Chief Executive Officer, Corbion
Corbion Talks: The story behind the numbers (Q1 2022)
Corbion financial results Q1 2022.
About Olivier Rigaud
Olivier Rigaud, CEO of Corbion, said in February 2023 that the company achieved record growth and profitability in 2022 despite what he described as the highest market volatility he had seen in 35 years. He stated that Corbion adapted to cost inflation and supply chain disruptions through price increases, mix improvement, and operating efficiency gains. Rigaud noted that the company achieved break-even in its algae-based omega-3 business, increased carbon footprint reduction targets, and invested in production capacity in Thailand, the United States, and Singapore. In January 2023, Rigaud participated in an interview at the World Economic Forum in Davos, where he discussed Corbion’s focus on replacing synthetic ingredients with natural alternatives. He said the company works with suppliers to reduce emissions and provides customers with carbon footprint data. In comments on first-half 2022 results, Rigaud reported organic net sales growth of 23.4% and said the company had passed on cost increases to the market without experiencing adverse volume impacts. Earlier in 2022, he described a strong first quarter with above 20% organic growth and margin recovery, while emphasizing safety and innovation as ongoing priorities.
Transcript (16 segments)
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Tonno Massar0:11
Hi everyone, welcome to Corbion Talks at the Q1 2022 results. My name is Tonno Massar, I'm with Caribbean Communications, and with me are Olivier Rigaud, CEO, and Marcel Robles, our Chief Science and Sustainability Officer. Welcome gentlemen. First of all, Olivier, what is your overall feeling looking back at the first quarter of the year?
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Olivier Rigaud0:32
Hi Tonno. So yeah, we just delivered a very strong quarter with above 20% organic growth, and we've been able to improve our profitability back to, of course, our depressed margin from the second half of last year, now to above 12.5% EBITDA. So very nice recovery on that front as well.
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Tonno Massar0:50
That is really great to hear. So much very good progress in the business. Um, but we always say safety first at Corbion. So where are we on that journey?
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Olivier Rigaud1:00
Well, it's a very important question, Tonno. We started already two years ago with the safety program, and we have now enhanced that even with the behavior-based safety program. And we really want to have a culture change there. And we're also focusing on process safety, and we already see the tremendous progress happening there right now, which is not trivial in times where there's a lot of uncertainty and things going on outside the company, like, of course, the pandemic, but also as we know the whole world is in turmoil, and that also is very important to keep us focused on that safety.
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Tonno Massar1:33
Okay, good. If you zoom into the results of the different business units, could you give me a little bit of visibility there how we're doing?
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Olivier Rigaud1:41
So we are doing very well across the three BUs. So in Food Solutions, basically we are seeing growth driven by price increase primarily. However, we see a very strong momentum into our functional systems business, so we have more and more solutions on mold inhibition, on improving freshness as well, so very strong momentum there on top of the pricing. So on the Lactic Acid and Specialties, the usual categories like the pharma industry, the electronics are really pulling very nicely as well in terms of volume, and not to forget the lactic acid to PLA, where the joint venture we have together with Total Energy is still on a very strong foothold, so growing very nicely as well there. And of course, to end, we have our algae business, where we have developed the business very strongly, and we are benefiting from new contracts for this year 2022. And not just in the aquaculture, we also benefit from a very nice momentum into pet nutrition, which is adding, of course, to the portfolio we have in energy. So very good prospect there as well. Great developments in the business. Marcel, you're looking after innovation obviously for Corbion. I think in Lactic Acid and Specialties we have particularly strong growth in biomaterials that is really underpinned by innovation.
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Marcel Robles2:56
Right, yep. Lastly in biomaterials, we supply products that are being used in drug delivery and also in orthopedics. And what you see there is that we have seen a record growth this quarter, and that's really very nice. It is also a bit the result of the fact that we had some postponement of elective surgery during the COVID period. Now that is picking up, and our teams are really doing their best to make this happen. So it really requires delivery of high quality medical materials at high volumes, and we are very good at that.
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Tonno Massar3:28
That's great. Nice innovation. And what else is happening in that area of your innovation portfolio?
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Marcel Robles3:36
We're doing quite a bit of things on process innovation. So we're improving our current processes, and that is true for the algae business, but it's also true for our lactic acid production and other organic assets that we're making. And on the other end, we're also investing a lot of resources on product innovation. And we're looking at natural mold inhibitors where we have some really new developments going on there. And we're also looking at feedstock flexibility. In these times you really have to have a flexible front end of your processes to be able to meet the market needs.
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Tonno Massar4:05
Great. And innovation at different fronts for Corbion. We don't like to mention it, the pandemic still plays a role in today's world. So where are we if you look at the world of Corbion?
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Olivier Rigaud4:20
So of course, although the pandemic is looking better in a way, we still face, as everyone, supply disruptions, sourcing disruption. So we are not immune to that. So far the team has been doing an outstanding job because we have no big disruption, so we've been able to serve our customers and make sure that we have business continuity. But it's true that of course we see a lot of disruptions still. We are still operating in a very volatile environment, and I want to really thank the Corbion employees across the globe for securing business continuity, because so far we've been doing pretty well on that front despite all these challenges.
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Tonno Massar5:00
Okay, that is really good to hear. Marcel, besides innovation, sustainability is a key part of your remit. We have a strong purpose: preserve what matters. So what is the update on sustainability for Corbion at this moment?
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Marcel Robles5:12
Well, a couple of things. So we've signed up for the Science Based Targets initiative, and so we're really making sure that we have greenhouse gas emission reductions in our company. We promised to reduce that by 33% in 2030, and we're making good progress there. And we're even thinking of making our targets maybe a little bit more ambitious. On the other end, we also have adopted the United Nations SDGs, yeah, 2, 3 and 12, and we make sure that all of our innovations are actually supporting one of those three SDGs.
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Tonno Massar5:43
Okay, very clear focus there as well. Finally, Olivier, to you, I would like to ask: so what is your message, looking at the rest of the year, where we are now and what's ahead?
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Olivier Rigaud5:57
So the first priority is, of course, keeping our organization safe. COVID is still not over, so that's still the primary focus we have across the organization. The second priority is our margin recovery, and we are still working very hard to restore our profitability. So that, in the coming months and quarters, is still a very strong area of focus. Obviously, at the same time, we continue our journey in terms of innovation, in terms of generating pipeline to secure longer-term profitable growth, and as Marcel just highlighted, do that without compromising our sustainability drive. So this is where we are today and what we are focusing on.
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Tonno Massar6:37
Thank you very much, gentlemen, for this update. Thank you for watching Corbion Talks, and till the next time, thank you.