Warm welcome for you at the Investor Event 2026. Now, let me lead you through what you can expect from us today and from me. First of all, we will start with a presentation about the context. I will do that a little bit where we are today, the path forward. Secondly, we will have then the three business unit presidents here to talk you through their growth path for their three respective businesses. Last but not least, at the end, we will have Ralf, who will dot the I's and cross the T's, which I like, an English expression, for all the details, the financing part, et cetera. We will have, after every business unit, a small Q&A opportunity focused on those businesses.
We will have a full Q&A with the full executive committee, later after Ralf has finalized the presentation. We are here for you all day. Now, I'm not sure what all day means, but we are open for any question. There is no time limit to it other than you maybe have time restrictions. Because I think in today's world, it's important to take time to run through transparently where we are today, and I think we have a lot to talk about. Now, with that, I will speak a little bit about the journey, but very brief because we've done the transformation. We've done with the transformation. We're now the company we aspire to be, and we want to accelerate that company in terms of growth, in terms of EBITDA margin, and in terms of cash.
I will look back a little bit on the past, give you a little bit of background on Animal Nutrition & Health. You had raised a lot of questions. Ralf will also come back to that, and we'll give you a little bit more insight. We'll also give a little bit of an update where we are in terms of the tuning of the portfolio. Also, that is almost done. Then the last bit is about synergies, cost synergies and revenue synergies. That brings us to today. Today, 2026, and we will give you an outlook on 2026 today, and clearly around the parameters of a consumer-focused company. About organic sales growth, about the EBITDA quality in terms of percentage of margin, and about the cash conversion in terms of percentage of sales.
That brings us into beyond, and I hope I can clearly clarify what the pathway is towards our midterm targets for 2028 and beyond. That's a little bit on the agenda for me today before I hand over to the business units. Now, this is the slide also internally I use quite frequently, and this will be the last time I will use this slide. You will never, ever see this slide from me again. Maybe Ralf in his presentation just used it once, but this has been our journey, and we are now going from the merge to the focus to the tune to the accelerate phase. We have done the portfolio transformation. We've done the integration of the company, and now we're gonna grow what we have. We're gonna anchor what we do, and we're gonna deliver on our promises.
That's the starting point for 2026, with a clear focus for 2026 and 2027. Now, before we fast-forward to today and beyond, a little bit of background on the Animal Nutrition & Health deal. I think we failed to share with you the context in which we've done this Animal Nutrition & Health deal. It was clear in the second half of last year that the profitability of that business on the vitamin side was deteriorating. That really stressed the fact that we had to split the Animal Nutrition & Health into the Solutions Co, that's the specialty bit, and the Essential Co, which is the vitamin part. If you clearly look at our reports, you do see that the profitability of ANH in total has deteriorated from Q3 to Q4 in itself. In that context, we were negotiating that deal.
It took longer than I have hoped for. I think we want to shape the context which we did. Within that context, I'm very happy that with the necessity for splitting the company, we could make the deal with CVC, where we have clearly mitigated the downside, the volatility. Yet again, the second half of 2025, it showed the volatility of it. We mitigated the downside because we have two things. One, we had made a favorable supply contract for dsm-firmenich , and we created an upside in case business was normalizing via the earn-out. The earn-out is in line with what we call market-standard private equity money multiples. Ralf will give you a little bit more insight on how that earn-out has been built up. Secondly, we have retained a 20% ownership. Why?
Because we wanted to benefit from that normalization and benefit from that valuation itself. We've done that many, many times before. We have divested Materials, we've divested caprolactam, we've divested acrylonitrile. Many times with this construction, which has been very favorable for us if you look back. This is the value creation upward we do see. Ralf will give you a little bit more details around that. Secondly, on the tuning of the portfolio. Remember that during the review of Animal Nutrition & Health, where we decided because of the volatility and the capital intensity, we had the opportunity to also look at our portfolio. We deliberately decided to move away from a few pockets which were either commoditized or volatile. I'll give you an example on the aroma non-differentiated aroma ingredients.
That has gone with ANH. That's been attacked by the Chinese. We knew that volatility was there. We brought that into the deal with Animal Nutrition & Health. Now, also non-differentiated vitamins, but also earlier reported yeast extracts and marine lipids, and the only small bit agro ingredients, is on the brink to be signed. Also that will happen within a relatively short time. The tuning of the portfolio has also been finalized. Animal Nutrition & Health being finalized, tuning of the portfolio have been finalized, and that is now a clear path forward to accelerate to grow what we have. Now, in that bit, the third bit on that journey, ANH tuning, was also the synergy part. Remember the CHF 350 million, of which many of you said, "Mm.
Let's see if they deliver." We delivered on that CHF 175 million cost part. Many say that's the easy part, but we delivered. The second part is the synergy revenues. Now, you will have the BU presidents here on stage. You can ask them all about synergy revenues, but just as a sanity check, let's look at TTH, Taste, Texture & Health. Mauricio Clementi is the BU president. The majority of the synergies on revenues were in TTH. We always said that about 60% of the CHF 500 million top line. If we look at the growth rate of TTH over the last two years, and we compare that with peers, then we have outgrown the market with about 2%.
The synergy revenues are obviously kicking in, and we are halfway through that path, and you see that we are very confident that that synergy revenue continues towards 2026 and 2027 onwards. Having said that, we did not forget about sustainability in that journey. You could say in the current environment, who cares about sustainability? Well, the interesting thing is our customers do. Our customers do care about sustainability. They require us to report about sustainability to be on their call lists. We did work on sustainability quite a bit. We merged the companies, created datasets, and we're very happy and proud that we have the CDP double A rating on water and climate. Also EcoVadis, the highest ranking you could have, which is platinum.
You do see that sustainability is important, and I think also for you watching our company, you should also ask the question: What is happening with the employees? What is it with their engagement with so many changes? We check that on an annual basis, and I'm also very proud to say that our employee engagement has been very stable, around 80%. With all these changes, and 80% is really in the upper part of the rating of companies that test their employee engagement. We also made good progress on sustainability, not because it's a requirement, but it's because our customers really care and want to see us to improve. Now, let's leave the past. Let's leave the journey. This is it. What do we have? What is it what we have built?
We have built a company that is EUR 9 billion in size, EUR 9 billion in size. That creates economies of scale enough to invest in platforms, in R&D, in innovation platforms. You need to have that scale to do that. EUR 9 billion is a very good scale in our industry. Now, what did we do in terms of growth? We've grown about 4.5% per year, so that is in the organic sales growth. I think peers around 5%, so in line with the industry. We beefed up our EBITDA margin, come back to that in a minute, from 14% close to 20%, and we delivered, if you correct for FX. We'll come back to FX in a minute. We delivered a EUR 300 million EBITDA step-up from 2023 to 2025.
It is a strong business already, but it needs to accelerate, and that is what we're going to do. How we're gonna accelerate that is building and grounding it in our business model. Before I go to all types of numbers and financials, I want to spend a little bit of time with you on why it is so unique what we're building. It has to do with our business model. Let's go back to the middle of that slide first. Think about the specialty ingredients and the creation innovation, and then I'll come back to the outer columns in a minute. This is the core of our business model.
We made a deliberate choice to invest in the ingredient toolbox, and more creatively it's called the palette, and we built a fantastic creation capability, and those are perfumers, flavorists, application specialists close to the customer. Now, that is melded together via a brief system where regulatory requirements are important, where delivery systems are important, and where the ecosystem is important. We made at dsm-firmenich a deliberate choice to invest in these two anchors. We're not a company that only innovates and invests in ingredients, so we're not an ingredients company pur sang. There are some in our industry who really focus only on ingredients. We feel the ingredients need to be coupled with creation, with perfumers, flavorists, and application specialists. Understand what is needed in compounding. Understand the need in formulation. Let me give you this example.
If we go to customers and we get our briefs, and we have great perfumers, great flavorists, and great application specialists, but they have a mediocre toolbox of ingredients to play with because they can only buy from the outside or they source, then they will not win briefs. Also, on the other hand, if you have a fantastic toolbox, a fantastic palette with the best ingredients in the world, and even some proprietary captive ingredients nobody can get, but you have mediocre flavorists, mediocre perfumers, and mediocre application specialists, you will not win enough briefs. We feel that a business model which is built on two legs is more future-proof than a business model that is built on one leg. That is a fundamental strategic choice we've made, and we stick to that.
We invest and innovate in the creation capability as well as ingredients, and I'll come back to that in a minute because there are lots of questions about, "Yeah, but these ingredients are attacked by the Chinese." Well, that is not the specialty ingredients as we talk here, but we'll come back to that in a minute. That is the key of our business model, and that is coupled with two elements to supplement our strategy. First of all, we made a deliberate choice where we think the world is moving towards in three to five years and what they need. That is, and you see that on the right-hand side. That is biotechnology. Move away from synthetics into biotechnology. Invest in receptor and sensor technology. How does the flavor and fragrance impact your receptor and sensor technology capabilities?
Thirdly, about health, a lot is still unknown about microbiome. It's the next step in terms of building new businesses, and that is really helped and supported by data science and AI. This is valid for all our three business units. Now, secondly, where do we want to play? Obviously, we play in our current business, and obviously in that current business, we want to be extremely competitive. There we talk about market share. If you only grow while growing market share, you will not future-proof your company. Yes, we wanna grow our market share, but it's coupled with what we call blue oceans. I don't know if you read that beautiful book written 15 years ago. It's about blue and red oceans. The red ocean is you defend your market share in existing markets. Blue ocean is you develop new markets.
Now, new markets, blue oceans, are healthy and tasty food. Sugar reduction. It's replacing sugar where we're not in with enzymes, with ingredients which create the sense of sweetness. That is new business. HMOs in the health, nutrition, and care part. That is an additional ingredient to the playing field. The early life nutrition market stays the same, but the ingredients in the early life nutrition is growing. That is blue ocean, and it's not market share gain, it is additional business. Preventative healthcare. I already mentioned HMOs. With the aging population today, healthcare cannot be financed as such. There will be a disruption or an evolution, but there will be a change for people taking care more and more about preventative measures for their health, because you can no longer afford not to do it. Thirdly, it's about wellbeing.
Wellbeing and beyond, how you feel, how you look for your identity. There also fragrances play a key role, not only in the generation which is normally traditionally using, but also the younger generation itself. We are next to having innovation platforms. We also build our company to grow in the blue oceans, new areas to grow with. That is super important because that's the key how we can differentiate ourselves. Now, having said that, with that business model, with the company we've created, that CHF 9 billion company with a good portfolio, we do operate in a crazy world. There are a few challenges we need to share. I think there are also a few themes you wanted us to talk about.
We did listen to you to say, "Hey, what are the themes you want us to dive into a little bit?" Not only me and Ralf, but also the BU president. Let me first start with the major headwinds. AVIX, and this is the dollar for us, as well as the Swiss franc, that has had a negative impact of CHF 100 million in 2024 and 2025, quite considerably. That will still have a negative impact in 2026 of about CHF 70 million current rates. AVIX impact for 2026. Now the dollar, if you take a 10-year timeframe, it goes up and down. Well, today, we never know where it's gonna end. On the Swiss franc, obviously we do see also there quite some ups and downs, but in a less frequent way as we speak.
FX headwinds are still out there and we can't manage them, but we'll need to be very transparent on what we see today. Now, second is that we have seen in the second half of 2025 a more cautious consumer demand. Now, in a world where uncertainty is higher and higher, consumers basically become cautious. And what they do is you become cautious, you can do two things. You either pile stock, what we've seen with COVID. Uncertainty. What is happening? I buy a little bit more. Or you de-stock. Now, that has happened in the second half of last year with a bit more cautious behavior, and we've seen that predominantly, a bit ironically, in the North America market. So that is an interesting move to see. We don't see any change from Q3, Q4 going into Q1.
Looking at our brief and our pipeline, we do think that the second half we will see an uptake of that based on the experience we have. Now, there are four other elements I wanna share with you. I will come back on the China ingredients competition because that is apparently a topic we need to address in artificial intelligence. The other two, affordability and GLP-1, the BU presidents will come back to you on that. Also ask them questions during the Q&A, they will also address it. Let me remind you of one thing. On affordability, downtrading, GLP-1, if there is a change in requirements, if there is a new regulatory requirement, if there is a new ingredient, if there's a new product launch, if there's a substitution brief, that means business for us, extra business.
Change is our friend to a certain extent. Within the company, we'll just focus what we have. In the world, change will create new briefs and will create opportunities for us. That is valid for affordability, and that is valid for the GLP-1. The GLP-1, Mauricio will talk to you about it. That market linked to ingredients we have is growing faster than the average market. It definitely is an opportunity. Let's focus a little bit on the China ingredients, which is on your mind. Let me start with the fact that we did our tuning of the portfolio. You've seen the six blocks, ANH, but also the aroma ingredients, the non-differentiated ones, also the non-differentiated vitamins. They all went with the deal. The portfolio we have is predominantly a portfolio around specialty where we can differentiate.
Secondly, we are not in big molecules. We're not in menthol. We're not in all types of huge molecules in itself. We're not in citral. We're basically in smaller molecules because that's the business model. Now, we have more than 3,000 differentiated ingredients in our toolbox, in our palette, which we use. Not one of them, there's no one molecule which is more than 50 million. I can tell you logistically, that's a mess. It's a beautiful mess because it's very difficult to copy. We feel that the China ingredients competition has a very limited impact to us because of the business model, but also the ingredient toolbox we have.
Secondly, you need to remind that even if you have the right ingredients, you need to have that creation capability, creativity, perfumers, flavorists, application specialists with a whole ecosystem. You need to have that ecosystem to be competitive, to win briefs with customers. That complex ecosystem is also a barrier to do so. I think by far the most important one is we're not in the big molecules. We've done that. We sold it off. And remember, we also were in terpenes with Pinova, which we didn't rebuild the synthetic ones. So we feel that impact is rather limited. Now, AI. It's a busy slide, and that's because of it, because nobody knows exactly what AI will do to the industry. We see today positive effects.
What we always see is we look at opportunities from an ingredient discovery. You see that here on the left-hand side, and we use AI there. We use AI for productivity gains. I'll come back to that in a minute. We use AI to accelerate the brief to adoption process. Now, let me give you three examples of all three. One is the ingredient discovery. Within the perfumery part, in the Perfumery & Beauty unit, we use for more than 80%, the ingredient discovery, we use AI. They pretest, they prescreen, and therefore the acceleration of that whole process has increased considerably. We use AI as sort of a filter before we get the human emotional creativity into the game. That creates quite some efficiency and savings.
The middle block, more the gray brownish area, that is production development, production processes. We have applied, and this is use cases, so we're using it where we feel there is benefits. We used it to optimize an important process in our industry's distillation. We used AI for that to optimize that. I can tell you that the stability and the yield improvements have been 10%-30%. That's a couple of million CHF savings you can generate using AI going forward. We're gonna accelerate those use cases as we speak. Last but not least, the brief to adoption process. Also here, for instance, in TTH, we use AI to prescreen, to leverage and look at formula creation. What are the ingredients you could use?
Also simulate what the outcome will be in terms of how successful a formulation could be. That is reducing the testing costs. Also here, an opportunity for CHF 2 million. Now, those are use cases. We are super happy with the positive outcome of it, and we're gonna roll that further out. We're already working on it for quite some time, but we do now see that it has huge impact on how we could operate internally. Now. There are people in the world who basically say, "Dimitri, what if in the future, perfumers are no longer needed, flavorists are no longer needed. You have a Charlie of a Sarah," well, you know, a different Sarah than our Chief Science & Research Officer, but a Charlie and a Sarah who act as a perfumer or a flavorist.
Are you then not out of business? Now, first of all, I don't think that AI or Charlie or Sarah will ever have the creativity and emotions which our customers require. Secondly, if you have a perfumer or you have a solution for a fantastic food product, which is just mechanically being made without any emotion, I don't know if there's a huge market for it. It will help for the perfumers and the flavorists and application specialists to be faster, to pre-screen. To be fully transported and to be eradicated by AI, I have my doubt. There is a good place to do that, and even for smaller customers, you could do AI-generated. We've done that with some of the venturing and some of the experience we had in the past.
Now, let's assume, just hypothetically, which I don't believe, but hypothetically, that there is an AI perfumer, an AI flavorist, an AI application specialist. Just in that extreme case, you can only load the algorithms with data you own. Now, and here, our philosophy of having two anchors to build our business case, our business model is important because we own the specialty ingredients. We don't buy them from the outside. We partly buy them from the outside. We partly have sourcing joint ventures, but we also have these captive ingredients, the proprietary ingredients, which fill the algorithm. So in the extreme case that there is an artificial perfumer, flavorist, and application specialist, there is one company in this space who would benefit from that the most, and that's the one who has invested the most in the ingredient palette, and that's us.
We have the biggest, broadest, more specialist ingredient palette compared to all our others in this space. We are not afraid if that will happen. I don't think it will happen, but if they will be fully AI driven, we are the ones who can load our algorithms, and we will even be best positioned. Now, that on AI, an important topic. I don't have the full wisdom on what it will do, but I just share where we are today and what we feel philosophically about where it could go to. If it goes to the extreme, from all the companies in the space, we are best positioned. Let's move to today's financial. What's the starting point? Before I give you a little bit of financial trajectory. This is the starting point for what we have built.
Sales, there was about the CHF 9 billion I told you about, with an average organic sales growth of 4.5%, versus the market on average 4%. Slightly above in line with to the peers. On the adjusted EBITDA, I think it's important to know that, indeed, we have grown our EBITDA 9.5% CAGR for two years, and we have improved on the quality of our EBITDA margin. Now, 14.4% was the group at that time. If we then take the tuning of the portfolio, including the ANH divestment, you will see a step up from that portfolio from 14.4% to 18.2%. It shows deliberate choices we made from the business we basically have divested.
Now, as of that moment, we have improved on our EBITDA margin with a step up of 140 basis points from 18.2%- 19.6%. I know you should not correct for FX. I just do it for a minute. If that will be at the constant currency of 2023, that will be with another step up of 0.4%. We will be close to the 20% in itself. Now, that is the starting point, so around 20% on EBITDA and the CHF 9 billion of sales. The cash conversion, remember, in the CMD, almost two years ago, you were not very impressed about our cash conversion target of above 10%. We also said, let us be a little bit prudent, maybe a little bit conservative.
