Hi. Good morning, everyone. Thank you for joining us today. As you can see, we do this webcast from our home offices. So, we're still in dark red in the Netherlands because, yes, our Freedom Day didn't turn out that successful so far.
So hence, we're back home. We've chosen a new format here for this half year results. So instead of our 4 times a year the same quarterly financial reporting, we decided to focus more on half year and full year results, but then also make a broader update addressing also the progress we make on our strategic and sustainability journeys. That means that the interim quarters, we do fire social, called short trading updates, as you've seen us doing already at Q1. With more information to share at half year, therefore, also at full year, we thought it also be helpful for you to move the call to the afternoon, which gives you more time to digest the information, but it also allows our U.
S. Investors to follow this conference live. So welcome to the U. S. Investors for this first live conference for them.
What's our agenda for today? First, Geraldine will run you as usual through the financial performance for the first half, but then also will give you a short overview of where we are with our innovation projects as well as with the strategic journey. And then Dimitry will follow-up with an overview of our sustainability journey and then also zoom in on the Animal Nutrition business. These presentations will take about 40 minutes, and the slides have been published already this morning. You can find them on the website.
And the ones we're showing today are a little bit shorter than the ones we published, but they are identical, only a little bit shorter. After this 40 minutes presentation, we move to the Q and A, which takes about 50 minutes and that will be done with the sell side analyst. And before we move on, I have to do my usual thing. That means caution you that today's conference may contain forward looking statements. You can find these disclaimers as usual in the press release, which we published on our website.
And with that, I will hand over to Geraldine.
Thank you, Dave. And welcome, everyone, from me as well to this earnings call, which is new format, and we hope it's going to go smoothly and that it will be I'm well spent for you. As Dave just said, I will kick off looking at basically the H1 numbers And then looking at some of the progress we have made on the strategic steps that we have taken so far. And then I will hand over to Dimitry, who will then give a bit more color on our purpose led journey. And actually a bit of a deep dive on our animal nutrition, particularly precision services that we are Rolling out.
Sorry I'm just checking because I am not sure I'm seeing the right screen right now but hopefully you are. So let me start with the total group numbers and that is going on our first slide with figures. So as you can see here it's quite clear that we had a very good first half of the year. If we look at the numbers starting from the left We delivered an 11% organic growth, which has led us to delivering an adjusted EBITDA up 22%. And that drops down nicely to the adjusted net profit up 21% at 444,000,000.
Now all of these figures on the left side of the slide are actually the scope of continuing operations. And if I actually take this the lens of total DSM then here you would expect you would see actually a net profit in excess of 1,000,000,000 For the first half this year and that is because in the second quarter as from the 1st April we Recorded the divestments of resins and functional materials which brought in again net of tax of 567,000,000. So that is what makes up the €1,000,000,000 of net profit for the first half this year. Now keeping the lens of total group, we've also delivered a nice step up in cash generation. As you see here, the adjusted net operating free cash flow is up 11%.
And if I actually take a continuing operation scope, it would be plus 18%. Also worth highlighting here is our return on capital employed. Now if you look at the published number, the reported number, it's 12.2%. But given the number of positions that we have done in nutrition recently that does actually hide the progress of the underlying return on capital employed, which is here 17, 15.7 percent excluding M and A and that is actually a step up of 350 basis points on the ROCE, I have to say helped quite a bit by materials, but also with progress in nutrition. So you I have to read here with the footnote.
But this is what we are driving as an operational KPI. [SPEAKER MARIA DE LA CHEVARDIERE:] Now these total group figures of course are the sum of many moving parts. And to start going through them let's go to the next slide on total nutrition and what you see here are the figures for H1 and for Q2. So if we look first at the big picture, what it shows is that our nutrition business overall delivered a 6% organic growth in H1, Very much in line with our strategic midterm ambitions of mid single digit, which resulted in an adjusted EBITDA up 8% And a margin of 21.4, up 50 basis points. So this is a very healthy performance And also worth noting here that the contribution from the acquisitions that we have done It's still on Q1 and on Q2 offset by the foreign exchange headwind.
And you see that in the small boxes at the bottom there. We have FX minus 6% and M and A plus 6%. So that very much still a picture in Q2. But overall very good business conditions throughout the 6 months. Now looking at the particular business dynamics in Q2 it's probably easier actually to go directly to animal nutrition to start off with.
So on the next slide And let me see if the next slide comes up on Animal Nutrition. Here we go. So here if you remember Last year we saw a Q1 that was very strong due to COVID with a lot of nervousness of our customers wanting to not ran out. And therefore, we had seen in the Q1 of last year a 12% volume growth. That was followed by Q2 last year of a much softer quarter with only a 2% volume growth as there was some element of destocking And a bit of wait and see going on.
So that was the picture last year. Now as you know, this year in Q1, we were expecting to struggle to deliver growth on the back of already the big Q1 of prior year, but we did nonetheless deliver 5%. And what we can say today is that in Q2, we have seen neither a major stocking or destocking effect. And as a result, you see here the 5% organic growth in Q2 for Animal Nutrition. And that is really on the back of big good business conditions across the board, pretty much all species and regions, whether it be poultry, pets, beef, in the case of beef for instance, the strong exports out of Latin America continued towards China, helped by the Brazilian real being still relatively weak.
We also saw a continuing good momentum with the African swine fever that continues to rebuild the herd. And we're seeing actually in Q2 the aquaculture space starting to recover as that was actually quite impacted by the eat at home phenomena of the COVID phase. So good business momentum resulting in this 5% organic growth. Now if you look at the moving parts under that, you may wonder why is it that we have 10% volumes up and minus 5% price. And that is actually linked to last year.
So last year as I said in Q2 we had very moderate growth at 2%. So here you have a real comp effect Hence the 10% combined with of course the good business conditions. And the price minus 5% actually compares to a plus 7 in Q2 last year. And here again you may remember that we had some somewhat unusual movements in Q2 related to the pricing of pass through ingredients of FX in Brazil, for instance, And also some element of mix. So you've seen here effectively a bit the reversal of that plus 7 of last year.
But as indicated on the previous slide, this is not really impacting our earnings and our margin. So it's a bit of noise if you want on the top line. So those are really the key highlights when it comes to animal nutrition. Now if we go to the next slide and we are here on the human nutrition part. Well in human nutrition it was the reverse Last year, right?
So our Q1 was a relatively soft Q1. We saw the effects of pantry loading only start at the end of Q1. But Q2 was a very big Q2 last year. We had 13% volume growth. And of course, if you as you remember, there was Whole pantry loading.
There was clearly the shift in food and beverage towards the whole eat at home. And we were seeing clearly a lot of immunity dynamics with dietary supplements being strong. So a very, very big Q2 last year. And as a result it was always going to be a challenge for us to deliver any additional growth in Q2. And this is why you see here that for the Q2 in human nutrition we are actually flat versus this high watermark which is an excellent performance.
What we're seeing is positive momentum pretty much across all of those segments with growth even in dietary supplements And the only part of human nutrition that was a bit softer is early life nutrition, which As you remember, was already the case in Q1 and is very linked to the low birth rates, not only in China, but actually across Pretty much all geographies linked to COVID-nineteen. So that's continued. And pharma and medical are continuing, actually have a strong performance in Q2. So when you combine strong Q1 and this Q2, which is in line with last year, it leads us to this very solid 5% organic growth in human nutrition as well for the first half year. And to complete the nutrition picture, if we go to the next slide, you will see there the other nutrition elements.
Here, we are looking at Food Specialties. Food Specialties has had a good first half of the year with this 8% organic growth pretty much supported by all the different business lines within that division whether it be dairy, baking, the brewing part is very much coming back after the lack of out of home consumption And Savory remaining strong. So a good 8% organic growth there. And when it comes to personal care and aroma, here the background was of course that Aroma actually did quite well during the COVID months with all of the home care business, but what was suffering more is the personal care, in particular, of course, some filters, but some of the skincare. And what we are seeing is that that is now coming back.
