Integrated
Annual Report
2023
Table of Contents
Our company ......................................................................... 3
About dsm-firmenich ........................................................................ 3
Key data ......................................................................................................6
Letter to our Stakeholders ............................................................. 8
Integration update ............................................................................... 11
Strategy ..................................................................................................... 13
Science & Research .......................................................................... 16
Our stories............................................................................................... 19
Business ............................................................................... 30
Perfumery & Beauty........................................................................ 30
Taste, Texture & Health .................................................................. 36
Health, Nutrition & Care ................................................................ 42
Animal Nutrition & Health ............................................................ 48
Corporate activities ......................................................................... 52
Financial performance ................................................................... 53
Sustainability .....................................................................60
Letter from our Chief Sustainability Officer ................... 60
Our approach to sustainability................................................. 62
Sustainability performance.......................................................... 71
Stakeholder engagement ........................................................... 102
Sustainability statements ............................................................. 111
Assurance report of the independent auditor ............. 127
Risk Management ............................................................ 133
Our approach to Risk Management .................................... 133
Material risks and uncertainties ............................................. 135
Governance and Compensation ............................... 138
Group structure, capital structure and shares ............ 139
Board of Directors ........................................................................... 142
Executive Committee ................................................................... 157
Shareholder participation .......................................................... 163
Change of control and defense measures ..................... 164
Auditors .................................................................................................. 165
Board Statement .............................................................................. 166
Compensation report 2023 ...................................................... 168
Report of the statutory auditor ............................................. 190
Consolidated financial statements ......................... 192
Notes to the consolidated financial statements ........ 198
Statutory Auditor’s Report .......................................................268
Parent company financial statements ................... 274
Notes to the parent company financial statements276
Statutory Auditor’s Report ....................................................... 285
Other information .......................................................... 289
dsm-firmenich figures: five-year summary .................. 289
Concepts and ratios ...................................................................... 291
Abbreviations .................................................................................... 297
dsm-firmenich Integrated Annual Report 2023 2
Forward-looking statements
This Integrated Annual Report may contain forward-looking statements with respect to dsm-firmenich’s future
(financial) performance and position. Such statements are based on current expectations, estimates and projections of
dsm-firmenich and information currently available to the company. dsm-firmenich cautions readers that such
statements involve certain risks and uncertainties that are difficult to predict and therefore it should be understood
that many factors can cause actual performance and position to differ materially from these statements. The
information provided in this Integrated Annual Report is provided as of the date of its issue. dsm-firmenich does not
assume any obligation to update any information or forward-looking statement provided in this Integrated Annual
Report unless required by law. The English language version of this Integrated Annual Report prevails over other
language versions.
dsm-firmenich Integrated Annual Report 2023 3
Our company
About dsm-firmenich
dsm-firmenich was launched on 8 May 2023. Our company brings together the best of two market leaders in fragrance,
taste, texture, and nutrition, united in a common purpose: to bring progress to life, by combining the essential, the desirable,
and the sustainable. dsm-firmenich is a Swiss-Dutch company, which is listed on the Euronext Amsterdam and with dual
headquarters in Switzerland and the Netherlands. Our company has operations in almost 60 countries and revenues of
more than €12 billion.
We bring progress to life
With a diverse, worldwide team of nearly 30,000 employees,
we are innovators in nutrition, health, and beauty. We reinvent,
manufacture, and combine vital nutrients, flavors, and
fragrances to help the world’s growing population thrive,
sustainably.
We bring together a comprehensive range of solutions, with a
portfolio of high-quality natural and renewable ingredients
and a team of cutting-edge scientists, breakthrough
innovators and passionate creators who draw on a combined
legacy of more than 125 years of purpose-led scientific
discovery and innovation.
Working in close collaboration with our customers, we
combine what is essential for life, desirable for consumers,
and more sustainable for our planet. At the center of these
three: we seek to tackle the tension between what consumers individually want (the desirable), what society needs (the
essential), and what the planet demands (the sustainable).
We touch the lives of people throughout the day with our innovative solutions – whether through personalized morning
supplements containing essential vitamins, omegas, and probiotics, a revitalizing mid-morning drink from healthy cows
that produce less methane, a tasty burger made with plant-based proteins for lunch, or a dash of fine fragrance that
creates positive emotions and enhances well-being at any hour of the day.
Our Company – About dsm-firmenich
dsm-firmenich Integrated Annual Report 2023 4
A brief history
The year 2023 marked the culmination of a history stretching back over more than 125 years of purpose-led
scientific discovery and innovation. The creation of dsm-firmenich brought together two industry leaders united by
their long-standing commitment to sustainability and their gift for continuous evolution in an ever-changing world.
Building on more than a century of transformation
DSM has had a long history of reinvention. Set up in 1902 to mine coal reserves in the southern Netherlands, its name
originally stood for Dutch State Mines. Over the course of the 20
th
century, DSM transformed itself into a chemical
company, beginning as early as 1919 with the opening of a coking plant.
From the 1990s onward, DSM underwent another transformation – this time, into a company focused on science-based
health, nutrition, and sustainable living. Along the way, DSM worked with a wide range of partners to deliver innovative
solutions that nourish, protect, and improve performance.
From a startup to a global house of creators
Firmenich was founded as a startup in 1895, in Geneva (Switzerland) – more specifically, in the garage of Charles
Firmenich. It was originally the business of Philippe Chuit, a scientist and visionary perfumery ingredients creator, and
Martin Naef, a shrewd businessman. They were soon joined by entrepreneur Frédéric Firmenich.
After the retirement of Chuit, and later Naef, the Firmenich family became the sole shareholder. In 1939, the company’s
first research head, Leopold Ruzicka, was awarded the Nobel Prize in Chemistry. Over the years, Firmenich evolved –
creating groundbreaking molecules, developing new flavors and fragrances, and driving sustainability.
Our Business Units
From fragrances to farming, meals to micronutrients, our four distinct yet complementary Business Units strive to
address the latest consumer needs and wants in a sustainable way. We are uniquely positioned to help our customers
realize their ambitions and address evolving consumer trends. We do this by creatively applying proven science and
drawing on data-driven innovation capabilities as well as exceptional standards of operational excellence.
Our Company – About dsm-firmenich
dsm-firmenich Integrated Annual Report 2023 5
Our people and our values
At dsm-firmenich, our individual talents drive collective progress. Guided by our values, our diverse, worldwide
team of nearly 30,000 employees has a shared passion for a more sustainable future.
We strive to be a force for good. Because caring about customers, communities, people, and the planet is the right thing
to do. And this is the only way to grow an enduring, profitable business. Sustainability is at the core of our strategy as we
develop our roadmap and science-based targets based on the United Nations’ (UN) Sustainable Development Goals, The
Ten Principles of the UN Global Compact and the Paris Agreement on climate.
We make bold commitments to positively shape the future, and we go above and beyond to fulfill them as we own the
outcome of what we do.
Ultimately, we recognize we can do so much more together, so we work as one team, partnering with our suppliers,
customers, worldwide organizations, and many others to make a measurable difference.
Our Company – Key data
dsm-firmenich Integrated Annual Report 2023 6
Key data
Reporting period
The sustainability data includes information from the combined entity for 12 months (DSM and Firmenich are reported as
of 1 January 2023). The sustainability data in this Report cover all entities that belong to the scope of the Consolidated
financial statements. If this is not the case this is mentioned specifically. As this is the first year of reporting for dsm-
firmenich, no comparative data is available for 2022. For more information, see Sustainability statements.
The financial data includes information from the combined entity for 12 months, which includes Firmenich as of 1 January
2023 (pro forma, see Concepts and ratios). It also includes information that is presented in accordance with IFRS, which
includes Firmenich from the merger date onwards.
Key data sustainability performance
Sustainability performance
2023
Workforce at 31 December (headcount)
29,301
Female:male ratio
37:63
Female:male ratio (Global Management Team)
35:65
Total employee benefit costs (in € million)
2,891
Frequency Index Total Recordable Incident Rate
0.31
Employee Engagement Index (in %)
82
Primary energy use (in TJ)
19,300
Greenhouse gas emissions, Scope 1 and 2 (in kt CO₂e)
915.4
Greenhouse gas emissions, Scope 3 (in kt CO₂e)
9,996
Our Company – Key data
dsm-firmenich Integrated Annual Report 2023 7
Key data financial performance
Financial performance (in x € million)
Pro forma
2023
IFRS-based
2023
Sales from continuing operations
12,310
10,627
Adjusted EBITDA from continuing operations¹
1,777
1,443
Adjusted operating profit from continuing operations (EBIT)¹
666
430
Operating profit (loss) from continuing operations (EBIT)
(497)
Net profit (loss) for the year from continuing operations
(550)
(636)
Core adjusted net profit for the year from continuing operations¹
555
380
Adjusted gross operating free cash flow from continuing operations¹
999
856
Capital expenditure, cash based
734
684
Dividend for dsm-firmenich shareholders (based on profit appropriation)²
663
Net debt
2,215
Shareholders' equity
22,908
Total assets
34,270
Capital employed
26,766
Market capitalization at 31 December³
24,442
Other financial indicators
Per ordinary share in €
Basic earnings per share
9.14
Core earnings per share¹
2.03
1.54
Financial ratios (%)
Adjusted EBITDA margin (continuing operations)¹
14.4
13.6
Working capital / annualized net sales (continuing operations)
31.1
31.1
Core adjusted ROCE (continuing operations)¹
5.2
Equity / total assets
67.3
1 In presenting and discussing dsm-firmenich’s financial position, operating results and cash flows, dsm-firmenich (like many other publicly listed
companies) uses certain Alternative performance measures (APMs) not defined by IFRS and referred to as ‘(Core) Adjusted’. These APMs are used
because they are an important measure of dsm-firmenich’s business development and dsm-firmenich’s management performance. A reconciliation of
IFRS performance measures to the APMs is given in Note 2 Alternative performance measures to the Consolidated financial statements.
2 Subject to adoption of the resolution by the General Meeting of Shareholders to be held on 7 May 2024.
3 Source: Bloomberg.
(173)
Our Company – Letter to our Stakeholders
dsm-firmenich Integrated Annual Report 2023 8
Letter to our Stakeholders
Dear Reader,
Welcome to our first Integrated Annual Report, in which we reflect and report on the inaugural chapter of our new
company and share our initial milestones and achievements.
In 2023, DSM and Firmenich joined forces in a merger of equals to create dsm-firmenich, a company in a category of one.
Bringing together more than 200 years of combined history, along with closely aligned values, the closing of the merger
marked the start of our journey as innovators in nutrition, health, and beauty, and the beginning of a new chapter for our
shareholders, employees, customers, suppliers, and partners.
With a team of nearly 30,000 employees and a network of 340 sites across 60 countries, we are poised to lead in the
reinvention, manufacturing, and combination of vital nutrients, flavors, and fragrances. By working closely together with
our customers to create what is essential for life, desirable for consumers, and – simultaneously – more sustainable for
the planet, we aim to bring progress to life for billions of people around the world.
Against the backdrop of the creation of our new company, we faced very challenging market dynamics and soft macro-
economic conditions in 2023. We suffered from unprecedented low vitamin prices, a continued destocking cycle and
negative foreign exchange effects. We took several actions to address these headwinds and reduce our costs. Despite
the headwinds, we remained committed to the successful integration of the merger and the delivery of our targeted
synergies.
Delivering synergies through Integration
Our focus in 2023 was on integrating the two legacy organizations, with business continuity and delivery of the targeted
synergies as key priorities. The transition proceeded smoothly, thanks in large part to the solid preparatory work done by
the integration teams.
We are well on track to achieve our target synergies of approximately €350 million Adjusted EBITDA per year. Around half
of this is expected to come from cost efficiencies, with the full run rate achieved by the end of year 3. The remaining part
of the synergies is expected from incremental revenues of €500 million, generated by an acceleration of innovation with
customers. There has been good early progress and we are building the full pipeline, whereby the full run rate is expected
by the end of year 4. These revenue synergies are driven by complementary capabilities and realized in the three
Business Units with the strongest strategic adjacency - Perfumery & Beauty (P&B), Taste, Texture & Health (TTH), and
Health, Nutrition & Care (HNC).
To guide us on our integration journey, we launched our new shared values – Shape the Future, Be a Force for Good and
Own the Outcome – which are based on the heritage of our two strong cultures. We are proud to see these being
brought to life in our interactions with colleagues, customers, suppliers, and partners.
Navigating a tough environment
As indicated above, we operated in a tough macro-economic environment in 2023, characterized by unprecedented low
vitamin prices, but also by a continued destocking cycle and negative foreign exchange effects. In this challenging
context, P&B recorded good performance while performance in TTH was solid. HNC, but especially Animal Nutrition &
Health (ANH), were weak on exceptionally low vitamin prices and destocking.
In light of these unprecedented economic conditions, we initiated the vitamin transformation program and accelerated
our plans implementing our cost synergies from the merger. The restructuring program of our vitamin activities, which we
embarked on mid-year, was our largest profit improvement and cost reduction measure in 2023. This program is
expected to result in an estimated Adjusted EBITDA contribution of around €200 million per year with the full run rate to
Our Company – Letter to our Stakeholders
9
be reached by the end of 2024. By year-end of 2023, we already made strong progress in executing the program through
the closure of the Xinghuo vitamin B6 plant in China and shutting down the Jiangshan vitamin C production in China.
Moreover, the sales model now supports a ‘go-to-market’ approach which is simpler and more efficient in the current
market environment.
We also advanced the review of all our business segments. This led us to the initiation of a process to separate out the
ANH business from the Group which we announced 15 February 2024. This should strongly reduce our exposure to
vitamins earnings volatility and reduce our capital intensity in line with our long-term strategy. We believe that the full
potential of our attractive and future-oriented ANH business could be best realized through a different ownership
structure.
Supported by our innovation pipeline, all these actions will help us to prioritize and accelerate the company’s nutrition,
health and beauty high-growth and higher-margin businesses, all of which is reflected in our mid-term targets.
Strategic growth investments
As a global player in nutrition, health, and beauty, we continued to invest in our businesses during 2023. For example:
• We commissioned a new state-of-the-art Habanolide® facility in our production site in Castets (France),
significantly increasing the production capacity of this iconic perfume ingredient and helping meet the rapidly
growing demand for sustainable products
• We strengthened our business offering in health and nutrition by acquiring Adare Biome, a pioneer in the
development and manufacturing of postbiotics
• We are building a large-scale plant in Dalry (United Kingdom) to produce Bovaer®, our new, innovative, methane-
reducing feed additive for ruminants
• We began the construction of office spaces and application laboratories at our Biotech Campus in Delft
(Netherlands), including leading-edge facilities for food application development, especially suited for co-
creation with our customers
• We inaugurated a new state-of-the-art Science & Research Hub in Kaiseraugst (Switzerland), which will house
more than 200 researchers specializing in chemistry, data science, personal care and aroma, and analytics
Innovation-driven growth
Innovation is a cornerstone of our growth, and we continuously invest in Science & Research. In 2023, we invested more
than €700 million in R&D and innovation and published 233 new patents.
We strive every day to provide industry-leading Science & Research capabilities that focus on meeting the needs of our
business and our customers. These capabilities are designed to drive the innovation required to deliver on our purpose
and to provide differentiated solutions that combine the essential, the desirable, and the sustainable.
Sustainability
DSM and Firmenich each had a long history as pioneers in sustainability and a proud track record that we are determined
to continue. The year 2023 was an opportunity to assess the legacies of both companies in order to bring together a new
overarching sustainability strategy for dsm-firmenich in 2024. It also was a year in which we made progress on a range of
initiatives that generated positive impact for both planet and people. This included scaling up our methane-reducing
feed additive for ruminants, Bovaer®, reaching 677 million people with fortified food, and helping to improve the lives of
92,000 smallholder farmers. As part of our commitment to sustainability, sustainability goals represent 30% of the total
target value of our Short-Term Incentive Plan, and 50% of the total target value of our Long-Term Incentive Plan.
Governance
During the course of the year, our co-CEO Géraldine Matchett stepped down to further her career elsewhere, in full
alignment with the Board of Directors. The Board of Directors has expressed its great gratitude to Géraldine Matchett for
dsm-firmenich Integrated Annual Report 2023
dsm-firmenich Integrated Annual Report 2023 10
Our Company – Letter to our Stakeholders
her significant and impactful contribution to the former company DSM, as well as its thanks to both Géraldine Matchett
and the former CEO of Firmenich, Gilbert Ghostine, for their roles in bringing about dsm-firmenich. The Board of Directors
expressed its full support for Dimitri de Vreeze as sole CEO as from 1 September 2023.
The Board of Directors of dsm-firmenich is essentially composed of Members of the former DSM and Firmenich Boards.
Thanks to a set of strong common values and like-minded approach, the Board of Directors quickly developed mutual
trust and respect, thus enabling it to rapidly and effectively provide guidance and make decisions on strategy,
performance and sustainability – all in the context of a very challenging macro-economic environment.
The Board of Directors scrutinized the topics of Quality, Safety and Compliance during its meetings. It follows up on
compliance with Legal, Safety and Quality standards and expects all employees to uphold the company’s commitment to
legal and ethical business practices as enshrined in our Code of Business Ethics. Following the launch of an industry-wide
investigation by the European, US, UK and Swiss competition authorities in March 2023, the company fully cooperates
with the authorities.
The Board of Directors met seven times between its appointment in April 2023 and the end of the year, while the various
Board Committees each met three to six times. The full details can be found in the Board of Directors section of this
Report.
Looking ahead
The decisive actions taken in 2023, combined with our innovation drive, will provide a solid base from which we will be
able to deliver strong growth in the years to come. With our market-leading and highly complementary portfolio of
ingredients, science capabilities, and technologies, we are uniquely positioned to achieve our ambitions.
In conclusion, we extend our sincere gratitude to our stakeholders for their support and commitment. The collective
efforts of our talented teams, the support of our shareholders, and the trust of our customers, suppliers, and partners
continue to be the driving force behind our achievements. In particular, we want to thank our employees for their drive,
passion and commitment during a momentous year.
As we embrace the opportunities and challenges that lie ahead, we are confident that dsm-firmenich is well positioned
to deliver a future of success through positive impact.
Warm regards,
Thomas Leysen Dimitri de Vreeze
Chairman of the Board of Directors Chief Executive Officer
Our Company – Integration update
dsm-firmenich Integrated Annual Report 2023 11
Integration update
We made significant progress during the first seven months of our integration, our sights firmly set on becoming
a new company that is globally recognized as a category of one.
Integration priorities and governance
Before embarking on the integration journey, we defined four priorities: ensuring business continuity, defining a new
operating model, creating value through synergies and uniting the teams through common values and behaviors. We
established an Integration Management Office (IMO) to design the new company across all Business Units and Business
Partners, to deliver the integration objectives, and to ensure a comprehensive view on the integration process.
Business continuity
Business continuity was a key priority for the integration, and the transition proceeded smoothly. This was helped by the
solid preparatory work done by the integration teams who completed over 1,000 tasks, tested approximately 230
scenario plans, and designed and trialed more than 30 interim processes. In addition, more than 15 Business Continuity
Leads ensured stability during the hypercare phase. This preparation was instrumental in enabling a successful and
memorable Day 1.
Our Company – Integration update
dsm-firmenich Integrated Annual Report 2023 12
A memorable Day 1
The moment of combining two industry leaders whose respective heritages reach back more than 100 years involved a
memorable Day 1 for our employees, customers, suppliers, and investors. From site transformations through an all-day
global broadcast to our new brand reveal, Day 1, which fell on 9 May 2023, was packed with exciting surprises. We came
together across the globe to celebrate a new company, with a new purpose: to bring progress to life. Day 1 filled us with
the energy to deliver on our integrationplans in the months to come.
Value creation through synergies
Even before Day 1, we had made a significant investment in our clean teams in order to have cross-selling in place for the
launch of the new company. Our detailed preparations paid off: Between the merger and the end of the year, we achieved
significant cross-selling wins across our Business Units in the first seven months from the merger. With that, we are well
positioned to deliver incremental revenue synergies of around €500 million, with a full run rate achieved by the end of
year four.
In June, we hosted our first-ever supplier summit, bringing together more than 100 representatives of our top suppliers to
exchange ideas. Alongside this, we introduced a dedicated program, ‘Catalyst for Growth’, to better structure spending
across the company and help us accelerate cost savings from procurement synergies. This, with our planned actions to
reduce General & Administrative (G&A) expenses, generated significant cost savings by year end.
For more information on integration synergies, please see Financial Performance.
New operating model
The new dsm-firmenich operating model and organization was defined well before closing. It lays out how dsm-firmenich
will operate as one group that drives the priorities, strategy and standards, while at the same time giving the Business
Units a high degree of autonomy to ensure our market approach is agile and close to customers.
The implementation of the operating model progressed at speed: Before the end of 2023, we had appointed more than
730 leaders and had implemented the target organization design at all levels of the company, putting us in a position to
operate as a single integrated team with common processes and ways of working. Integration of the underlying systems
commenced in 2023 and will continue during 2024.
Purpose, values, and behaviors
Shared purpose, values, and behaviors are the foundations of our new company culture and identity. We launched our
new values on Day 1, building on the heritage of two great legacy cultures to guide us on our integration journey.
More than 550 Culture Catalysts, a network of colleagues who volunteered as change agents within our company, helps
us live our new culture and values. Our Culture Catalysts engaged more than 5,500 of our employees in a 72-hour
‘Behavior Jam’ to define our new company behaviors, allowing us to map out how to bring our purpose to life in our daily
work. We also launched a Pulse Survey shortly after Day 1 to capture employee feedback and more than 17,000
colleagues shared their views and helped to shape the culture agenda.
Setup for success
The year 2023 was pivotal: We became a new company and made significant progress on the integration of our two
legacy organizations, bringing together the best of both worlds in pursuit of our vision to become a category of one. With
our focus on integration, we have laid firm foundations for us to succeed in our purpose to bring progress to life.
Our Company – Strategy
dsm-firmenich Integrated Annual Report 2023 13
Strategy
dsm-firmenich brings together the best of two iconic global companies to form a category of one. As innovators in
nutrition, health and beauty, we make it our purpose to bring progress to life – by combining the essential, the
desirable, and the sustainable. We reinvent, manufacture, and combine nutrients, flavors, and fragrances to meet
the evolving needs and expectations of the world’s growing population while at the same time addressing the
urgent sustainability challenges facing our planet.
