Everyone, thank you for joining us today on such a short notice. We told you at first half year results that we would give you an update on our organizational changes once we would start our internal communications and that is today. We issued this morning an external press release and a presentation to investors which you can find on our website. Geraldine and Dimitri will give you an overview of the announcements followed by a Q and A session. They will use a few slides out of the presentation to investors.
Analysts who want to ask questions in the Q and A session have to register via an audio conference link which they can find on our website. Or other participants can listen into this Q and A session via this Zoom meeting. And before I ask Geraldine to start her introduction, as always, I need to caution you that today's conference may contain forward looking statements. You can find the disclaimers about forward looking statements in the press release we published this morning. Geraldine, the floor is yours.
Thank you, Dave. And hello and welcome on behalf of both of you and myself To this call and thank you for joining us today. Now, as you've probably already read in our press release and our presentation to investors, We have announced today that we have decided to accelerate our strategic journey towards a fully focused health, nutrition, and bioscience company. And these activities will be reorganized into 3 market focused business groups. Given this focus on health, Nutrition and Bioscience.
Going forward, our materials businesses will be managed largely on a standalone basis And our global support functions will be realigned accordingly. These are 2 great materials businesses and they too actually deserve The focus they need to continue their strong track record of strong financial performance and innovations that are really leading to a more circular and sustainable economy. We are therefore reviewing our strategic options for these businesses, including a possible change in ownership. Thirdly, in line with our commitments to have a positive impact on the world and specifically the global food systems. We have also communicated today a series of specific commitments that we will be taking related to the food system.
And these are in a Dedicated press release that we issued this morning, and we'll come back to that later in our comments. Now these are the main headlines, But let us step back for a second. Dimitri and myself will run you through some of the key slide of the investor presentation before we open for the Q and A. And for that, let's go to indeed our selection of Slides from my investor presentation. So as we say here on our cover page, this is really an acceleration of our purpose led and performance driven Strategy.
As you know, as DSM, we are a very strong ESG company. We've steered the company with a triple P bottom line for a long, long time, people plan And therefore, not surprisingly, the decision to focus on health, nutrition and bioscience actually comes from our views on the food systems. So let me start here by giving a bit more color on and if we go to the next slide, The way that we look at the situation today and internally we tend to refer to this as somewhat of a food revolution going on. Now, you all know on this call because you follow companies in this space that the food systems are facing all sorts of challenges, And we tend to look at them in 3 buckets. First, there is the whole issue of the health of people.
Then there's the health of the planet. And then there's actually all the livelihoods that go with it. Now, if we look at the health of people here, the statistics Are still extremely concerning, and we could put a lot of them there. But if we just start with the fact that 1 in 10 people in the world Suffer from hunger and malnutrition, that hunger has gone up 15% last year, according to WFP. So the challenge of accessible nutritious food remains very real in the world.
But at the very same time, actually 1 in 4 people are overweight, And there's a lot of illness and sickness related to the wrong kind of diets. You can think here of the too much, too much salt, too much fat, Too much sugar, but also simply diets which are not driving the right health outcomes for the vast majority
of people, unfortunately, in the world.
Then if we look at in the world. Then if we look at issues around the pandemic, the whole rise Of awareness of the importance of immunity. And the fact that if you don't have a strong immunity, you will be much more susceptible to if things like COVID It's very much there. Unfortunately, still 2,000,000,000 people in the world have a deficiency in micronutrient. Here, vitamins and minerals being the key ones.
So a whole set of challenges related to the health of people linked to food. But then indeed, there's also another issue. And that is really being highlighted again in the IPCC report on climate change, which is that food systems Are suffering from climate change as we speak. Not surprising if you look at the droughts, the floods, the fires That has been going on just over this summer. Actually, food production is at risk and will continue to be at risk from climate.
But food systems are also the biggest contributor to these issues. And as you know, is the 2nd biggest greenhouse gas emitter. And therefore, methane, you've heard us talk about bovair, is an important element, but not only Methane, and there's all the other emissions that relate to product producing food, which are relevant here. And of course, food is also one of the biggest drivers, unfortunately, of deforestation, loss of biodiversity. And in that context where we're raising 30% of food we produce.
So a lot to be done around how we produce Our food in the world is ongoing and there's really attention to this, but I'll come back to that. And lastly, livelihoods. If you think about it, actually there's about a 1000000000 farmers in the world of which half live in poverty. And that is an issue from a societal stability, but also from a food system. And we want to take that into account.
Now, these are all of the challenges, but if you look at awareness, and this is on the next slide, we're not the only ones To actually realize that this is going on. And there's an increased awareness across the board that these things need to change. It starts with the consumer. The consumer is increasingly looking to better health through nutrition, much more concern around diets, Around the nutritious content of food and beverages, and that is worldwide. And also a lot more consumer interest In the environmental impact of the food that they choose to consume.
