Good morning, and thank you for joining today's call. I'm sitting here with Dimitri de Vreeze, our CEO, and Ralf Schmeitz, our CFO. We published this morning not only our full-year results press release and the presentation to investors, but also a press release with our announcement on the separation of the animal nutrition and health business from the group. You can find these three documents on our website, where you can also find our disclaimers for, for instance, our forward-looking statements. After the presentation by Dimitri and Ralf, we do a Q&A session. Sell-side analysts who want to ask questions have to register via the questionnaire link, which they can find on our website in the financial calendar. If they've not done it yet, you can still switch. With that, let me hand over to Dimitri.
Thanks, Dave. And indeed, welcome to all, 2023 for the next scenario year. Extremely proud that we have created the global leader in nutrition, health, and beauty, and I have to say that our teams work really brilliantly together. I think we've made a huge step in integrating at DSM-Firmenich. You've seen that in the early benefits of cost and sales at the synergies, and you've seen, in this, extraordinary year of 2023, solid financial performance across the businesses. However, this was impacted by unprecedented conditions in the vitamin market as well as negative FX effects. We took immediate actions, as we have communicated. We took actions on accelerating the integration as well as the vitamin transformation project. And today, as Dave alluded to, we announced the separation of our animal business, today, and we will bring a little bit more color into that later.
Reflecting our confidence, we propose a dividend of EUR 2.50, which is in line with previous year, when our full-year 2024 outlook says at least EUR 1.9 billion, which assumes, at this early stage, only our 2x EUR 100 million EBITDA contribution projects from merger synergies, mainly costs, and the vitamin transformation part, building on an underlying effective prior year-end rate of EUR 1,700 million. If we then go to the next slide, I want to lead you through a little bit what we presented before and to give you a bit of an update on what we see today. So on the macro front, we still operate in a tough environment, with weakness in China and unprecedented dynamics in, in vitamins, although we have to say that we do feel that that is at its trough. We'll put a bit more color on that later.
We see normalization of input prices, although some of the input prices are still going up on the natural ingredients. Some normalization is definitely happening. Destocking, the quiz, big question out there, and maybe some normalization will follow. We took actions on this macroeconomic condition and not relying on the recovery by taking swift actions on the micro, for improving our performance. One is the acceleration of the integration synergies, and I have to say we've done that. You've seen that in quarter four, about EUR 20 million effect, which helps us then EUR 100 million for 2024. We started the vitamin transformation project only in June, July, when we announced it, and you've seen already some effect in Q4 with EUR 100 million effect for 2024.
W e've promised you that we will focus on cash, and I'm extremely happy that we showed that predominantly in the second half, with a very good quarter four, where we came in at EUR 999 million. I'm still trying to convince Ralf to make it a billion, but he sticks to 999. He's sitting next to me. But hey, in that sense, also, okay, what's in the last million? We've also said that taking swift actions on, on performance improvement will also accelerate the strategic review to strengthen our portfolio due to these macro, macro circumstances. And we have announced this morning that we will start separating out ANH because of the volatility in the vitamin space, as well as the higher capital intensity, to keep that network up and running of sites and premix locations.
And having said that, with all these actions in place, you see that we definitely have a strong future ahead with animal nutrition and health more focused on the sustainable farming part under a new ownership structure and DSM-Firmenich with the focus on really consumer ingredients with their very synergistic three business units playing, which was also part of the announcement during the merger, of which the EUR 500 million revenue synergies were coming from these three business units. Let's move on to the next slide to give you a bit of color on the integration part. Where are we? We've operated accordingly with the operating model which we have defined already for six months in a row, and we have implemented and operating accordingly very successfully with swift actions and geared towards the route to market, towards our customers.
We have started synergy delivery with the first EUR 50 million contributed in Q4. We have top line filling up the revenue. We'll have a separate slide on that. Very happy to see that the pipeline is filling, and we see some cross-selling going forward, but more importantly, we're really filling the EUR 500 million revenue synergy as we speak. And last but not least, I think we've seen many mergers stumble over values and behaviors and cultures. I think we've done a fantastic job on that, merging two companies with a clear focus on building something which is a leader in nutrition, health, and beauty. And I'm very proud to say that we do an annual employee engagement survey, and we've done that yet again in January to get a pulse on what's happening in the organization, how they feel about it.
And I'm super proud to say that the engagement score for DSM-Firmenich was 80% in these difficult macro circumstances with integration ongoing, with the vitamin transformation ongoing. Having an engaged workforce with 80% plus score is quite an achievement, and I see that as a, a huge plus for building DSM-Firmenich into the future. If we then go to the synergy track, so the next slide, a bit of background on the synergy delivery, very much well on track. Just as a reminder, EUR 350 million bottom line, EUR 175 million on the cost side, EUR 175 million on the revenue side. Let me just speak a little bit to the revenue part. You see that on, on the monitoring of the biweekly. This is something where Ralf and myself are, are very close to. We're tracking building up the pipeline.
Remember, EUR 500 million top line revenue, and I'm very happy to say that last week we've passed the EUR 100 million pipeline filling for TTH, which accounts for about 60% of the EUR 500 million, and it's ramping up as we speak. So we're building confidence that this is, this is going to deliver as we promised. I know that some of you have some skepticism around it, but, I will, I will show that the pipeline is filling and that we realize. You also know that with the brief machine, it takes a bit longer to have that effect. So we will see some effect in 2024, but the full effect will come in 2025 and 2026. To give you a bit of, of, examples, if you go to the next slide, for example, it's in your pack just to, to see.
For me, a very important one, the shampoo with concept hair care. This is for the Asian market. It basically has a healthy ingredient in the hair care shampoo, and it prevents hair loss. You don't see it, but I definitely, definitely do need it. The active ingredient in this hair care is something which brings DSM-Firmenich together, and that is really amazing. And then maybe you see it also there, the Melody Yogurt, for some, some of you who were there at the Geneva teach-in session, where you tasted this low sugar component on yogurt. We're now working on that and, and really launching this, this Melody Yogurt in the Middle East market, where with the lower sugar content, you still have the taste and the flavor of DSM-Firmenich.
