Ladies and gentlemen, thank you for standing by. Welcome to DSM's Conference Call on the Full Year Results of 2020. Throughout today's presentation, all participants will be in a listen only mode. After the presentation, there will be an opportunity to ask questions.
Now I
would like to turn the call over to Mr. Huysen. Please go ahead.
Thank you, operator. Good morning, everyone, and welcome to DSM's full year 2020 results Conference call. I'm joined on this call by our Co CEOs, Geraldine Metzuk and Dimitri de Vriese. Geraldine will give A short introduction, after which we will open the line for questions. As always, I need to caution you that today's conference call may contain forward looking statements.
You can find the disclaimers about forward looking statements published in the press release on our website. And with that, I hand over to Geraldine.
Thank you, Dave. Good morning, everyone, and thank you for joining us today. We appreciate your continued interest in DSM. I will provide a few comments on the key slides of the investor presentation that we published this morning together with our press release and then we will open the line for the Q and A session. And as a reminder, please note that following the announcement regarding the proposed divestment of our resins and functional materials businesses, We published our results on a continuing operation basis for since Q3 2020 And this is what we comment to unless otherwise indicated.
The full restatement will be provided in the integrated annual report 2020, which will be published Shortly. Now let's start with the financial highlights on Page 4. 2020 was an extraordinary year, as we all know, and one which presented significant operational challenges. Yet Throughout, we were determined to keep on delivering for our customers and we are proud that we were able to do this. Thanks to the commitment and resourcefulness of our colleagues around the world.
Against this backdrop and despite the strong negative foreign exchange effect, We delivered solid results. Nutrition performed well with a 6% organic growth and a 7% snip up In EBITDA, whilst our Materials businesses soar or negatively impacted by the pandemic With volumes for the year down 6%. Altogether, our adjusted EBITDA was nearly flat at minus 1% And our adjusted net operating free cash flow was strong, up 19%. Despite the operational challenges, we also continued to strengthen our long term growth drivers through, amongst others, 3 Specialty Nutrition acquisitions and the refocusing of our innovation platforms. Looking more specifically at Q4, on Page 5, our businesses performed in line with our expectations Despite the increasingly negative foreign exchange effect, Nutrition saw very good conditions and delivered a 9% organic growth With a 10% increase in EBITDA coming from Animal Nutrition, Human Nutrition and Food Specialties As well as a gradual recovery in Personal Care.
Materials saw a strong recovery in the quarter with volumes up 14%, A clear sequential improvement from the minus 6% in volumes in Q3. While we are of course pleased With this performance, it is too early to tell how much relates to stocking within the automotive value chain This is how much relates to sustainable improvement in global car build activity. As for the EBITDA for materials, We saw a significant improvement with from the minus 31% fall in Q3 To a minus 10% in Q4 versus prior year. Adjusted net operating free cash flow was strong in the 4th quarter, up 26%, driven mainly by the lower working capital and reduced CapEx. Now before looking in more detail at the performance in Q4 by segment, let me first comment on our positive outlook For 2021 that you will find on Page 6.
In 2021, we expect to continue to make Good financial and strategic progress owing to our strong Nutrition business model and the ongoing recovery in Materials. For Nutrition, we provide a clear outlook for the full year. Whilst for Material, given the economic uncertainty, It is more difficult to provide a definitive outlook at this stage. As a result, our outlook 2021 reads, DSM expects to deliver an adjusted EBITDA increase in Nutrition at the upper end of its mid term strategic ambition of high single digit Together with continued recovery in materials, DSM expects an adjusted EBITDA growth rate for the group Moving into double digits with a continued good adjusted net operating free cash flow. Now let's look in more detail at Nutrition in Q4 and to do that let's start on Page 10.
Overall, Nutrition delivered a good quarter with organic sales up 9%, Driven mainly by volume. Human Nutrition saw continued strong demand in dietary supplements and pharma. Animal Nutrition saw the resumption of good demand after the destocking of Q2 and Q3. Food Specialties had a strong finish to the year with strong demand in beverages and dairy And Aroma Ingredients continued to perform well, whilst Personal Care saw some improvement in the sun care and cosmetics when compared with previous quarters. Adjusted EBITDA increased 10% with the contribution from CSK, Glycom and Erba acquisition more than compensating a 6% negative foreign exchange effect.