Our approach to business
The merger of DSM and Firmenich created a world-leader in nutrition, health and beauty. Through its highly integrated
portfolio of nutritional, natural and renewable ingredients, together with complementary science capabilities and
technologies, it is positioned to deliver superior innovation-led growth.
By creatively applying proven science and drawing on data-driven innovation capabilities as well as exceptional
standards of operational excellence, dsm-firmenich seeks to tackle the tension between what society needs, what
people individually want, and what the planet demands. By working closely together with customers to create what is
essential for life as well as desirable for consumers yet simultaneously more sustainable for the planet, dsm-firmenich is
poised to bring progress to life for people around the world.
dsm-firmenich is organized in four distinct high-performing businesses, rooted in complementary world-class scientific
research and manufacturing excellence: Perfumery & Beauty; Taste, Texture & Health; Health, Nutrition & Care; Animal
Nutrition & Health.
Sustainability
We are a purpose-led company and we place people and planet at the core of our strategy, directly alongside financial
performance. Formed of two science-driven companies, both with a track record as global sustainability leaders, we are
determined to keep increasing our positive impact and raising our standards in helping to tackle climate change, protect
nature, and care for people all along our value chain.
Sustainability lies at the heart of our development and business activities and we develop our roadmap and science-
based targets based on the United Nations (UN) Sustainable Development Goals, The Ten Principles of the UN Global
Compact and the Paris Agreement on climate. Our bold commitments to shape a better future are evidence-based and
measurable, and we go above and beyond what is required of us in pursuit of lasting positive impact. Our values are
underpinned by a shared passion for a more sustainable future. Caring about customers, communities, people, and the
planet is not only the right thing to do; it is the only way to grow a profitable and enduring business.
Our principles for progress
In 2023, we set the fundamental principles on how the different parts of our organization work together and deliver value,
to achieve our vision of being the leading co-creation and innovation partner in nutrition, health, and beauty. Our four
Our Company – Strategy
complementary Business Units are supported by Group Business Partners such as Science & Research, Finance, Human
Resources, Sustainability, Procurements, Safety, Health and Environment and Digital & Tech.
The following principles govern our operating model:
• We operate as one Group, united by a common purpose and values. We drive group priorities, strategy and
standards across the company and ensure that we continue to differentiate through Science & Research as well
as Sustainability
• We empower our Business Units with a high degree of autonomy to ensure agility and close customer
connections in our market approach. To bring the best service to our customers, the Business Units have full
accountability over their manufacturing plants and Supply Chain as well as Regulatory Services. The Business
Unit innovation teams work in partnership with Group Science & Research to deliver on our ambitions in
innovation. In combination with their accountability for delivery of their profit & loss and cash generation, they
will be able to make choices faster, focus strongly on customer needs, and deliver customized services
• Our Business Partners enable excellence and efficiency, by partnering with the Group and the Business Units,
helping them to deliver on their ambitions, serve their customers. In addition, the Business Partners will drive
excellence with shared centers of expertise, to bring differentiated capabilities to our company
We made progress at pace in 2023 to translate the Operating Model principles into how our Business Units and Business
Partners are structured and how they operate, ensuring transversal alignment across the company. By the end of 2023,
the implementation of most of the new organizational structures and operating models were completed. See also
Integration update.
Our drivers of success
Through our shared strengths and complementary capabilities, we are uniquely positioned to provide visionary and
science-backed solutions that tackle key global challenges and help shape the future. We drive growth and positive
change with the aim of better meeting consumers’ needs. We deliver added value thanks to the skill and passion of our
people and our combination of creation and science capabilities, augmented by new data-driven and digital business
models.
Our people
Our team of nearly 30,000 people is dedicated to achieving our purpose and creating measurable added value for our
customers. From our master perfumers and leading scientists to our support staff and plant workers, we take pride in our
craft and have an uncompromising commitment to quality and innovation. Our defining values guide our aspirations: To
be a force for good in the world, to own the outcome of our endeavors, and to act together with our customers.
dsm-firmenich Integrated Annual Report 2023
14
Our Company – Strategy
Along with our purpose, these values established following the merger in May 2023 underpin what we stand for and how
we make choices in our day-to-day delivery to our customers and stakeholders. Shared values are an essential driver for
success as we elaborate our plans for integrated rewards, people development, safety, health and well-being, employee
engagement, and diversity, equity and inclusion.
Our innovation capacity
We build on the foundations of more than a century of purpose-led scientific discovery and innovation to create positive
impact for people and planet. Our growing portfolio of more than 16,000 patents and more than €700 million in annual
R&D and innovation investment enables our Science & Research team across 15 research hubs to deliver transformative
new solutions.
Our Science & Research team works in partnership with our Business Unit innovation teams and their 40 creation centers
and 75 application laboratories to deliver differentiating innovations for our customers. We believe that collaboration
offers the best chance of addressing the myriad challenges our world faces, and we champion an ecosystem approach
that thrives on more than 100 collaborative relationships with academics, startups, and established companies.
Our market proximity
Our 340 sites across the world allow us to combine a global outlook with local insights and market proximity, enabling us
to offer our customers a comprehensive range of value-adding solutions and to co-create with them on the basis of our
wide-ranging expertise and scientific and technological capabilities. We operate to exacting safety and quality standards
worldwide to ensure consistency and continuity of supply.
Our foundation
We recognize that our global presence brings with it not only opportunities but also responsibilities. Quality, safety
and compliance form the foundation for all our business activities and priorities, and are anchored in the principles
of our Code of Business Ethics and policies.
Quality
With our strong purpose and values, we are committed to leading our industry by consistently providing best-in-class,
safe, and reliable solutions and to being recognized as the trusted first choice of our customers. At dsm-firmenich,
quality is viewed as every customer’s right and every employee’s responsibility. Through the implementation of our new
Quality Policy Statement, we foster one single quality community across all our businesses, with a permanent brief to
drive excellence and continuous improvement. Our quality culture is dedicated to maintaining uncompromising
standards, and we take pride in the care with which we craft products and solutions for our customers.
Safety, Health & Environment
Our commitment to safety, health & environment transcends borders and cultures. It is driven by our core belief that
safeguarding our people, communities, and planet is not just good business: it is the right thing to do. We value and
protect people by constantly striving to enhance health and safety. Our Safety, Health & Environment (SHE) policy is a
promise to our employees, partners, customers, and stakeholders to hold ourselves to exemplary standards so that we
not only ensure our own sustained growth but also contribute to a safer, healthier, and more sustainable world.
Ethics and compliance
Our legal, regulatory and compliance team plays a vital role in enabling business growth, connecting our company with
opportunities and protecting our interests and values. We strive to ensure that we operate to the highest legal and
regulatory standards while carefully managing our risk exposure and upholding our commitment to ethical business
practices as enshrined in our Code of Business Ethics, in close collaboration with all the company’s stakeholders.
dsm-firmenich Integrated Annual Report 2023
15
Our Company – Science & Research
dsm-firmenich Integrated Annual Report 2023 16
Science & Research
Building on a pioneering tradition that reaches back more than 125 years, our Science & Research organization
comprises more than 2,000 employees working on innovation across 15 R&D hubs around the world. We are united
in the pursuit of sustainable and transformative innovation for nutrition, health, and beauty. With a track record of
world-class scientific leadership and a uniquely broad portfolio of ingredients, we apply creative expertise and
proven science to improve health and well-being and address the global challenges of sustainable delivery.
Our approach to Science & Research
dsm-firmenich drives the development of
disruptive products and technologies with an end-
to-end innovation approach. Sustainability is
embedded from the outset and throughout every
stage of the process – from discovery, pre-clinical
and clinical studies through application
development to scale-up and industrialization.
By harnessing the expertise of our scientists and
investing in our multidisciplinary approach, Science
& Research brings progress to life, driving
innovation that addresses global challenges and
unmet needs in nutrition, health and beauty.
We provide industry-leading science and research
capabilities to drive the innovation required to deliver on our purpose and to provide differentiated solutions that
combine the essential, the desirable, and the sustainable.
R&D expenditure
We continuously invest in innovation in view of the overall balance of our product portfolio and product life cycles.
Pro forma 2023
744
6
2,042
Biotechnology
Through our mastery of microbial systems, we have developed a wide range of health, nutritional, and beauty products as
a solution provider for our customers. Using both traditional and modern approaches to biotechnology, such as synthetic
biology and precision fermentation, coupled with digital technologies, we create and improve sustainable bio-solutions to
accelerate the shift to a climate-neutral society. As dsm-firmenich, our combined biotechnology knowhow allows us to
innovate, improve on our existing solutions, and provide a consistent supply of ingredients to our Business Units.
Microbiome research
We seek better understanding of human and animal interaction with the microbiome – the unique individual collection of
diverse microorganisms that populates the body – and its influence on health and well-being. This includes developing
novel precision microbiome and anti-microbial (hygiene) capabilities, in particular for gut or skin health. We capitalize on
synergies between microbiology, analytics, data science, and synthetic biology.
Our Company – Science & Research
dsm-firmenich Integrated Annual Report 2023 17
Receptor biology
Receptor biology research aims to decode taste, smell, and related trigeminal sensation at the molecular level and to
leverage this proprietary knowledge to generate value across a range of business segments. Together with our creation
expertise, this industry-leading science accelerates the discovery of highly differentiating flavor and fragrance
ingredients and modulators, long-lasting fragrances, and optimized formulations. Our key capabilities include high-
throughput screening, neurobiology, and genomics.
Perception and cognitive neuroscience
Research in the field of perception and cognitive neuroscience sheds light on the ways humans respond to specific
ingredients and mixtures. Our insight into the fundamental sensory and psychophysical characteristics of our fragrance
and flavor ingredients allows us to validate well-being benefits such as those generated by fragrances that can improve
focus and concentration. Our key capabilities in this area include in-house sensory testing, psychophysics and behavioral
psychology, complemented by psychophysiology and cognitive neuroscience conducted with the aid of external
partners.
AI and data science
We continue to exploit and explore advances in Artificial Intelligence (AI) to create new tools that augment our research
and creative teams, helping to significantly improve speed to market and deliver differentiating products. Data science
generates data-driven insight in bioinformatics, biostatistics, lab data sciences, AI-driven formulation performance
modelling, and knowledge management. The application of state-of-the-art data science methodologies and
infrastructure across our research and innovation enables the development of unique precision solutions for our
customers.
Chemical and process sciences
Our strength in chemical and process sciences is anchored in our historical successes. The creation of dsm-firmenich
has opened up new opportunities to develop novel, more sustainable ingredients. We deliver new signature ingredients
for our fragrance business and develop improved production processes for existing ingredients for nutrition, perfumery,
and beauty. Assisted by our green chemistry approach, we use modern catalytic methods combined with renewable raw
materials and data science to speed up successful product development while lowering our eco-footprint. Increased
customer demand for natural ingredients is addressed by developing advanced and sustainable extraction technologies,
such as the proprietary Firgood® platform, which extracts ingredients from their natural source without the use of
solvents.
“Our R&D teams bring together proven strengths in
developing sustainable and market-leading solutions validated
by rigorous, science-backed evidence. We’re driven by our
passion to help shape the future of nutrition, health, and
beauty and our continued investment in state-of-the-art
capabilities.”
Dr. Sarah Reisinger, Chief Science & Research Officer
Formulation and materials science
Our capabilities in formulation and materials science enable us to deliver perfumes, flavors, and nutrients to our customers
in differentiating and sustainable product formats. We develop cutting-edge biodegradable delivery systems for Consumer
Fragrance to extend perfume lastingness in use. In Personal Care, we can enhance the stability and bioavailability of our
Our Company – Science & Research
dsm-firmenich Integrated Annual Report 2023 18
active ingredients by mastering the principles of molecular partitioning. We also develop targeted delivery solutions for
ingredients, thanks to our expertise in controlled release, accumulated across industries. Our knowledge of flavor delivery
and modulation for off-notes is combined with our expertise in plant protein texturization to offer new formats.
Nutritional and food sciences
We create science-based and sustainable solutions for human nutrition and health, supporting the product development
and delivery process from concept, through preclinical and clinical research, to the customer. This is complemented by
our expertise in food science, which facilitates the development of targeted solutions that improve the flavor, texture, and
nutrition of food products. Our validation capabilities encompass in vitro and ex vivo models. In animal nutrition, our
research includes microbiome/host interaction, immunology, nutrition, and cell biology, enabling the development of
disruptive solutions that support our customers.
IP and licensing
Our group of qualified intellectual property (IP) professionals maximizes the value of dsm-firmenich innovations and
brands through strategic protection and defense of patents and trademark rights in key markets for the Group. The IP
team acts as a further differentiator through valuation and protection of IP assets in strategic partnerships, including joint
developments, technology licensing (in/out), IP asset acquisitions or sales. In 2023, 233 new patents were published,
reflecting our continued focus on protecting the competitive advantage of our Business Units.
Scientific collaboration
We participate in more than 70 public-private partnerships and collaborate with more than 100 organizations worldwide,
including academic institutions, start-ups, and other companies. Our commitment to a collaborative approach broadens
our scientific and research horizons, enabling us to collectively contribute to solving pressing societal and environmental
challenges.
Venturing
Our venturing unit provides investment, coaching, and support for startup companies to innovate nutrition, health, and
beauty. In 2023, we made six new startup investments and 13 follow-on investments in existing portfolio companies, and
successfully monetized the value of our investments through various liquidity events. By the end of 2023, our portfolio
included 38 startups. For more information, visit here. Venturing also supports building and scaling innovative ventures
from within dsm-firmenich by a venture-capital approach with dedicated entrepreneurial teams, single-tier startup-style
board governance, and value inflection, milestone-based funding rounds. One example is the creation and development of
Vivici B.V. (together with Fonterra) to bring to market animal-free dairy proteins produced by precision fermentation.
Pushing the envelope
By combining these strengths with our analytical science capabilities, our Science & Research team strives to pioneer
solutions that help shape the future of nutrition, health and beauty. Analytical science assists the discovery of novel
ingredients and allows us to gain greater understanding of complex biochemical mechanisms and interactions. We
respond to real-world problems and seek to contribute meaningfully to well-being and a more sustainable future.
In 2023, for example, we facilitated the rapid discovery of two glycan leads for 2024 clinical trials aimed at validating
mood and stress benefits in humans. Receptor biology also underpinned several breakthroughs in malodor control,
cooling and taste, which led to the launch of a novel bitter blocker to improve the appeal of plant-based dairy analogs.
To reinforce the connection between our Science & Research activities and our business innovation, on 6 December
2023 we inaugurated a new state-of-the-art Science & Research Hub in Kaiseraugst (Switzerland). The hub will house
more than 200 researchers specializing in chemistry, data science, personal care, and analytics, bridging Perfumery &
Beauty, Health, Nutrition & Care, and Animal Nutrition & Health.
Our Company – Our stories
dsm-firmenich Integrated Annual Report 2023 19
Our stories
Our People
Progress, powered by our people
Making the world a better place to live in is our daily job. To achieve our purpose as a company and maximize the
collective energy and abilities of our nearly 30,000 colleagues worldwide, we begin ‘at home’ – our workplace.
We bring progress to life for our individual employees, supporting their well-being by providing them with a healthy and
respectful daily environment, and helping everyone in the company achieve their unique potential and make a difference.
This starts with absolute prioritization of our people‘s safety and their physical and mental health, while our progressive
culture supports diversity, equity, and inclusion. Here, four employees from our global teams share their stories about
how they are working to foster well-being and bring our values to life within dsm-firmenich and beyond.
Safety, Health, Environment
What does Safety, Health and the Environment mean to you?
I firmly believe that Safety, Health and Environment (SHE) are the cornerstones for our lasting success that guide our
decisions in multiple areas. Think of the capital projects to improve health and safety in our plants, all the way to the
long-term environmental improvements needed to create a healthier planet for generations to come. I try to reinforce the
trust and mutual understanding we have created with the operational teams on SHE topics. And I want to create a
positive, proactive dynamic through sharing activities, to transmit knowledge and experience, and by encouraging our
partners to do the same at safety moments, for example. All this helps to shape the leadership and safety culture that we
want to live.
“Without high standards and a strong passion for safety, health,
and the environment, you can't be a leading and inspiring
organization. And it's also a way of demonstrating respect for
those who work at all our sites.”
Sylvain Rosset-Lanchet, Global SHE&S Lead for Perfumery & Beauty
Our Company – Our stories
dsm-firmenich Integrated Annual Report 2023 20
What steps were taken in 2023 to enhance safety?
The year 2023 was a year of immense change. With the creation of dsm-firmenich, we had to redesign two company
approaches and turn them into one fully aligned model. It turned out that the overlap in values, systems, and roles and
responsibilities helped us tremendously in creating the new governance model for our organization. That allowed us to
quickly identify our priorities going forward, such as creating aligned Personal Protective Equipment (PPE) standards and
Life-Saving Rules for employee safety. We will be rolling these out in the coming months together with our partners in
operations, in our labs and offices.
How do high SHE standards help us achieve our goals as a company?
Setting high standards conveys a strong message and delivers clear expectations. For example, our only acceptable
ambition is to reach zero incidents. Our leaders need to embrace these high standards, communicating and cascading
them throughout their organization to create engagement as well as operational discipline. And it's also a way of having a
common language across all our sites, demonstrating respect for the people who work there.
How can our colleagues make their own contribution to safety in the workplace on a daily basis?
Our employees are key in achieving our goals and working with our standards: they are the center of the universe for all
our SHE systems. Their individual ownership and behaviors create a living system that evolves continually. With their
feedback and personal commitment, we can create a true learning organization that lives by the motto “today was good
and tomorrow will be better.”
Culture catalysts
Now that we have celebrated more than 100 days as dsm-firmenich, what have been your most exciting
achievements?
Presenting dsm-firmenich to our customers at the World Nutrition Forum on Day 1 was something unforgettable. I'm also
particularly proud of our progress in Precision Farming in Animal Nutrition & Health (ANH), because it perfectly embodies
how we shape the future. And, internally, taking on the role of a ‘culture catalyst’, I’m one of a group of young volunteers
who have been tasked with sharing and bringing our new values to life. It’s exciting to join forces with such diverse and
inspiring colleagues from around the world.
“I'm incredibly excited about the future. The way we work
together to bring progress to life is one of a kind.”
Oliver Stettler, Marketing Manager Animal Nutrition & Health, Latin America, and ‘Culture
Catalyst’
What does ‘we bring progress to life’ mean to you?
It means much more to me than a company's purpose. It's a personal commitment in Animal Nutrition & Health -
innovating to sustainably feed the world. I take immense pride in contributing to this cause, bringing my passion together
with our customers' needs for a sustainable and prosperous future.
Which of our company values most strongly resonates with you, and how do you embody it?
Definitely ‘Own the outcome’. Across work and life, we embody this value by pursuing progress. I try to navigate
challenges with accountability and ensure that my actions align with our commitment to sustainable solutions. It’s about
fostering a culture where outcomes matter as much as individual well-being.
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dsm-firmenich Integrated Annual Report 2023 21
What excites you most when you think of the future of dsm-firmenich?
I'm incredibly excited about the future! The way we work together to bring progress to life is one of a kind. The career and
development possibilities are endless and truly stimulating, offering a journey of continuous growth and innovation in a
dynamic corporate landscape.
Global Vitality Office
What is the Global Vitality Office?
The Global Vitality Office was established in 2023 to empower each of us to make informed choices for a healthier
lifestyle. We’re drawing on our extensive expertise in nutrition, health, and beauty, and reinforcing it by actively reaching
out to our colleagues around the world with tools to help their well-being. With our global campaigns and frameworks,
we’re establishing standards to focus on lasting prevention and health promotion across the company.
“We bring together the strengths of our companies and work
closely with Safety, Health & Environment, and Human
Resources, these are extraordinary assets for progress in health
and well-being.”
Muriël Thijssen, Senior Director Global Vitality
Why does dsm-firmenich place such emphasis on the health and well-being of its employees?
We’re really trying to put our purpose into action for all our people by creating a culture of health at work. It’s a strategic
priority that reflects our commitment to fostering positive choices for long-term health and creating a healthy work
environment. And it’s a great challenge to take up with my 30 years of experience in occupational health. My team and I
share a genuine passion for health and we genuinely want to make the healthy choice the easy choice at work. So at the
end of the day, working at dsm-firmenich is healthy!
How do employees make use of the support of the Global Vitality Office?
Our next step will be collaboration with Global Vitality Ambassadors to form a network and learn from each other, helping
us to keep our finger on the pulse worldwide. Our first opportunity was the #boostyourvitality platform, launched in 2023,
which has a unique dsm-firmenich touch. We’re supporting health and vitality through personalized advice and
education on immunity, vitality, and gut health, and offering employees dietary supplements with our top-quality dsm-
firmenich ingredients at reduced prices.
We also expanded our partnership with Thrive Global, a leading behavior change company founded by Arianna
Huffington. Thrive Global provides resources and interactive support to improve well-being that can also be integrated
into individual workflows. This benefits all employees and it’s really valuable for reducing stress levels, reinforcing
resilience, and helping to build a healthier work culture.
What are your key priorities?
To motivate and support our colleagues as much as possible and give them access to all our valuable information and
events. In addition to our two first ventures, we’re planning a Mental Well-being Program for 2024, to build resilience and
awareness, including among our leadership. I want to foster a workplace culture that encourages open conversations on
the subject, backed by a sustained company-wide system to support employees.
Our Company – Our stories
dsm-firmenich Integrated Annual Report 2023 22
Diversity, Equity and Inclusion
What is your job and what’s it all about?
I’ve been working at the company for over 15 years, and recently dsm-firmenich provided me with the opportunity to
embark on a new career as the Quality Lead for the China Region in Taste, Texture & Health (TTH). It’s a great role that
draws upon my extensive experience in both Taste and Ingredient Solutions.
“Embracing diversity, equity, and inclusion unlocks strengths
within us all. The emphasis on fairness gave me confidence in
the equity of the selection process for my position and I felt
free to express my ideas.”
Yu Peng, Quality Lead, Taste, Texture & Health, China
What does diversity, equity and inclusion mean to you and your teammates?
We have a highly diverse Quality team in TTH, encompassing a range of genders, ages, backgrounds, and life experiences.
I feel dsm-firmenich is truly inclusive and empowers every individual to share ideas and achieve our full potential. I’m in
an environment where everyone feels welcomed, respected, and valued for who they are.
Why is diversity, equity and inclusion so important?
