigaud, Chief Executive Officer, and Peter Kazius, Chief Financial Officer. Now, I'd like to hand over the call to Olivier. Good morning, everyone, and thank you for joining us today for Corbion's Q1 2025 earnings call. Let's start with some key aspects from our latest results. I'm very pleased to report that this quarter, we've seen an accelerated organic sales growth of 7.9%, driven by strong performance across our two business units. Our adjusted EBITDA is EUR 14.4 million, a margin of 16.5% per group. Our free cash flow quarter is EUR 8.6 million. This is a great set of results that would likely accommodate a great effort in Corbion's delivery. Going a bit into the divisions, starting with Functional Ingredients and Solutions, we achieved an organic sales growth of 5.88%, driven by a strong volume growth of 7.3%. This growth was seen across all three businesses within the same segment: food ingredients and lactic acid in the [age of the shop]. The adjusted EBITDA margin in Functional Ingredients and Solutions increased substantially to 12.1%, up from 7.5% in Q1 2024, and up sequentially as well. This improvement illustrates the benefits of our efficiencies and cost-saving measures. In our Health and Nutrition division, we delivered an impressive organic sales growth of 16.2%, with an adjusted EBITDA margin of 32.2%. This growth was driven by strong volume mix performance, particularly in the Nutrition business, as well as positive pricing impact. Our Health and Nutrition division has shown remarkable growth in both sales and adjusted EBITDA, thanks to volume mix growth in all three businesses. This growth is a testament to our commitment to innovation and the unmatched value of our product offer. Our Total Corbion PLA joint venture also saw robust organic sales growth of 21.9%, despite the adjusted EBITDA margin contracting to 7.8%, although it increased sequentially from 2.1%. Overall, Corbion's group-level adjusted EBITDA increased by 53.9% versus Q1 2024, reaching EUR 54.4 million. Our positive free cash flow for the quarter was EUR 8.6 million. I'm very pleased to affirm our outlook for the remainder of the year. We maintain our full year 2025 guidance for organic adjusted EBITDA growth of over 25%, driven by continued sales growth and margin improvement in both business units. We anticipate organic volume mix growth in the range of 2%-6%, supported by ongoing positive momentum in Health and Nutrition and in the Functional Ingredients and Solutions business units. Investments in our business will remain disciplined, with capital expenditure estimated between EUR 80 million-EUR 90 million for the year. We are committed to delivering a positive free cash flow in excess of EUR 85 million for 2025. As we navigate the macroeconomic and geopolitical uncertainty, we remain focused on executing our strategy and delivering value to our stakeholders. Corbion continues to provide essential, natural solutions that meet our customers' preservation and nutrition needs. The Q1 2025 results highlight the resilience of our businesses and our ability to adapt and thrive in changing market conditions. We are confident in our ability to achieve our fiscal year 2025 guidance with strong growth in volume mix, adjusted EBITDA, and free cash flow. We appreciate your continued support and are looking forward to updating many of you in the next weeks at conferences and roadshows. Now, Peter and I are happy to take your questions. Okay, thank you, Olivier. Call participants, if you'd like to ask a question on the call this morning, please press star one one on your telephone, and you'll be placed in the queue. If you'd like to remove yourself from the queue, press star one one again. Also, kindly mute your line while your question is being answered. Our first question this morning comes from Setu Sharda from Barclays. Setu, whenever you're ready, please go ahead. Yeah, good morning, and congratulations on a good set of results. Three questions from my side. The first one on the volumes, like strong Q1 volume growth ahead of your full year target range. To what extent do you think Q1 benefited from any order phasing, and would you expect to see any material change in trend in Q2? My second question would be around one of the news flows. That is, one of your largest shareholders argued that you should consider splitting up the business to realize value. Would there be any material dyssynergy separating Health and Nutrition and FIS division? The third question is on the fish oil prices, which have come down from peaks. Does that impact any contract renewal in your algae nutrition, and how should we see pricing development in Health and Nutrition in general? Okay, thank you, Setu. I will take, I mean, you know, the latest news flows on Inclusive Capital and the fish oil, and Peter will answer the volume on order phasing in Q2. Starting with the news from yesterday on Inclusive Capital, basically, I think the short answer to the question is