In a strategic move, nclick="updateothersitehits('Articlepage','External','OtherSitelink','dsm-firmenich to divest animal nutrition business and focus on food ingredients','dsm-firmenich to divest animal nutrition business and focus on food ingredients','339287','https://www.foodingredientsfirst.com/profile-directory/dsm-firmenich.html', 'article','dsm-firmenich to divest animal nutrition business and focus on food ingredients');return no_reload();">dsm-firmenich reveals it will carve out its Animal Nutrition & Health (ANH) business from the company within 2025 to increase its focus on its Perfumery & Beauty; Taste, Texture & Health (TTH) and Health, Nutrition & Care businesses. The separation will come in the form of a different ownership structure “for which all potential separation options will be considered.”

The company notes that the decision comes amid evolving market dynamics, particularly in the volatile animal vitamins segment.

Its ANH business, which provides solutions for sustainable animal farming, boasts a comprehensive portfolio of ingredients designed to support healthier and more efficient animal protein production. The decision to separate ANH also aligns with the company’s efforts to mitigate exposure to earnings volatility in the vitamins market, which has been experiencing significant fluctuations and pressure over the last year.

“In light of the unprecedented conditions with very low vitamin prices and a continued destocking cycle, we took a number of immediate and effective actions,” says Dimitri de Vreeze, CEO of dsm-firmenich. “We accelerated our plans for driving through additional self-help measures and advanced the review of all our business segments.”

“This led us to the initiation of a process to separate out the ANH business from the group which we announced today. This should strongly reduce our exposure to vitamins earnings volatility and reduce our capital intensity in line with our long-term strategy. We believe that the full potential of the ANH business could be best realized through a different ownership structure.”

By divesting the ANH business, dsm-firmenich says it can reduce capital intensity and boost its resilience to market fluctuations.

“ANH is a fantastic business that, over the years, we have built to be a true leader in the industry,” de Vreeze underscores. “This is a difficult moment, but we strongly believe that a separation would be better for both businesses and their employees and ultimately generate better value for all our stakeholders.”

Consideration for certain segments
As part of this procedure, the company states that the scope of the ANH business set to be divested is under assessment.

Considering Bovaer’s function in nclick="updateothersitehits('Articlepage','External','OtherSitelink','dsm-firmenich to divest animal nutrition business and focus on food ingredients','dsm-firmenich to divest animal nutrition business and focus on food ingredients','339287','https://www.foodingredientsfirst.com/news/beyond-the-headlines-dsm-firmenich-tackles-methane-morinagas-probiotic-milk-approved-in-brazil.html', 'article','dsm-firmenich to divest animal nutrition business and focus on food ingredients');return no_reload();">curbing emissions within the dairy sector — a pivotal segment for TTH — and Veramaris’ promise in dietary supplements, it is anticipated that both enterprises will continue to be retained within the company.

Ivo Lansbergen, who has been leading the ANH business since 2019 and is the segment’s president, will continue to oversee its operations during the transition period.

“We have an amazing team within ANH that has built a global leader with scale, a unique portfolio and unrivaled innovation capabilities to help our customers tackle some of the most challenging food security issues and with a strategy that is strongly focused on Making Animal Farming Sustainable,” he says.

Continued transformation
In addition to the separation of ANH, dsm-firmenich reveals that it will continue its vitamin transformation program initiated in mid-2023. The program was started to optimize costs and restore profitability in the company’s vitamin business.

It also highlights that significant milestones have already been achieved, including the closure of vitamin production facilities in China and the implementation of a more efficient sales model. Looking ahead, dsm-firmenich expects the vitamin transformation program to contribute around €200 million (US$215 million) per year in adjusted EBITDA savings by the end of 2024.

“Supported by our exciting innovation pipeline, all these actions would help us to prioritize and accelerate the company’s nutrition, health and beauty high-growth and higher-margin businesses, all of which is reflected in our mid-term financial targets,” de Vreeze concludes.