Corbion N.V. (CRBN) Earnings Call Transcript & Summary

Okay. It seems that we're good to go. Good morning, everybody. A very warm welcome to you all, also to those who were brave enough to make it today with all the turmoil in the market. So that's very much appreciated. So a very warm welcome also to those on the webcast. I know that many of you have chosen to take that option understandably. Of course, we're here today to discuss the strategy update, which is called Advance 2025. You'll hear a lot about that in the coming hours. We're going to do that in 3 blocks. Just a few logistics here. We're going to start off with the presentation from Olivier Rigaud, our CEO. That should take about an hour. After that, we'll have a 0.5-hour break. In that 0.5 hour, for the people who are present here, we'll go next door. You can taste some of the products where the Corbion products are incorporated. And I think you'll get a nice impression of what we do in the food space. So after that 0.5-hour break, we'll return, and then Eddy van Rhede van Der Kloot, our CFO, will come to the stage and talk about the financials. That will be followed then by a Q&A. And there's a couple of things around that Q&A. Obviously, the people who are in the room are free to ask any questions they might like. There's also an opportunity for the people on the webcast to ask questions. [Operator Instructions] Because what we're going to do in the Q&A is bring the full 8-person Executive Committee to the stage who can, as specialists of their field, can answer all those questions. Before I hand over to Olivier, a few safety remarks. A couple of things. Emergency exits. Should something happen, there's 2 emergency exits in the back. So if you exit this room, take a left, those are the 2 closest emergency exits. The collection point, basically where everybody comes together should something happen, is in the front of the hotel. So you make your way counterclockwise to the front of the hotel, where you probably entered the door. With that safety issue behind us, I'd like to hand over to Olivier, but first... [Presentation]