You have the mouthfeel with the hydrocolloids of DSM-Firmenich, and you will have culture and enzymes with vitamins from DSM-Firmenich, which also makes it healthy. So quite a unique combination and a nice example of how the synergy is kicking in. We then go to the next slide to give you a bit of background on the vitamin transformation programs. I'm switching now from the integration program to the vitamin transformation program. Also there, swift action. You already see an effect in quarter four with about EUR 10 million, with EUR 100 million for next year. You do see that we have closed vitamin B6 line in Xinghuo. We have closed vitamin C plant in Jiangshan, or at least the part of impacting DSM-Firmenich that is happened as we speak. We have extended shutdowns and accordingly also a reduction of headcount.
We have simplified our route to market, and you've seen that predominantly on the cash, really, really pushed through also on the stocks and delivered the cash as we have promised. So vitamin transformation is up and running, very confident that we can bring in the EUR 100 million for next year. If we then move to the next page to give you a bit of background on the why of the separating out of animal nutrition and health, we originally had planned for the portfolio review in 2024. However, given the market dynamics, we have accelerated this process, and as a direct outcome of that analysis, we think it's best positioned separately on a new ownership structure. It's a fantastic business. It has a, a global market leading position going forward. It has a complete ingredients position.
Obviously, with vitamin sites and premix, which require a more capital-intensive part of our business, it also has a different dynamic with feed costs, animal protein demand, and prices with a bit more volatility. Remember, in the past, we always wanted to reduce our exposure to vitamins. We've done that from 45% in the past in the old days to 25% before the merger into 15% exposure of sales in after the merger at DSM-Firmenich. And we'll make another step with the separating of Animal Nutrition and Health. So very much in line with the strategic reasoning. It also helps to focus on the three business units into the consumer ingredient space, a really focus for growth where, as you've seen, the revenue synergies come from perfumery and beauty, taste texture and health, and health nutrition and care initially as part of the merger.
By focusing on that consumer ingredients company, I think we can also accelerate and increase the probability of success as that company. So two fantastic adventures going forward, one more into the consumer ingredients, one more into improving sustainable farming for the world. Then go to the next slide. Just wanted to repeat that our purpose and value remains there. We are here for a reason, bringing progress to life with the three business units at DSM-Firmenich geared around the human space, consumer ingredients, create nutrition, health, and beauty, wellbeing for humans. And on the other hand, the way for Animal Nutrition and Health to grow their business, to create sustainable farming for the world and by different ways bringing progress to life. And with that, I hand over to Ralf for some background on the financial performance. Ralf.
Well, thank you, Dimitri, and a warm welcome also from my side this morning, and happy that you joined us in our call this morning. Let me talk through the financials of the group. Let me first overall summarize where we are. So overall satisfied how we landed the year. When we last met, it was at the back end of Q3, and we guided for Q4. We've seen similar business conditions traveling into the quarter, and we see continued good performance in Perfumery & Beauty and Taste, Texture & Health. Also, we've seen the first benefits of the programmes coming through, as highlighted earlier by Dimitri, which is a satisfactory performance as well. We're very pleased with the cash performance. We've seen working capital come down, and I'll comment on that in a little while as well.
Overall, happy how we landed the year, and that sets us up for 2024. Let me zoom in a bit in the financials. We start on page 11. Here we see the top line overall, and here you see that we're impacted by a challenging macro, impacted by a vitamin impact, and that has translated into an impact on the top line. Overall, we see a decrease of about 5% in top line on a like-for-like basis, which is driven by the vitamins, characterized by low pricing and low volumes, which I'll comment on in a second. We see a continued good growth in perfumery and beauty and our taste texture and health business. The vitamin impact is predominantly impacting in animal nutrition and health nutrition and care. Now, obviously, that had an impact on the bottom line as well.
You can see that at the bottom of the page, we did see a step down in our EBITDA performance driven by an impact from exchange rates. We guided for about EUR 90 million, and that's where we landed the year. Also the vitamin impact of EUR 500 million came in line with forecast. That vitamin impact is built up on a couple of components. It's driven by unprecedented low pricing in some of our vitamins, coupled with a decrease in volume. We also right-sized our production capacity as we started prioritizing cash, as we said in Q3, also reflecting in our strong cash performance in the second half.
If you put that aside for a minute and you back out the vitamin impact of our vitamins, you actually see an underlying step up in EBITDA of about 4%-5%, driven by, on the one hand, the contributions of the program kicking in. Dimitri, you alluded to that earlier, about EUR 15 million from the synergies and about EUR 10 million of the vitamin transformation, coupled with an organic growth performance in the other business. So there we see continued growth and step up in EBITDA. Maybe zooming in on the business, if we move to the next page. And we start with perfumery and beauty. Overall, a strong performance in perfumery with fine fragrance showing good growth throughout the year, and that continued into the fourth quarter.
Consumer fragrance also showed a very strong growth in 2023, especially in the second half, driven by higher inclusion rates for our ingredients and coupled with price where we continue to pass on the inflation into our pricing. Ingredients remain weak on the back of low demand in our industrial applications, where you also have to factor in the closure of our Pinova plant that we lost earlier in the year on the back of a fire. That combined translated into an organic growth of about 1% in Perfumery and Beauty, whereas if you back out the effect of the fire, the growth for the year was 3%, again, with different dynamics in Perfumery and Beauty, in perfumery, coupled with the weaker demand in industrial. That has translated into a good performance from a profitability point of view.
If you look at the overall step up in perfumery and beauty, you actually see a step up of 5% in EBITDA, which is net of an FX effect of a negative 6%. So the organic performance is actually very strong in the year. We also brought the margin to above 21% in the year, a step up of over 1% versus prior. And especially the margin in the second half at 22% is encouraging. Then if we look at our taste texture and health business, following a double-digit growth in 2022, it's encouraging to see that overall top line on a like-for-like basis came in line with prior year. Here also a story of two tales.
