DSM-Firmenich to separate Animal Nutrition & Health division amid vitamin market downturn
NETHERLANDS- DSM-Firmenich has announced plans to separate its Animal Nutrition & Health (ANH) division from the broader group, aimed at insulating itself from the volatile vitamins market.
This decision underscores the company’s commitment to focusing on nutrition, health, and beauty segments while safeguarding against earnings fluctuations triggered by the downturn in the vitamins sector.
The ANH division, led by Ivo Lansbergen since 2019, is slated to operate under a distinct ownership structure, with various options currently under consideration.
This separation comes in response to the division’s substantial performance challenges, primarily stemming from price fluctuations in vitamins, notably during the tumultuous year of 2023, characterized by persistently low vitamin prices.
In its full-year 2023 earnings forecast, DSM-Firmenich projected an adjusted EBITDA of €1.8 (US$1.94) billion, factoring in an estimated adverse impact of approximately €500 (US$538.97) million from vitamin price fluctuations and a further negative effect of around €90 (US$97.02) million due to foreign exchange dynamics.
The company’s Q2 2023 trading update unveiled comprehensive restructuring plans for its vitamins business, aimed at realizing annual savings of approximately €200 (US$215.59) million.
These restructuring efforts, which include the closure of a second vitamin production facility in China and extended shutdowns of Swiss vitamin plants, are expected to be a significant contributor to DSM-Firmenich’s adjusted EBITDA, with anticipated contributions of €100 (US$108) million in 2024 and the full €200 (US$215.59) million in 2025.
CEO Dimitri de Vreeze emphasized the company’s commitment to implementing “self-help measures” to navigate the challenging global economic landscape, with the restructuring of the vitamins business being a pivotal component of these efforts.
De Vreeze asserted that the separation of the ANH division would empower DSM-Firmenich to fortify its nutrition, health, and beauty segments while mitigating exposure to future earnings volatility in the vitamins market.
Addressing the announcement, De Vreeze reiterated the company’s overarching mission to “bring Progress to Life,” underscoring the strategic rationale behind the separation as a move poised to generate enhanced value for stakeholders and foster the long-term sustainability of both businesses.
Despite the divisional separation, DSM-Firmenich’s critical methane-suppressing feed additive, Bovaer, is slated to remain within the Group.
With approvals spanning over 40 countries, including the recent nod from Canada, Bovaer plays a pivotal role in reducing emissions in the dairy sector, aligning with the company’s Taste, Texture & Health business objectives.
Anticipation looms for forthcoming approval in the United States, expected in the first half of 2024, underscoring the continued relevance and strategic importance of this innovative product within DSM-Firmenich’s portfolio.
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