Hence this 13% organic growth. So that is really driven by personal care. So that is really the picture from a business development on nutrition. Now if we switch to materials going to the next slide. Here, this is really the quarter where we, of course, see a big step up versus Q2 last year when everything pretty much not everything but slowed down massively.
Let me put it that way. And as a result, we of course see these very big numbers in terms of organic growth versus Q2 prior year. However, I would like to point your take the get your attention or point out Actually, if you look at the comparison versus 2019, we are delivering growth versus 2019. So even if you ignore 2020 for a moment and what you see there is that this very strong recovery has led actually a volume growth of 11% versus H1 twenty nineteen and we actually see an EBITDA growth of 23% versus the 1st semester of 2019. So, you know, in all respects, an incredibly strong first half of the year.
Now this recovery, if you recall, started in Q4 and became stronger and stronger throughout the quarters. And if we go to the next slide here are some of the drivers. What we have here is of course a strong demand in automotive and Tronics that you've seen with other companies and that has continued from Q1 into Q2 with a strong order book. Here it's a combination of end user demand. But there is of course as well, particularly in the long value chains like automotive, a restocking effect of the supply chain.
And I think importantly, we really need to emphasize here that in order to keep up and to deliver with customer needs has taken a huge amount of effort and we've had to run fast And we are seeing increasing tension in the supply chain. This is not sustainable from a pace point of view, but we're also seeing inventory levels getting pretty low. And therefore we are a bit cautious with the second half. Although the order book is good, the ability of the whole And supply chains to keep up this sort of momentum is a bit in question. So that's why we refer here to extremely tight supply chain conditions as we move into the second half for engineering materials.
Now when it comes to protective materials here, as you know, it's a business that has a very different dynamic. And it was pretty soft for a few quarters, but we are seeing a gradual improvement from Q1 to Q2. And in fact, Q2 is pretty much back at pre COVID levels, particularly in the personal protection. So a nice recovery there And that should be a lot more progressive and without necessarily as much of a potential stocking, destocking effect that we see more in our engineering materials business. So that's really the highlights for materials.
Now if we go to a few other financial highlights, just to cover a few points. Here I would like to refer to the working capital and operating working capital. So what you see here is that the ratios the sales are very good. So we have a total working capital to sales below 20% at 19%, which is down 180 basis points. [SPEAKER JACQUES VAN DEN BROEK:] And you see the OWC also as a percentage of sales coming down strongly at 24.9%.
But I have to flag here, and you can see it in the press release, that this is driven for a large extent by materials business, which as I said, is running a little bit on fumes when it comes to inventory levels. And that is reflected in our working capital. But Nutrition did a good job as well given the circumstances. Now the other number here is net debt. I've referred to this already earlier, but we have booked now the divestments of resins and functional materials.
So the cash came in in Q2, Which was €1,400,000,000 as expected which brings us to this net debt of €1,200,000,000 at the half year. Then just to be complete to mention, we are announcing an interim dividend of €0.80 per share. Just as a reminder, this is not an indication of the ultimate dividend for the year. Our policy is to distribute 1 third of the prior year dividend As an interim amount. So this is just 1 third of last year's dividend.
We also in Q2 completed the cancellation of the shares that we bought back. We did a share buyback that ended in February last year. And we have now canceled those shares. That was done in Q2. And we also, in order to sort of keep the balance sheet clean, decided to do an early redemption Of one of our bonds, which was due to mature in September 2022 of €500,000,000 we decided to do an early redemption, which was also completed in Q2.
So those are the other financial highlights. And now moving a bit more into oh no sorry I was going to forget that leads us to the outlook. So you will have seen in the press release that we have updated our outlook on the back of these developments we remain very confident in our positive outlook for nutrition as was stated in the previous quarter and on the back of the strong performance of materials, we are now indicating that we to grow our EBITDA in the mid teens as opposed to towards mid teens, which really reflects this very strong recovery in materials. So these were the financial highlights and now switching a bit to our progress on our strategic journey. Here, there's a lot going on.
So I will be brief, but still worth highlighting a few key points and I will start with nutrition. So here innovation projects you will hear more about this in a second from me and from Dimitry but progressing very nicely on pretty much all of them. So good progress there. We're also making nice strides in our 3rd dimension of our very unique business model, which is the precision and personalization that you heard us talk about at the Capital Markets Day and we will tell you a bit more about SUSTEL later on in this presentation. But we also launched Hologram Science, which is our personalized nutrition consumer facing entity that really helps individuals get a diagnostic and coaching and basically personalized nutrition guidance.
So this is progressing. We have also in the period completed the acquisition of the FNS bio based intermediates from Amaris this has gone straight into our PCA business which is really leveraging our bioscience capabilities and giving us critical mass. So that is going as planned and very well. And actually in July we So increased our ownership of Midori. We were already a 38% shareholder in Midori.
It's a biotech startup in the u biotic space, very exciting space because it has all to do with gut health and basically fighting the overuse of antibiotics in the production of meat, we've now increased our ownership to 100% and we're very excited about that. So that was done in July. Now going to materials news. Here of course the divestments of resins is now completed. I've referred to that.
With that divestment, if you recall, our solar business partly went to Covestro, but the back sheets did not. And we're pleased that we were able to actually sell that part of the business and our colleagues found a new home with Wharton Industries and that was in June. So that sort of completes if you want partly that divestment and we're continuing to move our portfolio in the material space to the specialty part of the industry as you can see we have been able to really keep up the pricing momentum in materials and that really is clearly related to the specialty nature of the portfolio that we have today. Then when it comes to our JVs and associates, you will have noticed also that just shortly after the mid year point we actually divested with our partner CVC see our remaining share in AOC. This was a 17% shareholding.
The cash will come in sometime in the second half of the year. But that is another piece of the divestments of some of these associates shareholdings that we still hold. And last but not least, on our journey to the net 0 by 2,050 in terms of greenhouse gas, we're pleased today to add it to our bullet points, the fact that we are actually increasing our ambitions with the horizon of 2,030. I mean it's very important to have a 2,050 net zero target but of course milestones along the way Are pretty much essential and we have just upped that with all the roadmaps behind it to reducing by 50% our emissions from Scope 1 and Scope 2 by 2013. Then now moving more on to the innovations, which is always an important part of our growth strategy for DSM.
And this slide should be familiar because it's the slide that we showed at the Capital Markets Day in November. And it's an important slide because it really links up the pipeline of innovations and themes with our growth platforms And this is exactly how we steer our capital allocation and what underpins our ambitions in terms of growth generated by innovation. These are 4 categories the 4 P's precision, prevention, proteins and pathways. Now I've already mentioned today a number of these items whether it be Hologram Science and SUSTEL, whether it be the integration of the recent positions like CSK which is nicely integrated now or on the animal gut health That's the whole UBiotic platform. We had Balencios already.
Then we had acquired Ergo which also has a strong offering in UBiotics And now we're adding Midori. So as you can see these are all the different combinations of partly organic, partly acquired where we get more speed of innovation and really underpinning these important growth platforms. Now as I know you're all interested in the updates on some of the what we used to call big ticket items within that whole folio of innovations. Let me give you a very quick update on 4 of the key ones. Going to the next slide.
So let me start with Bover. So the news on Bover is that we are still in this critical year of expecting EU approval first with an EFSA clearance hopefully shortly after the summer And then the EU commission approval so you know if all goes to plan this should be a 2021 moment. Then on the back of that we are ready to launch commercialization whether it be in Europe Or in New Zealand and then potentially in Australia. And it's important to know that we basically have customers that are signed up to do this as soon as the clearance comes through and the market interest remains really strong particularly of course in the dairy space and with dairy players. Now the potential remains the same at 1 to 2,000,000,000 and when we look at the estimated sales.