Our world is changing profoundly, and our organization needs talents that address this complexity. Embracing diversity,
equity, and inclusion unlocks strengths within us all. As a female leader, the emphasis on fairness in dsm-firmenich gave
me confidence in the equity of the selection process for my position and I felt I could freely express some areas for
improvement from a Quality perspective. Beyond work, as a mother of two, juggling home responsibilities with global
meetings is indeed a challenge. Hybrid working has been instrumental in helping me manage the demands of both work
and life, motivating me to bring together knowledge, perspectives, and experience for the team.
What are your hopes going forward for this inclusive workplace?
My goal is to further cultivate an inclusive culture that permeates everything we do. For example, by offering additional
training and education to enhance awareness and understanding of diversity, equity, and inclusion, fostering a strong
sense of belonging and community among all.
Our Company – Our stories
dsm-firmenich Integrated Annual Report 2023 23
Responsible sourcing
Mint with Purpose: A new farming model for sustainable value
Our procurement and responsible sourcing
teams are working closely with Norex, our local
partner in India, to support innovation, establish
best farming practices, and empower
smallholders. This involves helping to secure
smallholders' living conditions while at the same
time ensuring a sustainable supply of high-
quality mint.
Eighty-five percent of the world’s mint used in oral
care and confectionery products is grown in India.
This figure includes 95% of all Mentha arvensis, the
most widely used variety, which is grown by
approximately 2 million Indian smallholders, mainly
in Uttar Pradesh. This is one of the most important states for Indian agriculture, yet one of the lowest-ranking in terms of
socio-economic development.
‘The golden crop’
In Uttar Pradesh, the ‘golden crop’, as it is known, is one of the main sources of income for local households. Mint leaves
are dried and distilled by villagers, thereby adding value to the harvested product. The sustainability of this supply chain
is therefore just as crucial for providing livelihoods to smallholders as it is for guaranteeing reliable supplies of high-
quality Mentha arvensis to our customers. Ninety-five percent of our annual needs for natural menthol and Mentha
arvensis oil comes from eight suppliers in the state. This includes all of our menthol.
Furthermore, one of those suppliers, which currently accounts for 7% of all our mint products (by volume), is at the heart
of a unique, 360-degree responsible sourcing project. We aim to increase their contribution significantly over the coming
years.
Empowering local smallholders
At dsm-firmenich, we always seek to increase the sustainability of our supply chains. By tackling both the environmental
and the social dimensions of mint production, this project aims to empower local smallholders and create synergies that
can enhance their earning potential and consequent economic resilience.
On the one hand, we strive to improve soil management techniques by embedding agricultural innovations into traditional
farming practices to reduce irrigation needs and increase climate resilience. We aim to drive down production costs
while raising yields sustainably, because improving farmers’ profit margins is the key to ensuring a viable income from
mint cultivation. This involves not only improvements in farming practices but also – through the professionalization of
techniques and the modernization of facilities - improving yields and at the same time enhancing the quality of crude
mint oil by means of local distillation.
On the other hand, given the specific context of Uttar Pradesh, the provision of greater opportunities for all, especially
women and young people, is designed to further strengthen local livelihoods. This is why, besides technical support, we
work at the level of the individual household by helping to cultivate entrepreneurial skills, support income diversification,
provide access to existing social schemes, and enable gender equality.
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dsm-firmenich Integrated Annual Report 2023 24
Applying our ‘Sustainability at source’ philosophy
Our purpose encouraged us to evaluate the best opportunities to implement our ‘Sustainability at source’ philosophy,
tailored to the specific needs of the mint supply chain. We were aware that there was only one initiative for sustainable
mint-sourcing, in the eastern area of Uttar Pradesh, despite the state’s global significance for the sourcing of mint.
Instead, we chose to work in the western part of the state to leverage an innovative solution developed by a local
research institute – the Central Institute of Medicinal and Aromatic Plants (CIMAP). The project was designed to enable
the cultivation of sustainable, digitally traceable, and natural products that would provide viable livelihoods to 3,000
smallholders, 20 distillers and 180 workers and their households.
To harness digital data collection and a rigorous monitoring and evaluation framework, we engaged one of our key
suppliers, two customers with a major mint footprint (Haleon and Unilever), and public-sector partners (the Foreign,
Commonwealth & Development Office of the United Kingdom, Seva Trust as local NGO and an Indian research institute),
They contribute funding, expertise, and field support during the course of the four-year project.
A pilot project in 2023 tested our model in real-life conditions. It achieved concrete initial results that will be ramped up
in the coming three years.
A three-pillar approach
Co-led by dsm-firmenich and its suppliers directly at source, the project is run by a specially recruited and trained
management team.
The first pillar aims to promote a new agricultural model for the sustainable cultivation of mint. The farming package
includes improved variety and growing guidelines developed by CIMAP, and the promotion of regenerative agriculture. It is
expected to provide measurable benefits including greater resilience to climate change, improved soil quality, and higher
yields. Good Health & Safety practices are promoted through all training activities.
Farmers receive training and advice from field officers, but they
also benefit from a network of champions selected from top-
performing and volunteer farmers. These champions in turn
showcase best practices on demonstration plots and advise on
the management of nurseries, helping to encourage a sense of
ownership ‘by farmers, for farmers’ and to ensure continuity
beyond the duration of the project itself. The second pillar
targets entire households, including women and young people. A
key tool is the Gender Action Learning System (GALS), as it
creates the synergy between agriculture, income diversification,
and the empowerment of women.
Through this community-led empowerment, we promote crop
and income diversification and entrepreneurship along with
gender equality.
People with low literacy levels receive help to develop
themselves professionally in a project of their own design, which
they build and implement with the support of trainers and
coaches. This concrete educational approach is backed by other
socioeconomic activities that help vulnerable households to
access existing rights and entitlements, such as widows’
pensions, education scholarships, and health cards, thereby
Our Company – Our stories
dsm-firmenich Integrated Annual Report 2023 25
strengthening their livelihoods. It is supported by an awareness-raising program about the prevention of child labor, along
with educational activities targeting local young people.
Finally, our third pillar aims at tackling distillation issues regarding yield and quality. A facility improvement program
covers 20 units and their respective workers, who will benefit from capacity-buildingto ensure that they are trained in
good distillation practices, operate in safe conditions, and work within a shift system.
Successful pilot project
In 2023, our pilot project for the sustainable production of Mentha arvensis in Uttar Pradesh involved 537 farmers,
including 50 champions, who received free planting material, and 20 demonstration plots were set up. The highlights of
the project were as follows:
• Around 23% of farmers received full training on the mint model and over 60% followed at least one training
course in regenerative agriculture
• The model was fully adopted by almost 100 farmers (including the 50 champions). Partial adoption is usually
linked to limits in soil preparation or the ability to achieve a double harvest
• The pilot project’s target of a crude oil yield of 50 kg per acre (based on CIMAP’s hypothesis and average yield in
the area) was exceeded, reaching an average of 54 kg per acre. More than 60% of farmers demonstrated yields
above target. Overall, the farmers demonstrated a yield increase of 7%
• Ninety percent of the crude mint oil produced by farmers was sold to Norex, as opposed to the usual 4O–50%
• Improvements in a pilot distillation unit enhanced crude mint oil quality (improved color and a 5-10% increase in
oil recovery) and enabled a 10% reduction in water use
• Twenty champions and 131 households were trained in GALS, and all farmers were provided with advice on social
welfare support. Most of the GALS tools were described as highly useful by 65% of the GALS champions, who
stated that their behavior changed most regarding savings (45%) and gender roles in decision-making (55%)
Our Company – Our stories
dsm-firmenich Integrated Annual Report 2023 26
Case study
Combining our capabilities for a three-way win
We brought together our newly united technical
and creation strengths to swiftly solve a
regulatory, taste and nutrition challenge for
Alpura, a dairy customer in Mexico.
Nutritious strawberry-flavored milk
drinks for young children
Mexico has some of the most stringent nutritional
food labeling regulations in the world. Its NOM-051
regulations require brands to add warning labels to
food and drink products that contain sugar, salt, fat,
or calorie content above the applicable thresholds,
as well as to products with added caffeine and
certain sweeteners. These regulations were
introduced in 2020 in an effort to combat growing obesity; more than 34% of people aged 5-19 in Mexico are overweight
or obese, according to researchers.
For Mexican food and drink producers, the challenge is to develop nutritious products that do not require NOM-051
warning labels while ensuring that these products remain shelf-stable and offer an appealing taste for consumers. This is
especially important for companies whose products are designed for children or adolescents, such as dairy company
Alpura. Among Alpura’s offering are strawberry-, chocolate- and vanilla-flavored milks aimed at children aged 5-12. To
support the health and well-being of these children as they grow, Alpura aims for these milks to be as nutritious as
possible.
Redesigning the formulation
In the fourth quarter of 2022, Alpura began experiencing issues with the formulation for its strawberry-flavored milk,
including the vitamin premix. Introduced to reduce fat and sugars, this formulation was releasing more off-notes than
expected. There were also stability issues with the strawberry flavor, which significantly diminished after approximately
two months. Finally, Alpura was also experiencing color inconsistencies and delivery and process issues. To continue
providing Mexican children with nutritious milk that offered an appealing strawberry taste over the whole of its shelf life,
Alpura needed to adjust its formulation across all ingredients.
Combining our capabilities
In 2022, Alpura invited us to develop a new vitamin premix solution to eliminate the off-notes in its strawberry-flavored
milk. Our collaboration was based on transparency as well as rigorous assessment: we supported Alpura with multiple
rounds of testing, adjusting the premixes as needed. After several industrial trials in February and April 2023, Alpura
approved a formulation containing our premix solution in May 2023.
This new formulation was free of off-notes and generated less aftertaste, and validation analyses showed that its
nutritional value was maintained throughout its shelf life. Nevertheless, Alpura wanted to further improve the strawberry
flavor before re-launching the product. With dsm-firmenich just established, the TTH Business Unit saw an opportunity to
contribute our newly combined capabilities to the flavor part of the solution. Specifically, the Ingredient Solutions division
(formed primarily from former DSM) invited the Taste division (formed primarily from former Firmenich) to create a new
strawberry flavor with greater stability than Alpura’s existing one. Speed was a key aspect of this part of the collaboration:
Our Company – Our stories
dsm-firmenich Integrated Annual Report 2023 27
Alpura needed to review our strawberry-flavor proposals against other contenders as quickly as possible. Again, the
recent merger meant both divisions could collaborate efficiently on this.
“With their improved consistency and taste, dsm-firmenich’s
vitamin premix and strawberry flavor are enabling us to bring
our nutritious strawberry-flavored milk to more children in
Mexico.”
Isela Flores, R&D Manager, Alpura
A clear favorite
In May 2023, we developed five potential flavor solutions for Alpura’s strawberry-flavored milk. To test their taste
performance, we ran a consumer study with children from Alpura’s target age group (5-12). From this study, we selected
and fine-tuned two strawberry flavors. Alpura selected one of these as a candidate for its final industrial trial. We
delivered 8-12 kilograms of our proposed flavor in one week for this trial, which took around one month to complete. In
July, Alpura confirmed that consumers preferred our strawberry flavor to the others under review.
We delivered the first batches of both premix and flavor to Alpura in August 2023. Alpura then commercially relaunched
the newly formulated strawberry-flavored milk in September to coincide with the start of the new school year. The milk is
sold in Mexico, as well as other Central American countries such as Guatemala. It is rich in proteins and fortified with
seven vitamins and minerals (vitamin A, vitamin B1
,
vitamin B6, vitamin B12, vitamin D, folic acid, and zinc), as well as having
reduced sugar content (1.4 g added sugars per 100 ml). It does not require any NOM-051 warning labels.
A three-way win
The solution we developed for Alpura is a three-way win, offering the following benefits:
• Nutrition (the essential): Alpura’s newly formulated strawberry-flavored milk is fortified with eight vitamins and
minerals, and its improved taste encourages more consumers to enjoy the health benefits of these essential
micronutrients
• Taste (the desirable): The milk has an appealing flavor without off-notes that remains stable throughout its
shelf-life
• Reduced waste (the sustainable): Because the new strawberry flavor is more shelf-stable, the newly formulated
milk is more likely to be fully consumed before the end of its shelf-life
One of many cross-selling successes to come
This cross-selling success was one of several that the dsm-firmenich merger unlocked for TTH. The strong match
between the former Taste & Beyond and Food & Beverage teams allowed us to deliver many benefits to the market. With
our combined science-based heritage, biotech knowledge, creation and application capabilities, and close customer
relationships, we can offer end-to-end, integrated propositions.
By accelerating product development, reducing time to market, and helping products stand out on the shelves, these
solutions increase our customers' success – as well as encouraging consumers to make healthier choices. TTH will be
responsible for generating 60% of the total growth synergies that dsm-firmenich has promised to deliver through the
merger. We will continue to own the outcome and deliver toward this target, including by cross-selling our full portfolio
to bring more products and solutions to our existing customers. Following our first commercial synergy successes, our
development pipeline is now filling up with requests from a wide variety of customers across the world, active in a range
of segments.
Our Company – Our stories
dsm-firmenich Integrated Annual Report 2023 28
Case study
Enabling sustainable aquaculture with Sustell™
As the world’s population grows, so too will the
demand for animal-based food – in fact, it is
projected to grow by as much as 70% by 2050.
This need for ever-increasing quantities of
animal protein is already placing tremendous
pressure on our planet’s finite natural resources.
To make significant improvements, detailed
measurement is essential at the levels of specific
animal feeds and individual farms. Independent,
science-based, data-driven guidance is necessary
to achieve this step-change in environmental
performance.
Animal protein companies, value chains, and
financial institutions are increasingly asking themselves how to reduce their environmental impact. They seek credible,
scalable measurement of their environmental footprint combined with expert, independent advice to answer their
questions related to the environmental impact of their business operations.
Greater precision in animal farming is key to a more sustainable and profitable future. Our digital Life Cycle Assessment
(LCA) platform, Sustell™, enables the scalable measurement and improvement of the full environmental footprint of
animal protein production, backed by sustainability advice to customers through the Sustell™ Expert Center.
Moving to the next level of sustainability
Wanting to formalize its sustainability journey, Grupo Almar chose dsm-firmenich and Sustell™ to measure and validate
its environmental footprint as part of a full, ISO 14040/44-compliant, LCA.
The Ecuadorian company explored multiple options and drew inspiration from the salmon industry, which has made
significant progress in measuring and improving its environmental footprint thanks to LCA platforms such as Sustell™.
“Through our partnership with dsm-firmenich, we have set
our sights on improving the sustainability of our industry. We
chose Sustell™ to go beyond mere measurement by taking
ownership of our full environmental footprint, managing it
24/7 within our own teams and organization.”
Wolfgang Harten, Chief Operating Officer, Grupo Almar
Making the invisible visible
Several years in development, Sustell™ was created in collaboration with key partners and recognized third-party experts
in the field of agri-food lifecycle analysis. Its genesis also drew on the input of customers and users worldwide, to reflect
the real-world requirements of sustainable animal protein production.
Our Company – Our stories
dsm-firmenich Integrated Annual Report 2023 29
Sustell™ is the leading solution in the animal protein value chain for helping customers understand and improve their
environmental footprint and unlock the value of sustainability. Working together with our customers, we have developed
dedicated LCA models for dairy, swine, poultry, beef and aquaculture.
Sustell™ utilizes primary feed and farm-level data. Through its industry-leading, user-friendly digital platform, it manages
the complexity of measuring, validating and improving the environmental sustainability of animal protein – transparently
and scientifically, farm by farm, and system by system. It is the most comprehensive sustainability intelligence platform of
its type and measures all the 19 different environmental footprint LCA categories to analyze total environmental impact.
Measurement: the first step to improvement
On 6 September 2023, Grupo Almar and dsm-firmenich announced a joint multi-year commitment to measure and
improve Grupo Almar’s environmental footprint using Sustell™.
Full environmental footprinting of Grupo Almar’s shrimp production commenced in January 2024 and will provide
internationally validated footprint results for the full year 2024 onwards. This collaboration will play a critical role in
enabling Grupo Almar to identify the optimal interventions for achieving its objective of becoming the sustainability
leader in aquaculture. Sustell™ is built on two pillars: the Intelligence Platform and the Expert Center.
The Sustell™ Intelligence Platform is continually updated and improved. This ensures that it always reflects evolving
science, new methodologies, and the changing regulatory landscape and that it reliably meets the changing needs of
individual animal protein producers, the animal protein industry as whole, and wider stakeholders too.
The Sustell™ Expert Center partners with customers to further unlock the value of sustainability, through modelling and
providing advice on different interventions and quantifying their impact, thereby enabling customers to make well-
informed decisions. This helps reduce the environmental footprint at farm level – right down to the level of the individual
pond. The Sustell™ Expert Center offers precise, straightforward, and actionable analyses in terms of both feed and farm.
It also provides recommendations, training, audits, and certification, as well as supporting business development
projects.
Unlocking the value of sustainability
Sustell™ enables customers to accurately measure and improve the environmental footprint of animal protein
production and unlock the value of sustainability.
Sustell™ provides customers with an immediate understanding of their environmental impact. It is easy to use, accurate
and interoperable, to enable value chain actors to work together to improve sustainability. Crucially, it uses feed- and
farm-level data and calculates the impact of specific interventions. This is essential for making targeted, measurable
improvements. Sustell™ is ISO-assured, providing ISO-compliant, LCA-based environmental footprint metrics, combined
with the unique sustainability expertise of dsm-firmenich.
Sustell™ takes sustainability to the next level. It opens the door to greater production efficiency and farm profitability by
identifying best practices while unlocking new value opportunities, such as product eco-labelling, carbon credits and
access to sustainable finance.
dsm-firmenich Integrated Annual Report 2023 30
Business
Reporting period
The Business Reviews include information from the combined entity for 12 months, which includes Firmenich as of 1
January 2023 (pro forma, see Concepts and ratios). It also includes information that is presented in accordance with
IFRS, which includes Firmenich from the merger date onwards - whenever this is used this is specifically indicated.
Perfumery & Beauty
Highlights
• Perfumery & Beauty delivered sales of €3,709 million and an Adjusted EBITDA of €783 million
• As part of the merger that created dsm-firmenich, we combined Perfumery, Ingredients, and Personal Care to
build a new integrated Business Unit, as top leader of the Perfumery & Beauty market
• We launched EcoScent Compass® Next Generation, our integrated, science-based impact measurement tool for
eco-fragrance and our Re:New collection of renewable and upcycled ingredients
• We reinvented fragrance encapsulation with PopScent Eco® Max - a breakthrough innovation that is the first
range of capsules made with 100% biodegradable ingredients
• We introduced ‘Wonder You’ products that offer scientifically proven solutions for skin and hair problems related
to menopause
• We created fragrances that can enhance well-being and are specifically designed to improve focus with
EmotiCode™
• We continued to invest in perfume compounding capacity and ingredients; we have commissioned a brand-new
Habanolide® facility at our production site in southwest France and a new compounding facility in Turkey
About Perfumery & Beauty
Formed as a result of the merger that created dsm-firmenich, Perfumery & Beauty (P&B) is a new integrated Business
Unit, composed of the combination of: Perfumery, Ingredients, and Personal Care. P&B has a strong reputation in
perfumery, supported by its major ingredients backbone, including a leading position in renewables and naturals and an
industry-leading creation palette orchestrated by an exceptional team of perfumers.
Key priorities for P&B include green chemistry (scientific processes that respect planetary limits), conscious perfumery
(the creation of sustainable fragrances and scents), and consumer-inspired innovation that delivers superior
performance.
Achieving these priorities requires a combination of human creativity (on the part of our team of perfumers, scientists,
and researchers, among others) and implementation of the latest scientific insights.
Business – Perfumery & Beauty
dsm-firmenich Integrated Annual Report 2023 31
We place our perfumers at the heart of our creative innovation drive while providing them with the latest ingredients,
technologies, and artificial intelligence tools, as well as the most recent insights from neuroscience and behavioral
sciences. With this blend of capabilities, our perfumers can augment their creations, push the boundaries of
performance, and develop solutions that meet our customers’ continually evolving needs and promote holistic well-being
in consumers of their products.
Operating environment
The year 2023 saw continued inflationary pressure affecting consumer behavior and destocking across the entire supply
chain after a period of high inventory levels recorded during the COVID pandemic. While consumer demand for prestige
fine fragrances and beauty products continued to grow, fast-moving consumer goods demand was impacted.
Continued strength of prestige markets
In 2023, several global consumer trends continued to grow in importance, fueled by the influence of social media; these
included personal grooming, premium fragrance, and luxury lifestyle. The continued strength of prestige markets favored
sales of our existing products in our Fine Fragrance and Personal Care segments. In Fine Fragrance, our strong new
project pipeline and creative leadership continued to be rewarded with a significant share of new project wins. The year
also saw successful launches of new fragrance blockbusters by some of our key customers. In Personal Care, we focused
on relevant innovation launches spanning our three sub-segments.
The merger that created dsm-firmenich also allowed our newly forged teams to build a joint plan to deliver revenue
synergies leveraging our combined market reach, broad portfolio, and creation and consumer insights capabilities.
Resilience of Consumer Fragrances and Fragrance Ingredients
In a context of a softer market driven by inflationary pressures and destocking, our teams in Consumer Fragrances and
Ingredients focused on developing innovation to meet increased customer expectations and deliver superior products
and to optimize inventory levels, while maintaining our best-in-class service levels. This was possible due to the close
coordination between our Operations and Sales.
In Consumer Fragrance, several customers focused on driving consumer demand via promotions and innovation launches
which led to increased demand for fragrances in the second half of the year. The work done hand-in-hand with our
customers on the design and launch of innovative new projects positioned us well to benefit from the improved market
conditions. Our position as a leading supplier to the world’s top consumer goods companies continued to grow, with
increased presence of our fragrances across several fast-moving consumer goods categories.
In Ingredients, we observed different dynamics by segment. Demand for industry specialty ingredients and large volume
fragrance ingredients remained soft throughout the year, owing to continued destocking, and adding to the soft
consumer goods demand registered in the first half of the year. Demand for specialty fragrance ingredients remained
high, driven by the strength of fine fragrance.
“I am very proud of our team’s performance in the dynamic and
multi-faceted environment we experienced in 2023. Alongside our
ongoing integration of new capabilities, we reinforced our position
to deliver the value our customers expect in their drive to delight
consumers with product superiority across segments worldwide.”