So a big shift in consumer trends, a big shift in society. We have seen, of course, a lot of work in Europe on the new Green Deal, on the whole farm to fork Strategies, but also next week, the United Nation is calling only, I think it's the 4th in history, Food Systems Summit with Heads of State since the 2nd World War, so since 1945. And this is all about discussing The future of our food systems. And this is in the context of these environmental but also societal challenges. So huge awareness.
And at the same time, this is happening at a time when technologies can scale to address these challenges. And here you have told you have I heard us talk about this. Of course, very relevant to us. The biotechnology, biosciences breakthrough, which are at hand and that can really provide Solutions at scale, combine this with data and digitalization, and that leads us to this area That we have talked about of, you know, the rise of personalized nutrition and the rise of precision in terms of the farming practices. So basically, a place, the food systems as we see it is a place with a lot of change And where as DSM we are uniquely positioned.
Now why do I say this? Just a couple of slides on our capabilities. So going to the next slide, we as DSM have always taken the view that if you have the ability and the capabilities, You also have the responsibility to use them to actually drive better outcomes for the world. Now you know us well, So I will go through the next slides pretty fast. If you look at the history of DSM, you see on this next slide That we have 150 year history and a deep heritage in the scientific knowledge and particularly biotech That enables us to have a very meaningful contribution here, both in how we produce food in the world, but also what is consumed.
And this comes from our origins. And I'm not going to, amplify this here further because you've seen this before. Now this translates in the next slide, in the fact that we have also over the and here we're showing the last 10 years, Added to this capabilities through innovation programs, but also M and A. If you think back 10 years ago, the acquisition of Martech, for instance, A big step in our biosciences capabilities, but this kept on going with one of our latest one, Midori. We've also used our M and A to expand our geographical Footprint to add to our pretty unique portfolio of ingredients, and that has been rowing and rowing over the years, And therefore putting us in a very, very special place to drive this transformation and in particular the emergence of integrated solutions for the food space.
Now if you take this and go to the next slide, this really feeds into this slide that you have seen before, Which are the platforms, the growth platforms that we're working on and the very rich pipeline of innovations that substantiate each and every one of them. This pipeline is a combination of our in house innovation programs and developments, new business models we've been launching like SUSTEL, But also we enriched with the M and A that we've been doing over the last few years. So again, a strong pipeline Very much linked to these challenges that we've just been pointing out. And last but not least, this is also linked to Our very unique business model that you see on the next slide. You know that our history is in global products, in the Science of these ingredients that we sell both in the human nutrition and animal nutrition spaces.
But we've also Over the years, a very strong local solution arm. So global products, local solutions is something that we're building now for the last 10, 15 years. And as we indicated in our Capital Markets Day in November, but again at our half year results, We are now adding the 3rd dimension of precision and personalization that really link very strongly to the digitalization of the world And of businesses, but also the capabilities in biosciences. So the unique business model to address a very exciting space Where the challenges are multiple, but the opportunities match these challenges. Now this is where we stand.
Now going to the next slide, where does that put us there for today? Well, when we look at this picture, we do believe that in order to get The full benefit of this potential and all of these opportunities does require us to focus. And therefore today we've announced that our intention to accelerate our journey to becoming a Fully focused health, nutrition and bioscience company. Now going forward, What does that actually mean? Well, as I touched upon in our key messages from the press release and the presentation, We're making it now clearer than we ever have before that we will be reviewing our options for our materials businesses, Including a possible change of ownership.
And in the meantime, we will be basically managing materials Much more on a standalone basis to give them more freedom to act as they see fit, to meet the great opportunities that they have. And that is, actually, they're very good businesses with very positive momentum, and they also deserve to have a bit more freedom To manage their businesses accordingly. Now this is not the only thing. We've also and we refer to this at our half year earnings release, We have been doing a lot of work this year on reorganizing DSM for this journey forward. That's, by the way, includes Creating 3 business groups out of our nutrition businesses.
Now I'll come back in a second on the movements, But our history did not set us up in the best way to address the end markets that we want to serve. And We've been looking at how do we therefore better align our businesses to the end markets that we want to be very successful in. And Dimitri in a second will run you through Each of these 3 new business groups, which basically represents the repositioning of our nutrition cluster overall. And that's food and beverage, Health, nutrition and care and animal nutrition and health. Now we've also taken a deep look at our innovation setup And decided to bring innovation much closer to these business groups in order to actually accelerate the speed at which we can bring The DSM Innovation Center will not be reported independently anymore, but the activities And the 3rd piece of all of these changes It's actually looking at our global enabling functions to see that we are correctly organized in order to drive success going forward.
And as a result, we've also announced today that our top leadership team is now going to reflect The structure of the company, and we will have the heads of these business groups at the table, as well as our operations organization and global products and alliances. Now Finishing off before Dimitry takes over, let me just go through one more slide. And that is, what does this all mean in terms of the reporting? Now on the left side, this is how we report today. It's actually linked very much to our history.