So good morning, everyone. So I'm Olivier Rigaud. So I recently joined Corbion as the CEO last year in August. I'm very glad to be here for the first Capital Market Day, being part of this great team of Corbion. As you can understand, you will hear a lot about sustainability in everything we do, and this is something we're going to come back along this presentation and in the future strategy of Corbion. So quickly going through what we've been working over the last weeks with the team globally. We redefined our purpose, and we redefined our purpose around also preservation in a wide sense, meaning, again, as Corbion, we are committed to champion preservation in all its forms, whether it is about preserving food and food production, but also health of people and the planet, as we strongly believe we are an impact company and we can have a strong impact on what's going on today. On this, we strongly commit to the Paris Agreement to work really and have an impact to go for the below 2-degree impact on global warming. So we've organized ourselves around the United Nations Sustainable Goals. And so far, we were already very much advanced on the #2 goal and the #12. And we've added in the part of the strategy the #3, which is around preserving health. And so as you can read there, I will not detail all these points, but there are many, many things where Corbion ticked the boxes and has an impact. When you start about food preservation, shelf life and impacting on waste, I will come back on those, to all the products we do for biomedical and pharma and preserving health of people. Obviously, as a preservation company, we have a big play in terms of food protection and food safety. Yes, you don't get food to poison people. So we really have a big impact in there. And obviously, our model is around fermentation, it's about circular economy, everything -- I mean -- and a lot of what we do is made from fermentation technologies. So going to the sustainability aspect of our business. We've agreed that everything we're going to do, and we're going to go walk the talk and put our money where our mouth is, is that we will be behind these sustainability goals. We've had to make some difficult portfolio choices around this, and we want to make sure that everything we're going to do going forward is aligned with the Sustainable Development Goals. Already today, over 60% of our revenue is aligned with these 3 sustainable goals. So that's quite significant, and it will just increase as we go. We're very proud to have had our science-based target approved by the end of 2019. And we are one of the first, as you can read, 339 companies that have the targets approved. We are the #8 in the Netherlands, so something the team is very proud about. I will come back to that, but the commitment we've taken in that respect is that we're going to slash 33% of our carbon emission by 2030. And the other important point is we're going to measure it. And it's an element of the new remuneration policy for all the senior executives as we're going to just go in that journey. So now you all know Corbion. Basically, it has been a journey, it seems -- Corbion was created a few years ago. And in that period, I have to say a lot of things have been done and achieved. First of all, the profitability was -- has been restored. We've had reliable operations established. PLA, which has been a long-lasting promise, is delivering right now, to the credit of the previous period. And the sustainability has been embedded already in the company through what I just explained. Now having said that, we know that some of the things that we need to improve is that our growth has been somewhat inconsistent. And that's something that, again, we've discussed a lot, obviously, something we also want to address in the new strategy. At the same time, although in the previous Ingredient Solution business, the margin has improved dramatically, because we took some deliberate choice for Innovation Platform. We invested quite a lot into this, let's say, longer-term project, being PLA, algae. We had also the FDCA initiatives. And this, of course, had some pressure on the margin, as you can see on that slide. So we will also address this going forward, as you will see in a moment. Now if you look and if you think about the strength of Corbion, the big, big strength of Corbion, starting with the fermentation. We've been 90 years in the fermentation industry, so we understand fermentation. And obviously, it's about lactic acid, but not only lactic acid. We also, again, are very good in fermenting vinegars, other food ferments. And recently, we stepped into the algae fermentation to add another set of skills to our fermentation portfolio. We are, today, and this is less known, already the market leader in food preservation and freshness. So today, this space is still not a huge space, but it's growing very fast. It's been growing double digit over the last 2, 3 years. And we want to claim the #1 position in that space in natural food preservation. However, obviously, we have an on-trend portfolio in meat and bakery that we intend to expand to other categories. And the last one is the lactic acid leadership. Lactic acid is a great molecule. We are able to do a lot with lactic, you will see later. We have a 40%-plus market share today, and we are the only global player having plants in all continents. And that's a big trend in terms of serving our customers, but also monitoring the cost base related to the feedstock we are using in these various regions. We are also with the Total Corbion joint venture in the PLA business, where today we are a very serious player in that space. And we are committed, as you will see, to further invest, but we have a good start with PLA. Now so as part of this strategy, we call it Advance 2025, and why did we do that? If you just look at the Cambridge dictionary definition, advance means just moving forward in a purposeful way. And this is what we want to do. Remember our purpose around sustainability? We will just move the company really forward, sticking to this purpose and mission. So we have to make choices on our core business and portfolio, and we will focus on higher growth core business. We made very clear choices on what does fit, what doesn't fit in there. We also -- I mean we go for an alignment around 3 segments, one being around Sustainable Food Solution, which is a solution application-driven strategy; another being around Lactic Acid & Specialties, which is a product-driven strategy, and I will come back into detail; and finally, we have an Incubator, where, again, we say we will have our bets for the future, but in a very different connotation from what you used to see with the previous innovation platform structure. These, let's say, business segments do have strong interrelationships. To give you an example, if you take the Sustainable Food Solution, almost 50% of the revenue generated there is from lactic acid and fermented products. So it is not that we have divisions with -- I mean just very different dynamic. They are closely interrelated, but I will come back on this. The last point about balancing our resources is commitment to allocate a lot more resources to the core business. So what you've seen also in the way we invested previously into the Innovation Platform, we're going to really rebalance the money that we used to spend there into the core to a much larger extent going forward. Aligning on these 3 core segments, again, being the Sustainable Food Solutions, the Lactic Acid & Specialties and Incubator, basically, everything being really fed through the fermentation core competencies of Corbion and everything fitting the purpose around sustainability. If you look at the solution-driven strategy, in functional systems, it will be around 2 key themes I will detail later, being natural food preservation and functional system. On Lactic Acid & Specialties, basically, what we are doing next to all the products and lactic derivatives, being lactate and various products for various industries, we are adding there the lactic acid we produce for the PLA purposes. And in Incubator, you will see that we have narrowed the focus very strongly to the things that we believe we can really land as part of the strategy around, amongst others, algae. But you will see also quite some investment on the natural co-polymers, again, based out of our lactic acid technology. Now let's dive into the first business unit, that is the Sustainable Food Solutions. You all know about the food trends. I will not elaborate on that too long. I mean you see that every day in the way you shop when you go to the retailers. But if you look to all these heavy underlying consumer insights, I have to say that Corbion is ticking 9 out of 10 boxes, so whether it is about sustainability, clean label, the protein challenge. So we are really on trend with what we do. And we are really doing what the consumers are aspiring to get as part of the moves around sustainability, global warming, waste reduction, but also willing to understand a lot more what is on the label: transparency, traceability. And this is important that, again, when you think about what Corbion's sets of skills and capabilities are, we really are spot-on into what, at the end, we in this room, on the call and the consumer out there do want and expect from a company like -- as Corbion. Just -- I mean looking at the food waste, which is a big issue. You speak about consumptions. Basically, do you realize that -- just take meat as an example. If 20% of the meat we produce in the world, and there is roughly almost 300 million ton of meat globally being produced, if 20% doesn't reach our gut is waste before, just think a minute. I mean if you put in terms of what does it mean, means 75 million cows that are just raised, killed, spoiled, so not being consumed. Take the example on cereals. With everything we put to the bin before reaching the gut, whether it is bread, pasta, it's the same thing. The equivalent of this number is roughly 1 million -- 1 billion, sorry, pasta boxes that are thrown away before you can even eat them. So Corbion, by better preservation, shelf-life extension model can really impact this massive issue that is about food waste. Whatever we do, we know that by accommodating more people on the planet by 2050, you've all heard the usual statement about how we're going to feed the extra 3 billion people. Yes, there is not enough land, not enough water, not enough protein to feed people. So one of the solution is also to reduce waste, and this is also where Corbion does play. Clean label. Again, I will not comment all the details on this chart, but this is not a fad anymore. This is mainstream already since a few years. People want to understand what they eat. Traceability is important. So we've seen a shift and a big move from what we call the free from, getting rid of everything that is fossil-based or petrol-based from our food to natural alternatives or fermentation-based product. So whether -- and you know what happened a few years ago in color segment, shifting from synthetic colors in food to natural colors. We've seen this move in sweeteners. We've seen this move across a wide range of food ingredient. We believe, and I strongly believe, that for preservation, which is today, and to a large extent, based on synthetic food preservatives, there is a big room for Corbion to play and drive the market conversion towards natural alternatives. And again, doing that, also having in mind that it has to be very clear, transparent, and we have to help our customers to clean the label and clear the label to reduce the number of ingredients providing the same functionality. At the end of the day, you still have to make sure that you preserve food. You don't poison people. You keep the food safety integrity really at top, top level. Obviously, it has to be done in a sustainable way. So you see more and more on some labels. You know what is the impact on the carbon footprint. And there are a lot of initiatives where we have to do life cycle analysis on our products to show that, yes, this is what we are doing in terms of carbon emission. And a lot of customers start to do translate all this on their own label. Now let's, again, go through the solution model business. If you look to our food ingredient industry, generally speaking, you have 12, 13 big food ingredient families, whether these are flavors, natural colors, emulsifiers, acidulants and so on. And that's a way to look at our industry, looking vertically to this family of ingredients. Another is to say, "Okay. Can we combine these ingredients together to some extent, not just to offer a blend, but to offer a functionality?" So moving to a view that you look at single ingredient on one side and that vertical categories being either meat, bakery, dairy, beverages to looking for functionalities. You look in food products to improve freshness. You are looking to stabilize the product. Of course, you are looking to the sensory, to the appearance, whether it is flavor, color and taste. So our approach going to solutions that we largely do today, to some extent, into the Bakery business, but also we start strongly into meat, is to go into the right side. And why is that important? Not only because, of course, the customer do want that, but it's also creating opportunity for growth for Corbion. There is so much you can do into a vertical category being meat or bakery. By doing this also, we want to move to adjacencies. When you know how to preserve a good meat-based product, you also have the capabilities and the technologies also to go into savory. When you know how to stabilize a bakery product and you have the capabilities from an application standpoint, on operating production standpoint, you also know how to go and do the same for dairy. So -- and what we are going to do by moving to this type of a solution-based approach is to create growth opportunity either on the right side of the slide going to adjacent categories or on the vertical going to additional functionalities. So -- and that's pretty important that we look to that approach as a solution provider where, basically, the model is to be very agile, very nimble, very close to the market and to the functionality that are being required by the food habits' evolution. So we'll come back to that in a minute. But -- so what does it mean in terms of numbers? The Sustainable Food Solutions business unit is a big chunk of our portfolio. You speak over EUR 500 million in sales. And this is built on 2 big pillars that are existing today. One is around natural preservation. The other is around functional systems. And you could see that these 2 parts do represent today already over EUR 400 million of our business and are growing very nicely. We have another part that we address, the food that is single ingredient, where we will not necessarily invest, but that is there as part of our go-to-market strategy. But -- so 2 big legs within Sustainable Food Solution: natural preservation and functional system. Let me come back a minute on this preservation in the food preservation market. This is a significant market. You combine everything that's being used to preserve food. You speak over EUR 3 billion business. The natural portion or the fermentation-based portion out of it is slightly over EUR 1 billion, but it's growing twice the market rate of the overall preservation market that is basically growing in line with the food GDP numbers. So we're already playing in that space, and we are growing very fastly, double digit, as Corbion. And we believe we can claim the #1 leading position in that space by, first of all, still building on the current portfolio, but also expanding the portfolio to new products. The big themes in there are around the conversion from synthetic to natural. But there are also big themes that are pushed by regulatory pressure around sodium -- salt reduction and also nitrite reduction, where Corbion has alternatives, both to reduce sodium and to reduce nitrite in food. That are big things where actually the regulator is the one driving the shift from some of these synthetic alternatives to natural ones. We discussed about food safety. Again, we have a big role to play and we are playing a big role. Just let me give you an example, just on European market, every year, there are 23 million people that are getting food poisoning. Almost 100,000 people land into the hospital and close to 5,000 people die, I mean, from food poisoning, whether it is listeria, salmonella and so on. We have a huge responsibility as Corbion in food preservation to lower that number to make sure that we have full integrity. And the last point is about food waste reduction that I alluded to before. So big drivers, underlying drivers in food preservation where Corbion can claim that space. How do we build the #1 position into natural food preservation? Obviously, we will start with our fermentation technology and application know-how, and you will see that we are committed to invest even more in application. Today, we are already leader in preservation solutions, but we also base our, let's say, capabilities on not just products, we have a very good modeling system in terms of food spoilage that is unique and proprietary to Corbion when we go and discuss with a customer about problematics he has in terms of preservation. We are able to model, according to the raw material you're going to use in the final product, exactly what type of preservation you're going to need. And this is a very powerful thing that is unique in the market and unique to us, to Corbion. So obviously, expanding that position, starting with adjacencies, of course, on meat, where basically, although the market is not booming in meat today, there is still a huge amount of synthetic preservatives in our food that we can still replace through fermentation and natural products. Going to the famous meat alternative, you all have heard about meat analogs. Although this is still a niche market today globally, there is a big fad, a lot of noise around it. We are already very active in that field. And believe it or not, it's a lot tougher to preserve this type of plant-based alternative burgers and meat analogs than it is for meat sometimes. So we understand and we believe there is also, as this market is growing, for us much more opportunities in that field. And then, okay, as I said, we have the ability to go to very close adjacencies, being savory and bakery. I will give a lot of examples on bakery later on around preservation and mold inhibition. So what we're going to do to support that growth there in natural preservation is invest in a lot more application, technical centers and lab. Today, we have state-of-the-art capabilities both in Europe and in the U.S., but we need to do more in the emerging markets, amongst others; committing to invest in infrastructure, whether these are local operations; also committed to invest into additional products we're going to add to our portfolio that do fit today with the current lactic acid derivatives and ferments that we already have. Two examples I want to mention there is around natural antioxidant and the one -- and around antimicrobial solution. And we're going to look at that both from an organic standpoint as well as very selected bolt-on acquisition in that space. At the same time, we have already some very nice advanced projects on food ferments that have been developed in-house by our own R&D. So this example of natural ferments, that's an example I want to share, because I find it, first of all, fascinating. Myself, when I joined Corbion, it was already in the play. And basically, as we speak, this is being launched into the market in the U.S. Usually, we produce our ferments from sugar carbohydrates and wheat or corn sugars. The idea that our guys did have there was to say, "Yes, let's look at the vegetables that do contain a lot of sugar." The onion is one of them, 30% natural sugar in the onion. The onion is pretty sweet. While if we use our ferments, our bug, to produce lactic acid in-situ within an onion juice that you could provide a couple of things. First of all, it's natural fermentation on natural vegetable sugar. It's lactic-based, so it will have the same functionality in terms of acidification or preservation. On top of it is clean label. It's just onion juice that is fermented onion juice, so there is no fossil-based synthetic. And you bring next to preservation a sensory element that we didn't bring so far, back to my functionality and clear label. So there is a number of veg juices that we are exploring as we speak. I mentioned onion, tomato, and there are a few I will not disclose today, but we believe that this will open a wide range of areas for us that really, again, fits with the strategic intent around preservation, clean label, naturals. And we have the capabilities to do that, because the strength is on one side on the application, on the other, on the library of bacterias and strain that we own already today. So that's -- I mean just to give a bit of flavor of what it is about. The second leg within Sustainable Food Solutions is around functional system. This functional system is, of course, you could say, these are just blends. No, it's a lot more than blends. Because what you want to do there is not just co-pack for your customers. By the way, you're going to assemble products together. The functionality will be very different than if you just put a one bag mix of everything. A good example I could use is we have capabilities in enzymes cocktail, whereby combining certain type of enzymes in certain proportion, we're going to provide functionality, whether it is around freshness, shelf life extension. So you have to understand the interactions within a system. When you put everything together in a food matrix, whatever the matrix is, it could be a flour for bakery, could be whiteners for dairy, it could be meat, it could be solutions for also confectionery, we have a number of capabilities where we, by doing all this, understand the impact in the end application. We have very strong theme around sugar reduction with these enzymes, around sodium reduction with lactic salt, but also helping customers to remove synthetics and fossil-based product. The driver there and also what we provide to customers is speed to market. In a lot of cases, we act as their own R&D arm. So they come to us to say, "Yes, we want to launch this with these and these claims. What can you do for us?" Basically, we simplify a lot of their supply chain, and we improve their trustability. So there is a number of benefits in that market. There is a big difference with that market then with a big volume, a larger volume lactic acid business, where there you have a lot more SKUs you make to order, you have a lot of flexibility and fast pace and changes. We have already a good presence in both Latin America and in North America on this business, and we intend to grow. So on this space, it's a wider space. We have this expertise, as I said, in formulation capabilities and blending capabilities. We want to build on the expertise we've built so far in both Latin America and North America, as I said, to move into other geographies and other territories. On this, as for preservation, we need a much deeper, higher investment in application expertise. So -- and that's an important thing, as you will see, as an underlying theme about the Advance 2025 strategy. Obviously, we will not go all over. We will really pick some very specific categories where we think we can create differentiation. From today, the bakery and the confectionery where we are very strong, the next logical one, if you look to the functionalities we're going to target and where we are very strong today, you see on the right-hand side of the slide, the next logical one is bakery and potentially savory also will come. This is just illustrative to say that. Obviously, we do not intend to become the supermarket to the world in there. We will have a very selective approach on these functional systems of where we're going to play, but we will not only play into single categories, being bakery only or meat only going forward. So by expanding our reach, as I said, keep on the focus as for preservation into clean label and clean label solutions, whether this is around enzyme blends, whether this is around anti-mold solutions, shelf life extension and really committed to geographical expansion. So it's about, of course, getting more feet on the ground in terms of frontline, go-to-market capabilities. It's also about more application technical centers and bolt-on regional blending capabilities, whether these are just in-house developed or coming from a selected bolt-on M&A. Quick illustration, as an example. We are pretty proud of that one, because we got awarded from the American Society of Bakers (sic) [ Baking ], and so that's a great recognition. But just also to show the link between our lactic business and the functional system in there. Mold is a big thing in bread. So it's a big issue. Today, you might not know, but what is being used for mold inhibition primarily is calcium propionate that, in most of the cases, is coming from fossil-based derivatives. So there is a big, big, let's say, pressure to come with natural alternatives. So we've developed a product that is labeled really as a fermented product, in that case, cultured dextrose to replace this fossil-based emulsificant. And again, this is a product that is just being launched with first commercial success, but only that opportunity on that functionality per se is already higher than $100 million. So it's a nice one. That again is coming from the similar angle: fermentation capabilities, clean label attributes, in-house developed with our strains, so really spot-on. So with this, I would close the first business unit around Sustainable Food Solutions. This is, as you recall, a EUR 500 million-plus business. Now moving to the second big leg around Lactic Acid & Specialties. Lactic Acid & Specialties, this is our jewel. As I said, we have 40% global market share. And do not forget, this is also fueling 50% of the revenue of what I just explained before, for preservation and functional system. Lactic Acid & Specialties today, so we are leading the market growth. We are also, as much as we can, try to create the market and develop the market. In that strategy, we are committed to continue to invest in lactic acid. You've seen that with the recent announcement. We are targeting to become the #1 PLA player. Today, we are #2. We are targeting to become the #1 PLA player. You speak about a EUR 260 million business roughly. However, what is coming on, as you can see in the growth initiative, is the new plant we recently announced. So you can really easily make the math, 125,000 tons additional lactic acid. This is over EUR 100 million, EUR 130 million revenue we will add to this part once the plant is being built and up and running. The next big initiatives around all these products that are either lactic acid or derived is the natural biopolymers. Today, we have also a very nice growing business around biopolymers to the medical and biomedical sector that also we will continue to heavily support in the strategy, and I will detail that in a minute. So this biopolymer, this is not a business that is necessarily always well known. But from lactic acid and the polymerization capabilities we've developed over the years, we have a very nice business where we own 50% of the global market share that primarily goes into orthopedics, so through resorbable polymers, so whether these are screws for orthopedics or sutures, resorbable sutures. We see that there is a huge trend developing these resorbable polymers simply because, of course, you lower dramatically the type of surgery you do not have to reopen later. So it has a lot of benefit. Obviously, there is a lot of, let's say, projects going on, on how do you strengthen that. One of the big initiatives we are after is called FiberLive, where we incorporate glass fiber into our natural co-polymer to strengthen these orthopedics products. This is a big opportunity, as you can see there. Again, still to be proven and delivered, but we speak about over EUR 300 million opportunity. And next to that, same concept. We can use this polymer for slow-release delivery as they are biodegradable in time. You can tweak, of course, the polymerization degree and look to what is the release base you would have whatever the application and the end application is about. So thinking about a few examples I will detail later. We have really nice prospect in that field. Second big initiative I just mentioned is PLA. I think you've seen Corbion teaming up with Total. This is just a great combination, because you team up the global market leader in lactic acid with the only one having a global footprint, with Total who has a very strong polymer expertise and the go-to-market sales force and development sales force that we do not have. So actually, the complementarity between Total and Corbion is just fantastic. So -- and today, we see the momentum going, let's say, together where basically, this is delivering beyond our expectation -- ahead of our expectation. As you can see, we've had a very nice volume ramp-up since the startup of the plant that is very recent. Actually, we started by the end of '18, and we're already able to have them in a breakeven EBITDA by Q2 last year on this JV. So as we speak, we are looking to how do we expand that. And we are strongly committed to Corbion to continue fueling over the next strategic period the PLA growth. We have a short video. I think it also will give you some flavor about PLA and the size of the plant and the people and the energy and the passion we have behind. So let's go through the video. [Presentation]