Emmanuel Butstraen, Business Unit President of Perfumery & Beauty and Chief Integration
Officer
Business – Perfumery & Beauty
dsm-firmenich Integrated Annual Report 2023 32
Performance 2023
P&B delivered 1% organic sales growth, with a good performance in Perfumery owing in equal part to volumes and pricing,
offset by lower volumes in Ingredients which was impacted by ongoing destocking. Personal Care recorded good growth,
driven by pricing.
Perfumery delivered a strong performance in the year, with a particularly strong performance in Fine Fragrance, which
was supported by the demand for innovative and sustainable captive ingredients offering superior performance. The
second half saw significant growth in Consumer Fragrance, owing to customers looking for higher inclusion of new,
sustainable, and long-lasting fragrances and innovation for personal and home applications to create a superior value
proposition.
This good performance was partly offset by a weak operating environment in Ingredients, impacted by ongoing
destocking, low demand for industrial applications and the impact of the shutdown of the Pinova ingredients plant in
Georgia (USA).
Personal Care performed well throughout the year, supported by good demand for its sun, skin and hair care products.
The business saw increasing interest in the new product offerings made possible by the synergies created by the merger,
particularly around products combining fragrances with active ingredients.
The 2023 Adjusted EBITDA was up 5% compared to prior year, driven by good demand growth, strong pricing, and
continuous cost control efforts and despite a negative foreign exchange effect of around 6%. As a result, the Adjusted
EBITDA margin increased to 21.1% from 19.7% in 2022.
x € million
Pro forma
2023
IFRS
2023
Sales
3,709
2,619
Organic sales growth (in %)
1
Adjusted EBITDA
783
579
Adjusted EBITDA margin (in %)
21.1
22.1
The year in review
EcoScent Compass® Next Generation
In January 2023, we launched EcoScent Compass® Next Generation, an integrated, science-based impact measurement
tool. It provides robust sustainability data and verifiable claims, enabling a higher degree of precision in sustainable
creation and understanding.
Expanding on a tool first launched in 2018, EcoScent Compass® Next Generation empowers our perfumers with a wider
range of digitally integrated sustainability data, supporting 45 distinct fragrance claims and 20 ingredients claims. By
providing our customers with clear, accessible, and trustworthy information via this powerful tool, we help them translate
numbers into claims and proof of impact and support the attainment of their sustainability goals.
PopScent® Eco range
PopScent® Eco Max is one of our biggest innovations in 2023. We reinvented fragrance encapsulation, delivering
outstanding long lasting fragrance benefit, with the first range of capsules made with 100% biodegradable
ingredients. Starting the development as early as 2015, anticipating European Chemicals Agency (ECHA) rules and
investing nearly all R&D resources on finding a performing biodegradable encapsulation technology. This was developed
Business – Perfumery & Beauty
dsm-firmenich Integrated Annual Report 2023 33
internally, as capabilities had been built over the years in S&R, encapsulation, analytical & biodegradation support and in
the Perfumery Poptec and Softener technical lab, and were mobilized towards the same goal.
The PopScent® Eco range, including PopScent® Eco and PopScent® Eco Max, delivers a lasting fragrance experience from
wash to wear. Crafted with diverse chemistries and complementary performance profiles, these capsules empower
perfumers with the most efficient and versatile tools, offering wide creative flexibility across categories. These versatile
capsules, bring high creative and applications flexibility and meet the highest sustainability standards with no
compromise on consumer experience.
HaloScent® Berryboost
In July 2023, we launched HaloScent® BerryBoost, a fragrance innovation that releases two different perfumery molecules
simultaneously, known as dual-release profragrances. These molecules, which have a low environmental impact due to
their biodegradability, are activated through contact with air and water. With a new, patented natural activation
technology, and a fruity olfactive profile, HaloScent® BerryBoost elevates the overall product experience, increases the
fragrance preference, and enhances consumers’ overall sense of satisfaction. It has applications not only in home care
but also in hair care.
Launch of exclusive ingredients
In 2023, we launched an exclusive collection of six natural and synthetic ingredients. This includes two captive
ingredients – unique, proprietary scents that cannot be replicated by other perfumers or fragrances houses – that were
released to market for the first time. Both were carefully selected by our experts to bring sustainable solutions that meet
relevant regulatory requirements to fragrance formulas worldwide. The first, Mimosal™ is an intense green muguet
aldehydic note. It is highly performing and offers a long-lasting effect. The second captive ingredient, Ambrette FIRABS, is
a unique signature and accessible substitute for Ambrette Absolute.
Two other exclusive ingredients launched in 2023 is Lilyflore® and Upcycled Cardamom Green Pod Guatemala SFE.
Lilyflore® is a key ingredient in the floral fragrance market, delighting perfumer palettes with its versatile and modern lily-
of-the-valley facets. Upcycled Cardamom Green Pod Guatemala SFE, was created using our Supercritical Fluid Extraction
(SFE) technology. SFE offers several advantages over other extraction technologies, as it reduces solvent use, energy
consumption, and emissions while maintaining the integrity of sensitive compounds. The launch of Upcycled Cardamom
Green Pod Guatemala SFE and Mimosal™ strengthens our longstanding partnership with NELIXIA, the world’s top
cardamom producer, which also offers 100% traceable products. The final two ingredients launched were the powerful
and complex Doremox®, which serves as an excellent replacement for rose oxide, and cyclopidene, which, with its the
distinctive ylang-ylang quality, functions as a performing alternative to methylparacresol. Predominately biodegradable
and designed according to the principles of green chemistry, this collection underlines our leadership and core strength
in sustainability.
More about our Ingredients business
Our Ingredients business was impacted by the fire at, and subsequent shutdown of, the Pinova, Inc. ingredients plant in
Georgia (USA), and was also affected by low demand in some industrial and some fragrance segments.
Aside from this, we have also commissioned a brand-new Habanolide® facility at our production site in southwest France.
Habanolide® is an elegant macrocyclic musk with a warm and slightly woody note, and is a key ingredient in our industry-
leading palette. The new state-of-the-art facility will significantly increase the production capacity of this iconic perfume
ingredient and help meet the rapidly growing demand for sustainable products.
Business – Perfumery & Beauty
dsm-firmenich Integrated Annual Report 2023 34
New center of expertise in China
In 2023, we expanded our global network of creative facilities by opening a new center of expertise in Shanghai (China).
Developed and operated in partnership with Xun Laboratory, a perfumery studio rooted in China’s rich history and
culture, the center marks another step in expanding the dsm-firmenich customer experience, following the opening of
our Fine Fragrance Atelier in Shanghai in 2019 and Studio Guangzhou (likewise in China) in 2021. With this close
collaboration, we aim to help customers enhance authentic storytelling that reflects China’s rich olfactive history while
introducing even more winning fragrances desired by both local and global brands.
The expert knowledge in ancient ingredients that Xun Laboratory brings to the partnership will also boost the
endorsement of unique ingredient sources that are regarded as native to China. Customers in China can benefit from
having an unexampled, holistic experience which allows them to rediscover and replicate ancient Chinese fragrance
ingredients for use in modern-day creations.
‘Wonder You’
In 2023, we introduced ‘Wonder You’, a global-reaching, cross-segmental beauty offering in the menopause category.
This comprehensive product line for skin and hair care includes sun protection factor (SPF), cream, serum, shampoo, and
conditioner. Every solution in this collection has been designed to align with consumer trends toward holistic well-being,
mindfulness, and celebration of individuality.
Made possible by 40 years of research in personal care science applications and informed by our Skincare Consumer
Survey, the ‘Wonder You’ collection affirms our global leadership in providing scientifically proven solutions for
menopause with a leading sustainability profile.
Re:New collection
In 2023, we launched the Re:New collection of ten renewable and upcycled ingredients, further increasing the diversity
and impact of our renewable palette. This collection is powered by SylverGreen®, our innovation program to drive
transformation toward low-carbon, bio-based ingredients.
The ingredients of the Re:New collection are renewable by-products of the wood or paper industries, which are upcycled
and transformed at our ingredients facilities into renewable molecules. By following green chemistry principles, we can
convert petroleum-based ingredients into renewables without any change to the smell of the final product.
In August 2023, we further strengthened our commitment to green chemistry by signing a joint development agreement
with Bloom Biorenewables through which we will accelerate the development of key, low carbon, bio-based ingredients.
EmotiCODE® Focus
The power of scent is enduring, and consumers are still looking to fragrance to improve their mental health and well-
being. In our 2023 NewNextNow Barometer consumer insights study, for instance, 85% of consumers surveyed reported
that fragrances can help their focus or concentration levels. In 2023, we made considerable progress on developing
fragrances that assist in these areas.
This progress was due to the launch of EmotiCODE® Focus, our patent-pending design rules for fragrances that are
scientifically proven to enhance mental performance. Drawing on 25 years of neuroscientific research, advances in
artificial intelligence, and our proprietary ScentMove™ emotional mapping technology, EmotiCODE® Focus has significant
potential to drive progress in shareable, memorable, and emotionally resonant perfumery.
Business – Perfumery & Beauty
dsm-firmenich Integrated Annual Report 2023 35
Sustainability
dsm-firmenich is at the forefront of circular innovation and sustainable creation, driving transformative change in the
perfumery and beauty industry. The launch of EcoScent Compass® Next Generation epitomizes our commitment to
transparency and measured impact, underscoring our dedication to advancing sustainability across perfumery and
beauty. Through our Science & Research team’s programs on circular ingredient innovation, responsible sourcing, and
advancements in eco-extraction technologies, we ensure our palette of ingredients is future-ready to create delightful,
high-performing solutions across Perfumery, Beauty, and Ingredients with rigorous sustainability standards.
Beyond product innovation, we strive to propel the industry forward by reinventing methods of creation that have a
positive impact and lower the carbon footprint of our products and ingredients. We do this by leveraging our eco-tools,
compaction design, eco-extraction technologies, biotech, and green chemistry. We also actively contribute to shaping
the future of sustainable Perfumery, Beauty, and Ingredients. In 2023, we did this by sharing our expertise at a series of
industry events, most prominently the Beauty Leaders’ Summit in Paris (France), Cosmoprof Global in Bologna (Italy),
Cosmoprof Asia in Hong Kong (China), Exsence in Milan (Italy), and the Fragrance Innovation Summit in Paris (France).
Through our thought leadership at these and other events, we influenced conversations among key perfumery
stakeholders, driving collective progress across the industry. More broadly, we catalyze industry-wide change through
global engagement and continuous support for customers who are navigating their own sustainability transformations,
offering collaboration and guidance to support the delivery of eco-friendly products that respond to consumers’
aspiration for a healthier planet.
Innovation
Innovation was a cornerstone of our success and growth in 2023, with PopScent® Eco Max and HaloScent® being some of
our biggest innovations for the year. PopScent® Eco Max reinvented fragrance encapsulation with the first range of
capsules made with 100% biodegradable ingredients. Throughout the year, we continued to find new ways of connecting
human creativity with scientific insights. For instance, our EmotiON™ program applies neuroscience and behavioral
science to validate fragrances that promote well-being while respecting the planet. Through other initiatives, such as the
Re:New collection, we draw inspiration from nature to produce renewable, biodegradable, and high-performing fragrance
and personal care ingredients.
Throughout 2023, we continuously explored new ways to connect human creativity with scientific insights and uncover
the power of olfactive receptors in shaping our experiences. We also investigated how emerging trends and concepts,
including the metaverse, physical experiences, and Web 3, have the potential to influence the future of fragrance, and
how we can play a leading role in these areas. Through all these activities, we position our perfumers at the heart of our
creative efforts, giving them the power of the latest ingredients, technologies, and artificial intelligence to augment their
creations and push the boundaries of fragrance performance. We make constant use of the latest research, not only to
drive our business, but also to address key societal challenges, such as sustainability, wellness, and biodiversity.
Business – Taste, Texture & Health
dsm-firmenich Integrated Annual Report 2023 36
Taste, Texture & Health
Highlights
• Taste, Texture & Health delivered sales of €3,038 million and an Adjusted EBITDA of €556 million
• The merger between DSM and Firmenich brought together two highly complementary businesses in the food and
beverage space to form the new dsm-firmenich Business Unit: Taste, Texture & Health
• In 2023, we made excellent progress in integrating the two businesses enabling to bring new, integrated solutions
to market faster, helping our customers shorten their time-to-market and become more competitive
• We validated the revenue cross-selling and concept-selling synergies identified post-merger and created joint
segment strategies for additional upside while at the same time reporting our first joint commercial successes
• We continued to invest in our state-of-the-art facilities across the globe, launched new sustainable products
and solutions, signed commercial partnerships, and continued to invest in research and innovation
• We combined two platforms for accelerated growth – our plant-based and sugar reduction platforms –
integrated our shared functions, and set up joint key global account management
About Taste, Texture & Health
Building on our combined science-based heritage, biotech know-how, creation & application capabilities, and intimacy
with customers, Taste, Texture & Health (TTH) addresses one of society’s biggest challenges: how to deliver nutritious,
delicious and sustainable food and beverage solutions. In doing so, we help accelerate the diet transformation by offering
appealing taste and texture and help feed a growing world population sustainably, while minimizing food loss and waste.
By co-creating with our customers, we bring progress to life through the development of attractive, desirable and
sustainable food and drink products that help support health and well-being.
TTH comprises two divisions: Taste, which includes flavors, natural extracts and sugar reduction solutions; and Ingredient
Solutions, which includes food enzymes, cultures, hydrocolloids, proteins, natural colorants, nutritional ingredients,
premixes and yeast extracts. Our plant-based platform combines the portfolios and application and creation capabilities
across the two divisions.
Our passion for the science and emotion of food extends from discovery to application, via the customer to the end-
consumer. Leveraging our broad portfolio of unique ingredients and intrinsic creativity, we deliver solutions for every
taste and occasion. This includes drinks with little or no sugar; dairy products with consumer-preferred mouthfeel;
succulent savory bites; and nutritious plant-based alternatives – healthier and delicious products that are better for
people and planet.
Business – Taste, Texture & Health
dsm-firmenich Integrated Annual Report 2023 37
Operating environment
Several macro-economic factors contributed to a challenging business environment for TTH in 2023. These included
continued inflation of input costs, volatile foreign exchange rates, exceptionally low vitamin prices, and customer
destocking as companies continued trying to manage their inventories and costs.
Segment review, integration and cost prudency
With our market-leading and highly complementary portfolio of taste and ingredients solutions, plus our pioneering
science and technologies, we are uniquely positioned to successfully deliver innovative food and beverage products to
our customers. We started to review our joint end markets for TTH to prioritize and accelerate the high-growth, higher-
margin businesses within TTH.
We continued to focus on our integration efforts by bringing teams together to drive cross-selling and concept selling
synergies for top-line growth. At the same time, we built up our innovation pipeline to establish a strong foundation from
which to deliver innovation-driven growth and sought to capture the combined benefits of our portfolio of technologies
and competences.
We were active in pricing in order to help offset higher input costs. We maintained our focus on maximizing the
operational performance of our day-to-day activities. This involved strict prudence when making capex investments,
optimizing our operating working capital, and maintaining strict cost controls across the business. At the same time, we
focused on seamless service delivery to our customers, on time and in full.
“2023 was a very special year. Two complementary food and
beverage companies came together to bring new, sustainable,
integrated solutions to market faster – helping our customers
shorten their time-to-market and become more competitive.
We focused on our integration and reported our first joint
commercial successes.”
Patrick Niels, Business Unit President Taste, Texture & Health
Performance 2023
TTH recorded a modest 1% decline in organic sales (versus an estimated double-digit growth in prior year) with strong
pricing fully offset by lower volumes due to ongoing destocking and the deliberate decision to step away from some low-
margin products, including vitamins.
TTH saw solid conditions in its key end-user markets, including beverages, confectionery, dairy, and bakery & cereals,
albeit with destocking across the businesses.
Taste delivered a strong performance. Within Ingredients Solutions, enzymes and cultures showed solid performance.
Vitamins and yeast extracts were weak.
Adjusted EBITDA was up 1% compared to prior year, despite a negative 5% foreign exchange effect. Adjusted EBITDA
margin improved by 100bps to 18.3% compared to 2022, driven by strong pricing actions and more favorable mix, led by
good growth in Taste.
Business – Taste, Texture & Health
dsm-firmenich Integrated Annual Report 2023 38
x € million
Pro forma
2023
IFRS
2023
Sales
3,038
2,471
Organic sales growth (in %)
(1)
Adjusted EBITDA
556
437
Adjusted EBITDA margin (in %)
18.3
17.7
The year in review
Excellence in Flavor Science Award for Eric Frérot
Eric Frérot, one of our Distinguished Scientists, received the Excellence in Flavor Science Award from the Flavor Extract
Manufacturers’ Association (FEMA). This is awarded to specialists who have made an exceptional contribution to flavor
science – so it is an outstanding achievement, and a testament to our world-class Science & Research team.
Accelerating execution of our revenue synergies
Marketing & Sales and application colleagues were empowered to deliver our growth synergies through a series of joint
regional summits. Organized in every region between June and August, these summits brought together the sales and
technical teams from Ingredient Solutions and Taste to explore our combined capabilities and kick-start action on high-
priority revenue synergy opportunities. They provided inspiration to bring exciting new joint food and beverage concepts
to the market and resulted in a strong pipeline of commercial opportunities and concrete first customer wins by the end
of 2023.
Integrating our operations
In 2023, we defined the new operating models for the integrated operations and supply chain organizations that will help
us shape the future. With the combined organization, we now have more than 40 manufacturing locations around the
world, allowing us to be close to our customers and regional markets wherever they are. We have successfully maintained
our focus on business continuity and are proud that in a year of transformation, we have seen no major disruptions in our
delivery to customers.
Continued investment in our facilities
In Europe, we began the construction of our new TTH headquarters and application labs at the Biotech Campus in Delft
(Netherlands). This building will replace the current offices and facilities in Delft and will feature leading-edge facilities for
food application development, especially for co-creation with our customers – including a demonstration kitchen and a
sensory room, as well as collaborative office spaces. The building will be energy-efficient and will meet the highest
sustainability standards, BREAAM Outstanding, for its entire life-cycle. The building also meets the highest level for
certification, WELL Platinum, for buildings that promote occupant well-being.
We also opened a new pilot facility in Plainsboro (New Jersey, USA), which offers a full range of capabilities and
equipment to help customers scale up production of new foods and beverages. This facility is designed to create small-
scale application samples for product innovation across all product categories, including beverage, nutrition and sweet
goods. The facility focuses on scaling up liquid products such as milk, ice cream and yogurt, both dairy and plant-based,
and provides customers with consumer sensory laboratories, a focus group room, and a conference room with a direct
view of the facility.
Within the framework of our plant-based platform, we opened an extrusion test center in Tau (Norway) to work on dry
texturized proteins, high-moisture extruded proteins and concentrated process flavors. The creation of this new facility
will help in our ambition to become a leading provider of integrated solutions for delicious and nutritious meat and fish
alternatives.
Business – Taste, Texture & Health
dsm-firmenich Integrated Annual Report 2023 39
Completed full ownership of VKL Seasoning
After former Firmenich acquired a majority stake in VKL Seasoning Pvt Ltd. in April 2019, it completed full ownership of
the Indian company in April 2023. Founded in 1996, VKL is the market leader in spices and flavors in India. The company is
known for its strong understanding of flavors and leading reputation among Indian customers. VKL helps us further
expand our seasoning capabilities and customer reach in India, while expanding our raw material palette for clean label
ingredients.
Leading in sustainability: EcoFood Compass® for taste
Our taste EcoFood Compass®, a proprietary, integrated, online science-based impact measurement tool, evolved during
2023 from a pilot project to a sustainable enterprise solution. This tool - containing the carbon footprint data of our
solutions – allows customers to calculate, monitor and measure the social and environmental impact of our taste
solutions on the environmental footprint of their products. While more and more of our taste palette is already covered
by the taste EcoFood Compass®, we aim to cover 100% of our offering by 2025.
We continue to see significant and growing interest on the part of our customers in understanding the impact of the
ingredient or flavor in their products, as they aim to reduce Scope 3 emissions on their own net-zero journey. We are
determined to satisfy this interest through our services and value propositions.
Maxilact® Next
In early June, we launched Maxilact® Next, the fastest-acting lactase enzyme on the market, to enable lactose-free dairy
products to be produced more efficiently and sustainably. By optimizing production processes such as yield and
throughput time, we help customers to effectively manage both unit costs and carbon footprint. We also continued to
make good progress in developing comprehensive information such as carbon footprint statements and Environmental
Product Declarations.
Banana Bread
In May, one of China's well-known bakery brands launched its latest product: Banana Bread with Filling. The uniqueness of
Banana Bread with Filling lies in the use of our BakeZyme® enzymes and β-carotenes. BakeZyme® enzymes help to
eliminate the problem of dense or dry baked goods and provide a soft bite. β-carotenes, meanwhile, give the bread its
attractive natural color, making the product more visually enticing to consumers in search of both taste and aesthetics,
resulting in a delicious product.
Peach+ announced as forthcoming Flavor of the Year
In December, we announced Peach+ as the Flavor of the Year for 2024. With the Flavor of the Year, we celebrate
consumers’ desire for exciting new ingredients and bold, adventurous flavor creation. Peach+ was inspired by emerging
signals in the cultural and consumer landscape and a wide variety of influences, including culinary, fashion, design, and
art.
The Flavor of the Year empowers our customers to be leaders in global trends. Peach+ is an invitation to our customers to
innovate with this flavor, to transcend its traditional juicy-sweet aspects and also incorporate softer, smoother, lighter,
more refreshing textural elements.
This marks our 12
th
Flavor of the Year, which is something our customers have come to look forward to annually. The year
2024 will be the third consecutive year of a sensory partnership with Pantone®, the global color authority and provider of
professional color language standards and digital solutions for the design community. Peach+ is a companion to Peach
Fuzz 13-1023, Pantone®’s 2024 Color of the Year.
Business – Taste, Texture & Health
dsm-firmenich Integrated Annual Report 2023 40
Sustainability
By bringing together two purpose-driven businesses TTH is now in a strong position to enhance its positive impact on
people and the planet.
We believe our combined portfolio can further unlock the sustainability potential of our taste and ingredient solutions.