You're familiar to seeing our nutrition cluster reported along the animal nutrition and human nutrition components. And we had this other nutrition Part which was actually quite sizable with a 1,000,000,000 of turnover, but was not easy to put everything together. Now going forward, we are realigning these different parts. And you will see that the food and beverage element Human nutrition will be combined with food specialties to create the core of food and beverage. We're also moving the pet food Under food and beverage because it's actually the same customer base and the same dynamics that we're seeing in those end markets.
So that is the first big shift. Then we have health, nutrition and care. Dimitry will run through what is in there, But effectively think of it as human nutrition minus the food and beverage parts, which is now in food and beverage. But we are also positioning in health, nutrition and care biomedical. Now, you are familiar with the DSM Innovation Center.
Now predominantly the important piece in there today is biomedical. So that will go under Health, Nutrition and Care and the rest of the innovation elements will be coming towards corporate. And in terms of animal nutrition and health, not much change there other than the pet nutrition going over To food and beverage. Now, of course, this is a lot of moving parts, and we will provide full clarity early next year. We will, you know, Align the reporting to these 3 business groups and provide the restatements that go with it so that you can Follow all of these moving parts going forward.
So that's from a reporting point of view. But Dimitry, why don't you Take over here and tell more about these 3 big business groups.
Yes. Thanks, Geraldine. Indeed, Exciting to give you a bit of color on these business groups, although many of you know the segments and the likes. And I'm very happy to say that The auto nutrition bit which we always gave some color on all the time and you were asking help me with it auto nutrition. I think now we made A clear decision to organize health according to the 3 business groups with an end market orientation.
First, the food and beverage unit, €1,200,000,000 with The bits and pieces Jovian just explained clearly around creating nutritious, delicious and sustainable solutions. And we'll give you a bit of color on the food and bath a bit later on, but it's all about integrated solutions. Then the Health, Nutrition and Care, the €2,300,000,000 business, Great leadership positions in the segments, all about keeping the world's growing population healthy. And then our 3rd Business Group, Animal Nutrition and Health, 3,300,000,000 really about sustainable farming, radically changing to a more sustainable Animal farming and these are the 3 pillars, the 3 business groups of the health nutrition and biosciences company Where we're going to accelerate our journey. And we do that because we feel that the space is great to play in.
It's a great Growing market space. Secondly, in this space, there is huge opportunity for innovation accelerated The Food System Revolutions and we do feel that and Geraldine showed a bit of a busy slide on the innovation pipeline. I think if you have a busy slide on innovation pipeline That's good news. If you have busy slides on the rest, that's bad news, but the busy slide on innovation pipeline shows that we have a full innovation pipeline. And then you can also see that in all the 3 business groups, we've done our acquisitions over the last 3 years with different acquisitions in the different business groups.
And let me give you a bit of color on food and beverage, which is the next slide. And there are far more details in the printed pack of IR. So I want to refer to that so you can go through. But this is about food and beverages to create nutritious, delicious and sustainable solutions. And It's a great growing space.
It's a space where innovation is absolutely key. And I've highlighted 2 here. It's the EverSweet, Our sweetener and canola pro are plant based protein. We're going to build on that. Secondly, This is a space where integrated solutions instead of a single ingredient supply is the name of the game.
And We have absolutely expertise in the taste, texture and health area in food and bath. We merged these together. In the past, those were Allocated through 3 business units. We now bring that together in one route to market. We create these integrated solutions for our customers.
That's absolutely key. And we add our biosciences background, our broad portfolio of ingredients together with a unique Premix solutions which we can offer to our solutions. So a very important business group which we bring together and which we want to grow organically and maybe also with a few inorganic growth bits here and there. Then Health, Nutrition and Care. Keep the world's population healthy.
Also here in more details in the pack, Leadership positions in the segments, early life nutrition and dietary supplements. Also here a great space for growth With innovation everywhere, certainly in boosting your immunity, looking at MPD, looking at probiotics, it's a space We have an innovation headroom. And certainly, if we look at what is happening also on our 3rd leg, which Geraldine talked about in a unique business model on Personalization, personalized nutrition with the installment of the Hologram Sciences pathway, I think we have a good opportunity to build on the expertise we have and build on the personalization which is ongoing. And then the 3rd business group which is Animal Nutrition and Health Animal Nutrition and Health Helping to radically change to a more sustainable farming, absolutely key. You see emission standards, being imposed by governments.
And that is a great space for innovation, a great space to grow with our global portfolio, with our global exposure. Huge innovations ongoing on Bellancia's, Vera Mares, Bover, all in the space of going to more sustainable farming. So like we said, I think we have a very unique positioning here also for Animal Space, broad portfolio, a global presence across the globe. We're also here the personalization and precision in the animal space where we're going to measure the emission with an activity we've launched Sysdal, but also Virex where we look at block markers and help the health of the animals of our farmers. So Absolutely three business groups which built together the health, nutrition and biosciences company.
