M&A, Corporate and Financial News

Corbion Q3 Results

Corbion reported sales of € 728.9 million in the first nine months of 2019, an increase of 9.4% compared to the first nine months of 2018. Organic sales growth was 2.8%. Adjusted EBITDA in the first nine months increased organically by 5.8% to € 112.1 million.

“Quarter three is my first quarter as CEO, and I am happy to see a combination of organic sales growth in excess of 6% and healthy EBITDA growth. Growth was driven by continued improvements in Food, particularly by natural preservation solutions in Meat, and strong momentum in PLA-related sales.

However, in Biochemicals we continued to see weakness in Electronics, and Algae Ingredients are behind our expectation despite significant growth in the quarter. As a consequence, we have to slightly downward adjust our full-year net sales outlook.

In the past few months I have visited all the Corbion locations and met most of our people around the world. This further strengthened my excitement about the future of our company”, commented Olivier Rigaud, CEO.

Key financial highlights first nine months of 2019

  • Net sales organic growth YTD was 2.8%
  • Adjusted EBITDA YTD was € 112.1 million, an organic increase of 5.8%
  • Adjusted EBITDA margin YTD was 15.4%
  • One-off items at EBITDA level of € 3.0 million
  • Operating result YTD was € 71.4 million, an organic increase of 2.3%

Ingredient Solutions

Net sales in the first nine months in Ingredient Solutions, which encompasses Food and Biochemicals, increased by 7.0%, mostly driven by a positive currency effect of 4.6% and organic net sales growth of 0.9%. The adjusted EBITDA margin increased from 19.7% to 20.3%.

Business segment Food Net sales in the first nine months increased organically by 2.5%. Bakery, the largest segment in Food, continued its net sales growth path YTD and in Q3. In Meat we saw the shift in the portfolio mix towards natural preservation solutions continuing, which translated into aboveaverage growth rates.

In Q3, growth in our Meat segment was the highest of the year. In other markets (Beverages, Confectionery, Dairy) sales were stable compared to last year in the first nine months, and increased slightly in Q3. The adjusted EBITDA margin YTD increased from 17.5% to 17.8%.

Business segment Biochemicals

Net sales in the first nine months decreased organically by 3.5%. All markets were in decline except for Medical/Pharma. The biggest declines YTD were in the Electronics segment due to a slowdown in semiconductor markets, and in the Agrochemicals segment in anticipation of a regulatory phase-out of a category of actives by our customers. In Q3, most segments grew.

However, due to adverse market conditions in Electronics overall Biochemicals net sales declined for the quarter. The adjusted EBITDA margin YTD in Biochemicals continued to be significantly ahead of last year (28.0% vs 25.6%) mostly due to positive mix effects.

Innovation Platforms

Net sales in the first nine months organically increased by 37%, mostly driven by increased lactic acid sales to the Total Corbion PLA joint venture.

The PLA joint venture continues to develop beyond our expectations. Q3 was the best quarter for Algae Ingredients thus far, primarily driven by the seasonal pattern in aquaculture, which is reflected in the lower Q3 EBITDA loss for Innovation Platforms. However, overall net sales growth in Algae Ingredients remains below our earlier expectations.

Outlook 2019

For Ingredient Solutions we expect organic full-year net sales growth to be in the 0-1% range (was: 1-2%) as Biochemicals sales performance has further weakened in Electronics. For Food we expect organic net sales growth to accelerate into the second half of 2019 (unchanged; H1 2019: 2.0%).

We expect a full-year Biochemicals sales decline but expect Biochemicals H2 organic sales growth performance to improve compared to (or versus) H1 (unchanged; H1 2019: -3.9%). We expect the EBITDA margin for Ingredient Solutions to improve versus 2018, reconfirming our guidance of >19%.

The Q4 EBITDA margin in Ingredient Solutions is typically the weakest of the year and will be additionally adversely impacted by ERP go-live costs.

For Innovation Platforms in 2019 we reconfirm our expectations of >20% organic net sales growth. Q4 sales growth will be adversely impacted by a planned temporary shutdown in Thailand in relation to the lactic acid capacity expansion.

We expect a higher net sales level in H2 versus H1 (unchanged), driven by both our PLA-related lactic acid sales and the Algae Ingredients sales. For 2019, the EBITDA loss is expected to be around € -35 million (unchanged). In aggregate, we expect organic 2019 net sales growth for Corbion to be below the target 3-6% growth guidance range (was: near the low end of the target 3-6% growth guidance range.).


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