Now this is a new space, as you know, which makes the estimation always a bit of a challenge. But here we're really looking at an estimate of about 100,000,000 in the next 3 to 4 years with the disclaimer that it is a bit difficult to say. It could go faster, but we don't know. Viramaris, here last time we spoke, of course, we were discussing the fact that the salmon industry had suffered quite a bit during the COVID period. Now we are seeing that the reopening of the economy is helping.
And we are seeing the salmon industry basically getting more positive momentum, which is of course very helpful. We also see that the salmon industry is increasingly in the spotlight for its own environmental footprints. And here the conversation really becomes very focused on what is called the FFDR, which is the Forage Fish dependency ratio. Sorry, it's a real mouthful. But in short, it means how many fish from the wild do you have to catch to produce one fish for consumers.
So it's really and you know, most salmons, it takes 66 tons of wild fish for one ton of salmon. So this is a very much in the spotlight and is very helpful because of course, veramaris oil comes directly from the algae, so we can very much help the farming, the fish farms be able to respond to this requirement. The capacity of the production is ramping up. So we've gone from, if you want, startup phase to ramp up phase. And what we're seeing here is with the current capacity, we're looking at about 150,000,000 sales for the JV with the current capacity which should be reached in about 2 years.
Market potential is unchanged at 1,000,000,000 to 2,000,000,000. Then moving to our next slide. Here we are looking at, of course, the plant based space with our canola pro plant based protein. Now this is a space which is strong in terms of momentum. Where we are at is that our production site is being finalized in deep.
We should be able to produce during 2022. So it will be start up here next year. But in the meantime, we do have samples that are going to customers looking at all sorts of applications, you know, from basically milk to yogurts to meat alternatives. And this creates a very strong solid pre work so that hopefully the sales can ramp up nicely once the plant is up and running, which basically means that we should see a few dozen million of sales in the next couple of years post COB commercialization. And the potential here for specialty alternative proteins remains 1,000,000,000 to 2,000,000,000.
So we haven't change that estimate. And last but not least, Avancia, our fermented stevia. Again, last time we talked, We were very much mentioning the fact that the COVID markets were not helpful for the launch of products. We are seeing a bit better momentum now, although not as strong in terms of product launches than pre pandemic. But the EverSweet is very much appreciated as a leading artificial sweetener in the space and we therefore So have a good momentum and we are already in double digit million sales from this.
So again, going from startup to ramp up. And we estimate the sales to be about €100,000,000 in the next 3 to 4 years from this as well with a market potential of €1,200,000,000 Now these are only 4 examples of the long list that you saw on the 4P slide. And what's important is to point out, Which is at the bottom here in blue, that if you take the whole pipeline of innovation, we are very confident that our innovation momentum will be able to help us add 1.5 percent to our top line growth and 2.5 percent to our EBITDA growth going forward up until 2025, a combination of these projects and the rest of the pipeline. So this is really in terms of our innovation. And last but not least from me, this is the slide that you should also recognized from the Capital Markets Day.
This is what we said would keep us busy on our journey forward. On the left side, it's all about keeping up a good performance with the business as it is today. I've talked quite a lot about it in terms of business performance, innovation promise and how we're doing with our acquisitions which are nicely integrated. Dimitri will be giving some more color on our purpose led journey going forward and how we're doing on this 3rd dimension of precision. So it just leaves me to comment a bit on the 4th box at the bottom there, which is the alignment of our organizations.
Now following the divestments of resins and functional materials but also the many acquisitions that we have done in nutrition we had said from the beginning that we would look at aligning our organization. This is something that needs to be done on a relatively regular basis. We're making good progress and the next phase of the rollout will actually be in September. And maybe actually we'll arrange a short call although it's not always of that much interest to the outside world maybe a short call summarizing the key changes Could be after the summer, to give you a flavor. And with that, Dimitri, over to you.
Yes. Thanks, Geraldine. Thanks for that and a quick update. Bear with us for a couple of minutes more And then we let the gate loose. But we'd like to give a bit of context on People, Planet And profit.
I mean we were certainly a people planet profit company. You talked heard Joven talking about a lot about the people aspects And the profit aspect, we also would like to have another time that people end the planet aspects to it. And everything is linked to what we Call the sustainable development goal. So it is a core value, but it's also a business driver. And we're not doing that on our own.
We're doing that also with partners, and we see that below on what type of partnerships we have done. And with these sustainable development goals, we developed a purpose led Performance driven strategy and you see that on the next slide and most of you have seen that slide. This purpose led performance driven slide It's built on capabilities and competencies. And if someone can move to the next slide, and that would be appreciated. Yes.
Here you can see that the sustainable development goals to fit a little bit the trends in the world, the megatrends in the world, And we compare that with what type of competence do we have. And then with that capability, we also have responsibility around 3 focus domains. And you know that we always talk about nutrition and health, climate and energy and resources and circularity, nicely linked to the sustainable development goals to create A growth company. Today, a growth company for now, but also for the future. If we then go to the next slide, this strategy and this execution of it is also clearly recognized.
We have an ambition to be top ranked in the ESG companies, we do quite a bit to enlarge our exposure to create responsibility for what we do. I'm very happy to say that most of them are also being recognized, and we're proud on that recognition. Net recognition doesn't come for free. You need to deliver on it. So let's go through the progress on sustainability ambitions in the next slide.
In the first half of the year, we have made quite some progress on 3 key Planning sustainability ambitions. Let me highlight 2 of them. Also closely linked to the commitment and the upgrade of our Commitment to half our greenhouse gas reductions by 2,030. Remember that we started the greenhouse gas target reduction already years ago. And we were pretty unique in that whole setup.
We were pretty unique also by asking SBTI to validate these targets. And we've made since then enormous progress. And you can see in the realization that on the greenhouse gas reduction, we have reduced 19%, 19%. And with that path and that track record going forward, we have reviewed Our commitments going forward. And you know DSM a little bit.
We just don't put a nice marketing statement out there that we want to reduce the greenhouse Guys, no, we also want to develop a science based road map to deliver on what we promised. And I'm very happy to say That roadmap now leads to a 50% reduction in 2,050 in 2,030. Helping the 2,050 commitment to be net carbon 0. And you've seen many companies out there in the world, you've seen many CEOs out there in the world We easily committed to net carbon 0 in 2,050, but the trajectory starts now. And I think BSN once this showed away, and therefore, I'm very happy to say that today we have committed ourselves externally as well to reduce our greenhouse gas by 2,030 with 50%.
It is helped by purchased renewable electricity. Remember, 5 years ago, Our renewable sources were about 0. And it shows that if you want things to happen, you can make things happen. And that is something which we have done over time and 69% of our purchasing efficiency to date is already renewed. And let's go through the other progress on sustainability ambitions in the next slide because it's not only the planet part, it also has to do with People plot.
And you see a few of these ambitions here, employee engagement, safety, one of our foundations of DSM, there's also diversity. I would like to highlight though the brighter leading solution bit. That is a metric to look at how much positive support we bring towards our customers, towards the value chain in helping them to create Brighter lives. And I'm also here happy to see that we are at 62%. But it's the start of the journey.
We obviously Would like with all our innovation that percentage to go up quickly. That with the measurements on sustainable ambitions, But we will continue reporting on sustainability. And if you go to the next slide, you clearly see that the net 0 by 2,050 is one of our key drivers going forward, but it's backed up by a few sharp commitments. So 2,050 indeed is our end goal. But we do that by sign based targets, by looking at scope 1 and 2 for 2,030 already, But also by applying an internal price on carbon.
We just recently agreed to move it up from €50 to €100 on top Just to further guide our investments and operational decisions towards a carbon neutral operation. Next slide, please. If you then look at our reporting, I think we're one of the few companies out there who already have reasonable assurance on our sustainability reporting. Remember, reasonable assurance sounds medium reasonable assurance, but reasonable assurance is the highest level Of assurance you can get on sustainability reporting. We feel that over time, There will be a reasonable assurance.