You show here that we have been a little bit prudent and conservative because we have outperformed that 10%. But we're obviously not happy with that 10%, and we'll come back to that a little bit in updating our midterm targets for the cash conversion. That will be more than the 10% as you've seen here. On average, it is around 11% over the years. Now, that is starting point. That's the basis we start to grow our business on. What are the elements of growth in our sales, in our EBITDA, in our cash? Now, these are the action plans in place. First of all, we're gonna grow the business we have with a focus on the high growth, high margin. What does it mean?
It means, for instance, in TTH, we'll grow in the enzymes and cultures and probiotics. For Perfumery and Beauty, it means that we wanna grow fine fragrance. For HNC, we're gonna grow HMOs in the early life nutrition space. Separately, we use the reformulation. Change is our friend. GLP-1, clean label, new colors, it helps on the brief. We will materialize on that, and we need our innovation to help us with that. We feel we have a pathway to accelerate that sales. On the EBITDA margin. Now let me make it very clear. We are at around 20%, and we need to be around 22%-23%.
One percent of that we'll take in our own control. We have launched an operational excellence project to reduce costs, which will generate around 1% of EBITDA margin. That's around CHF 90 million-CHF 200 million if you look at that sales. It's a 1% which we do on own program, own cost control, and we're gonna deliver on that like we've done always on the cost programs. Secondly, we'll use the leverage. If we grow our top line, we use the leverage to add another 1%. That means that we move from 20% - 21% - 22% in the accelerated EBIT. Now, we all know that we have the ANH carve-out, that we have Service Level Agreement.
We have the special service agreements over one to two years, which will fade out, and we're gonna have programs aligned to that to offset these stranded costs. The stranded costs will not have an impact. Now, Philip Eykerman is here. Many of you know him well. He is fully dedicated to the whole transformation. Stranded costs for ANH, we've done that many times before with the pharma divestment, with the materials divestment. We're pretty good at that. It is painful, but we're gonna deliver on that program, and Philip is fully dedicated to help us to do that. On the EBITDA margin, I think we have a clear pathway where we have that under our own control.
Cash conversion, let me remind you that in the current CapEx as percentage of sales, there is still a 1%-1.5% on Bovaer. This is the last year in 2026. Our plant will be ready end of this year and then start to have commercial volume somewhere in 2027 itself. That is a 1%-1.5%, which will no longer be there. That's not the underlying part. That was a special project. We'll couple that with an inventory reduction program. We need to be structurally below 27%. We are in the 28%-29% area. I think we have a step-up to be made which will help that cash conversion. Now, what does that mean for the outlook 2026?
I bridge that to the path to the beyond. In the current context, let me make it very clear that our assumption is that the Middle East situation, the war in the Middle East, doesn't have a prolonged period. Now, nobody knows. We need to see. That is not part of the outlook we're giving. Now, the outlook is 2%-4% organic sales growth in the current context, with an adjusted EBITDA of around 20% and a cash conversion of 11%-12% somewhere in the middle in the current context. I think we believe that, in today's environment, being a little bit prudent is wisdom. Now, that is 2026.
If we take that 26 with the growth drivers to see what is it bringing us beyond, we clearly focus on the growth areas of the businesses, and the business units will be on stage after me. Let me start with P&B. We will accelerate growth by using the focus on the regional consumer brands, because that's where the real accelerated growth is, and on fine fragrance. Fine fragrance coupled with the Middle East. Now, in this case, that was before the Middle East war started. We all know that there is extra growth. There's accelerated growth in the Middle East for fine fragrance, and we're gonna target that. We've opened a new lab office in Riyadh, and we have a good position in Dubai, and that will accelerate.
Now, remember that also the growth drivers for 2026 and beyond, we had a subdued sun filter demand in 2025. Now, if that stabilizes and normalizes, that obviously will help in terms of growth. That's the wrong reason to grow, so don't get me wrong. But if you grow because last year was bad, that's not the growth we want. But for sun filters, it will help us in 2026 and in 2027. Then on TTH, we're gonna capitalize on GLP-1, on healthy and tasty food. We do two functional drinks, and we see the dairy category, the yogurts and the cheese, being seen as a healthy category. We do see above average growth in that area, and we'll couple that with the enzymes, the culture, and probiotics. We have very good, strong position.
For instance, in enzymes, we are the number one player in the dairy segment. We should be number one in many other segments as well, Mauricio, but we already are in the dairy, and we're benefiting from that healthy setup. We'll focus on India, on Africa, and on Asia. On HNC, we will have new product launches in a category which is growing very fast. It's women's health. In a previously male-dominated world, we were all launching male health parts, but the women's health is a different story. We're gonna categorize that. It's a fast-growing area, certainly also North America, and eye health will materialize on that. Obviously HMOs, we already talked about it. That is we are the leader in the HMO space.
We are the leader in life nutrition, so having coupled that ingredients with creation is a very strong trait. North America will basically stabilize over 2026. That is, if that will happen, obviously it will help HNC because that was with a 40% exposure of HNC in North America. A stabilization and maybe later on a normalization will absolutely help their growth. Those are the growth drivers in place. We're gonna grow on all of our portfolio. Don't get me wrong. The EUR 9 billion, we're happy with what we have. We're gonna make a few pinpoints where we outgrow that average growth, and we have them in place for the business units, and there are only two, three per business unit.
If we do that, we can come to that accelerated growth, and therefore, we feel comfortable that we can make that movement from 2%-4% as our outlook into 4%-6% for 2027. It's based on what I just said, grow what we have. The different topic areas, focused areas for the growth of the business units, coupled with a little bit of market normalization. We're expecting a little bit of market normalization, and I think all companies in our space basically expect a bit of market normalization. Don't ask me when, but if it normalizes, that will help us from 2026 to 2027, between 1%-2%. Depends a little bit on how 2026 lands. Then bringing it to 2028.
Let me make it very clear, our focus for the next two years is on 2026 and 2027. We grow what we have. We accelerate performance for 2026 and 2027. To give you a bridge to 2028, because that was also one of the questions we got is that, "Hey, how do you build that to your midterm targets?" We feel very strongly that if you have 4%-6% as the underlying growth with a bit of normalization in grow what we have. By the way, we have grown 4.5% in 2024 and 2025. It's absolutely doable. Bovaer will sink in in 2028. Bovaer will be the plant will be ready end of 2026. We'll start up commercial volumes in 2027, and we'll see a significant impact in 2028 and beyond.
The 5.7%, and we always said that there was a 1% Bovaer in it. I split it into 4%-6% as the underlying business growth, plus the 1% related to Bovaer. We clearly see a clear path to that growth momentum which we have depicted. On the EBITDA margin, I think we are around 20%. We will bring the cost program in place that will deliver the 21%. That will happen a little bit in 2026, but predominantly in 2027, maybe a little bit in 2028. That will be the 1% which we have under our control. With the leverage of the top line, that will bring another 1%, and that we are in the range of 22%-23%. Also here, clear focus on delivering 2026 and 2027.
Nice to dream about 2028, but we're gonna deliver focus and accelerate on 2025, 2026 and 2027. On the cash conversion. Now, you see it already here. Our cash conversion target and commitment for 2028 and beyond is 14%. 14% or higher to be precise. How precise can you be in 2028? It will be 14% or higher, coming from around an 11%. Now, 1 %- 1.5% on Bovaer brings you at 12.5%. Now then with a 1% EBITDA margin increase, you're in a 13.5%. With a little bit of working capital which we have put in, we are feeling very comfortable that we can generate a company that generates 14% or higher.
Having said that, I think the key element of making our company tick is that it starts with growth. Grow what we have. I've indicated a little bit what are the key pockets that we can outperform with growing the high growth, high margin area. I've clearly indicated that the transformation is done. You will not see that journey slide from me anymore, anytime, because now it's time to focus, it's time to execute, and it's time to accelerate. We're gonna do that by focusing on growing what we have, but also by anchoring what we do. No big new projects within dsm-firmenich. The program we're gonna run is the cost efficiency program, is the cost optimization program, is operational excellence, is optimizing what you have. That is anchor what we do.
By doing so, focusing on the growth with optimizing what we do, we gonna deliver on our promises within the pathway we've set with an outlook on 2026, with a bridge from 2027, with a pathway clearly on 2028. Having said that, 2026 and 2027 is a clear focus for us to deliver. Not only me, not only the BU presidents, but all 21,000 people within dsm-firmenich. Thank you.
The way we think about health is evolving. It's not just about isolated moments. It's a lifelong, proactive journey towards total wellbeing, where smart choices around nutrition, health, and care shape how we think, feel, and act. Navigating this exciting shift in health can't be done alone. At dsm-firmenich, we believe the best progress happens for humanity when we co-create with our customers. Helping parents give their infants the best start in life, supporting toddlers and teens through their growing years, igniting people's passion to make their health a priority, and improving patient outcomes with better medicine and restorative healing. This is what inspires us to push past our individual limits with a shared vision to elevate consumer and patient health at every stage of life. With an integrated approach that goes beyond ingredients, delivering enjoyable and memorable experiences.
Together, we can deliver what people want, what humanity needs. Unlock life's possibilities by shaping what's next. Innovating health to new heights takes more than just ingredients. It takes an end-to-end solutions-driven path. We bring progress to life.
Good morning. I must admit, I feel quite proud and excited to be standing here in front of you, and this for various reasons. The first reason is that I actually joined the company, dsm-firmenich, end of last year. Was the handover PO with Philip, and I took over the role as of January first. The first reason is, you know, looking at where dsm-firmenich and actually Health, Nutrition & Care, which I will refer to as HNC in the presentation, sit exactly at the intersection of what I've been doing the past 25 years. On one hand, spent close to 20 years in the consumer industry, B2C, at a global level.
When I say global, for those who don't know me, I'm actually Swiss originally, but I spent most of my time, most of my life since childhood outside Switzerland in countries like Colombia, like Nigeria, like the U.S., where I studied. Then I joined Nestlé, and I had the chance and the privilege to live in emerging countries like Venezuela, like Mexico, then in China, where my daughters are born, then in Singapore, taking care of APAC, and then only back to Switzerland when I actually left Nestlé 20 years after joining the other part, which is the B2B part, not in the industry, not in manufacturing, in service industry, in medical diagnostics, so still very much linked to the health sector. If I look at dsm-firmenich as an HNC, they sit exactly at the intersection of these two worlds.
They bring those two worlds together. That brings me a lot of pride and excitement. Lastly, because HNC has a very important role to play within the journey of dsm-firmenich on health, nutrition, and beauty. Now, let's step back a bit. If we think about, you know, some of the long-term trends that are impacting positively and that represents an opportunity for our for our category is, you know, through simple questions. Who in this room doesn't want to live longer? The second question is: Who does not want to live longer and better, healthier? Not only inside this room, but outside as well. That creates the first opportunity, which is called, you know, you probably heard about the 10-year gap between the lifespan and the health span.
How many years people actually live versus how many years people actually live better, and not only longer. That's the first opportunity. The second opportunity is, in order to live better, you need to create daily habits around exercise, around nutrition. To create those daily habits in nutrition, we all have probably, and we will share an example here, aging relatives or aging parents, how hard it is to to stick to this daily nutrition on macro and micronutrients. Taste and experience matter a lot, and that's the second opportunity where dsm-firmenich brings those two worlds together. The next 20 minutes, we're organizing around three elements. First, who we are as HNC. Give you a bit of facts, where we come from. Number two, what makes us unique in the marketplace.
Number three, where will the growth come in 2026, and then to reach our midterm targets. On the first point, who we are. I will not cover all the numbers, but few elements are interesting. First of all, it's a people business. You build trust. You build trust with your customers, you build trust with your consumers. The key number here is 3,600 health and nutrition professionals are dedicated to provide a better life to thousands, hundreds of thousands of people around the planet. Number two, if you look at our business line and segment spread, it's quite interesting because you see different segment, different businesses, and you will see throughout the presentation that those segments and businesses are very much connected, even though they're addressing different consumer segments into a very powerful story.
Number two, someone before the event was asking me, "Hey, Alex, how much of your portfolio is actually discretionary versus non-discretionary?" You see some very interesting segments here. We talk about biomedical, pharma, medical nutrition, early life nutrition. These are non-discretionary. You could argue around dietary supplement, but we're well-positioned. Second element, customer mix. Also well-balanced, because if you look at early life nutrition, medical nutrition, it's actually very much concentrated into few players that represent 2/3, close to 70% of the category that are driving the growth and the innovation. If you go to dietary supplements or even pharma, the mix is actually opposite. We're very well diversified. On the geographies, yes, North America represent 40%, but 40% across three businesses. Eye health, a B2C business, biomedical-B2B and the rest of the consumer ingredient business that we have.
Now, the interesting part or the other interesting part is the regions that are fast-growing are China, APAC, and EMEA across different segment. This is also balancing itself and giving us a lot of confidence to meet our midterm targets. That's who we are in a nutshell. Now, where do we come from? You heard before, Dimitri speaking about tuning the portfolio around divesting. You know, these are decisions that were made that were implemented already that give us a great foundation to accelerate from. Non-differentiated vitamins, marine lipids are exited. At the same time, the integration has, you know, been already implemented. You know, across the three divisions, we have the blend of the legacy and the power of DSM and Firmenich bringing all together. We're scaling up.
Now, algal lipids, we're number one in that segment around the world, and we're scaling up the solution selling model. Yeah. Vitamins represent less than a quarter of our portfolio today. It represented much more only a few months ago, you know. We are accelerating that part. Now, if you look at the numbers on the right side, what is interesting is, yes, of course, you look at 1%, we're not happy with 1%, huh. Now, there's two elements. With 1% CAGR, you're able still to generate a quite significant step-up in EBITDA. That's the first thing to notice. The mix is really moving into the right direction. Second, if you double-click on the 1%, you have few elements here.
First of all, 2024 versus 2023 growth was quite significant all the way to mid last year, and it is fair to say that the second half of last year was disappointing based on few elements that we can cover later. We're seeing in quarter one, it will take a bit of time, quarter two, and then we'll be back on growth. It's important not to take the 1% just as a one-off. There is a different reality in this, but the trend is positive, and I feel very confident, not only on the year but also on the midterm target. We covered the who we are, we covered where we're from. Now, what makes us unique?
What is very interesting is the way we look at our segments are connected. Connected through what I explained earlier. We're talking about healthspan, an enjoyable healthspan, creating opportunity of prevention. Prevention is not only happening, you know, when you start taking dietary supplement around midlife. That helps, but it starts way earlier. It starts actually even before birth. Now, all my experience in the infant nutrition category talks about the first 1,000 days of life having such an important impact on the rest of your life. It starts with the early life. It starts with the beginning of life. It continues obviously with the prime of life. Interesting data here, people do start taking dietary supplement earlier on. In Asia, typically around 35 years of age. In the rest of the world, around 45.
Those are important number, and every time people are taking them earlier. Of course, the advanced years are very critical. Categories like medical nutrition, you know, you see age decline now around the aging parents that we spoke about. We can help to give still a very interesting healthspan, an enjoyable healthspan for our parents and our aging parents. That's a continuum. Prevention has to be taken care of at every single stage, and we're the only one that can do that. Now, obviously, we're gonna be extremely focused, razor-sharp focused, because those stages are obviously, you know, you can say they're pretty broad. What are the choices we're making? Where are we actually playing? You know, on the beginning of life, premium ingredients. Now, the demographics around beginning of life, you look at the birth rates in China.
I spent five years in China. I actually contributed to the birth rate. My daughters are born there. When I was there in 2011, it was around 16 million births per year. Now it's down to eight-nine. I was like, "Wow, the volume is really declining." Well, guess what? The value of that market has not declined. Has actually increased. The markets are premiumizing, and we're shaping that. We're shaping that through, well, premium ingredients, HMO, human milk oligosaccharides. What parents are looking for is the best nutrition, and the best nutrition is in the breast milk. We need to support those mothers that cannot breastfeed or that still want to complement the food of their children with the best possible nutrition. We're gonna double-click on that.
In the growth space, in the prime of life, choices on healthy longevity with what I just talked about. Dietary supplement is a wide category. We're gonna make those choices, and specifically on regions where we see the penetration, opportunity. Then on the advanced years, aging-related decline, GLP-1, the importance of consumption adherence, that means sticking to a daily nutritional habits. That gives you, of course, an opportunity and an opportunity of CHF 25 billion addressable market. Now, what is interesting about that is that you see all those growth areas. Actually, we can scale it, and that's gonna be my next slide. We can scale it because we have developed an end-to-end innovation engine, one single one that supports all our customers into this. The second element of scale is that we don't do that alone. We do that with our customers.
We do that with our customers in a way that we stop being a B2B player. We become a B4B4C player. What changes here is few things. First, you see the C appearing. I spent 20 years understanding the C, the consumer, 'cause you cannot support, you cannot co-create, you cannot provide solutions to your customers if you don't understand their own end customer. That's our job to support them. It starts with that. Every example I will give you start with the understanding of the consumer, 'cause then we sit down at the table with our customers, and we co-shape the pipeline with them. Not just one launch, a full pipeline. I've experienced that with them already. I met more than 30 customers since I joined. From the local one, the regional one, the global ones. Not everyone has R&D muscles.
I'm gonna share with you an example of end-to-end innovation that we provide to our customers with their brands, but we do everything. That's what we call market-ready solutions. It's turnkey innovation. How does that look like? Well, exactly, it's simple to understand. Yeah. It's pretty unique because on the left side you have our hero ingredients toolbox with our own science behind it, our own ingredient brands behind it. Yeah. Algal lipids with life'sOMEGA, GlyCare on HMO, with multiple HMOs not only launched already as we speak, but in the pipeline to come, in China and in the rest of the world. Vitamin forms, the one that are differentiated are with us. Biotics with Humiome, in particular postbiotics, very differentiated to probiotics because you can apply them in different shape and forms like gummies.
You cannot do that with probiotics. Flavors and maskers, obviously, that's what I mentioned at the beginning. You bring the two worlds together, the strength of DSM and Firmenich together. Then you have the creation and application, as we spoke about, you know, receptor sensory science, performance blends for those customers that have, you know, factories, the big large players that say, "Look, you give us the blends with your hero ingredients, but we take care of the final manufacturing." No problem at all. Or the market-ready solutions, "Well, look, we have no R&D. We have no factories. Just give us. We give you the label, the brand, and you give us the product." We can do both. Specialty biomaterials, which is more for biomedical, and then obviously the customer centricity across the different regions, across the different segments.