And the adjusted EBITDA margin was broadly stable at 20.3% versus 20.2% last year. Now let's move to Page 12 for Animal Nutrition. In the Q4, Animal Nutrition delivered a good
7% organic growth, mainly volume driven.
With the Mainly volume driven. With the destocking completed in Q3, DSM saw strong demand in poultry and swine And a continued good level of beef exports out of Brazil. In addition, the negative effects of the African swine fever that impacted our results Last year, our receiving in China and DSM is well positioned to benefit from the resulting professionalization of pork production. As a reminder, in this quarter, we consolidated Erber, which gives DSM market leadership in mycotoxin prevention And consolidates our position as world's largest supplier of uBiotix for animals. Besides expanding our capability in diagnostic technology and innovative testing solutions, Other made a strong contribution in its Q1 within DSM, realizing €81,000,000 in sales With a total adjusted EBITDA of €18,000,000 Now moving to Human Nutrition, let's go to Page 16.
In the Q4, Human Nutrition and Health delivered 9% organic growth With volumes up 7% and prices up 2%. Dietary supplements and pharma recorded strong results In line with previous quarters, supported by elevated demand for immune boosting solutions since the start of the COVID pandemic. Food and Beverages also recorded again a solid performance, while early life nutrition sales were down On weak market conditions in China, Glykom consolidated since the Q2 delivered €14,000,000 in sales And an EBITDA of €7,000,000 with its development work with customers continuing to be hampered in Q4 by the pandemic, Leading to delays in product launches. Finally, our other nutrition businesses delivered a good financial performance in Q4, The details of which you can find on Page 18. Food Specialties saw very strong demand across most product categories, Including most likely some stocking effects.
CSK, the addition since the beginning of 2020 To our Food Specialties portfolio of paste, texture and biopreservation solutions for semi hard cheeses Saw a good finish to the year with a strong financial performance and the completion of the integration work ahead of schedule. As for Personal Care, we started to see some recovery in Q4, while aroma sales continued to be good, Supported by high demand for detergents and disinfectants. And finally, prices in Human Nutrition and Health for the Q4 We're up 2%, benefiting from lower levels of promotional activity in eye health. Moving now to Materials for Q4, let's go to Page 23. In Q4, Materials delivered a marked step up in activity with volume up 14%, Reflecting a strong improvement in engineering materials as demand from automotive strengthened, reflecting higher demand for car builds And stocking effects throughout the automotive value chain.
Protective Materials reported a 6% volume growth With personal protection activities continuing to be impacted by delays in orders from local authorities and governments Despite the healthy order book, EBITDA for the quarter closed 10% below prior year, A further improvement compared to the EBITDA drop of 31% in Q3 and the EBITDA margin in Q4 closed at 20%, Showing a good recovery compared to the 13% in Q2 and 17% in Q3. The lower EBITDA reflects the negative operational leverage caused by the lower volumes in higher margin specialties,
Great for questions. If I have one for questions, go ahead please. 1st question is from Mr. Matthieu of Bank of America. Go ahead please.
Hey, good morning everyone. A couple of questions please. The first one, about a year ago, I think you announced the Fit for Growth initiatives. I wondered if you could just give us an update on whether that was Fully implemented given the COVID disruption and if so, what results you're seeing from that program so far? The second question is specifically around infant formula.
We're in an environment, I guess, where global birth rates are pretty low. And you talked in your introductory remarks about perhaps some delays in new product launches. I just wondered if you could talk a little bit about How you're budgeting that category in 2021? And can you remind me what your relative position is with the domestic Chinese brands Versus the Bolch Nationals. But my understanding is that the domestic players seem to be gaining share in the China market at the moment.