There will be assurance. There will be audits on all elements of how to run a company, on people, on planet And on profit. In that evolution of sustainability reporting, we will be proactive And creating more transparency going forward with new and future requirements. So also here, It's a journey, but we will certainly be corrected in that and create more transparency. That all being backed up by the reasonable assurance by the audited numbers On sustainability for people and planet like it is important for profit.
Next slide, please. And overall, I think to close the loop on our purpose led journey, I think it's key to understand that the Sustainable development goals are key for all we do, not for all sustainable development goals, but we pick the sustainability development goals Where we have something to offer, where we have the capability and therefore have the responsibility. Next slide, please. Then let's move from the overall context to the context of Animal Nutrition and Health. Let me put that in a broader context.
What do we see happening out there in the world? What is it where we want to build our company towards in the Nutrition and Health space, we see that healthful people and healthful planet is absolutely key. And that is depicted by 3 key trends we see. From a consumer perspective, we see changing behavior. We see preferences changing and we see increased awareness on how nutrition could positively impact your health.
This is the health for people aspect. Let's also look at the environmental part. You have clearly seen that there's more and more pressure On the emissions and the exposure of emissions at farming. Farming needs to become more sustainable. This is the health for Planet Park.
The emissions and waste in the whole food production should have a price. It contains a cost and therefore should be related to a price so that the innovation could work its way Two words, a sustainable farming environment. And then the society at large is playing a bigger, bigger role. They expect different things. Global population growth requires a food system revolution.
It requires to think differently Because in the world today, there is malnutrition and hunger on the one side and there is obesity and overweight on the other side. That has to change. It also has to change because we need to think about affordable health care. And these All these three topics, all these things together bring People, Planet, Profit closely together. And if we look if you go to the next slide, if you look 2050, let's forward to 2,050, where we have 9,700,000,000 people.
That is almost Not only from a food security, but also from a health care perspective. So we need to move to healthy diets. And that healthy diet has 2 parts to it. And if we move to the next slide, it has 2 parts to it, which I would like to highlight. A lot of people think that animal based proteins will be substituted by alternative proteins.
I think animal based proteins will go hand in hand with alternative proteins. I think the global population growth needs proteins And alternative proteins are absolutely key to the future. But it's still small, but it will have huge Potential. And DSM plays a role there, not in the Animal Nutrition and Health part, but in the Food Specialty, Food and Beverages part Separately. And we will play those.
DSM wants to play on all of these legs. So it's end, end. However, the animal based protein production needs to become far more sustainable. And if you go to the next slide, you will understand that, that will be an important role to play. It needs to be more sustainable.
It needs to be more efficient and affordable. But it's also a key societal economical factor. A lot of people work in agriculture activities, about 30% of the world population. And here the dilemma comes. And here sustainable farming is the solution.
And if you go to the next slide, I will show you that it has to become more sustainable. It has to become more sustainable out of an emission perspective, But also out of a biodiversity perspective, this cannot go on. And quality and safety needs to improve as well as food loss The waste, about onethree of the food produced is going into waste. That's no longer acceptable. So that Must change.
And if we then go to the next slide, I'm also having a positive message here. This not only must change, it can change. It can change with the innovation ongoing. It can change with the innovation DSM is offering and working on from a productivity perspective and economic perspective, from a health perspective, from a nutritional perspective And from an emission perspective, in this case, a methane inhibition perspective, but also nitrogen and also ammonia. So if we then go through the next slide, I will describe a little bit what are the key business drivers for this Animal Nutrition and Health business.
It has 6 business drivers because it makes good sense. It makes good societal It creates responsibility for the future, but it also creates business. And there are 6 drivers. I will not go through it. You have seen the pack, but I would highlight 3 of these drivers with some specific examples.
Let me go through the third example, the first example, and that's helping To tackle antimicrobial resistance. And if you go through the next slide, you will see what the issue is here. 50% to 70% All antibiotics are used by the livestock farming industry. That's no longer sustainable. Our mission is to replace that, to replace the antibiotic growth promoters with opioids, with others.
And we have a few of the innovations already. We have a few already on the market of which Balances is 1. But in this case, I would like to help highlight Vavofitale. The beauty is that it's not only a sustainable aspect to it Because it lowers ammonia and nitrogen emission, but it also helps the farmer to improve feed efficiency. So here it is end to end.
It is possible. Then the second driver I would like to highlight that is making efficient use of natural resources. That's the next slide. The natural resources are absolutely scarce, and we need to work accordingly to see How we work around this. And I think Dheermaers, I think Geraldine already highlighted it.
It's a fantastic innovation going forward. And The interesting is that the algae based solution is the way to go. Instead of fishing the ocean empty, you can create algae based fish oil. I find it amazing. I don't know if you are planning any holidays to the Mediterranean Sea, but it's amazing that if we make Veramaris to life, We can prevent wild catch fish, which are annually caught from the Mediterranean Sea.
I think that is a fantastic ambition and incentive to make this work. Then the last example I would like to share with you That is reducing emissions from livestock into the next slide. That is 14.5% of all greenhouse gas emissions today come from livestock. That also has to change, and the opportunities are there. There are plenty of that.
I will not highlight over there. I think Geraldine already mentioned it. I think you are aware of it. I would highlight maybe a product, an innovation made by DSM, which you're not so familiar with, Fevo Fitr. It's an illbiotic, Which here again increases the economics, the feed efficiency, but it's at the same time also reducing ammonia and nitrogen emissions By up to 20% in swine.
So all these elements are there. These are the drivers for the future to go for sustainable farming and innovation Is there to play? So if we then go through the next slide, I would highlight one of the key muscles which Geraldine and myself Explained to you last time at the Capital Markets Day, and that was about precision in animal nutrition. It was about personalization in human nutrition. It's about precision in animal nutrition.
And that's the next step in that journey to sustainable farming. I would like to show you a quick video to understand why this is really the future.
As the world's population grows, so too will the demand for animal protein. In fact, by as much as 70% By 2050, beyond the planet's boundaries, if we continue business as usual, there is increasing awareness and importantly, the acceptance that we all have a role to play from consumers through to producers in order to make real Improvements and sustainability. If we want to feed the rising population sustainably and responsibly, the time to change is now. Together, we must start to accurately measure, report, and improve on the environmental footprints production along with the existing practices on economics, food safety, animal health and welfare, credible and validated science space data will not only guide these improvements, but help to clearly communicate the results. Being purpose led, we at DSM Are listening to these needs.
We understand what needs to be done. And our response, SISTEL, an intelligent sustainability that will improve the environmental sustainability of animal protein production. SUSTEL combines the most Fast environmental footprinting calculation tool with expert sustainability and nutritional knowledge to create tailor made practical solutions and business Development projects, the result of which is to enhance the environmental sustainability and profitability of animal protein production. Several years in development, SISTEL brings together the power of the animal protein sustainability footprint tool, combined with the find with the independent expertise of Blanc and the advanced nutritional science and broad scientific network of DSM to deliver meaningful change to the sustainability of animal protein. Sistel unlocks the value of animal protein sustainability by evaluating and understanding The different stakeholders' sustainability needs and business opportunities.
Sistel achieves the seemingly impossible, simplifying the Complexity of measuring, validating, and improving the environmental sustainability of animal protein transparently, scientifically, Farm by farm, system by system, animal farming companies and the associated value chain has, for the first time, Our full solution to measure, compare, and improve the sustainability of animal protein Because we listened to everybody, because everybody has a role to play in producing the food the population needs sustainably and responsibly and Simply and within planetary boundaries. If not us, who? If not now, when? Together, we make it possible.
Thank you. That was a Sneak preview into the future. Measure, simulate and improve. This is what precision Nutrition is all about in the animal nutrition space. And this is done throughout the value chain.
This is from feed to farm To food, to fork. If we go to the next slide, two elements because is why we are So strong on this trajectory because it's happening today. The time is today. We do see today That there are eco scores being developed. Retailers are experimenting with sustainability food labeling.