So as you can see, we have exciting times ahead. So back in January, we announced the new investment in Thailand on this Rayong site for lactic acid. Having said that, we already took some stance to follow up the demand of the lactic acid market and the PLA by investing over the last month up to $35 million to generate an extra 50,000 tons, both in Thailand, but also in other Corbion site. And to this, we're going to add an investment of $190 million to build that really brand-new plant. And what is unique about that brand-new plant is this is on the new technology that has been developed in Corbion over the last decade. So it's not something that came overnight. There is a lot of science efforts behind. And we are coming to the moment where we're going to start to bet on what we call the low gypsum technology. And the beauty about this is low gypsum, obviously, is around the sustainability impact. We mentioned that many, many times. It also is a great fit with our strategic intent. If you look to the carbon impact of this plant, obviously, you know what we call in terms of emission from cradle to gate, we start with a very good footprint, because starting on sugar, we start with a very nice credit. We emphasize that credit by burning the by-product into our boilers instead of burning gas or oil. So that means that gives us another credit in terms of circular economy. And then, obviously, we have lactic acid that is adding carbon, but the difference between the conventional process you see in dotted line and the new process is massive. So at the end of the day, we still have a negative footprint. And this is, again, very important that it is one of the few industries across the globe when you think about biobased that still, at the end, does provide a negative emission from cradle to gate. So for 1 ton lactic acid, you have almost minus 470 kilos of CO2 because of the starting point and, again, the way we are improving the lactic acid production as well. So quite impressive. So this plant is forecasted to start by mid-2023. So we are really looking forward to bring that innovation to the market. And moreover, it's going to really help us to maintain our leadership. So whether it is on cost, but also global presence and sustainability impact, which is as valued as well by our customers than the cost picture. Now -- so the third segment is Incubator. So just again, before starting on Incubator, this has nothing to do with the previously Innovation Platform. Within this Incubator, basically, we will have these initiatives that we're going to pursue in a much more focused way. So we will concentrate on 3 major initiatives. And as soon as these initiatives would mature, they will be transferred back to the business, either to the 2 previous divisions we've been through or we would create a new leg when relevant when it would make sense. So the 3 initiatives we have in this Incubator, one is around DHA omega-3 from algae that is already in the market. You've seen a few weeks ago that we've had an impairment in our algae business. We had a big exercise on resetting our cost base, but I'm strongly committed to that for a number of reasons. First, I think it fits our model. It fits the fermentation capabilities of Corbion. It also fits the impact we can have on resolving some of the protein challenge we discussed before through either aquaculture or even plant-based protein. We'll come back to that in a minute, but this is a sizable opportunity. The second is around algae protein. I will also detail that, that is going through our cooperation with Nestlé. And the third is around decoupling our platform that I will also disclose them in back on what does it mean and what is behind. But again, everything being based on our technological platform and core competence around fermentation and natural polymers. So let's go to the algae. It's a bit of a complex slide, but you all know about algae. We've been, let's say, running behind our own expectation in algae. So we decided really to refocus our efforts on aquaculture and on this DHA. And as we speak, there is, again, a lot of commercial initiatives going on, but also a lot of push, from an R&D standpoint, to improve the yield and the efficiencies of our plant in Brazil to make this a success. The other stance that we decided to have on this is to appoint the President of the Algae business unit that you will see later is in the room reporting directly to me to give you the very strong emphasis at ExCo level on that particular business. Now if you think about -- again, not going into the detail, starting with wild fish that you can buy every day that has a content of omega-3 of around 10%. Over the years, for a number of reasons, this went down. The initial approach of Corbion was to say, "Okay. We're going to provide to the market algae oil rich in omega-3 to help the aquaculture industry to get back up to higher level." And we would do that on the promise of a better sustainability profile. And I think this is a valid way to look at things. However, when you look at, I mean, the aquaculture industry and the margin spread, there is so much that people can't afford to pay for in terms of sustainability attributes or in terms of health benefit through omega-3. So one other thing to make sure we are successful in that field is, of course, to continue doing what we've done so far, but it is also to look at can we also help the entire value chain by providing algae oil and fish oil -- wild fish parity price. And answering these 2 arrows I have here, these purple arrows that, I think, to make it a success, we need to work both ways. For this, obviously, you need a cost and you need a yield to produce oil with your algae that is at parity or very close to wild fish oil. Recently, we have developed really new strains, and we are getting very close. So we will update you later on as we go with the progress on these new strains that we have that would potentially enable us to get very close to fish oil -- wild fish parity. But there is a huge gain for us there in the sense that when we speak about impact, if you just think about what is going on out there today in terms of depleting the oceans, farm fish growing 5% per year, we know that today, we are severely impacting by overfishing the biodiversity under the water. I think algae is really a big way to the solution, to stop depleting the oceans and providing an alternative to wild fish oil to the industry. And by doing that, we would not only resolve depletion of the ocean, but we will also improve the health benefit through higher omega-3 content. So there is a big theme behind this model. Now where, let's say, the challenge is for us behind this is how fast can we create business momentum and how do we trigger some consumer pull and consumer awareness through the retailers that makes it really top of mind for the consumers buying their salmon fillet when they are fish farming. Why I think this thing is going to happen as well is that if you look to the conversion ratio from feed to fish protein, this is the most efficient animal protein you can produce if you compare this to the other animal proteins. So it will not resolve the entire protein challenge. It will be part of the solution. There will still be red meat around, and that's okay, that's good. But this will help to resolve part of the protein challenge for the animal-based protein, because fish is a very, very efficient protein in terms of sustainability and cost. So that's about our, let's say, DHA business. The second big initiatives is around protein for food human consumption, which is directly an algae protein. You've seen, in late '19, we've announced this top cooperation with Nestlé. So I think being together, joined up with the world's largest food company in these initiatives, is something that is a thing for us, very important because we are both companies strong believers into that value proposition. So when you speak about, again, the protein challenge going forward, we all know that if we keep the same value of consumptions of protein globally, just by adding this famous 3 billion additional people to feed, you need twice the size of India to feed the people with the same level. And in the same time frame, if we dream to reduce the global warming below 2 degrees, we are just dreaming if we just continue as is. So algae is, again, part of the solution. It will not be the solution that is going to resolve everything, but it's part of the solution. The beauty of these algae is that the fermentation cycles, if you look at it, you can produce algae protein in less than 10 days. So you could argue, "Yes. Okay. You still need sugar and land for sugar." Yes. But okay, sugar, in the best case, you have 2 or 3 crops a year. There, I mean, every 10 days, you can have another algae run as well. So again, it's not the magic solution to all the problem. It's part of the solution. And this is why I strongly believe it fits with the carbon strategy. And again, it's based on our fermentation capabilities. The last big initiatives is around the natural co-polymers. So you've seen everything we've been able to develop from lactic over the last years. Now we go for the green dot, which is a new field, where we say, "We are not at the end, by far, of this molecule and what we can do with it." Natural co-polymers can also bring you a lot of fossil-based alternatives in some fields. One of the examples I will have is self-healing concrete. "self-healing concrete," you say, "what's that?" And we've been able to produce a polymer of lactic in which we encapsulate spore of a bacteria. And when this is going to be in contact with water, it will just start self-healing. So we've developed that with the University of Delft here in the Netherlands. Again, this is a massive problem in terms of sustainability as well. If you have to build bridges, buildings, roads, whatever, going to start to crack, you have to remove it, rebuild again. If you think about the loss in there and what we can bring, basically, this is -- I think we have a -- we have a video there, yes, coming, just to show you how it works. But this is the kind of unique things we are looking after around these natural co-polymers. And actually, this is already in the market also very recently launched. [Presentation]