Here, what is critical is protecting the brand reputation of our customers. Quality and safety, and I'm not saying something that is irrelevant for what we've seen the last weeks. How important is quality and safety? How important is innovation for our customers to differentiate themselves in the marketplace, whether they're large, medium, regional, local? This is the model. What is even more exciting, and we spoke about AI before, is that we're already more than experimenting. We are developing a model that will help us formulating through AI that increases your speed to market. Well, actually reduces your speed to market. Yeah.
also generating new customer and consumer insights through AI that allows us to understand, in a very personalized way what our customers are wanting, anticipate that, and propose them already solutions to where their brand is positioned, thanks to our innovation engine. In a nutshell, this is not an invention model. It's not a simple model to innovate. It's a model to industrialize with scale, differentiated innovation for our customers. We stop being an ingredient supplier. We become a system player, and that is rare, and that is quite unique. I spent a bit of time in some of the trade shows and some of the big trade shows, global trade shows. I can tell you there's not a lot of companies that offer that.
Now, let me give you some examples how that comes to life, not only confirming our mid-term ambition, but already starting in 2026. We start obviously with early life nutrition, the beginning of life. There are probably parents around the room, yeah. When you're a parent, I am one, while you look at quality and safety, it's not anymore a hygiene factor. It's a decision criteria. You don't joke with that. You know exactly what I'm referring to. Number two, you want innovation. How do you drive premiumization? By understanding the natural human nutrients that are in breast milk. HMO is one of the major one, but there are more. We have more in the pipeline. We're putting a lot of R&D behind understanding breast milk and using our biotech technologies and capabilities to scale it up. Number three, we don't stay there.
There are new application, new consumption opportunities like supplements. I was in China end of last year. I didn't go there in 10 years. I saw a category of kids supplement, so kids above three years, that is growing very fast. Gummies, you know, different application that are actually very convenient for children. These categories are growing. Maternal nutrition. When a mother wants to. Well, she's already pregnant, she needs to have the right nutrients for her baby. We're providing those supplements. This category is also growing very fast. Obviously, you have the HMOs that I put as an example. You know, HMOs is gonna be in most infant formula in the future. The good news is that it's today in less than 20% of all worldwide infant formula. Less than 20%. We're shaping that category. We're driving this category growth.
It might not be at 100, but it will get close to 70%-80%. There is growth to come in the next years. We are present not only in China, of course, everyone talks about China, where we're present and registered in more than 100 countries worldwide. So growth gonna come from HMOs. ARA, you know what I'm referring to. There is demand there. We're scaling up our production as we speak. So in quarter one, we will not see much effect. We'll start seeing it as of quarter two moving forward. Customers are knocking at the door, I can tell you that. Another example, again, starting with consumer. We spoke about it, healthy longevity. We're making sharp choices.
Here it's very interesting because once you start making those choices, once you understand what is critical to healthy longevity, as in cellular health, for example, and then you start understanding what will make the difference here. You know? Here, what you see on the right part of the screen is actually a concrete example. Now, you will get some samples when you leave the room. It's, you know, a combination of our life's OMEGA with our Quali-D. You remember on the left part of the engine, you know, the innovation engine, they were on the hero ingredients. You start blending that with our application and creation model, 'cause what you need to know is behind omega there is an aftertaste. That's where our taste technology, our Maxus technology comes in.
That provides a very actually interesting taste or neutral taste. Yeah, masking what's not right. What's even more exciting is our science showing that if you take that product, you know, for three years in a row, the science shows that you're reducing your biological age by three months. Obviously, with a bit of exercise. Yeah. This is the product. These are samples that we're showing to our customers as we speak. They use it as such. They can claim it. This is a real-life example of what we launched in Japan a couple of weeks ago. It's a brand. It's a leading yoga brand in Japan. They don't know how to do supplements. They don't have any R&D on that. They don't have plans. They're positioning themselves as well-being.
Leading, very famous brand, and they knocked at our door, you know. We provide them end-to-end the product. The only thing they have to bring us is the label and their brands. We take care of the rest. These are concrete examples on how we're working and co-creating with our customers, depending on the size. Another example is the one I already mentioned. I have an aging mother. She's exactly going through that. I see age decline, less mobility, muscle mass is reducing. I bought some samples or some real products of medical nutrition where I know that the science is there, you know. At the beginning, I came back, and I saw, you know, a couple of samples used, but she basically didn't take it.
I said, "Why didn't you take it?" "It tastes horrible." This is where the opportunity is. We're here to solve that issue. The science is solid, but if we don't solve the taste, they will not take it. If you're a cancer patient, you have that metallic taste in your mouth. We're able to mask that as well. We're not here to sell more, we're here to solve more of that issue. Thanks to our unique capabilities, we're able to do that. Another example, i-Health. Positioned in North America mainly. In the B2C segment, we have strong brands like AZO, like Culturelle, like Estroven, and yet the opportunity is to double down on the online sales channel. We're gonna do three things here, or we are doing already. Rejuvenate the brands. We are increasing massively our investment in media, and we start seeing some results.
Innovation on two specific areas: women's health, which is growing fast, and microbiome or gut health. AZO specifically on women's health and Culturelle on the microbiome gut health. Estroven is more on the menopause, which is also a very interesting segment. We're making those choices, focusing on, well, you know the online sales channel in the U.S.. No need to mention them. We're partnering with them to make sure that we drive and shape those categories online. Obviously, we have strongholds in the brick-and-mortar channel, and we make sure that we obviously defend and protect those channels as we grow the online. Very exciting stuff happening on that end. Then last example I will give you before concluding is on biomedical. Very interesting segment that even though it's not about nutrition, doesn't matter.
We're talking about prevention and preventative health. We're talking about enjoyable health span. What's very exciting here is if you look at the innovation around biomedical, it's all linked to enjoyable health span. We are moving into prevention monitoring fields, drug delivery, metabolic disease. Take, you know, diabetes monitoring, use our technology. If you're the dad, and we have some in our teams, dad, and your daughter has, you know, diabetes at three years old, you wanna make sure that the technology is safe and secure. Yeah. They're using our technology for that. Super exciting field, high growth, high margin, super high barriers to entry. Most of our revenues today come from North America. We are expanding in the next 18-24 months in two additional countries called China and India.
Everything I shared with you so far will help us not only in the midterm, but also starting in 2026. You know, these are some of the products region and new segments. I mean, we've covered them all, but I'll go through quickly. Product leading the portfolio premiumization with HMOs and microalgal lipid platforms. Number two, strengthen our market leadership with our superior quality, ARA. Accelerate creation and application engine in dietary supplements and medical nutrition. I shared with you some very concrete examples. When it comes to region, we see a big opportunity, namely in China, EMEA, and APAC. By the way, we have our... Where is Christina? Can you stand up, Christina, so people see you?
If you're interested in understanding more what we do in EMEA, I mean, first of all, Christina and her team are doing a great job. We are shaping the categories in dietary supplement. We're growing faster than the category, and there's great stuff happening there. If you wanna engage with her over coffee, feel free to do so. And obviously the North America, it's still 40%. Let's be realistic. Of course, when North America consumer confidence is not super high there, we need to mitigate it with the rest. If this starts normalizing, you know, we will accelerate that even further. Finally, a new segment. We spoke about eye health. We spoke about medical nutrition. A little bit less about pharma. There's also very exciting stuff happening.
Maxus technology is critical in pharma because you have bitterness in many of the APIs, and our technology is enabling that masking. If you wanna hear more for that, you can also talk to us at the coffee break. Last slide, you know, if we sum it up. We spoke about who we are, where we come from, the decisions that were made that build the foundation and the base for the future. We spoke about what makes us unique, you know, with the unique life stage approach on prevention, the unique end-to-end innovation scalable model, and then concrete example of what we're doing already now in 2026 and that will help us with the midterm. I personally feel very confident with the organic sales growth of 4%-6%. Why a range?
Well, you can imagine with what's happening around the world, you know, we also need to be realistic. You know, you've heard it from Dimitri earlier. I feel very confident that we're gonna cross the bar of 20% EBITDA this year already and 21%-23% as a range for the midterm. Thank you very much.
Okay. We're a Swiss-based company, so we'll stick to the clock. That means that we have one key question for Alex, and then he will obviously be on the stage at the end of all presentations. Who wanna take care of that one key question for HNC which is burning? Yes. Go on. Maybe just introduce yourselves shortly, and then
Thank you. Agne from Impax Asset Management. Quite clearly a lot of thought has gone into your capabilities, making sure that you have a right to win in those capabilities. How much thought has gone into aligning yourselves with the right customers? You mentioned the yoga brand that's doing supplements now. Why does the yoga brand have a right to win in supplements? I guess that's just one example that maybe you can talk about more.
Thanks for that. The first element of answer is that depending on the segment where we are, you know, you take early life, you take medical, you might want to, you know, and start innovating first with the big players to get the scale, you know. That's where we have pipeline building with the big players that you know of, the four or five global ones. On top of that, you go to China. There are strong players that are not only big in China, but that want to internationalize. You make sure that, you know, in terms of range of customers you target in those segments, you go for those ones.
To your question on dietary supplement, you know, we see clearly regional and local players having actually bigger growth than some of the global ones. It's a different dynamic than early life and medical nutrition. We wanna make sure we capitalize on those growth, you know. The mix in dietary supplement is actually close to 80% local versus 20% global. These brands, they belong there. Some will fail, but it's part of, you know, experimenting and give them a chance to succeed with our technology and with our R&D capabilities.
Great. Agne, maybe for the overall HNC here, a lot of people think this is all about global play. If you look about local versus global on the portfolio, it's about 60% still localized customers and 40% the global play. Even some of the global play play locally. That is also HNC. I think thank you. Thank you so much.
Thank you.
We'll see you back on stage. We now go from one beautiful business to another beautiful business. This beautiful business has beauty in its name, so it's a bit of an unfair competition with Alexander. This is obviously the world of perfumery and beauty, and let me introduce Emmanuel for you.
A powerful new age is unfolding. One shaped by those who imagine fearlessly and act with purpose. Our senses are the spark, igniting emotion, connecting us. Those connections are under pressure, blurred by rapid digitalization and the relentless pace of now. This is where perfumery and beauty steps in. Through transformative solutions uniting the essentials, the desirables, and the sustainable. We bring delight and care together as one, moving beyond well-being. Not just helping people feel good, but empowering them to feel great with intent, with impact. We reconnect people and places through sensorial experiences, caring for minds, bodies, and homes. Pushing boundaries. We don't follow trends, we set them. Rooted in superior science and breakthrough innovation. From fragrances that stir emotion to beauty actives and ingredients that enable creation.
Designing advanced molecules, creating fragrance icons, elevating everyday essentials, advancing sustainability without compromise, powered by the best talent, united by purpose. In a fast-moving world, we accelerate with urgency, ambition, and care to make a difference today and tomorrow. This is how we bring progress to life.
Happy to see you. I love this video, by the way. I think it really well represent who we are. Great to see you today. Last time some of you we met in Villa Botanica. It was a bit of a different setup because we were on the top of the hill. We have the view of the Grasse city, and also there was a sea view. It's a bit different today, but no. Big welcome to all of you. Very happy to be here. Basically, I think those moments are very important for all of us because it's really a great time to see what has been already executed, what we do, but more important, how P&B is evolving in this moving world. Big welcome to all of you. Maybe let me start.
Let me start maybe with who we are. Who we are, who is behind P&B and the team of 5,500 people supporting it. A team which is in the business of fragrance and ingredients, a leader in the world with EUR 3.8 billion at 22% rounded EBITDA. An incredible machine, an industrial network of more than 30 sites in the world, which are really spread around the different geographies covering perfumery and ingredients, which is broad, big with a scale and allows us to get really competitiveness. A broad portfolio, a very broad portfolio in multiple categories.
We serve so many categories in the world, which, and also many regions in the world, which helps us to, I would say, manage volatility of the business whenever it comes. Last, which is I think for me the most important, is really the machine of science, innovation and creation, which is composed of 33 centers in the world to at the end create the best fragrance. At the end, really put really creation as a heart of all what we do and the best fragrance which a consumer loves and also the best fragrance that they could really be able to serve in any corners of the world. This is really who we are and very happy to be the leader of this beautiful P&B business unit.
One of the most popular slide I show to the customer is this one. I think I did maybe hundreds of times over the last three years and did it again with Sarah. In January we visit. I think in a week we visit around 30-40 different customers and each of the time we present that one, our unique ecosystem. An ecosystem which is composed of perfumery and ingredients. Perfumery with three different channel, very important, where we split consumer fragrance into two pieces. Means local and regional consumer brands, global consumer brands, but also on the top of that FFE. This is perfumery. Second, the backbone, the heart of what is perfumery and what makes at the end of the day our perfumery business successful, it is our ingredient business unit.
The ingredient is an undisputed leader in the world and represents 1,700 ingredients that we produce every day in all the different plants around the globe in 10 olfactive families with a significant high share in that space. This is what is the anchor of the success in the perfumery business. On the top of that, since the merger in these ingredients, we had the cosmetic, the beauty and care actives on the top to really put, I would say, a really a picture which is a unique ecosystem in the world. Now, on the top of the unique ecosystem, what is fundamental is innovation. Innovation is everywhere, EUR 700 million spent every year.
Innovation connected with creation, and creation is really the key of what made the success of P&B. Creation, when you speak about creation, it's about 120 perfumers, and the perfumers have really a center role in what we do. This is really something where we take care of. By the way, since the merger, very happy to see that we reinforce even our creation capabilities. When I see the dynamic, the passion of what our perfumers is doing is great, and they are the key points of the wins. I will come a bit later in the winning space. Now, having a fundamental creation, a powerful creation is great. What is also fundamental is this intimacy with the customers. You know, we are not a suppliers of fragrance.
We are the one to help to co-build the brands. We are connected with them, much more than with ingredients and perfumers, but we provide consumer insight. We share the vision, what's the trend of the different market, and we contribute to the success of the brand. That's why this customer intimacy, our inspiration is really the customers and the consumers, and we are really much having a team which senses the customers, which understand the consumer every day, and which makes at the end of the day a great success. This is what the ecosystem is about. Now, having an ecosystem with creation at the heart and with our inspiration is not enough. I think, what do we do with that?
What do we move from an ecosystem to, I would say, to deliver our financial targets? For that, we create a vision. Beyond wellbeing, uniting delight and care. Please remember that very well, which I would say combine the essentials, those 11 moments of care, like in hygiene, the desirable, where we bring product superiority, new olfactive territories, which all the consumer will enjoy. Also the sustainable, very much recognized, because over the last three months, I think we received two very important awards, which is the AA CDP and EcoVadis Platinum, which really position sustainability also as a big part of the vision of P&B. Now, if you look backwards since 2021, we all recognize that after COVID, fragrance took a very different position in our life.
It's incredible, by the way, what happened, because somehow maybe people during the COVID lost the smell, the nose, and maybe they realized that losing the smell, the fragrance has a very different role in their life. In fact, the way I could see it today is, in fact, maybe in the past, we had fragrance for the others. You know, you wanted to show how good smell was your fragrance and show it to your neighbor, to a fragrance for yourself, to feel good, and at the end of the day, being somehow an expression of yourself. Also, beyond olfaction, fragrance is also the symbol of wellness, wellbeing. Simply feel good, reduce your stress, and just simply, at the end of the day, as it was said in the movie, feel great.
That's why we're very, very happy to be in this fragrance business, because we know that it's underlined by very, very big fundamental. By the way, fragrance is everywhere, and you saw that for the last years. We're very happy to see the Gen Z completely crazy about having not only one, not only two, maybe five, six, seven different fragrance for themselves. By the way, it's followed very much by the Gen Alpha. I think it's very encouraging that the Gen Alpha also will continue to do it. Social media, where TikTok has a big, big role in the selection of the fragrance moving forward. The online shopping, the incredible what happened on online shopping.
The fragrance was usually on retail, and in fact we can see that how much the online shopping has grown, the potential of the fragrance and the reach to everyone in the world. It's incredible what happened with the fragrance over the last year, and I'm very happy to do that. It's some kind of a bit of a revolution that in which we are, and let's see how this will continue moving forward. Now, having a vision is great, having an ecosystem is great, so what do we do with it? We define a strategy with very clear priorities. Accelerate. Accelerate on regional consumer brands, accelerate on Fine Fragrance, accelerate on skincare. Second, strengthening our position in global consumer brands.
We have historical, very big position with the global consumer brands, and very happy to share with you that, in 2026, starting 2026, we are back to be the leader, the number one in the world in the global consumer brands. Lastly, which is also fundamental with regard to the backbone upgrade. Upgrade continuously our ingredient portfolio to make sure that, at the end, we will have the biggest and the most possible specialty portfolio of ingredient in our space. All of that, clear priority under a roadmap, an execution roadmap. Emmanuel Thomas is in the room here. He's the one leading that.
There is 150 people today taking the priorities, having a plan for the next three years to come, 21 program that we are deploying to be able to implement our strategy and make sure that we have the best possible execution. Since Grasse, our last meeting, where some of you were with us, a lot have happened. A lot have happened, and let me shout out on the team, the team of the 5,500 people, which in fact made a tremendous work over the last months to build the ecosystem, start deploying the roadmap, and make a fantastic job and so much committed to it. Big chapeau to all of them. I wanted to recognize that. Now, many milestones have been reached. First, on the portfolio. We divested EUR 250 million of commodity ingredients.
In fact, we did it immediately after the merger, and very happy to do so, in order to make sure that, in fact, our ingredient business will focus on specialty. Second, we executed a massive organizational change within P&B. What you should know is that for ten years, in fact we put together fragrance, ingredients, supply chain, and beauty and care under the same roof. Which by the way was never done before.
More than 10 years ago, it was a model from the past, and in fact we putted it together to make sure that we are very much focused with to bring clarity, better execution, accountability, but more important, create this organization to, in fact, deliver, you know, those channels and make sure that we are the most efficient possible in Fine Fragrance in the global consumer brand, but also with the regional consumer brands. This is what has been done. It's a really strong foundation for growth. Now, we took also advantage of this change to make sure that we also put all past acquisition, like Agilex, like DRT, et cetera, et cetera, under the same model, under the same ERP. It was representing around 15% of our total revenue. Now it's done.
That's why I was saying we turn a corner somehow, because in fact, we will start 2026 with this one being executed. Last, we invested a lot. Invested in innovation, and you will see later what it means. We invested in capabilities, in offices, in creation centers, just to make sure that in fact we align the strategy with the investment that we are doing. I don't also forget for Amaury, we invested also in capacity. With all of this transformation, we also perform. We delivered a solid performance, 5% organic sales growth over the last two years. High mid-single digit in perfumery and a low mid-single digit in ingredients.
