Wow! Here he is. So why dream small if you can dream big? That's what we've done. We are dreaming big. You have dreams on your own; this jar will be with us for this day. So if you have dreams for DSM-Firmenich, just put them in. You have the opportunity for the whole day. I'm not guaranteeing all dreams will come true. We'll get a bit of a feel on what you think the dream for DSM-Firmenich is. Today is about the dream we have, building a company where we bring progress to life. The dream all started, poof, a couple of years ago, and we announced it two years ago in Paris. I think that was quite a moment, and you see the room on the screen. Remember, we just closed about a year ago, so we just recently celebrated our one-year anniversary.
I don't know about you, but when I was one year or a young kid, that was an exciting anniversary, and it still is. But it shows the journey we are on, and that's exactly the journey of today. I wanna show you the steps of that journey in bringing progress to life and filling that pot with all types of dreams. And it started with the dream a couple of years ago with the signing and closing last year. What was the merger? And you see that here on the screen, the merger part, bringing two iconic companies together, and like Ralf said, in pretty difficult market circumstances. And I'll come back to the measures we're taking a bit later.
We've decided, in that context, to review our portfolio, and in February, we announced to the world and to all of you, that we find a new home for ANH, because we think it's better served for ANH, as well as for DSM-Firmenich, to be more human-focused, consumer-related company. That's the step in the journey which we've seen here, which we call focus. Then, with the consumer-focused company, we have pulled forward the review of our portfolio. Originally, that was planned for 2024, but in the current circumstances, we did that in 2023, and the outcome we'll present today with you. So we looked at our portfolio. We looked at where we would accelerate, where we wanna grow, and maybe where we wanna deprioritize. And then we'll end up in a phase which we call accelerate.
An accelerate phase will be grow the company we have, grow what we have, grow what we have decided for, and we'll run you through, and throughout the day, you get a bit of a feel in the breakout sessions, how we're gonna grow what we have. That's the journey of today. Let me lead you through for all these steps, a little bit with a bit of color from our side. Let's start with the merge part. If you are a bit confused where you are on the journey, you see it on the screen, merge. I go to focus, I go to tune, and then I go to accelerate, right? Then you know where we are on that journey, because it went pretty fast also for ourselves, so it's good to remind you. I'll take you through that journey.
On the merger part, difficult market circumstances. You see that here, and we've addressed them pretty strictly and rigorously. We accelerated our synergy program, our integration program, and I think we've already seen the measures of success. Last year, a little bit with full, full throttle, also this year. Secondly, we started our vitamin transformation program, also with delivering the savings, last year and this year. And we've pulled forward our portfolio review, and we decided to have ANH find a new owner and have DSM-Firmenich with a consumer scope, more into health, nutrition, and beauty. And within that ANH strategy, we reviewed a few dimensions while we came to that decision. First of all, you see the market cyclicality, the volatility in itself, and you see a little bit of the extremes, and ANH is a bit more volatile throughout the cycle.
Second element which we looked at in ANH was the capital intensity. With its fantastic infrastructure of assets on vitamins and ingredients, it also requires a slightly more capital expenditure and investments to keep that up to par. If you run these assets, you need to run these assets up to par, and we have seen many examples over the last 5 years -10 years what happens if you don't. I will not be specific on the example, but if you run it, you need to run it safely, and you need to run it credibly. So this business is slightly more capital intensive. Thirdly, if you look at the third reason, if you look at the integration part and remember the synergies which we put out, the EUR 350 million, of which half was cost, half was revenue synergies.
The revenue synergies were predominantly in the other business units: Perfumery & Beauty, Taste, Texture & Health, and Health, Nutrition & Care, not in Animal Nutrition & Health. So also in terms of cohesion, we think that ANH is better suited with a new owner, and we focus on the consumer part. Then on that process of ANH, a few timelines, because we also get questions, "Oh, Dimi, can you already announce a deal?"... If you know that business a little bit, it will take some time to carve it out. It was already a separate business unit within DSM-Firmenich, but there are interrelations and assets, carve-outs would need to be made, let alone IT systems and legal entities.
So we are in the midst of that carve-out procedure, and we try to finalize that a little bit towards the end of this year, so that in the first half of next year, the first half of 2025, we can start the transaction process. With the ultimate goal towards the end of 2025, but don't pinpoint me exactly on the right date, but towards the end of 2025, to have a deal which is signed to close, which still needs all types of governmental and external approvals. That's the timeline for ANH. Well, if we then have that company with ANH put somewhere else, we have our consumer space for DSM-Firmenich. The consumer space plays in the market where we really feel the macro trends are helping us, and let's share three of them.
There are many more, and throughout the breakouts and presentation of the BU presidents, you will see a little bit more. But the first trend is lifespan vitality. In every phase of life, health, nutrition, and beauty plays a more and more important role, which definitely help us. Even in the younger generation, the percentage of health, nutrition, and beauty products are even increasing. Secondly, preventative health. Today, all the healthcare costs in the world is about curing. About 80% of the healthcare budgets are around curing. So it means basically, we wait for the people to become ill, and then we start thinking on how to cure them. That's a very silly way. If we would operate our company accordingly, we will be bankrupt in a minute. But we do that for healthcare, to be frank. Only 20% is spent on preventative.
The good thing is, we see things changing. Governments finding the deficit important, they want to find ways to reduce that. Healthcare insurance companies are looking more for preventative healthcare, and that will switch to 50/50. So that's an enormous market growth from 20% to 50%. And just a small detail, a bit of a shocking detail. I didn't know, but Philip Eykerman told me, that 80% of the healthcare costs are spent to people who are in the last ten years of their life. That's scary, right? Luckily, we don't know exactly what the last ten years of life will be, but it's a scary thought. So it has to change, and it will change, and we see changes upcoming. Thirdly, wellbeing. If we look at the world, if we look at the pace of change, oh, people, people are sometimes lost.
They look for a bit of self-reflection, a bit of self-care, and there, wellbeing, fragrance, and beauty comes into play. We definitely see that in the younger generation. I think the use of fragrance and beauty is considerably higher than the average of the population. In this field, we play. In this field, where we've chosen to be a category one company in nutrition, health, and beauty, all these macro trends work for us. In this world, where none of the consumers want to compromise, we bring the essential, the desirable, and the sustainable together, and there are only a few companies who can do that. There are companies who can bring the essential, there are companies who can bring the undesirable, there are companies who bring the sustainable. We are really unique in bringing essential, desirable, and sustainable together, and this will shape the future.
Our lives are suspended in the rising tension between what we individually want, what we collectively need, and what the planet demands. We believe that progress lies not in sacrifice or compromise, but in our belief that when human inventiveness embraces and scales the wonders of nature, a way forward can be found, combining what's essential, what's desirable, and what's sustainable. From making nutritious, yet appetizing food more accessible, to providing solutions so farmers can work better with nature. From improving the health of millions at every stage of life's journey, all the way to creating next generation fragrances that feed the soul. We enrich life for the many while nurturing it for all. We are two companies coming together as a single force for good, enabling the world's most admired businesses to help us all thrive. Together, with our partners, we combine the essential, the desirable, and the sustainable.
Together, we bring progress to life. Together, we are DSM-Firmenich.
I don't know about you, but you feel what we're trying to achieve? I know we all like spreadsheets, we like facts, we like strategies, we like all of that. I love them, too. But if you really ask, what makes us different? It's this feeling in this audio fragment. It's not only me, and I'm sometimes struggling even to... I've heard it many, many times, right? And it still touches me. It still touches me, and that's exactly why I'm super proud to be CEO of a company like DSM-Firmenich... This is what I get out of bed for every day, together with all 30,000 people of DSM-Firmenich. Let's go back to the facts. What we're trying to build is a category of one, and I already told you before, bringing three things together, what makes it pretty unique.
You will find people in the space who can do essential, who can do desirable, who can do sustainable. You will not find many in this space who could bring these three together in a consumer space, who don't want to compromise on this. And I explained the macro trend, macro trends on nutrition, health, and beauty. The macro trends will help us to shape that company for the future, and it will be backed up by science and research. We will not be a, a fooey-fooey marketing company. We are a science-based company. It's not without reason that we have Sarah Reisinger, our Chief Science and Research Officer, on stage after me, 'cause we are a science-based company. Post the separation of animal nutrition, what type of company are we? We're a company around the size of EUR 9 billion. We're a company with about 21,000 employees.
We're a company with around 7% of R&D spend year after year. We're a company with an historic growth rate of that business of around 5%, which is a pretty good starting point. Remember, we still need to add the synergies and the innovation and the likes, and an EBITDA quality margin of around 20%. That's a starting point of what we've chosen to play in. That's the starting point of where we are today. And then we took that business, and remember, we're now moving to the tune phase. So we took that business and said, "Hey, let's not look at this business from a three business unit perspective, but let's look two or three levels below. Let's sub-segment those businesses." And you see here all three business units with their sub-segments. There are about 20-25 of these sub-segments.
We've looked at what is the market growth linked to macro trends? What do we see? Coupled with what is the capability to add value from two lenses. One, what is the right to win, and what is the capital efficiency? And then we've plotted these businesses, and we had a quick discussion just before we went into this presentation. Well, did you have a number in mind or where do you want it to end up in all these categories? No, we just did the fact-based analysis, and you see here all these businesses being organized around four categories, and the categories do have a clear mandate on how we operate. So the accelerate category is driven by creation and innovation, obviously, but we'll have prioritized investments. And there are about six of these segments. We have the grow segment, where we will have continued investments.
They have proven to have good market growth. They have proven to have the right to win with an optimal capital efficiency. Then we have two businesses, and the respective BU presidents will lead you through two segments where we say, "Hey, we need to improve to grow." So we improve on the cost effectiveness, and we improve on the profitability before we decide to further grow. And the last category is the deprioritized category. That category is, in one way, shape, or form, where we would like to capitalize on the value of these businesses but will no longer be part of DSM-Firmenich. And there are a few businesses which will go with the ANH parameter. That will be the vitamins part, the non-differentiated vitamins part, and the aroma ingredients. So they will go with the ANH scope going forward.
There are three businesses where we're gonna review strategic optionality, how to best capitalize on the value. That will be the agro ingredients, the yeast extracts, and the marine lipids. In total, it will be above EUR 600 million, and these businesses have, if you look at the analysis, have seen lower market growth, a little bit more capital needed, and we basically feel that the company we would like to build will be without these businesses going forward. How we do that? We will review optionality. We have this business. ANH is carved out. We deprioritize these businesses, and then we have the business we have chosen for. This business will quickly grow to above EUR 10 billion in size, and we organize it according to three business units.
The three business units you know, they will also be on stage here. You will see the breakout sessions with Perfumery & Beauty, with Taste, Texture & Health, and Health, Nutrition & Care, with the respective growth rates and the EBITDA margin. These are not targets. These are directions, right? We'll come back to targets and commitments in a minute. How are we going to grow what we have? Remember, ANH is carved out. We make the tuning with some of the deprioritized segments, and what we have, we will grow. A lot of people will say, "Oh, that's boring, just grow what we have?" I find it extremely exciting. But we need to grow what we have. We need to show the potential of that business going forward. How are we gonna do that? We're gonna anchor our unique business model.
I think I spoke to many of you before, also in the teaching sessions in some of the Capital Markets Day a year ago. We have something unique. We have, on the one hand, a fantastic ingredient box. In French, that sounds better, it's la palette. Hm? That's better, right? I still need to work on the pronunciation, Emmanuel, but I'm trying, right? In English, it's the ingredient toolbox. So if you had the right ingredient toolbox to play with, it's a great entry for success. However, you also need great creation and innovation capability, being very close to the customer and the consumer, right? So if you have a fantastic creation and innovation capability, but you don't have the right toolbox to play with, you will disappoint customers.
However, if you have a fantastic ingredient toolbox, you're really in love with all the ingredients in your toolbox, but you don't have that creation and innovation capability, you fail. You need both, and you need both to communicate with each other. We call that via the brief and solution capability. So in fact, you need to have three unique capabilities, and they need all to be tuned towards each other. That's a unique business model we have, and that's why we generate the growth we have, and that's why we create the customer satisfaction we have. This is unique, and we're gonna anchor that uniqueness. And this will be backed up by science and research, and it will be helped by sustainability as a business driver. Let's give me a few minutes of color on these two additional topics.
So science and research, I need to be careful because after me is Sarah, and she knows far more about science and research than I do. But I do have a passion about science and research, and it starts with three platforms where we've decided to shape the future. So this is not something where we shape the future next quarter or next year, but this is something where we change the world in three, five, or 10 years from now. And all these three platforms will be backed up by digital, data science, and AI. And these three platforms are, first of all, bioscience. Merging the two companies together, I think we are a unique set of components there. Secondly, it will be microbiome, the gut health. Looking to lifespan fertility, looking at healthcare, the microbiome is an under-researched area.
We only know part of what's really happening in our gut. It's pretty amazing, but I'll leave that to Sarah. Then thirdly, equally important for the company we're building, the receptor and sensor technologies and competence we have are amazing, and we are ahead of the game. We have 400 receptors in our body. This is something where we really are pushing the boundaries. So these three platforms will help us to build the company in the future. Not next year, but when we are back in this room in five years from now, you will understand why we selected these three, because they really are going to change the world. And then sustainability.
Sustainability as a business driver, so this unique business model, backed up by science and research, and helped by sustainability as a business driver, because our customers and consumers are asking for it. We don't even see it only as a business driver; we also take it at heart as a responsibility. It's a responsibility as a company. I wanna re-emphasize that for us, even in today's world, where people question it, we feel it's a responsibility. We do that around people and planet, and we call that People, Planet, Progress. We not only put that down in words; we will also put that down in commitments and targets. Let me start with people. On the people side, many of you did not ask the most important question you should ask me. That's: What's your engagement score of your employees?
Because you can have a strategy, you can have your system, you can have a unique business model, but the people make the difference. We measure that every year. I'm super proud that we had an 80% engagement score when we tested it last January. In a year where we did integration, the vitamin transformation, where the macro circumstances were difficult, we had huge change. The 30,000 employees, of which I think 79% gave a response rate, showed that they were engaged with an 80% score, which is in the top league. It shows that apart from the story, we also have the people who are really behind that dream. Second part on people is responsible value chains, responsible sourcing. We have a very strict supplier code of conduct. In our industry, that's absolutely key.
We audit our suppliers, we take action if there are deviations of the supplier code of conduct, from safety, from human rights, from child labor. And today, you've seen, for instance, on the Jasmine case , how important that is. We have a very strict supplier code of conduct, and we take action when needed. That's part also of the people part. Then the planet part, we did a lot of work, where we are committed to reduce Scope 1, Scope 2, Scope 3, renewable energy, and we also submitted that for validation to the SBTi. So it's not only our numbers, our reporting, it's also external validation. So what you see here is our strong commitment also to externally validate what we report. So we don't report a cigar from our own box. We ask external validation to the numbers we present.
That's also how we take sustainability as a responsibility. So we talked about people, we talked about planet, we talked about profit, talked about progress. How does that translate into our midterm objectives? Well, you can see it here. You see people, planet, profit really being represented, and Ralf will lead you through a bit more in detail later on stage at his presentation. Let me wrap up. We are on a journey, a fantastic journey, a big dream. Let's dream big. We started that dream a couple of years ago. It resulted in the merger last year here, only a year and a month ago. That was a merger in difficult market circumstances. We started the vitamin transformation project, and we're gonna execute that. We're on track, and we're gonna execute that.
We accelerated our synergy and integration project, and we will execute that for the fullest. Then we move to focus. We started the separation of animal nutrition and health, and we'll drive that to what's assigned to close in 2025. We reviewed our portfolio. We've tuned our portfolio. We'll deprioritize some of the businesses, and then what we have selected to be that consumer-focused company, we'll grow what we have. We will show you the potential of that business. We grow what we have, we will anchor what we do with our business model, and we will deliver. Deliver on the promises made, deliver on the dream to bring progress to life. Thank you.
Wow, what an energy! If that sets the tone for the last presentation, usually the hardest one to close the day, but a massive energy coming into the room, and that's what we wanted to do today. You cannot leave saying we didn't take good care of you, can you, huh? You will leave with a better skin, smelling nice, huh? Philip provided you with dietary supplements for the rest of the week or the month. Patrick made sure that you're not leaving hungry. I hope you got a good taste, scent, and feel for what we, as DSM-Firmenich, will bring. I will continue to take you along on that journey. Let's look at the next phase.
You heard Dimitri starting the day, going back to the dream, taking you through the various phases, all the way up to the new DSM-Firmenich, set to excel in the future in terms of growth and profitability. I will be addressing three phases today as well. First, give you some insights on how we're doing on the synergies and how are we doing on our vitamin improvement program, two important commitments that will deliver our financial performance in 2024. Then, I know many of you have questions, what about the separation of ANH? Can you remind us about the quality of the business, and what about the separation process? We'll give you some insights on that as well, and explain where we are and what to expect on that front as well.
And then last but not least, we will be translating how the portfolio of the new DSM-Firmenich will look like. We'll translate that into our financial targets that underpin our strong financial profile going forward. Now, let's first dive in into the topic that we are anxiously understanding, and you've seen a glimpse of it in terms of our sales synergies, but I'm gonna start very boring with the cost synergies. And by the way, Dimitri, I do get up for the numbers every Monday morning. Yeah? Good. Starting with cost synergies then as well, let's first remind ourselves, what is it that we are committed to achieve? We will deliver EUR 350 million contribution to the EBITDA from synergies. And we've been consistently sharing, measuring, tracking, and will deliver 50% of that through cost synergies and 50% to sales synergies.