And if you go to the next slide, you will see that this sustainable food labeling goes hand in hand with nutritional information labeling. And it's happening while we speak. This is not far, far future. It is future that starts today. And the time to change is now.
We are absolutely seeing it is happening. DSM is part of it because we have the capability. I If we have the capability, we also have a responsibility. And if we go to the next phase, I can't say it better than what was said in the movie. If not us, who?
If not now, when? We make it possible. Thank you.
Here. Thank you, Dimitry. Indeed, time to start the Q and A session. We're running a little bit behind, I think about 15 minutes, but that's not a problem from our perspective. So I hope that the audience can bear with us for that time.
We've got 17 sell side analysts in our Zoom meeting for this Q and A. You will see these analysts when they ask a question, but there will be a short delay between, let's say, them coming up and you get it through on your screen, all the other viewers who are not participating through the Zoom meeting will be in a listen only mode. And before we now can start, maybe operator, you can give a short instruction to all the Zoom participants how we're going to operate. Operator?
Hi. To the sell side analysts in the Zoom room, if you would like to ask any questions, please use the raise hand feature at the bottom of the zoom screen keeping it up until we are ready to take your question. So So we will take our first question from Andrew Stott. We will now move you into the room. Please
Bonnie, can you hear me?
Hi, Andrew. Yes, we can
Hi Geraldine. Hi Dimitri. Hi Dave. Thanks for the presentation. I have 2 questions.
Thank you. First one was on the supplements business. It seems to be outperforming some of the data from competitors and I just wonder if you could explain how you think you're doing that in Q2 and also if you can map out the second half thinking as well around the whole supplements business. And just staying with this area of human nutrition, Is there any way you could quantify the ELN performance? I assume it's negative in Q2 year on year, but if you can quantify it in some way, that would be helpful.
If you can't, can you give me an idea of how it performed versus Q1? Thank you.
Thanks, Andrew. Dimitri, do you want to jump in?
Yes. Let me do that. Thanks. Nice to see you, Andrew. It's a bit of trial and error with the technology, but I think it all works.
So thanks for that. In the dietary supplements, I think a good observation. I think we are very positive on what is happening in the dietary supplement front. I think it's fair to say that what we see in terms of growth Is it clear mirroring of the immunity awareness of many of us in the world? And we do feel that, that is there to stay.
So what we do see is that with opening up in the economy, people still realize that vaccination It's not immunization. So it still makes it worth to think about your health. And I think what we've seen is that the dietary supplement space And a pre COVID growth of around mid single digit. We now feel that at least mid single digit because of the more Health awareness going forward. And that is absolutely key.
But the growth is from a higher base because we made a step up in that. So it's a double plus From that perspective. The second half, we also see solid order portfolio. We see that continue. We also know that in the dietary supplements space, we have our eye health business, which is very strong.
It's about 30% of that dietary supplement sales. That is very strong. We're also globalizing that I Health business, which was predominantly U. S. Based in the past.
And thirdly, we are working on market ready solutions. So we work with customers To quickly bring immuno optimizing ingredients to the market. So it's surely also a path forward, not only banking on the good trending of the dietary supplements, we also take specific actions on it. Then your second question was on early life. Well, you know that, that space is a space with a few So I need to be refraining from a lot of information at that perspective other than macro trends having an impact on the global birth rates.
And that is basically the growth is not helped by the ELN segment for us. And the ELN segment is about 20% to 25% of the total H and H sales overall.
Yes, sorry, Dimitri. Can you just spell out whether you've actually seen an improvement in Q2 relative Q1 on a year on year basis or not? Give an idea of the direction.
For year end?
Yes.
No, we didn't see a change from Q2 to Q1.
So similar to Q1. Okay. Thank you.
Thanks,
Andrew. We will now take our next question from Nicola Tang Exane BNP Paribas. We will now move you into the room. Please turn your camera on and unmute yourself. Thank you.
We're struggling to get Nicola in. Yes.
I think we might be having some technical issues there. No worries. We will try again in a moment. Next, we will take Sebastian Bray from Berenberg. Please be aware that you will be moving in
Okay. Now we have Nichola and Sebastian. So, Nichola, if you unmute, maybe we start with you.
Hi there, everyone. Sorry, Sebastian. Nice to see everybody. And thanks for the presentation. I wanted to ask 2 quite separate questions.
The first was, I guess shorter term and the dynamics in animal intuition in the second half. In your remarks, you talked about no Stocking or destocking. But I was wondering what you expect as in the second half, do you expect a kind of normalization of the logistics issues and perhaps sort of Stockpiling that we've seen, especially as I guess some of the temporary supply issues that we've had in the space start to normalize. And then the second question was a longer term one on your Scope 1 and Scope 2 emissions targets. I was wondering if you could talk About the relative emissions from Nutrition and Materials, on an absolute basis, your emissions profile, Scope 1 and Scope 2 is not necessarily High, but certainly relative to the rest of the ingredient space, it's a bit higher.
So I'd inferred from that that the majority or larger share of the emissions was coming from materials. And if that's the case and given your more ambitious targets and also your sort of higher carbon pricing assumptions, Does that change at all how you're thinking about owning materials or how you think about managing materials over the long run?
Okay, great. Thanks very much, Nicolas. And let me maybe kick off with Animal Nutrition. So here exactly, so what we're seeing is good business conditions Pretty much across the board, which is of course helpful. And also if you think of Q3, we have actually a similar situation in terms of the comps, in terms of a relatively weaker comp in Q3 normalized in Q4.
But of course, what we also know is that in Q1, we saw this sort of stocking on top of the high Q1 and a little bit when do we see this normalization of inventory levels. So we are factoring in and of inventory levels. So we are factoring in, in our overall outlook, the fact that we expect that to unwind Progressively, it's difficult to call out when I have to say. So is it Q3? Is it Q4?
But maybe we're going to see something like a 2% if we split. Imagine it splits a little bit over the remainder of the year. Maybe it's about a 2% across Q3 and then across Q4. So those are the Marigba. So all in all, that still puts us pretty nicely, probably in the mid single digit for animal nutrition.
So that's how we are looking in terms of those pieces. And then Dimitri, do you want to cover the scope 1, scope 2?
Pleasure. So the total scope is at the current scope of DSM. So 80% is Nutrition and Health, 20% Engineering Materials and Dyneema. The differentiating factor on where to reduce greenhouse gas has more to do with Some of the plans and where they basically use energy, and you know that also some of the plans we have in Nutrition and Health are the big plans. So there we have enormous energy saving programs running with some small investments and then we have a huge outcome.
The second element which the biggest part of that progress is that what we have seen is that if we acquire companies, then they normally come in with a worse environmental In stages then the standards of DSM. And you've seen that we have done quite some acquisitions. So as part of the acquisitions, we always ask ourselves Question, how does that impact our sustainability profile? How does it impact the greenhouse gas emissions? And if they go up, there needs to be a mitigating plan.
That's always part of the acquisition approval when it comes to Geraldine and myself. So what we do see is that in certain big M and As And certainly, big M and As in China, we have a huge progress to be made. So that is also driving that target. And then thirdly, What you do see is that renewable energy is absolutely key to reach that target. We were at 0%.
We're now at 69. We've made huge progress in Europe and in the America. Our next step needs to be in China where we have a very Good manufacturing footprint. Then we need to come to renewable energy as well. So it has partly to do with M and A, partly to do with region And to a lesser extent, your question on where is it in Nutrition and Materials, yes?
That came a bit of background.
Thank you.
Yes. Thank you, Nicola. I don't know if we lost Sebastian in the meantime.
Yes. We will now take a question from Sebastian Bray from Berenberg. Please turn your camera and unmute yourself. Thank you.
So hello, everybody. Good afternoon. Can you hear me?
Yes, we can. Welcome, Sebastian.