With a step up of profitability from 20%, which was in H2 2023 when we started being together to 22%, over the last two years. I think what I would like to say is, in fact, I'm very, very happy with what we have done because in fact, despite the 2025 where we have tariffs, where we have headwinds in the sun filter business, in fact, the team has become and continues to be resilient, agile, in order to be able to transform and perform at the same time. Now, I would say what matters today is 2026. Basically, we really turned a corner in 2025 with one of the most satisfying things that I saw in 2025 with what's really our wins.
We had a stellar year in terms of wins. First of all, we had an incredible momentum on the wins with regard to the new adoption. We won a lot. By the way, 2025 we won with an index of 115, that's the growth index or the win index that we have, which is 115, means that we won 15% more than prior. It's also this 2025 was also the consequence of winning more before. In fact, since the merger, we significantly increased our wins in that space. Second, we increased partnership with our customers, in particular focused on regional customers, regional and locals, with what we call core list. For those ones who know the industry, the core list is very important.
In fact, as we speak, as of today, very happy to see that in fact, we delivered 90% of what we were targeting at the end of 2026. 2025 was a stellar year in winning in Fine Fragrance. In Fine Fragrance, you have several segments. You have the prestige segments, and in fact, John in the room, and don't hesitate to communicate with him just after. We doubled the wins for the large project in 2025 from 15 - 27. It was an incredible stellar year. In fact, behind those 27, you have incredible big brands, the most iconic brand in the world. Very, very happy to have seen that. This, as you know, this win in 2025 are launched from 12 - 18 months later, so it will feed 2026 and beyond.
In fact, what I wanted to do today is to really see what is a win, what is a launch, because once you have a win, then you have a launch. We wanted to move, I would say, to in fact many successful launches of those products which were a win in 2024, that has been launched in 2025. Let me start first with this fantastic Prada Paradoxe. This avant-garde amber woody note which had been created by Marie Salamagne. Marie, thank you very much, and Bruno, but also Nicolas Bonneville, who really create a gem, who create for me a blockbuster, and had been considered by the company we launch it as the best ever launch in their history.
This is really. You saw that everywhere in the world, but I'm telling you, it's a fantastic note, and don't hesitate to test it just after when we will move the room. Then Dolce & Gabbana, My Devotion. I think Dolce & Gabbana wanted to grow faster, bigger in the U.S.. This is a dedicated masculine fragrance for the U.S.. It's a fantastic gourmand signature.
For those ones who are specialists of perfumery, Olivier Cresp, our Master Perfumer, created this incredible pear, flower, vanilla, gourmand notes, and in fact made a fantastic fragrance, which was a fantastic success, which will allow, by the way, Dolce & Gabbana to be this quarter in the top five of the perfumery house in North America. The third example, and I wanted to bring three different example, is to represent the niche segment in that of the Fine Fragrance market.
The Kayali, you know, the two sisters creating this brand arriving around 2020 in Dubai, creating a very specific regional brand with a lot of Middle East type of input, but much more than that because it becomes really an incredible brand. This one, the Vanilla Candy Rock Sugar with a bubblegum signature. You will see again in the room, you can try it. It's very specific and is also making it a great success because basically it's the number one on Sephora as we speak in the U.S. Gabriela and Fabrice made a fantastic perfume.
This is all to show, I would say, the power of creation, the power of our perfumer, the passion behind that, the uniqueness of the creativity. Now, not only recognized by the customers and the consumers, but also among the peers. What you should know is that in 2025, again, I would say, we received 47 awards by 30 different perfumers in the world. 47 awards in what we call the FiFi Awards, whether it is in New York, in Paris, in Berlin, in London, just to show that in fact, we represent a very, very strong power in the creation of the industry, and very happy to do so. Now, I also want to thank all the customers behind that because there's a lot of this intimacy with the customers also.
Thanking them is important to giving us the chance to build the brand together and being successful together. Now, let me go back to one point. It's good to have the great ingredients, the backbone of perfumery. It's great to have the perfumer, but whatever we do, we cannot do anything without also innovation, which is a very important part of the triangle. In fact, we have very big, I would say, capabilities, science capabilities. Seven different, capabilities which allows us to bring the best innovation in that space.
You may have seen this list already from some of the competitors, but what I can tell you is that these capabilities are really differentiated, like the formulation and material science, like the receptor-based science, like the biotech, et cetera, and it makes us very proud about these capabilities led by Sarah in the room. All of that to enable, I would say, our innovation pipeline. In fragrance, we have three different categories of innovation. The first is what we call technologies. The technologies, the game of the moment of the market, of the consumer, there's a long lastingness. A long lastingness, it's about the capsule, so the Popscent Eco. We launch in 2025 a new generation of Popscent Eco, very successful.
Important in China because in fact there is regulation in Shanghai which really imposes. Very key, but also our AloScent Fusion, which allows, from a chemical standpoint, to really prolong and amplify the power of our fragrance. That's about technology. Second, it's about fragrance design. Fragrance design where we have our malodor control toolbox with ClearScent, which really makes a real difference, especially in the laundry space. But also, you know, we were speaking moving out of olfactive or olfaction. It's about enhancing your emotion. That's why we have emotion social connection, which I would say enhance the well-being at the level of the people. Last, very important, our anchor, our backbone, which is the ingredient space.
First of all, in the beauty and care space, the fantastic ALPAFLOR Neuro-Roots which make a very incredible sensation on your skin. ALPAFLOR is coming from a flower, which is called Scutellaria alpina. Produced in the Alps, where we have extraction technology in Switzerland, and which is enabling us basically to really create a fantastic product which indeed give a very good sensation of your skin. Last, I wanted to finish because Amaury is in the room, and it's important for him. I think the anchor, the backbone, our ingredient machine, with 1,700 ingredients which are there with an incredible innovation. We have this one.
This one, Ambrever, I think, is our last captive launch, I would say two years ago. It's the best ever ingredient we ever launched in the history of dsm-firmenich, which has a 100-year history. The best ever, 10 times more, 10 times bigger than the second one. For sure, in some of the wins that we had in fine fragrance, I think Ambrever has really helped us to be able to be to do that, but beyond others also, because we have many other very good captive in that space. Let me now finish, I would say, this presentation on 2026. We saw that we won a lot, so it should feed the growth in 2026.
We start the year for sure with, I would say, a market with limited visibility, with somehow unpredictability. Let's see what we saw over the last days out of the Middle East. From that standpoint, this is the context in which the market is starting. Now, on consumer fragrance, I think let's split the fragrance business into two, the consumer fragrance and the Fine Fragrance, which are different dynamics. On consumer fragrance, we see a very cautious consumer sentiment, with the FMCG, in fact, in home and beauty really show a slowdown from mid-single-digit to low single-digit.
We also saw in 2025, by the way, a normalization of the market, from a very big double-digit growth, in 2024 to a mid-single digit in 2025. The good news is all the customers in consumer fragrance want to invest in superiority. They still consider that fragrance is a key element of success of their brand in the market. By the way, there is competition who is superior to which of the others. Despite, I would say, the context, which is not the easiest one, fragrance is still keeping a central role in that space. Now, we expect, I would say, the market to grow at 3%-4% in 2026.
A bit more in H2 than in H1. That's a bit what we're expecting in that space. Now from the Fine Fragrance perspective, there is really two different markets. The market of prestige, the market of lifestyle, and the niche market, which is one market by itself, which in fact deliver a mid-single digit already last year. And basically, we believe that this will continue. Now, the rest of the market, which we'll call masstige, in fact, which really grow very, very fast with double-digit growth, the key question is how at the end the Middle East crisis will impact the evolution of that. From that standpoint, we are a bit more prudent. We still believe that this is a very solid market, a very solid foundation.
You know, all what I said about the role of fragrance in the daily life of everyone, but also in the Gen Z and the Gen Alpha. We still see solid, but in fact, let's see what the Middle East could impact that segment. Last, it's also about ingredients. You know, we speak about competition on ingredients. Please have in mind that we're in this business for 100 years. Competition in ingredients is something we know for many years with many cycles, so it's not something new. Remember that we divested CHF 250 million of commodities, so this is not anymore in the portfolio. We have very much a specialty portfolio. Also please have in mind that every year we also adjust the portfolio.
We move from make to buy in order to make sure that we produce the most possible specialty ingredients in that space. From that standpoint, you saw that our performance in ingredients was pretty good compared to peers over the last months. Now, we will see a moderate slowdown moving forward in the next months to come, but we're still very, very positive. We want to keep our market share and get ready when the market will move up. Now, we have very clear priority just to finish with you for 2026. First, keep winning. Second, continue the great momentum in consumer fragrance, especially with the regional, based on the investment that we've made. Third, on Fine Fragrance, we need to accelerate. We will accelerate thanks to the prestige, all the wins that we had in 2025.
We need to expand into new geographies, and in particular in Middle East, in India, in China, and Indonesia, where we believe the masstige market will grow. Last, on ingredients, we will have a different dynamic. We will have, I would say, a very good recovery. We will see a good recovery on the beauty and care, while I would say a moderation, a slowdown in the context of ingredients. All of that to deliver 2026. Now, this is P&B, a unique ecosystem. A very solid transformation I believe that we've made for the last 24 months. A very incredible team. I was speaking about the perfumers, but a team of people with a lot of passion, a lot of dedication.
A team which is there to deliver, believing in the métier in which we are and focused on execution, thanks to the roadmap that we were speaking about. A great trajectory, by the way, I see to deliver 2026, and also to deliver our midterm targets, moving forward. I would like to close this presentation by saying, don't forget, beyond wellbeing, uniting, delight and care. Thank you very much, everyone.
I think, Emmanuel, we need to rehearse that a few times to get that landed. Also here, looking at the Swiss clock in London, maybe one key question. I mean, we will be back on stage for all Q&A. What is the key question you wanna ask Emmanuel about P&B? Or was he so clear? My goodness. Right. Yeah.
Hi, Charles Eden from UBS. Just on the Fine Fragrance, obviously you've seen strong growth, but it hasn't matched some of the market leaders. Do you think it is a geographic issue, and therefore you mentioned Middle East, China, India over time or is it something else? Just trying to pinpoint, 'cause I'm sure obviously you're happy with the growth, but you also have aspirations to be market leading. Just trying to pinpoint. When you've dissected that, what have you attributed the underperformance relative to best in class to?
So.
I love that question.
I'm not happy with the fine fragrance growth that we have over the last two years. Okay. Now I really think that 2025 turns a corner in that space because I think we start to win much more, especially in the prestige segment. We were very strong in the niche and lifestyle, also we are growing. In that space, I think we did a lot in 2025, and you will see this growth coming in 2026. Now, on the masstige side, no doubt that in fact we have not been the first one to jump into that market. There is a reason behind this, is because the Firmenich was extremely careful about what we call proximity, the proximity rules of the fragrance.
We wanted to make sure that before we jump and we invest massively in the masstige segment, we are clear with our historical customers on the proximity rule, which we did. 2024, 2025, we clarified the proximity rules with our historical customers. We defined the frame in how we're gonna develop in the masstige segments. We invested in Dubai, we invested in Riyadh. We have now offices there in Riyadh. We had offices in Dubai for a long time. We invest in new people, but also beyond Middle East, we need to look at what is happening in China. We invest in China for many years. We have a leading position in China, by the way, in fine fragrance. We will see how we will continue to develop in China, in India, and Indonesia.
That will be the four key regions where the masstige growth will come from. I really believe that we will grow that space moving forward, thanks to our ingredients and the incredible power of creation.
I like that a lot, and thanks for that question because I think let's make it very clear. We track how we're doing, and you said lagging behind other leaders behind one, because if you compare to the rest, we're clearly on number two. Your question on local and global. I mean, really in that transformation trajectory is really changing, accelerating the local presence, and we need to do that. Remember, we were 30% local, 70% global. We're now 40% local in Perfumery & Beauty and 60% global. That will continue in terms of the growth and the wins, and like we said, depending a little bit on how Middle East evolves, we are invited to do more.
Within the proximity rules in the company we are today. I think very well set with, I think, a very strong win pipeline, which creates this confidence for 2026, but also thereafter. Now, let's close here. I got clear instruction from Dave, you all know as a head of investor relations, that you are entitled to a 20 minutes break. Yeah, I don't know. He never does that if we have internal meetings, but fine. I think you are entitled to that. Let's restart at 11:45 A.M. Also for the members live on the webcast, 11:45 A.M. London time, sharp back on stage with Taste, Texture & Health. Enjoy the break.
Taste, Texture & Health. We bring all three together so people don't have to choose between what tastes good, feels good, and does them good. We help our customers create healthier, more delicious food and beverages, better for people and the planet. We offer the industry's most complete portfolio of taste and ingredient solutions with more than 7,000 colleagues across 60 countries. We combine global scale with deep local insight, co-creating solutions that meet real tastes and occasions, from lower sugar products to functional drinks that truly delight. We help our customers meet rising expectations without compromise. We did not build this overnight. Step by step, we created something unique. After hitting the ground running in 2023, we integrated our businesses and delivered. Strong customer intimacy, human insights, advanced technology, and scientific expertise enable us to grow ahead of the market.
Today, we don't just follow trends, we help customers stay ahead of them. From demand for healthier functional foods to the need for indulgence, affordability, and convenience in busier lives. We are ready to accelerate food and beverage innovation and put change on the menu. We're sharpening our growth strategy to focus on where we can have the biggest impact. We're streamlining how we work to serve customers better and faster. We're building on the strength of an engaged future-ready workforce together as one team. We bring progress to life.
Hello, everybody. I hope you feel good. If you don't feel good, you will feel good after this presentation because this is what we talk about, feeling good. That's life. That's food. I'm the new president of TTH. I'm very happy to be with you today to see the passion you have with food and with our industry. I recognize some of the faces during the break. I got a lot of questions, so I will try during my presentation to answer some of those questions already. To streamline, you know, I'm Italian by origin, but I'm quite Swiss in terms of timing. Definitely from my colleagues who are of different origin, but not very smart on timing. I will be very, very precise. I will move very, very fast.
First of all, I will take my control and maybe who doesn't know me, I will mention I'm Italian, but I've been living 30 years around the world, like Alex, and I'm very passionate about food. What I learn across a different world is that food is about passion. It's about local understanding of who we are, and we bring this kind of feeling, this kind of understanding in what we do every day. Just keep this in mind. Our consumer insight is our strength to understand consumers. It going into the world, you understand how are we different in each part of the world. What is more interesting for you is what TTH, who TTH is and how we grow up in the last three years. There was a lot of anxiety three years ago when we did the merger.
Let's say, how these guys will do, putting together two different portfolio, two different mentality, two different focus. Actually, this has been the pleasure of this merger. We are the core of the merger. We really enjoy the journey. It was not an easy one, but we really love it, and I will explain why and how we made it. Okay. Worldwide, I won't go in all the numbers, but what is important for us, what is important is the proximity to our customers. We are well distributed regionally. A strong presence in U.S., Europe, but growing fast in emerging market. Other important point is the portfolio. Our portfolio is very balanced. We work across all segments, but we are very relevant presence in the key segments, so beverage, dairy, confectionery, bakery, savory, and others I will explain to you.
You will ask me one of the question I already got is, "Maurizio, why do you feel so different?" I feel different because we are different. What we have done as a business model, we create a kind of a unique value proposition. When you combine ingredient and taste, you do successfully, you basically control the food ecosystem. You can deliver a product understanding how the matrix, the food matrix works from a tasting profile, tonality, aroma into the ingredient part of it. In these slides, I summarize the four core capabilities that we brought together. First is science. From ingredient science, you have the bioscience, you have the biotechnology understanding, the fermentation understanding. From tasting, you have receptor-based technologies. How do you profile the perfect aroma for your customers? What inspires us and our customers, our capability in creation, application, and consumer insight.
Without a strong consumer insight, you won't understand consumers. You won't fulfill their need. At the same time, we have a specific team that work on foresight. We anticipate trends five, seven years before they come into the market. That's a specific capabilities we have built in our team. We use also a lot of AI in doing this. Third element is our people. Passionate people, that's also one key element to why we have been successful in doing this merger, it's about the passion in what we do, not only what we do or fighting to show who's the best among us. Number four is a balanced presence in all markets, proximity to customers, customer intimacy, and at the same time balance the customer type, global versus regional. We have a 28.
We have really deployed a lot of regionalized team to get the proximity to those customers. When it comes to performance, you say, "Okay, Maurizio, you tell us what you did well, so can you show what you did well?" Okay. That's what I'm gonna show, what we did well. First performance. I think, Dimitri explained this. I'm quite and particularly proud to show what we have done the last three years during an intense merger. We grew 7% organic growth, our portfolio, combined portfolio. We grew EBITDA by 13%, 183 basis points. Most importantly, we outperform our competition with a lot of activities running for integration. You can imagine understanding each other, aligning our strategies, innovation, et cetera, et cetera.
You would say, "Maurizio, when you merged, you announce you would deliver synergies." Yeah, it's true. We perform, and we deliver synergies. We are delivering synergies. I want to give you the sense how we are delivering synergies. We built over the last three years, CHF 450 million-CHF 460 million of pipeline, of which to date CHF 200 million has been converted into wins. This is also why Dimitri explained that, this is why we're also growing faster than the other one or two points because we're really transforming this integration is a real advantage to our customers. You say, "Okay, is this enough?" No, it's not enough. Why are we a winning model?
We are a winning model because we could in only three years, 2.5 years, combine and deliver innovative solution to the market. We have many. I just show here four of them. The first one is very close to my heart. You know, being an Italian, you know, you associate to pizza, pasta, mandolin. What is important, pizza is not just an Italian thing. If you think about, and I've been living in U.S. for 15 years, you have a New York pizza style, you have Chicago pizza style, you have Mumbai pizza style now. Pizza is becoming a global event. What is the challenge in making pizza? I do pizza myself, so I know what is this challenge. You need to have an original pizza flavor. You need to have a stretch mozzarella.
You need to replicate this every day in the restaurants and at home. We have all the technologies to bring this in real life every day. This is what we do. I can continue for hours, but because I'm more efficient than my colleagues, I need to stay on the 20 minutes timeline. You can ask all the questions you want. I want to go more into how we're gonna grow the future, because we have been successful in the past doesn't mean automatically we will be successful in the future. Building on what we've been successfully deliver, we are very focused on where customers are going. Our strategy is basically to shift from an integration mode into building the future mode. How we're gonna do this. First, we're gonna focus on a growing strategy. We are building a strong growing strategy.