Hi, Matthew. Thanks for joining the call. Sure, let's do that. I'll start with the first one, with Fit for Growth. So absolutely, if you remember Fit for Growth, we started actually in the middle of 2019, looking at how do we improve our go to market The structure within our Nutrition business after its big growth and the addition of acquisitions, etcetera.
The actual execution and implementation of it took place in the First half of twenty twenty and although we were in lockdown circumstance, etcetera, we did push through And continued and completed the Fit for Growth program, which was as much reinvesting in our ability to grow, if you remember, And then anything else. So Fit for Growth has been completed and we are now pretty much operating under that new structure. And maybe Dimitri, do you want to take the infant formula early life nutrition question?
Yes. Okay. Thanks, Matthew, Indeed, early life nutrition, we see lower birth rates, a bit magnified By COVID-nineteen and the uncertainties, but we'll certainly see that, that will go and that we will see normalized growth rates going forward. Overall, China, it is about 35% of the market with Chinese indeed taking A bit of share supported by the government. But let's see how this plays out because the field itself is still a premiumization field.
So This is not a volume game. This is really a value game where innovation is key and science is hardcore in that whole Segment, obviously, when we talk about babies in early life. Quality and reliability are key, and that is Certainly, where we do play, and we are an ingredient player in this field. So let's see how this plays out, but we are well positioned, certainly now With R and DHA and certainly the HMO ingredient added to that portfolio for our early life nutrition route to market.
And sorry, Dimitry, are you fairly agnostic as to whether it's the multinationals or the domestic Chinese who capture That growth? Or are you biased one way or the other?
No. I think today, our position is relatively small. We look at Where we play with our innovation card, the premiumization card. And we definitely will put on the radar screen on what has For today, I think we basically get an ingredient player to choose where we can and will play. And let's see after COVID-nineteen and when the uncertainty is gone, how the birth rates will pick up.
All consumers Look at premium quality materials. So innovation and also science backed up by that innovation is absolutely key for us. Thank you both.
Next question is from Mr. Mutluk Kundegon, ABN AMRO. Go ahead please.
Yes, good morning. Two questions. The first one is on nutrition. Can you give us an update on Nenter? Where do we stand currently?
Is the plant up and running? And what is the expected contribution to EBITDA in 2021? And then secondly, on Materials, obviously, a strong quarter in Q4 with benefits from restocking. And I understand that that makes Yes, it looks a little bit difficult. So perhaps can you talk about the volume growth so far in 2021?
Have you seen that Come down following restocking. Thank you.
Yes. Good morning, Madri. Thanks for joining. Yes, So Mentor, which is now Yamante, is progressing well. So if you remember just looking back a bit, There was a bit of delay.
We had to do the shutdown to upgrade the sites, which of course got caught into the whole COVID situation, particularly Whether given it's not far from Wuhan and there was also actually some flooding in the Yangtze River Valley. But the good news is that it got It's completed and in fact production has started to get moving. So we expect To bring material to market from that side as of about Q2. And we will see exactly the timing. We will adapt according to the market demand, the ramp up.
And we would see a contribution probably in the order well, it depends again on the ramping up, but between Maybe €10,000,000 €15,000,000 for the year.
Yes. And then maybe the question on materials from my side. Indeed, this is the €100,000,000,000 question, how much is restocking, how much is picking up demand. It's difficult to judge, but what we have seen is that it's definitely a restocking ongoing after Winding down the global production build rates in quarter 2 and in quarter 3, and you've seen also that reflected in our volumes with minus 21% in Q2 And minus 6 in Q3. It's a bit of repairing the value chain with filling the pipelines.
And you've seen that Now also the electronic into automotive is a bit struggling into the supply, and that is Certainly a supply chain issue. So I think a part of that is definitely filling the pipeline. We do see that quarter 4 into quarter 1, we do see January going more or less in that same rate, But it's very difficult to say how much is filling the pipeline. Remember that last time in the call, I said the value chain and the pipeline of automotive is very long. You have lots of different players.