Thank you. Thank you for the presentation and indeed for taking my questions. I would have 2, please. The first is on forecast growth If I take the figure that Dimitry mentioned earlier of $1,700,000,000,000 and take that out to $3,000,000,000,000 by 2,050, The implied CAGR is about 1.1%, which if you assume, let's say, we have 1% a year pricing inflation, would imply no volume growth in the market to meet over that period, is that an assumption you're comfortable with? And if so, is 5% per annumorganicgrowthinanimalnutrition achievable in the long term.
That's my first question. The second is a financial one. JV and financial expenses have been rather volatile over the last few quarters. Could you give us any hints on what we should expect on an annualized basis from these?
Thank you.
Okay. Let me start with the easy one, and that is the JV and the financial expense. Well, it's not that easy actually, [SPEAKER MARIA DE LA CHEVARDIERE:] Because there is no straight line on those lines. What happens on the financial interest line, by the way, is that some of the contracts on energy Create quite a lot of volatility because of fair value adjustments. So what you're seeing there is typically that's the swing.
But if we look at from a guidance point of view, the financial expense for this year, we're looking at 110 to 120 Versus prior we were at 67. And the movement there is not actually the cash out on interest, it's the fair value adjustments that now under Far as go through that line. So probably good to know that the cash element is closer to a steady sort of €60,000,000 So Sorry about the noise but that's that is IFRS. Now when it comes to the associates there what we had last year by the way was the impairment of Poets and that's why you had a one time negative so you see a nice step up in our associates performance But that one I would say is a little steadier. But we can give you a bit of a breakdown offline if that is helpful.
That is why you had such a jump between prior year and this year for H1. Now when it comes to the meet dynamics, Dimitri, do you want me to take it or do you want to take it?
Yes. No, my pleasure. So be aware that we are not in meat production ourselves. We are in the ingredients, right? So we basically are in the ingredients to make it more sustainable, more healthy going forward.
So That is an area which is growing faster than just the meat production because we are in the specialty area. So either nutritional values On minerals or the enzymes or the ingredients, which we place antibiotics, it reduces emissions, partly We'll not even be in regions that will be serviced. So we feel very comfortable with the mid single digit organic growth in that space because It is in specialty part. It's an innovation part. It is triggering some of the trends going forward.
So you should not compare the meat production with the growth with what we have to offer. So you need to distinguish those 2.
Understood. Thank you for taking my questions.
Thanks for coming.
And next, we will be taking a question from Sebastian Satz From Barclays. We will now be moving you into the room. Please unmute yourself and bring your number on. Thank you.
Hello, Nir.
Hi, everyone. Sorry, it took me a while. And I've got 2 questions as well, please. And the first one would be on Bovair And just on your guidance of a couple of €100,000,000 revenues in 3 to 4 years, you said it could potentially be higher than that. Assuming that the Demand shapes up a bit more positive than you're assuming it in your business case at the moment.
What kind of capacities do you have in place already? And how much revenues could you generate from those? And assuming you would need to build a few new capacities, how long would that take? And what kind of CapEx implications would that have, please? And then the second question is on Glycom.
Unless I've missed this, I don't think you provided an earnings number This quarter, I think you did that in past quarters. Could you just tell us how the business has done and also how the performance has been and how you think about Approvals both in China and the U. S. Going forward.
Thank you.
Sure. So first on Bover. So indeed, it's a little bit because it's a new space. It's not easy to be certain how we're going to be able to ramp this up. Now the capacity we have in place in order to meet the commercial launch.
So we are able as soon as we have clearance to get going And we will over time then see the pace at which we go and determine the kind of capacity expansion and CapEx. So we haven't yet So it disclosed what sort of investments we will be looking to make in order to reach the kind of ramp ups that we're getting to. One step at a time. We're first getting that regulatory clearance. We do have though some customers signed up, which is really great.
So it's not just hypothetically wait till the clearance and then discuss. All of that is happening in the background. We also see basically that the environment is very, very supportive with the EU Green Deal amongst others. So it's all looking very good. And then as we progress on using the existing capacity, we will share a little bit what the trajectory will be in terms of capital investment and ramp up.
So that's where we are on Bover. And then Dimitry do you want to give the Glycom update?
Yes, super. Indeed, Glycom is now fully integrated in our early life nutrition business. So it is now integrated in the area, DHA space. We also know that we have approved HMOs in Kultorel. So this is a year after integration went well.
So that's the reason why we don't report it separately. But I can give you a bit of background on the numbers. So in 2020, we had about €7,000,000 EBITDA per quarter. In 2021, you've seen quarter 1 around €10,000,000 Quarter 2, about €8,000,000 So let's say, on average €9,000,000 EBITDA per quarter. So quite a step up per quarter.
And we expect a step up of around €15,000,000 from 2020 to 2021. Important point is the approvals. We're already approved in the U. S. So we're working with customers for HMOs containing launches.
And in China, we have required regulatory approval, and we expect that somewhere end 2023. It's a bit of a black box, obviously, but there's a lot of push to make that work also from a China perspective. So we need to have that regulatory approval before we can start launching products. But overall, a bit of a delay in initial phase of COVID, where people were a bit hesitant to go into all types of approval processes in their labs. But I have to say that it's slowly opening up, and we see quite some traction now also on the approvals and lab work done.
So overall, I think a step up versus where we started from last year.
Great. Thank you very much.
Thanks.
Next, we will have Matthew Yates from Bank of America. We will be moving you into the room now. Please
Hi, everyone. I hope you can hear me and see me.
I have a question.
We can hear you. We can't see you, but please go ahead.
I'm sorry. It's only been 2 years of lockdown. You would think I'd mastered Zoom by now. Right. I had a question about what you call your other nutrition business, which is €1,000,000,000 of revenue.
It's not a small business. My question very simply is why do you call this other? Because it gives a bit of the impression of being somewhat miscellaneous and non core. So I'm just wondering about internally how this business fits into your kind of matrix model to leverage The benefits of the Nutrition platform. So is there a distinction here between how it's run internally versus how maybe it's presented To the financial markets.
Very nice question, Matthew. I see you smiling, Dimitri. Do you want to take this one?
I'm very happy to hear that question. I think Matthew would remember that when I started this Go CEO, I was making jokes. And let me tell you a little bit about this other nutrition stuff. By the way, that's By the way, that's SEK1 1,000,000,000 in terms of turnover. So it's not nitty gritty.
And it's absolutely key as being part of our health and nutrition And business. So why is it being reported separately? Because today, it is managed separately. So Food specialties and hydrocolloids were and are 2 separate units and have their own P and L and their own organization. The same for personal care and aroma.
So that is why she ended up at other nutrition, but it fully fits into our health and nutrition space. So I think it's it is also something which we're working on to see, hey, in terms of route to market, is that the best way going forward? And Geraldine aligned it quickly on some of the realignment of some of the organizational route to market. So this is something which we're thinking about it does make sense because for instance, in DFS, there is quite some overlap with the food and beverages. So there is overlap in route to market to customers.
So a fair point. It's on our radar screen, but it's derived from the fact that today, food specialties is run as
Perfect. Next, we will be going to Mubasher Chaudhary from Citi. We will be moving you into the room.
Hi. There you are. Welcome.
Thank you. It's all working very well so far. I see. I had a couple of questions, please. Can you talk about your margin expectations for materials going forward going to be kind of potential weakness or potential kind of supply chain headwinds expected into the second half.
There's some comments around that would be helpful. And On the JV and associates side of things, are you able to provide any timeline for when the remaining parts of the clinical in this business Or when we can expect that disposal or some news line around that? And then just finally, on slightly on the long term, The only efficacy and the ambitions around the around your portfolio of product and the current meat market, can you talk about your Assumptions behind the €1,000,000,000 to €2,000,000,000 market size. Maybe I'm a bit too new to this, but this feels quite Small compared to the overall meat market and it just feels like is it kind of a penetration ratio or something? What's kind of driving that market size assumption?
That would be really helpful.
Okay. So let me start with the margin because indeed it was actually a mistake on my part. I forgot to comment on it in my opening comments. So What you see in our materials margin for the first half and particularly in Q2 is it is very high. It's at 24.6%, Which if we take a more normalized margin for materials businesses in the new scope, so on the continuing operations, it's more around 21.