While we continue to strive for the highest levels of sustainability and transparency in our own value chain, we are
providing our sustainability certifications to support sustainability claims of our customers' products. And the Taste
EcoFood Compass® allows us to design flavors that align with sustainability brand promises and consumer needs by
measuring the social and environmental impact of our raw materials and solutions, and to share this data with our
customers. With this measurement tool, we have covered more than 80% of our palette in terms of volume used in flavor
solutions.
Driven by consumer preferences and health legislation, we are increasingly focusing on finding solutions that help reduce
salt, sugar, and fat in everyday food, while keeping food tasty and shelf stable. In this way, we can support many people
around the world who are seeking diet-related health benefits in areas such as improved immunity, energy levels and gut
health - in support of Sustainable Development Goal #3: Good health & well-being.
To increase the sustainability of our global food systems, we are also helping drive the transition to plant-based proteins
to enable better health while supporting the decarbonization of food value chains.
To achieve progress, we are also working closely with our customers and with industry associations, such as the
Association of Manufacturers and Formulators of Enzyme Products (AMFEP) in Europe and the International Organization
of the Flavor Industry (IOFI), as well as the Petfood Sustainability Coalition.
Innovation
In the food and beverage industry, capitalizing on new scientific and business opportunities increasingly depend on the
effective deployment of advanced digital technologies – such as artificial intelligence for fermentation and lab
automation – to develop new solutions for food and beverages faster and more accurately.
In 2023, we further increased our investments in the digital transformation of our science and innovation capabilities for
TTH, with a clear focus on being able to generate and combine consumer, customer, and technical data insights faster.
This is with the dual aim of accelerating internal innovation processes and supporting our customers with faster
availability of data useful to them.
Taste and Ingredient Solutions began joint research programs in 2023 in sugar reduction and plant-based products.
Combining the taste and texture capabilities of both divisions enables us to address the challenges customers
experience in reducing sugar and making alternative meat, fish, and dairy products tastier. For instance, our
SmartProteins Masking solutions help make plant-based dairy more delicious. And with Smart TX PRO we can create the
right mouthfeel, bite and chew to craft customers’ products to meet evolving consumer expectations.
Together with other leading foodtech companies and knowledge institutions in the Netherlands, dsm-firmenich was one
of the founders of the Next Food Collective, a Dutch consortium that aims to accelerate the transition to sustainable
food systems and healthy nutrition by driving the research agenda in this field and developing joint programs and
projects.
Business – Taste, Texture & Health
dsm-firmenich Integrated Annual Report 2023 41
Our science application efforts allowed us to launch several new innovative solutions. For example, in 2023 we launched
the Delvo®Phage test kit for thermophiles (bacteria or other microorganism that grow best at above normal
temperatures) and we launched new cultures for our fresh fermented range: Delvo®Fresh Pioneer for delicious yogurts
with pH stability, and Delvo®Plant vegan cultures. In the brewing sector, Dual Brew was launched at BrauBeviale in
Nuremberg (Germany) in November. Dual Brew is a diversified range of beer styles, both alcoholic and non-alcoholic,
combining our enzyme technologies and flavor solutions. With the no/low alcohol revolution on the rise,
our BeeR'Evolution concept enables customers to easily add a distinguishing signature twist to their no/low alcohol
beverage.
Partnerships
We signed an agreement with leading global Chinese dairy producer Yili to partner on research, innovation, sustainability,
and more. The agreement paves the way for cross-Business Unit collaboration – we can offer Yili flavors and ingredients
from Taste, Texture & Health, nutrition solutions from Health, Nutrition & Care, and animal feed from Animal Nutrition &
Health. In China’s highly competitive market, our unparalleled combined capabilities in taste, texture, and nutrition are
what particularly appeal to Yili.
Business – Health, Nutrition & Care
dsm-firmenich Integrated Annual Report 2023 42
Health, Nutrition & Care
Highlights
• Health, Nutrition & Care delivered sales of €2,270 million and an Adjusted EBITDA of €389 million
• We made a strong start to our synergy journey by combining our essential nutritional portfolio with a full range of
desirable taste capabilities as well as our consumer healthcare business
• We activated our synergy potential with customers by building a complete taste infrastructure and training
program, backed by compelling new product concepts and prototypes
• We significantly strengthened our biotics offerings with the launch of new innovative solutions, and the
acquisition of French biotics leader Adare Biome
• We achieved a number of strategic partnerships, industry approvals, and new product launches to help deliver
ever more effective nutritional solutions, including expanding our life’s®OMEGA portfolio of algal-based omega-3
• We responded to this year’s challenging market with targeted actions to improve profitability and
competitiveness, while continuing strategic investment in future innovation and growing key business areas
About Health, Nutrition & Care
Health, Nutrition & Care (HNC) is dedicated to supporting the health of the world’s growing population through nutrition
and care solutions. We deliver nutritional solutions that support well-being and proactive health at every stage of life and
for every lifestyle. As an end-to-end solutions provider, we partner closely with our customers from product conception
to launch, providing unique consumer insights, a broad portfolio of nutritional ingredients, innovative solutions, and expert
taste capabilities.
HNC offers solutions for the early life nutrition, dietary supplement, pharmaceutical, medical nutrition, and biomedical
materials markets. We address specific consumer nutritional and wellness needs with our direct-to-consumer i-Health
business. We also serve the nutrition improvement sector, providing affordable and accessible nutrition fortification
solutions for some of the world’s most vulnerable populations.
We serve these industries with a portfolio of high-quality products covering vitamins, nutritional lipids, minerals,
carotenoids, botanical nutraceuticals, digestive enzymes, probiotics and prebiotics (including human milk
oligosaccharides, HMOs), active pharmaceutical ingredients (APIs), and a range of biomedical solutions. In 2023, following
the acquistion of Adare Biome, we solidified our position in the rapidly growing segment of postbiotics, and began
developing new products in a new partnership with botanicals pioneer Indena.
HNC provides a suite of customized solutions (premix, market-ready solutions, and personalized nutrition), as well as a
range of expert services in regulatory affairs and formulation. This year, we added the full breadth of delivery systems and
masking and flavor capabilities to transform our health and nutrition offerings with new consumer-preferred tastes and
formats.
Business – Health, Nutrition & Care
dsm-firmenich Integrated Annual Report 2023 43
In 2023, we became the first and only nutrition player with a full suite of taste capabilities, including flavors, blockers and
masking systems, encapsulation technologies, and delivery systems. We worked closely with teams from Taste, Texture &
Health (TTH) to create a diverse portfolio of exciting synergy product concepts, reinforced by real prototypes to inspire
brands in new product creation. These taste capabilities allow us to tackle the organoleptic challenges associated with
many nutritional ingredients, such as B-vitamins, lipids, minerals, botanicals, and proteins, and to open the door to more
innovation in the new consumer-preferred delivery formats.
Operating environment
Our industry experienced challenging market conditions. External geopolitical factors and inflation drove up energy, raw
material procurement and production costs. Simultaneously, dietary supplements market was impacted by pressure on
consumer discretionary spend, especially in North America, and lower demand for immunity-supporting solutions post
COVID. Early life nutrition market faced a high comparable period (due to product shortages in North America), further
exacerbated by a continuing decline in birth rates (especially in China – the largest ELN market) and ongoing destocking.
Successful launch of vitamin transformation program
In response to the exceptionally challenging macroeconomic environment in the vitamins industry, in mid-2023 the
company embarked on a major restructuring program in its vitamin activities to reduce costs and restore profitability.
More details on the vitamin transformation program are available under Financial performance.
“Health, Nutrition & Care significantly expanded its portfolio
and capabilities. This expansion represents a step-change in
our ability to serve rapidly evolving customer and consumer
needs for enhanced nutrition and well-being solutions.”
Philip Eykerman, Business Unit President Health, Nutrition & Care
Performance 2023
In a challenging environment, HNC recorded 4% lower organic sales compared to the same prior year period with 6%
lower volumes and 2% higher prices. Volumes were affected mainly by persistent destocking and softer consumer
demand, while continued pricing was partially offset by low vitamin prices.
Sales in Dietary Supplements were impacted by pressure on consumer discretionary spend, especially in North America
and lower demand for immunity-supporting solutions post-COVID. i-Health delivered solid results driven in particular by
North America online sales and strong consumption growth in select global markets. Pharma was weak. Medical Nutrition
experienced good market conditions and Biomedical performed very strongly.
Early Life Nutrition faced a high comparable period (due to product shortages in North America), further exacerbated by
a continuing decline in birth rates (especially in China – the largest Early Life Nutrition market) and ongoing destocking.
dsm-firmenich’s innovative human-milk oligosaccharides (HMOs) saw strong interest from customers, especially for
applications in new premium products. HNC received the first-ever approvals in China for two HMOs in October, clearing
the way for a China launch in 2024, as well as delivering the first new products and concepts combining the strengths of
the merged businesses.
Business – Health, Nutrition & Care
dsm-firmenich Integrated Annual Report 2023 44
The Adjusted EBITDA was down 27% year-on-year, with an estimated vitamin effect of roughly 20%, which resulted in a
drop in Adjusted EBITDA margins by 490bps. Without this effect Adjusted EBITDA would have been down 7%.
x € million
Pro forma
2023
IFRS
2023
Sales
2,270
2,246
Organic sales growth (in %)
(4)
Adjusted EBITDA
389
377
Adjusted EBITDA margin (in %)
17.1
16.8
The year in review
We deliver value to our customers through our deep understanding of the most significant consumer trends and
behaviors affecting the markets we serve. In 2023, we published a number of in-depth, data-driven studies designed to
enable brands to support the world’s health at every stage of life.
Immunity Report 3.0
Research conducted in 2023 indicated that consumers take dietary supplements primarily for immune system support,
and that this was the top health area they planned to address. However, the immune health market is evolving rapidly,
with more emphasis on overall health, including physical and mental well-being. Drawing on extensive consumer research,
our Immunity Report 3.0 examines emerging consumer wellness priorities, from increased awareness of ingredient
labelling to healthy aging.
Acquisition of Adare Biome
In 2023, we further strengthened our ‘Health from the gut’ offering to meet growing consumer demand for better gut
health with nutritional solutions that have scientifically backed health benefits combined with easy application and novel
product formats. These clinically proven, multi-ingredient products include our next-generation Humiome® pre-, pro-
and postbiotics, GlyCare™ HMOs, Tolerase® digestive enzymes, and Quali® vitamins.
In July, we completed the acquisition of Adare Biome, a pioneer and global leader in the development and manufacture of
postbiotics. Our strong infrastructure, commercialization and science capabilities will enable us to substantially scale
Adare Biome’s industry-leading scientific research. Together with Adare Biome’s team of experts, we are poised to
accelerate the creation of next-generation biotics faster and more efficiently than was previously possible to a wider
range of people around the world. Further development of postbiotic business-to-business ingredients and solutions
presents opportunities in dietary supplements, early life nutrition, and medical nutrition.
Partnership with Indena
To address evolving consumer demand, for botanicals, in October we announced our strategic partnership with Indena, a
private Italian company with a century of experience in the identification, development and production of high-quality,
innovative, and efficacious active botanicals for the pharmaceutical and nutrition industries. The partnership is dedicated
to specific strategic health areas and selected ingredients in the field of dietary supplements, including those that
support immunity, vision, brain health, women’s health, healthy aging, and gut health. Through our shared scientific
expertise and vision, together we aim to develop the next generation of solutions in premix and market-ready solutions
with our core ingredients and Indena botanical extracts.
Approval for HMOs as nutrition fortifiers
As a leader in HMO research, development and production, we are continuously pioneering advances and expanding our
offering across the early life nutrition and dietary supplement markets. In 2023, following a rigorous technical, safety, and
Business – Health, Nutrition & Care
dsm-firmenich Integrated Annual Report 2023 45
efficacy evaluation, two of our HMOs were approved as nutrition fortifiers for specific infant and young child products in
China.
HMOs are an important component of human breast milk and have been shown to play a role in infant health by
supporting immune function, gut health and, potentially, cognitive development. A growing body of scientific evidence
outlining their potential benefits has shown HMOs as a powerful emerging ingredient that brings the composition of
infant formula closer to that of breast milk. This approval in China marks a significant milestone, signaling the successful
navigation of a multi-year, multi-phase regulatory process that allows the unique benefits of HMOs to be accessible to
infants and young children.
life’s®OMEGA
algal alternative to fish oil
Omega fatty acids support cardiovascular health as well as cognitive and immune function. However, less than 20% of
people worldwide consume the recommended 250 mg per day. This is partly due to concerns regarding their impact on
marine ecosystems as well as the unpleasant taste associated with omega-3s.
Ten years ago we created life’s®OMEGA, the only commercially available, algal-based omega-3 that delivers the essential
fatty acids eicosapentaenoic acid (EPA) and docosahexaenoic acid (DHA) from a single quality source. Our extensive Life
Cycle Analysis (LCA) study proves that our life’s® portfolio has a lower environmental impact than fish-based alternatives.
This year, we achieved a significant milestone with the launch of life’s®OMEGA O3020. This is the first and only single-
source algal omega-3 with the same EPA-to-DHA ratio naturally found in standard fish oil, but with twice the potency,
and more desirable organoleptic qualities. Using proprietary precision fermentation of a natural non-GMO algae grown in
a controlled environment ensures purity, while multiple production locations ensure supply reliability.
Healthy growth in Biomedical
Our biomedical materials business delivered very strong results, supported in part by the recovery of elective orthopedic
procedures post-COVID. Biomedical drives innovation by addressing healthcare needs through sustainable science. In
March, we announced the launch of our bio-based Ultra-High Molecular Weight Polyethylene fiber, certified by the
International Sustainability and Carbon Certification system, providing full compliance and traceability.
Our industry-leading, medical-grade polyethylene biomaterials platform has supported multiple partners in the
development of suture-based technologies for the global orthopedics market and driven growth in the global vascular
market.
Within our natural biomaterials portfolio, we successfully introduced our technologies into China and India, expanding our
international presence and introducing our healing technologies into strategic therapeutic areas. We enabled one of our
key partners to grow in the neurovascular market, generating significant revenue growth for our medical coatings
portfolio.
i-Health delivers consumer solutions and growth
i-Health, our direct-to-consumer business, continued to thrive, through its focus on products serving the gut health and
women’s health segments, thanks to increased interest in immunity and overall health and wellness. Strong performance
across our Culturelle® brand, as well as our women’s health brands, AZO® and Estroven®, in North America were driven by
outstanding growth in Amazon e-commerce and Costco Club channels. The key launch in women’s health was Estroven®
Complete + Ashwagandha, supporting menopause symptom management.
Our Culturelle® probiotic range continued to attract strong consumer interest. Key US launches this year included
Culturelle® Women’s Health 4-in-1 with Lactobacillus rhamnosus GG (LGG) probiotics, one of the world’s most effective
probiotic strains, designed to promote women’s vaginal, urinary, digestive, and immune health. Other significant
Business – Health, Nutrition & Care
dsm-firmenich Integrated Annual Report 2023 46
achievements in i-Health supporting early life nutrition include the launch of Culturelle® Baby Drops with LGG in China
and Brazil.
Personalizing nutrition with Hologram Sciences
Hologram Sciences, our AI-focused health incubator, builds consumer-facing brands, supports strategic partners, and
leverages modern technology to advance personalization and improve health outcomes. Hologram Sciences provides a
unique partnership model for outsourced innovation, including access to a pipeline of modern brands for licensing:
d.velop
TM
(vitamin D immunity) and Phenology
TM
(personalized menopause solution); and resources to support existing
brands or create entirely new white-space opportunities.
In 2023, Hologram Sciences entered into a collaboration with Mayo Clinic to develop an innovative Precision Nutrition
Platform aimed at addressing the critical challenge of malnutrition in hospital settings. This new platform will combine
Hologram's advanced machine learning and adaptive technologies with Mayo Clinic's extensive clinical insights. Its goal is
to create highly-informed proactive strategies using predictive analytics and personalized nutrition in order to enhance
patient care & recovery, outcomes, and readmission rates.
Bringing progress to life across our segments
Within Dietary Supplements, we expanded our ‘Health from the Gut’ platform with the launch of Humiome® Post LB – a
unique postbiotic combination of two proprietary lactobacillus strains and their metabolites offering health benefits
across several therapeutic areas. This combination can be applied in on-trend formats such as gummies and beverages
that we obtained through the acquisition of Adare Biome. Our new partnership with Indena, expands our portfolio with
high-quality science-backed botanicals.
In our Medical Nutrition business, we achieved regulatory approval in Brazil of ampli-D®, a potent form of vitamin D3,
clinically proven to raise vitamin D3 levels three times faster and more effectively than traditional alternatives, especially
in elderly people. We also successfully launched the first ready-to-pack premix solution including a science-backed
blend of vitamins, minerals, amino acids, and flavors targeting the healing of chronic wounds in diabetic patients.
As a supplier of APIs, we serve our customers with high-quality products, pharma documentation, regulatory support,
and supply reliability. This year, we became the only Western supplier providing a unique sustainability offering through
our Imp’Act cards, measuring product sustainability with our LCA expertise.
Nutrition Improvement is the segment where we serve the under-nourished, especially in Africa and Asia. In this segment,
as an on-continent multiple micronutrient supplement (MMS) manufacturer, we are supporting a locally-produced
solution backed by 30 months of successful stability data.
Sustainability
We help our customers drive their sustainability goals by leveraging our internal LCA expertise through our HNC
Sustainability Imp’Act Card™. The Imp’Act Card™ transparently communicates the measured environmental footprint of
our products from cradle to gate and supports substantiated consumer claims. The most important and relevant
information is clearly labelled at the individual ingredient level, including the calculated environmental impact,
traceability, certifications and social impact.
In 2023, we trained more than 1,200 people internally and rolled out the Imp’Act Card™ at our largest global customers
and strategic regional accounts, and the initiative was shortlisted as finalist in the Convention on Pharmaceutical
Ingredients (CPHI Pharma) Sustainability Awards category.
Business – Health, Nutrition & Care
dsm-firmenich Integrated Annual Report 2023 47
Innovation
We have defined a number of strategic innovation priorities based on consumer and customer needs across all our
business segments. These include providing novel ingredient solutions as well as novel premix and market-ready
solutions that deliver nutritional support in segments such as healthy aging and women’s health.
In 2023, we accelerated the shift from fish oil to algal sources with the launch of life’s®OMEGA O3020, and led the market
in infant nutrition innovation in HMOs.
Other notable innovation achievements this year included:
• Increasing the bioavailability of vitamins with our ampli® vitamins range
• The publication by the European Food Safety Authority (EFSA) of the conversion factor for calcidiol (25-
hydroxyvitamin D3) in its scientific opinion on the tolerable upper intake level for vitamin D – a major regulatory
process milestone for obtaining approval for ampli-D® in the European Union
• Providing new solutions for one of the world’s biggest nutrient-related disorders with Tolerase® G, the first and
only enzyme demonstrated to effectively break down residual gluten molecules
• Pioneering in biotics-based gut health with the Humiome® brand, an innovative range of ‘Health from the gut’
solutions. Shaped by microbiome science and consumer needs, Humiome® comprises prebiotics, probiotics and
postbiotics, along with multi-ingredient custom solutions delivered via microbiome-targeted technology
Partnerships
HNC is actively committed to tackling major global challenges in human health and nutrition, but no one party can solve
them alone. We are working in partnership with the Bill & Melinda Gates Foundation, the World Food Program and Sight &
Life organization to combat hunger and malnutrition among the most vulnerable populations, including children and
pregnant women. You can read more about dsm-firmenich’s partnerships in the Partnerships for Nutrition & Health in
Sustainability performance.
By sharing our knowledge and expertise, we are making progress toward our shared goal of reaching 800 million people
through cost-effective large-scale food fortification (LSFF). LSFF is one of the most cost-effective ways to address
malnutrition, but essential micronutrients embedded in the most consumed staple foods must be of high quality as well
as being affordable. We are playing a key role in scaling up access to fortified staples, such as rice, flour and cooking oil.
Business – Animal Nutrition & Health
dsm-firmenich Integrated Annual Report 2023 48
Animal Nutrition & Health
Highlights
• Animal Nutrition & Health delivered sales of €3,227 million and an Adjusted EBITDA of €128 million
• Our sales from recently launched products (primarily in performance solutions and precision services) enjoyed
double-digit growth despite macro-economic headwinds, inflation, and high feed production costs
• In response to the macroeconomic environment in the vitamins industry, we embarked on a major restructuring
program in its vitamin activities to reduce costs and restore profitability
• Our feed enzymes HiPhorius® and ProAct 360™, continued strong growth and gained market entry in all regions,
lowering feed costs and improving return on investment for customers
• Grupo Almar, one of the world’s top five shrimp producers, entered into a partnership with us for sustainable
shrimp farming, using our intelligent sustainability service, Sustell™
• Veramaris®
1
, our omega-3 fatty acids from microalgae, saw strong growth on replacement of natural fish oil, also
a consequence of the anticipated decline in global fish yields
• Our methane-reducing feed additive for ruminants, Bovaer®, is now available in 57 countries
About Animal Nutrition & Health
As the world’s population continues to grow, more and more land and resources are required to feed it. Our innovative
offer in Animal Nutrition & Health (ANH) helps meet the rising demand for animal protein and support the sustainable
transformation of food systems.
We combine our professional passion and smart science to deliver new approaches to animal health and nutrition that
enable the sustainable production of high-quality animal protein while simultaneously reducing emissions and our
reliance on natural resources.
With our portfolio of vitamins, performance solutions, and data-driven precision services, we serve the entire animal
production value chain and are helping to shape the future of animal farming. Our digestive enzymes increase the
efficiency of feed raw material utilization, improving performance while reducing feed costs and environmental impact;
our eubiotics help improve animal gut health and contribute to the reduction of antimicrobial resistance; our mycotoxin
deactivators help protect farm animals from the harmful toxins that grow on feed; and our methane-reducing feed
additive for ruminants helps reduce the greenhouse gas emissions associated with cattle farming. We bring progress to
life by helping to make animal protein more sustainable, nutritious, and affordable - for example, via our game-changing
algae-based omega-3 oil, Veramaris®.
1
This trademark is owned by Veramaris V.O.F.
Business – Animal Nutrition & Health
dsm-firmenich Integrated Annual Report 2023 49
Operating environment
Overall global animal protein consumption remained resilient throughout the year driven by good demand for poultry.
Market conditions in China remained subdued with pork demand stabilizing in the second part of the year but not
showing the anticipated recovery.
