Thank you, operator. Ladies and gentlemen, good morning and welcome to this conference call on DSM's full year 2019 results which we published earlier this morning, I'm joined today by our three managing board members, being Feike Sijbesma, our outgoing CEO, and the two incoming CEOs, Geraldine Matchett and Dimitri de Vreeze who, as you know, assumed their position as co-CEOs on February 15.

Geraldine will give a short introduction as usual, after which we will open the line for questions. As always, I need to caution you that today's conference call may contain forward-looking statements.

In that regard, I would like to direct you to the disclaimers about forward-looking statements as published in the press release. And with that, I hand over to Geraldine.

Thank you, Dave. Good morning, ladies and gentlemen.

It's my pleasure to welcome you to this call on DSM's full-year results 2019, I will provide a few comments on the key slides of our investor presentation that we published this morning together with our press release and then we'll open the line for the Q&A session. Before starting, I have to point out that our full-year 2019 results are reported against a set of prior-year figures that included a significant additional benefit from the exceptional supply disruption in some key vitamins that we clearly communicated all of throughout 2018 as the temporary vitamin effect.

In order to provide as much transparency as possible, we continue to show this separately, calculating growth against 2018 total results, including this special event as well as the comparison excluding this event. Of course, from the perspective of monitoring the progress of our business, the comparison to prior year's underlying business is the only meaningful one.

For this reason, in the remainder of this introduction, I will compare the 2019 results versus the underlying business as estimated and reported in 2018. One more comment on comparisons.

Please note that we adopted the new IFRS 16 standard on lease accounting as per its effective date on January 1, 2019, while our 2018 figures are not restated. You can find the full information on this on page 25 of the press release.

This said, let's start with the financial highlights on page 2. We are pleased to report a good year 2019 despite the challenging macroeconomic environment.

We achieved a high single-digit adjusted EBITDA growth of 10%, which includes a 3% IFRS 16 benefit, which is in line with our Strategy 2021 targets. Nutrition delivered a good performance with an adjusted EBITDA up 12%, including 3% IFRS 16 benefit.

This was driven by a solid performance from Animal Nutrition despite the African swine fever headwind, while Human Nutrition was softer, and a strong performance in Personal Care and Food Specialties. Materials demonstrated again the relative earnings resilience of its specialty portfolio against weak market conditions in some of our end markets.

We also delivered a very strong adjusted net operating free cash flow, up 47% including a 10% benefit from IFRS 16. And finally, I'm pleased to report that we continued to step up our sustainability performance in line with our ambitions and our purpose-led organization.

Now, before commenting on our outlook 2020, let me first comment on the fourth quarter results and some of the individual business performance. And for that, let's move to page 3.

Q4 was a solid quarter, especially in light of the soft trading conditions in some of our markets. Adjusted EBITDA was up 7% or 3% excluding IFRS 16.

Nutrition saw a minus 1% organic sales development, with 2% organic sales growth in Animal Nutrition despite the African swine fever and a minus 6% organic sales in Human Nutrition due to softer markets in Food and Beverage and Early Life Nutrition. Personal Care and Food Specialties was strong with a 7% organic sales growth.

Nutrition adjusted EBITDA increased 9% or 6% when excluding IFRS 16. Materials top line remained soft with a minus 11% organic sales development, mainly due to volumes down 9% owing to ongoing weak market conditions in some of the end markets, together with some further destocking in Q4.

Highlighting the relative resilience of the Materials specialty portfolio, however, the adjusted EBITDA for the fourth quarter was down only 1% despite the weak top line, which includes a 2% benefit from IFRS 16. Let's move now to page 8 for a few more comments on this year's performance in Nutrition.

Overall Nutrition delivered a good top line growth of 5% in 2019, with an organic growth of 2% driven by higher volumes and an overall stable price mix effect. This was achieved through a solid top line growth in Animal Nutrition, as well as strong results in Personal Care and Food Specialties, while Human Nutrition showed some softness.

In Q4, Nutrition reported a slightly negative organic growth, with volumes up 1% and prices down 2%. As already mentioned Nutrition realized a 12% adjusted EBITDA growth in the year, including 3% from IFRS 16.

In Q4, Nutrition realized a 9% adjusted EBITDA growth, including 3% from IFRS 16. The adjusted EBITDA margin remained strong at 20.7%, including 50 basis points from IFRS 16 versus 19.5% in prior year.

Before commenting more on the performance of each of our Nutrition businesses, let me first cover briefly the launch of Fit for Growth. For this, let's move to page 9.

As indicated here, in order to increase our agility and driving above-market profitable growth, Nutrition launched this week a Fit for Growth program. By simplifying our operating model and further improving business steering, this program aims to improve how we serve our customers.