The reason for the high margin in Q2 is really the positive pricing momentum and actually the fantastic work done by our teams to really stay on top of what is an inflationary environment out there in terms of raw material costs, but also In terms of logistics and transport costs and these are things that we're very proactive and to the nature of our portfolio, which is very much specialty portfolio, these are conversations that one can have with customers, but you have to stay on top of it. Now therefore, looking forward, please let's not extrapolate 24.5% as the new normal. That is not the case. But we do not feel that you know we have a major margin challenge going forward barring maybe a bit of a timing gap sometimes, you know, there's a little bit of a temporary squeeze, but it really depends on that momentum. So thank you for raising the question That was actually a mess on my part.
Now in terms of the associates, indeed, we've divested with CVC the part Of AOC, which will bring this €300,000,000 also in the second half. The remaining Stake in associates is actually an anchor. It's a 35% stake. And there is no specific timing we can I mean we are a minority shareholder in this? It will be a value creation decision when the best timing is for that to be monetized.
So I'm afraid we really I'll provide any forward guidance on that. It's very much an alignment of buyer seller market conditions And we will see when that happens. But obviously over the years we've actually generated a fair amount of liquidity through those divestments over Which is nice to see. And I don't know, Dimitry, do you want to comment to the market potential of SEK 1,000,000,000 to SEK 2,000,000,000 on Bover?
Yes, let's try to give you a bigger background. As you may know, there are about 1,000,000,000 cows in this world. I didn't know, but when we started Bover Alhur. Out of that, the Bover 750,000,000 is for beef and Bover 250 It's meant for dairy. With Bovair, we are predominantly first focusing on the dairy caps because there we see we get a premium in terms of sustainability.
We work with key brand owners who position it as sustainability. And these cows, you feed 1 spoon a day For this methane reduction of 30%, 40%. And if you calculate that well, then basically, we say it's around SEK 1,000,000,000. But you can imagine that is don't quote me on behind the comma, right? This is a rough estimate on the back of an envelope, But with a bit more content to it than only the back of the envelope.
But it's only a small part of the total. So if this is really working, obviously, we have Expansions possibility outside only Dairy Accounts, but we started with Dairy Accounts first.
That's very helpful. Thank you.
Thank you.
We will next go to Ayesha Sharma from Stifel. We will be moving into the room and please turn your camera and microphone on. Thank you.
They're testing our patients.
Hi, Sharon. We see you now.
Hi, good afternoon guys. Nice to meet you. This is the very first time. I wish it were more personal rather than virtual, but this is still the next best option, I guess. I have a couple of questions on your innovation pipeline, please.
As I understand, there's good progress on the methane inhibitor space with start ups Like Agilent and Nutra and they seem to be quite ahead of the curve. So I would like to understand how Bovera is positioned in this space and how you differentiate yourself from the other, methane inhibitor feeds that are available. On Veramaris then also you seemed much more optimistic last year with an indication of even possibility of doubling your capacity. But the targeted sales don't seem too ambitious. Is this just a COVID driven thing?
Or Is there more to it than that? And then the last one, if I can squeeze one more in, is on Eversweet. There is different processes to make A stevia based sweetener, right? And as I understand it that you do not exactly get a non GMO certification that When you use a fermentation process. So is that true?
And how does it work in the bigger scheme of things? Are you confident of your product? And again, in the same way, a little bit more on the competition comments on competition would be great.
Sure. So let me start with the Bovair and Andres Amaras. And nice to meet you virtually. So So when it comes to Bovair, I think it's very important to highlight that this is a technology that we've been working on for 10 years plus that has more than 45 very sizable studies involving I think we estimated in excess of 10,000 cows across a huge number of countries, to validate the science, not only the science of, you know, short term Methane reduction, but really the long term impact on the animal, on the milk, on the meat, on everything. And just to add some statistics 35 peer reviews to go alongside with that.
There is nothing out there that has the similar level of scientific backing, because the vast majority of the other solutions that are out there are seen as a feed ingredient, be it an essential oil or garlic or something like that. And therefore hasn't gone through the scientific scrutiny And the validation that Bover has had, that's the reason why I have to say that when we talk to either governments like New Zealand, who is the 1st country to have an actual target on enteric methane reduction or to the EU or to all of the customers that are interested in on the dairy space, we are the credible long term party that they are talking to. So that's really how it's going now. The fact that there are other others out there looking at this, I think just shows that this is not as quirky as it may have sound when we launched it as the clean cow many years ago people looked at us and going what are you doing innovation on? And it really was seen as a very peculiar topic to be working on.
And now you have the Burger Kings who want to have low methane burgers, etcetera. So It's become a very valid topic of conversation and that is actually what is fantastic is that this is coming to fruition at a time when the background and the backdrop from a regulatory but also a societal point of view is perfect. So that's how I would position us versus competition in that space. Then in terms of Veramaris, to your point that there's a little bit combination Veramaris did take did suffer a bit not because of our technology or our ramp up or anything to do with us, but really the salmon industry. So what we're seeing is that, of course, during COVID, it really suffered from a salmon pricing point of view, which made it a bit harder To onboard some of the retailers to because they closed the fish counters and things like that.
So it was very much of it on the back foot. But what we're seeing now is with the reopening of the economy, this is going better. And in that sense, So we have some nice developments. For example, in Norway, 6 out of the 10 leading fish farming companies are with us. We're seeing good growth on the shrimp growth as well, because it's not just salmon, it's also the shrimp industry.
And we're making good progress on the discussions on the application as well for pet food, Because there's actually a lot of these oils that also go into pet food. So in fact we're very comfortable and confident that this is heading in the right direction. What we're mentioning here is actually the sales of the existing facility. And so the 150 it's really the capacity of that site. Now it is a fermentation process and therefore you know the yields can improve beyond that and you can do debottlenecking and take it a bit further.
But now we've decided okay let's focus, let's bounce back from this slightly soft market backgrounds and really get the ramp up going as you know we hope the economies and particularly the restaurant industry and the retailers sort of give a tailwind to the salmon industry in the months and quarters to come. So that's the In the months quarters to come. So that's the backdrop on Veramaris. And then EverSweet?
Never sweet. Yes, it's a GMO free product. So it's not in a few mobile flight. That's also how it's been done. Obviously, it's a fermentation process where we use bugs to fabricate the product.
That's also the beauty of the product, by the way. It is difficult to say something objective About the quality of Eversheet compared to others, because I'm subjective because I'm the co CEO of this company. So everything But I think it's the best in class reference by far in the industry. And I say this as authentically as I can, I also have a reason to tell because it's we are the unique technology where we could wrap them and wrap we be together where there is sensory benefits to it? So that plays an important role if you're going to create a mouth taste.
What I've learned from our customers is that's absolutely key and we are absolutely investing fast. In addition to superior stability, because if you want to do a mixture, you need to have a superior stable product. And those two elements, we are absolutely best in class. Nevertheless, in this market, like with other innovations, like Jurgen was saying on Voura, if there is competition, we don't see that as bad Because we're going to develop that market together. We need to go to a society where sugar is being reduced.
Sugar is not good for your health. We need to find alternatives to that. So apart from the fact that that absolutely objective that we have the best technology and the best product, even if there will be a competitor, I mean, it will not hurt us. Maybe it will accelerate to the market expansion going forward. I hope that gives a bit of background.
That's super helpful. Just if I may, so the labeling of the product cannot be you cannot say that it's non GMO. You don't have to say that it is GMO, but you also cannot claim that it's non GMO because of the fermentation process. Is that a correct understanding?
No, we can label this GMO free. But obviously, you need to create all types of requirements just to make sure that you can register as such, Right. So with that product, it is key to work together with your customers. In our processes, it's a GMO free product.
Understood. Perfect. Thank you both. Thanks a lot.