that we are in the midst of our strategic review. As you know, we are basically going through the end of our Advance 2025 strategy by the end of this year, and it's really a natural moment for us now, you know, to really look to the next five years, so the 2026-2030 period. As I said, we are in the midst of reviewing that and are planning to go back to the market in H2 this year. There is not really a lot more to comment than that, and as part of any strategic review, we are reviewing the entire portfolio. On your second question about fish oil price, actually, indeed, we've seen some real fish oil price drop recently. As we've discussed a few times, we have a sizable part of our business that is on longer-term contract, but not all. We are expecting some pricing pressure on what is not contracted. At the same time, you know, we still see that there is a structural deficit on the market. We still see, I think, the consumption of algae-derived products and omega-3s primarily going up in the year to come and in the years to come, as well driven by this structural shortage. Our strategy has been indeed to lock some longer-term contract volume to offer also price stability to our customers, which is something they do value. We are intending to continue the strategy on locking, you know, some longer-term deals as we are going and not being subject to every other quarter fishing season outcome, you know, to set up a pricing strategy. On the Q2 volume and the order phasing, Peter, I would like to. Yeah, Setu, thanks for the question. I mean, a couple of things to know. I think, first of all, it has been a really strong quarter. You are right, if you break down a bit to the different elements and give you some flavor. I mean, Olivier alluded to it. If you look in Functional Ingredients and Solutions, all three businesses did grow, which is food, biochemicals, and lactic acid to PLA. If you look to the food business, this is growing quite consistently already over the last five quarters. There we also plan to consistently grow throughout the rest of the year. If you look in biochemicals and lactic acid into PLA, this has amplified, I would say, the growth in Q1. Therefore, you can anticipate a bit of a reversal during the rest of the year, but still confident to deliver the full year amount. If you look to Functional Ingredients and Solutions, there is no intent. I mean, always hopeful that we continue to grow 7% per annum. If you look into Health and Nutrition, also that nice-to-see volume mix growth of 12.8%. Let's reflect a bit back in the year 2024 as well. I mean, we have seen 14% in H1. It went up, then it was returning to mild growth in Q4. It is really nice to see this being on track from that perspective. That is a bit, I think, Q1, really nice to see it. Will we potentially have a softer Q2, but still being positive? The answer is yes, because there is some phasing effect. Thank you. That's helpful. Okay, thank you. Our next question this morning comes from Fernand de Boer from Degroof Petercam. Fernand, please go ahead. Fernand de Boer from Degroof Petercam today to take my questions. First, Olivier, did I hear you saying that both segments do have the margin potential to improve this year? Because I thought in the previous discussion we had with Peter that he was actually cautioning a little bit on the margins for H&N. That is the first question. The second one on the capacity of PLA, you had a very strong volume quarter. Could you give a little bit of an indication how much capacity it is running now? When is there a risk that you have to de-bottleneck for the PLA? That is another question. To come back on the phasing, Peter, did I hear you correctly saying softening potentially in Q2? Was that specifically for H&N or for the group as total? Yeah, maybe you want to address this last one, Peter, and I will take the other two. Yeah, no, I could take that one. I mentioned specifically for Functional Ingredients and Solutions, Fernand, and also within FIS, it's biochemicals and it's lactic acid to PLA. Of course, that then has an overall impact on the total Corbion. Okay, very clear. On the margin, Fernand, so basically, I think on H&N, you know, we feel really confident on maintaining the current margin level, you know, as we indicated earlier, around 30%. Yeah. That is, I mean, again, something we feel, again, confident about for the rest of the year. In functional ingredients solution, as you know, we are really very active into basically compensating from some of the cost. As you might remember, last year, following our restructuring and some efficiencies and cost-cutting measures, we are continuing on that journey, basically, you know, to go, as you've seen, a strong re-rating now in Q1 to above 12%. We are in our journey over the next couple of years, you know, to re-rate up to 15% this division. We are well on track also to continue there in FIS. On PLA, indeed, you've seen a strong volume in Q1. What we see is