At the same time, we have implemented our new operating model, and our Ex Co colleagues are instrumental to that. We have been implementing that new operating model, made all the necessary announcements with over 700 appointments. You heard our colleagues talk about the importance of people, because people make the difference every single day. People make a difference and drive a business. People sell.... people deliver performance, and we did that with an engagement score of over 80%. Dimitri talked about it, that it's a characteristic of a high-performing company, and it is. But more importantly, it subscribes that our people underpin our strategy, have a belief in the journey, and are going out there every single day, delivering the performance that we need as a company.
Then if we look into a bit deeper into the cost synergies, also there we have been communicating that the EUR 175 million will be delivered over three levers. One is G&A savings. The second one is indirect savings, where you start collectively streamlining your organization, leveraging the contracting that you have in place. And the third lever is improving the direct cost, bringing the cost of product to the market down. All those three levers will contribute more or less evenly to the EUR 175 million. What you can see from this page is the phasing thereof, where on the back of implementing the organizational model, making the necessary choices, taking the duplication out of the organization, G&A is contributing most to the delivery on the synergies of the short term.
But what you also see is that the procurement savings and the cost improvements are coming through. And there we also promised that after about six months, you would see them flowing through into our P&L. And why was that? Because you first need to go through your inventory, and you need to go through your contracting cycle, so you see those benefits kicking in, and we've been very transparent in reporting our contribution to our performance. We had the first contributions in Q1 or Q4 last year, where we indicated an overall contribution, and also in our Q1's earnings call, we are highlighting the contribution of the synergies and the vitamin improvement program. We'll come back to that a little later.
If you then look at how that is ramping up throughout the period, we're confident and we're even ahead of target in delivering that EUR 175 million EBITDA from cost. We see EUR 100 million coming through this year in addition to the benefit that we saw last year, ramping up to the full EUR 175 million in 2025. Every time you ask me, saying, "Well, Ralf, what, what is it? Can you give us some tangible examples?" We basically highlighted a couple of big tickets for you. At your left side, you actually see the benefits from a G&A perspective, where we, on the back of making those choices, you streamline your organization, and you actually see that that is giving us about EUR 20 million benefit on a run rate basis to the organization.
At the same time, we're optimizing our processes and leveraging our shared services in the organization, which on a full run rate basis, will contribute another EUR 10 million. So that is really driving the benefit in the G&A savings, let alone that there's further opportunities there. At the same time, in the middle, what's the meat to the bone around consolidating offices? Well, it's contributing EUR 10 million in terms of our offices, and there's more opportunity there, and it serves two purposes. It improves our cost base, our costs will go down, but more importantly, it also brings the organization together. So we added some couple of examples on the bigger places that we are consolidating, and we'll continue to do so, bringing the organization together. At the same time, both companies were running at a captive insurance captive.
By consolidating that, merging the two captives and leveraging the power that you have and streamlining our insurance cover, we were able to secure a saving of EUR 10 million as well. Again, a sizable ticket contributing to our confidence in terms of the ability to deliver the cost synergies for the group. And last but not least, an example next to the fact that when you team up, you start sourcing material together, and that is driving costs down, which we'll see an improved cost position in our inventory levels going forward. And we see that actually coming through with a slightly lower valuation of the inventory, which is giving us confidence that that will find its way to the P&L as well.
But at the same time, we're leveraging, again, the negotiation power of two companies together, and also in the supply chain cost arena, we were able to secure about EUR 25 million of savings. All adding to our target, all adding to the confidence that we have in the ability to deliver upon that. If we then tilt to the other EUR 175 million, sales synergies. They were commented on in each of the BU presidents, 'cause in the end, it's not me delivering the sales synergies. It needs to be embraced by our people, and I hope that by showcasing the examples today in the breakouts, it gave you an example of the power and the ability that we can do as an organization.
But also that you see the belief of our people and the excitement around the offerings that we can bring to our customers, and that is driving the sales synergies going forward. You also heard Patrick say that it takes 12-18 months before you actually see a new product development actually translated into commercial sales. So for that reason, we are monitoring the development of the pipeline on a, Patrick, on a weekly basis, Dimitri, myself on a monthly basis, 'cause we wanna see that pipeline accelerated in order to drive the synergies. It's often the biggest question mark in mergers: Can you deliver upon your sales synergies? And we are confident we can. You heard Emmanuel talk about it. I'm well ahead of plan. I don't need the full strategic period to deliver upon my sales synergies.
I see Beauty and Care space a lot of cross-selling opportunity actually coming through. Patrick, very confident around the pipeline. Overall, we see a pipeline of over EUR 275 million collectively for the three businesses. That is giving us confidence in delivering the sales and associated EBITDA benefit from that. We see the first benefit kicking in in the second half of this year, so we pinpointed down a number for the second half of EUR 70 million, and we see that now coming through, and that will contribute to the EBITDA performance of the group. Now, next to showcasing, of course, the examples, today, we showcase you other examples in Princeton and yet other examples in Geneva, and we can continue to do so. A couple of more of what the company can actually bring to our customers.
I'm personally pleased with the one my bottom left, your bottom right. It's my guilty pleasure, I like ice cream. But at least then Patrick ensured that there's a plant-based alternative, which is also nutritious, so I have to feel less guilty next time I'm consuming. Yeah? But I'm also very pleased with the middle section, because this is the ANH offering, the P&B team, where actually you can see the benefits of the merger really coming through with the taste enhancements that he can introduce in his products out to the customers. So also here, very confident in our ability to deliver sales synergies. We've got the pipeline, but more importantly, we've got the excitement with our people that are going out there, presenting these offerings to our customers, and we've got customer interest in actually embracing them and develop them in together.
Now, we did not only commit to synergies, we also committed to a vitamin improvement program, adding EUR 200 million of EBITDA on a full run rate basis to our P&L. And also here, we're making good progress. The momentum is improving in animal nutrition, fueled on the back of this, the benefits of this program, which will drive up the EBITDA of animal nutrition as well. Of course, it has an impact on the P&L of HNC and TTH as well, because we're collectively improving our cost base. And let me remind you of the three levers that are backing up that EUR 200 million of improvement. So on the one hand, we're optimizing the site network.
You heard us walk away from several of the businesses in China, but we're also consolidating our premix network to still continue to drive the growth in the businesses, but do it in a more optimized way and a more cost-controlled manner as well. At the same time, we're also applying the discipline in streamlining the organization, and that is both in factories, but also in the commercial organization and support organizations as well, in order to improve the performance going forward. That is impacting quite a number of people. The detailed slides that are published as well contain a bit more detail, but we're optimizing our offering in that front as well. At the same time, we're focusing on cash, because when your profitability is down, you also need to focus on continuing to deliver on your cash ambition.
And with that, we have a strong focus in the animal nutrition space, in the vitamin space, and cash as well, where you heard us making conscious trade-offs between EBITDA and inventories, where we're deliberately starting to bring down inventory and prioritize cash over EBITDA. And that is something that we continue to be disciplined about. And at the same time, we're also disciplined in the level of investment that we're making, weathering through these terms, but it will restore profitability. So confident in the delivery on synergies, confident in the delivery of the vitamin improvement program. Then, we also brought focus to the organization. Earlier this year, we announced the separation of animal nutrition. Dimitri explained once more why it doesn't have the strategic fit. It comes with a different financial profile, and it's less synergetic.
If you're serious about executing a strategy of a business, then you also need to invest, and we would not be doing that. For that reason alone, it's better to find a new home for animal nutrition. It is a good and great asset, and I do want to spend a bit of time explaining you about that as well. If you look at the business model, it is a unique model, and you've seen this slide before, where the combination of a unique portfolio and the widest portfolio of ingredients, coupled with a strong local network, where we're present in around 50 countries, where you can bring that technology, that product offering to your customers and have close proximity to your customers, is a unique model.
Fueled with innovation, we will deliver the strategy of animal nutrition, and Ivo is geared to that, of delivering sustainable farming. And that is something that we continue to do. But also financially, it's characterized by a strong performance, 'cause let's remind ourselves, and here at the top part of the sheet, you actually see the performance of our animal nutrition business. It has consistently delivered 6% growth over the period. It has consistently delivered a 15% margin. Yes, it is a bit more volatile, and that's why it doesn't fit the financial profile of the new DSM-Firmenich going forward. But if you look through that cycle, very strong performance. And yes, 2023 is impacted, but we also constantly reminded you, it's an unprecedented situation with an unsustainable low vitamin pricing.
That basically allows you to adjust your production capacity. That's what we've done. We're focusing on cash. But if you look through that, that will be restored. And with the vitamin improvement program in place, also profitability will be restored. And if you then look at the business, it's a business well over EUR 3 billion with three distinct pillars. Well, on the one hand, you have your straight vitamins, where we sell our vitamins that we don't consume in our premix, all the way up to premix, where you have the ability to differentiate. And the more you can differentiate, the more premium you can demand.
That business, that part is growing mid-single-digit over the period and will continue to do so, because the world population continues to grow, people consume it, and we will continue to work on our inclusion levels. At the same time, at the left side, you see the performance solutions part of the business, and that has been growing constantly at a high-single-digit. Also, last year, we often mention it in our quarterly earnings call, that when you look at the overall profitability, one would almost forget that that is EUR 1 billion sales. It has meanwhile grown to EUR 1 billion in size, and that is growing at a high-single-digit and comes with an EBITDA profile of over 20%.
So if you look that and complement that with new inventions like precision nutrition, you have a very complete business that will find a great new owner at the right valuation, and that is something that we will continue to execute upon. Then, looking at the execution, before we look at the timeline and how that all plays out and how we basically see the separation unfold, I think it's important that we also confirm that we've got the right team in place to do this. We have an experienced team that is focused on the separation of animal nutrition, that has experience with carving out businesses, experience both in DSM-Firmenich, but also outside, so well experienced, and they know what to do and what it takes in order to deliver upon our ambition to separate the business in 2025.
It also, there's a benefit of having a dedicated team in place that allows Ivo and his team to fully focus on the delivery of the business results, because we need to continuously improve the business, bring back growth, in order to drive the valuation of animal nutrition. And Ivo and the team have embraced it, because they also see the opportunity, and we're grateful for that, and you're driving that every single day by also embracing the opportunity by becoming a priority and attracting the right level of investment to execute the strategy of sustainable farming. So very pleased with that, and at the same time, we have a plan. We know how to do this. We've done it before, and we will do it this time as well. Dimitri showed you earlier in his deck how that timing actually looks like, and there's four distinct phases in that.
In your deck, there is a bit more detail to what is on, what is done in all of these phases. The first phase, following the announcement, we actually started preparing ourselves. What does it actually mean? We're also having conversations with Philip and Patrick. They often joke, saying, "We're a customer and a colleague at the same time." What is of strategic relevance for you in the portfolio? Because that is something that we want to secure for the DSM-Firmenich going forward. That is a conversation that we're having now. At the same time, we're looking at what is the right organizational setup, legal setup, and the like, for the carved-out businesses, but also for DSM-Firmenich, because we also want to take it immediately as an opportunity to even fine-tune the organization even more. Now, those are the choices that we're currently making.
We will be making them all pre-summer, so immediately can go to execution in the second half of 2024. So we have the teams in place. All of the support functions have a dedicated team that is fully focused on securing the separation of the business. At the same time, once we finalize the scope, we can also start working on the financials. What are the financials of the animal nutrition business that we will be selling out there? What are the pieces within that, that allows us to actually go out and market the unit? At the same time, that will allow us to also look at how do then the financials of DSM-Firmenich actually look when carving out all of that. So whenever the restatement is done, we will be sharing that with you as well.
So that is something that we will be working on in the second half as well, once we finalize the scoping of the, of the transaction. Then 2025 is all about execution of the transaction itself. We will be out there marketing the unit. There's a lot of appetite. We'll be speaking to many people, and with that, we will take the business to signing and to closing in 2025. Of course, all subject to the customary approvals, just like any other transaction, but that is something that we're geared to doing in 2025, and we'll update you as we go. In the deck, it's not on the slide here, we also gave you an indication of the cost. We don't want to hold that from you as well. We're currently estimating that around EUR 100 million. It's a sizable figure, but it's a business.
You have to also look at it in size. It's a global-oriented business, remember, looking at a unique model present in around 50 countries, but at the same time, it's also sizable business, 'cause with all the interrelationships that we have, when at some point, Ivo will be selling, product to DSM-Firmenich in a normal supplier relationship, it's a business that will be above EUR 4 billion in size, giving you also an impact of, of the overall process that, that we're doing. Again, it's the first estimate of what we have now. We'll continue to update that because that is something that we want to do as well. We communicate transparently on the performance and how we're progressing along the way, and we'll take you along on that journey. Hmm? But key things to remember, it is a great company.
It is a great asset that will find the right home at the right valuation. Then turning to the new DSM-Firmenich, and you heard the BUs excited about their journey, the growth opportunities that they see, the areas that they want to grow, the areas that we're deprioritizing, and we're basically developing a company that will grow to over EUR 10 billion in size with three distinct business units. And let me remind you, you saw them on stage today with Emmanuel leading our Perfumery and Beauty Taste, Texture, and Health, and philip leading our Health, Nutrition, and Care business. All with a very nice growth profile, all growing 5% and above, all contributing to the growth ambition of the group, but also all with a very interesting EBITDA profile... and we're confident that we will deliver upon that.
We will set targets that we will deliver upon. So we plotted them here, and what does that then translate into as targets for the group? The key three key headline targets. One of them we, or two of them you're familiar with, we added a third one. We will deliver a growth of 5%-7% in the midterm period. That is a commitment from our side, and we will do that with a high-quality business. So we will deliver an EBITDA margin for the group of 22%-23% in the midterm period. That is what we will aspire to. That is what we will deliver, and we've got all the levers to do that. We will deliver on the synergies, we will deliver on the vitamin improvement program, and we will deliver on innovation-fueled growth. Sarah will ensure that. We added also a cash target.
We will deliver a cash conversion of at least 10% of sales. At least 10% of sales. I will zoom in into that a little later. At the same time, we're confirming our dividend policy. We will be distributing 40%-60% of our earnings, and subscribing to the confidence that we have in restoring our profitability, while at the same time generating cash. And we'll do that while protecting our balance sheet. We kept the net debt ratio the same, 1.5-2.5 times, giving us a lot of financial flexibility to weather any situation, and we'll continue to do so, 'cause we're also protecting our investment-grade profile as a company. Now, let me bridge the three key headline targets for you. If we're starting with growth, historically, we've always been growing 4%-5% in the businesses.
You've seen that consistently coming back in the presentations of our BUs earlier today. We're gonna fuel that further with the delivery of synergies. We will deliver EUR 500 million of synergies, very confident in the delivery of those. But at the same time, following the tuning of the portfolio and some of the accelerations coming into play, including Bovaer, we will be adding another 1%-2% of growth, giving us a lot of confidence in delivering 5%-7% growth. And you'll see that grow into the period as well, with synergies coming on stream towards the second part of the midterm period, with Bovaer coming on stream in the midterm period, moving to the upper end of the growth profile. If we then look at EBITDA margin, the quality, how do we get to the 22%-23%?
Also here, our businesses have been consistently delivering around 20% earlier, and also that will be fueled by synergies. We're gonna add EUR 350 million worth of synergies to the bottom line. That will translate into an improved EBITDA profile of the group. At the same time, the tuning of the portfolio and the new innovations coming to, into play will improve that percentage even further, again, giving us the confidence that we will deliver that 22%+ EBITDA. Now, many of you will then also ask the question, "Well, but help me, how to bridge from where you are today?" Well, if you take out Animal Nutrition, and again, I'm not on stage to give you a full slate of numbers, a complete restatement. We'll do that in due course.
But if you take out Animal Nutrition today, we are at an 18% EBITDA margin. If you then add the impact of the improvement of the vitamin improvement program in the area of these gentlemen, you also saw that coming back in the presentations earlier today as well, we're basically back to the level where we're starting, in line with our historical average of around 19%-20%, and we will then add the synergies and the tuning of the portfolio, giving us a lot of confidence in our ability to deliver 22%+ EBITDA margin. Yeah? Then our third target, cash, and let me zoom in a bit more. This is a new one that we're adding, where we are committing ourselves, as leadership, to a minimum conversion every year of at least 10% cash, and that is built up.
Of course, it starts with an EBITDA margin. We will be growing into an EBITDA margin of 22%+, but the two key drivers impacting our cash is working capital and is our capital expenditure. On working capital, we started on an improvement journey. If we look back to the start of the merger, when we actually went live on the back of premiumization that was out there, on being the reliable party, we were at an elevated working capital. We were even at levels above 38%, and we were diligent in our actions to bring that down, and we brought it down to the low 30s towards the end of the year. I guided you for 31%, I think. We came very close, let alone for some FX adjustments.
But I also said that we will be delivering on a further improvement in 2024, and that is what we're committed and set to do. So we will be driving it towards 30%, hopefully even slightly below, in the period of 2024, and we will be disciplined in our actions and decisions of taking that. Now, it's also not a straight line to heaven, and you have to take into account the seasonality. When I gave an update in Q1, in the earnings call, there was a question, "You're not guiding for working capital, how we're doing?" We are continuously seeking to see an improvement year-over-year in working capital, and everyone here on the front row signed up for that.