And therefore, the pipeline filling is very difficult to judge, and it also depends on where are you in that value chain. So this could be a sort of filling the pipeline with will be erratic. And therefore, it's very difficult to say anything on 2021 Because the pipeline is relatively long for automotive. Nevertheless, we said, hey, compared to 2020, we do see a step up for 2021. But I would not pinpoint how much is refilling and how much is real demand.
Clearly, the value chain is too long to make a Reason judgment, if we could.
Okay. Thank you very much.
Next question is from Mr. Thomas Wrigglesworth, Citi, go ahead please.
Good morning. Thanks for the opportunity to ask a couple of questions. Just wanted to focus on Animal Nutrition. You called out higher premix sales Driving prices in the 4th quarter. In the order books that you're seeing going forward Actually, in your guidance that you provided, should we be thinking that this high crop price environment is going to drive Poultry and pig farmers towards optimizing feed conversion efficiency, maybe a bit faster than they have In a lower crop price environment, if you could talk a little bit to that and your expectations around that would be great.
And secondly, innovation pipeline, any updates there that have taken place through the end of the year, I know we discussed a lot about the Capital Markets Day, but very keen to hear how EverSweet is developing And any updates to the time line for Clean Cow. Thank you. I know the names
have changed, so forgive me. That's okay, Thomas. Sure. Let me maybe start with Animal Nutrition and then I'll hand over to Dimi for human. So yes, crop prices are clearly up.
And I think you will remember that for our business that tends to actually Mean more focus on how to get the best out of the feed. So indeed the conversion is important, which tends to then Lead to higher ingredient inputs such as enzymes in particular, but also eubiotic, probiotics. So We would see that the overall environment of higher crop prices to be supportive rather than a headwind. And the other thing of course that will be a bit supportive this year is the continued positive development on the African swine fever front. I think you saw that also in our highlights Where we're seeing the rebuilding of a herd progressing nicely and combined with some new laws on banning antibiotics, etcetera, It creates a favorable environment for Animal Nutrition going forward because effectively Q4 last In 2019 was the low point on the African swine fever part.
And let me just wrap in a bit of news on indeed Boverre, the new The branded part of PainCow. So here what we're seeing is the fact that we're progressing nicely with ESSA. Time line remains quite similar. So we expect to get registration hopefully in the second half of this year, which would Open the path for commercialization as of 2022. And we've actually had some nice Announcements to make around this, including a collaboration agreement with Fontera that is launching some dairy products, Which are carbon neutral and really looking at how to lower the carbon footprint of the dairy chain.
So that's Really nice because as you know, New Zealand was always a country that was very interested in this, but it was taking a bit of time. So that's really great. Also a collaboration agreement with Valeo, that's the leading dairy group in Finland, where we're also going into much more intensive trials. They're looking to basically bring their milk sector to carbon neutral. So carbon neutral milk By 2,035 is their target and they see us as being an important part to that.
And then we also had a nice outcome of trials In the Netherlands recently where they tested with different seed compositions, different inclusion levels And that reconfirmed for the end time the fact that the reduction in methanes were between 27% 40%. So if I add to this a very large trial in Alberta on beef cattle, I mean that was actually involving 15,000 cattle And that also confirmed very high reductions in methane. This continues to build what was already a very strong file in In terms of the efficacy and effectiveness of Bover on methane. So very positive And then of course what is helpful as well is the backdrop against this, against which Boveri will come to market. If you look at the EU Green Deal, the climate law, now the change in administration in the U.
S. With them stepping back into the Paris Agreement, We're seeing a very receptive environment. So now we really want to get that ESSER clearance done.
And let me highlight the innovation part from Bover to Avansia, the ever Sweet. Like we said, this experimentation scale up is going as planned very successfully. We also said that we had A few launches being tested. I'm very happy to say that we've been successful at what we call the and they call it now seltzers, hard Seltzers, which are basically sort of alcohol free, alcohol white possibility as an alternative to beer. So you see that beer companies I'm trying to enter that category.
I think Heineken just launched it last week as being a key part. We've seen a few other beer companies. And Avonsia and Ebersheet is absolutely playing a key role there as a low calorie sweetener. So that has been confirmed. I think there There's market pool ongoing together with the ramp up on the scale.