Nutrition will introduce two business lines in Animal Nutrition and Human Nutrition with differentiated go-to-market approaches. At the same time as enhancing our ability to drive growth, this new setup will lead to around 350 redundancies and create a more efficient organization better able to respond to the evolving customer needs.

Now, moving to the performance of Animal Nutrition, let's go to page 10. Overall, business condition for Animal Nutrition was strong across all species and geographies in 2019 except for the swine business in Asia, where we saw a continued bigger impact of the African swine fever than originally estimated.

The disease has spread across China and into Southeast Asia, which account for more than half of the global pork production and the culling measures have affected in the range of 35% to 50% of pork production in the region. Whilst the global demand for animal protein is gradually leading to increased production of other species and in other regions, the scale of this disease has led to short-term disruptions with reduced feed demand for swine in Asia impacting our growth.

In the fourth quarter, business conditions were unchanged and Animal Nutrition realized a 2% organic growth, reflecting an estimated impact of the African swine fever of about 3%, same as in Q3. Having said that, we do believe that the measures taken to bring back pork production to the necessary levels in Asia as well as the new measures to increase biosecurity will eventually be beneficial for DSM.

Let's now move to Human Nutrition on page 11. Human Nutrition reported a marginally negative organic growth for the year, with a 2% increase in volume, being offset by lower prices.

Softer macroeconomic conditions started to weigh on demand in food and beverage part way through the year, whilst early life nutrition, which showed a strong performance in the first three quarters of the year, also had a softer fourth quarter. The other segments such as dietary supplements performed well and i-Health sales remained particularly strong.

The minus 3% price effect was driven by mix and lower prices in our Chinese vitamin C. As always, please remember that due to our large portfolio of ingredients, changes in top line due to price do not necessarily equate to a change in our margins as you have seen with our margins being up in the year.

As for the Other Nutrition activities, food specialties and personal care reported a very good growth. In food specialties, we enjoyed a good 4% organic growth in cultures and food enzymes.

And in Hydrocolloids, we recorded a 12% growth from the consolidation of Andre Pectin. Finally, Personal Care showed a very strong growth of 9% in sun and skin care.

In Q4, Human Nutrition reported minus 6% organic growth, driven by lower prices resulting from the softer early life nutrition and the lower prices in our Chinese vitamin C. Moving on to Materials businesses.

Let's go to page 13. In 2019, our Materials businesses were confronted with weak macroeconomic conditions affecting some end markets.

Engineering Plastics saw persistent softness in China and in the global automotive segment, while business conditions started to stabilize in Resins towards the end of the year. Dyneema continued to enjoy strong business conditions in 2019, especially in personal protection.

These market developments resulted in our volumes being down 5% for the year, while the negative price development of minus 3% fully reflects lower input costs. The adjusted EBITDA closed at €509 million in 2019, only 1% down versus prior year, including 1% from IFRS 16, demonstrating the strong resilience of our specialty portfolio in weaker market conditions.

The strong performance of the higher-margin businesses, especially Dyneema, combined with our good margin management and proactive cost control delivered an adjusted EBITDA margin of 18.5%, up versus 17.6% in prior year, including 30 basis points from IFRS 16. In the fourth quarter, we didn't see a material change in business conditions, although Functional Materials saw its sales of specialty coatings decline, driven by a temporary slowdown in fiber optic cable sales awaiting the anticipated infrastructure investments in 5G network.

Now, let me turn to page 17 for some quick comments on our cash generation and working capital. Page 17.

The adjusted net operating free cash flow increased by 47% to €801 million, which includes 10% from IFRS 16, well above our strategic target of an average 10% increase year-over-year. Total working capital as a percentage of sales was up by 200 basis points to 26.3%, resulting from the combination of the negative effect of acquisitions, IFRS 16 and foreign exchange movements.

Inventories, which are over time the key drivers of our desired reduction in working capital, declined towards the year-end when excluding the impact of acquisitions and FX. This said, we are continuing to actively push our programs aimed at improving our overall working capital performance.

Net debt closed at €1.144 billion, up from €113 million at the end of 2018, mainly resulting from our €1 billion share buyback program, of which we executed €600 million in 2019, as well as the adoption of IFRS 16 and acquisitions. Our return on capital employed, our ROCE, for our underlying business was down 130 basis points to 12%, including 30 basis points from IFRS 16, mostly driven by the impact of acquisitions.

And now, let's turn to page 19 for some final comments on the outlook. For 2020, we expect to continue make a good financial and strategic process, in line – progress, sorry, in line with our Strategy 2021 plan.

Our businesses are well positioned to capitalize on strong long-term fundamental growth drivers related to the world's most pressing challenges and we expect our large innovation programs to begin to contribute in 2020 and further expand during 2021 and beyond. Clearly, there exists in the near term some macroeconomic uncertainty, which is having an effect on trading conditions in some parts of our business.

