DSM Firmenich (DSFIR) Q3 2024 TU earnings summary

Executive summary

• Achieved strong organic growth and financial improvement in Q3 2024, with all business units contributing and synergy and transformation programs progressing well.

• Upgraded full-year EBITDA outlook to €2.1 billion, reflecting robust business momentum, synergy realization, and a temporary profit boost from higher vitamin prices.

• Completed the sale of Yeast Extracts and Marine Lipids businesses, with Marine Lipids now contributing as a 29% stake in KD Pharma.

• Animal Nutrition & Health (ANH) separation is well advanced, with transaction phase expected in H2 2025.

• Sustainability goals and net-zero emissions targets validated by the Science Based Targets initiative, with further ESG initiatives planned for 2025.

Financial highlights

• Q3 2024 sales rose 8% year-over-year to €3,244 million, with organic sales growth of 8% and year-to-date sales up 4% to €9,542 million.

• Adjusted EBITDA for Q3 was €541 million, up 32% year-over-year, and year-to-date Adjusted EBITDA reached €1,517 million, up 13% year-over-year.

• Adjusted EBITDA margin improved to 16.7% in Q3 2024, up 330bps from the prior year.

• Adjusted gross operating free cash flow for the first nine months was €879 million, supported by disciplined working capital management.

• CapEx maintained at around 5% of sales, with guidance for 6% by year-end and FY 2024 capex expected at €0.8 billion.

Outlook and guidance

• Full-year 2024 Adjusted EBITDA outlook raised to €2.1 billion, including a temporary profit boost of around €80 million in Q4 from higher vitamin prices.

• Expecting continued strong business conditions into Q4, with regular seasonality in PNB and TTH and a negative FX impact similar to Q3 (€15 million).

• Capex expected at €0.8 billion; D&A around €235 million per quarter; core income tax rate ~24%.

• Anticipate Q1 next year to benefit from vitamin price tailwinds, with an estimated €100 million impact.