Corbion growth falls short, according to H1 results

09 Aug 2017 --- One week after Corbion’s US$20 million “stalking horse” offer to buy the stocks and assets of microalgae specialist Terra Via Holdings, it has released the first half results for 2017 showing a slump in organic sales and earnings. This is partly connected to a hike in sugar prices and shortfalls in the bakery segment. 

The nutrition and specialty ingredients company says that top-line development in the first half of 2017 fell short of expectations, but predicts growth to be on track for the rest of the year. 

“Top-line development in the first half of the year fell short of our ambition level, mainly due to a shortfall in Bakery. The first results of our actions to recover sales in Bakery became visible in the course of the second quarter,” says Tjerk de Ruiter, CEO.

“Based on this, and the positive developments in other parts of the business, we are optimistic about our top-line performance in the second half of the year.”

“As expected, our margins in the second quarter were adversely affected by rising sugar prices. The PLA joint venture with Total became operational in early March, and plant construction is well underway and on schedule.”

Results
Corbion reported H1 2017 sales of €461.9 million (US$542.5 million), an increase of 1.4 percent compared to H1 2016. Organic sales growth was down 0.9 percent, mostly due to lower volumes in Bakery, while EBITDA excluding one-off items in H1 2017 decreased by 1.7 percent to €88.3 million (US$103.7 million). Organic EBITDA has declined by 6.2 percent in H1 2017.

Some other key highlights for the first half of 2017 include EBITDA margin before one-off items YTD was 19.1 percent, one-off items at EBITDA level of € 6.0 million, mostly in connection with the newly founded Total Corbion PLA joint venture.

Corbion’s joint venture is underway following its announcement late last year to join forces with Total to develop bio plastics by creating a 50/50 JV to produce and market polylactic (PLA) polymers, including building a world-class PLA polymerization plant at Corbion’s site in Thailand. 

Operating result YTD was €73 million, an organic increase of 10.8 percent, free cash flow was YTD €2.3million (US$2.7million) and net debt/EBITDA at half year-end was 0.9x (year-end 2016: 0.6x)

The company also started its €25 million (US$29.3 million) share buyback program in April and by the end of H1 the total buyback amount was €12.8 million (US$15 million). The program will be completed before year-end, says Corbion. 

Shareholders' equity decreased by € 43.8 million (US$51.4 million) to € 454.7 million (US$534.2 million).

Outlook 2017
Corbion says that its outlook for 2017 remains unchanged from its forecast in its Q1 Interim Management Statement in April and it continues to expect the 2017 organic net sales growth in Biobased Ingredients to end up below the multi-year guidance bandwidth of 2-4 percent. 

The company also expects organic sales growth for Biobased Ingredients in H2 2017 to improve compared to H1 2017 and, despite the adverse impact of higher input costs compared to last year, it continues to project the total Corbion EBITDA excluding one-off items for 2017 to be slightly below that of 2016 (€170.1million (US$199.8 million)), as the business mix continues to improve.