We're not just resting on integration mode. I will explain what does it mean growing the core and develop new platforms. At the same time, we want to simplify what we're doing today. A lot of activities were dedicated to integration, building new system, coordinating new processes, and et cetera, et cetera. What we're gonna do, we are gonna move all these resources that have been dedicated for three years, that we don't need anymore in that kind of activities, into building the new process, building the new strategies. Last but not least, we work a lot to combine the two teams. What is the most important thing in a successful team is to think as one single team, and we have been progressing a lot. We want to unleash this with our customers at the moment.
Before I jump on the winning activities or the winning strategy we want to implement, I want to go back to one thing, big challenge over the industry at the moment. I won't talk too much about the megatrends. You all know the megatrends. You all know everybody wants to eat healthy, and wants to go into affordable food, they want to go in the light of whole food. You all know this. What is really a challenge today is all of us as consumers, they want a personalized menu. They want a personalized agenda. They want really to enjoy what we do every day, and this bring a lot of differentiation, personalization. What is extremely important in this phase of our industry, understanding all those consumer trend, understand where really people wants to go and find the right solution to those consumer needs.
That's what we do very well. If you think in the morning, you go and have breakfast with your family, with your friends, you open the fridge. It is what we call the fridge dilemma. You open the fridge, and you find four bottles of milk, one full fat, one skim, one chocolate, which you will recognize immediately because it's brown, but the other three, you will be, you know, struggling to recognize which one is yours. Same when you go dinner at night. You have the vegan one, your high protein meal. It's very complex. This complexity is why we enjoy our work. That's where we do the difference in the industry.
Let me spend the next four or five minutes in explaining to you what we are gonna do differently or how we're gonna increase our offering in the future. In our strategy, what you call our core, so taste, ingredients, palate is what has been successfully delivered to the market, recognized by all customers, and you have seen the financial results. You don't get those financial results if you are not winning in the market, if you are not the preferred supplier to your customers. That's not enough. There are a lot of learnings we have made the last three years in where and how we can boost our core. One area, and Dimitri mentioned it, is around enzymes and cultures. This is a winning palate. Why?
Because when you buy your bread in the morning, or you eat your yogurt, or you buy your cheese, all those ingredients extremely important to develop the best performance of those product, the best quality, and the best tasting profile. If you on top add the capabilities we have in taste and our technologies, you got the best products. This is the area where we have a high innovative capabilities. We have the scaling capabilities because we have been investing in those technologies, and we also have the customer intimacy and the co-creation ability to deliver those solution with our customers. Second is savory. Savory, you would say, "Maurizio, this is not new." It is new because savory is evolving every day. What you eat outside, it's most of the time innovative. Where do we innovate in savory?
First, we have been growing and investing a lot the last seven years. We have two new plants in India, just for you to know. You know how India is, fastest growing. Indonesia was another big investment we have done. We brought savory capabilities. Even in Europe, we are growing capabilities because the demand of consumption in savory, it's increased a lot, and food service is one of the simple but not only. At home, you consume more, soups, fats and oil, and, noodles, etc., around the world is the biggest consumption area. Now, what we bring there, we bring a lot of technologies. We bring, asset, we bring capabilities, but we bring what we call receptor-based technology. We understand the tasting profile, the aroma profile.
We know how to replicate umami, kokumi, and we know how to reduce salt. Those are the critical capabilities that only few, if not only us in this industry, and we are mastering those capabilities in all our recipes. Beyond the core, we want to expand other segments, and I give you the sense of what we want to do. First of all, pet food. We build a solid customer intimacy in pet food through the health portfolio we have. We are expanding the gut health portfolio with pet, which is very successfully done last year. This year is really fast-growing. We want to expand that one by also, thanks to our capability in taste, we can expand the palatability offering.
You imagine when we go to customer today, we offer portion of the full product. In a year from now, we will basically do the full offering in that space across the three areas. Dairy, we are probably the biggest player in the world of flavor ingredient industry because we sell CHF 1.1 billion in dairy. When you take our portfolio end to end from tonality excellence to maskers to enzymes to cultures, et cetera, we sell CHF 1.1 billion. We have the full offering there. Guess what. Dairy is the fast-growing segment in the market. Why. Because GLP-1, because everybody want to eat healthy, because it goes from breakfast to dinner, et cetera.
Is the segment you want to be in the segment where we are the kings, and we have all the solutions. We bring more in that space. Sugar reduction, we were the first 15 years ago to enter in this space with innovative solution. For 15 years, we have been the leading company in the space. Clearly, we want to stay there. We are not gonna leave this space, and we have a very relevant pipeline in that space that will come to the market in the next two years, maintaining the differentiating value proposition. Last but not least, and probably the most important, from now moving forward for consumers, microbiome. Alex spoke about that. Sarah, if you ask the question, will answer a lot your questions.
Microbiome for food and beverage is a critical inflection point. People want to eat healthy. They want to heal through the body, assimilate the good elements to the body. Microbiome is the key of this dynamic, okay? We already sell probiotics, postbiotics, but we haven't decoded the entire ecosystem around microbiome through food. That's where we are gonna invest. We invest already a lot. We're gonna invest more in this space to bring more and more solution into food that act on the microbiome, on the connectivity between microbiome, brain, and inflammatory system. Bring energy, bring calm, and bring digestive immune system opportunities. Now, the question will come, as it came from my colleagues, they say, "Okay, Maurizio, nice story. What's gonna happen?
How are you gonna drive your business in 2026?" We have been quite resilient over the past years. We saw 2025, end of 2025, softening. The market was softening. Yes, we're still resilient because we have this balanced portfolio where even if premium products and consumers are affected by this economic macroeconomic deviation or inflation, people tend to be cautious. And we see this. We see especially in 2026 Q1 a lowering market kind of trend. Now, we have a very resilient product in our portfolio, and we are very present in markets that are still growing. So you will see, and I mentioned about dairy, energy drinks, and nutrition bars. We are in all those products that even if there's slowdown, will be always consumed by consumers.
At the same time, we are really showing relevant growth in markets like India, double-digit, Africa, double-digit, and we see Asia recovering from last third, second, fourth quarter. We are confident that we can play in a range of 2%-4% across 2026. Now, as promised, I've been exactly on time, and I will close the presentation with my last minute giving you three takeaways. We have been successful doing the integration. We have been performing doing integration. Now we need to shift into building the future, into performing in the future. We still have a little bit of advantage because the synergies, but really we need to shift because consumer are shifting. We have a unique value proposition in the market.
No one has the same finesse as TTH has, this compelling dual portfolio that bring a unique solution to the market. Third, we continue to invest in the future, assets, innovation, people capabilities, and technologies. That's what we do, and we demonstrated we have done quite well. You can trust us. Thanks for listening to me, and I'm open to Q&A.
Also here, one key question, and I think it's clear that Maurizio is respecting time on delivery. It's by the way, the same on the promises he made on growth and EBITDA. I think I hope you get a bit of confidence from his Swiss side. Although I also like the Italian part from that, but that left a lot. One key question before we go, and we come back to Q&A. These are a little bit more. I will make an exception because he was on time. We'll do two. I don't think it's working, right? Sorry. Also for the webcast who's live, I think we can hear you, but for the people online.
Yeah. Hi, it's Alex from Barclays. There's a question on Bovaer. Obviously, in the medium-term targets it's doing quite a lot. The heavy lifting: a point to group growth and two points to the divisional growth. I mean, this is a new business for you in Taste, Texture & Health. Could you maybe talk a little bit about how integrated or otherwise Bovaer will be? You know, how it helps with the CHF 1.1 billion dairy portfolio you have, and how you can help it with that portfolio, and what visibility you have on that 1%, and the build-out to it that's coming in from 2028. Thanks.
Yeah. Good. Let's do two things. I will respond a little bit on Bovaer.
Sure.
You basically say, why is it adding to your route to market part? Because we made a deliberate choice. Bovaer will be separate, so it will not be fully integrated. We feel going in your way is that we feel that it's sustainable dairy which is key and therefore it's well fit with TTH. Maybe some customer interaction you can share.
No, you mentioned it. I mean, we are very big in dairy. You know, the customers that can valorize, they valorize us, the one valorizing Bovaer. We are all in a sustainable world. We are all, you know, pushing for sustainability. This is a valuable product to enhance sustainable solutions. The connectivity with our customers is straight. Now, the adoption and how this is, of course, is cascading into farmers, et cetera, as a collateral effect, but the drive to our customers is quite straight too.
If I talk to CEOs of one of our key dairy customers, they always ask me, "Bovaer," because it's an entry ticket, and then we add the whole TTH business.
Yeah.
In many cases, also the H NC business to it. It's a key lever. Let me just wait for response on Bovaer because I already got a little bit of a comment from our CFO who wanted to talk about a little bit of Bovaer and a lot from CapEx perspective, but also business, because otherwise we shorten his presentation. I wanna respect that as well, Ralf. A second question and then we move on. I think the second question was here. Yep. Thank you.
Actually, it's Fernan de Boer from Degroof Petercam
Actually want to follow up on Bovaer, because if you look at your targets, you're quite confident for the 2%-4% this year, 2026. 2028, it's 4%-6% with 2% contribution of Bovaer. Actually that does mean, in my view, that the rest is not going to accelerate. How do you feel about that?
I think Dimitri explained that you know, today we have around CHF 40 million in Bovaer in sales, so it's not zero, it's CHF 40 million. Clearly, there is a shift in the 2026, 2027 years where we finalize the plant construction. The value proposition to the market will be driven by producing it directly. Then 2027, 2028 is where we're gonna have the escalation into the market.
What we clearly wanted to indicate is that the underlying business in TTH should grow 4%-6%. I think we'll all be happy if that will be 46%. We need to move that from 2%-4%. We have the wins here. We have some geographic approaches, as Mauricio explained. The 2% is on top of. By the way, the 2% in TTH is the 1% I referred to in the 5%-7%.
Yeah.
Remember? Because on the group it's about CHF 90 million-CHF 100 million. But if it needs to be more on Bovaer, we have a slide on Bovaer, we can continue that discussion. I appreciate the question. Let me thank you for the presentation. As an Italian on Swiss time, that's it.
Thank you, guys.
Super appreciated. I showed a little bit the context with the three business unit presidents really catering in for the growth. I hope that you feel that the EBITDA evolution and the cash evolution. I mean, it's not in the pocket. I think that's unfair to say, but there's a clear path forward, and that the question is, how does that growth element related to. That's why the three BU presidents are here. Let's also look at the financial side of it. I said it before. Let's have Ralf dotting the i's and crossing the t's with all elements going forward. With that, Ralf, may I ask you on stage?
All right. Good.
After you.
Thanks. Yeah. Good morning, or meanwhile, good afternoon, and thanks for staying here today with us and listening to it. Whenever I get to the BU presentations, this is where I get the excitement, huh? Because in the end, as a financial, we can only grow our business if we really grow our top line. That is an absolute key focus area, and we wanted to make sure that each BU was on stage, not only showing where we grow in 2026, but also what kind of innovations we have, what markets we're growing in, to really underpin our long-term story. Now, Dimitri already said it at the start, it's probably the last time you're gonna see that slide, but this was his first and his last slide. I think it's absolutely important that our transformation is completed. We've done that. We've carved out ANH.
We've delivered upon the tuning exercise. All of those transactions are also completed, so the business is no longer involved in that. Whilst we have also delivered financial performance in that period, we also recognize that there's a moment to accelerate, and that moment is now. That's the last slide, huh? Whilst we've created the company that we wanted to create, we will grow that company and we will step up in performance. Now, before I show you how we're gonna do that, and we'll first look a bit back before looking forward, I do wanna come back on the ANH transactions. There were a few points that we need to address, 'cause I don't think that is fully understood.
Whilst we've had a call around the transaction, at that point we didn't release our numbers, so it was a bit difficult to also show you Q4 and Q1 trajectory. At the left side on the slide, you actually see the inherent volatility that our ANH business had. It basically started at the time of the merger. The vitamins market were extremely volatile, and that basically reduced our performance, and we've seen that come up, but very much also driven by a supply disruption in the industry. We clearly articulated the tailwind from that, but after that, you also saw the results come down. Whilst we were very committed to delivering in line with the timeline that we communicated early, we wanted to transact over summer 2025. You also see from the slides that results were coming down.
That obviously complicates a divestment process. We lost some buyers in the process, but obviously it put pressure on the overall discussion. At that point, Dimitri already explained it, we needed to split the company in two because that was the only way to sell it. Where we initially started out is that we wanted to do it as a package deal. We had to split the company in a solutions company, growing mid-single digit and at an attractive margin profile, and the essential products company, which requires a turnaround. We've done that, but you have to do that. That's why it's also good that this volatility is removed from the quality portfolio that we've built. That was a clear driver.
We couldn't show you those results for Q4 and the outlook for Q1 at the time when we announced the deal itself, but we wanted to come back on that. The same around the proceeds of closing, we will collect CHF 1.2 billion, and there were some questions around that. We'll collect CHF 600 million in cash. That will come our way. There's CHF 500 million of debt transfers. I wanna call out, there's CHF 300 million related to pension and employee liabilities. When I show you later on, some of you already probably flipped through in the deck, in the net debt bridge, you don't see the CHF 300 million back, and it's good to take that into account. It's hard cash that is transferred because that will not translate into a cash out of dsm-firmenich going forward.
Last, the CHF 100 million vendor loan is a loan to the solutions company, the company that's growing, the company that's generating good profit. Why is that? It's a company that is operating in over 40 countries. Now, obviously, it doesn't come with the sophistication of a treasury setup and the like that we've built in dsm-firmenich as any other corporate where you leverage cash pools and the like. We will be bridging that, and we'll collect that money in 2027. That's a loan to the strong part, and there's a commitment that that will be returned. A second point that you raised or that came back is saying, we're not sure around the earn-out. Now, let me also come back on that. First of all, the earn-out contains very customary money market multiples. Moreover, there's, it's split in two pieces.
There's an element of CHF 300 million that is linked to the overall transaction. However, it's constructed in such a way that with a continuation of the growth that we've seen in the solution company so far, the margin profile in the company so far, and a net market exit multiple, we will realize that CHF 300 million on the exit of the solutions company only. If CVC delivers upon the business case, we will be generating that CHF 300 million earn-out that will come into our direction. The second part, CHF 200 million, is linked to the vitamin company. That requires a bit of normalization in vitamins. It's actually happening today. With the restoration, and we have CVC on board to actually take that part of the business through a transformation. We've done many deals with them.
They're excellent in doing that, and they're geared to do that. That's why we also provide the financing for it. We don't want any distraction discussing with banks, discussing about where we are in terms of the metric, whether or not the next EBITDA turn, et cetera, is achieved. We will provide the funding if necessary, because the businesses will be well-funded from the start. CVC is putting in about CHF 400 million of equity, and every business will start well-funded at the start of their journey. However, we also wanted to make sure that they can execute the transformation of the vitamins, and that's why we provided the loan facility as we communicated in the press release. Now, it comes with a good return. There's an 8% interest on that.
It also ranks senior to any equity proceeds payout to the shareholders, meaning that the loan will always be returned before there's any money flow towards CVC. We wanted to make sure that is addressed as well. There was a question around the tax outflow and the transaction cost. That's about CHF 200 million. That includes tax. It's split about half/half, and that will come as well, and you'll see that later in the bridge. I think those are the things addressed. We have a good confidence in collecting the CHF 500 million. You clearly understand where the CHF 1.2 billion is coming from, but we also benefit from the opportunity with the 20% equity stake that we've got.
It is important that the volatility is out of the group and the downside is protected, while at the same time we secure the profitability for our HNC business with a long-term supply agreement. Let's look a bit at the performance of the company that we created. Dimitri already showed a couple of the slides, but we also appreciate that there was a lot to take in. On the back of the deal on Monday, I think we released the restatement only in the afternoon, and then on Wednesday or Thursday, we presented the complete reset, and our hands were tied. I mean, the minute you actually sign a transaction, our friendly auditor also clearly said then you need to report in continuing operations and discontinued, and there was limited time.
We also played with the idea of saying, "Can we issue a restatement before?" Well, while you're in the middle of a transaction, and if you have done a few, that's not an option. We were bound by time, we had limited flexibility, but we also appreciate that we didn't help you necessarily when we presented our numbers, that they landed in a place without a consensus and the like. We want to provide a bit of insight on that. For that purpose, the deck will have a couple of numbers around 2023, so we restated them for convenience purposes because we only restated 2024 and 2025 fully as disclosed in the press release. You'll find that handy in understanding the performance over the last two years. This is the growth.
Overall 4.5% growth, 6% in 2024, 3% in 2025. Obviously, 2025 impacted by a more difficult macro in the second half. If you see a very strong growth trajectory for the six quarters starting January 2024, obviously impacted a bit by the macro environment. How does that overall look from a business perspective? You've seen the three B.U.s presenting each of themselves, their journey across the board, a 5% organic growth in P&B, a very strong growth in TTH on the back of synergies. HNC, I wanna call that out, it's a journey of recovery. We also shared that when we met you guys in 2024 at Capital Markets Day, we're saying it's gonna take a little longer.
We're building a solid foundation, and starting mid-2024, the growth was back up, mid-single digit. We delivered that in Q3, Q4 2024. We started the year in 2025 well. Obviously with an exposure of 40% to the U.S., if then there's a weakness occurring in the second half, that overall translates into the 1% that we've seen. The profitability step up is absolutely there. Now, if we look at the profitability, this is important because it also shows why we've done the exit of Animal Nutrition & Health, why we've tuned our portfolio, because the reported figure in 2023 was 14.4% EBITDA margin. If you look at the portfolio that we're now looking at, it's almost a step up of 4%.
It also shows that we took the right measures by taking the businesses out that were a drag on the overall performance and were hiding the quality of the company that we created. That's an important step number one. At the same time, we made a promise that we were going to step up the profitability of all of our businesses. There we made first progress. Overall, we stepped up profitability by about 1.4% - 19.6%. Now in the second half, I always like to call it, we were at 20%, highlighting that it's a journey. We're not happy with where we are today. We're happy with progress, but this is not where it's gonna stop. We will grow from here. That 19.6% includes a headwind of around 0.4% from FX.