And then if you go to the next slide, Building that health, nutrition and biosciences company and accelerating their journey with a great space to play in With capabilities we have, which we're going to build on, that comes with responsibility. And you know DSM Taking responsibility for where we could make a difference. And we're well known because of our ESG platform With responsibility taken for our own footprint and for our own people. And that you know, it's been recognized as strong ESG commitments. And we add to that commitment to care for the world, the impact we have, taking care for the world via Food system commitments.
And I want to highlight just one slide a bit, the food system commitments where Geraldine and I, together with All 23,000 employees in DSM really care about. It is about healthful people, healthful planet And healthy livelihoods. And this is anchored in who we are as a business. So health for people It's linked to an area where today more than 800,000,000 people in the world are malnourished, While at the same time, 2,000,000,000 people are overweight. Well, we feel that we need to address that.
And we feel we have the capability to address that. And therefore, there is a commitment to close the micronutrition gap, 800,000,000 people. That also supports the immunity of 500,000,000 people, which will be commitments, which will be measurable, will be quantifiable. And those will also be audited in the maximum assurance we have on sustainability today. It's called reasonable assurance.
I think that will also evolve over time. So this is commitment where we really want to be measured on. Then Healthful Planet, You've seen it yourself, more emission control, more regulation on emissions, carbon credit markets evolving. In today's world, the food systems are not working properly. No price for waste.
Emissions need to be tackled. And therefore, we have a commitment to a double digit farm livestock emission reduction to the farmers to help them to reduce their emissions. At the same time, we're going into the plant based area. And our commitment is to reach 150,000,000 people with solutions for nutrition based on plant based proteins. And then last but not least, healthy livelihoods.
Be aware that there are about 1,000,000,000 people in the world which have As a progression to be found, about half of these people live in extreme poverty. That is also the food system we live in today. And we basically have committed ourselves to support at least 500,000 smallholder farmers Across the value change, building on what we already do today with our Africa Improved Foods. So these are commitments which are part of who we want to be as a company, which we add to the journey to accelerate to become a health, nutrition and biosciences company. Let me try to wrap up with a last slide.
The last slide which brings it all together. And the last slide starts with that we're going to build a growth company that delivers long term performance, Profitable growth. And we do that because we want to play in a space which is a great space in terms of opportunities. There are changes in the food system where we want to play. And by doing so, by having that focus, we have decided to review the positioning of materials Because we need all our efforts, all our resources, all the allocation of innovation into the food system to build that Health Nutrition Biosciences company.
And we're going to build on our unique business model, global products, local solutions and precision and personalization with The great people we have and that makes the capability together in this space. And we want to commit ourselves to Our ESG targets to be responsible for our own footprint and our people, but also show the care for the world with food system commitments. And by doing so, we're going to create a company which is growing. We're going to create a growth company with ambitious midterm profit targets. And today, we've announced that this journey, which we accelerate, will back up by Changing and adding, the key business players who make a difference in our executive committee.
In our existing committee, we add The business group leaders as well as people responsible for operations in our global products. And we have agreed that we will have the 3 business groups Being reported separately to show that this is the Health Nutrition BioScience company we're going to build. And we all do that So at least at the end of the day, if you go to the final slide, you'll have a positive impact to build a growth company that creates Rise a life for all. And with that back to Dave.
Okay. Thank you, Dimitry. We will now go to the Q and A with analysts which we will do via an audio connection. So all other viewers can stay in this webcast to follow this Q and A, but they will be in a listen only mode. If there are analysts who want to actively participate in the Q and A but have not yet registered, you can still do so by going and finding the link on our site.
Please be aware that as we're combining Zoom here with an audio conference, our 2 systems together, there will be a short delay in switching between 2 systems during the Q and A. So don't think it's weird. This is the way it's going to be done. So having said that and warned you. Operator, please let's have the first question.
Thank you, Mr. Huizing. And the first question is from Andrew Stott, UBS. Go ahead please.
Good morning, everybody, and thank you for the presentation. So two questions. Start with the announcement today. Just wanted to understand The timing, in so much as you can say at this stage, why now? If you are pursuing A disposal process ultimately, are you already in any third party discussions?
And if you were to end up In the sale process, can you help us a bit with issues that you may have to tackle? So they may include stranded costs Center or tax issues. So I don't know how much of that you can answer, but that's my first question. The second question is turning to the presentation on Nutrition and the 3 separate segments. I understand that the ex co is now larger.
So I see that as a major practical change. But what else Is going to change. So for example, in sales and marketing, for example, incentive structures to employees across the organization. Just an insight into beyond the reporting structure, what will practically change? Thank you.
Okay. Hi, Andrew. And well done for navigating 2 systems in parallel. We keep innovating. This is Dave's favorite thing.
But it's working well. So and thanks for joining. So let me first maybe comment on your first question. And then Dimitry maybe on the second. So the why now?