So this gives you a flavor of what is happening there in that, let's say, R&D project. This one is to market. But there are a few more coming around -- to give you an example, there are a lot of projects that are coated by petrochemicals that you could think about, is there something that is slow release, fully biodegradable that at the end of the day would just transform into carbon and water. And this is what we are doing. So again, very focused around DHA omega-3 on this Incubator, around the algae protein with the Nestlé relationship and around natural co-polymers. And this is where we're going to stick, so having a stronger focus in this Incubator. Obviously, it will come later in the financial part on what does it look like in terms of financial terms. Eddy will come back to that. Around innovation, basically, it was also how do we refocus our innovation. And we said, "Okay. These are the 6 big initiatives around natural preservation, around the functional system portfolio, maintaining our lactic acid leadership." As you could see, the medical polymer -- biopolymer growth and our algae ingredient platform, and this is where we're going to put most of our investments around these 6 initiatives. So a lot more focused. What we will do is we're going to refocus our R&D to serve these 6 big initiatives. And at the same time, we're going to embark on an open innovation program where, as you've seen with Delft, but with other, whether these are academics, ventures, going to also look to in-source some projects, not having everything necessarily developed in-house, but that will be outside the in-house R&D. So now how do we measure? As we come close to the end of my portion, how do we measure ourselves, first of all, on the sustainability? We have all the science-based targets and some very key points where we have measurables, whether it is about how we source our materials, how do we do fight against deforestation and make sure that we do not contribute on the opposite to that. The green house gas emissions, I mentioned our 33% reduction by 2030, so we have yearly targets on that. And last but not least, which is a big one, is also to make life cycle assessment on all the Corbion's products. About the business, we have guidance and we will come back to that in detail, where we know it has been inconsistent in the past. We've raised the target between 4% to 7% on this core business. And with an EBITDA margin by 2025 above 17%, knowing that, indeed, we have in the early years to reinvest in our business and invest strongly in our business to generate growth, and that's also an important message I want to convey there. Starting also with our people. It's about safety and our own people's safety that goes together. When you claim about caring about the planet, we start caring about ourselves and our own people. So that will be one of the top also performance indicator in our journey. And it's also about engagement, inclusion. It's also about gender, where we've embarked on this program, we are still in the early days. But there is a strong commitment to really improve our current position in the 5 years to come. So on this, this is the end. I would really recommend you to go, of course, for a bio-based brand. But also next door, we have the opportunity and you have the opportunity with our application team in Gorinchem. You would see the team that is usually facing customers every day, every week, presenting prototypes, what we are able to do. So that's the way we go to market, with full solutions. And from there, we take it back to what is your problem, what can we help you to resolve. And then we sell, obviously, our ingredients or our solutions. So you will see a real case example of what we are capable of doing. And that's the model that works, that we want to expand to a much wider extent. It works very well today in the U.S. It works in Brazil. It works here in the Netherlands. We want to expand strongly the model. Also, for those who like sweets, we have a candy shop with small sachets you can take home, either for you or for your kids, if you have. So -- but feel free to serve and help yourselves as well. Yes, yes, 30 minutes. And then we reconvene in 30 minutes from now. Thank you. [Break]

Okay. Good day, everybody. Welcome back from the break. I hope, I trust, I expect you've all been able to see our sustainable food solutions at work in the tasting session next door. So you've been able to see and taste our tasty, healthy and safe food products that our solutions are in. So I will continue to take in the next step, the financial and reporting consequences of the Advance 2025 strategy journey that Olivier already took you through, what that means. But before doing so, it's always a good practice to review back on how did we track in the last 2 years under the previous strategy. Here you'll see it captured in one overview, and I will take you through a couple of the key highlights in terms of the different metrics. So the total company, the organic net sales for total Corbion in the last 2 years was at 3.1%, so just at the lower end of the bandwidth. The net growth was very much supported by the growth in Innovation Platforms, and most notably, the lactic acid into the PLA activities that we're selling with a growth rate of 50% in the last 2 years. Then Ingredient Solutions just grew at a slightly below guidance range at 1.5% in last 2 years, but that was very much caused by the Biochemicals segments. There, we had a flat sales development in the last 2 years in the Biochemicals segment that was very much caused by the semiconductors downturn last year that we have also faced the headwinds from. And that's a kind of a pity, because our food business, we turned that back into growth in the last 2 years. That has been growing quite nicely with 2% and an increasing momentum in the last 2 years in it. Then the EBITDA margin development hold firmly in the last 2 years in Ingredient Solutions at 19.4%, so comfortably above the 19%. And also the ROCE development was strong with above 20% performance. At the bottom of the chart, you can also see that from a capital discipline perspective, our CapEx outlays on a recurring basis was at the lower end of the EUR 60 million to EUR 70 million bandwidth with EUR 60 million per annum. So all in all, I would claim, I would say we've met all targets except for the sales growth and most notably in the Biochemicals segment. So moving forward, this is trying to capture the story of Olivier of this morning in one sheet in terms of our reporting structure. And clearly, if you look at the 3 columns, you see the portfolio choices that we've made. Because we are going to drive -- we're going to manage this company in 3 different pillars with different strategic intent. On the left-hand side, you will see our core activities. This comprises 83% of the current business of the current sales. This is really managed for growth going forward. And in the core activities, you will find back the 3 different units being Sustainable Food Solutions, the Lactic Acid & Specialties and the Incubator. Then on the right-hand side, we have done the noncore activities, as we label them. And on the far right column, it is some piece of the business we will manage for exit. And clearly, these are activities that have a low strategic fit or even no strategic fit with the core. So you see here 2 business-to-consumer activities we're still involved in, frozen dough and Thrive. Now those of you that were not here 2 years ago, Thrive is the cooking oil algae-based that is clearly not having a fit with our portfolio going forward. And also, we will set part of some low-margin co-blending -- co-packing blending business in U.S. Then at the bottom right, FDCA, in itself a very nice or promising molecule. FDCA is the key component of a new biowaste plastic polymer called PEF and PEF is set to replace PET. But still this molecule, to bring it to the market, still needs quite some time, efforts, investments. And we don't think that we are the best owner to do that on our own accounts. So we will clearly look for a better owner to bring that development further. In the middle, there's positions, what we call, manage for value. There you see positions, the emulsifier business. It has a low limited strategic fit with the sustainable food solutions, but it's not to be said that it is not a profitable business. This is a quite nice profitable business. It is strolling of cash, so it's cash generative. And that cash we will reinvest in the left side in the core business to invest in growth. Then on the bottom, PLA joint venture. We have a 50% stake in a joint venture with Total. Clearly, the joint venture cannot be consolidated in our own accounts. But of course, we do have the net results for 50% of that joint venture in our P&L. And the lactic acids that we sell into the joint venture is captured in the Lactic Acid & Specialties business unit. We have provided, by the end of the pack, by the way, restated figures over the last 3 years, so you can trace back according to this new reporting structure, however those last 3 years already are performing at. And I think it's good for you to see also that structures, so that going forward, externally, we will report in 4 segments. So Sustainable Food Solutions, Lactic Acid & Specialties, Incubator and the noncore as a group. So what are the key value drivers of Advance 2025? And if you listened well to the story of Olivier, then basically you can group them in 4 different buckets of value drivers. It clearly starts with sales growth. And the sales growth in the core, you will find back in every single unit. So when it talks about Sustainable Food Solutions, to repeat, it's about 2 key themes, preservation and functional systems. Maybe you look at the Lactic Acid & Specialties, is it -- there's about a further ramp-up of lactic acid that we sell into PLA. But also it is about the medical polymers, so those polymers that we can sell into orthopedics and drug delivery systems. And in Incubator, in this strategy period, we do see a further ramp-up of the algae-based DHA omega-3. And also, we do expect the first contributions from our new lactic acid-based co-polymers platform. So those are 2 initiatives that currently reside in Incubator. So all about sales growth. Then the second bucket is about mix improvements. And mix improvements will remain in our portfolio. We are able to grow the higher-margin portion of our portfolio at a higher pace than a lower-margin part of our portfolio. And this is nothing different from what we have already been able and shown to do in the past. So this is really a continuation of the trends, and it plays out at different levels of granularity. It is between businesses. It is within businesses and even in certain product market combinations, for example, switching from standard solutions to more high premium solutions. And that's nice, of course, because that mix improvements give support to our value creation potential. Then the third leg is supply chain improvements. Olivier has already shared it a couple of times, and we did the announcement some weeks ago that we are going to invest in a new lactic acid plant in Thailand, set to become operational by mid-2023. And the moment that, that plant is in operations, that means that we can further optimize, also from a cost perspective, our lactic acid global manufacturing footprint. And then the fourth bucket is in Incubator. So there, we really see potential to reduce the losses that we've incurred there in the last couple of years. We are targeting for an EBITDA breakeven of the omega-3 algae product that we have in the Incubator by 2022. And then I want to briefly explain how we want to work with the Incubator. The Incubator is really populating investments, each of them supporting to have an outlook on a substantial platform of growth, but it takes a longer-term time frame to develop those. And every time when we have an activity in Incubator reaching a certain maturity level, a certain profit level, then we will spin it out internally to one of the existing order businesses. Or maybe it can even allow to open up a third leg in the company. So the moment, we've reached the breakeven on the omega-3 algae product in 2022, then that is bound to be spun out of the incubator. But then from then onwards, the Incubator will continue to run at EBITDA investments, so at EBITDA losses. But we capture that in a range that the EBITDA investments will be in a range of 0.5% to 1.5% of our core/noncore sales. So all these 4 drivers will make the target for organic sales growth in the core between 4% and 7% per annum, and that the margin, the EBITDA margin will expand from a 15% in 2019 to over 17% by the end of this strategy period. So let's talk about CapEx. CapEx, we discriminate between recurring CapEx and special additional CapEx. Recurring CapEx are the blue bars. In the last years, we have had cash outlays of between EUR 50 million and EUR 60 million per annum. Going forward, we see that, that will trend slightly upwards to a bucket of EUR 60 million to 70 million per annum, again, to express the investments we put behind the sales growth that we are after. And on top of that, every so often, when we do a major investment like the lactic acid plant in Thailand, we will get extra CapEx outlays. And that is happening as we speak in 2020 up to 2022, where we have additional CapEx needs to fund that capacity expansion. So how does that translate into our net debt-to-EBITDA ratio? So also there, we see our investments for growth expressed in a targeted ratio. You may remember that the old -- under the old strategy, the target ratio was 1.5 turns. If you see the press release today, 2019, we closed at a level of 2.0. And also going forward, we target our net debt-to-EBITDA ratio to continue at the 2 turns level, but that's to be measured over the cycle. And what we mean by that is that the moment again that you are having these extra investments, for example, for a lactic acid plant, then we estimate that we will peak and we will reach levels to around 2.5 turns. So that you have to expect in the coming years to happen. Dividend, we will propose to the shareholders' meeting this year an unchanged cash dividends of EUR 0.56 per share. That equates to 72% as a payout ratio of the adjusted result after tax. The cash outlay is more or less EUR 33 million related to that. And if the shareholders' meeting approves this dividend proposal, then the pay and date will be in May this year. The underlying dividend policy has not been changed in this strategy. So we continue to have the ambition to pay out a stable to gradually increasing absolute amount of dividend per share, but that is subject to an annual review. And every annual review, we will have a good look what is our outlook for the net debt-to-EBITDA ratio development going forward. And of course, we take into account the performance of the business, the outlook of the performance of the business, but also the rhythm of the CapEx, major investments or potential bolt-on M&A, the timing of that or divestments. So all these factors will be taken into account to see in that annual review how we can maintain the dividend policy. Then I want to conclude with the financial guidance sheet. We structured this in 2 different layers. So on the top, it's really talking about financial targets. And at the bottom section, in purple, it is about the underlying assumptions supporting those targets. So first, looking at the targets. These are targets set on the core activities, again, 83% of the business as is. And there are, again, we are -- like I said before, we are targeting the organic net sales growth between 4% and 7% per annum. EBITDA margin will expand from the current 15% to over 17% by the end of this strategy period. And then the underlying assumptions for the businesses are: For the Sustainable Food Solutions, a growth rate of 3%; for Lactic Acid & Specialties, a higher level of growth, 7%, as that also includes the lactic acid that we will sell into the PLA; then the omega-3 algae product, we have already breakeven EBITDA in the outlook for 2022 to be achieved; and the other Incubator investments is, like I said before, between 0.5% and 1.5% of the Corbion core sales. Recurring CapEx, EUR 60 million to EUR 70 million, on top of that, the EUR 55 million, more or less, on average basis per annum for the new lactic acid plant in Thailand. And then the ROCE, we see that we develop this business at a ROCE level above the cost of capital. So with this, before we open up the floor for Q&A., we have some further closing remarks on this section by Olivier.