Had we been at the same FX, Dimitri said that 20% margin. Why do I call out the FX? It's even more profound in HNC, as you'll see on the next page. Looking at the three businesses, overall, a very encouraging step up, 7% step up in P&B. You see the leverage also of growth. That's why growth is so important for us. That's why the BU presentations were really focused on the growth that we see going forward. You also see that accelerator effect, that a 7% growth that Mauricio talked about earlier in the businesses translates into a very nice step up. On a like-for-like basis, 13% up in the two years in Taste, Texture & Health. That is also an accelerator for an improvement in margin.
If you look at the margin of P&B and Taste, Texture & Health, very much at the low end of the guidance that we gave, 22%-24% for P&B, 21%-23% for TTH. We're on the verge of getting in there, but we are confident that we will get into that range in the period ahead. Very strong pickup in HNC as well. You see a strong recovery. There we also focus very much around laying a solid foundation, improving our cost base, and that drove an increase in margin to 19.4%. I made the comment on FX earlier. With the exposure to the U.S., while having a very strong sales presence in the U.S., but at the same time, a cost base in Swissy, the impact in Alex's business was even more profound.
It impacted the margin by 1.4%. I'd imagine that the FX had not moved, we would be having a margin of well above 20% in HNC as well. 'Cause every time when we're roadshow and you're asking us about the confidence to get the margin of HNC back up and back into the trajectory of 21%-23%, we are confident that we will also get there. With the growth back in the areas where we're growing, in high margin markets, we will be back up in the margin also on HNC. Cash then, average 11%, not really happy about that. Take into account the 1%-1.5% of Bovaer. It's a costly enterprise. It's a very interesting model. I'll show you in a second.
Overall, we're not happy with where we are. In the earnings call of the full year 2025 results, I indicated that we were sitting about CHF 100 million of inventory, navigating through the environment of tariffs and also dealing with the softer environment, but also with a carve-out because we kept a higher level of inventory because we will never, ever disappoint a customer. I think that has to be priority number one. Despite the fact that we're focusing on cash, need to be disciplined, we'll never disappoint a customer. In the soft environment in the second half, we were not able to fully navigate that out of the system. We'll do that in the year ahead, but that's why we also delivered a 10.5% in 2025. We have a solid base to grow from there, and I'll show you a little later on.
This slide you've seen before, but it's the foundation on which we will be accelerating our financial performance. Nine billion, 20%, but also very important at the right side, a ROCE that has increased to 11% and a cash conversion of 11% that we're going to build on going forward as we have released our new midterm target to above 14% with an intermediate step in 2027. Now, how are we going to do that? I'll not dwell too much on this page because this was the heart of the BU presentations. Great growth trajectory ahead in all of the BUs. We're investing in the regional growth in P&B, Middle East, China, India. You've heard that. We're building capacity, but we're also investing in killer ingredients.
You can see the excitement in Emmanuel and the twinkle in his eyes with the launch that we've got because when he speaks about captive, it's about ingredients that we develop and obviously blend into the solutions and the offerings of our customers, but that we don't sell on the market. That is important because that's the differentiating element. We're investing in that. Taste, Texture & Health, enzymes, cultures, high growth margins, high growth businesses and high margins. I'm always combining it, so that's easier, so they know where to aim for. At the same time, we're building capacity in savory, a very interesting growth category. We're building a large plant in that space because it's again an area where we see the growth and we will be driving the synergies also going forward.
HNC, you heard us talk about HMO, the algal lipids, eye health. Those are interesting segments. Summarizing, we're going to grow in high growth areas, high margin areas. We're going to build on the wins. We spend a lot of time rebuilding the pipelines, making sure that our win rate is up because that lays the foundation for the years to come. At the same time, Sarah is working closely with the BUs to have the right innovation, that we've got the right application capability, but also that we've got the right investments that will deliver the growth beyond 2027. Now, I wouldn't be a CFO if I would also not be talking about cash and cost. Also on cost, we realize that we need to step up.
To support our margin ambition, we have launched a program that will help increase our EBITDA margin by 1%. It's targeted at two areas. On the one hand, we want to drive operating excellence. It's under the heading of Emmanuel as Chief Operating Officer. He will be driving the operational performance in all of our BUs. We'll improve our plant efficiencies. We'll seek out where we can improve. AI will help there as well in order to become more effective because that's also the longer term play. It's not about getting the margin up in the short term, but improving the margin on a long-term basis. At the same time, we need to be disciplined around our cost, and we see areas where we can grow. We can leverage the global enterprise system more. Shared services, that is something that we need to leverage.
We need to leverage more tooling, but also on the back of the company that we've created while we're addressing stranded cost, and I'll come to that in a second. It's also an opportunity to once more look at the model that we have in play and seek those opportunities to optimize. Same time, there's a supplier rationalization. We've delivered quite some synergies on the back of that. We've seen the potential, but there are areas where we can still step up. Take the area of digital and tech, very developing rapidly, and we'll take the opportunity to actually improve our cost base also on that front. So work in progress, clearly driven, it's on at ExCo level, and we're committed to improving the margin and helping ourselves. That, on the one hand, you have the leverage element from growth.
At the same time, we will apply a good level of self-help to actually get us to where we want to be. At the right side, it's dealing with stranded costs. If you carve out 25% of your business, you're bound to have stranded cost. Now, we have experience with dealing with that and carving that out. The estimated stranded cost is about CHF 75 million. That's only the upside of the delay in the transaction and gave us even 12 months more time to prepare for that. We already launched an initiative in 2024 around this. We have clearly articulated targets with every what we call business partners. Function owners, whether you own finance, HR, et cetera. You need to be adjusting your operating model for a company of CHF 9 billion instead of 12.
The actions are set, the targets are clear, and we have identified how we will be moving that out of it. It's Philip will be driving that in the period ahead. Now, every carve-out of the size of that we've done comes with a what we call TSA or SLA, yeah, Transitional Service Agreement or Service Level Agreement. There's no party that can sustain that because also ANH was leveraging group services. While they become standalone, you typically have a period of 12-18 months where you continue to service them, which also gives us time to move those costs out of the system. That's why we have the confidence we've got, because we've done that in the past. We know how to do that.
That gives you also time to move that cost out of the system so that your profitability of the company that we created is not impacted. Now, cash, and because it's nice, growth will drive EBITDA. That's the first element of cash. But at the same time, we need to also be disciplined on working capital. Whilst we've made good progress, it's the slide starts at the left side with a 31% in 2023. I think at the merger, one of the questions out of the room was saying, "Are you guys now focused on working capital because you're even closer to 33%?" I said, "Well, that needs to come down." We made good progress. We ramped it all the way down. We delivered 27% in 2024, but we need to do more.
You see the uptick in 2025. It's largely inventory-driven. We're today at around 4.8 months of inventory. That needs to come down. It needs to be well below 4.5, and we'll continue to drive that. There is a program in place that we're looking at our supply chain operations, but we're confident that we can get it back structurally below 27%. We've done that in 2024. We'll get back there. It will take a bit of time to get that out of the system because we also want to make sure that we have the right products and the like. But we will do that. It's mainly inventory and it's receivables. We need to be disciplined around our payment terms, but also around in our overdue.
In the environment we are, we've seen that creep up a bit to around 6%. That needs to come back to 4%, where we were in 2027. We need to apply good discipline on that front, and we'll be structurally below 2.7x. On the CapEx side, when we started our journey, we said we'll be at an elevated level of around 6.5%. Now, that was for the total group. For the core companies, that was around 6.5%. You've seen that. That's what we've delivered over the last two years. That elevated level includes Bovaer for about 1% or 1.5%.
That will come down, and that also gives us the confidence that we will be investing around 5% of our top line, in line with the industry post the completion of Bovaer. Post 2027 that will normalize, and obviously that will help us realize our cash ambition going forward. We wanted to come back on Bovaer as well. It's an interesting investment opportunity. Today it was mentioned by Maurizio, we have CHF 40 million of sales. We'll continue to grow that in 2026. We're bound today by the capacity limitation that we've got. As long as the plant is not up and running, we cannot scale. Today, we're feeding more than 500,000 cows on a regular basis with Bovaer, it's getting on stream.
All the pilots with the dairy companies are successful. While there is from time to time some noise in the market, that happens with every new technology introduction. Some countries are taking a more aggressive stance and making it mandatory. When you make things mandatory to farmers, then you get a bit more feedback than you may wish. Everybody recognizes the potential and the need. While sustainability as a topic maybe has parked a bit, the pledges and the commitments haven't changed, and that's also the engagement when we talk to the dairy companies that is there. The question is, how fast will it come? Our main priority needs to be finishing the plan so we can operationally grow our business, because today we can't. We don't have the capacity to do so.
We're limited to what we can produce through the production arrangement that we have put in place while we're building that plant. It will come. We'll gradually ramp it up to above CHF 200 million, either through straight sales or through license models. That is something that we're constantly working as well. Priority number one in 2026 is completing the plant. Now, if you look at the investments in the other side, I already alluded to that, and it came back also in the other presentation. We're investing in future-proofing the growth. We're investing in capacity. We're investing in technology. We're investing in ingredients, whether it's in P&B, opening labs, in Taste, Texture & Health, also into new areas.
We've built a complete pet food plant in the U.S. also on request of customers, so also ready to grow on that front. In HNC, we continue to expand as well. Our outlook for 2026. We're going to grow 2%-4% with a margin of 20% and a cash performance of 11%-12%. It's a step up versus 2025. Maybe not a step up that you are saying, "Hey, Ralf, you showed us four or five great slides, but why don't we see that back?" We also want to be a bit careful starting the year. We know that we started the year in the first quarter where we kind of left it off in Q4, right? In Q4, we realized a growth of around 2%, and that's also our guidance for Q1.
We will deliver low single-digit growth in Q1 because that's the environment we're in. That also makes us a bit careful for the year. While the underlying metrics are all driving in the same direction, we will be improving and accelerating our financial performance. We will be cautious with our guidance for 2026. We live in a volatile environment. We don't know how the Middle East is gonna pan out, whether it's just a matter of weeks or a prolonged event. We'll see about that, but that's baked into the guidance that we set now. If you then look at how does that translate, and Dimitri showed you that slide on how we're bridging it, we also wanna provide the perspective on how a normalized growth for the company will look like. There you see the step up in 2027 to 4%-6%.
With a 1%-2% from normalization, but you also see with the growth actions that we're taking, that gives us the confidence that we will step up our performance, and we also wanted to bridge it towards the midterm target. By providing that intermediate step in 2027, it also shows you the confidence that we are building ourselves on how to get from where we are today into 2028. I think this is the actions. There's a clear outlay of what are the drivers to actually get us there. In a normalized business, our normalized growth rate will be around 4%-6%, and I think that was the question on how does that mean for TTH. It's a normalized growth of 4%-6%, supplemented by a 1% for Bovaer because we will be ramping up after 2027.
2027 will be a bridging year, and then we'll ramp that up. The same for TTH. I think it came in the Q&A. 4%-6% growth, but given the impact and the magnitude on the TTH business, that actually contributes 2%. Margin as well continue to step up by our own efforts, by our program. We wanna have the operational excellence program completed by the end of 2027. That's baked into that. And also there, we wanna be careful in terms of the guidance, but we've got the levers in place coupled with the growth to actually get us there. Yeah. The same for the cash conversion. You've seen that it's working capital and CapEx driven. Now where does that translate into in terms of leverage?
We were at a 1.9 x leverage at the end of the year looking at the continuing operation. We landed at CHF 3.3 billion. Here you see a bit of the moving pieces. On the one end you see the operating performance, 11%-12% operating cash flow, netted off with the tax and APMs and the like. On APMs, I'm specifically calling that out. We had quite some leakage in the past years as well. On the back of the merger, whether it was merger costs, integration costs to realize actually part of the cost synergies, all of that blurred into our cash pictures as well. That will reduce to around CHF 100 million in 2026 as well, and that's netted off. Then you see a big blue book. That's the capital return.
We continue to do a dividend of EUR 2.5 a share, so that's a little over EUR 600 million. Couple that with the share buyback that started today. We're in the market with EUR 540 million, so that's the big block in the middle. Then you see the deal elements. The debt transfer, remember that we had EUR 500 million of proceeds expected at closing, of which EUR 300 don't show back in the net debt bridge because those are pensions and employee liabilities. It's important the rating agencies take it into account, so it's relevant from a rating perspective, a headroom perspective, but not from an IFRS net debt perspective. I also wanna guide specifically so we don't have a misunderstanding on that one.
CHF 600 million cash coming in and the CHF 200 million cash out for tax and cost. Yeah? Then leverage. Liquidity is important, but the reason why we put in the slide is that we live in a volatile environment, and the last two to three weeks have shown that. We had a CHF 1.5 billion maturity because if you merge two companies, you live with the legacy of bonds and the like. Now the treasuries team has done an excellent job in already refinancing that fully, so we've been in the market a few weeks back.
We've also dealt with the refinancing of 26, and that's why we issued the two bonds that will now mature in 2031 and 2038, completing a maturity profile which will never ever result in a financing risk because the maximum that you've got in any given year is around CHF 750. Now the rating agencies have looked at our plans as well. They took into account the share buyback in the divestment, and they reconfirmed our ratings. We're firmly committed to a strong investment grade profile because it will help us navigate through any scenario, and it's proven very helpful over time, and that's something that we're committed to as well, and that's baked in, and it's, I think, the strongest in the space that we operate in.
Now this one I do wanna spend a minute on because I talked about leakage earlier on cash. There was also a leakage on earnings per share, and I don't think that that was clearly articulated when we released our full year results. If you look at in our core earnings per share, there was a 10% impact from non-recurring items. With the tuning of the portfolio, we put a couple of companies outside of the group, but obviously that led also to some value adjustments done by either new ownership, so where the KD Pharma made some value adjustments under the ownership of private equity, but also a few of the others, and that led to a leakage and a value adjustment, which is non-cash, but it still flowed through our P&L in 2025. These are not recurring going forward.
Also the flow-through from the step-up in profit that we will see all the way from EBITDA to EBIT will have a much stronger flow-through all the way down to earnings per share. I wanted to make sure that that was understood and not taken into account, that there's a continued leakage because to some investors, especially U.S., earnings per share is absolutely important. I wanted to make sure that we addressed that as well. Last, there was a question around why did you change the definition. It was on request of many of you because we were already adjusting for the merger accounting impact, where we had the step-up of intangibles of CHF 10 billion in our capital employed that we need to amortize over time.
Why are you not adjusting for the other M&A? We've done that. The impact is not super big, but it's around CHF 130 million-CHF 140 million as well. We baked that in, and I wanna make sure that that is clearly understood. In the corporate housekeeping slide earlier with the outlook, you'll have all the details. For modeling purposes, we wanna be fully transparent on that. At the right side, a very strong improvement on ROCE as well. We started from the get-go, the reported ROCE was around 5% in 2023. Now, obviously, with the portfolio changes and the definition changes, that was 6%. What is important is that we realized the 5% step up on that. Part of it because of the portfolio change, it's about half of it.
Also in the underlying business results, the ROCE improved by around 2.5%, which is in line with our commitment that we wanna continue to step up our ROCE by 1% per year, and we will do that also going forward. Now, capital allocation policy, no big news. It's largely in line. We invest in the growth. We gave ourselves a 6.5% up until the completion of Bovaer. So after that, you'll see that come back to 5%, but that's baked into our cash target. So the cash target of above 14% has baked this in and will secure the future growth of the company. Dividend is important. That's why we changed our policy. We wanna stick to the EUR 2.5 per share.
It's a bit outside the earlier range that we set, but we are confident when we will grow back into it. We also flipped it around from a mindset we wanna continue to grow dividend as well. For the first years, it will be stable, but our policy is stable, preferably rising, and we've changed that earlier. M&A, we're happy with the portfolio that we created, and that's the portfolio that we will grow. Don't expect any major transformation in 2026, 2027. M&A is not a priority for us in the periods to come. We wanna accelerate the financial performance of the company that we created, and that leaves space for a capital return. You've seen the leverage earlier and well-placed in the guidance of 1.5x-2.5 x with a 1.9 x leverage today.
That's why we also launched a CHF 500 million share buy ahead of collecting the proceeds from the ANH transaction as that is something that is important to us as well. This slide actually shows what we've returned over the past period ever since the merger. Looking at 2023, 2024, 2025, and the proposal for 2026, overall, we've distributed around CHF 2.5 billion in dividend and a share buyback of CHF 1.5 billion, returning overall CHF 4 billion to shareholders. I think that's important as well, and that should translate into a decent yield on the investment. What's also important is this in the blue box at the bottom, not to be forgotten. We also took some feedback on that. Overall, we've changed the metric in our long-term incentive program. We upped the percentage related to total shareholder return.
The relative performance in our share and dividend against peers, so that is now 40%. We also upped the percentage of ROCE to 30%. Now in the long-term incentive program, so the share program, holds 70% financial metric to make sure that we're absolutely fully aligned in terms of objectives going forward. Now let me wrap up because I'm over time. I'm not so precise as my Italian friend. The message is important, and this is something that I wanna leave you with. The transformation is done. We've created a company on which we will accelerate its financial performance. We'll grow the company. We'll grow our business. We'll apply discipline around cost. We'll apply discipline around cash. With that, we will increase our financial performance on all three key metrics: growth, EBITDA, and cash.
I think you've seen an exciting team that is behind that and will deliver on its promises. Thank you. Now, at the moment you're here, I'm sure you're anxious with a lot of questions. So Dimitri back on stage and then also the BU presidents, then we'll do a bit of logistics. We've got ample time, so don't shy away and hesitate for any question. It's the opportunity to also have the BU presidents. Otherwise, we're uncomfortable, huh? So, is everybody?
Yep.
Geared up? Dimitri, why don't you.
Yep.
Lead us through.
Yeah, let's go. Are there handhelds?
Give it.
Well, I also got to move a little bit. Hi.
Oh, thank you for the presentation, Sebastian Bray of Berenberg Bank. I'd have two, please. One on Taste, Texture, and Health. A lot of companies talk about the benefits of GLP-1, but which categories in your experience are actually shrinking and which, aside from dairy, are doing a lot better than would have been the case three or four years ago? My second question is on the Bovaer project. How has this gone relative to initial expectations, both in terms of cost, facility size, and revenue opportunity? What do you make of some of the more recent headlines coming out of Denmark? I think you alluded to some of the noise around the story.
Yeah.
Has anything changed in this? Thank you.
Good. Thanks.
Mauricio, you first.
Yeah.
On, uh.
Is the mic working?
Yep.