This has served to sharpen our focus on looking at our own strengths in order to offset these impacts through initiatives aimed at driving growth, cost and operational excellence across the Company. Finally, as is the case for many companies, we are responding to the coronavirus our situation as best as we can, but the impact remains very difficult to estimate.

As a result, our outlook for 2020 reads as follows. DSM expects to deliver a mid-single-digit increase in adjusted EBITDA for 2020 compared to prior year, together with an improvement in adjusted net operating free cash flow, in line with our Strategy 2021 targets.

This outlook is driven by DSM's own growth initiatives, innovation programs and self-help actions and does not assume any significant improvement in current macroeconomic environment. With regards to any potential impact of the coronavirus, DSM will monitor the situation closely.

And with this, I would like to open the floor for questions. Operator?

Morning, Geraldine. Morning, Dave.

Thank you for the questions. First one was on the new program, the restructuring of Nutrition.

I just wondered if you could share a bit more on what the simplification of the sales operation really involves and the motivation behind that. Also, when you talk in the press release about greater responsibility for the P&L at the management level, I assume – Is that new KPIs or maybe just some more detail on how that greater responsibility happens.

And then, staying on the same theme, the 350 redundancies, can you put a cost saving number on that, please? So, that's one question, but there's three bits to it.

And then, the second question is around the phasing of growth in 2020. So, I get that you've guided for a mid-single-digit EBITDA growth, but is it right to assume a slow start to the year?

And if so, it's very much a back-end loaded growth. Thank you.

Good morning, Andrew. Okay.

Let me handle these ones to get us started here, although I'll, of course, have Dimitri and Feike here as well with us.

Hi.

Good morning. [indiscernible].

No, no problem. I see how fast it goes.

Thank you very much.

Okay. So, let me say a few words first on Fit for Growth, which is I'm glad you bring it up because something that is – that we are very actively working on as we speak.

So, basically, as we say in the press release, what we are – one thing to do is respond to the fact that, as you can see, the markets out there for every company, growth is a challenge and you just need to be sharper in the way that you go to customers. And for that, instead of having a generic way of approaching the market, we want to be a little more specific.

Now, what we mean by that is that we have both in Human Nutrition and Animal Nutrition businesses that require more or less attention when it comes to making a sale, and that is what we are going to be more specific about. So, we will have teams that are more into selling the innovation-related products, which require more solution thinking where relationships are really valued over time and where you capture not only growth, but good value by doing that.

And some other customers are a little more, let's say, transactional maybe to describe it that way and we're very much – you focus on speed and efficiency rather than maybe investing in relationships. And that is really the purpose for this.

So, it's a very good thing. But given how much we have grown in Nutrition over the years that there comes a point where you sort of think about your organizational setup and make sure that your go-to-market is sharp and differentiated the testing on your customer base.

So, that's really the spirit behind it. So, it's very much about driving growth.

Now, when doing this, it does result in some redundancies because of the way that we are reorganizing ourselves. And we are estimating about 350, which will, of course, at some point, have a financial benefit there, but this will take a bit of time because it's – yeah, it takes a moment for this to come through the organization and we're talking a few tens of million, but we will have to see exactly how it pans out.

The main driver here truly is growth behind the purpose of this Fit for Growth program. As for our outlook, the phasing, I think it's important to realize that we are really looking here at the current business conditions.

So, as we stated, we are not expecting or we're not relying on a significant change in the conditions and, therefore, there is no reason for this to be heavily weighted towards the second half of the year. Having said that, I do want to caveat, that's clearly with the coronavirus now, we have some increased uncertainty on the first quarter and we will have to see how that pans out.

Great, thank you.

Thank you very much. Couple of questions from me.

Firstly, can we talk a little bit about the mix effects in the Nutrition business? Obviously, we're seeing good margins, probably better than I was anticipating in this business, despite the headwinds.

And specifically, in Human where I think historically we've seen the Human business probably having higher margins than maybe Nutrition on average. So, could you help – is it that the headwinds are low-margin products that are falling out or is there kind of underlying growth there that's driving an improved margin performance?

And then, secondly, on Avansya, you say the product is in test today. Could you help us understand a little bit more about the stage gate for that product and the timeline when you might be able to announce either success or a signing with a customer?

Thank you.

Okay. Dimitri, do you want to take the first one?

Yeah, let me take the mix effect question on Human Nutrition. Overall, I think before we dive into Human Nutrition, I think it's also fair to say that we also have our Food Specialties business and our Personal Care business and our Hydrocolloids business, which we don't report under the Human Nutrition piece.

But let me zoom in on the Human Nutrition part because that was specifically your question. I think what we see, we have four segments there.

Dietary supplements in i-Health – and like Geraldine already said in her introduction – we see good growth there as well as in Pharma. What we see in two specific events that impact our growth rate in Human Nutrition, one is the sluggish market for food and beverage, which basically we see predominantly in North America.