We see continued good performance in our taste part of the organization with solid growth on that front, coupled with a weaker ingredients where we deliberately walked away from some low-profitable business and obviously a small impact from the vitamins as well. You see that business part continue to be impacted by the destocking at our customers, as we highlighted before. Overall, that translated into an organic growth of minus 1% in TTH. Also here, if you look at the profitability, we focused on profitable growth. Here you see also a double-digit organic step up, obviously partially set off by a vitamin impact in taste texture and health. Combining that, that still shows a 6% step up in the underlying performance on a like-for-like basis versus prior year.
Obviously, also here we have a small negative impact from our VIX, still netting off in a step up in EBITDA in the year. Also here, we've seen improvement in the margin. We also improved the margin by over 1% in Taste, Texture & Health to above 18% for the year, which is a good improvement as well. Then a few words on Health, Nutrition & Care on the next page. Here we see volumes down 6%, where we see consistent destocking and basically softer consumer demand. And despite continued good pricing, where we continue to pass on inflation to our customers, that translated into an overall organic growth of -4%, where dietary supplements are very much impacted by a shift in consumer spend, where money is allocated to different categories, and we see a reduction there, predominantly in the U.S.
We're also working through the normalization of the pre- and post-COVID impact, where we saw a boost for our products on the back of the drive for immunity-boosting supplements. Also in early-life nutrition, we highlighted that before on the back of historically low birth rates and continued destocking in that space. We saw some decline in that part of the business offset by continued strong growth in eye health and biomedical. Eye health was particularly strong in Q4, and biomedical continued to perform very well throughout the year. Here you also see an impact from vitamins, predominantly impacting dietary supplements. And that is also having a reflection in the bottom line performance of our Health, Nutrition & Care business. Overall, the decline in EBITDA is very much linked to the exchange rates and the vitamin impact in this business.
Then lastly, turning to animal nutrition and health on the next page. Despite continued good demand for animal protein on a global basis, the market is still very much impacted by weak economics for our farmers. And that has basically led to a continued destocking of our essential ingredients business. This has led to unprecedented market dynamics in the vitamin space. We highlighted that before, and that is obviously shown in the overall negative organic growth of 13%, which is driven by volume and prices. The weak demand has dropped down pricing to an unprecedented and unhealthy level for the industry. We're addressing that. We launched a vitamin improvement program that is giving us a contribution in the fourth quarter to also address that part. At the same time, we see a continued good performance in our performance solutions business.
I think they were offering great solutions to our customers, and that has actually seen a very strong growth consistently throughout the year. We're very pleased with that development in this space. Now, given the size of the vitamin impact, we sized it around EUR 500 million for the group. About two-thirds of that is actually landing in animal nutrition, and that you can see also at the bottom of the page, predominantly impacting the drop in EBITDA in animal nutrition, both in an absolute EBITDA and into a margin effect for the year. Looking at the dynamics of the last quarter, Q4, so let me also share a couple of words there. There we saw essentially unchanged conditions versus Q3, where we see a continued destocking. We also continue to focus on cash performance.
Overall, we delivered a quarter of EUR 440 million, an encouraging step up versus Q3, on the back of also the benefits from the programs contributing to the performance. Overall, we need to turn the page, sorry, on the next page, I apologize for that. Yeah, here you can see it. So overall, we see continued good growth in Perfumery and Beauty. That has continued to perform well. And ANH and HNC have a similar impact as we've seen before, although we see the benefits of programs kicking in now. And that, coupled with strong cost control, has delivered a quarter in line with guidance. Then turning to the next page, how does that all translate into the rest of the P&L? We guided earlier for an earnings per share of around EUR 1.90 a share. We came in at a little over EUR 2. Pleased with that.
If you look at the various lines making up the earnings per share, I think largely in line with the guidance that we provided. A positive surprise here is the lower financial income and expense, where we were anticipating some unwind of energy derivatives, and that materialized. So we're coming in a bit stronger there. Also, we saw some of the impact actually being recorded as an APM item, giving us a bit of an upside on the earnings per share as well. We were a bit conservative in our guidance, but pleased to see that that came in a little stronger as well. Then turning to cash. I highlighted that at the beginning of the insights around financials. Pleased with a very strong performance in the second half. We did a rebound on the back of H1.
Our cash conversion in the second half was over 80%, which is a very good performance. That actually brought the full year to just under 60%, which is a presentable performance as well. We want to continue that going forward. Key driver for that is the improvement in working capital. At the half, we commented that we were at an elevated level of 34%, and we committed to bring that down. At the end of the year, we're down to a level of 31%. That is something that we will continue to improve, where we continue to make trade-offs and prioritize cash in some parts of our business, given the dynamics that we're in. Overall, we saw a strong reduction in inventories, so we landed the year just below EUR 3.4 billion. I said that my target was EUR 3.3 billion.
When adjusting for some last the FX effects in the fourth quarter and some consolidation effects, I think we came very close to that target. And that makes us confident that in the objective that we set also for 2024, that we will be disciplined in taking the actions to drive for further improvement on that front as well. That all led to a proposal for stable dividend of EUR 2.50. Now, with that payout, we're above the policy that we set of distributing 40%-60%. Now, 2023 has been a year with many moving pieces. And here we also want to underpin our confidence in our earnings. We are committed to restoring profitability over time. We continue to focus on cash. And with that, we're happy to confirm a stable dividend over the year 2023.
That obviously has an effect, indeed, on the next page on our net debt. Overall, we landed the year a reported net debt of EUR 2.2 billion. But a few words of caution read out around that. Obviously, you need to factor in our commitment to buy out the minority shareholders. That is a cash out of around EUR 0.7 billion. You need to factor that in when looking at our net debt. And I'm happy to confirm that we did an additional tender round at the start of the year, and we issued a press release earlier this year where we're actually repurchasing 4.2 million shares actually this week. That leaves about 1.5% outstanding, which we will conclude with the squeeze-out procedures that are currently running. But you need to add that in your debt calculations. At the same time, we also have the hybrid outstanding.