Remember, it is a unique setup with average week having Sort of a neutral taste and confirmed scale up capability. So if you launch a brand, you want to make sure that if the launch is successful, That the materials can be delivered, the ingredients can be delivered, and we have both in place. So I think some successes last year, And we've definitely on the growth path. I think we mentioned during the investor event that this is already business of a few tens of millions, And we're looking forward for 2021 to continue that drop.
Thank you, both. Very helpful color. Thank you.
Next question is from Mr. Martin Roediger, Kepler Cheuvreux. Go ahead please.
Yes, thanks. I have three financial questions. Number 1 is on, basically, Nutrition. You had 10% top line growth and EBITDA growth also of 10% in Q4. And therefore, the margin was up by 10 basis points year over year.
Can you talk about the leverage in Nutrition? Because In the past, I remember that we had such a high top line growth and your EBITDA margin was expanding much stronger. Secondly, on the underlying depreciation and amortization charges, It's clear that the key driver for the sequential increase in D and A is the consolidation of Airburn. But is there any other item which caused this sequential increase of EUR 26,000,000 in Q4 versus Q3? And then finally, I see that you had significant write downs or impairment In Q4 of €101,000,000 can you explain what has caused that item?
Thanks.
Yes. Hi, Martin. Let me start with the 2 finance ones and then I'll come back to the Nutrition margin that will probably be a bit There's more pieces to that. So when it comes to depreciation and amortization, you're absolutely right that we see a step up In that expense now, it's good to remember of course over prior years that we have IFRS 16 in there, But the step up comes from the PPA. So sorry, from it's a jargon, from purchase price allocation on acquisitions.
So here I think it's good to say that we probably including the PPA are looking now at about €165,000,000 per quarter, Reflecting about €20,000,000 relating to those amortization of intangibles, acquired intangibles. So that is on depreciation and amortization. Now on the impairments, absolutely correct. So what we booked in Q4 are a couple of impairments. On the one hand, linked to the resins and functional materials divestments, what we had is within the scope of discussion with the solar business.
Now Covestro took the solar coatings business, but they were less interested in the backsheet. Now what we did within Q4 was to have a look at The market condition, market developments, etcetera. And as we always have to do, we run an impairment test and we had to impair The remainder of the solar business, but to be fair, that was already expected when we closed the deal with So this doesn't this is actually factored into the gain on disposal that we estimated when we communicated the divestment Financials. So that was about half of the impairments and the other half is linked to DPNS, so bio based products Now if you recall, the joint venture we impaired earlier in the year due to the weak market conditions in biofuels That we don't foresee to improve in a hurry some technical issues with the downstream processing. Now what we've done as part of the full year impairment reviews is we've also looked at what we had on the balance sheet as DSM Relating to biofuels.
So here we are talking about some of the yeast and enzyme second generation R and D that was done over the years And seeing the prolonged difficult market conditions, this led as well to an impairment Of those assets on the balance sheet, which is the other half. So both of those have been booked in Q4. And then Nutrition, in terms of the margins, now indeed what you're seeing is Broadly a stable margin in the quarter. Now Q3 to be fair was an outlier at 22%, It's probably best to look at the full year margin for Nutrition. And here what you see is that we are at 21% versus It's 20.7, so 30 bps up.
And if you recall from our expectations around Nutrition If we would be above 20 and then with some upside coming from the mix, whether it be innovation, whether it The M and A, etcetera, but there are of course a lot of moving parts in there. And this is sort of in line with what we would expect to see our Nutrition business Evolve towards which is a gradual increase in margin of 30, 50 bps per year.
Thank you.
Next question is from Mr. Segun Yudeshi, JPMorgan. Go ahead please.
Yes, hi. I just had one question just around the there is a lot of News flow anecdotal data suggesting a lot of disruptions in the whole shipping channels, especially between Asia and Europe And U. S, and I'm just wondering if DSM has seen any impact from that either positively Or negatively in your materials or probably more in your nutrition business given the shipments of The demands that usually happens from China to rest of the world.
