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.

• Animal Nutrition & Health (ANH) separation is well advanced, alongside strategic portfolio adjustments including the sale of marine lipids and yeast extracts.

• Sustainability milestone reached with net-zero emissions targets validated by the Science Based Targets initiative, and a dedicated sustainability event planned for early 2025.

• Upgraded full-year 2024 EBITDA outlook to approximately €2.1 billion, reflecting positive business momentum and a temporary profit boost from higher vitamin prices due to supply disruption.

Financial highlights

• Q3 2024 sales rose 8% year-over-year to €3,244 million, with organic sales growth of 8% and group volume growth of 9%.

• Adjusted EBITDA for Q3 2024 was €541 million, up 32% year-over-year, with margin improving to 16.7% (up 330bps).

• Year-to-date Q3 2024 sales reached €9,542 million, up 4% year-over-year, and adjusted EBITDA was €1,517 million, up 13%.

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

• Perfumery & Beauty delivered 11% volume growth and a 22.8% EBITDA margin; Taste, Texture & Health volumes up 13%, EBITDA up 21% to €162 million, margin 19.7%.

Outlook and guidance

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

• CapEx expected at €0.8 billion for FY 2024, with D&A around €235 million per quarter and core income tax rate near 24%.

• Expect continued strong business conditions into Q4, with regular seasonality in Perfumery & Beauty and Taste, Texture & Health, and a negative FX impact similar to Q3.

• Anticipate Q1 2024 to benefit from vitamin price tailwinds, with €100 million expected in ANH and some improvement in Health, Nutrition & Care.