Okay. No interesting question. Actually, it's the question I'm receiving almost every day at the moment. GLP-1. GLP-1 is a strong trend attracting a lot of attention, but when you look at the real impact on the market in the short term is not so huge. Clearly is an evidence how consumers are shifting dramatically. Okay, now the impact today is very limited. However, what everybody's looking at is the impact of tomorrow. We are well-positioned in that space. Why? Who is consuming GLP-1? What it's doing basically is kind of reducing dramatically or drastically for a certain period of time, consumption of regular food. Then when it stops, it start moving into a kind of more dietary supplements or nutrition food.
What is the nutrition food they usually use post GLP-1 or during GLP-1 is high protein, high fiber, and for example, dairy is highly consumed. Now you lose also a lot of muscles. That's why you need to reintegrate the muscle mass through protein and movement. Most of the category, let's say 1/3 goes after two months, three months to regular consumption. That's what we have seen. The other 2/3 actually, they have different habits other than normal, but keep consuming those fibers, and protein, those nutrition bar, those dairy products where we are heavily present. Energy drinks sometimes because they feel a little bit, the necessity of getting a little bit of energy and alcoholic drink is not highly consumed by the way.
This is where the category are shifting. Today, honestly, we don't see a massive impact. In our portfolio actually is the opposite. We get the benefit of high consumption of the product I just mentioned.
The interesting is that you were relating to some of the segments where maybe we'll lose snacks, right? Some of that. We don't see that yet, but any change, any new ingredient will help us in the formulation. Now, what's also interesting is I think there was a note out yesterday from Lindt & Sprüngli, which I really would advise you I think is one of the best chocolates in the world. Lindt & Sprüngli indicated that the consumers in the U.S. were taking even more. They didn't see that breakthrough. I mean, that was surprising for me to read because I thought it would go down. It's still too early to say. What we do see is building on what Mauricio is saying is GLP-1 is impacting how people think about health.
There's another aspect, more of fiber, proteins, gut health, because it's impacting your gut with probiotics. Where we're strong at, and it's less sugar, less fat, less salt, and that's also where we are clearly positioned. We definitely see it as an opportunity. On Bovaer, let me highlight a few things and then hand over the science question to Sarah. Sarah is also here, member of our executive committee, being Chief Science & Research Officer. By the way, Philip is also here at the back. He always likes to sit at the back. He is our M&A transformation and strategy officer. He can also jump in if you wish. Bovaer. Let's start with the sales. It was ramping up quicker than we thought.
There was more appetite than we initially thought in our business case, and we were quickly into CHF 20 millon-CHF 30 million sales with the intermediate capacity we had. And therefore, we also decided with that quick adoption from the branded dairy consumers who all came out with methane reduction pledges and oh, wow, this is great, right? We decided to scale up the investment in Dalry based on that initial acceleration. That created also a slightly more CapEx than we originally had in our case, but also with higher capacity with a little bit of delay because of the extended capacity. Now, let's start with the sales first. Now, that CHF 30 million-CHF 40 million is now our maximum because of the intermediate capacity, and Rob was already alluding to it. It's a strange world.
If some people say that mandatory you need to take stuff, you get more pushback than if you say, "Oh, it's a great product, let's use it." I think that's a learning from Denmark. Let me make it very clear, this is the most researched ingredient we've ever brought to market at dsm-firmenich. It's more than 100 studies. It is safe to use. It took a long time before we got EFSA and FDA approval. We've got all of that in Denmark.
Very interesting to see is that I think just beginning of this week, there was this Danish national dairy data out who will check the health of the cows, which was one of the quote, “discussions” in Denmark that cows became ill because of using Bovaer, because they needed to use it mandatory. That data came out and there's a health rate for cows. I didn't know there were health rates for cows, but they're managing it. Guess what? The health rate went up. Secondly, the yield, so the production of milk from the cows also went up while still using Bovaer. We feel very confident that this is a scientific proven safe to use ingredient.
Hearing that from me as a CEO, you could say, "Yeah, okay, what do you know about all the science?" I wanna ask Sarah just to give the real science behind it.
Thank you, Dimitri. I think that for part of your answer, it's the first time ever that you undersold and in fact that we've done 153 clinicals with Bovaer, and the evidence is super clear of the significant reduction of methane production, as well as that the health of the animals is not impacted. I think you undersold that by saying just about a 100 because it was 153. The other really important thing that you're talking about is with 153 studies, we have a lot of data. What we started seeing in some of these clinicals is some anecdotal evidence of increased health of the animals or increased fat in your milk content, which is something that's important to dairy producers.
This is where we're really digging into those data to try to identify some other key elements. That's an ongoing research project that we're doing, but we're excited about that aspect.
Thank you. Coming back to your question, I think after initial faster ramp up, we have had a delay, partly incurred by ourselves, but also partly because of all the turmoil around it. Obviously with the US backing and parking a little bit sustainability. However, like I said, and I think Mauricio was also alluding to it, I think on an earlier question on Bovaer. Our dairy customers want to talk to us, obviously because of a great engine we build on TTH, but also about Bovaer because they have publicly made methane pledges for reduction. It's still very high on the agenda, but I think we are about one year late in our plan going forward. Yep. Yeah. Is someone with it? Yeah.
Thank you very much. It's Matthew Yates from Bank of America. It's a lot of information to digest today. Appreciate the work that's gone into it, and Ralf in particular, trying to sort of bring it all together and summarize it at the end. I wanted to ask you about the margin guide for this year, the around 20%, because as you said, your exit rate last year was getting up to that level. What's gonna hold you back this year? Is it incremental currency? Is it the mechanics of the TSA? Do we need to be more patient for mix? Like, what's maybe I'm being greedy, but why not more margin expansion this year? And second question, if I can, is for Emmanuel on the P&B business.
You know, you talked about shedding the non-differentiated ingredients. It's still a CHF 900 million portfolio. How much of that is truly differentiated versus something that could see competitive pressures over time?
Good. Can you give the mic to your neighbor? Let me go next. Thanks.
All right. Let me start with the margin. Great question. Of course, that's where we landed in the second half. If you look at it on average, we are around 20%. But at the same time, we wanted to be a bit careful when with starting the year. You pointed out one clearly lever, which is currency. We have about a CHF 70 million headwind ahead of us, taking into account that we hedge about half of the exposure that we've got. It's in the slide with the housekeeping rules that we've reduced that exposure also following the revision of the portfolio. Our dollar exposure came down about 15%-20%. But moreover, our CHF exposure decreased by about 40%.
That is a good reduction, but it's still there. That obviously has a bit of pressure certainly at the start of the year, so because that's where the majority of that impact is. With the environment that we're in, we just also wanna be a bit careful around our margin, while at the same time take the actions that we highlighted in the presentation. We will be working on improving, but as we're guiding at the start of the year, we wanna be a bit careful on that.
With regard to ingredients, we at this stage, you're right, it's around CHF 900 million total revenue for fragrance ingredients. Today we consider 85% is differentiated. As I was trying to explain, first of all, it's composed of synthetic naturals and biotech. It's not only a synthetic one exposed sometimes to Chinese competition. It's much broader than what it is. As I was trying to explain, every year there is a continuous cleaning and at the same time innovation flow. We produce new innovation every year. We clean the portfolio from, let's say, less of a specialty outside of the portfolio from make to buy.
We have also a very interesting ecosystem where we have alliance with some producers, but also joint ventures. We play with joint ventures and alliance in making this really ingredient machine being the best differentiated machine of the industry.
Good. By the way, in addition to the CHF 900 million you're referring to, we also have our captive ingredient. It's hand in hand. Yep.
No, maybe I wanted to add something also. Please have in mind that with our ingredient, we want to serve our perfumery product. Okay? When in fact we have sometimes limitation of capacity, sometimes. We always put, I would say, we make sure that perfumery is and our perfumer will be happy by feeding that. At the same time, okay, we also like to have very solid business outside of the internal use in order to bring competitiveness, in order to bring size, scales. That's why it's a combination of internal use and external sales.
Good.
Thank you. Agne from Impax Asset Management. My question is on the pipeline you mentioned is very active at the moment. Can you perhaps break it down by business unit, by type of customer category, just to help us understand where this activity is happening? There seems to also be a delay in converting some of that pipeline into sales. What's causing that delay? Why are the customers sitting on the sidelines? What are they waiting for, essentially?
Well, shall we do business unit by business unit? Because I think it's per business unit it's slightly different. I think it's important to understand, and I think Emmanuel said it very well, but it's valid for all BUs. If you win a brief, it doesn't mean that tomorrow you have sales. You win a brief, and then together with the customer, there's a launch of the product, and then it comes. There's always a bit of a delay. The winning ratio obviously important to get a bit of a forecast on what the sales is. Let's do a quick round on what's in your pipeline. Let's not dissect it in all types of dimension you want it to. We have a fact book where you can find a little bit on how that's been done.
Just to give you key areas of what you're most excited about in the pipeline, if I may rephrase your question a little bit. Yep.
You want to start?
Yeah, let's go with the Swiss.
Sure. Some of the, you know, when you look at our pipeline, is growing, so it means that we have a project with customers that show interest in what we are generating. Now, I was showing the synergies pipeline, the CHF 450 million, which is very proportional of the overall pipeline. In our portfolio, however, it's not just the pipeline that generates growth. We have an existing product on the market that are still growing, but they fluctuate depending on our consumers and the economic situation is evolving. If you focus just on the pipeline, in our business, you transform your pipeline in 10-15 months, okay? Because you work on the project. The more you bring innovation technology, the more require work with the customer.
The project entered the pipeline, you see it. One is adopted. That's where we shift the positioning of the project. It's adopted by the customer, then it's converted into sales. That's the way it works. In our industry, it takes, really, this process takes between 12-15 months. Then depending on economic situation, can boost, can soften, but that's the dynamic. Now, we are very well-positioned on pipeline. Actually, you have seen we have very, very strong pipeline. Now, we are very cautious in our numbers. We are very cautious on the economic situation, as I was saying. Without the current economic situation, we will keep flying as in TTH, we're flying 4%-6%, 5%-7%. We are very cautious on the current moment, so we are not over selling.
Sure.
What we're doing.
Great. Alex?
In the case of HNC, the dynamics are similar. The only caveat or the difference would be that, as I explained earlier, the solution selling is more recent for HNC, so we're scaling up the pipeline. We've done that over the last few months, and we're looking at a pretty solid win rate, so we're confident and to deliver on the synergies and on the growth side. We're scaling up the size of the pipeline as we speak.
The pipeline on Perfumery & Beauty has always been extremely big, I would say. Remember, there were three different categories, the ingredients, the fragrance design, and the technology. Now, I think I wanted to answer to your question as following. We decided to split the organization from the global consumer brands to the local consumer brands because the speed from research, innovating, and deploying is faster, much more faster than what it is with the global consumer brands, and then sometimes also in Fine Fragrance. That's why overall, we'll accelerate the deployment, thanks to, I would say, the increase of our focus on the regional consumer brands.
Yep. I think that's an important point. Remember that I said that Emmanuel is working on building up that regional local percentage, so it's 40/60.
In TTH, it's about 80% local, 20% global. With Alex, we discussed that it's 60/40. The real growth is in the regional ones. Let's not forget the global ones, but we need that pipeline. This is the pipeline which you most alluded to 2026, 2027. We also have a pipeline on science and research, which has maybe a slightly longer time, but we're also here to build a company for the future. What is in your pipeline, Sarah?
Yeah. Well, there's a lot in our pipeline. I think one thing that you would understand is the great power that we have at dsm-firmenich, in our innovation, is we have platforms that can serve all of the businesses. For instance, you heard Alex talking a lot about healthy aging, and we have a platform studying cell senescence. That's basically when cells, as you age, stop dividing, but they stay around, and they actually make the other cells around you start aging faster. This, we first launched in our beauty business, but we have now leveraged it and start screening it for healthy aging products for Alex's business in HNC. These same types of platforms are being used also in TTH for pet care.
This is one example of leveraging that power of the group to develop products for all three. The same is true in the microbiome. Everyone thinks about health from the gut, which is super important, not just for your gut health, but your mental health and everything. But you also have a microbiome on your skin, in your oral cavity, so it's super important for our oral care business in Perfumery & Beauty. Leveraging the expertise we have in microbiome across all of our businesses to have a big impact in the next, you know, both mid and long term.
I think it's important for you to understand why we have these three business units as the core of dsm-firmenich. It has to do with the scale of science and research you do. Let's go back on the innovation platform. Microbiome is, as a platform, working for HNC, TTH, and also P&B in the skincare area. Biotechnology, building the biotech ingredient for the toolbox is valid for all three. They all have fermentative products in their ingredient toolbox. Three, it's all about sensor and receptor technology. Now you could say, "Well, is that all three?" Yeah, it's all three. Perfumery and beauty, obviously, then also in TTH. Alex was speaking about medical nutrition, about the taste. Also the sensor and receptor technology competence we're building is really having scale for all three. Then last but not least, AI, and we're all working on that.
That is helping all BUs. We have that scale, therefore, I was saying CHF 9 billion. You really need a CHF 9 million-CHF 10 billion company to succeed to have that scale for innovation in science research to really make that difference.
I think that what's also really important, what you highlighted, Dimitri, is it's not just in modern science, it's not just about single science capabilities. In fact, as we talked about, the bedrock of dsm-firmenich is our unique ingredients, be it hero ingredients in Alex's HNC business or our captives for perfumery, and we combine our data science technology with that of receptor technology, biotechnology, all of that combined to be able to discover new ingredients that can perform in the different business units. It's that combination that can help you go faster and deliver unique, differentiated products that also makes us special.
Thank you. Yep. Questions here. Oh, I saw your hand. Yep.
Yeah. Hi, it's Chetan from JP Morgan. I had a few questions. I'm just taking the liberty of you know, Ralf saying, you know, now is the time to ask questions. So I'll be short. First, I just wanted to understand this concept of market normalization of 1%-2% growth. I know you're not the only one, you know, some of your competitors also talk about it, but what will normalize? Because I can also argue you benefited in the last three years from the super cycle in fragrances, which probably nobody saw. So why would that not normalize on the other side, which is on the downside?
I'm just curious, what is this market normalization that we should have in mind which will drive that 1%-2% incremental growth over the next 12-18 months? The second question I had was just curious on this cost optimization program that you're talking about, which is 1%, again, margin improvement next year. How should we put that into context of, you know, a company trying to grow more at the same time cutting costs? Usually, you know, you want to reinvest more to grow more. You know, it just seems a bit uncorrelated in a way. Last question, any impact you've seen from the Middle East conflict in any of your businesses, whether on fragrances, on raw materials? Is there any seasonality on margins that we should have in mind?
You know, is 20% a good number for all of 2026? Thank you.
Let's start Middle East first, with impact on Q1.
Yep.
I will do normalization.
No, happy to do that. So Middle East, I think it's a little early to call that out. Maybe framing it first, what is our business in the Middle East? Overall, we have about CHF 250 million sales in the region. Now, the big question is, of course, is this an event of a couple of weeks or will it drag on much longer? We're currently anticipating that it's a matter of weeks and that things will then stabilize. If you look at it, we've of course doing our homework, what's on the back of that. Now if you look at, for example, energy and the like, we're 80% hedged for the quarter in Q1.
We've got a good hedge rate going into the second quarter and the rest of the year. Obviously there's always some sensitivity around it. We don't expect big on the top line. Could always be a couple of million CHF around that, but on the impact on the quarter. Let's see how that overall develops into the year. I think at this point it's a little early, but obviously we're looking at it and we're preparing ourselves.
Yep.
For to deal with that.
Our Middle East sales is about?
Sorry?
Our Middle East sales.
Middle East, total is around CHF 250.
250.
Across all of the three BUs, with obviously a bigger presence in P&B than for TTH and HNC. Yeah.
Yep. Maybe on the cost part, you need to see this as hygiene. We're not walking away from investment in science and research, neither on the normalized CapEx on 5%. We're not jeopardizing growth. It's just hygiene. If you merge the company, you've done your portfolio tuning, you need to do some hygiene work that will deliver the 1%. It sounds easier while I'm saying it. It is executed in steps, but it has nothing to do with touching on the growth. It's hygiene after the whole transformation. Coming back on the normalization. Yeah, it's a sort of a favorite term everybody uses.
We don't know exactly what the definition of it, but I think it's clearly indicating that the second half of last year, we saw some slowdown with cautious consumer behavior. We labeled that as something that will normalize. It's clearly indicated that we need some normalization to get the step up from 2% - 4% - 4% - 6%. Now, you've seen that if that is a half year, it's about a 1% growth. If that continues for the full year, it could be 2%. It's not as scientifically proven as the answers Sarah normally gives, but it gives you a bit of a feel on how we think.
We think that, and I said it before, if there is a lot of uncertainty, consumers become a bit cautious, and then they either pile stock or they de-stock. Well, in this case, it was de-stocking. If you look at our customer behavior, we do see that stocks are relatively low in the chain because you get all types of urgent orders and the like. Now, that is now in the Middle East situation, even more exacerbated in that space. We feel that that will normalize to normal levels, and then that's the 1%-2% which we've indicated on, based on what we see in the second half of last year. That's all. No rocket science. I think there was a question on the. Just behind you. Was it? Yeah.
I come back to Charles. Yep.
Yeah, a couple of questions. Alex from Barclays. On HNC, thanks for the presentation. You mentioned upfront you didn't think the end markets were particularly discretionary, but at the same time, you know, you did call out the slowdown there being in part by weaker consumer confidence in North America. Could you kind of like square that disconnect for us?
Yeah.
Are you actually seeing slower growth in the end market from the end consumer, or is this about de-stocking? Which areas have you seen most pressure? Maybe if I could ask a second one, just coming back to the normalization point. If you could get a bit more granular, what would the maybe three end markets that you would sort of most expect normalization to occur? Could you sort of call those out, please?
Yep.
Great catch, Alex, on the discretionary, non-discretionary. I mentioned part of the portfolio is not discretionary. Another part is, and if you look at the segments of HNC that I shared, probably dietary supplement is the one where you could say, "Yeah, do I really need to continue when I need to feed my kids and my family?" Actually, if you look at North America, and that's where it's crossing, we have eye health that is mainly dietary supplement and is purely in North America or mostly. Then, our consumer ingredients is also quite big in dietary supplement in North America. That's where it's crossing.