The ANH business operated in an exceptionally challenging environment being impacted by an imbalance in the global
feed additive marketplace due to ongoing destocking as farmers’ profitability was squeezed on substantially higher input
costs. This was most pronounced in China where pork production has been loss making throughout the year. These
difficult market conditions led to unprecedented low levels of vitamin prices, as well as under-utilization of the vitamins
asset base, resulting in a very weak performance of the essential ingredients activities of ANH.
“The year 2023 reaffirmed the need for more sustainable
animal protein. Despite the adverse business environment, we
continued the strong growth of our Performance and Precision
solutions, while taking decisive action to emerge stronger from
the vitamins crisis.”
Ivo Lansbergen, Business Unit President Animal Nutrition & Health
Performance 2023
Performance Solutions, such as enzymes, gut health solutions, and mycotoxin management delivered a strong
performance owing to the prioritization of efficiency yield management by farmers. The strong growth in this category is
supported by the innovation pipeline, which includes Bovaer®, Balancius®, ProAct360™, HiPhorius™, Mycofix® and
Veramaris®.
ANH’s organic sales declined by 13% compared with the same period in the prior year, with negative pricing (-7%) and
negative volumes (-6%) – both driven by weak sales of straight vitamins.
The continued unprecedented conditions in vitamins were addressed by prioritizing cash generation to reduce
inventories, especially in the second half of the year. In June the company started the vitamin transformation program.
The Adjusted EBITDA was down 76% year-on-year, because of lower vitamin prices, weaker volumes and higher idle costs.
Foreign exchange rates had a 2% negative impact. Adjusted EBITDA margin was down to the level of 4% which was
980bps lower than in 2022. The total vitamin effect is estimated at around €350 million.
x € million
Pro forma
2023
IFRS
2023
Sales
3,227
3,223
Organic sales growth (in %)
(13)
Adjusted EBITDA
128
128
Adjusted EBITDA margin (in %)
4.0
4.0
Business – Animal Nutrition & Health
dsm-firmenich Integrated Annual Report 2023 50
The year in review
Successful launch of vitamin transformation program
In response to the exceptionally challenging macroeconomic environment in the vitamins industry, in mid-2023 the
company embarked on a major restructuring program in its vitamin activities to reduce costs and restore profitability.
More details on the vitamin transformation program are available under Financial performance.
Collaboration with Grupo Almar for sustainable shrimp farming
Awareness of environmental sustainability has increased noticeably in recent years. This change is particularly evident
among downstream players and financial institutions, which have set science-based emissions targets for 2030.
A very good example of the importance of sustainability measurements in the animal protein value chain is our
collaboration with Grupo Almar in Ecuador, one of the top five shrimp producers in the world. In September 2023, we
entered into a multi-year commitment with Grupo Almar to measure and improve that company’s environmental
footprint. This will be done by the deployment of Sustell™, our intelligent sustainability service. Full environmental
footprinting of Grupo Almar’s shrimp production commenced in January 2024 and is planned to provide ISO-accredited
footprint results for the full year 2024 onwards.
Grupo Almar chose dsm-firmenich and Sustell™ to accurately measure and validate its carbon footprint as part of a full
ISO 14040/44-compliant, Life Cycle Assessment (LCA)-based environmental footprint.
For more information, see the case study Enabling sustainable aquaculture with Sustell™.
Bovaer® continues to develop momentum
Our methane-reducing feed additive for ruminants, Bovaer®, is now available in 57 countries globally (up from 45 in 2022)
and has already reduced our customers’ greenhouse gas footprint by an estimated 75,000 tons of CO
2
e. Customers
(including dairy and beef companies and retailers) around the world continue to pilot and expand the use of Bovaer® in
their operations. Construction of the large-scale Bovaer® production plant in Dalry (Scotland) is progressing well and is
expected to commence operations as planned in 2025.
Symphiome™ precision biotic
Following its successful launch in August 2022, our precision biotic Symphiome™ achieved an important sales milestone
in 2023, passing €5 million in sales.
Symphiome™ is an excellent example of our expanded focus on how the microbiome behaves and influences animal
health. It is a first-of-its-kind precision biotic designed to orchestrate microbiome metabolism in poultry flocks in order
to support good gut health and growth. Symphiome™ optimizes birds’ resilience to enteric stress, facilitates nutrient
utilization, improves welfare, and reduces emissions. It is the first product in our new category of microbe metabolic
modulators. Acting on desirable metabolic pathways, Symphiome™ offers benefits for poultry flocks and the
environment.
Veramaris® achieves commercial break-through
Veramaris®, our 50:50 partnership with Evonik for algal-based omega-3, enjoyed strong demand in 2023. The sustained
growth of Veramaris® is driven by rising demand that is attributable to two factors: the global expansion of aquaculture,
and the decline in finite marine resources obtained via wild fishing.
Veramaris® plays an important role in enabling the continued sustainable growth of aquaculture, especially salmon
farming. The world’s first Aquaculture Stewardship Council and Marine Stewardship Council (ASC-MSC)-certified
Business – Animal Nutrition & Health
dsm-firmenich Integrated Annual Report 2023 51
microalgae omega-3 oil for fish and shrimp feed, Veramaris® is a highly valuable source of sustainable omega-3 that is
rich in both EPA and DHA, produced through a unique fermentation process.
Sustainability
The need to provide enough animal protein for the world’s growing population, while at the same time reducing the
environmental impact of farming, calls for smart science and innovative solutions. This challenge is addressed by our
unique approach to ANH, which is based on six sustainability and business platforms:
• Improving the lifetime performance of farm animals
• Making efficient use of natural resources
• Reducing emissions from livestock
• Helping tackle antimicrobial resistance
• Reducing our reliance on marine resources
• Improving the nutritional quality of meat, milk, fish and eggs while reducing food loss and waste
Innovation
We offer concrete and measurable solutions that are closely linked to our products, reducing environmental impact while
at the same time improving profitability for producers. In 2023, we successfully continued the roll-out of our smart
science and innovative solutions, including:
• Sustell™, the world’s first intelligent sustainability service, designed to improve the environmental footprint and
profitability of animal protein production
• ProAct 360™, our innovative second-generation feed protease, which drives consistent improvements in poultry
growth performance and reduces production costs while making animal protein production more sustainable
• Bovaer®, our cattle feed additive that reduces enteric methane emissions by 30%, helping to cut global warming
• Veramaris®, our algae-based omega 3 oil, which helps reduce reliance on marine resources and supports the
sustainable growth of aquaculture
Partnerships
In 2023, we entered into a partnership with Sustained and joined forces with Foundation Earth to provide food
companies with a full end-to-end solution for the detailed assessment of the environmental footprint of animal-based
foods down to SKU level, while enabling these food producers to then apply an on-pack eco-label to their products
through the use of EU PEF compliant Eco-Impact scores from Foundation Earth. The eco-scores delivered by Foundation
Earth range from A+ to G and are re-certified annually, making it possible for food product owners to differentiate on
sustainability and improve their production standards and associated score over time, while meeting the increasing
demand of consumers for sustainably produced products. This multi-lateral collaboration is the first of its kind and
allows farmers, processors, food manufacturers, and retail brand owners to manage and communicate the sustainability
of animal-based food production by leveraging our Sustell™ service for capturing accurate farm-level specific emissions
data and the Sustained platform for delivering product-level environmental life-cycle assessments of consumer food
products at scale. This end-to-end, farm -to-fork solution is applicable to all animal proteins such as eggs, milk, fish and
meat.
Business – Corporate activities
dsm-firmenich Integrated Annual Report 2023 52
Corporate activities
Reporting period
The Corporate activities section includes information from the combined entity for 12 months, which includes Firmenich
as of 1 January 2023 (pro forma, see Concepts and ratios). It also includes information that is presented in accordance
with IFRS, which includes Firmenich from the merger date onwards.
Any consolidated activities within continuing operations that are outside the four Business Units are reported as
Corporate activities. These comprise operating and service activities, as well as a number of costs that cannot be
allocated directly to the Business Units. While this segment reports net sales to third parties from its service units, it
normally has a negative operating result.
Corporate activities include various holding companies, regional holdings and corporate overheads. The most significant
cost elements are corporate departments and the share-based compensation for the company.
x € million
Pro forma
2023
IFRS
2023
Sales
66
68
Adjusted EBITDA
(79)
(78)
Insurances
We retain a limited part of our material damage, business interruption, (product) liability and other risks via our captive
insurance companies. In 2023, the total retained damages were €25 million (2022: €15 million).
Corporate research
We centrally invest in a focused number of clearly defined disruptive technology platforms, managed by our Senior Science
Fellows, through which we aim to create greater differentiation over the long-term. These underpin early-stage innovation
projects that are co-funded with the relevant business, following the principles of co-leadership, milestone-based funding,
and assumption-based working, in order to provide market-ready scientific breakthroughs in the future.
Share-based payments
Executives participate in the Long-Term Incentive (LTI) scheme. This links their compensation to the long-term interests of
our company's stakeholders. It also provides a vehicle for the attraction and retention of suitable employees.
As shares / share units have become more prevalent in the market, we replaced stock options with shares / share units in
2017. This resulted in better alignment with the LTI vehicle already in place for the Board of Directors and the Executive
Committee. The use of shares / share units also targets yet closer alignment with the interests of our stakeholders. For
detailed information, see Note 27 Share-based compensation to the Consolidated financial statements.
Business – Financial performance
dsm-firmenich Integrated Annual Report 2023 53
Financial performance
Reporting period
The Financial performance section includes information from the combined entity since the beginning of the
comparative period, which includes Firmenich as of 1 January 2022 (pro forma, see Concepts and ratios). It also includes
information that is presented in accordance with IFRS, which includes Firmenich from the merger date onwards -
whenever this is used this is specifically indicated.
At a glance
On a pro forma basis:
• -7% Sales versus 2022, with organic sales -5%
• -22% Adjusted EBITDA versus 2022
• €999 million Adjusted gross operating free cash flow, up 9% versus 2022
• €555 million Core adjusted net profit, down 45% versus 2022
On an IFRS basis:
• €2,153 million Net profit (total group) versus €1,715 million in 2022
• €9.14 Basic earnings per share (EPS) versus €9.80 in 2022
Navigating a tough environment
dsm-firmenich operated in a tough macro-economic environment in 2023, characterized by a solid performance across
the company, significantly impacted by unprecedented low vitamin prices, persistent destocking by our customers and
negative foreign exchange rate effects.
In light of these unprecedented economic conditions, we accelerated our plans for driving through profit improvement
and cost reduction measures and advanced the review of all our business segments. This led us to the initiation of a
process to separate out the Animal Nutrition & Health (ANH) business from the Group which we announced 15 February
2024. This should strongly reduce our exposure to vitamins earnings volatility and reduce our capital intensity in line with
our long-term strategy. We believe that the full potential of the ANH business could be best realized through a different
ownership structure. The process is subject to satisfying customary conditions, including consultation with works
councils and employee representatives (as required) in all relevant geographies.
Our largest profit improvement and cost reduction measure in 2023 was the restructuring program in its vitamin
activities, which we embarked on mid-year. This program is expected to result in an estimated Adjusted EBITDA
contribution of around €200 million per year with the full run rate to be reached by the end of 2024. By year-end of
2023 dsm-firmenich already made strong progress in executing the program through the closure of the Xinghuo vitamin
B6 plant in China and shutting down the Jiangshan vitamin C production in China. The sales model now supports a ‘go-
to-market’ approach which is simpler and more efficient in the current market environment.
Business – Financial performance
dsm-firmenich Integrated Annual Report 2023 54
Delivering synergies through integration
In 2023 we made good progress in integrating the two legacy organizations, ensuring business continuity and our ability
to deliver the announced synergies. We are on track to achieve our target synergies of approximately €350 million
Adjusted EBITDA per year. Around half of this is expected to come from cost efficiencies, with the full run rate achieved
by the end of year three. Initial benefits of about €15 million were delivered in the fourth quarter of 2023. The remaining
synergies are expected from incremental revenues of €500 million, generated by an acceleration of innovation with
customers. There has been good early progress and the full run rate is still expected by the end of year four. These
revenue synergies are driven by complementary capabilities and realized in the three Business Units with the strongest
strategic adjacency - Perfumery & Beauty (P&B), Taste, Texture & Health (TTH), and Health, Nutrition & Care (HNC) - with
roughly the following balance:
• 60% in TTH Business Unit
• 25% in HNC Business Unit
• 15% in P&B Business Unit
Great future ahead
Supported by our exciting innovation pipeline, all these actions will help us to prioritize and accelerate the company’s
nutrition, health and beauty high-growth and higher-margin businesses, all of which is reflected in our mid-term financial
targets of 5-7% annual organic sales growth and 22-23% Adjusted EBITDA margins.
“In light of the unprecedented conditions with very low
vitamin prices and a continued destocking cycle, we took a
number of immediate and effective actions. We accelerated
our plans for driving through additional self-help measures
and advanced the review of all our business segments.”
Ralf Schmeitz, Chief Financial Officer
Financial results
P&B recorded good performance while performance in TTH was solid. HNC, but especially ANH, were weak on
exceptionally low vitamin prices and persistent destocking.
In 2023 net sales was €12,310 million which was 7% lower than in 2022. Organic sales declined by 5% year on year. The
results for the full year were impacted by a combination of unprecedented market dynamics that led to very low vitamin
prices, together with a deep destocking cycle.
Adjusted EBITDA, significantly impacted by the vitamin effect and foreign exchange was 22% lower than in the prior year,
resulting in a 280bps margin decline. This includes a negative vitamin effect which is estimated at about €500 million.
Without this effect, the Adjusted EBITDA would have been in line with prior year, despite a negative foreign exchange
effect of about €90 million.
Business – Financial performance
dsm-firmenich Integrated Annual Report 2023 55
Income statement and key data - pro forma
x € million
Pro forma
2023
Pro forma
2022
Change
Continuing operations
Sales
12,310
13,238
-7%
Adjusted EBITDA
1,777
2,275
-22%
Adjusted operating profit
666
1,361
-51%
Operating profit (loss)
(173)
1,111
-116%
Net profit (loss)
(321)
788
-141%
Adjusted net profit
365
1,013
-64%
Core adjusted net profit
555
1,013
-45%
Adjusted gross operating free cash flow
999
918
9%
Adjusted EBITDA margin (in %)
14.4
17.2
Core adjusted ROCE (in %)
5.2
8.4
Income statement and key data - IFRS
x € million
IFRS 2023
IFRS 2022
Change
Continuing operations
Sales
10,627
8,390
27%
Adjusted EBITDA
1,443
1,395
3%
Adjusted operating profit
430
767
-44%
Operating profit (loss)
(497)
682
-173%
Net profit (loss)
(636)
555
-215%
Adjusted net profit
190
555
-66%
Core adjusted net profit
380
555
-32%
Adjusted gross operating free cash flow
856
310
176%
Adjusted EBITDA margin (in %)
13.6
16.6
The below tables provide a reconciliation of the Alternative Performance Measures (APMs) on a pro forma basis to the
APMs on an IFRS basis. For a reconciliation of these APMs to the closest reconcilable IFRS metric, see also Note 2
Alternative Performance Measures to the Consolidated financial statements.
Reconciliation pro forma with IFRS
x € million
IFRS 2023
Firmenich
1 January - 8 May
Inter-company
eliminations
Pro forma
2023
Continuing operations
Sales
10,627
1,697
(14)
12,310
Adjusted EBITDA
1,443
334
-
1,777
Operating profit (loss) (EBIT)
(497)
324
-
(173)
Adjusted operating profit (EBIT)
430
236
-
666
Core adjusted operating profit (EBIT)
614
236
-
850
Net profit (loss)
(636)
315
-
(321)
Adjusted net profit
190
175
-
365
Core adjusted net profit
380
175
-
555
Adjusted gross operating free cash flow
856
143
-
999
Adjusted EBITDA margin (in %)
13.6
0.8
-
14.4
Business – Financial performance
dsm-firmenich Integrated Annual Report 2023 56
x € million
2023
Average capital employed (IFRS)
20,576
Book value adjustments¹
2,465
PPA adjustments²
(6,618)
Core average capital employed (pro forma)
16,423
Core adjusted operating profit (EBIT)
850
Core adjusted ROCE (in %)
5.2
1 Book value adjustments relate to the book value of Firmenich's assets and liabilities before the merger date and adjustments related to the buy-out of
minority shareholders.
2 PPA adjustments relate to the fair value step-ups on Firmenich's identifiable assets acquired and liabilities assumed following the merger transaction.
Net sales and Adj. EBITDA per Business Unit - pro forma
Net sales
Adjusted EBITDA
Adjusted EBITDA margin
x € million
Pro forma
2023
Pro forma
2022
% change
Pro forma
2023
Pro forma
2022
% change
Pro forma
2023
Pro forma
2022
Perfumery & Beauty
3,709
3,792
-2%
783
748
5%
21.1
19.7
Taste, Texture & Health
3,038
3,174
-4%
556
549
1%
18.3
17.3
Health, Nutrition & Care
2,270
2,418
-6%
389
533
-27%
17.1
22.0
Animal Nutrition & Health
3,227
3,784
-15%
128
524
-76%
4.0
13.8
Corporate Activities
66
70
-6%
(79)
(79)
0%
-
Total, continuing
operations
12,310
13,238
-7%
1,777
2,275
-22%
14.4
17.2
Net sales and Adj. EBITDA per Business Unit - IFRS
Net sales
Adjusted EBITDA
Adjusted EBITDA margin
x € million
IFRS 2023
IFRS 2022
% change
IFRS 2023
IFRS 2022
% change
IFRS 2023
IFRS 2022
Perfumery & Beauty
2,619
579
22.1
Taste, Texture & Health
2,471
1,546
60%
437
266
64%
17.7
17.2
Health, Nutrition & Care¹
2,246
2,939
-24%
377
546
-31%
16.8
14.4
Animal Nutrition & Health
3,223
3,788
-15%
128
678
-81%
4.0
23.0
Corporate Activities
68
117
-42%
(78)
(95)
-18%
Total, continuing
operations
10,627
8,390
27%
1,443
1,395
3%
13.6
16.6
1 The 2022 figures for Health, Nutrition & Care include the Personal Care & Aroma Ingredients business, which was transferred to Perfumery & Beauty
following the merger.
Net profit (IFRS-based)
Adjusted net profit from continuing operations of €190 million was down by €365 million versus 2022. Next to the
addition of Firmenich and the vitamin impact, this was mainly caused by the increase of depreciation and amortization,
following the Purchase Price Allocation of Firmenich. The net profit available to equity holders of DSM-Firmenich AG
increased by €437 million to €2,131 million. This increase was mainly a result of the net book profit of €2,796 million on
the sale of DSM Engineering Materials (in comparison with 2022, where we had the net book profit of €1,018 million on the
sale of DSM Protective Materials), partly set off by the higher Alternative Performance Measures (APM) adjustments of
€746 million, mainly due to acquisition, integration and restructuring costs (including impairments). As a consequence of
the above, the net earnings per ordinary share from continuing operations decreased to -€2.82 in 2023 (2022: €2.64)
and for total dsm-firmenich it decreased to €9.14 (2022: €9.80).
Financial income and expense increased by €62 million year on year to a net expense of €150 million. Next to the
addition of Firmenich, this was mainly caused by the increase of the exchange differences by €71 million, largely caused
by the development of the Argentinian Peso.
The total effective tax rate over taxable result 2023 for continuing operations was 2.8% (2022: 21.0%), excluding APM
adjustments this was 37.3% (2022: 20.2%). This was mainly caused by the geographical spread, primarily due to the
vitamin effect, and changes in tax rates.
Business – Financial performance
dsm-firmenich Integrated Annual Report 2023 57
Adjustments made in arriving at dsm-firmenich’s Alternative Performance
Measures (IFRS-based)
Total APM adjustments from continuing operations for the full year amounted to a loss of €826 million (2022: a loss of
€80 million), consisting of a loss in EBITDA of €633 million (including restructuring costs of €234 million and acquisition/
divestment/integration costs of €363 million), impairments of €294 million, financial expenses of €34 million and a
related tax impact of -€135 million.
Sales by destination Sales by business segment
Sales bridge 2023 Adjusted EBITDA margin
Cash flow statement - IFRS
x € million
IFRS 2023
IFRS 2022
Cash and cash equivalents at 1 January
2,755
1,561
Cash provided by operating activities
1,265
965
Cash from / (used in) investing activities
(726)
876
Cash from / (used in) financing activities
(820)
(645)
Effect of exchange differences
(18)
(2)
Cash and cash equivalents at 31 December
2,456
2,755
Business – Financial performance
dsm-firmenich Integrated Annual Report 2023 58
Cash provided by operating activities of €1,265 million mainly consists of the EBITDA for the year (€3,610 million),
excluding the net book profit from disposals of €2,843 million (mainly the sale of DSM Engineering Materials, recognized
under investing activities) and the change in working capital of €160 million. Overall, the full-year operating cash flow
increased by €300 million. Next to the various impacts of the merger, this was mainly due to the improvement in
performance in relation to the working capital.
The cash used in investing activities consisted mainly of the acquisitions of subsidiaries (-€3,691 million, primarily the
merger with Firmenich) and the capital expenditures (-€684 million), partly offset by the proceeds from the divestments
(€3,533 million, mainly from the divestments of DSM Engineering Materials). The cash used in financing activities
included the dividend paid (-€582 million), repayment of borrowings (-€549 million) and the repurchase of shares (-
€256 million), partly offset by the proceeds from issuing new shares (€733 million). For the full cash flow statement, see
the primary statement in the Consolidated financial statements.
Balance sheet (IFRS-based)
The balance sheet total (total assets) reached €34.3 billion at year-end (2022: €17.4 billion). Equity increased by €12.3
billion, which was attributable to the issuance of new shares (€11.5 billion) and the net profit of €2.2 billion, offset partly
by the dividend payments of -€0.6 billion, the repurchase of shares of -€0.3 billion and the transfer to liabilities relating
to the buy-out of non-tendered shares of -€0.6 billion. Equity as a percentage of total assets increased from 62% to
67%.
Compared to year-end 2022, net debt increased by €2,128 million to €2,215 million, mainly due to the
acquisitions/merger, partly offset by the divestment of DSM Engineering Materials. The gearing at year-end 2023 was
8.8%, compared to 0.8% at year-end 2022.
Capital expenditure on intangible assets and property, plant and equipment amounted to €700 million for continuing
operations in 2023 (€684 million on a cash basis). Including new leases the additions to intangible assets and property,
plant and equipment was €844 million, which was roughly the same as the level of amortization, depreciation and
impairments, excluding the impact of the purchase price allocation (PPA) of Firmenich.
