Corbion reports modest Q3 results, organic sales growth falls flat
27 Oct 2017 --- Corbion has reported sales of €680.5 million (US$791.4 million) in the first nine months of 2017, a decrease of 0.7 percent compared to the same period in 2016, while organic sales growth in Q3 was flat. EBITDA excluding one-off items in the first nine months decreased by 3.6 percent to €129.9 million (US$151 million).
Key financial highlights first nine months of 2017 include:
• Net sales organic growth YTD was -0.6 percent; volume growth was -1.3 percent
• EBITDA excluding one-off items YTD was €129.9 million (US$151 million), an organic decrease of 6.0 percent
• EBITDA margin excluding one-off items YTD was 19.1 percent
• One-off items at EBITDA level of €5.5 million (US$6.3 million), mostly in connection with the newly founded Total Corbion PLA joint venture
• Operating result YTD was €102.5 million (US$119.1 million), an organic increase of 7.7 percent
• The €25 million (US$29 million) share buyback program was finalized on 18 September 2017
• Acquisition of most of TerraVia assets finalized on 29 September 2017
“I am pleased to see the positive momentum continuing with a return to organic sales growth in Biobased Ingredients in the third quarter. We keep our focus on sales recovery in Bakery and expect further gradual improvements to our organic sales growth in Biobased Ingredients. Our EBITDA profitability remains well above our target level of 18 percent, despite the higher sugar input costs,” comments Tjerk de Ruiter, CEO.
Food
The organic net sales growth performance in the Food segment in the first nine months was 2.2 percent. Sales growth in Bakery was negative due to challenges in executing our Bakery channel strategy and customer losses in frozen dough. In Meat, sales increased in the first nine months as the shift towards natural preservation solutions continues to gain momentum in the US, while outside of the US, meat markets developed favorably, mostly in Latin America.
In other markets (Beverages, Confectionery, Dairy), sales decreased slightly in the first nine months. The EBITDA margin for the first nine months decreased from 21.8 percent to 21.2 percent mostly due to higher input costs.
Business segment
Biochemicals Net sales for the first nine months increased organically by 4.1 percent. All markets grew except for Animal Health. The EBITDA margin for the first nine months decreased slightly from 25.8 percent to 25.2 percent mostly due to higher input costs, mainly sugar.
Biobased innovations
Net sales decreased organically by 1.5 percent in the first nine months, which mostly reflects higher volumes sold to the Total Corbion PLA joint venture in combination with a negative price/mix effect. The negative price/mix effect occurred because lactic acid that is sold to the Total Corbion PLA joint venture is sold at a lower price/kg than lactide and/or PLA. Construction of the Total Corbion PLA plant in Thailand is on schedule, requiring a temporary shutdown of the lactide production facility during Q4, negatively affecting sales to the Total Corbion PLA joint venture in Q4 2017.
Outlook 2017
Corbion’s outlook for 2017 is unchanged, the company 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. Organic sales growth is expected for Biobased Ingredients in H2 2017 to improve compared to H1 2017. Despite the adverse impact of higher input costs compared to last year, Corbion continues to project the total Corbion EBITDA excluding one-off items and excluding the negative impact from the TerraVia acquisition for 2017 to be slightly below that of 2016 (€ 170.1 million (US$197.7 million)). The company estimates the TerraVia acquisition EBITDA impact for Q4 2017 to be in the range US$ -7 to -12 million.
Speaking about the TerraVia acquisition, CEO Ruiter, says: “We are looking forward to welcoming a team of highly dedicated colleagues to the global Corbion family. TerraVia brings us a versatile microalgae-based platform which will enable us to expand into the field of producing specialty lipids and proteins, structured fats and tailored oils. TerraVia's IP portfolio and R&D pipeline, as well as its partnerships with industry leaders, provide high-growth opportunities for many years to come. At the same time, we are of course aware of the challenge of bringing the business from promise to commercial success. Corbion's more than 80 years of reliably and economically running industrial-scale fermentation plants and producing sustainable ingredient solutions will help us turn the TerraVia assets into profitable businesses in the coming years.”