And as you know, and I think, by The reactions this morning were very much in line with us. This is not a big surprise, right? This is a continuation of a journey that We've been on as a company. We're already 80%, 85% health, nutrition, bioscience. However, a few things have kind of Come to our attention.
One is the pace at which the food systems is changing. And we do find that this Was even more focused than we had maybe anticipated before. We've also, in the context of our strategic priorities, and you may remember a slide with Seven blue boxes. We said we would review the way that we are organized in order to set off set ourselves up in the best possible way for the future. Now in doing a lot of that work, which includes, by the way, the 3 business groups, it also includes the functions, what we've come to realize is that in order to create Clarity and focus for all of our colleagues in the nutrition businesses and in the materials businesses, it actually required us To be a little clearer as to where we expect the journey to go.
And that is why we're making the decision Today, to be more explicit than we have ever been before, that we are heading towards this pure health nutrition bioscience company and that we're reviewing The options for materials. Now as for the review on materials, now it's it's ongoing. We have started. Now this is not something That only takes a few weeks or a couple of months, but we don't want it either to take years years years. So there is no Set a timeline behind it, but it's not something we're going to drag out for the sake of it.
And therefore, at this Point, you know, there's not much more we can add to that timing other than it is now made explicit. And also, it is helping Our materials colleagues to get themselves, set up in the right way. And I will bridge to what are the challenges that can happen. Now we're going for standalone, being managed more on a standalone basis, because this is already, therefore, helping us With some of the challenges that in the past we have faced many times when businesses have moved on, the more recent one being resins and functional materials businesses is that you are indeed, as a business, part of a bigger company. By putting materials on a more standalone basis, we're already shaping, so that we have less challenges When we come to a point, which would be our preferred outcome, by the way, of finding new the different moving parts that we have talked about today and the why.
But I think it's very important to me if you could now comment on what does it change for the 3 business
Thanks for that question. And first of all, be aware that we had an executive committee of 7. And now we have 6, but with the retirement of Chris and I taking over his role as being the President of these and nutritional products, That was a sort of a transition period. So and basically, we go from 7% to 10%. And we feel it is important to have in the Executive Committee All key elements and key functions present to make swift decision making.
And I will give you a little bit The background on how we think about that. But we've decided at least that the 3 business group presidents should be part of the Executive Committee. And therefore, A and H, H and C and Food and Beverage will be part of the Committee to have the right discussions at the right table and not only twice or three times having immediately at the table. Secondly, a big part of our business model success is the Global Products with the alliances we have. And therefore, Andre Boss, who is currently the Global Product and Alliance Vice President, will also join the Executive Committee for the first of June.
And then last but not least, And we've seen that over the last years, how important operations supply chain end to end is to deliver our customers. And I mean, we have done a fantastic job over Last year has been doing that and it's key for the success not only short term but also long term. And therefore operations will be part of the Executive Committee. So we feel, Geraldine and myself, that new Executive Committee is absolutely capable in tackling all issues we should have. However, The Executive Committee is thinking about the strategic future.
We will have strategic discussions horizon on the agenda of the Executive Committee. We About the DSM for the future. The business groups will have their plans to build that Dream we have as being a leader in health nutrition and biosciences along the lines of food and bev Animal Nutrition and Health, Nutrition and Care. And they're going to implement that strategy in, let's say, a 1 to 3 years time frame linked into what we've discussed as strategic direction for the Executive Committee. And therefore, we'll create agility, speed of decision making being close to where the market is To grow our business, to build the growth company.
So that is important. What does it mean for incentive structures? I have one of your questions. There is no change. What we will do is we'll bring the business together from an end market perspective.
So food and bev in the past three units We'll never be 1 unit, so one route to market. Then we will tailor and harmonize the approach. Sales and marketing will be different for these businesses because they differ. They have different customers. There are different dynamics in the end market.
So that's also one of the reasons why We decided now to install the 3 business groups because we do see these changing happening today. And certainly on the food and beverage part Where integrated solution is the name of the game and you've seen our latest acquisition, bolt on acquisitions playing that game, we feel now is the time to make that difference. So A bit of a long answer, but I think all key questions which I think are important to address.
Thanks very much.
The next question is from Ms. Nicolas Tang, Exane BNP Paribas. Go ahead please.
Hi, everyone. Thank you for taking my questions.
The first was
around the review and sort of in the context of this accelerated journey, Assuming you had to exit materials of your preferred route, could you talk a little bit about what you would plan to do with the proceeds? And then the second question was around your new food system commitments. And I was interested in hearing a little bit more on the planet side. So You've committed to this enabling double digit farm livestock emissions reduction by 2,030. How exactly do you Intent to measure this.
And you mentioned over there, we know about the kind of solutions you have for methane, for dairy cows. But can you talk a little bit about either Existing or perhaps new products you have for the ammonia and phosphorus side. And then as a sort of final tag along question, I guess, on the commercial side of that, Do you see an opportunity to kind of price on sustainability value within those offerings for the livestock Emissions reduction or is it actually in the context of what you said around livelihood and farmer poverty, is it actually a bit more difficult to sort of I guess charge a premium for sustainability focused products. Thank you.