Yes. Sure. Why don't we take that, Jimmy?
Yes. Let me take that one. So we do see disruption in the world of container shipping and freight rates going up, But it's predominantly on spot rates. As you would expect, we as a company have long term contracts with shipping companies. So It is not directly impacting us on the operations, although we absolutely alert on when the shipping is being contracted and we bring stuff Across the globe.
So from that perspective, no. But we do see disruption and insecurity from good flows And all types of people in the value chain do see insecurity ongoing. Coupled with the fact that you see Chinese New Year Coming, which is always a bit of a supply chain nightmare the month before. So that has escalated this all insecurity around it. I personally think that this will normalize again after Chinese year is over and people are ramping up.
So This has more a short term volatility effect, and we need to absolutely be keen on. But I can assure you that by contracting what we have done on the freights, We can continue shipping what we intended to ship. So it's a bit of a volatility in insecurity for the spot rates. Nevertheless, I think it is not helpful in creating a more secure supply chain going forward.
My question was more besides just the freight rates, have you seen any impact on the demand for DSM products, given that you guys are the few who produce Some of these vitamins outside China. So are you seeing some better demand from customers in this environment where maybe the shipments From China might be disrupted in general.
Yes. So I think the demand itself will not go up if Freight rates are going up or whether it's insecurity on the supply. What you do see is that there are interruptions from one player to another. And as we are a global player, we do see the interruptions, but we do only see that for the short term. And at the end of the day, it is smoothening out.
So No, we've not seen a huge impact on us. What I say is we see insecurity and volatility popping up because there is a bit of spot behavior ongoing. So that is not helpful in creating a bit of a secure supply chain. But no, we've not seen a huge demand going up Because there is a scarcity in freight.
Next Question is from Mr. Andrew Stott with UBS. Go ahead please.
Yes, good morning, Geraldine. Good morning, Dimitri. Two questions. First one is on the nice problem you're going to have in the next few months, I guess. So Once you've got that cash from Covestro, you're going to have a reasonably inefficient balance sheet again.
Can you just remind me of what your priorities are for 2021? And where the capacity is For the yes, I'm thinking management, not just yourselves, but divisional level as well about the ability to do more deals in the short term if that ambition is there. That's the first question. The second question is much more detailed around your Nutrition performance. The Others business, saw what seems to me like a crazy number, So 15% organic growth in Q4.
And I think you're referencing restocking in Food Specialties as one of the key things behind that. I
Thanks, Andrew. Let me start with the first one. So maybe a couple of words on the balance sheet. So indeed, we closed the year with a net debt of 2.6 €1,000,000,000 started the year with €1,200,000,000 which is a delta of €1,400,000,000 which Basically reflects our spend on acquisitions of about €1,500,000,000 and the share buyback. We did about €145,000,000 in 20 So that brings us to €2,600,000,000 and then of course we will get the proceeds from the divestment which are Actually about €1,400,000,000 So it brings us back to €1,200,000,000 Now I wouldn't say it's a grossly inefficient balance sheet.
I mean, when we announced The €1,000,000,000 buyback at the time we were net cash. So it is a slightly different situation. But you're right, that does give us Financial capacity to continue to invest into our future growth, which is great. I think your question was actually towards the organizational And we are very mindful that of course on the one hand we have to complete the carve out, but we also need to properly integrate CSK now is done, but we're still partly doing glycom and clearly, Erber, we've just celebrated the 100 days. And so there is quite a bit going on.
So we are in no rush in terms of having to deploy this fast And we want to be sure, like we've always been very disciplined on what we acquire, we also want to be disciplined in terms of not overloading the organization We have too much to be done. So we'll see how we go. But of course, looking back, we are very happy with the Three acquisitions that we did, particularly and it's important to highlight that they were in different parts of the organization. So CSK in Food Specialties, Glycom in human nutrition and urban animal nutrition, which also has spread the load in terms of the burden of integration. So that's broadly how We go into the year.
And, Ymir, do you want to take the other nutrition?