We're happy with that instrument, and we'll assess that over time. If I were to factor that in, then the net debt is actually a little over 2x EBITDA from that perspective. With that, I think that concludes the highlights of the financials. Let's also look at the other angle, sustainability. With that, back to you, Dimitri. Thanks, Ralf, indeed, and putting some color on the financials. Let me start with the next slide to contextualize a little bit the four business units, the four businesses. You have alluded to that a little bit, so let me wrap up. I think Perfumery and Beauty, a very good performance. Very happy with that. Certainly strong in the perfumery part, personal care doing well, and indeed the ingredients part, as you alluded to. Taste, Texture and Health, solid performance, a bit weaker in the yeast extracts and the vitamins.
Health, Nutrition & Care, solid performance if you back out the vitamins. Obviously, with the separation of Animal Nutrition & Health, that will also reduce the vitamin exposure in Health, Nutrition & Care. So I think really the first three units being focused on the human space with consumer ingredients, with high growth, high margin, with more resilience. And then Animal Nutrition & Health, significantly impacted by vitamins, where we feel the trough has been reached, but also with the actions taken where we already see the first effect in Q4, but certainly full effect in 2024. I think we are on the right track. That has accumulated in an outlook. If you go to the next slide, let me not read out the outlook to you. I'm pretty sure you read it yourself. I think at least 1.9. And you see on the right-hand side a bit of housekeeping.
If you have questions about housekeeping, then I will refer you directly to Ralf because he's better in that than I am. Then let's move on to a little bit of background on bringing progress to life. You can't do that by pursuing a sustainability journey. We have three pillars there. One is climate and nature. The other one is nutrition and health. One is social. Although there's a lot of society discussion about sustainability, let's be aware that this is part of who we are, but also in which value chain we play. This is also requested by our customers to make progress on that journey. This is not something which we just do. This is something which we breathe. This is what we live.
I'm very happy to say that on climate and nature, we have submitted our SBTi target set to be validated. On nutrition and health, I'm very happy, and we've announced it, that we extend our partnership, our 17-year partnership with the World Food Programme, to eradicate malnutrition in the world because we have capability, and with capability, there comes responsibility. On the social front, I already highlighted a little bit the social front highlight on the engagement of our own workforce with an engagement score of 80%. If we then go to the next slide, a little bit of background, I think on an important step as DSM-Firmenich, in 2023, we did make quite some progress on Scope 1, Scope 2, Scope 3, and renewable energy.
But I think more importantly is that we have submitted as DSM Firmenich, as one integrated company, our SBTi validated target. We're in the midst of the discussions there. We have submitted it to be net zero in 2045, and this is aligned with the Paris Agreement, the COP21 Accord, to be below 1.5 degrees. Now, let me summarize to the almost last slide and then open the floor for Q&As. To summarize, if you go to the next slide, go back to macro and micro review portfolio. So macro, started the discussion earlier. China and vitamins are normalizing. It's at a trough. Input prices are normalizing with variations. Destocking, the jury is out, but we do see some normalization going forward. We didn't wait for that macro recovery. We took actions, and we are delivering on all three actions we've promised you. We're delivering on the integration synergies.
We're delivering on the vitamin transformation program. We're delivering on cash with focus, as Ralf alluded to. We accelerated our review of portfolio, and I think with the move we have announced today, I believe to separate out of ANH for a better future under a new ownership structure, while focusing the DSM-Firmenich units really in a synergetic approach on consumer ingredients, where we really pursue the revenue topline synergy, as initially mentioned during the start of the merger, I think we have a great future. The combination of the micro with the view of your portfolio will deliver a great future. Will not be easy. It is not easy. Sometimes it is with pain. But as you've always expected from us, we are looking around the corner. We're making the move ahead of the game, and I think we're doing so.
We're committed to do that in the best interest of all stakeholders. With that, I hand over to Dave by making the bridging slide. If you go to the next slide, to invite you for the U.S. investor event. For the ones who couldn't join the Geneva event, we'll do that for our U.S.-based investors around. If you couldn't make Geneva, more than happy to welcome you in Plainsboro on the 22nd of February. And obviously, the CMD, the Capital Markets Day in Paris, where we would try to make your life a little bit easier. So I hope you're already around in that week in Paris. And then on the Monday of the 3rd of June, you are more than welcome to join the Capital Markets Day in Paris. And with that, back to Dave.
Yeah, thank you very much, Dimitri. So we move to the Q&A.
Just as a reminder, the selected analysts can ask questions. In order to do that, they should have registered via the questionnaire link. And if you're not done, you can still do it. With that, let's start with it. Operator, can you give us the first question?
Ladies and gentlemen, when I begin our Q&A session, if you have a question, we ask that you please use the raise hand function at the bottom of your Zoom screen. Once your name has been announced, you can ask a question. If you want to withdraw your question, please lower your hand using the raise hand function in the Zoom app. Our first question comes from Nicola Tang at BNP Paribas. Please unmute your line and ask your question.
Hi there. Do you hear me?
Yeah, we hear you.
Yep. OK, great. Thanks for taking the questions.
I wanted to start on the topic of your animal nutrition separation. Firstly, bearing in mind that some of the assets that you have cross over between animal and human, can you just explain a little bit, I guess, in practice, how this separation will work and how you could limit any negative implications on the human nutrition side? I was thinking back to the Geneva event where you nicely showcased some of the synergies between flavors from Firmenich and nutritional ingredients from the DSM side. So can you talk a little bit about how you still maintain that going forward with the separation? And then, I guess, a tagged-on question, why keep the Bovaer and Veramaris side? Is it because you're kind of locked in with the partnerships there, or do you see some kind of strategic overlap with the rest of DSM-Firmenich?
Perhaps I'll leave it there and let others take the rest of the questions. Thanks.
Yeah, thanks for that question. Indeed, on the assets, so this is one of the reasons why we think ANH is geared up for success. They have a network of sites, premixes, and the likes, and they are integrated. And we do feel that that is needed. And it also requires capital to bring that up to speed. So that capital intensity is different than the more consumer ingredient-focused part of DSM-Firmenich. Secondly, you do see that the vitamin effect was obviously predominantly impacting ANH, but it also had some effect on H&C. And therefore, we basically look at continually reducing the vitamin exposure. Remember that our strategy was to reduce the vitamin exposure. We were 25% earlier, and maybe in a far, far, far distant history, even 30%, 35%.