Over time, we see a further improvement because we think 28% is the right level for the company that we are in order for us to run. So there's further improvement on that side possible, but that will gradually come. So we will see an improvement in working capital, and then obviously, working capital continues to grow with the company. Then tilting to CapEx. Here, we're guiding for 5%-6%. I want to be very clear, we will be starting with 6%. We continue to see a lot of opportunity in our businesses, and at the same time, we're working through the finalization of our investment in Bovaer, but we want to invest and future-proof the growth of the company.
In order to do so, we see ample opportunity in our three BUs, and we will be making the necessary investments to do that, to continue to secure the growth, to deliver upon our ambition, not only through synergies, but consistently anchor and have the capacity to grow with our customers through a sustainable growth going forward. We will be making those investments in the short term. However, following that, investments will normalize, will normalize to a level of around 5%, which is customary in the industry that we are. If you add all of that up, you get to an at least 10% cash conversion. And I want to stress that that is a commitment from our side towards yourself, that we will be delivering upon that in the period. Then maybe tilting also to some other financial metric.
A question often asked, "What about ROCE, and how are you improving that, and what are you doing on that, that front?" Also here, we will seek a continued improvement year over year. Now, we're talking about the core ROCE here, where we back out all the effects of the merger. So we will do the merger adjustments as we explained earlier in our earnings calls. What we will not do is we will not back out all of the M&A, because then I can go back 15 years. We created a new company, DSM-Firmenich. We backed out the merger effects, and we'll continue to do so for future M&A when relevant, but this is the metric that we're steering on. If you take out, we are at the 5% reported in 2023.
When you back out Animal Nutrition, we're closer to the 7, and we will continue to grow from there with at least 100 basis points per year, taking us well above the 10% in the midterm period as well. Last, not least, we're also guiding for some tax, so the tax rate will normalize on 21%-22%. And two key things: first of all, it includes the effects of any Pillar One, Two, and Three discussions, so that is factored in. We guided you to 20%-21% at the outset of the merger, so the percentage is, 1% up on the back of that. The second point, what is important, there's no adverse consequence of the carve-out of Animal Nutrition. So the percentage will be same.
It is neutral to the organization, and there's also no major tax leakage on the carve-out and the separation itself. I know that's a question many of you have as well. How about setting priorities? In what kind of order do you do that? And let's look at our capital allocation policy as well. Number one priority, Dimitri would say it's number one, priority number one, two, and three. We grow what we have. We're happy about the portfolio. We tuned it, and this is something that we will continue to invest in. That's where the CapEx will go. Over 60% of our CapEx will be used to fuel the future growth of the company, and that is priority number one for us, so this is where we will be allocating our capital as a key priority. Then second, we know dividend is important as well.
We repeated our policy going forward, but dividend is priority number two. The third one is M&A. Now, let me be clear, it's not a focus for today. We are clear in our priorities. We need to deliver upon our synergies, we need to deliver on our vitamin improvement program, and we need to separate Animal Nutrition and Health. Those are the key three priorities that we are focusing on. Does that include bolt-ons or alike? No, but it's not a priority, and it's not a focus at this point in time. And then last but not least, share buybacks. Now, it's a question out there as well. First of all, it depends on proceeds coming in, but at that point, we will be looking at all of the opportunities and options available to us, including possible returns to shareholders and the time when it's relevant.
We do that while being disciplined around our capital structure, protecting the 1.5-2.5 times multiple in terms of our net debt levels and protecting our investment credit rating. We added here basically the maturity profile of the group. We've got quite some refinancing coming up, but the good news is we've got all the financial schemes in place. We've got a bridge facility. We've got our ratings confirmed, which we're very pleased with. We had Moody's and S&P doing their reviews late April, and they both published a report confirming our investment-grade rating because they take us along in the journey as well. They see what we're doing, the choices we're making, but also the commitment we have as leadership to maintaining a strong balance sheet, with that in place.
So we can tap into the financial markets. We have the documentation in place. We have the guarantee structured issued, so we can tap into the markets whenever we see opportune, basically building a new maturity profile of the group. And that brings me to the end. Now, I do want to leave you with a couple of messages, and that is taking us back to the flow that we see. Going back to the dream, merging two iconic companies, really focused on the merger, delivering upon the synergies, priority number one, delivering on a vitamin improvement program, priority number two.
At the same time, by bringing the focus, we've put the team in place that has the experience to separate Animal Nutrition from the group, while at the same time allowing Ivo and his team to fully focus on the delivery of the business and restoring profitability ahead of a transaction. And lastly, tuning the portfolio, setting us up for future growth by delivering 5%-7% growth with a high-quality EBITDA margin and translating that margin into a good cash generation. And with that, we bring progress to life, and I thank you for the attention. Thank you.
Science is everywhere. Science touches each and every one of your lives every day. At DSM-Firmenich, we harness the power of science to deliver new solutions to make people's lives better, and to turn those dreams into reality. Now, I'm really happy to have the opportunity to talk to you about our science research capabilities at DSM-Firmenich, and how it's accelerating our future growth. Now, DSM-Firmenich has an astounding track record of innovation, with more than 150 years of scientific discovery. From one of our early scientific directors earning the Nobel Prize in Chemistry for his work on musks, which is a key class of perfumery ingredients, to pioneering delivery systems and groundbreaking biotech ingredients. This scientific excellence is what serves as our foundation upon which we are building the future of DSM-Firmenich. We are an innovation powerhouse in health, nutrition, and beauty.
Each of our business units is driven by deep science, and we use science research and capabilities across the business units to accelerate their growth. Now, I'm gonna talk to you a little bit about recent innovations in each of the businesses, with the business presidents talking much more later today. Products we love, but healthier, more delicious, and better for the planet. Taste, Texture, and Health is all about, bringing together the passion that we have for food, I think we all have that, the passion for food, but also that expertise in science, bringing it together to develop solutions that we need. In 2023 alone, we had 39 global launches for TTH of innovations. I'm now gonna talk to you about two different key markets where we've developed solutions for consumers. The first one is all about sugar reduction, because let's face it, sugar's awesome.
It's versatile, it's cost-effective, and I know I love it. Oops, sorry about the mic. I know I love it. I probably all of you love it, too, I'm willing to bet. But you know what? Often, many of us love it too much. I know I have that problem. And when you love it too much, it actually, this overconsumption, can cause severe health problems. The difficulty and the challenge that TTH is working on at DSM-Firmenich is: how do we deliver the exact solutions in foods that you know and love, but healthier, reducing that sugar? And luckily, we are the experts of science of sweet. For more than 25 years, we've been studying the sweet receptor, and we are the world's expert, so we took that knowledge to address key challenges in the market.
One of these is delivering carbonated beverages, sweet carbonated beverages, that are reduced in sugar. Now, what you might not know is, when you're drinking a sweet carbonated beverage, what drives your liking of it is actually that carbonation, and when you reduce the sugar, your perception of that carbonation changes, and it's a big, difficult challenge. So we studied that interplay with the carbon dioxide, that mouthfeel that you get, and sweetness, and then developed a solution that delivers what consumers want. We're able to amplify the flavor in a reduced sugar format, increasing perception of carbon dioxide, as well as masking any of the off taste or, or lingering that you may associate with sweeteners. This product, our customers are loving when we talk to them about it, and consumers as well. It's called Taste, sorry, TasteGEM Carbonation, in case you wanna go look check it out.
The second one I wanna talk to you about is the plant-based alternatives. This is allowing for sustainability and healthier solutions for all of us, as well as it's good for the planet. And our consumer insights team found that one in five European consumers like and drink, consume regularly plant-based beverages. One in five. But that number can change to four in five, more than 80%, if it would taste more like cow milk. So we, being the experts that we are, understand that there's two really big components on likeability, and that is about mouthfeel and about flavor. So we've developed our best-in-class milk solution that addresses these two attributes. The first, in mouthfeel. We developed Dynarome DA technology, which is encapsulating a vegetable fat, so that you have an experience more like that of dairy in your beverage.
The second is optimizing for flavors that addresses some of the off-notes and off-taste, and off the aromas you see in plant-based food. This best-in-class milk has won in consumer tests, well, our customers love it, and you're gonna have the opportunity to test it in the experience room later today. So hopefully, I'll hear some great feedback from you as well. I'll check. Now, Dimitri talked about the paradigm shift that's happening in healthcare today, with a move from curative to preventative health. This is something Health Nutrition and Care is really focused on, preventative health solutions that nourish and protect you through your entire life's journey. First, let's talk about omega-3 supplementation during pregnancy. Now, one in ten babies worldwide is born preterm, and clinical studies have shown you can reduce that by 40% of early preterm births by supplementation with omega-3s.
But compliance is low, and that's where we've come in with innovative solutions. Using biotechnology, we've developed an algal-based DHA/EPA omega-3 that has the same ratio of those omega-3s that you get from fish, without the fishy taste. And then we went beyond that to work on new formulations, such as gummies, so that you can have even better compliance. In the United States alone, compliance would allow for 40,000 fewer preterm births and healthcare savings of almost $7 billion annually. This is huge impact. You can also taste this in the rooms later today. And then another thing that Dimitri talked about is gut health. A lot of us are hearing so much about microbiome and gut health, and at DSM-Firmenich, we're developing a portfolio of biotics to address this important need.
Today, I wanna talk to you a bit about the Humiome line that we've developed, and specifically, Humiome B2, which is a vitamin B2 delivery system. Now, normally, when you take a supplement, a normal pill, only 2% of the vitamin B2 actually gets to your colon, where it needs to feed and nourish it. 2%. With our patented microbiome targeting technology, 90% of that B2 is going to be delivered to your colon, where it's gonna nourish your microbiome and help you to have a healthier gut. So from 2% to 90, this is a huge amount of impact to help really feed and nourish your body. Going from feeling good to feeling great via the power of scent and beauty, that's what Perfumery and Beauty is all about. It's beyond emotion, elevating how you feel.
Now, the first innovation, you guessed it, you've probably been paying attention, two innovations to talk to you about for Perfumery and Beauty, and the first one is in skincare, our latest skincare innovation. Now, I would probably think that almost all of you would love to have younger and healthier-looking skin. I know I use many of the team's products and this is what our latest innovation addresses. So Eterwell Youth selectively targets senescent cells, zombie cells, and zombie cells actually give premature aging to your skin. Eterwell Youth eliminates these zombie cells, resulting in an increase in collagen in your skin, boosting it, and helping you to look younger and healthier.
It recently, just earlier this year, won the Gold Award at in-cosmetics, held here in Paris, and we're very excited about this product, as well as the innovation portfolio using this senescence science. Moving to perfumery and fragrance, what's really important is delivering at key moment for consumers, and two out of three consumers say that they wish their scent last longer. But I would argue that it's actually almost three out of three, and that's because scent is beyond the fragrance that you notice, but it actually signals that it's fresh, it's clean, it's safe. And we have a portfolio of different types of technology that can deliver long-lasting fragrance, and today, I wanna highlight HaloScent, because you're gonna get to smell and experience it later today.
So our HaloScent portfolio is a portfolio of pro fragrances, and a pro fragrance is a fragrance ingredient that's actually chemically linked to another molecule. That could be another fragrance ingredient or an inert molecule. And so initially, in the formulation, you don't smell that fragrance ingredient, but then upon a trigger, that fragrance is released at key moments that the consumer wants. We have developed triggers for the release in air, triggered by oxygen, in water, and even enzymes from your microbiome on your skin. We have a portfolio of seven pro fragrances, HaloScent pro fragrances, and we're continuing to invest in this portfolio. Now, all of the innovations today, our customers, we're getting great traction with, and we also continue to invest and are really, really excited about our continued portfolio.
I wanna tell you about what are some of the key attributes of our team and our capabilities that are putting together the innovation of the future. So I know many of you like numbers, right? So let's give you some numbers. We have more than 2,000 employees working throughout our innovation community, focused on delivering groundbreaking innovation to grow our business. We're backed by more than 16,000 patents protecting our innovation, with 200 new patents, whether it's the first patent in a new family, in 2023, in our first year at DSM-Firmenich alone. We also were recognized as one of the 100 most innovative companies in the world by LexisNexis this year. We have a global footprint of innovation, and we invest more than EUR 700 million annually. Now, again, you probably want to say, "EUR 700 million?
What are you spending that on?" All right, so I'll tell you a bit about that as well. What are we spending it on? We're spending it on an unparalleled breadth and depth of innovation capabilities. We have mature technologies that serve as our foundational technologies that are incredibly essential for fueling our business growth. And then you already heard a preview from Dimitri, so you can check how we both talk about it, about some of the more fast-evolving technologies what we believe are really gonna differentiate us and grow in the future. So now I'm gonna go a bit more in depth into each of these fast-evolving capabilities to help you understand how we view it, how we're unique, and how we're using these technologies across our BUs to drive and accelerate growth.
At DSM-Firmenich, we view biotechnology as a transformational science for a sustainable future, and we are fully end-to-end, from early-stage discovery all the way to industrial-scale production. What makes that end-to-end unique for us is the fact that we are able to work super closely with our perfumers, our flavorists, our nutritionalists, and our customers from that early stage, so that as we co-design and we ensure, we're going to develop new differentiated ingredients that the perfumers love and want to use, and that help our creations stand out even more. This is truly a unique way of working that helps us go farther and have more impact. We also have an incredibly diverse portfolio of microplatforms, allowing us to make many different types of molecule enzymes, proteins, and all of this together helps us have an unparalleled time to market.
Now, I want to share with you a bit about one example here of how we're leveraging it across the businesses. So terpenes are a key class of secondary metabolites made in plants. There's actually more than 50,000 different terpenes already known to be found in nature. And we have built a biotech platform of terpenes, which we've leveraged across the three of the business units, making fragrance ingredients for Perfumery and Beauty, differentiated natural sweeteners for TTH, as well as sustainably produced vitamins for HNC. Now, Dimitri spoke a bit about the microbiome, and I also talked a little bit about it, and the idea is that the microbiome goes well beyond gut health into your feeling of well-being. And as Dimitri also mentioned, it's a new science.
Maybe ten years ago, you hadn't heard about it, but now you know that it's really impactful, but we're still learning about how it impacts our our well-being, both mentally, physically, and all aspects of our life. But what that means is it's a huge opportunity, because if we can learn how to harness the power of the microbiome and modulate it, we have the potential to have a huge impact on human health and well-being. At DSM-Firmenich, we take a unique approach, where we take a transversal look at using it across your different microbiomes. So many of you know about the microbiome in your gut, but you also have one on your skin, in your oral cavity, in your lungs, actually, in basically everywhere in your body, and they're all unique, but the same tools and learnings can be used across them.
We also have a huge proprietary library of naturals that we've screened for bioactive properties for having an impact on health benefits. And we're using synergistically using pre, pro, and postbiotics together against diverse microbes, but also in different applications, allowing for solutions across our BUs, accelerating the solutions to customers. Chemosensory receptors are essential for the human experience of taste and smell. If you didn't have them, you wouldn't be able to taste or smell. And recent studies have now shown that those same receptors actually are essential for other key physiological experiences and human processes. Now, at DSM-Firmenich, we are world leaders in olfactive and taste receptor research, with decades of experience in understanding your taste and olfactive receptors. From the moment a receptor is bound by a molecule, all the way to the emotional response or health-triggering event.
We have proprietary high-throughput screening platform, as well as a huge treasure trove of data that allows us to have unique insights, as well as to discover novel, new ingredients. Now, we leverage this again across multiple businesses. We're using our knowledge of olfactory receptors. We're able to develop antagonists, which make it so they block the smelling of a malodor, so that your laundry, as in the image shows, smells fresh, or your deodorant also keeps you fresh without smelling that malodor. We use the same technology for taste receptors to block bitterness in functional foods and beverages, and as I said, because the chemosensory receptors have gone beyond, we can target those same ones in the gut to have a profound health impact. And then, of course, data science and AI. AI is changing the world.
I think I have to say that again, although you've probably heard it everywhere in the newspaper or on your phone, but AI is changing the world. There's no question about it. But what it's also doing is changing, at DSM-Firmenich, how we innovate, but also the types of innovation that we can deliver. And as you probably hear a lot about AI, data is power, and we have more than a century's worth of data, and this is a huge competitive advantage for us. And we are leveraging that to create tools to turbocharge our discovery engine, as well as for developing tools for creation and augmenting it. We have implemented data science and AI in every aspect of how we do innovation to ensure we're doing it faster and able to discover new insights.
And here, we talk about how we're using AI and machine learning throughout our business, where we've developed tools to help, increase the speed of creation to support our, our perfumers, and also to inspire them into new areas of creation. We're using similar technology in TTH to actually co-create with our customers, using our DelvoOne technology platform, to come up with new combination of dairy cultures for yogurt and other fermented products, dairy products. And then we're even using it to identify what are the key factors in healthy aging. Now, all of these emerging technologies are, really important to our growth of our business, and I think I've given you a bit of an understanding of how we are unique at DSM-Firmenich. But there's another thing that makes us unique, and that's just as important, and it's the power of synergy.
Bringing together different science capabilities into a single project, putting them together, that synergy allows you to go faster and farther. Here, I give you an example of new ingredient discovery, where we are leveraging data science and AI to identify different structural spaces, where without that, you might be used to just what you see in nature and limit your search. We're using combinatorial biosynthesis to increase a structural diversity further, and then receptor biology to screen those hits, and then testing them in creation and applications. This combined approach allows us to come up with new, differentiated solutions we would never have come up with alone, allowing us to grow our business and develop better solutions for the business and for consumers and customers. But let's be honest, we at DSM-Firmenich cannot do everything ourselves, and truthfully, we shouldn't.