It's also fair to say that, with the current vitamin C price context, we have been less aggressive in sales to these large global customers for food and bev. Some good news within that context.

I think the vitamin C prices has dropped and can only come up as from the level that we see today. The second part is our Early Life Nutrition business.

I think that's a high margin business for us. There, we've seen a very good sales in the first three quarters, with a soft quarter four.

And that had to do with the fact that our global customers saw lower demand from China, which is an important part of the ELN, Early Life Nutrition, demand due to lower birth rates and some Chinese competitors who gained share. This was supported by government initiatives.

This slowdown was not reflected in the first three quarters by our global customers and, therefore, they had to destock for quarter four as our customers needed to balance out production with lower demand. So all in all, I think for Human Nutrition, the growth drivers are in place, but we have these two special events, which we've highlighted for quarter four.

Thank you, Dimitri. And, Feike, do you want to talk to Avansya?

Yeah. I think Avansya is doing fine.

We started up the factory. We have the collaboration and joint venture with Cargill and we both target the different customers in our sales force.

So, we look more to the flavor companies, we go directly towards and they go to the big food and beverage companies they anyway serve. So, it's a very combined good sales force.

We are now – having started up the factory, we are in the testing mode for further bigger volumes with our bigger customers and that needs to work out in the course of this year. The taste profile of the product is very good.

Factory ramps, we can deliver the product. I think the product has much more stability in terms of supply chain than the natural stevia, which comes from plant extract and is more costly and more irregular on this supply side.

So, I think we are very well positioned here. And, yeah, the operation is there, the product is there with the right taste profile and the right cost profile, and so I have good hopes on the further development in the course of this year and need to see.

I cannot – by far two potential biggest customers, I don't mention by name, but all those big food and beverage companies are potential customers. I don't want to speculate when they really start buying big volumes, but it looks good.

Okay, thank you very much.

Yes. Good morning, everyone.

Well, first of all, congrats on the move, Geraldine and Dimitri. And to you, Feike, all the best and good to see that you will remain connected to DSM.

I had a few questions. On Nutrition, I think that Thomas' question wasn't really answered in my opinion.

So, maybe I'll have a swing at that as well. Can you explain to us how the EBITDA margin at Nutrition was strong despite Human being so weak?

Usually, I would expect that Human carries a higher margin. So, there will be a significant negative mix effect.

So, if you can explain what offset that. That is the first question.

And then, secondly, on the share buyback, the €1 billion is still there. Can you tell us what is withholding you of announcing another share buyback?

Okay. Good morning, Mutlu.

So, let me start maybe with the share buyback because, as you know, the capital allocation has not changed in our policy, which is we want to predominantly deploy our capital on our organic growth. Secondly, we apply it to our dividends and you saw the step up in our dividend, which is the proposed one to the AGM, which is in line with our ambitions.

And as you know, our dividend policy is stable, preferably rising. So, that's a very strong commitment there from a capital allocation.

Thirdly, M&A. And the share buyback is really the fourth element.

Now, when we announced the first billion, it's on the back of our confidence of the cash generation of the company, while retaining, of course, some financial flexibility to do some M&A. So, at this point, we think that our focus should be on driving growth, driving performance of our businesses, complete the billion.

So, you can expect the €400 million of share buyback to take us through about the middle of the year. And in that period, of course, we continue to look into potential M&A activities, primarily in our Nutrition part of the company.

Now, having said that, we never say never. It is the capital allocation policy and we can always see later on whether further share buybacks would make sense.

So, that's really the position on share buyback. And in terms of the mix...

Yeah, indeed. It's a little bit – the questions are – they just saw some softness in the HNH business in Q4.

Obviously, yes. Not so much in the ANH business, which I think against also the African swine flu, it did very well to be honest, helping, of course, the overall margin also in the total Nutrition where we give the margin for the total Nutrition business.

And you're right, we, especially on the pricing side, lose there where it is not the most profitable product on vitamin C. I agree with you there.

So, that hurts us also in the EBITDA a little bit less, although you see it in the organic growth, especially in HNH. And remind you that another part of the Nutrition business in i-Health, Dietary Supplements, Personal Care and Food Specialties, like with Hydrocolloids, Pharma like Dimitri was saying, in all those, we have been growing very well.

And therefore, you see in these, a little bit weaker volume. You see overall and you see a price decline which you don't see it so much in our margins, as you correctly indicated.

And, yeah, this vitamin C effect was likely – I guess, you will see that also in the first and second quarter, a little bit in our price movements because in the comp to last year – although I bet in terms of margins, it's not our highest margin product. So, in terms of the margins, you don't see that so much.

And in the second half year, like Dimitri was saying, it's troughing out. So, the second half year cannot go lower.

You don't see that in the comp anymore. Well, indeed, the other parts of Human Nutrition and in i-Health, Dietary Supplements, Personal Care, Food Specialties, Hydrocolloids, Pharma are growing very well and those are pretty high margin products as well.