Before the merger, we were at around 25%. Post-merger, that became about 15%. By separating out animal nutrition and health, we'll go to 7%-8% of turnover, which are vitamin-related. That is predominantly in HNC. To further reduce that volatility, we basically will make clear choices on what part of vitamins remain of the DSM-Firmenich group in the consumer ingredients scope. So it could even well be that this 7%-8%, we will reduce more in the direction of 5%. That means that this 5% will more into these food application approvals, pharma grades, and the like. So more resilient, high margin, high growth. Secondly, by bringing the whole network of sites and premix facilities in the animal space, we basically don't need to have the assets in the health, nutrition, and care part. You can also source the material.
So that also reduces a little bit of volatility. So the idea behind the separation is that the majority of the infrastructure will go to Animal Nutrition and Health, and that we basically, on the vitamin front, will source the vitamins, which we then formulate and premix ourselves in the Health, Nutrition and Care space. Then to your second question, Bovaer and Veramaris, those are two businesses which are organized separately. So Bovaer, it's clear that we're in the midst of building our plant in Dalry, Scotland. Bovaer is very much linked to the dairy value chain, so also to our dairy customers, where we innovate also on different areas, like low sugar, like flavor, like putting healthy ingredients into the dairy products. And it's very close to the discussions also to have the Bovaer in.
So it is a clear choice linked to the dairy value chain to have that. And it's a unique ingredient. It's really a fantastic innovation, which helps us positioning at those customers as well. So it is a clear decision to keep that part of the group, and also because it's still in development while we speak. So that's the reason on Bovaer. Veramaris, it's a different story. You know that's a joint venture with Evonik. There, we feel there's a lot of opportunity to grow in the human space, in Omega-3, which are algae-based in the human application space, in the dietary supplement space, also, by the way, in the pet food space. So there, the consumer ingredient focus is absolutely key. And that's also the reason why on Veramaris, we keep that in scope of the group.
Thank you. Just to add a quick one in, and sorry if I missed the beginning because I was a bit late to join. Did you talk a little bit about, or could you talk a little bit about, what potential options you would explore? Is there a situation where actually you might maintain some ownership of this business as you go through the separation? Yeah, I think two things there. One is we clearly indicated the timing here that throughout 2025, we think the separation will be complete. That creates a bit of optionality in terms of preparing it. That's one. Secondly, I think it's important that we're going to restore profitability. So we will have a full impact of the vitamin transformation program that is not touched. Maybe it's even been accelerated by the separating.
Also the integration part on the cost side will help prorata the Animal Nutrition and Health business. The restoring of profitability is a key focus. As you've seen, Ivo Lansbergen, currently heading Animal Nutrition and Health, will be the CEO of the Animal Nutrition business. He's really focused on restoring that profitability while separating everything out as a unit. Secondly, in terms of time-wise, I think we just started the process. We need to go through the formal procedures and processes and the like. But as you have known from DSM-Firmenich also in the past, we always do that with a keen eye on all stakeholders. We never jump into conclusions. I think from all the divestments we've done, I think they landed very well at a very good valuation.
You can count on us to do that in the same way as we did in the past.
Thank you.
Our next question is from Charles Eden at UBS. Please unmute your line and ask your question.
Hi, good morning. Can you hear me OK? Yeah. Perfect. Yeah. Perfect. Morning, both. So I'll limit myself to two, please. So firstly, on the medium-term margin aspirations for the business, excluding ANH, I guess in 2023, the other remaining three divisions, if you include the corporate cost, generated a little over 18% EBITDA margin. If I incorporate the EUR 350 million of synergies, this will bring you to around 21% margin. So I guess my question is whether this gives you even greater confidence in the 22%-23% EBITDA margin targets over the medium term, or if perhaps you even see some upside to this range when excluding ANH.
I know it may be a bit premature to be talking about upside to that target, but just interest in your thoughts. And then the second one is on portfolio construction and a bit of a hypothetical question for you, Dimitri. Obviously, you've had a little over six months of DSM-Firmenich in the current format. And the announcement today obviously gives us an indication of the parts of the business you don't see as part of the long-term future of DSM-Firmenich. But what about on what you might be missing? Are there white spaces which you'd look to fill following any potential exit from ANH? Or are you content with the asset base today, and it's more about delivering compounding growth and margin expansion on these assets? Thank you.
Nice questions, indeed. You said maybe it's a bit premature to think yet about positive impact.
But I mean, I will leave it to my CFO to comment on that on the midterm target. And then I take your question on what we think we're missing. Yeah, good morning, Charles. And thanks. You've done the math right. So indeed, adjusting for that over 18% and then with the plans announced that would bring us to that space. Remember that when we set the overall targets, we obviously set those in guidance pre any vitamin impact. And we're also anticipating on the growth of our promising ventures like Bovaer and Veramaris in the space and the growth. We do see a continued step up there, indeed. And at this point, we don't see reason to change the outlook on that front in terms of margin. But like I said, we'll continue to focus also on improving the profitability of our animal nutrition program.
But at the same time, with the acceleration of our strategic review, we're also looking at how to accelerate the growth in the other segments that will basically underpin the confidence in the long-term targets that we set for the group. And then to your point, what are we missing? I don't think we're missing. I think we have a great portfolio. But you always have areas where you can strengthen your portfolio. And I like exactly your question because it's one of the reasons why we say, let's review also our segments. Where can we double down in terms of innovation, research, possibly venturing collaboration, and the likes? And there are four areas. And our Chief Science and Research Officer, Sarah Reisinger, also presented that earlier.
I think she will be also on stage with you during the Capital Markets Day to really focus on what are the platforms we could even strengthen our proposition. And one is in the microbiome area, in your gut health. You know that we've done an acquisition last year in Adare Biome in postbiotics. It's an area which is still relatively not hugely researched. It's an area where we have competence and capability. It's an area where I strongly believe in, where we can bring in something good for the world. The second area is everything around biosciences, biotechnology, fermentation. It's an area of interest of us where we also bring capability. The third area I think everybody is talking about is also valid for us, is digital AI. We're reviewing that, personalized nutrition. Maybe we need to do more.
