DSM-Firmenich Earnings: Adjusted EBITDA In Line With Our Forecasts; Shares Undervalued

Wide-moat DSM-Firmenich’s first-half 2023 results delivered few surprises, having been largely revealed as part of a trading update at the end of June. Pro forma adjusted EBITDA amounted to EUR 929 million, in line with the company-compiled consensus and our forecast. Still, this represents a decline of 21% compared with the same period last year and translates to an EBITDA margin of 15.1%—300 basis points lower than the first half last year and significantly below the company’s midterm target of 22% to 23%. As previously announced, the lower profitability was primarily the result of cyclically weak conditions in the vitamins market that affected the commoditized animal nutrition and health segment, and to a lesser extent the health, nutrition, and care segment. Management confirmed the guidance it issued at the end of June for full-year EBITDA of EUR 1.8 billion to EUR 1.9 billion.