So, that explains what you see in the organic growth versus what you see in the margins and, therefore, also the EBITDA.

Understood. Thank you very much.

Yes.

Good morning, everyone. The first question, just a clarification, please, around the buyback.

When I look at your press releases, I think the latest one said you've done €960 million. Obviously, within that is part of, I guess, exec comp and scrip dividend.

Can you just disaggregate that for me in terms of the €1 billion commitment versus what's been done as of mid-Feb? And then, the second question is around the leadership change.

And I just wondered if you could share some insights, just like maybe discussions at the board in terms of a co-CEO idea. It's maybe not totally unheard off, but it is unusual.

Did you look at certain case studies or examples where you thought that structured had performed well.

Okay. Thanks, Matthew.

Geraldine should start and I can think [indiscernible] Supervisory Board will think. But you start with share buyback.

Yeah, Matthew. The share buyback, I don't have the split here with me, but we can provide you with that.

But let me explain the dynamics of how it works. So, what we do is, firstly, by the way, the execution of the share buyback is given out to the banks that are executing it.

And in order to have efficient transactions, we combine the share buyback for the €1 billion program with the share buyback for the stock options and for the stock dividend. So, you saw the same actually in 2019, which is that, in those months around the incentive plans and the stock dividends, to get better hedging, we want to do it at about the same time and, therefore, the shares if you want – a share is a share, but we allocate it to different buckets in order to derisk the price.

So, for example, with the stock dividend, you want to be buying about the same time as the ratio is calculated. So, that's really what's happening in there.

The rest is very much a little bit at arm's length from us. And if we have a look at the volumes that are going through, we think that we will be completing the €400 million in Q2 and we'll have to see whether it's mid or end of Q2.

But it does maybe give me a chance to mention a clarification on the average number of shares in circulation because we did get that question a couple of times. It seems to stay high for the year 2019.

But that is because, because of this dynamic, the €600 million of buybacks came late in the year because we prioritized getting the options and the stock dividend buybacks done first, and that's why you see that the average number of shares in circulation remained at €175 million when, in fact, the year-end position is lower at €172.4 million and you will, therefore, see the full benefit from an EPS point of view in 2020, starting from that lower position. So, it's all the treasury mechanics that go behind these things, but it's fully in line with what we could have expected to see happen.

So, that's on the buyback. Now, Feike, the leadership change.

We are listening. Thank you for asking the question.

And I need to be careful. You never know.

what if my chairman also reads the transcript or calls in, and I should not speak on behalf of our Supervisory Board nor our chairman. But I think we did not – of course, we looked – or they looked also to examples out there and it is not the most common model.

I totally agree. And there are examples out there.

But this was not the point. The point was to look more to ourselves.

And Geraldine and Dimitri and myself formed the Managing Board over the last five years. We worked very close together in building the company, putting the strategy out there.

Also, the strategy we currently have, the 2021 strategy. So, we are totally onboard.

We have built it together and we want to continue. Continuation of the track record in terms of growth, in terms of innovation, in terms of managing costs, it was the most important element for Supervisory Board.

Can we continue that track and the track record which we had over the recent years? And then, two elements played a role.

If I look to the two persons – sorry for saying something about both of them, but they are complementary to each other. So, the fit between Geraldine and Dimitri was felt by me and also by our board as very, very strong.

And then, secondly, maybe tell something about our company that a co-CEO-ship could maybe not fit in every company, but I think in terms of the culture and the nature of the DSM, it fits with our company. Let me remind you, and that's also not that common in companies, we exist for 120 years and we always had the succession internally.

Not that we don't hire people from the outside world. We do at all kind of levels, but at the highest level, the CEO, it came always from the internal.

And this time, we played for the – Supervisory Boards also a very important role, can we continue on the track record? And I'm talking about the three elements they mentioned the most – organic growth; innovation, the big tickets; cost control and being added to acquisitions when they are value creative.

And that made the choice. And I need to say that the transition is going very, very smooth.

I don't want to call it relaxed, but you could almost call it a relaxed transition in a macroeconomic environment, of course which we discussed, which is not that easy, but they are fully focused on the business and innovation and delivery. So, I would feel comfortable.

And we see the same reaction internally. People say, 'hey, that track record which we have built, we need to continue.'

And that was I think their considerations.

Thank you, Feike. All the best.

Thank you.

Hi. Good morning, Geraldine, Dimitri and Feike.

Just a question of clarification on your FY '20 guidance for mid-single digit growth. At this point, given that you've seen some slowing top line in Q4, could you please talk through how much of that growth is driven by further price mix versus underlying volume?

And also, what contribution you're expecting from the acquisitions you've already done in that guidance? And then, just further clarification on the impact from the coronavirus.