I think we also have some developments in our perfumery and beauty case. And then last but not least, receptor technology. So how does your 400 receptors in your body work? How do they react on all types of ingredients? How can you make sure that you have sugar-reduced food, which still stays sweet, and you still find it desirable to take? So those are the four areas. We're working on that. And I will promise you that we'll come back on that in the Capital Markets Day to give you a bit of a feel. But there are still areas where we feel we could strengthen, where we have capability, but where we think maybe we could even do better if we accelerate things and reprioritize some of our work more into these directions.
That's really helpful. Thanks, both.
And maybe I can squeeze in a housekeeping one and maybe for you, Ralf. Just in terms of the volumes ex vitamins for Q4, obviously, you reported -3%. Do you have a number of what it was ex vitamins in Q4?
Yeah, but similar trend as you see on the full year. If you back out the vitamins, overall, we would come out flat to slight positive in terms of growth, Charles.
Thank you.
Our next question is from Sebastian Bray at Berenberg. Please unmute your line and ask your question.
Hello, hello. Thank you for taking my questions. Can you hear me?
Yes. Brilliantly.
That is great. I would have two, please. The first one is another housekeeping one.
What is the depreciation and amortization charge associated on an annual basis with animal nutrition after taking into account the impairments of various assets there over the last 18 months? And my second one is on the strategy review. Is this done now, or is there a chance that at the Capital Markets Day we wake up and let's say DSM wants to invest this in divest its ingredients business? And if I might develop on that, let's pretend that a potential buyer of animal nutrition comes along and says, well, it's an OK business, but I really want Bovaer in there. Would you be open to having that discussion? Thank you.
Let me take the housekeeping and then Dimitri to answer your second part. Overall, we gave guidance in the PTI as well around the full year guidance on depreciation, amortization, and the impacts of PPAs and the like.
We don't guide the separate segments and the EBITs of that. On the other hand, it's also a bit premature for finalizing the scope and looking at what overall is included. We're just starting the process of that. And once we have more visibility on that, we will provide more insights as we go. So it's a little premature to dive into separating out the individual components of each business unit at this stage.
Yeah. And then indeed, I liked how you phrased it. Any surprise in the Capital Markets Day? I mean, normally, looking at your strategy is you need to do that on a continuous basis, right? And our strength, I think, of DSM-Firmenich is that we always look around the corner. And we really enjoy to challenge ourselves. And I think you've seen we never shy away from the discussion. There's no no-go area.
We always challenge ourselves. We will, if you don't mind, we'll continue to do so. However, we really now have made a step where we say animal nutrition and health goes into the growth of sustainable farming with a new ownership structure where they can grow with coping with the volatility and the higher capital intensity. The DSM-Firmenich part with the three business units which are very synergetic, bringing the revenue, we talk about growth. So how can we accelerate growth? How can we play in the consumer ingredient space? So you will see us more where can we redirect to the earlier question on what are the key areas where we still think we can accelerate and we can bring our capabilities? So it's really a growth question in itself. However, let's face it, strategy is never done. You always need to look around the corner.
But I think what we've announced today is having the next step within the journey of DSM-Firmenich. Then on Bovaer, there is a clear contribution to the discussion on the dairy value chain, obviously with our customers, to bring that into the next phase of more sustainable dairy value chain. So there's a clear reason why that should be the case. We also know that Bovaer, we are in the midst of it. We are building our plant in Dalry, Scotland, which will be commissioned in 2025. So it's far too early to say how that works out. So I would say that's too early to answer that question. Let's just bring that Bovaer to a success and really help our dairy value chain customers to make that to a success. That's helpful. Thank you.
Thank you. Our next question is from Matthew Yates, Bank of America. Please unmute your line and ask your question.
Hey, good morning, gentlemen. A couple of things. I think the first one is a follow-up from Nicola's question earlier about disentanglement. How do you think about securing supply for the vitamins that you're still going to need in those residual business lines that you'll continue? Is there any analogy here with what yourself and Ralf did when restructuring the materials business and exiting Capro but continuing to do the downstream polymerization? And then the second question, volume trends obviously remain a bit mixed across the business. But the human, what we call human, it was back to positive in Q4. Do you think that is reflective of the overall category, or are DSM outperforming that category? And just any thoughts on development of organic growth into 2024? Thanks.
All right. Let me do the disentanglement. Ralf could say something about health, nutrition, and care. Thank you for picking that up. I think we had a very good quarter four with some dynamics. But Ralf can give some background. Let me go for the disentanglement. Indeed, we will look at all optionalities. But obviously, we'll look at it in a way that really helps our health, nutrition, and care business. So security supply is important. And remember, like I just said, we're also going to focus a little bit that 5% of sales will be more or less the vitamin exposure. We're not talking about a huge amount, but it's an important critical amount. So we will have those discussions. And all options are open there. And indeed, Ralf and myself have some experience in that.
So we're going to use that experience to make sure that we create security supply and ease of doing business with us, also with the customers in the future, while not immediately having the assets. So definitely, it's on our mind. And we will pursue a setup which suits us. Then maybe on HNC, Ralf?
Yeah, no, absolutely. Happy to comment on that. And we did see some good growth in a couple of segments within that division, especially highlighting eye health. There is a seasonal effect. Usually, the end of the year is the strongest quarter there. But we're actually pleased with the performance coming through. At the same time, we saw dietary supplements stabilise a bit as well. And there we actually see growth, obviously, compared to a weaker Q4 last year. But it's encouraging to see that that is stabilising as well.
It's a little early to say how that will materialize going into the year. You had Dimitri also talk about our guidance. That we're cautious at the start of the year. So I wouldn't comment necessarily over the overall category. But we're pleased with the performance that we actually see in those segments in the fourth quarter. I think it's fair to say that for Health, Nutrition & Care, vitamin is the issue. I think we cover that in the separation of A and H. We have two segments. I think you've questioned us on that as well, dietary supplements and early life nutrition. Dietary supplements, I think, is a bit of a temporary effect, normalization post-COVID. We do see dietary supplements customers getting a bit more optimistic on demand normalization. But let's see how that spells out. Early life nutrition, let's face it.