Total working capital from continuing operations (excluding the liability relating to the statutory buy-out of non-tendered
shares of DSM N.V.) amounted to €3,199 million compared to €1,992 million at year-end 2022. This represents 25.7% as a
percentage of annualized fourth-quarter 2023 sales (2022: 23.8%). Cash-wise, the operating working capital (OWC) from
continuing operations decreased €268 million compared to last year, which is mainly attributable to the reduction in
inventories. The OWC percentage increased from 29.0% at year-end 2022 to 31.1% of annualized sales at year-end 2023.
Cash and cash equivalents came to €2,456 million at the end of the year; including current investments, this amounted
to €2,563 million (2022: €2,880 million). Besides the regular cash flow elements, the large movements due to the
acquisitions and divestment were almost in balance.
Business – Financial performance
dsm-firmenich Integrated Annual Report 2023 59
Balance sheet profile
IFRS 2023
IFRS 2022
x € million
in %
x € million
in %
Goodwill and intangible assets
18,738
55
5,147
30
Property, plant and equipment
5,549
16
3,576
21
Other non-current assets
1,139
3
552
3
Cash and cash equivalents
2,456
7
2,755
16
Other current assets
6,388
19
5,373
30
Total assets
34,270
100
17,403
100
Equity
23,070
67
10,845
62
Provisions
176
1
95
1
Other non-current liabilities
6,539
19
3,950
23
Other current liabilities
4,485
13
2,513
14
Total equity and liabilities
34,270
100
17,403
100
Outlook 2024
As the global political and economic environment remains uncertain, and given that it is early in the year, we feel it
prudent to base our full year outlook for the entire company only on those elements which are under our control, namely
a €200 million step-up in Adjusted EBITDA from a combination of synergy delivery and the vitamin transformation
program. Considering that the full negative vitamin effect emerged only in the second quarter of 2023, the effective
Adjusted EBITDA run-rate in the period Q2-Q4 2023 on an annualized basis was about €1.7 billion, the company
estimates for the full year 2024 an Adjusted EBITDA of at least €1.9 billion.
dsm-firmenich Integrated Annual Report 2023 60
Sustainability
Reporting period
The Sustainability section includes information from the combined entity for 12 months (DSM and Firmenich are reported
as of 1 January 2023). The sustainability data in this Report cover all entities that belong to the scope of the Consolidated
financial statements. If this is not the case this is mentioned specifically. As this is the first year of reporting for dsm-
firmenich, no comparative data is available for 2022. For more information, see Sustainability statements.
Letter from our Chief Sustainability Officer
Dear Reader,
The creation of dsm-firmenich brought together two market-leading companies and united two world leaders in
sustainability. Both were uncompromisingly committed to delivering sustainable solutions not only in the form of their
own products and processes but also via positive interventions throughout their respective value chains. The merger that
created dsm-firmenich involved a meeting of minds, a fusion of sustainability agendas, and the development of a vision
to bring progress to life by means of sustainable business steering.
“Our commitment is uncompromising: We embed sustainability in everything we
do. By delivering transformative and sustainable solutions to our customers, we not
only help future-proof our company but also maximize our positive impact on
society as a whole.”
Pioneers in sustainable business steering
Within their respective fields of operation, the two legacy companies were recognized as pioneers in sustainable
business steering long before the merger. DSM and Firmenich embarked on this course as long ago as the 1990s with, for
example, the signing by Firmenich of the International Chamber of Commerce’s first Business Charter for Sustainable
Development in 1991 and the publication of DSM’s first environmental report, the Responsible Care Report, in 1993.
After years of sustained public and audited reporting, most recently DSM introduced and developed its Brighter Living
Solutions plus (BLS+) key performance indicator (KPI), while Firmenich launched its second ‘Pathways to Positive’
Environmental, Social and Governance (ESG) Strategy outlining its long-term ambitions and intermediate targets for
measuring progress.
Going forward, we will define a consolidated portfolio steering approach that is in line with external practices, designed to
meet the expectations of both our customers and our investors and to enable us to continue our course toward yet more
sustainable business and business opportunities.
Our combined sustainability journey
Within the wider framework of dsm-firmenich, we shall continue our sustainability journey with unchanging determination
as we move forward into 2024. We will continue to act in close collaboration with key thought-leaders such as the World
Business Council for Sustainable Development (WBCSD) and the World Economic Forum (WEF).
Sustainability – Letter from our Chief Sustainability Officer
dsm-firmenich Integrated Annual Report 2023 61
We will maintain our well-established partnerships with organizations such as the United Nations World Food Programme
(WFP). For insight into the type of partnerships and what impact we have with them, please refer to Nutrition and Health.
Last but by no means least, we will work ever more closely with our suppliers and customers to deliver measurably
sustainable solutions throughout the value chains in which we participate.
Bringing progress to life
The following section of this Report outlines in detail how we bring progress to life by combining the essential, desirable
and sustainable to deliver transformative solutions that the world needs. It explains how we work toward three outcomes
– futureproofing our business, delivering value for customers, and creating positive societal impact – by means of a range
of sustainability programs predicated on Climate & Nature, Nutrition & Health, and Social Impact.
In 2023, we made progress on a range of initiatives that generate positive impacts for the planet and people. We further
scaled up our innovative methane-inhibiting feed additive Bovaer®, for example. Combined with our other feed solutions
for ruminants, we enable a 20.5% reduction of greenhouse gas (GHG) emissions in diary. We are now reaching 677 million
people with fortified food, staples and specialist nutrition solutions to help close the micronutrient gap suffered by some
of the world’s most vulnerable populations. And we are helping to improve the lives of 92,000 smallholder farmers by
means of commercial supplier and business contracts and training programs – for example, through our joint venture
Africa Improved Foods, as well as by means of dedicated 'projects at source' for supply chains such as jasmine and mint.
These are just three examples of many in this Report. The following chapter explains in detail our ambition to drive
change at scale and to maximize our potential for delivering measurably sustainable solutions, bringing progress to life
and benefiting people and planet alike.
Warm regards,
Katharina Stenholm
Chief Sustainability Officer
Sustainability – Our approach to sustainability
dsm-firmenich Integrated Annual Report 2023 62
Our approach to sustainability
Highlights
• We delivered strong progress on our GHG reduction program, and in early 2024, we submitted for validation our
integrated science-based targets comprising absolute emission reduction targets for Scope 1 and 2, and Scope
3, and our net-zero by 2045 commitment
• We piloted the initial steps of the Science Based Targets for Nature guidance, including modelling of risk-based
approaches to biodiversity restoration and engaging in the new SBTN materiality assessments
• Our partnership with UN World Food Programme has been in place since 2007, reaching 35 million
beneficiaries each year with nutritionally improved products
• Our new dsm-firmenich values were announced in May 2023 together with our purpose: We bring progress to
life. Having shared values is an essential driver for success in our integration.
• We engaged with 30,000 suppliers through our Responsible Sourcing Program, consisting of Supplier
Sustainability Performance Management, Due diligence and Sustainability at source, and our Supplier
Engagement Program
• We maintained Platinum ratings from EcoVadis, and were included in the Sustainalytics’ 2024 Top-Rated ESG
Companies List, across our businesses
Materiality Matrix and value creation model
Materiality Matrix
Within the dynamic landscape of sustainable business practices, our commitment to transparency and stakeholder
engagement takes center stage. At the heart of our disclosure strategy lies the Materiality Matrix, a powerful tool that not
only reflects our dedication to responsible corporate governance but also serves as a compass guiding our sustainability
journey. It guides us to determine our sustainability priorities, and to adjust our goals and performance indicators in line
with up-to-date sustainability issues and with our stakeholders’ expectations and concerns. In addition, the consultation
process is a valuable tool to engage our colleagues, customers, suppliers and investors on our sustainability journey by
including them in defining its future direction.
Sustainability – Our approach to sustainability
dsm-firmenich Integrated Annual Report 2023 63
Materiality Matrix
Our Materiality assessment process followed the approach described in the EU Corporate Sustainability Reporting
Directive (CSRD) and the European Sustainability Reporting Standards (ESRS) and is in accordance with the GRI
Standards. It applied a double materiality approach. Double materiality is composed of impact materiality (the actual and
potential impacts of our company on the environment and society) and financial materiality (the material societal and
environmental risks and opportunities that may affect the company). Our materiality assessment is based on materiality
assessments conducted at the Business Unit level supplemented with input from the Group. Our process in 2023
employed the following steps:
Sustainability – Our approach to sustainability
dsm-firmenich Integrated Annual Report 2023 64
• Desk research on
frameworks legislation,
ratings and trend
reports
• Peer reviews and
internal stakeholder
interviews
• Apply materiality
design principles
• Alignment with ESRS
topics, sub-topics
and sub-sub-topics
• Internal validation of
the topic list
• External stakeholder
interviews
• Internal regional
interviews
• Business Unit and
Group workshops
• Desk research on
additional external
stakeholders
• Apply weighting logic
across stakeholder
groups
• Analyze raw data
based on ESRS
guidelines on
materiality
• Compare the
Materiality analysis
with the Risk
Assessment results
• Creation of Business
Unit Matrices
• Consolidation across
Business Unit and
Group inputs
• Validation with senior
leaders and Board of
Directors
• Approval by the CEO
Through a bottom-up approach, and the involvement of various stakeholder groups, we also identified the priority topics
at Business Unit level, as well as the most important topics by stakeholder group.
Priority topics by Business Unit
Material topics
P&B
TTH
HNC
ANH
Climate change mitigation
√
√
√
√
Health, nutrition & taste, and food security
√
√
√
Innovation, digital & technology
√
√
√
Product quality, safety & impact
√
√
√
√
Respect of human rights
√
Responsible & transparent sourcing
√
√
√
Top 5 Material topics by stakeholder
Customers
Employees
Investors
Suppliers
Public organizations
1
1
Climate change
mitigation
Product quality,
safety & impact
Climate change
mitigation
Climate change
mitigation
Climate change
mitigation
2
Product quality,
safety & impact
Health, nutritious & tasty
food, and food security
Corporate governance,
business ethics &
transparency
Responsible &
transparent sourcing
Climate change
adaptation
3
Responsible &
transparent sourcing
Climate change
mitigation
Respect of
human rights
Occupational
health & safety
Diversity, equity
and inclusion
4
Health, nutritious & tasty
food, and food security
Climate change
adaptation
Product quality,
safety & impact
Diversity, equity and
inclusion
Waste and plastics
management
5
Biodiversity
& nature
Corporate governance,
business ethics &
transparency
Talent attraction,
development & retention
Corporate governance,
business ethics &
transparency
Regenerative
agriculture
1 Public organizations includes Business Associations, NGOs and International Organizations / Frameworks
Defining a long list
Defining a list of
material topics
Impact Assessment
Visualization and
analysis
Validation and
approval
Sustainability – Our approach to sustainability
dsm-firmenich Integrated Annual Report 2023 65
Value creation model
Our value creation model visualizes how our business model takes capital inputs and converts these into value outputs
and impact, enabling us to deliver on our purpose. At dsm-firmenich, value creation extends beyond financial metrics; it
encapsulates the intricate interplay of economic, environmental, and social factors that define our commitment to
sustainable and responsible business practices. Our value creation model is based on the value creation and capitals
concepts of the Integrated Reporting Framework (the ‘<IR> Framework’).
1 All financial information is for continuing operations. R&D expenditure includes Firmenich as of 1 January 2023 (pro forma). All other financial information
is presented in accordance with IFRS, which includes Firmenich from the merger date onwards.
Our Business Model
We operate as one Group, united by a common purpose and values. Our four complementary Business Units – Perfumery
& Beauty; Taste, Texture & Health; Health, Nutrition & Care; and Animal Nutrition & Health – have a high degree of
autonomy and have fully accountability for manufacturing plants and Supply Chain. They are supported by Business
Partners who enable excellence and efficiency. Through our business activities, we deliver on purpose to bring progress
to life by combining the essential, the desirable and the essential.
Sustainability – Our approach to sustainability
dsm-firmenich Integrated Annual Report 2023 66
Our guiding principles
We believe that business can be a force for good. We advocate the positive role of business in society and the
beneficial impact that companies can bring on Climate and Nature, Nutrition and Health, and People. Through
measuring our impacts, we demonstrate how we contribute to positive outcomes for society and environment.
Product quality
People are critical to our success. This is why one of our four strategic areas of focus for 2023 involved enhancing and
embedding a Quality culture within the business. This message was one of the key focal points when we proudly
celebrated World Quality Day 2023, launching our new Quality Policy Statement, which introduces and defines our four
Quality principles. These principles are Quality culture, Crafted with care, High standards and Continuous improvement.
Our Quality Policy Statement highlights our commitment to empower our people to deliver excellence to our customers.
Building on these principles, our Quality culture program will focus on the how of enabling our Quality community to
achieve success. Quality is a key differentiator for business growth: it is every customer’s right, and every employee’s
responsibility.
Product Stewardship
Our leading principle is that each of our products must be safe in terms of its production and application up to and
including the end of its useful life. We make conscious choices about the substances we use and produce. We actively
identify the risks attached to, and the potential impact of our products on people and the environment, including their
production processes. We support our customers (and other interested stakeholders) in doing the same by providing
them with clear information on potential health and environmental impacts.
In 2023, we reviewed the set-up of Product Stewardship within the context of the merger, identified the most critical
processes, and started the alignment, standardization and integration of our approach. Product data and system
integration are seen as key success factors.
Our company and the SDGs
The Sustainable Development Goals (SDGs) were launched by the UN in 2016 to provide a roadmap toward a more
environmentally and socially conscious and responsible world by 2030. Companies have a key role to play in achieving
the SDGs, and the Goals have been adopted across society as a common language for articulating how we can contribute
to this roadmap. Businesses can serve for a more equitable, sustainable and inclusive world. The SDGs support this by
guiding our efforts to create positive change, from eradicating hunger to fostering climate action.
Through our business activities, we believe our company contributes to the following SDGs:
And for our people and operations, we focus on the following SDGs:
Sustainability – Our approach to sustainability
dsm-firmenich Integrated Annual Report 2023 67
Business Ethics
We do business honestly, transparently, and ethically. To live up to this promise and to drive compliance with all
applicable laws and regulations wherever we operate in the world, we have installed a Business Ethics team. This
team is responsible for the design and implementation of a global Business Ethics Program that goes beyond a
check-the-box compliance and provides support to management and employees.
At the start of our new company, the dsm-firmenich Code of Business Ethics and the dsm-firmenich Supplier Code were
launched. During 2023, the existing legacy policies and procedures in the area of Business Ethics that are in line with the
new foundational Codes remained in force. Common Group policies and standards will be introduced in 2024.
Code of Business Ethics
Our Code of Business Ethics comprises our values and our commitments to each other, our communities, and our
planet. It is a reference document as well as a day-to-day manual to guide our people on how we do business (and how
we do not). This is elaborated in our business principles, which clarify key issues, help us do the right thing, and underline
how we expect everyone at dsm-firmenich to act with integrity in their daily work. Our Code is universal. It applies to
everyone in our company and everywhere: at our offices, sites, warehouses, and when engaged in any company business.
In 2023, we launched a campaign to request and require all dsm-firmenich employees to read and acknowledge our
Code of Business Ethics.
“We’re all responsible for setting the highest standards of
honesty, fairness, and integrity. Together, we can make
integrity key to how we bring progress to life.”
Jane Sinclair, Chief Legal, Risk & Compliance Officer
Group Policy Framework
For the implementation of our business principles more detailed explanations are provided by the documents of our
Group Policy Framework. The Group Policy Framework is also used to foster efficient and effective business processes,
and to mitigate risks.
Position Statements clarify the company’s positioning
on
ethical topics related to specific areas of our business
for our external stakeholders and can be found on our
website.
Group Policies explain the why, the high-level
management intent, the key elements of the governance
structure, and define the requirements for employees of
our Business Units and Business Partner functions.
Group Standards provide further detailed instructions
on how to comply with the requirements of the Group
Policies in a harmonized way. Group Policies and
Standards are usually only published internally.
Sustainability – Our approach to sustainability
dsm-firmenich Integrated Annual Report 2023 68
Supplier Code
As a trusted partner to our business stakeholders, we strive always to operate to the highest standards. We only want to
engage with others who commit to operate according to the same standards, with the objective of achieving an ethical,
traceable, and sustainable value chain. These standards are captured in the principles set forth in our Supplier Code. All
suppliers are expected to follow the dsm-firmenich Supplier Code and all relevant laws and regulations. We confirm the
adherence to the principles of our Supplier Code via Supplier Self-Assessment Questionnaires and on-site or desktop
audits. A breach of this Code could lead to the discontinuation of the collaboration with dsm-firmenich and to possible
legal sanctions and proceedings.
Likewise, to ensure ethical business conduct of agents and distributors when acting on our behalf or dealing with dsm-
firmenich products further down the value chain, dsm-firmenich expects them to work according to the highest ethical
principles and comply with all relevant laws and regulations, in particular those related to fighting bribery and corruption
Identifying and managing bribery & corruption risks
Bribery and corruption are both illegal and unethical: they have a negative impact on individuals, businesses, and wider
society. Therefore, we do not tolerate bribery or any form of corruption.
Our Code of Business Ethics and Supplier Code help employees and supply chain partners to understand the values and
principles that are relevant to their work at and with dsm-firmenich. Any act or omission on the part of an employee or
supply chain partner that is in contradiction with the Codes shall be regarded as a potential breach and may lead to
disciplinary action up to and including termination of employment, or termination of the business relationship,
respectively.
The dsm-firmenich Code of Business Ethics and Supplier Code are complemented by the legacy policies and procedures
to fight corruption, which explain the behaviors that are prohibited, the situations that should alert employees and supply
chain partners, what the good practices are, as well as additional compliance requirements depending on the type of
third party. In 2024, a new anti-bribery and corruption Group policy and new Group standards will be launched to replace
legacy policies and procedures.
As part of the Business Ethics Program, ethics and compliance-related risks are periodically evaluated, particularly with a
view to anti-corruption and bribery. Moreover, dsm-firmenich has a strong culture of risk management, internal control,
and audit.
Awareness of bribery and corruption is also ensured by mandatory trainings. Course completions are monitored and
management is informed as to completion rates. A process is in place to deal with uncompleted training cases. A unified
common training related to combat bribery and corruption is to be developed.
Finally, there are grievance mechanisms to report any misconduct related to a potential or actual violation of dsm-
firmenich’s Code of Business Ethics, Supplier Code and applicable policies and standards.
Sustainability – Our approach to sustainability
dsm-firmenich Integrated Annual Report 2023 69
Speaking up
At dsm-firmenich, we all have a responsibility to speak up if we have a concern regarding compliance with our Code of
Business Ethics. In the event people are not sure about a particular matter or have witnessed behavior that could be seen
to be at odds with our values or business principles, it is vital to report it.
We encourage open and honest communication, and therefore, where possible, we recommend that employees address
their concerns directly with the person involved or with their local contact from HR, their line manager, their Legal partner,
or the Business Ethics team. If this is not feasible, our whistleblowing channel can be used.
In 2023, we still used our legacy notification systems for whistleblowing, Firmenich Speak-Up and DSM Alert. Since
January 2024, our dsm-firmenich SpeakUp platform is available. The platform is operated by an external provider and can
be accessed 24/7. It offers the possibility to report anonymously and is also available for third parties. All investigations
will be conducted impartially, respecting the principles of confidentiality and the presumption of innocence.
We do not tolerate any form of retaliation against individuals who, in good faith, seek guidance, raise a concern regarding
misconduct, or cooperate in an investigation. We have zero tolerance for retaliation, no matter the circumstance.
Disciplinary action will be taken against anyone who engages in retaliatory behavior toward those who have spoken up in
good faith.
Whistleblower notifications
In 2023, we received 100 notifications via our legacy notification systems for whistleblowing (Speak-Up, Alert). All
notifications were reviewed and followed up, and investigations were started if admissible. Of the 75 notifications that
have been closed, 24 notifications were substantiated and 51 notifications could not be substantiated. Actions taken
included providing training, disciplinary actions, terminations, and policy/process review. Another 25 notifications are still
under investigation.
Reported allegations were primarily related to ‘Discrimination, Harassment, Bullying and Retaliation’ and ‘Misconduct or
Inappropriate Behavior’. There was one report related to bribery and corruption, investigation of which did not lead to the
further substantiation of the reported concerns.
Whistleblower platform
Notifications
Substantiated
Not substantiated
Under investigation
Speak-Up
59
14
31
14
Alert
41
10
20
11
Total
100
24
51
25
Sustainability – Our approach to sustainability
dsm-firmenich Integrated Annual Report 2023 70
Impact measurement and reporting
We measure and monitor the impact of our businesses through our Food System Commitments and our Portfolio
Steering mechanism. These impact measurements enable us to demonstrate the role that our businesses play in society.
In the wake of our merger, we will re-evaluate these approaches to ensure that how we measure our impact is future-
proof, and for our portfolio, in line with external practices.
The Food System Commitments
Our Food System Commitments were launched in 2021 to outline our dedication to transforming food production and
consumption by 2030. These were aligned with our business priorities, to showcase the positive environmental, social
and health impacts of our business, where feasible. In 2024, the Food System Commitments will be re-evaluated for their
strategic fit with the company given the context of the merger.
677 million people
Enable the micronutrient gap closure of 800
million vulnerable people
227 million people
Support the immunity of half a billion people
20.5%
GHG reduction per kg of dairy
20%
Nitrogen reduction per kg of poultry
6.8%
Phosphorus reduction per kg of pork
Enable double-digit on-farm livestock emission reduction
92,000 farmers
Support the livelihoods of 500,000 smallholder farmers
Basic
commitments
71%
Deforestation-free primary
supply chains, Tier 1
63%
Access to food
Global Reach
Nutrition education
Workforce Nutrition: education and healthy food
Due to the impact of the merger and the alignment of our plant-based proteins businesses, our plant-based protein
commitment will not be reported on over 2023.
Portfolio steering
As dsm-firmenich, we bring together two portfolios of solutions supporting improved societal outcomes, from reducing
emissions in animal farming to supporting health and well-being. Our portfolio steering mechanisms, including Brighter
Living Solutions Plus (BLS+) and our Ecotools have quantified the positive contributions our portfolio has made.
In 2023, our focus was on the data collection process for our merged businesses, a pivotal step in the integration journey.
