Corbion: The Digest’s 2015 5-Minute Guide

Corbion has over 80 years of experience in fermentation and downstream processing, is the global market leader in lactic acid, lactic acid derivatives and lactides, and a leading company in functional blends containing enzymes, emulsifiers, minerals and vitamins. The company delivers high performance biobased products made from renewable resources and applied in global markets such as bakery, meat, pharmaceuticals and medical devices, home and personal care, packaging, automotive, coatings and adhesives. Its products have a differentiating functionality in all kinds of consumer products worldwide.

In 2014, Corbion generated annual sales of €770.1 million and had a workforce of 1,893 employees.

The Situation

Last fall, Corbion re-aimed itself with the launch of its 2015-18 “Disciplined Value Creation” strategy.  In debuting the new direction, CEO Tjerk de Ruiter said “In its core, Corbion is a strong biobased ingredients company in food and biochemicals. At the same time, we will build new business platforms in biotechnology based on our lactic acid expertise.” The company said it would strengthen its core biobased ingredients unit with differentiated market strategies and portfolio choices and a “Streamline”, program to align the organization to these portfolio choices, simplify our business processes, and optimize the manufacturing footprint.

The Biobased Innovations business unit will consist of its PLA/lactide business, succinic acid joint venture with BASF (Succinity), gypsum-free fermentation technology, fermentations based on 2nd generation biomass, and other longer-term development projects. This unit will drive for growth via a disciplined stage-gate investment approach.

The company said “there is an attractive demand outlook for PLA, albeit at a lower growth pace than previously assumed,” and said it would transition from being a lactide provider to a PLA producer and invest in a 75 kTpa PLA plant (estimated EUR 60 million capex) in Thailand. The company said it would proceed only if securing one-third of plant capacity in up-front offtake contracts — which it achieved early in 2015.  The company also acquired Archer Daniels Midland’s lactic acid business on March 31.

De Ruiter commented: “Our updated strategy addresses the global megatrends of resource depletion, population growth and food security. With our 80 years of experience and knowledge in lactic acid fermentation, protected by IP and proprietary knowledge, we are well positioned to alleviate the impact of these trends with our biobased solutions. Corbion will accelerate its thrust into the biotechnology arena, making the next step in the bioplastics value chain by becoming a PLA producer. With entry into PLA, Corbion will bring new biodegradable solutions to the plastic market.”

With its updated strategy, the company has set targets as follows:

• Biobased Ingredients: Net sales growth CAGR of 2-4% (1-3% in Food, 5-8% in Biochemicals), EBITDA margin >18% in 2018, while maintaining ROCE > 15% throughout the period. Recurring capex is expected to be on average EUR 35 million per annum.
• Biobased Innovations: negative impact on EBITDA not to materially increase from current levels (EUR -/- 14 million in 2013). Business plans at maturity are required to deliver EBITDA margin of >18% and ROCE of >15%. Recurring capex, excluding large commercial-scale plant investments, is expected to be on average EUR 20 million per annum.

Technology overview

(Lactic acid technology) Thermophilic lactic acid fermentation employing Corbion’s proprietary gypsum-free technology in which optimal recycling of auxiliary materials avoids the formation of the byproduct gypsum, a byproduct of all current lactic acid processes. Unique features of this technology are improved sustainability, scalability to volumes > 100,000 metric tons a year, more attractive manufacturing costs and versatility to be integrated into all of Corbion’s current and future organic acid production processes.

Top past milestones

1. Gypsum free Lactic Acid process validated: reduced environmental footprint and increased fermentation productivity

2. Start Succinity, JV with BASF, to produce biobased succinic acid, plant in Spain annual capacity of 10kt producing commercial quantities for global market

3. Development of high performance PLA including stereo complex grades as

Top future milestones

1. Making the next step in the bioplastics value chain by becoming a PLA producer and constructing a PLA plant

2. Development of second generation lactic acid, based on plant-based materials such as bagasse, corn stover, wheat straw, and wood chips

3. Introduction of FDCA, as biobased building block for PEF, new biopolymer for packaging application

Business model

Corbion has 2 kinds of businesses. 1) Biobased Ingredients (food&biochemicals):serving a wide range of markets Strong margins,limited investment requirements,moderate growth. Differentiated market strategies & portfolio choices. 2) Biobased Innovations: we leverage our lactic acid fermentation/DSP technologies to create new business platforms, high growth.

Competitive advantage

Corbin has unique capabilities and know-how in fermentation and the downstream processing of organic acids, and in the development/ production of lactic acid and lactides.This opens the path to new organic acid platforms and make us very well positioned to drive the lactic acid economy to a new level. Our deep end market understanding and strong

Project

Gypsum Free Lactic Acid Technology

Capacity: 10.000 ton/year

Year and month first in service: July 2013

Feedstock: sugar beet

Description of process technology: Lactic acid fermentation employing Corbion’s proprietary gypsum-free technology in which optimal recycling of auxiliary materials avoids the formation of the byproduct gypsum, a byproduct of all current lactic acid processes. Unique features of this technology are improved sustainability, scalability to volumes > 100,000 metric tons a year, more attractive manufacturing costs and versatility to be integrated into all of Corbion’s current and future organic acid production processes.

Location: Gorinchem, the Netherlands

Products produced: lactic acid and lactic acid derivatives