And that's why we really take an ecosystem approach to innovation, because we can go farther and have more impact together. We have more than 100 collaborations with startups, academics, other companies, and nonprofits. We also have a corporate VC team that has a portfolio of more than 40 companies, which allows us to have deep insights and get an early look at emerging new technologies. And together, this overall view allows us to move faster, farther. Now, science is everywhere in our world, and I hope after hearing me talk for a few minutes, you understand how science is everywhere at DSM-Firmenich.
Our science capabilities are helping us to push the boundaries of what is possible, and we're gonna continue investing in these possibilities and in new ones to help accelerate a future of fulfilled dreams, where you don't have to choose between what tastes and feels good to you versus what's good for you and the planet. Where well-being comes together with sensorial delight to increase your own personal self-confidence. And where every member of the world population can maximize their own health span, allowing for the highest experience of well-being. Thank you so much for letting me tell you a little bit about science and research at DSM-Firmenich, and now I'd like to introduce my friend and colleague, Emmanuel, to talk a bit more about it.
Thank you. It's good to have this with me. Thank you, Sarah. Exciting time, and it's always a pleasure, by the way, to work every day with Sarah. The passion of science connected with our customers, it's always a great time. So let's move a little bit in the world of Perfumery and Beauty, and in fact, I would start this little presentation with by saying that how great it is to work for the perfumery business, okay? With this passion, with also the complexity and the mystery of what the creation is doing every day. And you will have the chance to see some of the perfumers. I see Nathalie in the background, and Florian and Florent.
I think this mystery is what we're living every day. It's a very, very special, a very special time. Now, we are very lucky because basically this is also a business where we are growing and supported by, I would say, significant macro trends. So on diversity and digital humanity, you have to remember that millennials and Gen Z, they, they grew a lot, the wealth grew very much by more than 80% over the last years. And I think beauty and fragrance is considered as a key element to express the personality and the identity of those people. The numbers of search on perfume on TikTok over the last years and just after COVID has more than doubled.
In fact, for this kind of generation, the consumption of beauty and fragrance product is one of the highest of any generation, and for that standpoint, it support very much this trend. Second, a third of consumers in the world are looking for superior product, superiority, premium product, and experience across categories. And high quality fragrance and also beauty care product, backed up by solid science rank at the top of the reason why consumers are willing to pay a premium. Third, in fact, as you may remember, a couple of years ago, after the COVID dip, we had experience, I would say, a diminishing, I would say, sensation to our body, to our mind.
In fact, we know we are awakening our sense with 83% of the consumers of the globe look for experience, for instant happiness. We can see that many product from FMCG are going in that direction. Fragrance is so critical and in providing this immediate delight and and happiness. So those three macro trend is just showing that fundamentally, we are very well we have a good foundation for growth moving forward, and that's why we're enjoying this growth in this very good business. Now, let's move to another chapter of I would say, two years after the Palais Brongniart visit, not far away from here.
One year and one month after the merger, we are moving into, I would say, we know, we make progress to life. But what means progress to life for Perfumery and Beauty? So I would like you to listen to this short video.
We are truly ourselves when our senses are totally engaged, and we can connect to our emotions, to others, and to the world around us. But all over the world, these connections are being challenged by rapid digitalization and urbanization. DSM-Firmenich, Perfumery and Beauty, exists to reconcile these uniquely modern tensions, to ensure we never lose sight of who we are individually or how we thrive collectively. We reconnect people and places through sensorial experiences. We bring delight and care together as one, creating positive impact for the world's population, going beyond well-being, not only to make people feel well, but to make them feel great, emotionally, physically, and with respect for our planet. With our creative legacy and future-forward vision, unrivaled scientific knowledge, and deep consumer understanding, our creations stimulate the senses and provide care to our minds, bodies, and homes.
By working with customers and creating in new and exciting ways, we push the boundaries of what is possible to deliver what consumers need now and in the future. This is how we bring progress to life.
Wow! How motivating it is to work for a business with such an ambition. We need, in fact, and deserve these little and big moments, where we feel great emotionally and physically, the body and the mind. That's why we are bringing delight and care together as one, and to go beyond well-being. So try to live in this world of beyond well-being. Now, one of the key question is: How we will embark our consumers and customers across the world on this journey? In fact, by creating those moments, elevating moment of care, by enhancing product, which are essential for us every day. From turning household chores in moments of well-being, to making fragrance to make us feel better, and to promoting healthy hygiene habits for by fighting malodor.
We deliver superior consumer delight. By making the product experience more desirable, we drive brand preference and usage. Last, and very important, we bring positive impact through sustainable choice in creation, innovation, and operation … and by sharing with our customers and being the partners in co-creation, with this vision, we will continue to enhance the great customer intimacy we have, and we will continue that journey moving forward. As I mentioned before, we are lucky to be part of this industry, where we, at the end, we will combine the essential, the desirable, and the sustainable, and come together to not make the people feel good, but feel great. Now, having a vision, is a good thing, but, also what is very important that we translate this vision into strategy, into the roadmap. Let's start by, being, who we are.
So we start from a non-viral portfolio, covering the entire market space into three different businesses. This first business, the business line perfumery, where we are the leading partner of our customers in fine fragrance and consumer brands, which represent around 60% of our business. Then, our ingredient business, providing the broadest backward integrated portfolio of the industry, but also the backbone of our perfumery, representing 25% plus of our total Beauty and Care, leading in sun care and showcasing differentiated skincare active products. These three business lines are built on a foundation, on science, on people, but also on sustainability. We worked so hard over the last 12 months to put those three businesses together in a unique ecosystem, with each business line, with a dedicated go-to-market, with a strong legacy and history of success.
But also connecting all together via shared innovation, global operation, but also a common culture of excellence. So, then, what an incredible journey we had over the last years, over the last 12 months. An incredible journey, an incredible amount of work, where the merger did not only offer her the opportunity to put a portfolio together, but to, to think differently, to, I would say, build a new, a new business unit together, to organize ourselves in a new way, but also to transform. And that's what we did over the last months. We transform ourselves by maintaining also an imperative, I would say, dimension of performance. And in terms of performance, this is what we have done. Position amongst the largest Perfumery and Beauty players in the world, with $3.7 billion business.
We come with a three-year period, with a growth of 6%, organic sales growth for the last three years. In the past 12 months, the team have focused very strong effort on improving profitability, delivering from below 20% EBITDA to above 20% EBITDA. And, we expect to, I would say, stabilize at 22% EBITDA and growing in-- as a next step, to 22%-24% EBITDA. But we also transform ourselves, and we also wanted to build a stronger foundation for the future. First, we put the 5,500 people together in a, in a project which was called symbolically Convergence. Convergence is an immense effort and use, and huge activities to align and build a new foundation for the future.
We have empowered, I would say, our leaders, our P&L owners, with more autonomy, with, more accountability. Make sure also that we can have people, we being empowered at a local level with more agility. We have further accelerated innovation, enabled and, and with our stronger, science foundation. We also delivered synergies, and we are very happy with that, and I will come in a minute, later on, on that. We also started to create a culture of excellence with, we'll say, few program, all enabled by AI and by digital.
I wanted to take advantage, in fact, of this meeting today, to thank all the leaders, but all the team, which over the last 12 months have been able to perform and transform at the same time in the context of, as you know, merging the two companies together. Now, let's, in fact, also try to see what will be our focus moving forward in terms of priority and growth around the business line. You will not be surprised that the perfumery business line will continue and accelerate based on our strong foundation in fine fragrance and consumer brands. No surprise, also, that you will see also the sun care, the Beauty and Care activity, which will accelerate and expand the portfolio.
Also, last, on ingredients, we will continue to focus the right balance between profitability and growth, which I would say it is, what we have done over the last 12 months, and we'll continue to do moving forward. If you look at the portfolio, because Dimitri has shown the entire picture of the portfolio, then let's have a look at the picture of the portfolio within Perfumery and Beauty. First of all, on the pink bubble here, on the perfumery business line, we'll continue to focus on global consumer brands, with added value innovation for home, scents, and beauty. Then, we will also accelerate our regional business, which with a tailored value solution, and we will activate and accelerate very strongly this activity.
While we will also sustain the momentum on fine fragrance by continuing to set the olfactive trend and with our team of talented perfumers. Secondly, on the blue Beauty and Care, we continue, we will continue the momentum on sun care based on our current leading position and portfolio. We will accelerate in skincare, but also, we will expand in scalp and hair care. Then, we look at the portfolio of ingredients, which you can see are represented here in all the different green bubbles. Let's start maybe with Pinova. As you know, we announced almost a year ago the closure of Pinova, and which at the end will come at the end of the process in July 2023.
We also would like to continue the improvement that we've made in the industry business, in the industry ingredients, which have increased significantly profitability versus growth in terms of revenue, and we will continue to improve to grow. But also, we will, as Dimitri was showing before, we will really try to, I would say, deprioritize, I would say, two activity. First of all, the agro and hygiene ingredients, which represent around EUR 40 million of revenue, as we said. And also, we will look at the strategic option in the context of the ANH separation, to find strategic option for the aroma ingredients.
So this is what we want to do from an ingredient perspective, and we believe that very strongly that after this, transformation of our ingredients, we will have, I would say, a fantastic, I would say, ingredient business, focused on fragrance ingredients and focused on renewables and, and really ready to, to be the backbone of the perfumery business moving forward. After the, the portfolio, let's, go back to, at the end of the day, who we are. How do we, differentiate ourselves? And, I would like to, to start by showing really what is our leadership coming from, what is our heart, and I would say, how is our inspiration. We have a unique business ecosystem. The EUR 3.7 billion, combining the perfumery Beauty and Care, and ingredients.
In fact, we have two very strong connections between perfumery and ingredients. We also have a very strong connection between Perfumery and Beauty care, which, by the way, is generating a significant synergies. Our heart, it's about creativity, is about the incredible population of our perfumers. It's with their heart, with their brain, with their knowledge that we have. The innovation is really what, in fact, is what Sarah was describing before, is really the combination of creativity and innovation is really making a difference on the marketplace.
And last, also, our inspiration about the consumers and customers, knowing that we have a unique knowledge in the consumer knowledge, in the consumer insight, to understand the trend, to understand for each of the market segments where we are, and in fact, to support the creativity, the innovation, which enable us to keep our leadership moving forward. Now, let me try to go into, I would say, the description of our leadership. We spoke about a unique ecosystem and the connection between perfumery and ingredients. We win today because we are the most vertically integrated backbone and the broadest portfolio with unique technology and innovation across natural, synthetic, and biotechnology. This allow us to provide the best ingredients to our perfumer, particularly our renowned captives, but also the biggest renewable portfolio.
At the end of the day, it allows us to be simply the leader in the fragrance ingredient market. We believe that this unique connection will be an even more critical advantage in the future, as our capability in biotech, green chemistry, and sustainable natural extraction position well, very well to anticipate what the regulatory constraint will come, but also to anticipate what is the upcoming sustainability agenda of the company, and we will discover that. We will have Amaury and Matthieu, which will later on show that in the breakout session.
The second very critical connection between Perfumery and Beauty, and, sorry, of perfumery Beauty and Care, it's about, I would say, the fact that we have a unique portfolio, a very big sizable business in, Beauty and Care, with a skincare where we are expert in translating scientific findings into tangible consumer benefit, with more than 40 years of expertise in skin biology. Also, in sun care, on top of the broadest portfolio of UV filter, we have state-of-the-art formulation. In scalp care, we have a current portfolio, which will be accelerated in terms of growth momentum, and in hair care, we want to expand, I would say, the hair care activity to, I would say, at the end of the day, create the synergy with the perfumery business.
We said that before that we have a great momentum on synergies, and we combine highly differentiated product in target prestige brand with ingredients, with broad penetration across market segments. We fully utilize the customer channel of perfumery to accelerate sales momentum, supported by a pipeline of 30+ new joint concept, which have been deployed over the last 12 months. And I'm very happy today with-- to share with you that the result have just been great to combine the two together, and our revenue synergy will be done ahead of time, and we will be able to accomplish them in 2025. And, my parent, colleague, my dear colleague, parent, and the entire team will show us the fantastic world Beauty and Care. so after the leadership connecting the two, let's move to the heart, to our heart.
For sure, when we start with the heart, we are starting with a community of perfumers, and you can see here, the 110 perfumers, it was an event that we, we had a year, almost a year ago, just after the merger, where we had a fantastic three days in Berlin. In fact, basically, this 110 perfumer, multi-generation, highly talented, and have in mind that, someone like Nathalie in the room, has more than 25 years or more, I don't want to say more, Nathalie, to be able to, I would say, represent this community of perfumers. And these three make a difference, but also they are enabled and augmented by science and data, as Sarah was mentioning before. Let's move to our innovation.
Absolutely key today, with all the research capabilities that Sarah has just shown before. Those capabilities feed three innovation platform, which together bring to life, I would, at the end, our vision, providing added value for customers and consumers. So on ingredients, we invest to discover new ingredients and fragrance captive, delivering customer delight, but also care. We have Dreamwood. We will show Dreamwood a bit later, which not only smell good, but also has a proven skin benefit. On technology, we are leader in fragrance delivery system. We have a broad portfolio of technology with encapsulation, with chemistry, which are satisfying also the ECHA requirements of biodegradability, with no compromise for consumers. Fragrance design is also where we combine innovation and creativity.
Leveraging proprietary scientific knowledge, we can give really to perfumers guidance on how to design a fragrance for specific benefit, like the so important greater tail, that you will see a bit later in the breakout. Just before we go to conclusion, we have, for sure, our commitment on the positive impact on sustainability. And for that, we want to be extremely focused and precise on, I would say, four priorities. The first one is on the level of transparency and accuracy we provide on sustainability measures. Our proprietary tool, EcoScent Compass, allow us to see in real time the sustainability impact of adding one material over another in a specific formulation. Overall, we want to achieve 100% LCA and sustainability data by 2025 for all our ingredients. So first of all, transparency.
Second, about circular ingredients, whether biotech, upcycles, or biodegradable, and we aim to have 90% of our portfolio biodegradable by 2030. Third, we also want to leverage carbon capture and compaction, meaning fragrance that achieve great performance with a lower count and dosage of ingredient. And all of these initiatives will enable us to further reduce by 25% the carbon impact by 2030, and we aim to, I would say, to be at net zero by 2045. Finally, we shape full responsible value chain, and we are able to anticipate future reporting requirements, and the aspiration is to have 100% of our key ingredients fully responsibly sourced by 2030. Last, and in short, we are global Perfumery and Beauty leaders with a unique ecosystem combining perfumery, Beauty and Care together, connected through innovation, operation, and excellence.
We will grow and accelerate in perfumery based on our backbone, based on our strengths in fine fragrance and consumer brands, with different approach by segment. We will Beauty and Care by continuing the great momentum we had over the last years in skincare, but also expand in hair care while capturing our synergy with innovation and joint concepts. We will secure our profitability and growth in ingredients and continue to be the backbone of our perfumery. In short, we have been performing and transforming over the last months. We'll continue to deliver this sustainable growth, building on major progress being done. We aim to grow at 5%-6% organic growth over the next years, leveraging our focused choice in perfumery, Beauty and Care, and the synergy also in between.
On EBITDA, we will first consolidate at 20%-22% EBITDA margin and aim at reaching 20%-24% on mid-term by capturing the full potential of a new organization, further acceleration on innovation, data, and AI transformation, focusing relentlessly on excellence, but also adjusting the portfolio. By that, I would like to thank you, and all together at Perfumery and Beauty, let's go beyond well-being, uniting delight and care for positive impact. Thank you very much.
Good. What a discipline, huh? You see the impact on the financial community is bigger than on my CEO, huh? We needed to get into the room. Good to see you all back for the second part of the program. We're gonna kick it off with HNC. So, Philip.
A warm welcome also from, my side. I think the mic is working now. Thank you very much. Really excited to present here, to you today the Health, Nutrition & Care, or HNC, business, and also to welcome you later on during the breakout in the experience room. If there is one term that nicely summarizes what we stand for in Health, Nutrition, and Care, it is preventative health. Preventative health is important now more than ever, and that is because there remains an important gap between health span and lifespan of typically 10 years.
If you know that 80% of a person's healthcare costs throughout his life, his or her life, are spent in that last 10 years of life, and you combine that with the fact that the population is aging and people above 65 years old are gonna double towards 2050, this becomes clearly unsustainable. Governments have understood that in North America, in China, in Singapore, for instance, and are taking measures to make people more aware about the importance of preventative health. The good news is also that COVID has people—has made people more aware of the need for self-care, and consumers are looking for enjoyable, sustainable, and science-backed solutions. Another, another element that I think is supporting our business is that we see new customers entering the space.
Many large ones, like Nestlé and Unilever, for instance, but also many, many smaller ones, often very, very regional, as barriers to entry our industry, I mean, in terms of becoming new customers, have never been, have never been that low. So all four elements clearly support, clearly support our Health, Nutrition & Care business. And so what we aspire to do is to keep the world's growing population healthy, together with our customers, by providing preventative health in enjoyable and sustainable science-backed solutions that are not only better for people, but also better for the planet. And we have a short video to illustrate that.