Hi, Nicola, and thanks for joining and great questions. So let me tackle the the proceeds. I knew this was going to come. You always, I'll say you guys, the girls as well, fast forward very fast to, you know, The day the money would be coming in, and therefore and we are obviously not there yet at all. Now when it comes to our capital allocation, this strategy that we're describing with Dimitry is in essence an organic growth strategy.
That Doesn't change. But so we will continue to invest as a first priority in organic growth, all of the innovation pipeline, etcetera, Dividend promise stable preferably rising always the same. And then of course this will give us some opportunity to look at M and A. All three business groups have got areas where M and A could be enhancing, maybe with a slight, slightly more in the food and beverage space Than, say, in animal nutrition, but we will be looking at all of the opportunities, to see where we can deploy These proceeds and the capital in the most valuable way and in a value enhancing way. So, you know, we've always been very careful with valuations and that kind of thing.
Now if at some point, we find that, you know, the proceeds are on the balance sheet and we are unable to deploy them in the right way, We could always do some sort of a share buyback. But honestly, it's far too early and this is not on the cards for now because, a, we haven't got the proceeds. You know, we're not It's not like they're coming tomorrow. And of course, we have it gives us time to look at how to deploy them. Now, as a pure Health nutrition bioscience company, it does mean that we can really look at the whole space and see where the opportunities are there.
So that's really how we look at it from a proceeds and use of proceeds point of view. And then, Dina, you want to take the food system commitment question?
Yes. So thanks for that question. I think We feel very strong about that. And you asked to give a bit of background on the Health for Planet. So the Health for Planet part is integral part on Our business model for Animal Nutrition and Health.
And I think innovation is ongoing. I mean, you know, Bolanciers, but we also have the launches. But we also have a product which is Ubiotix which basically plays antibiotics. So there are all types of innovation ongoing in that And what we will do is, we will quantify the emission reduction by tests, by measuring at the farm. And we put that into what we call a digital data engine.
We have them. It's called SUSTEL and where you really measure it. But also in the farmer space, they track and trace that themselves. And I think that is important to know that this is not just the simulation. This is also based on real data, and that is something where we're going to log in ourselves to.
It's important because at the end of the day, it needs to be quantified and measured Because we feel that over time, the carbon credit system will help the farmers. So there will be a price on carbon. If they reduce, It could be a revenue system on its own. And I think that is also part of the ideas we have to bring livelihoods to farmers in a better space. Then in terms of sustainability premium, that has to do with us as consumers.
That not have to do with the fact that the farmer needs to pay or the farmer needs to compensate for the margins. It is something where we already see today that some of our key brand owners in the dairy space are willing to position the product which is low carbon or net 0 at a higher price. And I think the awareness of Health for People and Health for Planet It's certainly improving, it's increasing. It's also what we see in the food system revolution. And therefore, the sustainability premium in Some of the segments, some of the categories we clearly see and we think it's an opportunity going forward.
So absolutely lowering the emission apart from the carbon credit, Apart from the governmental regulation, we also feel there's a game to play in tune of the premiumization of what we have to offer. So I would say all three elements.
And Nicolas, maybe one last comment. Next week, there's the UN Food Systems Summit. It's on the 23rd September. And in line with that week, we will actually be launching a campaign with a lot more information, a dedicated web on all of our commitments, but also our ambitions. We can actually do a lot more than these 5 topics that we picked.
We picked these 5 because we feel very confident we can measure them, track them and be very disciplined about it. But we want to also build a bigger picture around that. So I would say watch that space because next week we will be building on the information flow in the context of the UN Food Systems Summit.
Thank you. Very interesting. We'll look out for it next week. Thanks a lot.
Thank you.
The next question is from Ketel Kenny, Davy Research. Go ahead please.
Good morning all and thanks for taking my questions. Firstly, On the new business units, is it your intention to disclose profit by business units? And can you perhaps provide some early commentary On the margin profile of the respective units? My second question relates to Food and Beverage in particular. I'm just wondering, could you share with us The contribution to revenue from integrated solutions today.
And thirdly, what percentage of your food and beverage business Is natural versus synthetic? They're my 3 questions. Thank you.
Okay. Let me start Maybe with the first one. So when it comes to disclosures, our intention is indeed to provide as of next year when we start reporting Under this new three business groups, revenues, EBITDA and EBITDA margin. So that will be the way forward and we will provide You know, some degree of restatement so that there is comparability. So, you know, the overall cluster remains the same, but we're removing The different pieces in there.
Now in terms of our midterm commitments of Mid single digit organic growth and high single digit EBITDA growth. We are very confident with those Midterm targets, they remain unchanged because in effect, the whole nutrition cluster is the same. And, you know, we still need to do all of the details there and we will provide them. But broadly, this applies to all of the 3 groups. Now the rest of the disclosure will come next year as we start publishing under those three pillars.
