AMSTERDAM — Corbion NV has begun a process to divest its non-core emulsifiers business, company executives announced Dec. 1 at Corbion’s capital markets day, which unveiled other company news.
Progress was announced on sustainability efforts, and the Amsterdam-based company has created a new business unit for algae ingredients for the aquaculture industry with plans to expand into pet nutrition. Corbion on Dec. 1 increased its net sales growth target for 2023-25 to 5% to 8%, up from 4% to 7%, and set an adjusted EBITDA growth target of 15% to 20% for 2023-25. Corbion’s stock price on Dec. 1 closed at €33.10 ($34.74) per share, up 13% from the Nov. 30 close of €29.24.
Corbion is a market leader in the US emulsifier market and a leading supplier of emulsifiers to the North American bakery market, but the company in 2020 categorized the emulsifier business as non-core. Brands in Corbion’s emulsifier portfolio include Trancendim and SweetPro for baked foods, Alphadim for dairy and non-dairy products, and Certeza for dry pet foods and treats. Divesting the emulsifier business will allow Corbion to focus on growing its core business, according to the company, which did not set a timetable for any transaction.
“So we expect this to happen in the course of 2023, but that’s the only thing we would communicate about it,” said Olivier Rigaud, chief executive officer for Corbion.
The company’s Sustainable Food Solutions business unit, consisting of natural food preservation and functional systems, has had a compound annual growth rate of 13% so far in 2022, Rigaud said. The SFS segment had sales of €579.1 million ($607.8 million) through the first nine months of fiscal year 2022.
“We believe our SFS has a higher portfolio and has the potential to reach €1 billion sales by 2030,” Rigaud said.
The Lactic Acid and Specialties business unit has had a CAGR of 15% over the past two years, he said.
“So LAS does represent 34% of our core portfolio, our core sales, and this division has also been growing very fast with a CAGR of 15%, primarily driven by our lactic acid sales to our PLA joint venture with TotalEnergies, but we also have very promising subsegments such as green solvent for the semiconductor industry, lactic acid derivatives for the pharma industry and, as just highlighted, our medical biopolymer business,” Rigaud said.
The LAS unit also serves the needs of the SFS division in regard to lactic acid and derivatives for natural preservation, he added. Corbion has begun constructing a circular lactic acid plant in Thailand.
“We have initiated the divestment of our emulsifier non-core business, and we will create a new reporting segment for Algae Ingredients as we see a fantastic growth opportunity in that area,” Rigaud said. “And finally, we are actively managing down our leverage, going forward. These are the key messages we wanted to share today.”
Corbion has achieved break-even EBITDA in algae-based Omega 3 fatty acids.
“We have over 9,000 strains,” Rigaud said. “This is still very, very minor. There is still so much that can be developed there. Usually, these algae, they only grow with sunlight and CO2. What we are doing at Corbion is that we are cultivating them on large industrial scale in fermenters, saving significant amount of valuable water and agricultural land.”
The primary target for algae currently is aquaculture, and Corbion plans to expand into new categories like pet nutrition.
“From €14 million ($14.7 million) sales back in 2020, the business reached €31 million in sales in ‘21, and we will more than double that this year,” Rigaud said. “So we had, since 2020, an impressive CAGR growth of 84% in microalgae.”
A Corbion facility in Orindiúva, Brazil, uses sugar cane to grow algae omega-3 fatty acids through fermentation, he said.
“We see a major opportunity in higher-margin Omega 3 market in human nutrition,” Rigaud said. “So we are expecting to reach full capacity in Orindiúva by 2025, and by then, we would expect our sales to be around €140 million ($147 million) with an EBITDA margin of €25 million being accretive to the overall Corbion EBITDA.”
Algae has been around for 3.5 billion years, he said.
“They have been there,” he added. “They have adapted to nearly any type of environment. They can almost eat everything, and they make our world habitable and sustainable. Do you know that they produce over 50% of the oxygen in our atmosphere? And today, the number of species is enormous. New species are being discovered every day.”
Corbion now has four business units: Sustainable Food Solutions, Lactic Acid and Specialties, Algae Ingredients and Incubator.
Rigaud said Corbion has aligned its business behind 3 out of the 17 United Nations Sustainable Development goals: zero hunger, good health and well-being, and responsible consumption and production.
“And today, over 60% of our sales is already aligned behind these three goals, but 100% of our innovation projects are aligned behind these goals, and we can already claim some very important contribution, be it with our natural product preservation to help reduce food waste, improve health but also with our new lactic acid circular technology, which can help us reduce our carbon footprint by 19%,” Rigaud said.
Corbion is pursuing more aggressive emission reduction targets validated by the Science Based Targets Initiative (SBTi), the global body enabling businesses to set emissions reduction targets in line with the latest climate science. Corbion joined the SBTi in 2017 and pledged to reduce carbon dioxide emissions related to energy, key raw materials and transport by 33% per ton of product by 2030 from a 2016 base year.
Corbion has updated its goals by committing to reduce Scope 1 and Scope 2 greenhouse gas emissions by 38% by 2030 from a 2021 base year and by reducing Scope 3 GHG emissions from purchased goods and services, upstream transportation and distribution, waste generated in operations, and downstream transportation and distribution by 24% per ton of sold product by 2030 from a 2021 base year. The new goals align with the Paris Climate Agreement’s goal of limiting the rise of the average global temperature to 1.5° C.
Another sustainable benefit comes from mold inhibitors that reduce food waste.
“So now let me detail a bit one of these adjacencies and the opportunity we see in natural mold inhibitor that has been driving our recent investment in Peoria (Ill.) in the United States,” Rigaud said. “First, do you know that bread is the second most wasted food product, and that one main reason is mold? But do you also know that today, the most used mold inhibitor is fossil-based? Isn’t that crazy? I’m not sure that a lot of people do realize that you have fossil-based products in your daily bread. So there is a clear need there to switch to cleaner label and healthier ingredient.”
Corbion has developed a proprietary solution of several food ferments and natural preservatives to overcome some of the functionalities and sensory challenges.
“And we’ve reached very promising results,” Rigaud said. “So these developments are behind the recent investment we’ve just made in Peoria, and that will deliver value as from 2023. Additionally, this investment is expected to provide high value and very nice return in the range of 30%.”
Corbion financially will aim for €250 million adjusted EBITDA for its core activities by 2025 and expects to improve its funding ratio to 2.9x to 3.2x by the end of 2022, below 2.9x in 2023 and between 1.5x and 2.5x from 2024 onwards. Corbion is guiding organic adjusted EBITDA growth of 15% to 20% annually. Corbion set annual net sales growth targets of 5% for Sustainable Food Solutions, 7% for Lactic Acid and Specialties, and 25% for Algae Ingredients.
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