that, as also we discussed a few times, the momentum is good and is primarily good in Asia and within Asia, in China. This is what is driving, you know, the majority of the growth today, with a couple of subsegments being 3D printing, growing very strongly, as well as everything related to what we call food serviceware. Now, the joint venture share is able to indeed grow to closer to full capacity, but we are not yet there. We do not expect to have to de-bottleneck the plant at the current pace when we look at our projection for the year, either this year or next year, by the way. There is still a lot of room to basically go for even more growth over the next two years into the current footprint. Nothing to be expected short-term on that side. Maybe one last question on the input tariffs, you say to see little impact. Could this also have a significant impact on, let's say, the Chinese export to the US and then on the PLA joint venture? You are specifically referring to PLA or more broadly? Yeah, maybe you could elaborate a little bit more where you see this impact from the input tariffs specifically and what you do to mitigate the impact. Yeah, no, so listen, so no, on overall tariff, why do we think and we say it is limited? If we look to basically, you know, maybe four different items in there. The import of raw material into the US is one. The second is all the flows we have that are intra-company flows of, let's say, products we manufacture in Europe or in Thailand that goes into the US market. That's the second. We look, of course, at the third element being the competitive dynamic, positive or negative, that might affect impact the US market, but the broader market. The fourth, which is, I think, the more uncertain, is that going to trigger any demand destruction? Starting with the number one, if you look to raw material, this is relatively limited. Yeah, we have some imports from EU. We have some imports from China or Australia, so different geographies. However, when we look at mitigating actions on alternative sourcing options, there are a lot. And in some categories, you know, where we are using that in our nutritions, for instance, business fortification, these products are exempted from any tariffs. This is why the impact on raw material, although there is an important flow of raw material going to the U.S., is not that big. On the intra-company businesses, we supply from our Dutch and Spanish operation into the U.S. quite a lot, basically to serve our customers in North America. There, primarily in the Health and Nutrition space, think about, you know, all the products we are serving from, you know, our biomedical business, our pharma products. They are on the exemption list. We have over 70% of the intra-flow business that is exempted today. This is quite a minor impact for us. Now, the other aspect back to the competitive situation is if you think about the carbon footprint, you know, we are market leader in lactic acid, and we are the only player having plants in all geographies. This is quite helpful as we are looking to supply chain and manufacturing because it helps and enables us to maybe change some flows in terms of what are we producing where. For instance, we can leverage the fact that, yeah, we have a very nice footprint in the US with four plants in total covering different aspects of our business. We are reallocating productions and moving some stuff around in terms of where we're going to produce what. Obviously, it gives us a competitive advantage in the domestic market that we are intending to leverage. At the same time, we know that some of the Chinese volume might be redirected to other regions. Yeah. That is also something we are watching out very closely. Now, the broader themes, the last one about demand destruction is very difficult to assess. Short-term, we do not see any major or, if any, negative impact, but we are really watching that out very closely. Obviously, you know, there are some markets that could be more sensitive than others. We do not believe at that stage that if you take the bigger business we are in, I am thinking about natural preservation, that this would trigger people to go back to synthetic alternatives. We are not yet there. We don't believe as well, you know, that the salmon market is going to be impacted because, yeah, most of the US supplies are coming from Chile, not from Norway, where we are already present. More to come on that, but this is probably the part where there is more uncertainty of what might happen. Sorry, I made it a bit long for an end, but yeah, this is a bit the way we tackle these tariffs and why we believe it's not having a material impact on this. Thank you very much for this extensive answer. Thank you. Very clear. Thank you, Fernand. Our next call this morning comes from Wim Hoste from KBC Securities. Wim, sorry, please go ahead. Yeah, no problem. Good morning. I also have a couple of questions, please. Maybe first, there is quite