Health affects all of us at every stage of our lives. Health unlocks life's possibilities, and that's why we see the purpose behind every product. At DSM-Firmenich, we know health enables people to explore their passions, grow up strong, and open new possibilities. However, living in today's world brings its own challenges. Increasing levels of stress, insufficient nutritional intake, and illness are putting new strain on our wellbeing. To make our world a healthier place, we need to go beyond essential ingredients. We need to think bigger and support our customers. This means increasing omega-3 intake while protecting the oceans, improving kids' nutrient levels with supplements that look and taste delicious, expanding treatment options and convenience for patients of all ages, and making nutritious products accessible to all by fortifying staple foods. Together with our customers, we can deliver to the needs of consumers and patients.
We go beyond the essential to co-develop desirable and sustainable science-backed products, powered by our expert services. A healthier world takes more than just ingredients. It takes an end-to-end purpose-led partner that brings progress to life.
We bring that progress to life through seven segments, covering the entire lifespan of a consumer. Starting with early life nutrition for pregnant women, for infants, and for toddlers, over dietary supplements for active adolescents, active adults, to medical nutrition blends and pharma active ingredients for people that have a particular health state or health need, to nutritional improvement solutions that we provide for the undernourished in low and middle-income parts of the world. Those five segments cover our health nutritional ingredients, B2B segments. Next to that, we have our own specialized B2C business called i-Health, that is very much focused on health from the gut and women's health. Of course, we have our biomedical materials business, very much focused on mobility and on cardiovascular solutions.
If you look at the first 5 segments, that totals roughly EUR 1.7 billion in sales, and within that part of the business, we're roughly 3 x bigger than our next competitors, next competitors that are typically focused on just ingredients or on blending or on CDMO type of activities for nutritionals. Now, it's not so much the size that sets us apart, although it's not unimportant. I think what really sets us apart is the business model, consisting of the 3 pillars. The first one is the ingredient toolbox. We've got the largest ingredient toolbox in the industry, own produced ingredients, but more importantly, with our own scientific evidence associated to each of those ingredients. Now, ingredients alone is not enough. I think Dimitri mentioned it. There needs to be more.
One needs to be able to combine those ingredients in or with the products from the customers, and by doing so, coming up with unique health claims, first thing. Second thing is, one needs to fit in the application of the customer, and the number of applications is rapidly expanding from traditional capsules and pills, into gummies, into soft chews, into into stick packs, into gels, into shots, et cetera. I mean, consumers have become extremely picky on what they want to, on what they want to take, and so we're putting our products into special forms to make that, to make that possible. Last but not least, thanks to the merger and the integration we've got today, also access to fantastic masking and flavors technology that makes it also taste well.
All of that we do in the co-creation, in the co-creation engine, together with, together with our customers. If you wanna do that, you have to be close to your customers, and you have to be close to the regulatory authorities in all the regions where the customers are active. And we are, right? So I think if you want to be successful in this business, you need to have each of these pillars at scale, and they need to work seamlessly together, and they do. Now, before I'm gonna go more in depth into each of the pillars and what we're doing there, I'm gonna talk about the results of 2023. Over the last 10 years, this business has more than proven that it can grow at a stable, roughly 4% or 5% year-on-year, and do so at the margin of roughly 22%.
That hasn't been the case in 2023 for a number of exceptional circumstances. Firstly, related to the once-in-a-lifetime spike in immunity-improving ingredients during COVID. We've seen the unwinding of that in 2023. That, of course, has had quite an impact on our volumes, and that has been one of the three elements. Second element has been a long destocking with our early life nutrition customers, primarily because of the Abbott issue and the Abbott plant closure in 2022. Thirdly, an exceptional spike in the energy costs and the raw material cost that is luckily unwinding already at this moment in time, needs to work its way through the stocks, but so that will definitely disappear.
So these three elements have basically created a drop in the margin in 2023 that we are working our way through to bring the margin back up to 22%-23%. And the way we're gonna do that is by basically capturing the benefits of the vitamins transformation program. That has a focus on cost, but also a focus on volume. Secondly, capturing the synergies. Thirdly, fine-tuning the portfolio. And fourthly, accelerating our growth or accelerating the sales based on innovation-led, based on innovation-led growth. So let me talk you briefly through what we mean by tuning the portfolio in HNC. Just like the other businesses, we've done a very careful review of all our segments in terms of our right to win, but also in terms of the market developments. You see two businesses here in the accelerate segment: Eye Health and Biomedical.
Those two businesses have shown very consistent, very consistent, profitable growth, and also provide very, very good returns on capital. So we're gonna continue to accelerate their growth. Then, in the growth segment, we've got the Pharma and the Early Life Nutrition segment, where we're gonna continue to invest to also there continue the growth. The one segment that we need to improve and basically bring it up also to the growth segment is the dietary supplement segment. And we're doing a number of things there. The first thing is that we're gonna leverage the ANH carve-out to reduce our dependency on the non-differentiated base vitamins. And we have already started doing that by basically shutting down the vitamin C factory in China last year, and eventually divesting it earlier this year.
The other thing we're gonna do is we're gonna look into our marine lipids business. That is a relatively volatile business that also is quite capital intensive, and so we're looking into options in order to address that. Next to that, as I said, we're gonna reap the benefits from the vitamins transformation program. That is gonna benefit not only dietary supplements, but of course, also pharma and early life nutrition, and we're gonna further invest in our blending capabilities and in renovating the portfolio. Over to renovating the portfolio. So the first pillar, the toolbox of ingredients. What are we doing there? Basically three things. The first one is expanding the health benefits that we focused on. Traditionally, we've been quite focused on immunity-improving ingredients.
We're expanding that with a particular focus, as Sarah also referred to, on gut health, or as we call it, "health from the gut," because it improves brain health, it improves metabolic health, it improves mental health, it improves a lot of different types of, of health, of health states. And what we're doing there, and you will see it in the experience room, we have nowadays in the portfolio, pre, pro, and postbiotics, and the latest innovation we've launched a few weeks ago is basically a biotic vitamin, and we're the first one in bringing that to market. So as Sarah said, it's a vitamin that doesn't get absorbed in the gut or in the small intestine, but goes all the way to the colon. The second lever to renovate the portfolio is increasing the differentiation.
And that is where we particularly focus, I would say, on healthy aging, because typically, as one ages, the body absorbs less well different type of nutrients. And so what we're now doing is we're renovating, among other, the vitamins portfolio to make them more bioavailable. And you'll see here today, ampli-D, but we'll come up with an ampli-C and many other products to play nicely into the healthy aging space. Then the last thing we're doing is making the portfolio more sustainable. And we're, for instance, shifting from marine lipids, shifting the entire industry and creating a new category, I would say, so shifting the industry away from marine lipids into into algal lipids. So that is what we're doing on the ingredients portfolio. As I said, ingredients by themselves are not enough.
You need to be able to work with the customer to bring them together so that the customer can put a unique claim on pack. You need to make that combination work in the application of the customer, and it needs to, it needs to taste well. And that is, that is what we're doing, and we're doing that these days in a very proactive way, right? So looking at the customer's portfolio and thinking through with the customers, proactively coming up with ideas on how we could improve, improve the attractiveness of his or her product line. We sometimes call that purple boxing. Why do we call it like that? We cannot black box our solutions, right? Because in the end, the ingredients are on the pack, right? And someone could replicate that mix of ingredients.
But if we do it well, if we do it in a differentiated way, in a particular form, so that it better fits the application of the customer and it tastes better than any other competitor can do it, that is what can really differentiate us and make the business much more sticky than it has ever been, has ever been before. These are some examples... and you'll find them, and you'll be able to, to try them out in the experience room. I think the first one is maybe one of the most challenging thing to do, our customers have told us, because it's a product that is good for cognitive performance, and it's a combination of an algal lipid with a vitamin B12. By the way, the algal lipid, it smells fishy. It tastes fishy.
The B12 is very bitter, and the ginkgo biloba, that is the Virtiva, Virtiva Plus, is also very, very bitter, right? So that's the sort of things, that's the sort of challenges we try to crack for our customers. As you can imagine, this is the area where we will see most of the synergies in HNC. We have signed up for EUR 125 million of synergies, and we currently stand at a pipeline of roughly EUR 60 million. So making good progress here. Last but not least, as I said, if you wanna do that sort of work, you have to be very, very close to your customer, and we are. On the left-hand side, you see the breakdown of our sales.
We're a bit over-indexed on North America, which is not a bad thing these days, by the way, but that is entirely due to biomedical and eye health, right? If you take out biomedical and eye health, it's roughly 30, 30, 30. And what is even more important is the 30% that we are... 30% of our sales in developing regions, because that gives us a nice footprint for capturing the growth that there will be in those regions going forward, I would say, especially in early life nutrition, but also in the other segments. The middle pie gives you the breakdown of our sales with regional versus global customers. The percentage of regional customers has been going up quite a bit in recent years, up to 70%, as you can see. Also, that puts us in a good position.
Last but not least, as I mentioned it, we have to not only be close to our customers, but we have to be very close to the regulatory authorities in each region. Again, we are. If you look at the number of approvals we've gotten for completely new, innovative ingredients across the globe, across different countries, I think there's no one, there's no one else who comes anywhere close to that, right? That is utterly important, because regulatory environments are becoming more stringent, and so you need to work your way through that and be able to work your way through that in a fast and agile way. That covers the three, the three pillars: ingredients, the co-creation engine, and the customer proximity.
We're investing in all three of them, but in the end, all three, they serve to deliver the strategies that we have by segment, because we run the company in a BU-led way, but also within each BU, looking at the different, at the different segments, right? This slide summarizes the main strategic priorities for the four largest segments. So in early life nutrition, we're very focused on continuing to help our customers with the premiumization that is going on in the high-income regions. But at the same time, there needs also to be a premiumization or an upgrade in the lower and middle-income regions. That requires then to come with more affordable solutions, and you'll see some examples of that in the experience room. So it's the two, right?
It's working high-income regions, further premiumization, but more affordable solutions for lower to middle-income regions, where a lot of the growth will have to come from in the coming years. Then on dietary supplements is coming up with differentiated new ingredients in differentiated blends, right? It's all about blends. Blends that are good for healthy aging, blends that are good for health from the gut, women's health, a number of up-and-coming health benefit areas, and of course, growing with our regional customers. Eye health remains our window on the dietary supplement market, with a very strong focus on health from the gut and on women's health, and of course, gives us our own internal tool to test the market for our innovations, and you'll see a number of examples of that in the experience room.
Last but not least, pharma is all about expanding the portfolio, for instance, with CBD, but also expanding the applications. For instance, using our ingredients as excipients in biopharmaceutical products. So what do you have to remember from the presentation? One, we will rebuild the margin, and we will do so through the vitamins transformation program, capturing the synergies, but also fine-tuning the portfolio and accelerating innovation-led growth. To do so, we are continuing to invest in the ingredient toolbox, in the co-creation engine, and in our customer proximity, because the margin needs to improve through growth, right? We want to be a growth business and a profitably growing business.
By investing in the three pillars that need to work seamlessly together, we will primarily benefit our early life nutrition, dietary supplements, and pharma segments, while we will, of course, continue to accelerate our highly attractive eye health and biomedical business... In summary, we will rebuild growth, right? Sales growth, 4%-6%. That will come relatively quickly as we're going through the trough, and we will rebuild the margin. That is something that's gonna be a bit more gradual, require a bit more time. It's not something for the next two quarters, but it will, it will happen. Very confident about that. Now, someone told me that it's not all about numbers, that the numbers are not what people get out of bed for in the morning, not only the numbers. Maybe surprised by that, I was, too.
But, but I think it is this message, it is this message that I think takes extremely well with our organization people in our organization, and we have a very inspired organization. It's together with our customers to keep the world's growing population healthy. A big thank you for your attention. See you in the experience room, and with that, over to my colleague, customer, and supplier, right? Patrick.
Thank you. I'm always kind to my, my customers, too. He's, he's my customer. Hey, I'm very excited to be here. I'm excited to be here to tell you something about the journey that we're going through with Taste, Texture & Health. And what I would like to do today, in the 25 minutes allotted to, to me, is actually go through, first of all, what's happening in the markets. Now, secondly, why are we uniquely positioned, in our opinion, to actually capture those opportunities? And third, how and where are we going to grow? And I'm sure you have interest in where we are with our revenues. I'll cover that, too. So our markets, what's happening in our markets? Well, our consumers are looking more and more, in the food and beverage consumers, for healthy solutions.
66% of all consumers actually have concerns around health and the nutrition they're taking. Very important. Delicious food needs to be delicious. A superior sensory experience is required for a repeat purchase, so if our customers are not able to provide that, there will not be a repeat purchase. And last but not least, also sustainability with the consumers is continuing to become a bigger and bigger issue. Now, what does that mean for our customers? Now, if you look at our major global key accounts, you see there the real large FMCGs. They're definitely not increasing their spend on product development, on innovation, so they rely more and more actually on the suppliers. If you look at the growing regional local customers, they do not have the capability to develop anything, everything themselves, so they also rely on the suppliers and the partners.
So you see that the importance of these partnerships with your customers is increasing. Now, what else is happening in the market? So first of all, you see local taste differentiation is increasing ever and ever. It's going faster with faster new product developments, and we need to keep up with that, and our customers need to keep up with that. Secondly, sustainability, as not just because the customer, the consumer, is actually looking for it, but what we see also is our larger companies with a big brand also have their commitments around sustainability impacting how they look at us. Couple of weeks ago, I was in the U.S. at a very large FMCG, and one of our compounds, one of our ingredients was put on their list to be used by their formulators.
Well, not only because it also tastes very good, but very important reason was its LCA, a superior LCA, and that, to me, was the first time that really, that really hit, and they're gonna push it because they have made their own commitments. Now, what you see also is that product reformulation is accelerating and accelerating. Digital tools we developed for that, but that's really important because that speed, that requirement, is going up and up and up. Security of supply, we've seen issues requiring that. Also affordability, but also changes in consumer preferences, clean labels, et cetera, all driving that accelerated demand. Now, what's important in that, to solve that, you need to understand the interaction between your food matrix and your taste. Now, you'll see a couple of nice examples, and you will have the chance to have a alcohol-free beer today. Alcohol-free beer.
Don't know if there's real alcohol beer, actually, but at least with us, you get an alcohol-free beer. What we're able to do, if you make an alcohol-free beer, I don't know who drinks it, but it's very sweet. And why? When I say I don't know who drinks it, that's not a derogatory remark, sorry. I do not know whom of you has experience with drinking alcohol-free beer. But it's a very sweet taste. Now, what we're able to do is, with our enzymes, create that food matrix, in this case, a beer matrix, to make that much more neutral, and with that, create much preciser tonalities of the end product. Now, very important. On top of that, consumers are looking for less fat, less sugar, less salt, more proteins, health benefits, et cetera, et cetera.
That requires also a continuous change of your product, and again, there, the food matrix and the interaction of that is key. You'll also have a chance to taste this. It is a recovery drink. Now, I'm not gonna ask you who of you sports, because then I run the risk of maybe giving the wrong impression by that, who does and who doesn't. But a recovery drink, which has PeptoPro in it, which is a peptide, very small molecules. They get absorbed very rapidly in the body, so you get much quicker recovery from a sports activity than anything else. Now, this is an older molecule. DSM has had this in the market a long time, was never able to sell it except for professional athletes, and why? It's unbearable to consume. Now, extremely bitter.
Sarah talked about bitter blockers and the ability we have to develop these, these with this receptor technology, to develop these bitter blockers to allow you to actually make this not taste so bitter. You'll taste it. Again, speed of the need to speed up your product development, and product development is not just one dimension, it's the interaction of the food matrix with the taste, okay? And that allows us, that allows us to bring delicious, nutritious, and sustainable solutions towards the market. We have the essential, namely health, we have the desirable, taste and texture, and we have the sustainable all together. I have a little short movie to show you to express that a bit clearer.
Imagine a world where you don't have to choose between what tastes good, what feels good, and what is good for you. A world where the most desirable food products demand less from our planet, where great-tasting food and beverages use more nutritious ingredients that derive the best of nature, making every choice a better one. DSM-Firmenich has the recipe to lead a Taste, Texture, and Health. our passion for the science and emotion of food spans from discovery to application, to customer, to consumer. Combined with our broad portfolio of unique ingredients and boundless creativity, we ensure consumer-preferred solutions for every taste and occasion. We exist to transform how the world eats and drinks, to give more people access to better diets while embracing local culinary traditions.
By co-creating with our customers, we bring progress to life through truly desirable food and drink products that are essential to our future and well-being, helping them reach more people at the speed the market requires. Products we love, but healthier, more delicious, and better for people and planet. This is how we bring progress to life.
So we believe, bringing progress to life, we believe that where we are and what we do, we're a category of one. We're unique. And why are we unique? We feel we have three items that are rather unique. First of all, our portfolio. We have a broad portfolio with synergistic on-trend products. Those are all very important. On-trend, nobody wants to formulate out the products we have, the ingredients we have. It's on-trend, and secondly, what's important and what's important is synergistic. I'll come back to that later. Secondly, a very strong understanding of consumers worldwide. We have a big regional organization. We do understand very much how consumer preferences are evolving. And if you have the starting point ingredients and you have what the customer needs, you can connect that all through your product development, and we're unique in our capability in co-creation, application, and innovation through science.
Now, let me go into depth on all three of them to bring you along in the story why I fully believe, together with all of our team, that we are a category of one company. If you first look at the portfolio, broad, synergistic, on-trend portfolio. These are sales, about EUR 3 billion, divided over segments, all active in all the segments. Beverage biggest, dairy, baking & confectionery, savory, pet, and plant-based. The numbers here are not important. What is important is this: the depth of the portfolio, the ability for us to help our customers with that coordination or that interaction between the food matrix and taste. Secondly, our co-creation, application, and science capabilities. We have a global network of laboratories everywhere in the world, labs to co-create and to apply our products. Now, why is that so important? 500 folks are working with our customers on that.