The area that will take a bit longer is actually anything below EBITDA, and that is because of what Dimitry referred to, is that some of the assets behind these three business groups are actually shared. And therefore, There can be quite a lot of allocations when you start looking at capital intensity or depreciation and those aspects. So it will take us longer to really get to a Point where we have meaningful numbers in terms of asset intensity, depreciation, return on capital employed Per business group. And so that will not be available straight away. But over time, we may get there if we feel that it makes Sense, if you see what I mean, that it's not allocation driven rather than intrinsic.
So that's to your question on the financials. Now Dimitry, do you want to take the integrated solutions?
Yes. Yes, let's so Overall, I think it's clear that on the food and bev part, that integrated solution is a game we want to play. We're already playing. We want to That's one of the reasons why we create the food and beverage unit, including waiting for the clearance for first two ingredients to add that to our integrated Solution thinking. So I think it's definitely the direction.
We already have integrated solution thinking. But with the broad The volume we have in the biosciences, I think we can do better. And certainly with the integration we do. I think in that sense, it's a clear direction Going forward, it also indicated that we have this unique premix capabilities so that the integration is already part. But when we talk about integrated solution, It's also adding the application space.
So it is already there, but it is certainly the key area of development. It's one of the reasons why we bring The food and beverage unit together.
Yes. Thanks. And when it comes to the naturals, It was actually on one of our slides earlier on, but I didn't point it out that about 50% of DSM sales of nutritional ingredients It's actually linked to either bio based production or natural materials. So it's, you know, we're progressing very well. And what we're Seeing, of course, in the space is that our biotech capabilities is increasingly relevant.
And here, for instance, I would point to our latest acquisition In First Choice Ingredients, when we were looking at the synergies and why we would be a good owner for that company, it is because of our biotech Capabilities and our library of strains that can help in this dairy based flavors, because a lot of that is, of course, Embedded in biotechnology. So, we're seeing a very strong synergy here and increasing relevance Of our long heritage in biosciences coming bigger and bigger in the nutrition space as we go forward.
Thank you. That's clear.
The next question is from Ms. Isha Sharma, Staffell Europe, go ahead please. Hi, good afternoon. Thank you for the presentation. I just have 2 please.
If you think of DSM over the next 5 years, should we assume a similar split in revenue between the three segments? Or are there any priorities in terms of Focus on businesses in order to achieve the said change in the food system that you intend to make. My second question would be, what is really a realistic expectation in terms of natural bio based Ingredients given all sorts of challenges also with cultivable land available etcetera just to understand a more Bigger picture. Thank you.
Yes. Okay. Dmitry, do you want to take the first one?
Yes. We can. Yes. No, I'll take the first one. And then the second one, I think, is more evolution than that we really targeted.
But anyway, let me give some flavor on the first one. And 5 years from now that in this world is almost like eternity, but nevertheless try to give full color qualitatively. I think All three businesses operate in a space where a lot of growth is happening. So there's no differentiation there. I think all three Businesses contribute to building the health nutrition and biosciences company.
That's one. Secondly, if you look at the innovation headroom, if you look at the innovation space And the opportunities the food system revolution offers, I think all 3 are equal. And that sense, organic, innovation, I think they all need to grow. By the way, that is our key strategy to organically grow this company. Then on terms of inorganic, I think that it's an opportunity to grow all three.
But we have a slight preference to also work More on the H&C and food and bev. And certainly on the food and bev because you've seen the numbers, those are 1,200,000,000. And we bring that together Also to have an organization who could grow via sort of a docking station with acquisitions. But All three areas, all three business groups are part of our journey. But certainly in the food and beverage and the human space, I think We still have some extra opportunities to grow and that's also why we create the Food and Beverage Unit, not only because of merging into one route to market but also see the integrated solutions.
And we see perhaps some interesting M and As to build on it.
And I think if I picked up your second question correctly, but if I didn't, please correct. So the way we're looking at the food systems is there's indeed a lot Challenges. As Dimitri mentioned, firstly, when it comes to land use, we're really looking at how do you minimize the environmental footprint, particularly when Comes to animal protein and dairy, and that is emissions, in particular. But it's also, for example, if you look at Aquaculture, Viramaris, where we're able to preserve the ecosystems in the oceans by providing oil, which is not fish oil, but actually algal oil directly Salmons, etcetera. So there's a lot of work that we can do with our innovations to minimize, the impact of current Food production.
But if you also look further into the evolution, there are a lot of very exciting areas where there is developments. For instance, of course, meat alternatives have a lot of science behind it. If you look at meats, you know, grown in laboratories, Well, it doesn't actually change very much the difference whether it's part of an animal or in a pastry dish. They actually still need micronutrients to grow. So the building blocks are the same.