Thank you, Eddy. So just -- I mean, back to how we're going to measure the success, will not come back on the detail, but around, of course, the business around the people and around, of course, the sustainable target. Ending with sustainability, where I started, you've understood very strong commitment around the sales-based target and embedding sustainability in everything we do. That will be the driving line behind a lot of the things. I'm personally convinced, and this is one of the reasons why I joined Corbion, is because what we stand for. I'm also personally convinced that, basically, we're going to drive a lot of value for our stakeholders by following this sustainability angle. And I believe that looking forward, sustainability is also, I think, bringing a lot of value to us and to the society. So I will end on that. And obviously, we have plans to engage a lot more. U.S. stakeholders, our own employees. And we're going to strongly commit to play our role into the below 2-degree global warming challenge we all face. So on this, I will ask the ExCo to come over and also to have a chance that whatever the questions we're going to get from the audience or from the people on the webcast, we give you and provide you the answers as a team. And we're a team that's going to help me out, let's say, during this Advance 2025 review. So guys, if you want to come over, Marcel, Jacqueline and the other...

Before we start before we start with the Q&A, just also report to people on the webcast that there is the question-and-answer module that you can use to ask questions to the ExCo that is now here on stage. Maybe, Olivier, you can introduce the...

I will introduce the team. So starting with Jacqueline, so Jacqueline is the Head -- so our Chief Operating Officer, Head of Global Operations. So then, Marcel, Chief of Science and Sustainability Officer, which is another dimension we add to the -- let's say, to Marcel's competencies; Johan, so our Head of HR, so Chief Human Resources Officer; Marco, so Marco just joined us, used to run the EMEA business function. He will lead the Lactic Acid & Specialties, and he's also doubly in charge of managing the Total Corbion joint venture as well as the Corbion representative. So welcome, Marco. We have Ruud. Ruud will lead the Algae Ingredient business unit. He's been deeply involved into our food ingredient solutions business at senior level so far. Andy, Andy has been also with us, Andy Muller, running the Ingredient Solutions portion. And he will be the Head of the Sustainable Food Solution. And okay, you -- I do not present Eddy. I mean, of course, you all know Eddy as our -- so that's the team who are going to make it happen. So let's start with the questions, and we will see, as they come, we're going to allocate -- how we're going to allocate the questions.

So Patrick Roquas from Kepler Cheuvreux. So to start with, I've got 3 questions. And the first one is on your organic growth target. So it seems that the 3% for Sustainable Food Solutions, that's a bit higher than we have seen. But for lactic acid, it seems that now that you include the lactic acid sales to PLA, the 7% seems, well, let's say, limited, which I can only explain from, let's say, if you do not see further expansion into PLA, yes, the 7% seems a bit conservative to me. That's -- let's say, is that right? And the second one is related. So you indicated to target the top 1 position in PLA. Obviously, NatureWorks today is your bigger competitor. What does that mean? Does it mean that you do not expect NatureWorks to expand further? Or do you foresee yourself, together with Total, a big expansion going ahead? And then the third, if I may? Or do you want to...

Patrick, maybe I'll start on these 2. So yes, so on the first on the 7% ambition, indeed, if you look at the current momentum of PLA, you could say it's a bit shy. However, the momentum is, first of all, to build that capacity to supply the joint venture. And this is, of course -- when you build such an operation, as we announced in January, it takes, I mean, at least 2.5, 3 years to put capacity on the ground. So obviously, in the meantime, we have projects, as I mentioned, where we debottleneck our units to follow demand. But we also have to watch out that we also secure the supply to our, let's say, non-PLA business, because this is, as you've seen, very valuable businesses as well. So of course, we are in a position today where the capacity is pretty tight. That gives us, of course, some prioritization issue, but also, of course, this investment plan, as we've said, that we have to manage in time. There is no, let's say, lactic plant that can be built in a year from now. And to our knowledge, there is nothing major that has been announced so far in the global market. So this big capacity will come by mid-2023. So basically, these growth numbers do reflect also the entire supply and demand balance we see across the various categories, whether it is the preservation business, the biomedical and the rest and obviously the PLA. So this is, again, what we are trying to achieve across the period. So obviously, as we speak, we are constantly looking about yield improvement capacity debottleneck. One is coming, as we speak, in Q2 that will further enable PLA growth in Thailand, amongst others, but also the rest of Corbion. So that's about the 7%. About the PLA, obviously, indeed, we stated our ambition to become the #1. Today, we are still in a ramp-up phase of the plant #1, so -- and we are looking to, of course, market dynamics, customers, how do we build project pipeline and portfolio, so to prepare for, let's say, the future. Obviously, as a listed company and Total being a listed company, you will understand, we cannot just make any statement as soon as they are not respectively approved by each company governance. So whatever we decide to do, we would do it in a fully coordinated way going forward on this PLA.

Yes. So the third question is on omega-3. With the aim to become breakeven by 2022, what's the kind of capacity utilization for the plant in Brazil that then should be achieved? Is that 1/3 kind of comparable as what you've indicated before on PLA?

I would say you are -- again, it's a difficult question, because it's not only related to the capacity occupation, but also our ability to increase the yield. The algae's producing fat. And in there on omega-3 content, the more you can work on this train and develop it as you go to produce more DHA within the oil, the better. So we are working on these 2 fronts. Basically, of course, volume is vital. And we've had good proof points in the past where when we have, let's say, a good quarter, we see that we get close to, I wouldn't say breakeven, but to where we need to be in terms of creating this momentum. Now Marcel and his team in San Francisco are working a lot on, let's say, how do we improve the omega-3 content within the oil. To me, a big part of the answer is also in there, because that would, of course, create per se additional capacity within the same assets. So I could give you an answer with the current setup, but I would say the big things we are looking is, can we create capacity without having to put more capital on the ground. And this is, I think, what we are doing as we speak.

Reg Watson, ING. I just wanted to clarify, did I hear correctly on the video that the total JV spokesperson said that the 75 kilotons current capacity represents 1/3 of the Total ambition?

1/3 of the...

Total ambition.

This is what the -- yes. We...

You said 225 kilotons is the ambition. So can I ask, how has that number arrived at? I mean, clearly, will make you #1 if NatureWorks doesn't invest, but why is 225 the magic number?