some FX volatility. Can you maybe elaborate or give an estimate what the current FX rate, the negative impact might be on your full year guidance adjusted EBITDA? That is the first question. The second question, can you be a bit more specific on the efficiency contribution or the impact from efficiency measures on first quarter EBITDA and also give a bit of a timeline in building up towards the remainder of the year? A third question would be on the pricing in PLA. I think the press read mentioned that price erosion has halted. Can you maybe elaborate on the outlook for pricing? Is there any chance that prices will go up anytime soon in PLA or not? Those were the questions. Okay, Wim, let me take the last one and Peter will cover the first two. On PLA pricing, as we stated, yeah, we've seen on the joint ventures, I've seen erosion on the back primarily also of the fossil-based products going down sharply. So we've seen that. Actually, of course, it comes at a time where also the input cost for the joint venture are going down as sugar is substantially down as freight cost is also substantially down. However, yeah, you've seen this margin contraction at slightly above 8%. It is about the continuing, of course, efficiency improvement in the plant, which they have already done partly. It is also looking at the future on sugars because, as you've seen, sugar prices went down substantially. When we look at 2026, we start to cover even 2026 now at even much lower prices than the one we have for 2025. That will also, I think, bring a kind of, you know, security on that input cost as well if you look to the 2026 year as well. When we discuss with the joint venture, they do not see price recovery, you know, in the short to near term for PLA. Yeah. The basically active, you know, mitigation plan they do have, but this is not new. This takes long as you might have seen in the press the last weeks and months. They are really active in launching, you know, this differentiated product offering. Again, there is nothing new there, but you might have seen, you know, expanded PLA to new categories, quite a lot of partnership. This is a longer-term project they have embarked on, which is to build up more differentiated that could enable, you know, a mix improvement over the years to come. I will not speculate on that having a strong impact in 2025. Peter? Yeah. Happy to take the other one, Wim. Now, give me a bit of color around forex without trying to predict the forex moving forward, Wim. If you look on the US dollar, I mean, we're quite exposed in terms of translation impact to the US dollar. In our annual report, we disclose the sensitivity quite explicitly, which is 1% of the US dollar is having an impact of EUR 2.3 million. If you look in Q1, by the way, it's a positive impact because the US dollar in our Q1 results is something of 1.05, whereas last year it was 1.09. If you carefully look to Q1, then the US dollar actually became stronger versus Q1 2024. I did call out in the results call for the full year that our US dollar rates, which is the most sensitive one, is $1.08 basically for the full year of 2024. That is on currencies. If you look on the building up of all the efficiencies we do, if you compare year over year, as you know that we started the most sizable restructuring program by the end of Q1. Therefore, there is a sizable contribution from the stack-up of 7%-12.1%, which is nice to see and also in line with our plan. If you look to the full year outlook, there will be a lesser extent, but still a sizable impact in Q2-Q4. That leads, I would say, to the full year outlook of more than 20% or 25% in adjusted. Okay. That's good. Thank you. Okay. Thank you. Our next question this morning comes from Robert Jan Vos from ABN AMRO ODDO BHF. Robert Jan, please go ahead. Yes. Hi, good morning all. Thanks for taking my questions. My first one is on pricing in Health and Nutrition. In the press release, you mentioned that the positive pricing is the comparable effect of pricing realized late Q1 2024. My question is, now that this has annualized, should we anticipate lower pricing in the coming quarters or maybe even negative? That's my first question. Yeah, I'll continue. Okay. My second question is on free cash flow. You mentioned free cash flow in the quarter was €8.6 million. Of course, you have this target of at least €85 million for the full year. Can you elaborate a little bit on what are the components in Q1? Is that normal seasonality? Is that working capital? Maybe a few words of clarification there. My final question is on PLA. I remember, if I'm not mistaken, that Olivier, you said that you expect some changes made by the Chinese government that could benefit the business. You reported a very strong Q1, more than 20% organic growth. Is there any changes in legislation included in that already, or is that still pending? Those were my questions. Thank you. Thanks, Robert Jan. Yeah, let me jump on the PLA straight before