What we call co-creation is actually the shaping, the making of a final flavor profile. We do that very often with our customers. They come to our laboratories, and together with our customers, we actually fine-tune it according to where they feel, and we have the consumer insights where we believe that flavor needs to be. Now, if you have that flavor, if you have the taste profile, it needs to be applied in a product. We do that, too. We can make all end products possible for our customers. Now, that synergy, we have also an application. As you can imagine, with our ingredients, we also have a lot of knowledge in application, so the synergy is there also. Now, if you look at the science and innovation, we are unmet in our biology capabilities.
Genetics we can use, as also Sarah explained, can use to develop natural compounds, clean label compounds. That's one. Secondly, the unique receptor-based technology. Shared to you the example on the, on the bitter blocking, and that is really unique. And again, also science, the capability to understand interaction, food matrix, and taste. Last but not least, understanding local consumer needs. We do over 2,000 consumer studies on sensory consumer preferences a year. We touch 50,000 consumers. We've now extended that, because that's all centered around taste preferences. We now extended that towards consumer positions and opinions about the health propositions. On top of that, we've developed proprietary tools to use big data and artificial intelligence.
An example is we have a program called IRIS, where we take a lot of data, publicly available, and we use that and predict trends on flavors. So we have, for instance, we announce annually the flavor of the year, and our customers are interested to see what comes out, when it comes out, and how can we link to that? Next to that, we have a program called Trends, a bit more human-centric. We look at change agents in the world, architects, urban planners, designers, et cetera, to see what are the bigger holistic developments. And the interest of our customers to be in dialogue on that with us is very high. So those capabilities we have centrally, and we roll them out globally.
Every region has their own consumer insights department to help to support the sales process and to help to support our customers in growing their business and fine-tuning the products that they have. Now, how will we grow? We talk about synergies. I'll come back to that later. We have EUR 300 million in synergies. We've, as Philip said nicely, we've signed up for it. We've embraced it, we love to get the synergies. However, that also means that EUR 600 million actually of regular growth has to come, roughly. So two-thirds of our growth, regular, one-third of synergies. So we have to also keep our focus in our running businesses.
Now, that means we have a fantastic business in taste, where we continue to grow and continue to add value to us, but also to our customers, by really using our brief machine, where we get roughly 15,000 briefs a year, where we respond to customer demands in a very agile way, where we have local assets, dedicated assets, multipurpose, quick turnaround, and really help that fast product development cycle that we talked about. Continue to focus their growth based upon this fantastic customer intimacy, innovation, and the transformation to clean label natural. Now, our ingredient solutions will also continue to grow. Now, that we call a value proposition machine. What's the difference?
In taste, we explain our capability, we go towards the customers, give them ideas, and they come back and say, "Yeah, we really like that, but by the way, we like to have that target at a slightly different age group or with a slightly different profile on its flavor." Yeah, so it's a. You, you create the pull. The value proposition model is much more of a push. We have a means for you to optimize your process. We have a means for you to optimize or fine-tune your product left or right with a functional ingredient. That's a value-based, a value proposition-based selling cycle. Global assets, segment steered. There we said we continue with a product leadership. What we're also gonna do there is actually optimize the portfolio. I'll come back on that later.
Last but not least, use the customer intimacy we have through taste to actually build that business further. Now, next to that, synergies. Very important. Cross-selling, and it sounds simple, but it is very important. Turns out 4,000 customers, 10% of these customers have an overlap, so a lot of new customers. It doesn't mean those customers all need the same products, don't get me wrong, but a lot new opportunities to go after. Example, one company, actually, we've been trying to change them to change their texturizer. They were very concerned that the texturizer actually would change the perception of the consumer. Now, in the old days, our ingredient solution by itself does not have the track record or the relevance for the customer to really explain why consumers approve that consumers do not taste any difference.
Now, with Taste, together we are. So we got approved, and we're starting to sell the texturizers. We have many more of those examples, where going together, using a relationship left or right. Ingredient solutions has fantastic relationships in the dairy industry, due to its specifically enzymes cultures business. Using that to enter with the Bovaer is also a route for the cross-selling. Concept selling. What we do is we put our products together, show some unique capabilities, and bring it to the customer. I've gotten questions in the past, "How much have you sold of that and that solution?" None or little. Maybe a white label, generic retail chain will take something like that and put it in the market. Most customers, it's a trigger.
They come back with a brief, and we modify it, and something like that, we use the component to actually sell. You'll get to try a very nice barista oat drink-flavored milk today, and it has the flavoring, the best-in-class milk flavoring that Sarah talked about, but also actually our solutions to create the foaming, which I'm sure if you like your cappuccino, very, very important. And see, that's a concept. Again, we will not sell that. I think you are tasting a peach something. I think it's a peach flavor, if I'm not mistaken. Do not ask me, are we gonna sell the peach? No. We have now a whole portfolio to adjust that to other customers. I think you get the picture. On top of that, capabilities.
That example I gave you about the sensory sharing capabilities, there's more. Next to innovation, there's more capabilities we can share and actually accelerate our growth. Now, we also set a couple of growth platforms. You might say, "Why is not the whole unit a growth platform?" We gotta also be a little bit careful about how much—what are we gonna do together, and what do we continue to run? Remember, two-thirds, one-third of our growth. Growth platforms, plant-based. Yes, plant-based had some challenges the last couple of years. However, the opportunities, the reason why there are challenges in plant-based, taste and texture, the label, affordability, and nutritional content, are all items we can address. So a lot of opportunities by putting all of our capabilities together. Health benefit solutions. We know a lot about what our products bring for humans.
The question is: how do you bring that to market? How do you use your marketing machine to bring it to market? We put up a sort of a center of excellence to help our commercial teams in the world to roll it out. On top of that, I look very much at Philip, because Philip is developing hero ingredients, new hero ingredients, which I would love to put into food and beverage solutions. But food, in food and beverage, you cannot - you don't have the same premiums on that. It's a, it's a softer front-of-pack claim, so I really rely on Philip to actually build up the scientific substantiation below it. Sugar reduction. Again, Sarah talked about the receptor, the sweetness receptor. We can modify all profiles. With that, we've built our position in our portfolio of sugar reduction business within the taste organization.
Within Ingredient Solutions, we have a number of products that we can add to that, that also create the sweetness, and we're combining that capability in the market. Last but not least, pet food. Pet food is a market where today we have a business where we sell nutritional solutions. So we have a route to market, we have a dedicated sales force, we have the large customers, we have access, but only with one portfolio, nutritional solutions. We'll be adding there two pillars. One, a palatability pillar, taste, yeah? And we'll use the capability in taste. It is different than pet, so this is not something that will... is immediately transferable, but the know-how that we have, we can slowly but surely also capitalize on in our pet business. And gut health. We talked about the microbiome. Also, for pets, the microbiome is key.
50% growth in claims over the last three years of new pet food solutions all around microbiome. We believe we are well-positioned to address that demand. This is all standing on a foundation, sorry, a foundation of our people, and I'm very happy with the people and the engagement of our folks. We've had an interesting 12 months, but with that, we kept our eye on the ball in the performance, and we kept the eye on also the longer-term price, how to make sure we create this growth engine for our company. Engagement is high. It's very high, and also, the, the retention stays at the levels of before the merger. Those things make me very confident about us being able to continue to inspire our folks going forward. Synergies. Where are we with synergies?
Again, one third, two thirds, but synergies are important. We had the chance in Geneva, we had a teach-in in Geneva, which was in November, and we shared some closures we had. This is what we showed in November, and we were very happy with that. Why? Because it showed already the global coverage of synergies. We also had a teach-in in Princeton in February. You see the list is growing. Today, this is the list. And again, I'm so happy about the spread. It's not two or three people that get together, and they do that. No, it's globally, it's everywhere, and that shows the buy-in and the commitment of our folks to actually drive our sales. Now, sales is great. We have a pipeline. Takes roughly 12-18 months normally to transfer a pipeline into business, roughly. Don't take... There's all exceptions to it.
We're also learning how it now works with cross-sell, but that's in principle where we look at. And if you look at the pipeline, it's developing very nicely. Checked it last week, 173 in our pipeline. Lot of opportunities. What is a pipeline? It's not an idea of an account manager. No, it's actually a discussion with a customer, a sample being sold, sold, sent, an activity, a quote being sent out, et cetera, et cetera. So these are objective opportunities that are out there. If you look at our related synergies, we expect to reach roughly EUR 50 million this year. Things are looking actually pretty good at this moment. And we expect them to ramp up. 2026, ramp up a little bit faster. Why? We have now a lot of cross-sell.
The new joint concepts take a little bit longer time. As I said, we present them, we get a trigger back, and slowly but surely you develop together with your customers, new products. Focus. Where are we gonna focus on? You've seen this sheet. It's not a surprise to you. When I look at acceleration, we're gonna accelerate in the four growth platforms. I think that goes without saying. We're also very much focusing on growing our taste business. It is extremely well positioned, very capable, global coverage, innovation, the whole backbone is there. But it also acts as a magnet for other business due to the whole customer intimacy you have in the taste business. Now, with it also our cultures and enzymes, we continue to invest, which is a nice specialty business, and we'll grow our on-trend hydrocolloids as well as our premix businesses.
The premix is a tool to bring our health benefit solutions to the forefront. If you look at our improve to grow business, our proteins. We have two types of proteins. We have a canola protein, which is a big specialty, which we're bringing to market now. It's what we call a hero unique ingredient, allowing us to come into a customer with a unique product and have a differentiating discussion. And then we have also the proteins that are based upon pea and chickpea and fava.
Now, what we said there, the pea, chickpea, and fava based proteins, it's a company we acquired a number of years back, and we need to accelerate moving that towards human consumption, and we do that by putting it into our concepts and really moving it into a global scale. So we'll move that up. And the CanolaPRO, we're continuing to launch that and actually bring that to market. Now, you might be a bit confused if I say there are proteins to grow and have plant-based there. But plant-based is the whole holistic system. Texturizers, nutritional package, taste modifiers, maskers, et cetera. That's where we can really make the difference. Now, an interesting one is this. It's a protein-based bar.
We got the protein, worked a lot with the customer in getting the business, in making the protein exactly right, the right PDCAAS, which means the right, nutritional amount of, of, nutritional value coming into the, into the being absorbed there by the person. However, we don't have the taste, nor the texturizer in it, nor the nutritional package. So this is one that needs to become part of the pipeline of, of synergies. Okay? But I wanted to share that with you to give you a feel about the proteins itself are important also to build knowledge and to build the solutions in plant-based. Then we have our yeast extracts.
Yeast extracts have a below average profitability and above average capital intensity, so we're looking at options to see what we can do to mitigate that, while at the same time keeping access towards yeast extracts, extracts as a base product for our taste portfolio. The non-differentiated vitamins, Philip shared with you already about that's the one being part of the carve out of ANH. Now, that's what we intend to do. So summarizing, we can continue to focus our growth in taste through the value machine, through innovation, customer intimacy, and grow that business. Ingredient solutions, we continue to drive our value proposition machine through product leadership, as well as on top of that, optimizing the portfolio. Next to that, we'll capitalize on the machine, and the machine, I mean, portfolio, consumer insights, and ability to develop products.
And last but not least, we will deliver on the EUR 300 million revenues, as well as growth through the growth platforms. What will that lead to? Historically, we've been running at 4% growth, roughly. When you look at our synergies, that should be roughly 2%, maybe a bit more, but say 2%. On top of that, we're gonna tune and accelerate. Remember the phases we had? Tune our portfolio, as I shared also earlier, and accelerate, i.e., we also add, for instance, Bovaer to this portfolio, which will lead to us to a growth rate between 6% and 8% organically. EBITDA percentage-wise, we used to run at 18%-20%.
Now, if you put the synergies growth of roughly 2% organic, and if you add there some cost efficiencies to it, you come to 2%-3% additional EBITDA percentage and 1%-2% as a result of the tuning, of our portfolio, as well as adding the innovation of Bovaer to it, leading to a 21%-23% expectation for our EBITDA percentage in the midterm. Now, I hope you feel I'm excited about what we're doing. I hope you are excited about what we're doing, because we do something unique. We create a company, a category of one, and we create delicious, nutritious, and sustainable foods.
... and in my opinion, in our opinion, nobody else can do that as well as we can. Thank you very much.
Thank you, Patrick. There's one thing for sure with me, and that make me thirsty looking at all of the applications. And Philip, thanks as well for showing us the intro in the HNC business. And I know you're super excited about the breakout room that your team has created, and we'll be leading into that a little later. But before we do that, we have some sweet indulgences, so there's dessert served outside. And after that, we will be going into the breakouts, where we will be showcasing what the business is all about, to give you a taste, a flavor, and a scent of what we bring every single day. Now, I have to look at my speaking notes, eh? So, remember the colors. There's a color on your badge, yeah, that will determine the first breakout rule.
There will be a hostess and hosts outside that will take you there after you enjoyed the dessert. The green one will start with HNC, which is at the right side when you go outside, and you go through the corridor, and then you'll find the breakout room there. Then, the people with a red badge will start with the Wonderful World of Patrick. You will be put on some aprons, and you'll get some tasting experiences there. Those are at the left side. The one with the blue badge will enjoy the Wonderful World of Emmanuel, and that is basically immediately in your back. So with that, enjoy, and then we'll see each other after you had all the experiences. Thank you.
All right. I go here, go left.
Yeah.
Okay. So don't worry, we're not gonna dance. We just. I can tell you out of experience, you don't want that, so. The movie you've seen was June last year, where we had our top leadership conference, and we thought it would be a good idea just to dance for the rest of this Firmenich. We thought it was a good idea. At the end, I think they laughed more than that they enjoyed it. But nevertheless, super happy to have the last phase. I think like Ralf was saying, you have lots of questions on your list. We'll open with the whole executive committee to be here. We talked about strategy, we talked about our plans. You've seen our people in the booths, in the breakouts, and this is the team that stands to lead the dream.
I think there are a few people on stage you've not seen yet. You've seen Ivo. We talked about his business, Animal Nutrition and Health. He's BU president of Animal Nutrition and Health, and he's still full, flat part of the team. Any question on Animal Nutrition and Health, whether you wanna test whether Ralf or myself were right saying about animal, but I do think Ivo will contribute to the fact that it's a very strong business. But you can ask himself. Then we have Jane. She is our Chief Legal. She was on stage as part of the executive committee here as well. We have Mieke, Chief HR Officer, and we share together the... we are co-captain of the dream pod, right?
I got a few of your dreams later on, but I will use that as a closing remark. With that, let's open the floor. Just raise your hand, briefly introduce yourself, and then the mic will appear. And where the mic will come, it goes at randomly, and but don't worry, we will have time.
Okay, thanks. My name is Martin Roediger from Kepler Cheuvreux. Regarding your midterm targets, for your core activities, I heard that the starting point is not the day when you have done the merger, that means May 2023, but end of 2024, which brings you the timeline for your achieving your midterm targets to the year 2027, 2028. Can you explain why is that the case? Thanks.
Indeed, our midterm targets are 2027, 2028. That has been the case. I remember that you once asked in the room, "Help me a little bit. What are your midterm targets timeframe?" And I think I told you that my midterm timeframe is a bit longer than what your midterm timeframe is. I've been heavily coached by Ralf and by Dave, that we just put years on it, and we settled for 2027, 2028. Remember, we are on a journey here. I hope you appreciate that on that journey, we're just not gonna say, "Now we are in the midterm targets on quarter two, 2027 or quarter two, 2028." We're on that journey. We're making progress on the journey, and the midterm targets are 2027, 2028. Okay? Next. It just go at randomly, everybody will have his chance.
... Hello. So you mentioned, let's put-
Could you introduce yourself, and then-
Yeah, sorry, sorry... from Thematics Asset Management. It's an affiliate of Natixis. So you—let's put about 2023. For the historical part, you mentioned more or less 4%-5% growth, and going forward, quite much more. Can you elaborate or split a bit between, like, pricing, volume, mix, and what you see going forward, maybe with more value added into your product, more mixed price, into the algorithm of the growth?
Yep. Let's do a quick round on the BU presence in sort of a generic response on you looking at pricing, a bit stabilizing. This is predominantly volume, but let's do a quick round to get a bit of color. Let's start with you, Philip.
Volume, right? We will see some-
Oh.
-volume when we speak of growth, because we will probably see some deflationary effect from reducing raw material and energy costs. And in terms of the mix, with all the innovations that we bring forward and some of the fine-tuning that we're gonna do in the portfolio, there will, of course, be a mix effect in the margin.
More than less? Or more and more-
In the positive sense, yes.
Yeah.
Yeah.
Okay.
Volume.
All right.
I think overall—
Still interested in animal?
Yeah, go ahead, yeah. 'Cause it's gonna be-
Mm, mm.
In animal, we, we do expect volume growth as well, in performance solutions primarily, as already mentioned also early in the presentation. In vitamins, it's gonna be a bit of a mix, volume, and of course, clearly pricing as well. I hope that we will see a little bit of a price improvement, through the cycle.
Well-
Well, throughout the planning period, we're focusing on volume growth. If you look at it now, coming out of 2023 into 2024, we can talk about a lot about inflation and the unwinding of that, but we're looking at a midterm period, and there we're kind of saying, "Okay, the inflationary impact will be more that you continue to price slightly on, but, maybe it's, closer to the 1% that Patrick was mentioning." It's really a volume-driven strategy going forward.