I see that you're obviously monitoring the situation quite closely, but what impact have you seen so far? And could you remind us what percentage of sales are in China – of your sales are in China?

And also, how much of your manufacturing footprint is in China? Does this also mean that the guidance assumes no impact from the coronavirus?

Thank you.

Good morning. Alexandra.

Sure. Let me cover these.

So, firstly, on the outlook, I think as we've mentioned briefly earlier on the call, this outlook does include, if anything, the fact that the vitamin C low prices, which we perceive to be very much at the trough level at this point for all producers, will continue to be a headwind, certainly, for the first half of the year versus comp. And that is factored in.

Now, the rest, I'm not going to break down in all the volume, price mix. We have far too complicated a portfolio to go into that, but I think it's fair to highlight that that vitamin C dynamic will continue in Q1 and Q2.

And I think that we need to bear that in mind. Now, in terms of what is factored in, yeah, we do have our CSK acquisition that we were very pleased to close just before the year-end.

Now, it's not a very big acquisition, but we are happy to have it now part of the DSM family, and that is included in the outlook with all sorts of other elements which go in there. So, we have some positives like this and things like that, and, obviously, it will continue to be a challenge.

And as a result, we will be focusing very much on our own self-help actions. So, this is something that we have been doing now for many quarters, clearly, across the company, but with quite a strong focus, I have to say, on our Materials businesses that have been permanently keeping themselves very much in check in terms of their efficiency and their cost base.

Now, with Fit for Growth, we want to make sure that we can grow our Nutrition business very well, but it does also have an efficiency element to it, which will be gradually contributing within 2020. So, that's really the different pieces in the outlook that we have.

Now, to your specific question, does the outlook include the coronavirus. At this point, it is so difficult to assess what the impact is going to be that I have to say that, no, it probably does not reflect that.

It came a little bit late. And also, it's such a moving dynamic.

Now, let me give you a little bit of a feel for China. So, we have around about €1 billion of sales, both by origin and by destination in China.

Broadly speaking, it's about half Nutrition, half Materials. So, quite a mix.

We have 28 production locations in China, 5,000 colleagues there. And let's be clear, our focus has been on taking care of our colleagues first and foremost.

That was by far our priority. Now, our most important sites are up and running.

We have a few that are still down. The one that is near Hubei province was down anyway.

That was our vitamin E site in our joint venture partnership with Nenter, but that was already down for refurbishments, but it does mean that those – the reopening of the site will probably be somewhat delayed because no activity is taking place on the site there. So, that's broadly the picture on China as you should see it and we will – obviously, we have a team which is monitoring this every single day, particularly also because of the logistics.

So, it's one thing our footprint, but it is also what is happening to our customers and what's happening to our supply chain and what's happening in the logistic flows. So, I have to say quite a complex situation to manage and we'll see how it impacts us.

Thank you, Geraldine. Very clear.

Yes, good morning. A couple of questions from my side.

First on Materials. Can you maybe elaborate on the growth momentum for Functional Materials & Engineering Plastics?

Do you see – you mentioned, I think, you see bottoming out in some of the Engineering Plastic buckets. Do you see underlying growth coming back in Functional Materials?

When do you expect the 5G wave to kick in for you? So, that's the first question on Materials.

And then, the second one on the innovation projects. Can you maybe update on Veramaris, what the growth plan is?

You seem to be going very well with filling up the plants. But I guess you must be close to preparing next steps there.

So, can you maybe elaborate on that one as well? Thank you.

Okay, thank you for your questions. Dimitri, do you want to take Materials?

Yeah, thanks for the question. Let me try to show share some insights on Functional Materials.

I think there we supply coatings to Internet cabling. There are two dynamics.

You basically asked me about, how do you see the transition towards 5G. If I would have known, then most probably I would do something else.

Nobody knows. But I think it's important to say that, because the 5G technology is available, and when they will be adopted, we will benefit from that.

But because the 5G technology is available, people are holding back on investments on 4G, which doesn't help us. And that impacted the fiber optic materials business.

So, over the next year, we will get more insight on the transition rate towards 5G. If that will be quick, we will benefit from that.

If that will not be so quick, people will need to step up on the infrastructure and will reinvest again in 4G, which will then help us again. So, it's just sort of a stalling moment, an intermediate, temporary moment because people are waiting whether you go for 4G or 5G.

If you have an iPhone yourself, it's the same way you stick to the iPhone 8 or you upgrade yourself to iPhone X or not. So, this is something which is temporarily and that will – hopefully will be more clear towards 2020.

Secondly, your question on bottoming out on Engineering Plastics, that remark was predominantly made on building and construction for resins. So, there, we basically saw towards the end of the year, in 2019, bottoming out and stabilizing and even a bit of growth again.

But let me pass that and come back to your Engineering Plastic question. We certainly don't expect any recovery from the automotive market.