giving the floor to Peter. Indeed, on PLA, I mean, I mentioned that in the past, and actually, I was on a business trip in China a few weeks ago just checking also what is happening not just on the market, but regulatory-wise. The government is indeed, I mean, looking to officialize their directive by the summer. There is a strong recommendation/incentives to increase usage of PLA in certain categories. Not to go into all details, but basically, they go for, you know, a strong recommendation of even percentage of incorporation into various categories, whether these are the food serviceware or the plastic bags or, you know, even all the postal Chinese services. That is something that is indeed happening and will happen across the summer for implementation in 2026. We have not seen in Q1 any impact yet of this. What we have seen really happening in Q1 is, as I said, really a very strong drive in a couple of leading categories being primarily 3D printing. That is a very interesting one because this is a category where PLA is primarily used because of its functionality. It is really working very well in terms of harness and resistance into the, you know, filament industry for the 3D printing machines. There is a big shift in China that is probably going to extend globally on moving in the way you produce, you know, plastic spares pieces through 3D printing instead of traditional molding and injection. You have a big development of the so-called 3D printing farms in China, you know, that are changing the way these products are being manufactured with very low, basically CapEx, a lot more, you know, agility enabled in being able to change, you know, also frequencies of production rates and so on. That is one big driver. The second is, yeah, the food serviceware are, yeah, the Chinese market also is obviously exporting outside China, but also changing and moving, you know, everything related to straws, cutlery from fossil-based to bio-based products. Q1 is really, I think, driven by increased, you know, in these two categories primarily. We expect really the new Chinese government directive to have an impact more on the 2026, you know, volume, not in 2025. Let me answer the other two topics, Robert Jan. In free cash flow, you're right, it's really driven by a seasonality pattern in working capital and nothing specifically. If you look to the components, I mean, CapEx is really in line, what we guidance, quite stable. If you look in interest and tax, also nothing to note. It's really the kind of working capital components. I would see the same dynamic as last year a bit in Q2. Will we see also this year a phase in between H1 and H2 like we've seen last year? The answer is yes, but still confident to deliver this more than EUR 85 million for the full year. If you look in pricing in Health and Nutrition, and let me go to Algae and dissect basically in two different components. One is the longer-term contract, and the other one is the more shorter-term or spot contract. You're right that from a longer-term contract, we entered into this contract by the end of Q1 with nice price increases, and therefore this positive price impact will stop by the end of the year. Positive price impact is year over year of sort of base components. From a Q2, 3, and 4 perspective, it's therefore relatively flat. From the other parts, which are kind of more spot related, there we did follow more the fish oil pattern than the other ones because we wanted to move more to longer-term contracts. Therefore, with these longer-term contracts, we say, look, we do a relatively low price, really disciplined, but a longer-term one. On the kind of more spot related, you might see indeed a bit of negative pricing in Q2, but overall, leading to the margins, which we alluded to, of around 30% of health. That's clear, Peter. Maybe an add-on, if you say that the contracts part of the business for the coming quarters is relatively flat and the more volatile short-term contracts may be a bit negative, then overall the pricing for that part of the business could turn negative in the coming quarters. Right. Yeah. Correct. Okay. Thank you. Thank you. Again, a reminder, if anybody would like to ask a question, press star one one on your phone to be added to the queue. Our next question this morning comes from Sebastian Bray from Berenberg. Sebastian, please go ahead. Hello, good morning, and congratulations on the results. My question is on food and pricing in food preservation. This looks like it's gotten better between Q1 and Q4 without having a volume drag associated with protecting and improving the spreads. What has happened in this business over the last nine months? Has most of the more price-sensitive business already gone away? Could this be expected to continue for the rest of the year? Thank you. Good morning, Sebastian. On the food pricing, basically, we went, you know, for, as you remember, on the stranded cost discussion for basically a few initiatives. One