Thanks. Next. Yeah, let's, let's flip-flop from left to right.
Yeah. Hi, thanks. Charles Eden from UBS. Ralf, probably one for you. Just, just on the cash conversion target, I'm just looking at the definition, adjusted EBITDA less CapEx ex delta in working capital. So if I take adjusted EBITDA margin, roughly 20%, let's just use that as a benchmark, CapEx 5-6, that gets me to 14%-15% of sales.
Mm.
Delta on working capital, okay, may go up a bit. But that 10 feels very conservative. Is, is it... Am I missing something? Why, why not 12? What... Why 10? Can you help me understand?
Yeah, no, it's a great question. Why not 10? Why not 12? That's something we ask ourselves as well. When we put out a target there, that's a target that we wanna meet and beat, and that's something that we're focused on. But you also have to realize where we're coming from. Dimitri still hasn't forgiven me that I held back on EUR 1 or 1 million, that we delivered EUR 999 million of cash flow last year and not a billion round. But if you set that off against the top line that we had, we didn't deliver upon that performance. So that is something that we are absolutely committed to growing into. And you also have to recognize is that, over the midterm target, yes, we will be delivering that target with more confidence.
But you also have to recognise the journey where we are now, highlighting the margin of the portfolio today, around 18%, but also the step down in working capital is still something that we're delivering, while at the same time, we are committed to making the investments in the business. So it's a target of a minimum commitment. It also... It's not 10% per se, it's a minimum commitment that we put out there, but rest assured, we'll not leave a euro on the table, if there's more.
Yeah, and I just wanted to build on that, because I think it's a fair question. We're all you see a team here who's extremely competitive, right? Yeah, I don't know, I don't know how we've selected that, but this team is really competitive. So if we go out there with a promise, we wanna meet that promise, and predominantly like to beat that promise. Well, in the whole journey, I hope you appreciate that we would like to have a little bit of breathing room, right? We don't know exactly how everything lands. We know the big chunks of it. And we said, "In that process, let's start with at least 10%." Right? That doesn't mean that we're happy with 10%. It shows that we have at least 10% with some breathing room. I mean, we have ANH to carve out.
We have the vitamin transformation to come in. We basically have to build on the synergies. You've seen the growth path of 5%-7%, so we wanna have a bit of breathing room. So we said, "Let's put out at least 10% to meet it, but preferably to beat it." Right? Okay. Next, we go to... Oh, at the back. Yep.
Hello. My name is Artem, Redburn Atlantic, sell side. Thanks for taking my question. When talking about Health, Nutrition, and Care business, you mentioned the role of regional customers, which was, as far as I remember, around 70%. Would you briefly comment on the role of regional customers in other business segments, maybe also by geographies? I wouldn't necessarily expect the numbers, but to emphasize where you see the role of those customers more important than in other areas. Thank you.
For Health, Nutrition, and Care, or for the other businesses as well?
For other businesses, and maybe for geographies as well.
Okay. Let's make a quick tour and then go from right to left, so start with Patrick.
... in general, I don't wanna comment on it per region, but in general, the importance of local regional players is increasing in our portfolio. And I shared also earlier that they need a little bit more support, more partnership, and we're capitalizing on that and growing there also very rapidly.
I think I mentioned this morning that we want to accelerate the, what we call the regional consumer brands, with the tailored, effective solution. And, while also delivering with the global consumer brand. Now, for sure, the role of, some geographies like, India, China, is very important in the deployment and development of our local businesses.
For animal nutrition, it's a very regional, but even local business. Just to make that clear, the premix network, as mentioned also earlier during the presentation, is super important really to reach those customers. So it's a very local, regional business. Global customers, of course, you have a few, but it's predominantly actually regional, even local.
And then Philip?
I think it was covered in the, in the presentation, so for us, it's very, very important.
Good. And maybe I would like to circle that back to ask Mieke, who is the Chief HR Officer, on how important are the regions for us and how we... I mean, we're an international company, so maybe you can say a few words on what you see around the world while traveling.
Sure. If you picture DSM-Firmenich, okay, we're a EU-headquartered company, but the presence of where our people is, and a big part of our business growth, is outside of Europe. So you have to imagine the U.S. is market number one for us in terms of overall footprint, also in terms of number of employees. Then we have China, which is extremely important for us. Brazil, the whole Latin American region is very important. So we make it a point of pride to make sure, in line with the strategies that you've heard of the business units, to make sure that we drive the connection with regional customers, that we have the right capabilities and footprint in those markets to not be a too Euro-centric organization. That's a key part for us of securing our growth globally. Thank you.
Okay. Next. Who's next? Yep.
Thank you, sir. Matthew from Bank of America. Just a couple, maybe for Ralf. Can you just remind me the definition of revenue synergy, that EUR 275 million number? What is the criteria to be included in that, given it's a, it's a pipeline? Is that just you're involved in a brief, and then what sort of win rate would we assume? The second, maybe I think it was Charles's question. I'll just follow up on the cash flow. Dimitri, you, you started today talking about dreaming big, yet you've put out a cash conversion target that doesn't strike me as particularly dreaming big. When you get to the end or closer to the end of this journey of creating the portfolio that you're aspiring to, is there any reason why your cash conversion wouldn't be at least as good as peers in the sector?
Okay. You go first.
Good. Yeah, happy to talk about the pipeline, huh? But that's also a great question to my colleagues. So risk-adjusted pipeline, when we're looking at it with... There has to be a probability that this will be converted into sales. Now, on average, it takes about a 30% conversion of that portfolio into sales, just like managing any other pipeline. We don't have a specific different definition for a sales synergy pipeline than a normal pipeline that we would manage. However, and you also heard the excitement about from the BU presidents, that you typically develop this in a close cooperation with your customers. So we do hope that the win rate is actually bigger than what we normally see in our business and as customary in the industry.
Yeah, and then on, on dreaming big, I have to apologize indeed. If I dream big, I don't immediately dream about cash conversion. I start with sales and an EBITDA and a working capital, and as a consequence, cash. Nevertheless, your challenge is fair, and I think I've responded a little bit in saying I also want to dream and that you go home and say, "Phew, this executive committee, it's a dreamy bunch," right? "But what can I really count on? I mean, give me a break. I mean, dreamland, I go to Disneyland, right?" Well, here at DSM-Firmenich land, and in DSM-Firmenich land, we take promises seriously, and that's also a dream which I want to stand for. If we promise something, we go for the full max to do.
So at least 10% in a company we're building, and I think I opened the door a little bit. Can we do more? Ralf was saying we don't leave a dollar untouched. We'll certainly not. But I wanna also promise and deliver and preferably beat. And I don't want to talk about other references, but we could easily put out there 12%, and then we need to explain all the time that we'll get there. I'd rather put a number there where you can count on and then overperform. And I think in our industry, 10% actual, if you calculate back over last years, is a pretty decent number.
So I don't know where you're exactly referring to, but we feel at least 10% in the company we're building, with meet and beat, is at this moment in time, where we're building a company over time, is the best way forward. Also, not to be, to be accused of welcome in dreamland. Yeah. Next, we go a bit to the right. Lots of questions here. Yep.
Hi, Chetan from JP Morgan, and thanks for all the presentations. Maybe one for Sarah. You know, we heard about co-creation throughout the presentation. How much of your R&D actually is through co-creation sort of a model, if you were to break down your—maybe it could be the question for business units, as well? The second question I had was, and this is, Dimitri, you mentioned something I just, I sort of found it interesting in the morning session where you said targets are not targets, but they are directions. I was just curious, what exactly you meant by those comments. And the third question I had was, just on these synergies from ANH and the other businesses that might be sold.
Can you remind us of any number that we have or we should have on mind for the synergies? Thank you.
Okay. Start with co-creation.
Sure. I'm happy to talk about co-creation, and co-creation means many different things, right? So there's co-creation within DSM-Firmenich. And so I will give you a number, which is of the greater than EUR 700 million spend, roughly 40% of that is in our group science and research organization, and roughly 60% is spread across embedded innovation in the BUs. We work together as one innovation community, but that's where we're working. And then we also work with, again, as we said, more than 100 different partnerships across different areas. Of course, with customers co-developing, and what we do there is see what the need is and how we can go fastest to market and deliver what we need. And so we do that across all of our businesses.
Sometimes have, you know, deeper relationships and coming up to making sure that we can deliver the biggest traction in the market.
Okay. Yeah, no, I think there will be any follow-up question if you need it, then maybe on synergies, Ralf?
Yeah, on the overall synergies, we once more confirm that we will be delivering the full synergies, both the separation of Animal Nutrition and Health, and the deprioritized segments will now have an impact on that. We said that we're well on track, slightly ahead of track, and that's giving us the confidence for full delivery of the numbers as presented before.
Yeah. And then, interesting that you say that. What's the difference between targets and directions? So the targets are 5%-7% growth, 22%-23% EBITDA margin, and then at least 10%, which some people don't find challenging, but I think at least or meet and beat. Directional were the ones which were done on the business units, remember? The margins and the turnover. So from me to the BU presidents, those are targets. From you to me, those are directional. Next question. We go here?
Mm-hmm.
Yeah, hi, it's Alex Sloan from Barclays. Question on the deprioritization of sales. I think you talked about EUR 600 million of sales. In the opening presentation, the deprioritized segment was 10%, I think, of EUR 9 billion. So I guess the first question would be, could the 600 million actually be higher? And if it was higher, would you raise the margin target? And then the second sort of related question, just on the deprioritization of sales, I think you linked a few parts of that to the ANH separation process. I wondered if that's because early conversations you're already having are making you think that those would go together, or this is just something that you're proactively doing as you go through that process?
Yeah. All right, thanks for that, for that question. Let me answer the, the last one, and then Ralf can say a few about the numbers. So, we did the... Remember, we pulled forward the review of the portfolio from 2024 to 2023. So that was even in advancement of, of the announcement of, of ANH. We're already starting that, when we started the vitamin transformation program. Remember, when we launched the vitamin transformation program, we also had a hook that we would accelerate the portfolio review, of where ANH was a big, big chunk, and then the tuning was the second. So it was not related to it. It was really related to what's the market growth, what is the right to win, and what is the capital efficiency? Yeah.
Then maybe on the big numbers, yeah, I remember it was bigger or higher than 600, so it could be a little bit, but it will be around that number. And I think whether it's 600 or 700, it doesn't really matter. I think at the end of the day, we want to grow what we have with the core business, and we need to figure out a little bit on what's the best way, what are the strategic options, to valorize on those businesses. Because some of the businesses are really okay businesses, but it doesn't fit in terms of volatility of capital intensity, in itself. So we also want to create a bit of space to see how that really folds out.
But on the midterm targets, that is the new scope, DSM-Firmenich, where those five businesses were excluded. So, next, we go to this side. We flip-flop. We go to the right, to the left. Yep.
Sir, Fernand de Boer from Degroof Petercam. Coming back on the capital priorities or capital allocation, you said that share buybacks is the last option. Do we have to wait until the disposal of animal nutrition, and then if you have looked at M&A opportunities before you can decide what to do with the capital coming from animal nutrition? That's the first question.
That means you also have a second question?
I have a second question if you,
Follow the second question.
Okay, with that one.
It can be very shorter than the first.
Yeah? Okay, then the second one is, on algae, you mentioned a couple of times during the day that algae-based omega-3 is going to be quite important.
Mm.
But I also believe that Veramaris at this moment is sold out. So does it mean that you're going to expand or increase your capacity at Veramaris? And this is a joint venture, so how does it work that you have a lot of growth and maybe your Evonik partner has less?
Yep. You do the first one?
Yeah, maybe on the capital allocation, it is the fourth priority, but we also do wanna see the proceeds of the animal nutrition separation coming through. And only at that point you can really look at all of the options that are then on the table. And we will look at fairly at every single option, what delivers the most value, and what are the opportunities on hand at that point in time. Anything in advance would be, in a Dutch saying, "Hey, you would verkook de huid voordat je de beer geschoten hebt," so, we wouldn't preempt any conversation or transaction on that front. While at the same time, we are committed to maintaining a strong balance sheet as well, so that is something we continue to lever. It provides a lot of flexibility.
We will come to that point, and at that point, we will take the decision, weighing all the options in the interest of all stakeholders, including shareholders.
For the English speakers among us, Ralf was saying, as a fair Chief Financial Officer, "If you sell the skin of a bear, big bear-
Mm
... "at a fantastic price, but you didn't shoot the big bear yet, you're in trouble," right? Because fighting a bear, I mean, it's a bit curious. So be careful, be a bit cautious on when you spend the money. That's basically what he's saying, which is not a bad thing for a CFO.
But on M&A, do you feel you have wide spots in your portfolio at this moment?
Well, I mean, you should ask the BU president, and they will come with a whole list of what they like to do, right? But I think you've seen on the portfolio also with the clarification of Sarah, that I think we have no real big, wide spots. We have spots where we'd like to reinforce and strengthen, right? And what we don't wanna do now is to start already jumping into M&A. No, we wanna show the potential the current portfolio has, deliver on 2024, deliver on 2025, and then maybe throughout 2025, when we have delivered on what we have, okay, let's see what possible wide spots could be. I mean, I've been a business director as well.
If my boss were asking: "Hey, Dimitri, are there any nice ideas about M&A?" I can tell you, there was a long list of things, right? These gentlemen are built the same, but let's first grow what we have and then review. Well, that's, that's basically the story of today, and I think it's, I think it's good just to anchor a little bit what we have. Look at what we've done over the last year, right? And show the beautiful growth and the profitability of it. Yep. And I think then on Veramaris, so Veramaris is algae-based. It's fermentation, and it means that you have these bugs in a nice reactor, and they're all warm and cozy, and if they are comfortable, they produce more. And they finally are a bit comfortable, they produce more, they produce quite a bit.
Then you can develop strains to make these, these bugs even more comfortable, and they even produce more. We're in that process. So we already have about EUR 100 million of sales. We still have room to enlarge that by strain development. And then there's an interesting area where we do see there is huge opportunity, and that's in the human space, and I think Philip can, can elaborate that a, a little bit. The whole human space for algae-based fish oil, it is partly going to animal, but I think there's real good growth in the human space, and I think you are super excited about that, Philip. Maybe a few words there.
Yeah, absolutely. What we're driving is we're really creating a new, a new market here for algae, algae lipids in the dietary supplement space, and it's going very, very rapidly with the massive price increases we've seen on marine fish oil, right? So customers are now really shifting, and that is providing big opportunity, not only for Veramaris, we also still have a factory in, in South Carolina, in Kingstree, that produces algae, lipids. And both factories are, are ramping up for human also.
Yep. So just to make sure, the animal space we do together with Evonik, human is our exclusive for tomorrow. Yep. Next, we go here. Yep.
Uh, thank-
Next one, sorry.
Thank you. Sebastian Bray speaking. Could you set out the return on capital employed of each of the segments? Because DSM, legacy DSM, used to disclose this separately, and I don't think that the most recent annual report did. So if we take Taste, Texture and Health, Perfumery and Beauty, and Health, Nutrition and Care, where do they rank amongst the current capital employed and the amount of CapEx allocated across them to the business units?
Mm.
Ralf, I'd like to pick up on a comment that you made about the capital allocation-
Mm
... starting off at around 6% of sales dedicated to CapEx-
Mm
... and then dropping towards 5%, in line with peers at the end of the midterm period. That's about EUR 400 million above what setting this end would be if we just did that for peers. Is this just on two big-ticket projects, Veramaris expansion and Bovaer? Where exactly is the money going?
... Thank you. No, very good. Let's first zoom into the return on capital employed. We're obviously measuring that and taking it as a clear metric for us to focus on from a group perspective. Now, following the separation, and it's a little early to start dissecting the balance sheet overall in pieces, we will be providing it in due course. Once we finalize the scope, we will be indicating how much of that capital employed is obviously allocated. Now, and the way I look at capital employed is also basically pre any merger impact. If you like, really, what are the assets that are driving the business? 'Cause in the end, the allocation of that is a bit of an arbitrary effect.
However, if you look at the profitability profile of each of the groups, P&B growing to 22%-24%, the other two businesses going to 21%-23%. And if you look down at the balance sheet that associated with that, and the global network that each of the businesses have, there is no big differential in terms of profitability of those businesses. So that is something where we continue to grow, and you also have to look at it... Some say, "Hey, we've grown more organically over the period." Some did some M&A over the years. But if you look at it and take a step back in terms of the underlying fundamentals, no big performance differential between them, between them. Now, then, if you look at the CapEx, we're still completing a few big tickets, and Bovaer is a big ticket.
Also, historically, we had a couple of those. What we see going forward is a continued investment in all of the businesses. We're making investments as we speak now. P&B launched a couple of new plants earlier this year as well. We're making investments in TTH, but also we see opportunities in the space of Philip in some of the businesses, including biotech. So we will be allocating it. There's no ticket size in there like a Bovaer, so it will be more incremental, so there will be smaller chunks. But we will be making them in various places throughout the period, and that is where the money is going, and that will set us up for continued growth in the future.
We want to seek improve not only our cost base, but also seek that we have sufficient capacity to fuel the growth of the future, and that is where we feel that we are making the necessary investments now to set us up also beyond the synergies and beyond.
