Dsm-firmenich shares jump after core earnings forecast hike
Adds CEO quote from analyst call in paragraphs 6-8, share move in paragraph 2
By Dimitri Rhodes and Anna Peverieri
July 30 (Reuters) -Dutch chemicals maker dsm-firmenich DSFIR.AS raised its core earnings forecast for 2024 on Tuesday, banking on savings from the restructuring of its vitamin business and continued integration of DSM and Firmenich's legacy businesses.
Dsm-firmenich shares rose 4.4% by 0741 GMT, topping the AEX index, after the group said it was on track to achieve its target of 200 million euros ($216.62 million) in adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) by 2024-end from the two processes.
Born out of a merger of Netherlands-based DSM and Swiss company Firmenich in May 2024, the group now sees 2024 adjusted EBITDA of about 2 billion euros, up from the 1.9 billion previously expected.
The company reported an organic sales growth of 4% for the first half of the year, above a company-compiled analyst consensus of 1.9%, and a group adjusted EBITDA of 976 million euros.
Dsm-firmenich scaled back its animal supplements business by selling the yeast extract business to Lesaffre in June and Meg-3 fish oil unit to KD Pharma in July, as the group looks to separate the struggling segment in 2025.
"Spot prices (for vitamin orders) are at a level where we're not seeing very sustainable prices and profitability," CEO Dimitri de Vreeze said in an analyst call.
He said spot prices had delayed repercussions on contract valuations and that vitamin E would see strongest sales in the second half of 2024.
"We still have three businesses on that tuning segment left," de Vreeze said, adding that the aroma, non-differentiated vitamins, and aggro-ingredients units were being evaluated.
Dsm-firmenich reiterated its mid-term guidance for adjusted EBITDA margin of 22%-23%, organic sales growth of between 5% and 7% and cash-to-sales conversion of more than 10%.
"Previously, growth rates were below 5%, but now we have achieved a strong quarter, reaching the 7% range," CEO Dimitri de Vreeze told Reuters in an interview.
He said destocking had started to fade, with volume growth expected to be affected by restocking and destocking throughout the rest of 2024.
($1 = 0.9233 euros)
Reporting by Dimitri Rhodes and Anna Peverieri; Editing by Subhranshu Sahu
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