was primarily on portfolio rationalization and SKU optimization. We have been looking at the tail of our business and either phased out some of the products or addressed the pricing and the margin on the tail and removed quite some complexity in SKU, so you can see an improvement related to those initiatives. The next initiative that we did, you know, basically when we negotiated Q1 pricing, is that we went for Q1 correction that did work to some extent and in some geographies, not in all geographies, but basically we have been really also for stronger price management earlier this year in the food business. We intend looking forward to stay very disciplined on pricing as we go. Yeah. So. That's helpful. Thank you. Okay. Thank you. Our next question this morning comes from Reg Watson from ING. Reg, please go ahead. Morning all. Morning all. Peter, I'd just like to come back to the first quarter boost in biochemical and the lactic acid sales to the JV. Please can you quantify the percentage points of growth boost you received in Q1 because I'm presuming you're going to hand that back in Q2 if this was just a phasing issue? Without getting the full details, but if you look a bit to food, what's positive, biochemicals and lactic acid was even more positive than in the normal flow. I mean, if you look to what we guided it overall for Functional Ingredients and Solutions, if you remember in this capital market, it's around 4%. If you take that kind of philosophical, then the plus, what is it, 7.3% is significantly higher. I think that's how you need to look to it, Reg. Okay. So we should basically take the first half as an average for between the two quarters? That's a fine guess. Okay. Thank you. Okay. We have one more caller on the line, [Erik Wilner] from [Stifel Nicolaus]. Eric, go ahead. Thanks very much. Good morning, everyone. I had one question. Can you talk a little bit about your sensitivity to flight rates, particularly from Europe to the US? One could argue that these rates may go up if more global trade volumes are being directed through Europe to the US instead of from China. Thank you. Yeah, that's, I think, of course, I mean, a critical one also for us. To be very transparent on that, we've been, of course, tendering all our freight the last month. As we also discussed, that was a big initiative in terms of efficiencies, improvement, and cost reduction. Now, there is, I mean, maybe several streams to take into account. If you look to our flow out of the, you know, the EUR 1.3 billion business we have in total, there is, I mean, something around about EUR 100 million flow we have from Europe to the US. It is big, but it is not, you know, massive to the point it would disrupt our cost. We are so far well contracted, I mean, on our freight for the rest of 2025. Yeah. We are not extremely concerned about that. You know, the only disruption that could happen, I mean, honestly, for us is if something would happen as to further in the Red Sea, things would relax, you know, because it could sound positive at the first sight, but when we discuss with experts and specialists, you know, a reopening of the Red Sea, it's really counterintuitive this year, would mean a massive port congestion, you know, basically in Europe, and that would have really negative side effects on the short term. Yeah. That's the only thing on freight that we cannot anticipate, but that potentially would come when you discuss with experts. So far, we do not have any negative noise on the US route. Again, for us, it's quite limited. That means that your hedging policy in place would also not cover any scenario which would include a reopening of the Red Sea, I assume? Not this year. This year, basically, everybody we are discussing with, I mean, do not expect a reopening this year. When this would reopen, whenever that would happen, it would entail a massive disruption, at least for six to eight months, you know, in terms of port congestion in Europe. This is what, yeah, the experts in the field are telling us, but nobody sees that happening this year so far. Of course, look, again, that's something we don't control. That's very helpful. Thank you so much. You're welcome. Okay. Thank you all for your questions. Looks like there's no more questions or requesters on the line. With that, we'll end the Q&A session. I'd just like to say this concludes our conference call this morning. Thank you for your attendance. We look forward to discussing at upcoming roadshows and conferences in the next weeks. Please note that we will report our second half year results of 2025 on July 31. Information to attend is available on the investor relations page of our website, and we look forward to engaging with you all again. Operator, you may end the call. Did you want to say anything? No. Goodbye. Thank you all. Thank you. Bye. This concludes today's conference call. Thank you all for participating. You may now disconnect your lines. Thank you and have a good day.