I think it's important to understand that the risk profile of the investment also changes with the new company, this Firmenich. I think in the past, with the legacy DSM part, where we had the ingredient play, you really need to build a differentiating ingredient to get in, right? With a different risk profile. What we now have is this creation and innovation capability coupled with ingredients. So you will see far more risk-mitigated investment going forward, and therefore, we also move from 6 to a more normalized 5% over time while building the company. Okay. Next. I think we were just passed out here, so I think let's come back. Yeah. Here in front. Yep. Thank you.
Isha Sharma from Stifel. I have two questions, please. You defined 2027, 2028 as your medium-term target, but for sure, in among the business segments, you might see improvement early on in some cases, and, but we have to be maybe a bit more patient in other cases. If you could please help us with some color there. And, second question is very specifically on Bovaer. Could you talk about your collaboration with Elanco? The company has mentioned some pressure on gross margin because they are currently sourcing from a CMO in Europe and waiting for your plant to ramp up. So if you could help us, how we should think about the phasing for you?
Yep.
Thank you.
You do to mid-term targets?
Yeah, if you look at the mid-term targets.
You pushed me to put a year on it, so-
Hmm?
You pushed me to put a year on it, so...
No, so we've been guiding to the mid-term targets. We see a period of around 3-4 years, so that's 2027, 2028. But you're right. Some businesses will grow into that. Some of they are faster. Emmanuel commenting on a 22% margin today, you saw a step up in Q1, so we'll grow faster into that space and anchor the profitability of, of that business. TTH making a continued step up as well. We're consistently also coming back, if you look at our performance, not only Q3, Q4 to Q1, and we also guided for a continued step up there. But that will take a little longer because also that where the synergies are kicking in, half of the cost will come earlier. And there we said clearly by the end of 2025, but the sales synergies will start to improve going forward.
Also, Bovaer, and Dimitri will comment on that a little later. We're bringing the plant to life, which is in 2025, but then you'll only have a first full run rate in 2026 and beyond. So that is a bit also skewed towards the second part of the portfolio, the midterm period. So there is a differential between the two, but there has to be consistent growth in all of them to our term midterm targets.
Yep. And then indeed, on Elanco, I think, beautiful news on Bovaer, where we got approval, FDA approval in the U.S. I think it's one of the fastest FDA approvals we ever gotten. Very happy to see that. It's one of the reasons why we're very happy with Elanco, because they have these inroads in the U.S. government and the regulations. Obviously, they... We had a sort of an agreement that they basically will be the exclusive route to market for us in the U.S. They're looking at our Dalry plant, which Ralf was alluding to, and they're gonna build themselves, right?
And now with the accelerated approval on the FDA, they basically need to buy from us because they're not ready yet to have their own plant in order, and obviously, we would like to have some money for that. And maybe that is not exactly what they had in their business plan. And be aware that we already have Bovaer sales as we speak... about EUR 30 million. But we do that in an agreement where we use suboptimal capacity, right? Because we wanna get it kickstarted with pre-marketing levels, so we're not making real money on this sub-marketing level, pre-marketing levels. The moment that the plant is started, which is a mechanical complete mid-2025, it will take a couple of months to get it up and running, so the real year will be 2026.
And now with the Elanco up and running, some part of that capacity most probably will be sold to the US to get pre-marketing started for the US before they have started their own plant. So that there... I think they were a bit referring to, you need to ask them. But looking at the context, I think overall it's very good news for Bovaer. And remember, the Dalry plant is for about 5-6 million cows, and the US market is for 15+ million cows. So, I mean, this is really big for us going forward. Yep. Next.
Hi, thank you. It's Georgina Fraser from Goldman Sachs. First of all, it was great to see, in the breakout sessions, the combination of products from Legacy DSM and Legacy Firmenich, you know, used together. That was super interesting. But it did strike me, in most of the sessions, there was still quite heavy referencing to vitamins. They're still clearly a very important input for your products. In your midterm targets for the new scope DSM, how have you thought about the procurement or cost of vitamins? What's included in those assumptions?
Yep. Well, I could hardly imagine that Perfumery & Beauty talked a lot about vitamins. TTH, to a lesser extent, maybe HNC yes. And I think the presentation of Philip also showed that we will bring that down in terms of portfolio. So a few numbers. So today, about 15.15%, vitamins still in the total sales as a category. The moment that we carve out ANH , that will go to 7%-8%. And the moment that we do all the tuning, it is more towards 5%. It's a bit too early to say what the exact amount will be, but I think you understand the trending of it.
In the carve-out, and you've seen we use 2024 to separate and to really anchor the carve-out as such, we will clearly have sourcing contracts between these and Firmenich new scope, where we buy vitamins from the ANH scope. And obviously, that will be commercial, a bit, I mean, a bit guided by DSM-Firmenich, because at the end of the day, we wanna remove the volatility in itself. And I think ANH , also in the new ownership, can handle that a bit better, including the assets. So it also means the idle costs are an important part of the volatility. So not only the pricing volatility, but also the volume volatility. And if you have less volume, you still have your fixed cost, that adds another volatility part to it.
We're in the midst of that, but you will certainly see that if we reduce that to between 5%-7%, you also see that it will have reduced volatility. Secondly, the area of vitamins in Health, Nutrition, and Care are different vitamins. I mean, they are different vitamins in terms of specification, quality, but also the end markets we play, registration and the like. Vitamin D, Vitamin E, different story than vitamin D in animal, right? So also there is a more stable margin going forward. So that's a little bit how we look at that. There'll be separate sourcing contracts, will be part of the scope because the new owner will buy the business with the sourcing contracts we put in place.
Too early to exactly give you all the details, but the principles of how we look at it, I think I just shared. Yep. Thank you. You mean ... Maybe you can use the mic, then the others can hear it. So you were asking, do we see read anything in the word ownership?
Ownership structure, rather than new ownership.
Ah, yeah. Oh! Yeah, absolutely. Because and Ralf and myself have done many deals, by the way, together with Philip in the materials field. And ownership is a new owner. Ownership structure is creativity. So we wanna have creativity where we get the right value for the business we bring to new ownership, right? So ownership is important, but creativity about ownership structure to valorize on what we have is equally important. So we'll also look at different ways of how we valorize. So also the tuning, the deprioritizing segments, those are different in the way how we deprioritize and how we review optionality to capture value. Right. Thank you. Go here.
Thank you. Sebastian Satz from Citi. Two questions, and first on animal nutrition and your timeline that you've showed for the disposal, effectively. To what extent is that dependent on where prices are? So if prices don't recover at all, would you be willing to push it out a little bit? And you mentioned fantastic pricing. If you could give us any idea what fantastic could be? The second question was on-
In terms of?
In terms of the sales price. I think you mentioned right price-
Oh, you mean valuation?
Indeed, yeah.
Oh, I thought you were talking about vitamin prices. Okay.
No. And second question was on Bovaer, whether you already have an idea of who is actually gonna pay for it, whether it's gonna be the farmer, or whether it's gonna be the dairy companies-
Yeah
... and what type of margin we could expect from that business? Thank you.
Yep. Okay, let me talk with Bovaer prices. So who's gonna pay for it? It's you. Do you know what a 1 liter of milk costs? You ever do shopping yourself? You buy a liter of milk? I can ask, but I just did before we started Bovaer, because I didn't know either. A liter of milk in the supermarket costs EUR 1.60 in Europe, EUR 1.60. If you add the Bovaer ingredient, it will cost you EUR 1.61, with a considerably reduced methane profile of 30% for dairy products. So, I mean, who's gonna pay for it? I mean, at the end of the day, this EUR 0.01 per liter will not make the difference, but I would propose you pay for it as a consumer. And if not, you will see that brand owners are paying for it.
We have, we have many contacts with all dairy customers in, in the world, who basically feel that they need to take action. And in that sense, we also see in some of the governments, that farmers need to take action because they need to report emissions. So depending on where we are, but at the end of the day, EUR 0.01 per liter on 1 liter of milk for EUR 1.60, the EUR 0.01 is not making the difference. So that is what the Bovaer ingredient is all about. Then a little bit on ANH timeline. So we've put the timelines here, because I think, it's good to prepare the organization to move accordingly, because if you leave everything out in the open, it becomes a bit fizzy fuzzy. But, we did basically want a timeline there.
We are not waiting for the vitamins to recover and then start selling. I think Ralf was pretty clear on the three components of the business. There is a performance solution business, which is very strong, with a high EBITDA percentage. We have the premix business, which is very solid business, and you have the more straight vitamin business, where there's volatility, right? So even if vitamin prices are recovering, the dynamics and the characteristics of these businesses remain the same. So we're not in a wait and see mode. We prepare. However, it always helps in a process that vitamin prices go up a little bit, right? And hopefully, we'll see that continue going forward.
And maybe Ivo, you can respond a little bit on what you currently see in the market to reflect a little bit on today's situation.
I don't know what it works for you.
That's right.
I don't think it works. Oh, okay. Yep, it works now.
Don't, don't take it personal.
No, no, no, no. It's. Anyway, on the vitamin side of it, it's clear, of course, that we've been facing quite a bit of a challenge, actually, in the profitability. We see it's still actually quite challenging as it is. Quite a number of vitamins are still actually not really at sustainable profit levels. But there is a bit of a positive trend, and you may have seen it actually on vitamin E as well. It's a little bit early, because we typically, actually, also in animal nutrition, we track behind by quarters. So, you will actually see the effect later on in the year, not now. But at least that momentum is positive. So it's better than where we came from.
It's a little bit early days, and I hope the trend will actually continue. So that's what I see. So in general, and if I have the floor anyway, I would like to stay once more on animal nutrition. The business, the Performance Solutions business is doing really well, as shown also by Ralf. Driven by the major kind of mega trends in the space of animal nutrition. And then combined with this premix network as we have, which is really generating solid margin, solid growth. Yeah, I can only say actually, I'm hugely proud actually of sitting on that business and driving it forward, really for the future. So I'm optimistic in that sense.
Good. And then, your question on valuation, you'll be surprised if I mention a number, right? So I will not mention a number. I will just ask Ralf, how much, how much are you accounting for, Ralf?
At least a sizable number.
No, I think at the end of the day, it is a very good business, and part is a bit depending on the vitamin normalization. But remember, we also had the vitamin transformation, where we put the measures in place to recover ourselves, right? And today, like Ivo was saying, the Performance Solution business is doing very, very well. And I want to remind you that we have acquired the Erber business, and I think it was at a multiple of 15?
14, 15.
Well, you see where my head is. I think more about 15 over time. So it is something where I think partly we put vitamin transformation in place. We see a little bit of vitamin recovery, but let's be careful. Let's just execute where we have control. And the business model itself, over the longer term period, and I think we need to understand that if you take a 10 years period, this has been a very good cash flow generating business. Remember, if you look at 2023, which was the most challenging year ever, it was almost cash flow neutral. So it's not that in that year we're not generating cash.
Over the 10-year period, it has been a very good business, but unfortunately, a bit more volatile and therefore not fitting the company which we're trying to build. Yep. Next. Yep, in the middle.
Thank you. It's Chris Counihan from Jefferies. On the biomedical business, I'm just always a bit surprised within human health and nutrition and care, how it's in the accelerate and how it fits, because when it was acquired, I think, about 10 years ago, it was probably more pitched as an overlap to the now divested materials business. So just trying to think about where that lands and the strategy going forward, and also maybe any comment on your Robertet shareholding as a, you know, where that sits in the strategy, too? And the final one I had was just on innovation, 'cause there's a lot of talk about innovation, revenue, synergies, et cetera. And sorry, Dimitri, for bringing it up, but I remember the old 2025 target, so we're pretty close to that now.
Firstly, the EUR 1 billion and the 40% margin drop through. So just where we're at with that, and if it still has the same sort of margin drop through you will see going forward.
All right, then let's start with biomedical. I still remember Philip and myself being in charge of innovation and materials. We decided that biomedical would better fit nutrition, health, and biosciences. I think it was a brilliant idea, and we still think it's a brilliant idea, but maybe you put some color on it there, Philip.
Just a great business that fits our purpose in preventative health. It's an absolutely great business.
It's close to health. It really helps us in the setting. Secondly, Robertet. That's a non-strategic share we have. Let's be very clear on that. It's a financial stakeholding, and we value the company. I think that's about it. Then on innovation, indeed, that was a clearly completely different company when we talked about that, but some bits and pieces are still there. I think Bovaer, we talked about, was part of it. We had gut health, we had eye health, I think it was in the breakout sessions, very successful. We had the microbiome part being part of it. Veramaris was in it, so you've now seen Veramaris is EUR 100 million and still working on the strains and working on the human inroads. So that really was helpful.
So I think, yeah, it's very difficult to bring it back because Solar were also part of it, right?
Yeah.
Which has now been part of a new company. But I think the big ticket items, as we called it by then, and I'm just referring a little bit to your question on how does the investment profile look like, I don't think we'll have huge, big ingredients, CapEx intense projects anymore. But Bovaer and Veramaris, we nicely fits into the scope we have. Consumer focused, predominantly on the human side in Health, Nutrition, and Care with Veramaris, and Bovaer in the area of Patrick, with a direct link to the dairy customers. I mean, Danone, Nestlé, FrieslandCampina, Arla, they're all really much interested in Bovaer, which are exactly the dairy customers, Patrick and his crew is referring to.
So, I think if we do on hindsight, the numbers, I think we still have a growth bubbles which have been very successful so far. Although Bovaer, we can only judge in 2025, 2026. The margins, the margins are higher than the average which we've presented here. So you've seen on tune and accelerate, the margins are higher, and therefore, it helps the portfolio going forward, for TTH and for Health, Nutrition, and Care. Good. Next. Any questions left? I've got 50 seconds on my screen, so I think we're good.
Hi, maybe two quick ones. I mean, we've talked a lot about a lot of your innovations, but one of the DSM legacy innovations was Avansya. And can you just share on where that growth profile sits, especially, after the merger with Firmenich? And maybe just quickly on P&B, I mean, so many questions on conservative targets, but clearly, you're in the higher end of the EBITDA margin target on P&B already, and you're kind of confident on the volume profile, 5%-6%, and also confident that you can deliver the revenue synergies maybe early. So maybe just outlining why that margin target and why not higher?
I love that question. Thank you.
I asked the same.
But let's go to Avansya first, and Avansya has been part more of the sugar platform. Maybe, Patrick, you can tell a little bit. I mean, he's been very excited about sugar-
Yeah
... sugar replacement.
Yeah. First, we asked where it ends up, and it ends up in the sugar reduction platform. I tried to refer to that-
At TTH.
Sorry, at TTH. What I tried to refer to it is that... Well, let's first take a bit of a step back to give you a bit more than a one liner on the answer. When we initially started as DSM, DSM, developing a strain, creating a fermentation-based sweetener, we thought, "It's easy. You put it in water and it's sweet. It's done." It turned out to be somewhat underestimating the challenge. We then actually set up a JV with Cargill to really make use of their knowledge in sweetener, because in our perception, they're a huge player in sweetener, and one of the biggest players in sweetener. I come to find out in the process, that actually there is a further level of depth of complexity in sweetness. Sarah mentioned about the sweetness receptor, and that capability only no one has.
We have it, or the receptor no one has, but the ability to really form a, a unique sweetener profile targeted towards the, towards the customer. Now, luckily, the merger is there between, DSM and Firmenich. So now we're able to capture that. We're not gonna stop at fermentative stevia. We're also looking at other natural sweetener, because we feel we're perfectly placed to expand the portfolio. Because what you see is consumers need low calories, but also natural. And if you look at a natural fermentation, biotech is a great opportunity. So alive and kicking, and actually, we're looking at furthering accelerating it. Yeah.
Yep. The sugar platform as we have today is above EUR 100 million in sales, so it's really, really helping forward. And then, I mean, yeah, that's the bad thing about being such a beautiful business, you're always being challenged on why you're so conservative.
... That was the last question, so thank you very much. No, I think, as I said this morning, the team made an incredible job to perform and transform at the same time, and the transformation was absolutely key, and in particular, in the area of ingredients, and I want to acknowledge that. Also, we were supported by a very good market dynamic, the volume in the fragrance area. And the key question is, how this growth in fragrance will continue moving forward. So, I think, we confirm 22%-24%. We also confirm that we're gonna make a portfolio adjustment this morning.
At this stage, considering maybe a less dynamic fragrance business moving forward, and also further investment in growth to deliver the 5%-6% growth, is the right number at this stage. So, that's what I will answer.
Perfect.
Thank you.
I agree. Thanks. All right, let's close off. Let's wrap the day and have some drinks, and then you'll hopefully go home sharing our dream and also understanding it's not just, just a dream for dreaming. And I had two of your, your submissions to the, the dream jar. I wanna share that with you because I was energized by it. One was, "The dream is to continue to change the world." So you want us to continue to change the world. Thank you for that dream. I'll put that back in because that's what we're trying to do every day.
The dream is for peace and family to continue the health, the security, and the happiness for my family for as long as possible." I'm not so sure whether we can do that, but certainly via ingredients and products that-- "So that I have more time with my family in terms of lifespan." Wow! That's beautiful, right? Thanks for sharing. Then there was also a dream said, "We like your dream, but we'd like to see more figures." And that was before Ralf did his presentation, right? I think it was before lunch, probably. So I think I hope that we followed up on that. And then last but not least, "Thanks for being sincere about your dreams and promises." Thank you for that, because that's what we're trying to do.
Like Ralf was saying, we wanna be transparent, we want to dream, but we also want to deliver. So, we'll continue to do that. We will, we will grow what we have, we will anchor what we do, and we'll deliver on our promises, and we preferably beat our promises and bringing progress to life. Thank you. Safe journey home.