I mean, early life nutrition is a premium category that we really innovate. It's the high end of the market. It's really helped by innovation going forward, obviously hit by destocking in 2023. We see a little bit of easing. But we also see with our HMOs a nice entry into China, where we are gaining a bit of market share because of it. So there are some positives there. But I think it's too early to say whether that's structural, to Ralf's point. We see some positive signs. But let's be cautious. People were also reporting positive signs last year. And that didn't materialize.
Thanks, both.
Our next question is from Martin Roediger at Kepler Cheuvreux. Please unmute your line and ask your question.
Yes. Good morning. Thanks for taking my three questions.
Just coming back to the carve-out and separation of your animal nutrition business, do you have any clue what the dis-synergies might be from that carve-out and any clue about one-time costs for this carve-out? Secondly, you already touched on your expectation that you see some normalization in destocking. Did you see that already materializing in January and February? And is there any chance for restocking? And the third question is on FX effects. The Swiss currency is relatively strong. You have a significant cost part in Switzerland. What is the FX effect from the Swiss currency in 2024 if the FX rates stay unchanged versus today? Thank you.
Yeah. Thanks, Martin, for those questions. I will leave the Swiss franc to Ralf. That's a very difficult one to forecast, the Swiss franc, although it seems to be having only one direction.
A bit on A and H separation, I think it's a fair point. We will see hardly any dis-synergy. So the vitamin transformation will be accelerated. I think it will even be helped by separating it out. The integration is in full swing. Will not be touched by the separation. Remember, A and H is already a separate business unit. Some dis-synergy could happen in global support, stranded costs, if you wish. However, we always look at that in a very strict manner. That's too early to say. Let's say it's high on our radar screen to see. But I don't see a huge dis-synergy going forward. And if so, then obviously, we have to address it. But it's too early to tell. Then on the restocking and I'll leave the one-time cost to Ralf. Then on the restocking, interesting. I'm talking about normalization of destocking.
I'm not talking about restocking. If you look at the numbers and I think you have the numbers as well as I do, you do still see that stock levels in different categories are normalizing. They are not depleted. So I'm not talking about a restocking. I'm talking about normalization of destocking. I do think there was a bit of overstocking, which will normalize. We do see in consumer fragrances that that destocking is fading. And we also see in dietary supplements that that destocking is fading. But it's not restocking because the levels are still reasonable. Maybe one exception that is on the vitamin front. There, I do think that we have depleted stocks, not only us but also in the value chain. And there you see a bit of insecurity. There is no buffer to react.
So I do think that some restocking could be needed in the vitamin change. Then you will easily say, "OK, when do you see that?" We don't see it now. We don't see it yet. But in my strong opinion, restocking in vitamins could take place. But on the others, it's more normalization than restocking. And maybe there, Ralf, you on the A and H separation on the one-time cost and then the Swiss franc.
Yeah, no, happy to take those. And thanks for the questions. On the one-off cost, obviously, we're going to incur some. On the other hand, we just announced our strategic intent. And we're starting the process. So we need to start up that process. And given it's a complex carve-out and a lengthy process, one of the reasons why we're announcing today so we can get going on that.
Overall, difficult to estimate at this point. We did some guesstimates. We think it's probably in the range of EUR 50 million-EUR 100 million. But again, to be firmed up as we go and start the process of separating Animal Nutrition and Health, we obviously have some experience with prior transactions. To put a bit of context around it, I think we spent around EUR 50 million on the separation of our engineering materials business to give you a bit of guidance on that. But as said, we'll firm that up. We'll start the process. And once we've got better visibility on that, we'll bring that back to you as part of the overall dynamics of a possible transaction. Then maybe pivoting to the FX exposure. I think generally, we have a sensitivity around the FX. We communicate that around the dollar, where $1 has an impact of around EUR 50 million pre-hedged.
And on the Swiss franc, about CHF 10 million per quarter. We do have some hedges in place. And the combined effect of that, if we would roll forward the current rates, is about a negative impact of about EUR 40 million-EUR 50 million going into next year, which we will see coming through predominantly in the first half of the year. So that is a bit of an insight where we currently see and took into account.
Thank you.
Our next question is from Chetan Udeshi at JP Morgan. Please unmute your line and ask your question. Chetan, please unmute your line locally and ask your question.
Hello. Can you hear me? Yep. Yes. Yeah, hi, morning. Apologies, I have a few technical questions because we don't have the full P&L and cash flow statements yet. So apologies, this is quite basic.
But I was just looking at the gross margin number that you've given in your P&L. And it seems to have collapsed to 24% in 2023. If I'm not mistaken, DSM sorry, Firmenich used to do high 30s sort of gross margin. DSM was doing low 30s. I understand the vitamins part. But can you throw some light on what is your underlying gross margin? If the gross margin is so much lower, how did you actually come to the EBITDA numbers? Because clearly, there is something between EBITDA and gross margin, which is helping the numbers. And maybe that's OpEx. So just some clarity on that point. The related topic actually was just on the balance sheet as well. The two items that sort of stuck out in the early look for me was the employee benefit liability seems to have risen a lot.
Again, is this just a combination effect? Or is there some phasing associated with the restructuring cost? Just the last point, deferred tax liabilities are EUR 1.75. Again, a big number. Is this, again, technical associated with merger or something just we need to think about? Thank you very much.
All right. Let me take those. First of all, pleased to see that you run through all of the details. Indeed, the balance sheet and the P&L is in the back. It's good and comforting to know that I'm not the only one looking at those and reading them through. Now, maybe back to your questions. I think overall gross margin, you do see a drop. That's predominantly the impact of the vitamins and FX coming through. That's obviously reflected.