Yes. The other nutrition, I mean, If you say, all the nutrition, it looks like, ah, we have something on the site. Absolutely not. This is a core segment to us, but it has about 3 segments. And give me let me Try to give you some color on these three segments.
1 is food specialties, the other was personal care, and the third one is aroma. And What we've seen on the food specialty side, we saw indeed demand for savory and dairy was very good throughout the year. And Q4 saw a very strong demand across almost all product categories with certainly some stocking effect into that, and you've seen that In the number for Q4. In personal care, remember that they were impacted by COVID throughout the year, but we saw A start of a recovery in quarter 4, especially in the sun filters and cosmetics. And the third one, the aroma ingredients, Be aware that your raw ingredients are also linked into hand sanitizers and all has to do with cleaning.
So part of that It was really helped, and we saw strong demand for household and laundry goods. So you saw three elements of which some recovery in personal care, aroma being strong And food specialties being strong, but also with the extra stocking effect creating a very good quarter for. For the full year, This whole setup was around 3%. So I think if you rate it for the full year, I think that is more in line than an exceptional quarter
Okay. Thanks. Do you mind can I just come back to a comment, Geraldine, you made on use of balance sheet? If you're not in a hurry to do deals, is a buyback another option? Or are you just happy To continue to focus on organic growth only?
Yes. I mean, if you look at, firstly, the current market environment Still have a fair amount of uncertainty. So I think pushing leverage for the sake of leverage is probably not wise. We also do have a lot of ideas To where we could deploy a very valuably this capital to boost our growth. So our intention is, As we always have with our capital allocation prioritization, support organic growth, obviously, honor our dividend commitment and then Invest where possible in M and A.
And so that very much is our mindset. So now very little intentions of giving any cash That would have to really come on the back of not seeing sufficient opportunities, which is not the case right now.
Thanks, Geraldine. Thanks, Dmitry.
Next question is from Gunther Schachman from Bernstein. Go ahead please.
Hi, good morning, Geraldine. Good morning, Dimitri. On the Materials business and the uncertainty around the outlook into 2021, Can you just talk about the order book and how visibility has changed over the course of the last year? And secondly, Have you seen or are you expecting to see any impact from the semi shortage in that business?
Yes. Thanks For that question. Indeed, visibility, I think, is still difficult. That's also why we were not giving a precise outlook. Certainly, with the destocking restocking effect, it's very difficult to judge what the real markets are doing.
So That is difficult to give some color around. What we can what we do see is that What we see in the automotive piece is that automotive and electronics are coming together. And I think strategically, We have already indicated in our strategy a couple of years ago that we think more in terms of mobility, mobility and connectivity as the new segment, which Merge more or less electronics with automotive. And it's very interesting to see that the last couple of weeks that has been spelled out because the chips and the semiconductors Going in those two spaces and today, the new electrical vehicles are more driving connectors or driving computers than anything else. So We do see that there is a bit of disruption.
But as we play in automotive as well as supplying almost all Electronic and mobile companies in the world, we basically are not being impacted. But we see some disruption. But I think the automotive world in itself with the long value chain has time to adjust. So if this takes longer, most probably will have more structural effect. But we do see if you fill the pipeline, you always see a bit of disruption going through.
So I don't think this is structural. But hey, if you go back to a bit of normalization, It will go with some volatility going forward.
Thanks, Dimitri.
Okay. Operator, then we have time for one last Question.
Yes, sir. The last question is from Mr. Sebastian Bray from Berenberg. Go ahead please.
Good morning and thank you for taking my questions. I would have 2, please. The first is on the Innovation segment. What is in here now? Is it the Kensey Nash plus an allocation for R and D?
Or how has that gone? Is there anything related to biofuels left in there? What I'm trying to get at is, is from EBITDA margin shown a reliable Guide to Kenzie Nash, what are the factors that might change this? My second question is on potential other sources of capital. Prior to about 3 years ago now, DSM divested part of its Caprolactam assets to High Sun.