Automotive has been soft in our outlook for 2020. We don't assume any recovery from automotive or other markets.

So, Engineering Plastic in that sense is in difficult macro circumstances. That's also one of the reasons why we are beefing up our innovation more on the specialty side as well and being very vigilant on costs.

And therefore, we will see earnings growth, but on the Engineering Plastics growth, we will see some growth because the lower part of the business, what we call polymers, we will see a lower growth. On the specialty part, we are far more positive.

And Veramaris?

On Veramaris, yeah, as you recall, fish farms are more sustainable than emptying the ocean. But fish farms use the fish meal out of the ocean.

So, still emptying the oceans. It is prohibiting that by making the algae oils.

So, it makes it more sustainable. Secondly, the fish meal is fluctuating heavily in prices and it does not have to be made by fermentation.

So, that is the benefit. The other benefit is that our product is rich in EPA and DHA or DHA and EPA, I need to say.

So, that makes it also quality-wise more important. So, the product is great.

The factory ramp up started at the second half of last year towards this full year and reaching full capacity in the beginning of 2021. And the sales is ramping up the same way that the factories is ramping up towards the beginning of next year.

If you buy salmons, please do buy it in Germany from Kaufland, buy it in France from Supermarches Match, buy it in the UK from Tesco because those supermarkets are already starting with Veramaris-fed salmon amongst others coming from one of the farms, Lingalaks in Scandinavia, and that indicates that our customers are really interested in this. So, the customer interest is really great and we now further ramp up the factory through this year till the beginning of next year.

And like I indicated already with those three big retailers in Germany and France and the UK using our products, then the sales ramps up at the same moment. That's what we're doing.

Okay. And to come back on that, when might we expect new CapEx to be invested and how big of a potential do you see...?

That will not be my decision. It will be Dimitri's and Geraldine's decision.

But if the factory is in full capacity in the beginning of 2021, and as it looks like, if the sales development goes with the same speed as ramp up of the factory, and it looks like, then somewhere in the later course of this year, having seen the proof, they can start thinking about that. And I'm sure they will do that.

Whether they will announce something, that I leave to them and I don't want to place them in a difficult position now to say anything about that because that would be unfair. But, for sure, they will think about that.

Like we said already with the start of the factory, it might not be hopefully restricted to one factory. And for the time being, it looks good and they will decide their own timing when they announce something.

Okay, Feike. Thank you very much.

And all the best.

Yeah, good morning all. Thanks for taking my question.

I don't have much left to ask. Just two points of clarification.

And just in terms of your mid-single-digit EBITDA growth for this year, I'm wondering, is it fair to assume that actually based on your previous response that most of that will be profitability driven as opposed to top line driven? And I'm wondering how much of that is actually – your innovation program is really contributing to that?

My second point of clarification is around this new organizational restructure. Are there costs associated with it that we should be aware of?

And what's the timeline from which we should think about it? When are you expecting internally the results to show?

And will there be any change in reporting structure? Thank you.

Okay. So, clarifications in terms of the outlook, I think it's a combination of some top line growth and clearly some work on our efficiency earnings, et cetera.

So, I think it's fair to assume that the balances may be more towards the earnings than the top line, although we're not flagging here that we won't have top line growth. So, I would nuance a bit the interpretation.

And you can imagine, there are so many moving parts in that that it's a bit early to provide anymore direction. But it will be clearly a contribution from both.

Now, as to the Fit for Growth program, these are – obviously always takes a little bit of time. In terms of the cost, what you can assume is that our restructuring costs will be a bit higher in 2020 than they've been in 2019.

Not massively. A few tens of million.

But that will be picking up the cost of this program and probably you will see that in the first half of this year, most of it. As for the benefits, that will, of course, also take some time.

Remember that this program is really designed to drive growth as the first ambition and we will have some bottom line benefit, again tens of million, not a huge program, but very important in terms of boosting our ability to grow.

Yeah. And then we have only time for one remaining question.

Good morning all. Sorry to finish on a slightly duller note.

But coming back to Veramaris, your competitor, Corbion, took a write-down on their investments in algae at their last set of results. And I'm just wondering how you see your business developing differently to theirs and whether or not the fact that Veramaris is held in a JV structure means you have a different impairment procedure versus if it was wholly owned within the business?

My short answer is yes because you said write-off and develop – is your development differently. I guess so.

But I don't want to say too much about competition. I want to say that our product is a different product than they have.

They have a DHA product. It's not what the fish needs.

They need a combination of DHA and EPA. And that is what we have.

We have a different process, most likely at a totally different scale than they have. So, I think in terms of product, it's incomparable.

In terms of scale, it is also incomparable. I think what we provide is the real sustainability drive, with the right composition of the components in the product.

And that is, like I indicated, very much desired by the salmon farms. They need to show that a salmon farm is sustainable.

