DSM-Firmenich Earnings: Strong Business Momentum Leads to Full-Year Guidance Upgrade

Wide-moat DSM-Firmenich delivered organic sales growth of 7% in the second quarter of 2024, substantially ahead of 4% Vara consensus. Growth accelerated for the perfumery and beauty segment and the taste, texture and health business and turned positive for both the health, nutrition and care as well as the animal nutrition and health segments. The adjusted EBITDA margin of 15.9% was 240 basis points ahead of the same period last year and represented a sequential improvement of 80 basis points compared with the first quarter. The sequential improvement was primarily the result of higher profitability for animal nutrition and health with a EUR 20 million contribution (2.5% of segment sales) from the vitamin transformation plan and cost synergies. For the full year, DSM-Firmenich expects a EUR 200 million EBITDA contribution from synergies and the vitamin transformation program. Given solid momentum across the business, management upgraded full-year 2024 EBITDA guidance to around EUR 2 billion from at least EUR 1.9 billion previously. This aligns with our forecast and we confirm our EUR 130 fair value estimate. Shares were up around 5% in intraday trading following the consensus beat, but still offer upside of around 12%.