Corbion Q1: Healthy margins for Ingredient Solutions despite market pressures
26 Apr 2018 --- Dutch food and biochemicals company Corbion has reported sales of €213 million (US$259.3 million) in the first quarter of 2018, a decrease of 7.4 percent due to currency effects. Reporting its Q1 2018 Interim Management Statement, Corbion says organic sales growth was 2.5 percent, due to a strong increase in Biochemicals and Innovation Platforms, while EBITDA excluding one-off items decreased by 19.2 percent to €38.6 million (US$47 million) due to currency effects and higher input costs.
“The start of the year saw a continued positive momentum with organic sales growth recovery in Ingredient Solutions, that has returned to the 2-4 percent target range. As anticipated, a weaker US dollar and negative raw material price effects have put pressure on our Ingredient Solutions EBITDA. Nevertheless, we were able to maintain a healthy margin in this business segment,” said Tjerk de Ruiter, CEO. “We are experiencing improving market dynamics in bioplastic PLA, which is encouraging for the future development of our PLA joint venture plant, which is scheduled to open later this year.” EBITDA margin before one-off items was 18.1 percent (21.0 percent for Ingredient Solutions) and positive one-off item of €0.7 million (US$852,229) related to a land sale in Italy. The company’s operating result was €30.0 million (US$36.5 million), an organic decrease of 9.0 percent. Ingredient Solutions Net sales in Ingredient Solutions, which encompasses Food and Biochemicals, decreased by 8.6 percent, driven by a negative currency effect of -10.8 percent. Organic net sales growth continued its upward trend resulting in 2.2 percent growth in Q1 2018. The EBITDA margin excluding one-off items decreased from 21.9 percent to 21.0 percent, as higher input costs for several key raw materials negatively impacted both the Food and Biochemicals business segments. Business segment Food Net sales decreased organically by 0.4 percent. A decrease in sales was expected for the first quarter as Corbion is still facing an unfavorable comparison base in Bakery. The company says it continues to recover lost business, albeit at a slow pace. A key bakery enzyme recently went off-patent in the US resulting in some sales reduction as a consequence of lower input costs. This is expected to have a neutral effect on company profits. In Meat, Corbion has seen the portfolio mix shift towards natural preservation solutions continuing, which translates into above-average growth rates. Meat sales growth outside the US was mainly driven by Latin America. In other markets (Beverages, Confectionery, Dairy), sales increased again after several quarters of slight declines. The EBITDA margin decreased from 20.2 percent to 18.2 percent due to higher input costs, only partly offset by positive portfolio mix effects. Innovation platforms Net sales increased by 64 percent, mostly driven by the acquired algae ingredients acquisition. Lactic acid sales to Total Corbion PLA joint venture were relatively limited due to a planned shutdown of the joint-venture lactide plant. PLA plant construction is still on time and budget, with startup expected in the second half of the year. Corbion says it sees encouraging PLA market developments, which bodes well for the future sales ramp-up of the joint venture plant. The increased EBITDA loss was almost fully driven by the acquired algae ingredients platform as of September of 2017. Corbion also continues to make progress in the acquisition process of the Bunge stake (49.9 percent) in the SB Oils joint venture and expect to reach a final agreement before the end of June. Last month, Corbion signed a share purchase agreement with Bunge regarding the potential acquisition by Corbion of Bunge's stake in the SB Renewable Oils joint venture. Corbion and Bunge are 50.1 percent/49.9 percent partners in SB Renewable Oils, a joint venture that operates a facility in Brazil, specializing in the production of algae ingredients, such as omega 3 rich oil, for aquaculture and animal feed. The completion of the share purchase agreement is subject to certain conditions, including finalization of long-term supply agreements, and regulatory approval. Outlook FY2018 For Ingredient Solutions, Corbion continues to expect organic net sales growth to be within the guidance bandwidth of 2-4 percent, with the EBITDA margin exceeding 19 percent. The company continues to expect Food full-year sales growth to be within guidance (1-3 percent). Biochemicals growth is expected to continue in the coming quarters, albeit at a slower pace than in Q1. In Innovation Platforms, Corbion continues to expect the startup of the joint venture PLA plant in the second half of the year. In algae ingredients, the Peoria plant has resumed operations, raising the fixed cost level from Q2 onwards. For the SB Oils joint venture, the priority is to address the necessary plant improvements. To contact our editorial team please email us at editorial@cnsmedia.com 
Related ArticlesFood Ingredients News Plant-based protein growth: Hydrosol’s new stabilizing systems for dairy alternatives
24 Sep 2018 --- Hydrosol is tapping in the growing demand for plant-based proteins with its new stabilizing and texturing systems for a wide spectrum of dairy alternatives that give them properties very close to products made from cow’s milk. These include cultured desserts that contain no milk components, soy or gluten. Business News Polyol ambitions: Sunar Misir invests in sorbitol and maltitol capacity
24 Sep 2018 --- Sunar Misir plans to reach an installed capacity of 100,000 tons for its sorbitol and maltitol facility in Adana (Turkey) by the end of 2019. Sunar Mısır has over 33 years of experience with corn-based ingredients and offers sustainably-sourced, Non-GMO starches and starch derivatives for the global market. Food Ingredients News Water lentils: Parabel’s tiny plants with huge potential, LENTEIN’s disruptive promise
24 Sep 2018 --- There is much debate in the food industry that centers on the challenges that a fast-growing global population that is expected to hit 10 billion by 2050 present. How will we feed everyone? How will climate change impact on agriculture? What crops and food commodities are the most sustainable? These are some of the big questions that the food industry is currently facing. And water lentils, an innovative protein source, is one of the newest and exciting plant proteins that could hold the answer, according to Parabel USA. Food Ingredients News Biofuel collaboration: Mascoma and NextFerm Technologies enter partnership on yeast-based innovation
24 Sep 2018 --- Mascoma LLC, a subsidiary of Canadian business Lallemand Inc., and NextFerm Technologies have signed a new commercial joint development agreement that will expand their collaboration into the biofuels category. NextFerm is an Israeli biotech start-up that is developing and producing high-end, science-based, fermentation-derived ingredients for the global food and feed industries. Food Ingredients News Layn rolls out new sweetener platforms in Mexico
21 Sep 2018 --- Layn Corp. is rolling out its advanced sweetener and flavor systems in Mexico at the FoodTech Summit & Expo taking place in Mexico City September 26-27. The company is introducing its Lovia sweetener platform and showcasing Monk Fruit by Layn. |