That's the whole reason not to empty the ocean and to have the salmon farm. So, they need to show it is really sustainable, but you need to come with the right composition of the product.

Otherwise, it doesn't help them. Secondly, you need to do it at that right scale.

Fish meal is fluctuating, like I indicated, in price. Fermentation, you can keep it at a stable price because every week it's the same cost.

And now, we are ramping up the output that will also help our competitive position further during the course of this year. And you saw in the several retailers in Europe, which now take our product onboard and be even open on that, that we see good prospects for it.

So, indeed, we do that together with Evonik and a very strong partner also in fermentation and the technology. So, I think you have two winning players in this field operating.

And I look very, very positive to this into the future. And let me not comment too much on competition.

Okay, fair enough. And, Geraldine, from your perspective, from a sort of accounting, technical perspective, are there different impairment procedures for investments versus wholly owned businesses?

No. Actually, that is – actually, it's not even been a conversation, to be perfectly honest.

But I would not see that there is a difference because we are – and I'm thinking that Evonik is probably is also IFRS like we are. So, we would be looking at it in the same way.

So, I don't see there an impact of the JV structure.

Right, okay.

Let's be clear, any impairment is not at the table at all. I would like to build on the previous question is the second factory at the table, you don't have that discussion at the table when you're discussing an impairment, to be honest.

Yeah. I was thinking about getting into a spat with my colleague elsewhere.

It remains to be seen whether or not you even need the second factory at all. And it's presumably not within your gig [ph] to decide the impairment.

It's the auditors who decide whether or not you need to impair.

No, no, not true. But an impairment, you do when it is disappointing.

And a second factory, you don't do when it is disappointing.

Absolutely.

The discussion is when we ever decide on the second factory, and that's the contrarian discussion about what you hinted.

Absolutely. Okay, understood.

Thank you very much. Feike, all the success for the future.

And Geraldine and Dimitri, wishing you all the best for the challenging conditions ahead.

Well, on that note, because we're running now a little bit out of time for Q&A, but, Dimitri, maybe you still want to say some closing remarks.

Yeah. Thank you, Dave.

I'll keep it brief. First of all, I would just like to say that Geraldine and I are honored to start our new roles.

And we're very happy with where the company is today and with its potential and we certainly will build on it. I will look forward to drive the company, building on our purpose-led and performance-driven strategy and we remain focused on, one, driving growth; two, focus on innovation; and three, on cost and operational excellence throughout the company.

And as such, we feel confident in our full-year outlook where we expect to deliver a mid-single-digit increase of adjusted EBITDA for the year and our outlook 2020 is based on our own strength including innovation and self-help. It doesn't assume any significant improvement of the current macroeconomic environment.

And as a result, Geraldine and I, we remain committed to the Strategy 2021. Finally, I would like to take this opportunity on behalf of Geraldine and myself to thank Feike.

This was his last earnings call as our CEO. And he has shown remarkable leadership over these years at DSM.

He's always been here to support us in both heart and mind. And I know you will all join us in wishing him all the best for the future.

Feike, few words from you.

Thank you all for calling in again. Over the last 13 years, we did this over 50 times together.

And the last years together with Geraldine, which was my pleasure. One word about 2019 and 2020.

I'm glad that we can close 2019 with again a good year despite not easy macro circumstances, but with the EBITDA and the cash increase, I think we closed the year very well. And I'm glad also with the outlook for the year.

And like Geraldine indicated, on our own strength, not assuming improved macros or whatever, and that is important. And on that note, I want to say, yeah, I started in this role 13 years ago.

We had many of those quarterly calls. You've seen the value creation and share price appreciation over the years compared to when I started and where we are today.

And I realize that you can only run a company with the support of your customers, with the support of your own people, Geraldine, Dimitri and all the others, but also with the support of you, from the financial community, who are the final owners of our company and to whom we need to deliver. And the interactions, communications, support, I always felt, including, by the way, the challenges you gave from time to time, and that is the way it should be.

I really have full confidence, like I mentioned before, in Geraldine and Dimitri and especially that they can continue this journey. It's a remarkable company.

I've said before. I'm totally not objective on DSM.

Totally subjective. But in that view, it's a great company and we see huge potential also for the future in its innovation, in its growth momentum, and I'm sure they harvest that.

And as a shareholder, I would love to see them harvesting that, like you do maybe also. And I thank you all for calling in, for interacting, for being interested in the company.

Thank you. And with that, for the last time after 13 years, I hand over to Dave Huizing, Head of Investor Relations.

Thank you, Feike. By the way, also thank you, Geraldine and Dimitri.

This brings us to the end of the call today. I realize that we still have a long waiting list for the Q&A session.

We will reach out to you, so we didn't forget about you. And for everybody else who wants to have further clarifications, et cetera, as usual, please feel free to reach out to us.

And with that, I hand the call back to the operator.