Well, actually -- and again, if you look at the development of the market, this market is being created from scratch. So obviously, the dynamic is very good as we speak. What we just don't know is how far and how fast can we take that market to these new applications. What also, from a starting assumption standpoint, we see today is that PLA is also developing in some applications that we did not have in target initially. Also what we see, and that's the beauty of PLA, is that it's also being used, because of its functionality, as part of the solutions with other bio-based ingredients. So I think the beauty is that it's not just on used as a single biopolymer, but today, being implemented in very complex recipes, where it brings some other attributes like strength. So some of these assumptions are changing as we go, because as we learn the market and develop, create the market, some are pretty different from the starting point, and there is nothing wrong about it. So it's very difficult to say. Today, we know that 200,000 ton is still a very, very small portion of the plastic market. It's still a very small niche. And even at 500,000 tons, it's going to still be a niche. So this is also what we have to keep in mind looking forward is that, so far, and even in the midterm, PLA will not be a huge commodity. Will not be, because when you speak, you don't speak about millions of tons or tens of millions of tons, which is the case for the plastic market. So we are constantly refining, let's say, basically the market potential success with the pipeline. What is very vital to us is making sure that we continue to support the growth. Because the worst thing that could happen is that at one point, you tell your customers, "Sorry, we don't have anything." You don't give any outlook or perspective. That will be the worst thing that you stop the momentum we are building right now as an industry. I'm not speaking just about Corbion, it's also the case for our competitors.

Okay. And can I ask one of the advantages of gypsum-free lactic acid aside from the environmental footprint is also the cost. So how advantageous is the cost of the technology that you have?

No, we will not disclose that. Obviously, this is a competitive sensitive information, but it's sizable. But I think it's important for us that it's also something we do to secure our long-term future. Because in a situation, in a context where lactic to PLA will become also as important as our traditional core, we want to make sure that Corbion stays on the edge and the leading front from a cost perspective, whether -- this market is going to increase even a lot more than what it is today, and that would potentially be the case, then we have to make sure that we master the entire chain and are the most committed player.

And is that cost advantage enough to offset the pricing benefit you're giving to the JV? In other words, you preserve the margin that you have in your existing gypsum processes.

Let's see. This is a difficult one as well, because it's about the agreement we have with Total, which is very confidential.

I understand, but you -- it's confidential the agreement with Total, and also you're not telling us the cost advantage of the gypsum-free process. But you could at least tell us if the margin is better or worse under the new regime, because you accept a lower price, but you have lower cost? Has your margin gone up or down net without telling me the bits?

To me, the simple answer is that we don't do that to pass our margin away to the market. We do that to be in the best competitive position in this global market, where there is, obviously, a lot happening on the PLA biodegradable side. So this process, and it's what I would call our life insurance to be the last standing man whatever happens. Because I believe that you can claim also the leadership position once you are able, whatever happens, to stand on your feet and still be profitable. So the intent is not to pass any margin away to the market, but, obviously, like in any business, we do not have developed 10 years of gypsum-free technology to simply say, "Okay. Pass it away." I mean that's not our intent. Having said that, the Total Corbion combination is the most efficient one because we are fully integrated. And by the way, we are on the lowest cost feedstock you can find in the world being Thailand today and sugar in Thailand. And that's it.

I still want to come back on your first question, if I may. So you've seen on the sheets of Olivier that we are targeting a #1 position in PLA. I think the 1/3 that [ Simon ] was mentioning in the video was more meant to be the going-in position with the plants we currently have running in Thailand, which is 75 kilotons, where NatureWorks, who has been building this market in the last 20 years, is more or less double that size. So that is more, how I would say, how you have to read...

Okay. But if I said what [ Simon ] said correctly, he said the current plant represents 1/3 of the ambition. So 75 is 1/3. So divided by 3?

Yes. So if you change the word ambition, with the ambition we have seen here, then he's maybe right.

Okay. So the ambition is 225 kilotons.

Now that's the curve, which capacity...

You'll need another lactic acid plant on top of the one you're about to build?

Current capacity is more or less the 225. The PLA capacity is 75, we have, and NatureWorks...

Yes. And the ambition is to grow to 225 according to the video. The ambition...

It's more of a bridge.

No?

Yes, that's what he said.

Okay. Yes, we'll follow this up later. I'd like to move on to omega-3, please. So what gives you confidence that you will reach breakeven in omega-3 in 2022 when it's not going to happen in '21 and that was previously the ambition and the target?

So first of all, the ambition was breakeven on the Total innovation platform, so not just on the algae. And that's -- I mean...

I'd like to step back. The original guidance at the time of Tjerk, so you weren't hear, so I appreciate that predates you, Olivier, but the original guidance was breakeven in algae by 2021 and conserve the assets.

Okay. So I think on the reason to believe, actually, on the -- when I jumped in, of course, to -- for my own opinion on this business, I visited the key customers and the key players in that space, looking at the value proposition, which is a very strong one, with the approach I just mentioned, looking not only to the sustainability credential and feed customer and consumers are then going to pay just more for it, which is not the case. It's how do we create more momentum in the marketplace? And I have to be very clear, the jury is out still. So -- but if I look at the value proposition, recently having the right commercial focus -- and this is why Ruud is coming. He's one of our best, let's say, business person that we're going to allocate fully on this division, next to the fact that we have some good, good moves in terms of yields in our plant. And the plant is getting very reliable as we speak. When we combine these things with the feedback we get from customers, we know it's a matter of time. Now our challenge is to show a much stronger business momentum. So what we want to demonstrate, and again, the jury's out, we still have to make it happen, is that we are able to create this momentum in terms of what do we get in the project pipeline. Because this is what about if you want to convert, first of all, you have to have a pipeline. When I joined the pipeline, it was not big enough to come to a breakeven, whatever, soon. So being honest with you. So what we are busy doing right now very strongly is creating this project pipeline. Obviously, whatever the conversion rate is going to be, I don't know. But at the same time, working very strongly to have a price positioning close to wild fish oil parity. And I believe that these are the things you also need to be able then to sell the sustainability angle, the higher omega-3 angle value proposition. So next to that, we've said, okay, we will do that, but we will also reset the cost base in the Algae Ingredient business, which we've done over the last weeks. So this is, as we speak, being really strongly implemented into the business. So -- and this is -- I mean, again, now purely execution that we are in. And I will probably be able to tell you more after the summer once we would have 6 to 9 very intensive months of business push to see, have we been able to create the momentum or not?

Okay. So I appreciate the 12-month delay to breakeven is not massive in the timescale of these kinds of projects. Why were you unable to convince your auditors then that they should give you another 12 months before impairing the assets?

Have an auditor have a look at an impairment, so basically, is the carrying amount on the balance sheet, how does that compare to the business case. So what do you do with the business case, you look at the forward 5 years development and what is the residual value after that. And basically, the value of that you compare to what is the carrying amount. But in that case, this is purely in...

But with interest rates where they are at the moment, time value of a 1 year delay is virtually nonexistent. So why take a 40% impairment?

Now the interest rates are -- we took pretty high discount rates for that impairment in Brazil because of the risk in that environment. So you're not talking about interest rates very single low -- in the single digits, it is more than 10%.

Okay. So I've monopolized the microphone long enough. That's all. I'm good.

Wim Hoste, KBC Securities. Also a couple of questions from my side. Maybe first on the PLA business, can you offer us some more granularity on how that business is evolving for you? What kind of customer split do you have? How much pricing power or pricing volatility is there in that business? And how about the contract structure? Is it more evolving to yearly kind of contracts, or is it truly ad hoc batch kind of contracts? Can you maybe talk on -- a bit on that, please?

So you mean contract with customers or...

Yes, yes, yes.

Well, actually, so far, we are in a position where, indeed, we have to manage a very tight supply and demand, because the market is in a kind of sold-out position. And the only big upcoming capacity is with Corbion. So basically, as you can see, I think it's a favorable moment. The only risk you have in this type of configuration is not to disappoint customers who wants to convert from fossil-based to bio-based. So that's the biggest challenge we have. So obviously, this is a good position to be in, but at the same time, we cannot disappoint the market by saying, "It will not be available for the next 18 months or wait for our new plant to come over." So -- but we still have room in the current existing facility to ramp up to the design capacity. So that is also, I think, something that is important to state, because that's the only, let's say, available capacity out there on PLA. So usually, indeed, these are yearly contracts we are booking. So in the typical polymer market, so it's a very similar type of dynamic than what you would find in the rest of the polymer business. So I don't know if it answers your question.

Yes, that's fine. Another one is on the noncore businesses, there were a number of pockets in there that you mentioned. Some will be managed for cash. Some will be divested. Can you maybe break that down a little bit further? And how much is then the emulsifier business? How much is represented by the really noncore parts that...

We don't want to break it too much down, but that's why we grouped it together as noncore. But from a sales perspective, the far majority is in managed for value bracket. So it's the most prized business.

Okay. And then a question on FiberLive. Can you be a bit more specific on how the momentum for you in that business is developing? How concrete are you there? How advanced are you there to convert your technology into sizable sales and grow to that, what was it, a few hundred million market potential?

I will ask Marcel to build on the technology angle and how far we are, and then we can...

Yes. So what Olivier told you is that FiberLive is a composite material, and it is based off a bioresorbable material. So that's a PLA composite. So it's not just PLA with a PLA composite. Plus fiberglass, but it's not ordinary fiberglass, because ordinary fiberglass does not disappear in your body. So we call it bioglass. So it's a unique composite that makes, let's say, bodily implants now more sturdy, so you can use them in orthopedics. So in the whole bioresorbable space, there is not such an alternative at the current moment. That is really fully bioresorbable. So that's a very important trade. So what we have right now is we have one customer where which we are doing FDA approval right now. And that has been obtained for a specific application, which we feel is a landmark to bring this further. So that is, of course, very important. You have a first initial FDA approval of that nature. And then thereon, there will be other applications that follow. And we are at that stage. And I can tell you, from a technology perspective, to make a glass that is bioresorbable at the same rate as the polymer that you have, you can imagine that is quite a challenge. And we've made enormous strides in the last couple of years to make that happen, and we are at the right position now to see that initial, let's say, commercial development right now.

Fernand de Boer, Degroof Petercam. A couple of questions from my side. You mentioned the inclusion rate in omega-3 -- algae-based omega-3. Could you give us a little bit idea how much it is, and how much you see as potential for the inclusion rate? That's the first question. Then on the ROCE, Eddy, you said above WACC, which I hope it is, because -- but could you give a little bit the idea of what your current WACC assumptions are, and certainly, I think what your current return on excess capital is? Because I think you could bring it up, which are the ambitions you have.