Onto your normalization bit. I think Perfumery & Beauty have shown in Q3 and Q4 that they're pretty solid in their growth area, so it's predominantly in TTH and HNC. Building on what Alex just said, the normalization in North America very important for us, also in HNC. Then maybe the global accounts, which he was also referring to. If you come to a brief and you win a brief, and you need to create a global product launch, that's a big investment. In uncertainties, then people wait a little bit for that normalization and then launch then will come. We all saw that during COVID, post-COVID a bit. We see that cautious launch idea from global customers. Two areas, global customers with the timing of product launches, and secondly, the North America continent. Yep.
Yep, we go on the right side.
Thank you very much. It's Sebastian from Citi. Two questions, please. First one on your 28% margin target. Now, the majority of the uplift is supposed to come from operating leverage. I think the industry doesn't have the greatest track record of delivering operating leverage. Just wanted to understand what gives you the confidence, bearing in mind that cost synergies are behind us already. Second question on Bovaer again. When it was still called Project Clean Cow, I think you gave us a number of CHF 1 billion-CHF 2 billion, and now we see CHF 200 million+ on the slide. If you could just contrast those two figures, please.
Yep.
Thank you.
I'll do Bovaer, and then you do.
Yeah, I'll do the margin. Thanks for the question. If you look at it consists of a couple of things. On the one hand, we'll apply a good level of self-help to actually drive up the margin. At the same time, it's leveraging the growth. You also see that, and I think the biggest example is, if you look back on the development in TTH. 7% organic growth, two years straight. A 13% step up in EBITDA two years straight. I think that is the driver also for the margin. With our confidence in moving towards 4%-6% growth across the businesses, moving in the right areas on where we're growing, because you wanna accelerate the growth in the higher margin businesses, that will drive that uplift.
If you look at the margin breakdown, leverage is one, self-help is one, but then also Bovaer, it has an above average margin. It will not only help acceleration of the growth from a group perspective, but also from a margin perspective.
Yep. I think we've shown a little bit of leverage the other period. On Bovaer. Indeed, the total market was seen as CHF 1.5 billion-CHF 2 billion. It's still there. What we're talking about is the Dalry site, where we make our site on Bovaer, which is predominantly servicing Europe, and also doing the pre-marketing for the US and building that market. We think the market will need seven to eight of these plants. Let me also make that very clear. We will not build those plants. We'll create that concept, proof of concept in Dalry. We'll build that business, and then we go for, and I think Ralf also alluded to it in his presentation, for a license and technology model.
We basically sell the technology and the license, and then we get royalties back based on every kilogram of Bovaer salt. That's the idea. The top line will be limited to above CHF 200 million because that's the Dalry site. We will help our EBITDA and our net profit, no dilution from that when we do that licensing. We have had discussions in Asia. China is a possible opportunity. Brazil is a possible opportunity, but they're all saying, "Great idea, we're interested, but we want to see the site up and running." I could basically not blame them because I think if you pay for a license and a technology, you wanna see how that works.
Therefore, it's very important to have that Dalry site up and running commercially in 2027 so we can also take that next step. The 1.52 is absolutely still there. This was the turnover linked to one site. Okay. I think there was another question. Yeah. Maybe to your neighbor. Yep.
Thank you. Wim Hoste, KBC Securities. I have three questions, please. First one on HMO. Can you elaborate a bit on the regulatory framework, also the kind of contract book you have, how fast you're gonna expect to ramp up towards the high penetration rates that you cited in the presentation? So that's about HMO, first question. Second one is on the eye health business. What's the ambition to broaden that geographically plus also product-wise? Is that a possibility? The third question on TTH: do you see any impact from consumer being constrained going towards private label and things like that? Any thoughts on that?
Alex.
Thank you.
Yeah. On the HMO question, we have registered our HMOs in over 100 countries. As we speak, on the first three HMOs, we're registering the rest. The pipeline is there. We already have, you know, good engagement with the local authorities. The first part is always the most, you know, cumbersome part. Once you have developed that first routes, the first HMOs, the next ones are a bit easier. I include China in this. Even though China has very strict and relatively long processes, longer than what we expected, once the route is open, it's much easier and faster. That's on the HMOs. Does that answer your question or what is.
If you can put a bit more numbers to this on the time frame.
So I.
It will be around CHF 100 million in the period. Of course, I will not disclose the exact number where we are today, but the traction is good. Building on what Alex said there, I mean, we've got three HMOs approved, and we've got seven in the pipeline, and that's. There's a lot of development there. We're all the time guided for CHF 100 million over the midterm period, and you can look at him whether he's confident in that or not.
It's not that we don't want to be transparent, but I hope you understand that.
Mm.
That this is live, and I know there are a few competitors out there who carefully listen to what Alex
Yeah. Yeah.
Ourselves are saying. Right. You had a second question.
Yeah, we're shaping the category. Now on eye health, right? That was your other question. Look, North America is the biggest dietary supplement market in the world. We wanna make sure that, you know, we have that market, opportunity, under control before we start spreading the brands left and right. Having said that, we have signed an agreement of a licensing model of our brands in China. We have signed that a couple of months ago. We get royalties for that. In Brazil, we're partnering with a similar model with a big pharma company that has the exclusivity of distributing our Culturelle brand, and we're starting later this year. We're doing that very selectively in large markets, but our focus remains North America.
It's a good point. Yeah, we'll come back. It's a good point. Let's also make sure that we tried that earlier in China, and we also learned from failures we made. You really need to do that locally and not with a global mindset. It's not gonna work. That's why we do the licensing model with someone locally in the area because it is too ideal to think that we can do it from the U.S. or Europe. I think you had a third question.
On private label segment.
Yep. TTH.
Yeah.
Yep.
Good question. In this kind of a current situation, you will see a shift of a consumer moving from some brands to a private label, whereas there's a normal transition. We are present in those segments or set channels, as we call them. We constantly see these kind of shifts when the geopolitical or the economic situation shifts. We saw a lot during COVID. Usually it's a transition, but going back to discussion normalization, you see this flow moving back and forward. Our technologies, our products fulfill the needs on all segments. For us, it's very easy to shift. Actually, on private label, you have a fastest implementation of certain project, especially during this time. They want to shift and launch new projects.
So.
It's quite an opportunity for us.
We love our customers, but at the end of the day, we don't care whether it's a private label or a branded label or whatever label, as long as our ingredients are in. Yeah. Let's stay on the left-hand side. Yep.
Yeah.
Charles.
Excuse me. Charles Eden from UBS. Two quickish ones from me. First one is, when we talk about the normalization, part of the issue I think has been the amount of value focus that a lot of your, particularly global customers, have put through. Is there ever a discussion from your side where you say, "Look, if you're gonna keep taking pricing, we need to grow too. We need to start taking pricing over and above raw materials." I know that's not an industry norm, but is that something that you've considered given their approach? I guess linked to that, we talk about organic sales growth targets. Why not organic volume growth targets if that isn't gonna change?
Sure.
My second one is a very quick one for Ralf. On ROCE 11% last year, is it 13%-14% by 2028 based on the targets? Is that rough math the right way to think about the ROCE? Yeah.
Let's start with that, and then I come back on the ROCE. You would love that we grow with 5% and then minus 5% on price. Okay, well, let's park that.
I think you would like it and. No, on the ROCE, yes. We'll continue to grow by 1% per year. That is also what we're targeting in the medium term. Going forward, we need to do a step up with the focus and the acceleration of underlying performance. You should see that flow through of EBITDA and EBIT, and with that, the step up in ROCE. Yeah.
Yep. I think a very fair question. We manage the business on gross margin. Let's make it a little bit black and white. At the end of the day, we don't really care what the price is because it depends on what's in the brief. All these business unit presidents in all our organization get a brief, and on the upper right corner of that brief is a sort of a range of which the solution we offer, the formulation we bring should fit in. If we're outside that range. If we are outside the upper side of that range and it's too costly, they're not interested. The request is already in that range. That's one.
Secondly, we sometimes make higher margin on lower priced products than with higher priced products because of the margin step up and the brief, how we do that. Because at the end of the day, if it's a high range, you can play with more ingredients in your solution. If they wanna do a bit of a mass positioning, then you are a bit limited in terms of which ingredients you can use. However, the margin setup is important for us. We track the margin as one of the key areas. Now, on our guidance on 2%-4%, but also the 4%-6% plus 1% on Bovaer, the key element is volume growth. It's not like volume growth 0% and the rest you come from price.
Because of that, we assume that it is a big part is volume growth. However, if we move up on our higher quality portfolio, obviously on average, your price should go up as well, say to this paribus . Now, in today's world, there is no say to this paribus , but just to give a bit of feedback on how we look at that. This is really market-driven growth, which should be predominantly come from volume. Yep. Yeah, we switch to the right.
Yeah. Martin.
Martin was so courageous to be on the first.
Thanks a lot. This is Martin Rödiger from Kepler Cheuvreux. I have two clarification questions. First is on your midterm target timeline, 2028+. Do I understand that correctly that you want to achieve targets in the year 2028 and also beyond? Secondly and related to that, the 4%-6% organic top line growth +1% contribution from Bovaer, that is just for 2028 and beyond, but not the average over the period 2024-2028. Secondly, on Bovaer in particular, you target more than CHF 200 million sales. My understanding was that the plant in Dalry will already generate CHF 200 million sales. The plus figure is coming from the license income you may get from United States and other regions.
Is that the right understanding? In connection to that, what will happen with the CHF 30 million-CHF 40 million sales you generate today with partners? Will that stay and come on top to the CHF 200 million sales you generate in Dalry, or will that vanish?
Yep. You first.
Happy to take the question around the target. With the guidance, and that's why we also showed it, that we have 2026, 2027 and a step up to 2028. We wanna deliver those targets in 2028. We also said a plus beyond. We guided for a mid-term target. A mid-term target would not be only for 2028. Now, that is the target that we will realize in 2028 and then after. Now, why we also set a normalized growth of 4%-6% plus 1% on Bovaer, while we're ramping up and we're expecting that ramp-up, over time, there will also be a moment when that will start normalizing, and that will not be an eternal growth. That's why we said, "Look, let's first get that.
Let's also bridge it on how to get there." I also wanna stress and come back to the point where Dimitri finished. We are focused on 2026 and 2027 to deliver and lay the foundation to get there. We also wanted to say, "Look, that's the company that we created. With that Bovaer coming into play, that's where we need to be at in 2028." It will not grow forever because at the acceleration moment of Bovaer, at some point will level off, as will synergies. The focus is on getting to that range in line with the earlier commitment.
Okay. Is that clear? Clarify your question? Okay.
Yeah.
On Bovaer. Indeed, the CHF 30 million-CHF 40 million will then move to the Dalry production. That's not on top of. It will be produced by Dalry at a slightly better cost of goods sold than we now pay for the intermediate, so that helps a little bit of profitability. Obviously, we will take a little bit as a sort of a second backup supply, but the CHF 30 million-CHF 40 million, that was also a little bit the idea behind it, that we do the pre-marketing so that we already have the capacity partly filled the moment that we start up the Dalry facility. You had your question on 200. Why is the plus? The CHF 200 million, above CHF 200 million is linked to the Dalry site.
Any other deals we do will then be additional ones, right? The additional deals will not be that we build a plant and sell. You will see a limited number of sales growth, but that goes one-on-one into your bottom line, right? The CHF 200 million plus over will be the turnover, and then we go into the different models of capitalizing on the value. Yep. We go back. We stay left or right for the room. No, ladies first. Sorry. Oh, but do we have only one mic?
No, no.
Oh.
I will put one there.
Oh, sorry. I didn't see. Okay, then I'm okay.
Thank you. I'm Lisa from Morgan Stanley. I just wanted to bring it back to your EBITDA margin and the question from Sebastian. You talked about that your margin would be driven by higher value opportunities. If you feel like your margin has already benefited from very strong growth in cultures and enzymes as well as in Fine Fragrance. It would be helpful to understand where these high margin sub-segments are hiding. I can sort of think of sun filters potentially, but it would be good to sort of hear that from you. Then secondly, a small question on HNC. You brought up during the Q&A on solution selling. How much of HNC today is solution selling, and how should we think about the opportunity there?
Where do you see cross-selling opportunities with your colleagues in P&B and TTH? Thank you.
Okay. Let's start with Alex, and then maybe also jump on how you improve your EBITDA by growing faster in your high margin, and then we do the same for TTH and P&B.
Broadly, roughly a quarter, as I mentioned, of our portfolio in HNC is vitamins differentiated vitamins. The 100 that Ralf mentioned on HMOs down the line, the rest is linked to solution selling. I include eye health in this, even though it's a B2C or a B4C, it is a solution to consumers. That, that's more or less what you would have. Your second question was on the cross-selling opportunities. We do have customers in common with TTH in particular. We do see opportunities that we have captured already of opening doors if it's a customer of TTH interested in broadening the portfolio into supplements or adjacencies, that is working and vice versa. Now, whether global or also regional players. This is a reality already.
Yep. TTH.
I mean.
Higher growth, higher margin.
Yeah, higher growth, higher margin. We grow the margin because we selected the portfolio in line with the high profitable business. The opportunity at the strategy I presented are all focusing on fast-growing, high-margin businesses. If you look at those I presented, the six, they are all high margin. We are quite good margin average at the moment, I would say. Through those investments, we will clearly get where we want to go.
Yep.
I'm quite confident about that.
It's gradual, huh? Because if you grow the upper end, it takes a while before that really has an end. If you do that a couple of years, then you do see the leverage.
Yeah, it's true. We made investment, for example, enzymes with, you know, we have the best expert in the room, Dirk, managing ingredients. We invested in Seclin, our major site, and in China, CHF 70 million, where we are expanding mega capacity or scaling up certain enzymes. This will bring just a very-
Yep.
Very high margin into the portfolio. Culturelle is another area where we're gonna grow substantially the margins, and taste is an average high-margin business. The more we combine the solution, the more we grow the margin in the mix of our portfolio.
Close with P&B.
You remember the slide where we show acceleration as a clear priority. It was about Fine Fragrance. It was about skincare. Where I put skincare is a part of beauty and care. Today sun filters is under recovery mode. You saw that quarter after quarter from a very big drop in Q1 2025. Gradually we improve this moving forward. I think the acceleration of Fine Fragrance and skincare will also help to increase our margin. Now, I think also a big bunch of the margin growth will come from the volume growth and the operational excellence. I did not insist too much before in my presentation.
You're right, in the field of perfumery, operational excellence sometimes is a bit difficult to be developed. It is really what we are doing as we speak. Coming together between ingredients and fragrance, to really make operational excellence being a reality. Thank you.
Does that help? Yeah. Now we go.
Thank you. Agne from Impax. A question on TTH, please. Some of your global customers have spoken publicly about various levers that they could pull to drive volume growth. It could be promotions, innovation, perhaps taking prices down. I appreciate that it's early days, but from your perspective, which of those have been most and least effective?
In TTH?
Yeah.
We, the most
You talk about customers?
Exactly. Your global customers.
Cool.
I would say the most effective at the moment for internal growth are the local customers. They are more agile. They address, they are closer to customers. Now, I never will count only on one set of customers because the consumers really are very close to A brands, and they love A brands. Maybe there are shifts in, let's say, a quarter or two, but then they always come back to A brand. You don't let the A brands go. In terms of driving growth, one element is bringing innovation, innovative solution, more healthy products. As we mentioned GLP-1. GLP-1 require a lot of work on, you know, when you work with the fibers of protein to work on the off-notes and balance the taste.
Like Alex was saying, you won't use medicine if they don't taste good, but the food is even more important. If the food doesn't taste good, you won't buy, even if it's the most healthy, beneficial food you can eat. Those are where with Sarah, we're working constantly, receptor-based technology, clean label through enzymes and cultures. That's where you generate the growth and the margins.
All right. Here we go. Yep. You're pretty lonely on the first row.
I thought I'd be part of the company. I'll give you my CV later. Giles Money from Allianz. Just trying to maybe one for Ralf, but the buyback philosophy post the CHF 500 million, there's a few moving parts. Obviously, I've got to think about the RCF, I've got to think about other things, but is there any chance you could just share some philosophy beyond that CHF 500 million?
Why, why the CHF 500 million?
No. Well, why that, and then afterwards, what are you thinking about?
Mm-hmm.
As an allocation?
Is there more to come?
Yeah. No, that's why I was asking, so. The CHF 500 million, obviously, it's always a bit of a balancing act where you look at where am I in my leverage. What's the target range that I wanna do? We communicated the leverage ratio of 1.5-2.5. I think earlier in the year I said, "Look, I'm comfortable being a bit more at the conservative side, navigating through." At that point, we didn't have the visibility on closing the transaction. While we were confident, as long as you don't have a signature, there's nothing you can do. That's why we also looked at why CHF 500 million.
We're always balancing around our ratios as well and looking at where are we from a rating perspective, while at the same time, keeping sufficient flexibility to navigate any circumstance that you come through. We are at a 1.9x leverage at the end of the year. I think that's a comfortable level, somewhere in the middle. That's why we're balancing. That's why we also said, looking at our capital allocation, next is that we wanna invest in the growth and its dividend. You do wanna give yourself space for M&A and then capital returns. While we also said, "Look, our task now is to focus on executing and upping the financial performance of what we've got," that opens the door for capital returns while keeping the metric in play.
We wanna have an efficient balance sheet, not a lazy one. That's why we also said, "Look, the CHF 500 million will keep us there." If you look at where I am today, I started with a 1.9. I'm gonna spend the share buyback. We're in the market as of today, so that's gone before I actually have to proceed. It's also navigating that landscape with the rating agencies 'cause I'm getting ahead of myself. Normally, my CEO would say, "Ralf, you should first get the money before you spend it." This is also showing us the confidence that we will be able to navigate through that, and that's also what we discussed with the rating agencies.
It's that balancing act, while at the same time saying, "Look, we will have an efficient balance sheet going forward, and through that lens we're gonna look at that.
Basically in short, I think we showed the evidence that we're not sitting on our money just to go. We clearly indicated M&A is not a priority. If you take the policy, my answer would be we cross that bridge when we're there. Okay. Also looking at a lunch to be prepared, but I mean, we're here for all of you. We can continue the conversation. Is there a final last question and then we move into lunch? I think it's worthwhile to spend the time. I appreciate all the questions and your interest. Is there any last question you want to raise in the plenary session before we go for lunch? No. The magic word has been lunch. Yet again, thanks a lot. We've gone through a lot.
Really appreciate that we took the time to go through. I hope you get the feel that we'll grow what we have with all what we have, anchor what we do, and deliver on the promises. Just not for one quarter, but consistently over the quarters, over the years, with a clear pathway to the type of company we want to become. Thanks for your interest and speak to you at lunch. Thank you. Quick follow up.