And at that time, from memory, there was a composite resins business stake as well as one in acrylonitrile that was held jointly with CVC. What is the book value that these assets are held at? And could you perhaps give us an idea of the sales and EBITDA from these and EBITDA divestment is on the cards, Given that multiples in the chemical sector are quite high at the moment? Thank you.
Hi, Sebastian. Thanks Your question. Let me start with the innovation center. So indeed very fair question, what is left in there? So it's Probably good to remind everyone that we have our biomedical business in there, which is broadly about €150,000,000 in sales And delivers about €40,000,000 in EBITDA.
So that is a quality business. It has suffered a bit last year Because of elective surgeries being postponed because of COVID, so we will expect a nice Recovery in 2021. Now if you look at the EBITDA of the Innovation Center for the year 2020, you see the €21,000,000 And that is netted out by a combination of other activities. Partly we had BP and S in there with the license income, But some losses on the solar business, so put together that's about 0. And then we have what we have our shared Innovation supports expenses, which include our IP, venturing, incubator, etcetera, which is also netted in there.
So What we will see going forward is partly a strong performance in biomedical and a step up In some of our other activities. So that's in terms of the P and L. In terms of the capital employed, you see there a reduction and that is predominantly linked to biomedical now. So following these impairments that I commented on earlier, The 436 is for the vast majority biomedical related. So hopefully That provides some guidance there.
And Dimit, do you want to talk to the associates?
Yes. I think what we do see is that we still have Minority share in our Acheron Live Trial business that is Encore together with CBC. Like you said, minority share is that it's not key strategic to us, and we're looking at options to add value. And we certainly have, as one of the options, to step out over time or to go with a buyout over time. It's not critical for us.
We're looking at it from a value adding perspective together with the CVC. And like we said, we are a minority shareholder. The same for composite resins. Composite Resins at the same time, I think 1.5 years ago acquired the AOC resins business. So this is a €1,000,000,000 business in total.
We have diluted our share there. And over time, we will also exit that business. It's just a matter of Value generation for DSM. So it's a timing issue going forward, like we've done on many of our divestments. And I think we've done that Very well in the past, and we'll try to do the same for these two business going forward.
Thank you for taking my questions.
And for the valuation you find in the balance sheet, the share of associates and joint ventures is about €90,000,000 in there and that includes Those associates, so these are not very big balance sheet positions.
Thank you. Okay. That brings an end to the Q and A for today. Dimitri, do you want to make some closing remarks?
Yes. Thank you, Dave. First, as Jolynn already mentioned, I want to express once again how proud we are of our colleagues at Petersen, Without whom, we couldn't have realized these good results in this difficult environment. Besides closing 3 acquisitions, 1 divestment And also delivering against our purpose led sustainability ambitions in people and planet. It goes hand in hand.
On the latter, On the sustainability topics, I would understandably say a few things on the pandemic situation. A lot of people would thought that we would let go of it. However, We did not. And I would remind you of our highlights on Planet and People, which you can find on Page 27 of the presentation. We are continuing to make strides toward net 0 by 2,050, not only towards the end of the 2,050, but certainly already year after year Today, we improved our greenhouse gas emissions along with our key suppliers.
Our energy efficiency has improved by almost 6% compared to the previous year, Above our own annual ambitions, and we also have stepped up our renewable electricity purchase to now 60%, six-zero percent. And I'm also personally very proud on our safety performance. Our safety frequency recordable index Has improved year on year as well as our employee engagement index in the COVID-nineteen year of 2020. And this was supported by a launch of several initiatives in the year despite the pandemic. We also look confidently at the medium and long term growth Prospects of our company and Nutrition will maintain a strong growth by building on its global products, local solutions with an additional 3rd lag, precision and personalization.
And in materials, we expect to continue the development of a more resilient, higher growth, high margin specialty business, Amongst others, by adding further bio based and circular solutions. And with that, back to you, Dave.
Okay. Thank you, Dimitry. This concludes Today's conference call. If you have any further questions, please don't reach out to me and my team. Thank you.
Operator, back to you.
Ladies and gentlemen, thank you for attending. This concludes the GSM conference call. You may now disconnect your line and have a nice day.