So I will start with the omega-3. Because if you look at the inclusion rate, today, again, as an average, if you have, let's say, 6% omega-3 level within the fish compound, basically, you have 2 choices. Either you supplement and you add to that or you replace part of it. Obviously, the aspiration now is to get to a higher level, but you have to do that in a competitive way at the official parity, not necessarily at a surplus. So as I tried to explain, we are looking to these 2 angles to say, on one side, we could also help substituting part of the fish oil, knowing that we will never replace the entire fish oil. But primarily, we have an advantage to come with a product that has no volatility. Where when you look at fish oil price and omega-3 from the fish oil, over the last 6, 7 years, fish oil has been really ranging from $1,100 per ton to $3,000. And we have, I mean, a very stable input. So that's one of the things we bring. But if you look at the current prices and the fact that there will be less and less, we can also be the alternative as the market is growing. So the ambition is, of course, that is not our call, but if the market is going to move from the average 6% towards 10% omega-3, we can be part of the solution to fill that gap, knowing that 1% inclusion represents roughly $100 million market potential. But I believe that also we have to have the cost at a much better place with a close to official wild fish oil parity, yes.

On the ROCE question, so you will find in the press release and the key figures table that the ROCE came down last year from 11% in 2018 to 9.9% in 2019. And the biggest driver of that reduction is to be found in lease accounting. So there's a different manner how do we have to account for leases. By that nature, capital employed has increased quite significantly, about EUR 70 million, because of all the lease liabilities we had to put on the balance sheet. The WACC that you'll see later on in the annual report is about 8.5% on a pretax basis. So that is what you have to compare it to as far as we stand now. Of course, one of the disadvantages of a ROCE measure, if you look at what we are currently are in as a company, is that the moment you are making pretty big investments, which we currently do, at a lactic acid plant and [ hurl ] USD 190 million ticket versus the capital employed that we have, it is a relatively big addition, while the benefits of such an investment only comes and starts to come in the moment it becomes operational. And then that still takes quite a long time before your capital employed is back to about half of that after quite so many years. So in that sense, you have to buy diverse that indeed for at least the next couple of years, the ROCE will develop at a pretty modest pace, but at least above the cost of capital.

Could you also give us an idea about the Sustainable Food Division, what the organic growth rate has been in the past few years? Because you're now stepping it up to 3%, but they have had triple out the offering in emulsifiers food the last 2 years, then probably you are already at 3%.

So what we can say, the Total core, so that is the 3 units there, the food, the lactic acid, and Incubator that grew on average by 3% in the last 2 years. And then you have to compare to now the 4% to 7%. So if you take the midpoint of the range going forward, you're about doubling what we've done in the past 2 years.

And the last question is still on the dividend. You say, okay, will be reviewed every year. That still means that at some point, you could drop to EUR 0.56?

Yes, but you have also to take into consideration, we are starting now with a level of 2. By the way, the -- and then we have, of course, the lactic acid plant that we build. So we will go to higher levels in the coming years to 2.5, about that. The confidence, by the way, I did not maybe allude to that, but the confidence because of the changed accounting, we've also changed from 3.5 to 3.75. So there's still quite some headroom there. That is where we see that closing for the moment. And then the dividend has to fit in that picture and being dependent on all the dynamics I explained about the development of the business, major new investments potentially coming up, the rhythm and timing of M&A, on divestments. So all these factors play into account, and we take that all into consideration.

And last question, if I may. Your guidance of 15%, more or less EBITDA margin for this year also includes already some assumptions for corona or not?

Some assumption on what?

On coronavirus impact?

No up until -- corona, we have to be careful. It's very hard to read for us at this stage where that will go. The direct impact in the original countries where the -- it first featured in China and Italy, we don't have a big presence there sales-wise and also not manufacturing-wise, as you know. But we have to be careful. And nobody knows exactly where this is going. And yes, of course, we are selling, for example, parts of our electronics business in Korea, as you know. That is also a known area to be suffering from the economic downturn. But with the current visibility, and that is what we ought to express, with the current visibility, we still come out of this outlook that we have to -- monitoring this as we go, how that will develop in the coming months.

I'll take a few questions coming in from the webcast, basically. First question is on PLA recyclability. The question is, it is biodegradable, but is it -- is PLA also recyclable? And then secondary question attached to that is on Danone. Aren't you afraid that they're going to switch to alternative packaging like can, paper glass for dairy rather than to PLA?

I think Marcel will take the biodegradability angle.

Yes. The biodegradability is clear. It is biodegradable in nature. We do, however, advocate people to not throw it out their window, because it is biodegradable and compostable in industrial installations when operated at the right way. If you talk about recyclability, that is actually reuse, can we reuse PLA as a polymer? The answer is yes. The big challenge there, however, is that if you look at recycling streams, currently, the amount of PLA that is in recycling streams is less than 1%. And so for most of the recycling players, PLA is more a nuisance than an additional resource. And so what we have to do is, of course, make that volume in the total stream higher, therefore, it becomes a more easily manageable recycling stream. If you would have an instruction to the consumers to separate the PLA from the rest of the polymer, we can actually reuse that material.

I think about the bigger customer drives, actually, as we've said, the PLA is only a part of the answer. So we do not aim to replace all plastics. I think paper-based or cellulosic or you have a number of alternatives today. Also, buying bulk food stuff is one of the trends you see sometime in retailers. It's also part of the solution. So basically, if you -- again, if you look at the hundreds of millions of tons of plastic, PLA doesn't intend to resolve entirely, it's on the plastic, the plastic soap issue and the plastic issue. So we believe that, again, it brings also functionality. So there will be room. To which extent, we just don't know yet, because it's a new-to-the-world product so far. But yes, we see all these initiatives, and again, discussing with all these major global accounts that choose a lot of plastics. Again, we come in as part of the solution. We do not think this is a threat to PLA, because we see that sometime we offer some very good characteristics in terms of resistance. As an example, it's -- but yes -- so, so far, we do not look at it as a threat. On the opposite. It's just part of the toolkit.

Okay. Question is pretty simple. What happened to the biochemicals business?

All right. This is -- I mean, again, we still have that business, which is part of the lactic acid specialties, a business unit that Marco is going to lead, where you still have the very valuable part in there around our electronics business, our pharma, our biomedical business. So this is still an area that is a very much product-driven, a business where we supply high-purity products, as an example. So this is still really fully part of our strategy.

Right. And the third one from the webcast is, could you quantify and give more color on the P&L investments you plan to make to accelerate the organic sales growth?

Yes. I think you have to read that in the margin development that we stated. So like we said, we will have -- 2020, we have in the outlook a similar margin at 15%, as we have in 2019. And we will have margin expansion going forward to 19%. And if you do the math, if you look at the growth ambitions and you can take some cost assumptions, you can see how much we intensify on the EBITDA level in the years going forward.

And then finally, a short question on whether you will disclose what the EBITDA generation is for the -- only the managed to exit business.

The managed to exit business, it is not there meant to be that it will be very long in that managed to exit business column. So very easily, the moment that we make traction on that, we will report on that on each of those 4 activities that I mentioned there. So you will easily track the diverse -- the moment that, that bucket is empty, and then you can see what the impact has been and then also what the manage for value bucket will be in terms of sales and profit performance.

Robert Jan Vos, ABN AMRO. Still a few questions on noncore. Can you give a few examples of what it means that you manage the emulsifiers for value? Is that, that you maybe prioritize pricing over volumes or that you will terminate some less attractive contracts? That's first question. Then you already said a few words on it in the previous question, but on the business that is managed to exit, what does exit mean? Does it mean disposal? Or can it also mean that you simply shut down certain operations? And maybe a final question on this. Do you anticipate material proceeds from business you exit via disposal?

Okay. Now let's start with the exits. The nature of the 4 activities in the managed for exit column are pretty different. So the frozen dough, for example, is a business, with customers behind it, it has a footprint. There's a plant connected to that in the States. So they are -- yes, we will embark on a process to see how we can divest that. And yes, we do expect to do that in a wise way. We don't do that for free. So yes, we expect proceeds on disposing of that part of the business. When it talks about Thrive, it's a much more smaller position in terms of size. It's more a brand. So we're also looking there for opportunities to let it go, but it is certainly not the size that we see in the frozen dough business. And the co-packing, that is really business low margin that will go back to the customers involved. So basically, there's an in-sourcing again or an outsourcing from us with an in-sourcing for the customer back. So no proceeds on that. And FDCA is an innovation project, an innovation initiative. So we have some IP related to that. We have, in itself, we think, a nicely developed proposition, but we want to see how we can valorize that by looking for a different type of owner. Managed for value, like I said, the majority of the total noncore is related to the managed portfolio, both from sales as well from a profitability perspective. So you don't go lightly about that. What we mean about that is that we will not invest for growth. So don't expect us to come up with investment expansion, investment proposals to further expand our emulsifier -- the traditional emulsifier business positioned as a business. We really want to invest in the growth activities that Olivier and I shared with you in the presentation. That does not mean we will not take care in a proper way, almost managed for value on this emulsifier business, because it is good margins. It is throwing off cash. So yes, we will maintain that business. We will give it the right focus and attention. We will give it a dedicated focus within the company, just to give it the right strategic intention. But that is how you have to think about it. Related to that are, by the way, again, 2 production plants. So it is really identifiable parts of the business. So 2 production plants in the U.S. with the sales, the R&D involvement and what have you.

And based on what you said in your answer, it's fairly straightforward to assume that the EBITDA split between managed for value and managed for exit is even more skewed towards managed for value, right?

In terms of -- yes...

Yes, you already said that the vast majority of sales is managed for value.

Also the EBITDA as well.

But far more skewed probably? Is that a fair...

The majority -- the far majority also on the EBITDA is related to the natural value. Because I said, it has a decent margin and decent profit profile. So you can make some assumptions there.