And so we are very involved in following the developments of those technologies to see where our contribution of our science, for instance, can play a role. And of course, we're also looking at biotechnology in terms of where can we Also help produce food through bioscience, which can then spare some of the land from being used For free production. So these are some of the areas, and I don't, Dimitri, if you want to add on this because it's a very big area we can comment on.
I think you said it well.
Thank you both very much.
The next question is from Mr. Reg Watson, ING. Go ahead please.
I think you've come with a strategic presentation which investors have been planning for quite some Heim, you as the management team know as well. And you've outlined the structure, I think, very clearly. Playing devil's advocate here, I noticed though that the midterm profit targets haven't changed from before. So It seems like there's sort of an awful lot of effort going into realigning, streamlining DSM, but it's not leading to necessarily Any change at the bottom line for shareholders. How would you respond to that?
Yeah. Well, firstly, I would say that our midterm targets are what we believe are very exciting midterm targets, Which is mid single digit organic growth leading to high single digit EBITDA growth in a space where we've been present for a long time And where we do see a lot of positive momentum. So we're confident in those targets. And the space has been good for a long time. Now we're reorganizing ourselves To make sure that we are very successful in delivering on that journey.
At this point, we don't feel that it is neither appropriate nor necessary to actually revise Then upwards. Now we do have a strong pipeline of innovations. We've always said that some of these innovations Could scale to a point where, they come over and beyond, the contribution That we initially estimate, but that's how we look at it. So I certainly don't hope that I hope that you don't see it as In any way distracting from the relevance of what we're announcing today?
No, I think what you've announced today is fantastic. I think what I'm struggling with is that this really this step change in DSM or step change, Yes, it is a step change. DSM hasn't led to anything tangibly different to the bottom line. I think that's The potential disappointment here.
Well, as I said, we're confident in our targets For the midterm. And of course, transformation is still in process. Now maybe in due course, We will come to the conclusion these midterm targets can and should be revised, but not today.
Okay. Thank you, Geraldine. I appreciate that today is not the day. Fair enough.
Operator, we are running out of time. I think we have an opportunity for one last question. Can you please put that through?
The last question is from Mr. Fernand de Boer, Degroof Petercam. Go ahead please.
Yes, good morning. Thank you very much also for the presentation. I have also a couple of questions to come back on the targets and just to be clear. The adjusted EBITDA growth target Is after, let's say, corporate costs? That's the first question.
And could you also give an idea about the split The other activities and the cost between materials and nutrition or the new group. And then On the organic growth, I always thought that in the past you said the organic growth in Animal Nutrition is slightly higher than in Human Nutrition. And from your wording now, I understand it's more or less equal. So what has changed? Does it mean that you expect Animal to 2 week and nutrition to grow a little bit slower or the other ones to step up given all the opportunities they are.
Okay. So a couple of it's okay. A couple of pieces here. So, of course, our midterm target is a growth in EBITDA. So high single digit growth.
Now when it comes to corporate costs, what we're seeing is, of course, for now we are the Same company, we're moving the things around. What we will see is at some stage as innovation, the innovation center It's not reported anymore. Part of that goes into all the pillars, but part of it comes to corporate. So all in all, For now, you should assume about a similar level of corporate costs as we go forward, and that will evolve over time. No, of course, if there's further divestments, etcetera, these numbers move.
But in the current scope of total DSM, that doesn't change materially. [SPEAKER MARIA HUERTA: So that's to the corporate cost question. Now, when I referred to broadly similar, there are indeed differences. Animal Nutrition has, if you Look back in terms of CAGR being a bit higher growth versus the old definition of human nutrition and health. We will provide more granular input, but what I sort of wanted to say is that they aren't very different pictures here, But we will provide further clarity on that as we will provide you with the 3 pillars of figures Starting next year, basically.
So those were the
2 Yes. Then to be sure, the adjusted EBITDA margin of above 20%, this midterm target is for total DGM in the new setting or is that only for the 3 business segments?
We're not revising the target. So for now, the margin ambitions are as it is currently as a cluster. Same applies, by the way, for our materials businesses. So, we said materials should be an above 20% margin. It's Probably in this current format about 21%, and we will continue to do that until we do not hold materials.
So We are not revising the overall EBITDA margin at this point, for Nutrition and Materials. So in that sense, you can take the numbers as being who we are today.
Okay. Thank you.
And Dave, I think that brings us I think that was the last question, right?
Greg, that was the last question. So maybe one of you has some closing remarks before we finalize this webcast. Yes.
Let me be brief, also looking at the time. Thanks for joining. I think today DSM Announced that we're entering into a new chapter in our strategic journey where we're excited to accelerate our journey to become a fully focused health, Nutrition and Bioscience Company, very dynamic, interesting growing markets with a Strong commitment to sustainable innovation, sustainability in itself ESG, but also food system commitment with changes On the organization adapting to be successful for the future in building a growth company. Thanks for joining us today, showing interest in this beautiful company which is called DSM and I'm not biased. And if you have any questions please reach out to our IR team.
Enjoy your day. Thanks.