Thank you. Now looking at the time, I'm going to call in Dave and just to see with the operator how we're doing on the queue of questions, because I do realize we overrun a bit on the presentation. So I don't know if we want to keep going another 10 minutes or so.
Geraldine, we currently have 3 people waiting for
I suggest indeed that we do those 3 then and then so we take a look. Okay. So
let's do those 3 and then we round off. Thanks. Perfect.
So next, we have Martin Roediger from Kepler Cheuvreux. We will be moving you into the room. Please unmute yourself and turn your camera on. Thank you.
Hello. Can you hear me?
Yes. We can hear and see you.
Thanks. Two clarification questions. First on Bover. This sales target of SEK 100,000,000 in 3 to 4 years, Is that solely based on the regions you tackle for commercial launch, I. E, European Union, Australia and New Zealand?
Or would that figure be higher if you launch the product in other countries such as, for example, the United States or in China? And Are there any regions or countries where you will not at all launch that product? That would be our first question.
And you have another question?
Yes. The other question is on Veramaris. Just to clarify here, In former times, you saw the sales potential of being between €150,000,000 €200,000,000 for that. And now you say SEK 150,000,000. I understood what you said about the COVID pandemic and therefore the delay.
But is that softer outlook for the sales potential by having the same capacity? Is the outcome for that, that your the standard farmers are asking for a lower price for their product? And therefore, you had to, let's say, recalibrate then the sales potential.
Okay. Good. Thanks very much, Maarten. Let me start with Bover. So indeed, the current sales projection is in the markets where we see that we have the chance to, of course, Get the registration and those who are waiting for the EU registration to move.
So for instance, we know that in New Zealand, they're very keen to see the EFSA clearance come through. Of course, the whole of the European space will be covered by the EU clearance. And for instance, we see that Australia technically would we would be able to commercialize already. But they are also keeping an eye on the European registration as a kind of a validation. So this kind of 3 to 4 year potential So is really linked to the geographies where we know that we will have an ability to commercialize once we unlock the European registration.
Now there are other geographies that we can contemplate, But the timelines will vary. One of them is actually well some of them are in Latin America interestingly. There are countries like Uruguay that are really looking at the footprint of their bovine population, let me put it that way. So there's a lot in the pipeline of work looking at which are the countries where governments are also expressing a strong interest relating to the Paris Accord and the impact of methane in that picture. And as you know we also did quite a lot of trials in North America, in Canada amongst others and that would be a geography that comes a bit further down the road in terms of To commercialize.
So that's broadly the picture from a geographical point of view On Bover. And then on Veramaris, Dimitri, do you want to comment on that one?
Yes. On Veramaris, indeed, we always We have a range. Remember that we now say 150 for the next 1 to 2 years, meaning it's a shorter period. And you also know that this is fermentation processes. So the bottlenecking expanding is part of it.
So I would not be too hang up on the range. We have seen that Veramaris have has passed the station over a scale up. Basically, it is commercial business, tens of millions of business, which we have seen last year, and we see that happening. So in that sense, I will review it as such. So we always get questions, are you interested in buying a new plant?
And then we said, well, let's fill the first plant first. Remember that one plant It's about 15% of the total market. So it's more in the range to it. And also in terms of the timing, which we've been in the next Thanks.
Thanks, Martin.
Thanks. Our next question will come from Massimo Onus Oli from Equita. We will now be moving you into the room. Please turn your camera and mic on. Thank you.
Massimo, we can see you.
Hello, Geraldine. Hello, Dimitri. Nice to see you. I'm curious to hear if you have any thoughts on the 5455 program package of the EU, both the direct and indirect implication for DSM, I would have assumed a more aggressive stance on emission cuts In Agriculture and Farming, I see you are pretty confident in regulatory approval in EU For second half, for Bover. So any thoughts about?
Timon, do you want to take that?
Yes, thanks. Grazie, Massimo. Good question. Fit for Growth, Fit for 55 is absolutely key for European Union, but it's also key for accelerating innovation. So this is absolutely good news for us.
It will drive people to rethink about their greenhouse gas emissions. And I've just indicated in my Animal Nutrition and Health presentation That is all about emission, yield and health. So this will help us going forward. Secondly, it will help the value chain. You've seen that we also committed To extend our greenhouse gas emission in absolute terms to half that in 2,030.
So in that sense, it's also in line. Be aware that the 55 target Of von Stiemermans in the EU also includes service companies, banks and the likes, right? So that's a bit easier. I think We as a production company committing to 50%, I think is really good news because it means that the value chain, all players in the value chain Have to improve on their emission standards. And that will help emissions, that will help our innovation Come to life and maybe in a more accelerated form.
So we still need to see what the approvals will be and how quickly all will be implemented. But DSM is all supportive for that, not only because of we feel it is a human responsibility to look forward for our next generation, But also because it business wise helps us in accelerating the innovations.
And Massimo, maybe to your point of you know, the broader ambition. So I think what you're seeing versus the agricultural space and it was also very apparent in the pre UN Food Systems Summit last week is actually the livelihoods linked to agriculture. I mean, when 30% of people are involved in food production, you see there a little bit the tension with some of the political decisions taken around food. But we are very, very supportive, as Dimitri said, when it comes to the border tax, although we would much rather that the fight against climate change be global, this may be a necessary and useful step in the meantime. And maybe one last piece around that is that we've increased our internal price on carbon, as Dimitri had presented, to €100 per ton, very much reflecting the We expect carbon to keep going up and have a meaningful cost.
And that is driven by, of course, the policies taken by the European Commission on the on the whole trading platforms. So you know very supportive. And of course I think over time you will see a bigger Or stronger correlation with food production and agriculture over time.
Thank you.
Thank you.
So our last question will come from Fernand Devaugher From the group, Peter Pan. We will be moving you into the room. Please turn your camera and microphone on. Thank you.
Maybe audio, but not on screen.
Yes. No. Hi,
Fernand. Can you hear us okay?
Yes, I can hear you. Can you hear me?
That's nice video.
It doesn't go on.
Okay.
Camera should also go. It's because most questions have been answered. So thank you for that. Very briefly, you mentioned that you are going to announce some restructuring organization restructuring in September. Does that come again with some restructuring charge of has those already been taken in the first half?
Because if you look at the last few years, every year, there has been quite a sizable amount of restructuring charges. So it's going to be a kind of habit in my view.
Good to answer.
Okay. Yes, Fernand, thanks. And we do see you now actually. So welcome. So maybe just to so what we're really looking at is predominantly realigning our company.
So looking at the impact of the carve outs And of the acquisitions and how we organize ourselves. And that has been the fundamental part of what we do. Now as a company, we have from time to time to also So look at our efficiency and that is something that all companies need to do. So we're not announcing necessarily a restructuring, but more the how does the realignment work going forward and taking DSM forward in the right alignment with our end market. So It's very much what we were referring to in November and we've been doing a gradual rollout and the next phase is in September.
Now occasionally, the one time expenses that we need to take in order to structure our company correctly, We always find that these things are worth doing unnecessary. And this is part Adjusting to a changing world is that you have to adjust your company, but that's more of a generic reflection on your comment.
Okay. Thank you very much.
Thanks. Now I think I will therefore wrap up on behalf of Dimitry and myself. Firstly, thank you for bearing with us. This is a new technology, new platform. So we have to learn a little bit the timing and how it it works, but hopefully you found it useful and more engaging than just the voice only earnings call.
Key messages, very strong first half of the year, very confident outlook on our nutrition business, both in Animal Nutrition and in Human Nutrition [SPEAKER JEAN FRANCOIS HENRIK SUNDSTROM:] And in materials, a fantastic first half, amazing work from our colleagues, but with a bit of a warning in terms of the extreme tightness in the supply chains in the second half, nonetheless, all put together an increased outlook to mid single digits Sorry, mid teens EBITDA growth for the full year. And with that, I thank you for your time, your interest in DSM and look forward to Speaking with you all very soon again. Bye.
Stay healthy.