Yes. I was curious about the macro sensitivity offshore guidance. Obviously, this morning, we had oil price collapsing and currency going all over the place. So just wondering, what's your base case scenario in terms of GDP, main currencies and the commodity side of the equation? And in terms of the sensitivity analysis, what would be the most relevant? Is it sugar price, the Thai baht? I mean, just to get a sense of what could go wrong in the macro developments.

Well, clearly, indeed, I mean, there are things we do not control, so seeing the market movements today and over the last days. But indeed, we have our position in Brazil, in Thailand with the currency exposure. But obviously, the fact that we have a global footprint today and we are really nicely spread across different type of substrate to feed our fermentation is one of the strengths we have. So we work with, of course, some methodology by hedging and, let's say, also hedging our feedstock and raw material for a period. So we are not directly exposed per se, because we have good coverage on this. So having said that, obviously, yes, there are still a lot of moving parts that could affect us in terms of currency in these troubled times. But yes, what we -- the way we build our plant was, again, taking some assumptions that pretty much in line with what we've had over the last month. And so we didn't -- don't expect any major changes in that respect. So obviously, when we decide about major investment decisions, as we've done for the lactic acid plant, we look at a number of things in terms of, indeed, currency and sugar carbide, right feedstock with the assumptions going forward. So that's, again, part of the intelligence we try to build internally to figure out the big balances, I mean, over the world between the various sugar markets, corn market, wheat market and so on.

Yes. Maybe to add on that. So in the annual report, every year, we are quite transparent on our currency exposure. So we are hedging the transactional exposure. We're not hedging the translation exposure. And as you know, a big share of our business is in the space, so it's dollar-exposed. So it does mean if the dollar weakens more or less $0.01 is a good $1 million low in EBITDA. So we're benefiting from strong dollars in the past, and we have to see where the dollar is going. The yen, for example, there are -- improvement of the yen strengthening will help us. So those exposures you can find pretty nicely, I would say.

Yes. So 3 short questions. Firstly, on omega-3. So you have a different product in terms of technology versus your key competitor, Veramaris. But can you confirm that in terms of the price value that your product offers that you're at least at par today versus Veramaris? That's the first question. Second, could you kind of give an indication of the amount of money that you're investing in the business in terms of sales force, applications, et cetera, et cetera? And then thirdly, Eddy, electronics business was a bit of a drag on the Biochem division last year. Can you still confirm that you're back on track, let's say, what else, with Q1, Q2 this year?

So maybe I'll take the first on the algae products, and again, not speaking about our competitors in there, but about our own offering, and again, without entering into too many technical details. But we've developed over the last month also some liquid versions of our product to make sure that we would be able to be flexible and offer both a powder biomass-based product, that was the original product, to a liquid version. So this is already in the play and actually is already, let's say, in the market being sold so as a commercial product. So now we have both options, which is one of the nice evolution over the last 3 months. Yes? So it's pretty recent, but it's one of the move that we've done. The other question is difficult, because I believe that seeing the size of the price and the market momentum, you're not enough -- 2 in the market to preach the fact that this really makes sense. And there is really room for 2. And the more we are preaching and trying to convert the market and pushing to the retailer, the best. So I think on that, I would look at it in terms of, can we bring the right functionality to the, let's say, mid fish farmer in aquaculture and can we also support the development. Because they are facing major issues in terms of availability of wild fish or in terms of sustainability footprint and in terms of margin. So that's a bit the answer on the omega-3. On the...

Yes. On the investments as a variety over an earlier question, but like I said, we start off with this 50% and trending up to the 70% towards the end of the study period. So if you take the math and assume a certain growth between the 4 and the 7, and you assume a certain inflation on our fixed cost, then you can see more or less what we will invest in terms of, indeed, expanding our R&D, the applications, this is where that will be. So that is, indeed, what we will invest, but it will really be also at the earlier period of the study period. So don't expect us to jump to the 17% margins, right, very short term. And the third question? Sorry.

Electronics.

Electronics. Maybe you want to say something about it?

Yes. The electronics market is recovering slowly. And that's something that will be managed by Marco in the future. But since I was responsible up until now, just wanted to make some comments. Partially, it has been dampened by coronavirus, because most of the electronic market is in Asia, and coronavirus hit Asia the most. That doesn't mean that it will not recover. It will -- still recovering, and we are seeing a good momentum coming into Q1 and Q2.

Just like to come back on PLA in the end markets. It's my understanding that PLA pricing is now disconnected from polystyrene pricing. That's really good news for you and the JV. What are the applications where you're finding that consumers and customers have a need for PLA which can't be met by PS?

I would say these have a lot of very diverse technical applications where, actually, the PLA is being used in blends and not on its own. Because some of it, if you replace polystyrene in food packaging or veg or even meat, these are pretty straightforward. But what we've seen during the development, actually, and that was the good surprise, is that the breadth of type of customers is much wider than what we initially anticipated. And also by supplying the -- not just the direct customers, but the compounders, they are using our products in a wide varieties of products. So I would say it's very variable. It's across many, many types of technical applications. Marco, maybe you can build on that?

Yes, sorry. So obviously, as sometimes, as you said, it's similar to polystyrene in some of the functionalities. So that's why you're alluding to this, to the polystyrene, let's say.

And historically, NatureWorks had a policy of meeting the PS price head on and basically selling PLA as a substitute for PS.

Yes. And I think that, that's correct if you look at the properties of PLA versus polystyrene, where actually, that is the logical one to say, I want to go in and match that. There are, I think, 2 things that are impacting the business today. One is you really need to look at the functionality other than just polystyrenes. One, we're talking about biodegradability, bio-based and end-of-life opportunities, you have different opportunities than polystyrene, and I think you have a different driver there. So once that it becomes a driver, you start to see the disconnect.

Yes. I mean we're aware, for example, use of PLA in fracking, in cigarette filters -- well, the heat-not-burn cigarette filters. What other applications are there that you're seeing where PLA is uniquely positioned to fulfill the need?

Yes. I would say that I think today, still a big piece of it is still in the food packaging, and there's still a lot to develop in that area. But we do see, with the technology, we have to be able to go into other plastics we see today. I think another impact, as of today, of course, we announced and we started our joint venture as a second PLA, let's say, a major player. With that, of course, you get a release of customers that wouldn't be dragging their feet to get into the market, because it was only one supplier. And today, they're actually willing to open these opportunities.

Yes. There was one application in the movie, where it was mentioned that you can make the coffee cups with the coffee that is in there is already compostable, but the cup, typically not and especially not if it is made out of aluminum. If you have that as a PLA in the packaging, basically you can compost the whole thing. That's one application. And of course, there's a lot of coffee consumed in the world. But there's one application, where clearly, it may have the same characteristics, polystyrene. But there, the biodegradability is what really makes it different.

And you touched on the fact that the initial ramp-up has been caused by some customers dragging their feet. When you look at the volumes that you're seeing coming through now, is that pent-up demand because NatureWorks is unable to supply? Or is that actually new customers deciding they will take on PLA as a first-time application, because they now see dual sourcing supply, and therefore, the risk of using PLA is much lower?

No. I really think it's a combination, but really, what you see is that opportunities are improving, are increasing. They can see 2 things. One is 2 player, but the other thing is also capacity ramping up. I mean we're saying that we're increasing. It's more available. So we really see the whole market growing, so the whole pie is growing.

Any other question?

So you're talking about EBITDA by 2025 being around 17% in the core business. How would that split up between food and lactic acid? And also, in terms of lactic acid, once you have your PLA plant -- no, your lactic acid plant in 2023, would that kind of be the point in time where we see, like, a boost in EBITDA potentially?

Eddy?

So in the attachment on the last page, you see where the last 3 years' margin development has been in the 3-leg set. It's not only the Sustainable Food Solutions, in the lactic acid, but also the Incubator. So that gives you a bit of an understanding and a feel of how much is the margin spread between the sustainable food and lactic acid. Towards that part of the strategy period, when the DHA, algae DHA business has been spun out of the Incubator, we stated that the rest of Incubator will cruise at 0.5% to 1.5%, so that is a minus to me, right? So that means the rest of the business is 17.5% to 18.5% at least. And then you can make more or less a judgment on how that's spread over food versus lactic acid.

And then also your algae-based protein with Nestlé, how is that going so far? Is it very successful, et cetera? And also, going forward, how is it going to spill over into the food segment? Is there going to be a lot of spillover benefit into the food segment? Is that really included in your guidance? Or do you leave it out for now?

So about the -- sorry, about the algae protein, absolutely, we are in the early days. We announced that very recently. So we are still in the kind of phase where we are working on, let's say, how do we improve our products in terms of, let's say, nutritional values, taste, color, and you name it, but also the regulatory push that needs to, let's say, take place. So you have in there some regulatory approval. And this is why I want to set expectations. We are not about to launch the product there. It takes a few years before you can come to market with these new products. So as we speak here, Marcel is leading, of course, this relationship from a scientific standpoint together with Nestlé. And we have a plan, and we have a Steering Committee that meets very regularly on progress and milestones that we've already set up. So we will keep you posted, but this is not a product we intend to launch in, let's say, months to come. So it's a multiyear program where we expect, obviously, to add a good sizable product that we can scale up in our pilot plant and then in a major plant in Brazil in the years to come. But we are very, very early days on that. Yes? So...

And just because you're going to be so much closer to Nestlé, is there -- do you think you'll have additional significant business in the food segment as well? Or is that kind of not really relevant?

I would say no.

Nestlé is already a customer of ours. And yes, the closer you get to your customers, hopefully, you can also be able to sell -- so the closer you get to a customer, the more intimacy, the more opportunities there are. So yes, the answer is, hopefully, they're going to like what we are doing with them and they're going to keep giving us more business.

Yes. I think -- so I want to thank you all for the time today. I hope we've got you in a much better understanding of what Advance 2025 is about. We are really looking forward to update you on a very regular basis with how the strategy is evolving and the delivery, obviously. So we are certainly committed to make it work. We know that strategy is one thing, execution is what makes the difference. So we will not, as a team here, lose sight of that. So thanks for coming. Thanks for people on the webcast, and see you pretty soon. Thank you.

This concludes the Corbion Capital Markets Day of March 9, 2020. Thank you for listening. You may now disconnect.