That's also highlighted where we're saying there is an impact of higher input prices, I think, throughout the quarters. When guiding for our results, we also highlighted that we're sitting on high-value inventory on the back of the inflation, that we are passing on to our customers. But obviously, that had an impact on the margin in 2023. Rightfully so. At the same time, you're spotting, saying, "Hey, what else are you doing to improve the EBITDA margin?" That was a combination of the programs that we're running. At the same time, focusing on tight cost controls as well to make sure that we deliver an EBITDA performance to the best of our ability whilst weathering through the vitamin impact that we discussed before. Looking to the balance sheet questions that you had, yeah, very well spotted.
There is indeed a shift in the employer liabilities. I think if you scroll a couple of lines up, you actually see the provisions. So there was a reclass from some of the employee benefits around some of the pension provisions down to the employer's liability. Sometimes, we're confronted with some new rules of the game on the accounting front. And that basically caused the shift. I think that's about EUR 124 million, if I'm not mistaken, at least when I looked at it. So that is merely a reclass on the balance sheet. And then to deferred taxes, that is a real technical thing. It's obviously related to the step-up. Overall, we did see a step-up in our asset on the back of the transaction of around EUR 10 billion. Obviously, there is an associated deferred tax liability with that. And that's predominantly reflected on the liability that you just highlighted.
So that is merely an accounting entry than anything else, Chetan.
And do you have a gross margin number X vitamins in your head at the moment? Or I'm just trying to assess why is the gross margin so much lower, even taking into account vitamins effect? But I can follow up separately if that's it.
Yeah, sorry. We are a little bit tight. I mean, I also want to give the other analysts I suggest that you drop me a call afterwards. And we discuss this more in detail.
Cool. Thank you.
Our next question is from Stefano Toffano at ABN AMRO. Please unmute your line and ask your question.
Yes. Good morning, everybody. Dr. Dimitri. A few questions from my side. First of all, I understand it's very early in the process. And you're just starting out.
But thinking about normalized earnings and normalized valuation, let's say EBITDA multiple on the A and H part, what kind of confidence can you give us that you will be able to get a, let's say, relatively good price for this asset? Obviously, the worry here is that you're selling an asset at a moment in time where maybe, arguably, multiples are at cyclical lows as well as the earnings. So I hope you understand, well, not say my concern, but maybe the issue. Then the second part, again, on the guidance, if I may ask. I mean, obviously, the guidance seems we all learned from 2023, right? So I appreciate the cautious guidance. But this one seems relatively baked in if I hear the comments about stabilization. Again, you already mentioned it's stabilization. It's not restocking, et cetera.
We're talking about H2, basically, times two plus something that you should be able to achieve relatively easily. So I don't know. It seems to be a little bit cautious. The last question is a technical one. Working capital, excluding the A and H part, what kind of movements or, let's say, normalized working capital levels can we expect?
Thank you. Good. Thanks for that question. Thank you all, indeed. Timing, that's why I really focused on restoring profitability for animal nutrition and health. As you've known, I hope you agree with us that we're not stupid. We're not going to find a way on new ownership structures where we do feel we don't get the value for what it's worth.
Remember, animal nutrition is really unique in the animal nutrition and health space, really a global lead in that with the fantastic infrastructure and also in the way on the big themes of sustainable farming. What we'll do is we're going to restore profitability. I'll give you a bit of color on what we think we can do. Restore profitability. We also have throughout 2025 to prepare ourselves, not only because work needs to be done on separation, but also we do feel that we need to restore profitability and confidence in that business going forward. And as you've also seen, we have optionality on how we do that on the new ownership structure. If you go back in the past, we've done that with pharma, with a joint venture, and then step out. We've done that with straight sales.
I mean, we have an open mind on how to do what's best for the company from all perspective. And I think we do that in a responsible way. So I hope you trust, based on the history of what Ralf and I did, that we do that in a smart way. Secondly, on the vitamins, you've seen we reported EUR 491 million negative impact in 2023. We've launched the vitamin transformation already in June and July, which will bring EUR 200 million of that. So EUR 200 million will be covered by restoring profitability on our vitamin transformation program. Then we have about EUR 200 million, which are linked to pricing. So if we get some normalization of pricing, then that's EUR 200 million. Not saying that the full EUR 200 million will come back. But some normalization of pricing will have to come.
If you follow the spot pricing on Feedinfo, there is some movement. Finally, after, I think, 5 quarters, we see some green lights. It's too early to really materialize. Some normalisation needs to take place because at current pricing, nobody is making money, including us. That will happen. Then we have about EUR 100 million of that EUR 500 million, which is linked to volumes and demand. Obviously, if volume's not coming back, then you need to adapt your cost structure. If volumes are coming back, that helps you, certainly, on the idle cost. I think we have a pathway to partly, grossly cover the EUR 500 million. We do that in a way. We have some time to do that going forward. We will do that in a smart way.
Then on the outlook, you basically said, "it looks like a bit cautious." Well, you've seen that very well. And I ask you and all of you to allow us to be somewhat cautious. And then the third question for Ralf.
Yeah. Working capital, first of all, we're pleased with the improvement that we've seen now and also in previous guidance and such that. And then working capital needs to continue to improve towards what I think is healthy for the overall business. And when guiding earlier, we said, "Let's work down from 34% down to 31% and realize a similar step down in the course of 2024." Now, that is something that we're geared to and will be disciplined in our actions to drive a further improvement along the way. I think then we're also getting to the place, which is a healthy level for the overall business.
It's a little early then to see what the implications are on the carve-out of animal nutrition. But besides that, we will set a healthy ambition on our working capital going forward, which is balanced because we also want to make sure that we are the supplier that will develop and grow with our customers. Nonetheless, we need to be disciplined in the areas where we need to be. So we'll focus on a further improvement going forward.
Yeah. And I'm afraid that discipline is indeed now the key word. I mean, we're running out of time, unfortunately. But we also have a big other program also with other communications. So unfortunately, I have to cut it short now. But the good news is you can reach out to our team. We're very happy to talk to you. You can come to Princeton.
We still have a few seats where also Dimitri and Ralf will be with a lot of other managers being in place. Unfortunately, I have to end the session today. Thank you very much for listening in. With that, I give it back to the operator to finish the call today.
This concludes today's call. Thank you for joining, everyone. You may disconnect.