This also included the harmonization of underlying systems from the two legacy companies, a complex task that is
required for the foundation for our future portfolio insights. Consequently, we have paused reporting on the performance
of our legacy portfolio steering mechanisms. This strategic decision aligns with our commitment to transparency and
allows us to concentrate our efforts on the process of consolidating and optimizing our operational infrastructure. For the
coming years, our goal is to craft a future-fit sustainable portfolio steering framework, designed to meet the expectations
of both our customers and investors. This framework will serve as a guiding force, empowering us to steer the portfolio
and innovation pipeline of our newly created company toward more sustainable business and business opportunities.
Sustainability – Sustainability performance
dsm-firmenich Integrated Annual Report 2023 71
Sustainability performance
Climate and Nature
Climate and Nature are two sides of the same coin. The loss of our natural ecosystems and the climate crisis are
interconnected issues, and they need to be tackled together. The extreme climate impacts we see around the
world today - warmer temperatures, drought, rising sea levels – these, and other extreme consequences of climate
change, are contributing to an unprecedented destruction of biodiversity and the loss of the natural resources on
which we all depend. At dsm-firmenich we are increasingly looking at Climate and Nature as one interlinked topic
to ensure we develop the required solutions with an equally interlinked approach.
Climate
dsm-firmenich has brought together two companies that are both industry leaders in their commitment to ambitious
climate change mitigation targets but also their unrelenting drive to deliver against these targets. During 2023, we
continued to successfully execute against the individual plans of the two companies and built on our combined expertise
to develop plans for 2024 and beyond. In early 2024, we submitted our dsm-firmenich net-zero science-based targets
for validation by the Science Based Targets initiative (SBTi), aiming to achieve net-zero by 2045, aligned with the
ambition of keeping global warming below 1.5°C.
We take our global environmental responsibilities very seriously both in our own operations and in our broader value
chains as a significant part of our emissions are either upstream or downstream of our operations. In 2023, we delivered:
Scope 1 and 2
46%
Reduction in CO
2
e
versus 2016 in former DSM
35%
Reduction in CO
2
e
versus 2017 in former
Firmenich
65%
Reduction in CO
2
e
versus 2020 in former DRT
Scope 3
11%
CO
2
e intensity
improvement
versus 2016 in former DSM
17%
Suppliers with validated
SBT for former Firmenich
20%
Suppliers with validated
SBT for former DRT
Renewable
electricity
88%
Purchased renewable
electricity for dsm-
firmenich
Sustainability – Sustainability performance
dsm-firmenich Integrated Annual Report 2023 72
Our climate approach
At dsm-firmenich our climate approach is focused on both climate change mitigation and climate adaptation in both our
own operations and our value chain, as indicated in the figure below.
Climate change
mitigation
Climate
adaptation
Reduce our own
emissions
Reduce the emissions
of others
Increase permanent
carbon removals
Increase resilience
In our own
operations
Reduce our direct
emissions and Procure
Renewable electricity
(Scope 1 and 2)
Collaborative
customer and
consortia projects on
waste, transport,
renewable energy, etc.
Carbon removals in
our operations
Protect our operations
from physical risks
In our value
chain
(up/down
stream)
Reduce our indirect
emissions
(Scope 3)
Reduce the emissions
of others through our
products and services
(‘avoided emissions’)
Carbon removals in
our supply chains
Protect key supply
chains from physical
risks
Our climate mitigation activities, guided by the latest 1.5°C global warming science, includes:
• The reduction of direct emissions in own operations (Scope 1 and 2) through operational efficiency
improvements and our renewable electricity transition strategy
• The reduction of indirect emissions in our value chain by driving Scope 3 improvements through engaging and
collaboration with our suppliers and driving additional value chain improvements
• Collaborating with our customers to avoid emissions in their own operations through the products and services
we offer
• Ultimately, in alignment with SBTi standards, using carbon removal technologies to deliver our net-zero target
With respect to climate adaptation, a risk-based approach helps us identify and access risks and opportunities and
therefore where we need to build further resilience into our own operations and value chain.
Climate change mitigation
In 2015, the Paris Agreement first established a common ambition to take urgent action on greenhouse gas (GHG)
emissions to limit average temperature increases to well below 2°C. Later in 2018, the Intergovernmental Panel on Climate
Change (IPCC) provided a clear and compelling case to redouble efforts to limit warming to 1.5°C. Our fair share of this
ambition resulted in our objective to achieve net-zero by 2045 (subject to SBTi validation) by rapidly accelerating the
rate of our emission reductions over the coming decade.
Our key climate targets for both legacy companies are our Science Based Targets
Until they are replaced by dsm-firmenich targets, the existing Science Based Targets (SBTs) from both legacy companies
describe our key climate targets and our contribution to climate change mitigation. Both legacy companies have
validated near-term SBTs, developed in line with levels prescribed by the special report of the IPCC on the impacts of
global warming of 1.5°C. Additionally, former Firmenich also achieved validation of its net-zero SBTs in 2022, further
highlighting our ambition to be leaders in the climate change agenda.
Sustainability – Sustainability performance
dsm-firmenich Integrated Annual Report 2023 73
The SBTs from former Firmenich include a 55% reduction in our absolute Scope 1 and 2 emissions by 2030 versus 2017
and a Scope 3 commitment of engaging 80% of suppliers by 2026 to validate their own SBTs. SBTs exist also for the
former DRT business (acquired by Firmenich in 2020), and they include a 54% reduction in our absolute Scope 1 and 2
emissions by 2030 versus 2020 and a Scope 3 commitment of engaging 80% of suppliers by 2027.
Former DSM’s SBTs are an absolute reduction of GHG emissions from own operations (Scope 1 and 2) by 59% (increased
in 2022 from previous ambition of 50%) and a value chain (Scope 3) intensity reduction of 28%, both by 2030 versus a
2016 baseline.
In January 2024, dsm-firmenich submitted to the SBTi for validation an update to the near and long-term science-based
targets following the Net-Zero Standard. This is aimed at harmonizing the varied legacy targets and to reconfirm our
ambition of being a climate leader. With this new commitment, we aim to reach net-zero emission in our direct
operations and value chain (i.e., Scope 1, 2, and 3) by 2045. This SBTi's Corporate net-zero Standard implies a minimum
90% decarbonization and the use of high-quality offsets for up to 10% of base year emissions. Additionally, aligned with
our historic approach, we have committed to new harmonized and simplified near-term targets, aiming to achieve an
absolute emission reduction of 42% for Scope 1 and 2, and 25% for Scope 3, by 2030 from a 2021 baseline, without the
use of carbon offsets. Within Scope 2, we have also built on our ambition to be a front runner in the transformation to
renewable electricity (RE) and have set a new target to reach 100% purchased RE by 2025.
Ownership of climate actions is at Executive Committee level
The dsm-firmenich climate agenda and transition plan bring together all our key climate actions. Progress of the agenda,
including the implementation of the Taskforce on Climate-related Financial Disclosures (TCFD) recommendations, the
GHG reduction program, our portfolio development and efforts to advocate accelerated transition with partners, are
managed and actively reviewed by the Executive Committee as well as the Sustainability Committee of the Board of
Directors at various moments during the year.
Aligning our climate approach with science
Meeting our long-term ambition to reach net-zero GHG emissions aligned with climate science will require us to
structurally reduce emissions across our operations and value chains by at least 90% in absolute terms by our target
date of 2045. To neutralize any residual emissions in 2045, up to a maximum of 10% as prescribed by the Net-Zero
Standard, we may deploy permanent carbon removal solutions to bring us to net-zero. These removals will need to meet
the highest quality criteria and social and environmental safeguards. Our updated near-term 2030 targets are the
intermediate step to achieve this goal, supported by our ambitions regarding renewable electricity and energy efficiency,
and by working intensively with our key suppliers to reduce our large Scope 3 footprint. Our ability to meet these targets
will require us to transform our own operations and value chains.
We acknowledge the challenge we have set by aligning with a science-based approach and are working with long-term
innovation roadmaps that will bring us as close as possible to zero emissions in the coming decades. These investments
will support us on our own emission reduction journey through developments in terms of processes, solutions and
materials but will also deliver a portfolio of solutions that can help avoid emissions through reductions in our customers’
operations and value chains. In parallel, we are also exploring high-impact instruments for additional contributions to
accelerate the global net-zero transition beyond our own value chain - for example, high-quality carbon credits. In
alignment with the current SBTi standards, any contributions related to carbon credits or avoided emissions within our
value chains are not claimed against our own emissions.
Sustainability – Sustainability performance
dsm-firmenich Integrated Annual Report 2023 74
Scope 1 and 2
In 2023, our Scope 1 and 2 market-based GHG emissions amounted to 915 kt CO
2
e, with 606 kt CO
2
e related to Scope 1
emissions and 309 kt CO
2
e related to Scope 2 emissions.
Legacy ompany
Near term (2030) Scope 1 and 2 SBTs
Absolute Scope 1 and 2 emissions reduction
Scope 1 and 2 progress
DSM
1
59% versus a 2016 base year
46% reduction
Firmenich
55% versus a 2017 base year
35% reduction
DRT
54% versus a 2020 base year
65% reduction
1 DSM SBT reporting excludes businesses divested in 2023. Our Scope 1 and 2 reporting includes divested businesses in line with our non-financial
reporting policy.
To achieve our current results and continue to progress toward our targets, we have developed a roadmap consisting of
mainly three improvement pillars:
• Reduce our energy consumption through energy efficiency measures
• Transition toward renewable electricity
• Transition toward renewable heat, using renewable fuel sources and the electrification of our heat demand
Energy efficiency improvements result from the development and implementation of multi-year project plans that are
continuously improved in order to generate maximum savings per investment, thereby also supporting business
resilience. Energy efficiency projects can be of a wide-ranging in nature: from process optimization, ensuring basics in
place (such as insulation or heat recovery) and implementing best-available techniques in support of innovation and the
implementation of digital solutions.
Contributing to 2023 results, many projects were implemented in several sites in 2022-2023, such as:
• Generation of flash steam in the powerplant in Grenzach (Germany) saving ~2 kt CO
2
e
• Implementation of steam trap monitoring technology, allowing us to identify in real time leaking or malfunctioning
steam traps, in Sisseln (Switzerland), Village-Neuf (France), Dalry (United Kingdom) and Kingstree (USA), saving
approximately 4 kt CO
2
e
• Reduction of power signal quality losses in Chifeng (Inner Mongolia, China) and Tongxiang (Zhejiang province,
China) saving close to 1 kt CO
2
e
• Recovery of boiler waste heat in Gujarat (India), saving ~200 t CO
2
e
The 2023 results were also impacted by reduced production volumes, and plant closures. The fire incident at our Pinova
site in Brunswick (Georgia, USA) was not included in our emissions as no guidance relating to the inclusion or calculation
of such as incident is available.
Our 2023 delivered program consists of more than 50 projects that will mostly contribute to the reduction of our Scope 1
and 2 emissions in 2024 and beyond. They also cover a wide range of sites and technologies, examples are improvement
of the steam distribution in Yimante (Hubei province, China), Delft (Netherlands) or La Plaine (Switzerland) the generation
of steam out of reaction heat losses in Lalden (Switzerland).
Sustainability – Sustainability performance
dsm-firmenich Integrated Annual Report 2023 75
Energy and electricity
We are a member of RE100, the Climate Group’s initiative comprising leading companies that have committed to
obtaining 100% electricity from renewable sources as early as possible. Our new commitment is to purchase 100% of our
electricity from renewable sources by 2025. In 2023, we realized 88% purchased renewable electricity, well on track to
achieve our target.
Purchased renewable electricity in Europe and North America
For our operations in Europe, we maintained 100% renewable electricity through existing agreements, pre-production
guarantees of origin (GOs) from the Power Purchase Agreement (PPA) in Spain, and fewer separate GOs. In the
Netherlands, we have two PPAs with wind parks that are in operation.
The PPA in Spain combines three assets of which the wind park and one solar park are operational while another solar
asset is under construction.
In the US, we have concluded three PPAs. The first is operational and produces electricity from wind, while the assets for
the other two are under construction and will provide solar-powered electricity. The production from the first agreement
and the pre-production renewable energy certificates (RECs) from the two other agreements provided 100% purchased
electricity from renewable sources in the US and Canada in 2023. We were able to identify and implement merger
synergies in PPAs in North America and Europe.
Progress on purchased renewable electricity in China
For 2023, we purchased 44% of our electricity from renewable sources. In addition, we concluded several five-year
agreements that will further improve the amount of renewable electricity from 2024 onwards.
Renewable electricity in the rest of the world
Besides Europe, North America and China, 93% of our purchased electricity in Brazil is from renewable sources, and we
have several local renewable electricity contracts at smaller sites around the world. The amount of non-renewable
electricity in the rest of the world represents less than 1% of our total purchased electricity.
Working on the decarbonization of heat
We also continue to use renewable sources for steam and heat, including the biomass cogeneration plant in Sisseln
(Switzerland), purchased steam from local biomass residues in Chifeng (Inner Mongolia, China), purchasing by-product
heat from a neighboring company in Yimante (Hubei province, China), combination of biomass from a local reforestation
and bio-based by-products in Vielle Saint Girons (France), as well as use of forestry residues and by-products in Castets
(France). The focus on low-carbon heat solutions has become more prominent in our GHG reduction program; we are
working to optimize the use of waste streams and collaborating with external providers to explore opportunities. See
below overview of renewable heat / low-carbon fuels initiatives that are currently in place in several of our sites across
the globe.
Sustainability – Sustainability performance
dsm-firmenich Integrated Annual Report 2023 76
dsm-firmenich sites using renewable or low-carbon steam
Scope 3
Our commitment to sustainability extends across the entire Scope 3 value chain and we are pleased to report progress in
reducing greenhouse gas emissions beyond our own operations. Our absolute Scope 3 GHG emissions across both
legacy companies amount to 9,996 kt CO
2
e.
Scope 3 emissions by category (aggregated)
2
2 Scope 3 emissions reporting excludes emissions from businesses divested in 2023.
Sustainability – Sustainability performance
dsm-firmenich Integrated Annual Report 2023 77
The Scope 3 results are presented for dsm-firmenich; however, the legacy companies have different targets and scopes,
thus progress is reported separately for each legacy company. During the year, we began aligning the Scope 3 accounting
approaches, and developing integrated Scope 3 reduction roadmaps.
Currently, we report against the multiple SBTs within the company that have been validated by SBTi. We have submitted
our combined, accelerated absolute reduction target, which is based on a harmonized baseline and improved accuracy,
with a significant improvement of volume coverage. Further Scope 3 emissions reductions are expected following the
development and implementation of our roadmap. In the meantime, the following Scope 3 progress can be shared for
each legacy company and its SBT:
Company
Near-term validated Scope 3 SBTs
Scope 3 progress
DSM
Reduce Scope 3 emissions from relevant categories
3
28%
per ton of sold product by 2030 from a 2016 base year
11% reduction versus 2016
Firmenich
80% of suppliers by spend covering purchased goods
and services will have SBTs by 2026
17% of raw material suppliers have
validated SBTs
DRT
80% of suppliers by spend covering purchased goods
and services, will have SBTs by 2027
20% of raw material suppliers have
validated SBTs
3 Relevant categories are Purchased goods and services, Upstream transportation and distribution, and Waste generated in operations.
Value chain engagement initiatives and progress
Our value chain engagement initiatives include targeted sustainability workshops, joint goal-setting sessions, and ongoing
collaboration to identify and implement emission reduction strategies in the value chain together with our suppliers and
customers.
Upstream
Our programs across both legacy companies are being combined and will form part of our integrated business reduction
roadmaps. These roadmaps will be the foundation for our absolute Scope 3 emissions reduction targets that are aligned
with SBTi’s guidance and Corporate net-zero Standard, and which were submitted for validation by SBTi in January 2024.
The existing roadmaps for the main seven value chains in former DSM have been developed with over 100 opportunities
for reduction identified, and more than 100 suppliers being engaged for delivering reductions, covering 30 purchasing
categories.
Additionally, according to former Firmenich’s 2022 CDP supplier statistics, 85% of requested suppliers are reporting
operational emissions and 69% of requested suppliers are reporting active targets and engaging their own suppliers. The
supplier statistics also indicated that 19% of requested suppliers have validated near-term SBTi targets compared to
16.8% of former Firmenich’s raw material suppliers in total.
We have committed to Scope 3 upstream action plan to step our Scope 3 decarbonization efforts, driven by the world’s
largest CEO-led climate Alliance - the Alliance of CEO Climate Leaders - to scale collaborative action across value chains
and drive above-average impact.
Downstream
We share our carbon footprint through Environmental Product Declarations (EPDs), Imp'Act Card™ and Ecotools for our
businesses. These cover our main product forms.
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In ANH we have 58 EPDs in the new marketing format which are accessible for customers via the digital portal. We share
most relevant information at the ingredient level through Imp'Act Card™ in HNC, which our help our customers drive their
sustainability journey. At P&B, we recognize the imperative to reduce carbon emissions, and this commitment extends
throughout our entire value chain – from sourcing ingredients to delivering perfumes to clients and consumers. For
example, in Ingredients, we explore new innovations, such as the low-carbon bio-based alternative, Dihydroestragol RC.
We also foster partnerships, such as the joint development agreement signed in August 2023 with Bloom Renewables,
aimed at expanding biomass feedstock sourcing and accelerating the development of key low-carbon bio-based
ingredients. Our dedication to sustainability goes beyond the ingredients and into our product range also at TTH. We
actively engage in eco-designing fragrances and flavour solutions with low carbon emissions, utilizing our digitally
integrated tool, EcoScent Compass® and EcoFood Compass®.
Avoided emissions
At dsm-firmenich, we put the primary focus of our climate agenda on the reduction of our own GHG emissions in Scope 1,
2 and Scope 3, following the SBTi. In doing so, we also contribute to the reduction of the Scope 3 GHG emissions of our
customers further down the value chains, supporting their net-zero journey.
As a key supplier in nutrition, health and beauty, we see the opportunity to partner with our customers in each of the
industry sectors, to help transform the value chain with products that can help tackle the most urgent, sector-specific
climate challenges. Before looking at any downstream impacts, we support our customers with their emission targets by
providing them with products with an improved carbon footprint. We do so by setting ambitious corporate climate
targets and implementing emission reduction roadmaps in our own operations as well as our value chains. In addition to
this, we are giving increased attention to identifying, developing and strengthening the products that can create impact
through avoided emissions. These are emissions that are not part of our own Scope 1, 2 or Scope 3, but which can be
reduced due to our unique product performance. The ways avoided emissions are realized are driven by the global
challenges in the business context in the specific sectors we serve and how our products can best help address them in
their market applications. We use Life Cycle Assessment (LCA) studies to quantify and substantiate the benefits of
avoided emissions enabled by our products, when sufficient reliable data is available.
Our performance solutions, including feed enzymes, eubiotics and mycotoxin deactivators improve animal performance
and feed efficiency and reduce waste, thereby reducing emissions related to animal protein production. Farmers can
accurately and credibly quantify their own environmental footprint reductions associated with these solutions by means
of their primary farm and feed data, using our intelligent sustainability service, Sustell™. LCA studies carried out with
Sustell™ show that applying our feed enzyme solutions Ronozyme® HiPhos and Ronozyme®WX products in representative
pig diets in Spain reduced the carbon footprint of pig production by up to 7%. If applied to all Spanish pork production,
approximately 1,200 kt CO
2
e emissions could be avoided.
Our innovative waterless formulations for scalp and hair care provide the same level of performance that consumers
expect from liquid formats, while significantly reducing their environmental impact, by transporting less water and
minimizing packaging. Compared to a standard liquid shampoo, a powder shampoo with dsm-firmenich ingredients
requires the transportation of 91% less water, thereby saving 42% of GHG emissions along the supply chain, considering
that the use and manufacturing stages are equivalent.
Brewers Clarex® is an enzymatic solution that prevents chill haze formation while maintaining the quality of beer. The
efficiency of the brewery process as well as it’s eco-footprint can be improved by using enzymes to replace traditional
treatments in the production process. Our Brewers Clarex® solution helped our customers to reduce their GHG emissions
by approximately 120 kt of CO
2
e in 2023. This happens without any impact on the desired properties of the end-product.
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Climate adaptation and transition plans
Climate-related risks such as heatwaves, drought and water stress may impact our sites and our value chain. As a
complement to our efforts on climate change mitigation – reducing and stabilizing greenhouse gas emissions to combat
the root cause of climate change– we also assess the vulnerability of our assets and value chains. We are mapping the
impact of physical climate change, both upstream (suppliers, agricultural commodities) and downstream (end-market).
We also assess risks and opportunities related to the transition to the net-zero economy for our business.
Scenario analysis
In line with TCFD, we use climate scenarios to assess risk and opportunities for our business, over different time horizons,
up to 2050. The scope is not limited to our own operations but includes the impact along the full value chain. Scenarios
are based on IPCC temperature models – the Representative Concentration Pathways (RCP):
• 1.5°C (RCP 2.6)
• 2°C (RCP 4.5)
• 3+°C (RCP 8.5)
For transition to a net-zero world, we enrich the IPCC scenarios with forward-looking business context (e.g., regulations
on land and or water use, eco-footprint of products, shifts in consumption patterns).
Approach to assess climate risks & opportunities
• For physical climate risk assessments, we use desk studies for a high-level screening of physical hazards -
extreme heat, drought/water scarcity, flooding/precipitation, high winds, wildfire (RCP 4.5, RCP 8.5). This provides
us with the major impact factors for our portfolio. We do onsite deep dives to obtain a more detailed
understanding of the actual risks for our assets.
• For transition climate risk assessments, we organize separate sessions, with input from experts and senior
management, to assess risks and opportunities for each scenario.
The material risks identified through the physical and transition climate risk assessments are integrated and managed as
part of our regular risk management processes. For more information on our risk management process, see Risk
Management.
Physical and transition climate risks assessments
Own operations
Our physical climate risk assessment journey started in 2020, where we screened 19 sites that are part of dsm-firmenich
today. We identified flooding and water scarcity as the highest impact factors. The journey continued at former Firmenich
in 2022 with a desk study, screening 46 operational sites. This study highlighted heat stress, extreme precipitation, and
drought as the primary hazards. We are using the results to improve the business continuity planning of our sites and the
water stewardship program (see Nature).
In 2022-2023 we completed nine on-site deep dives to understand the (future) climate risks in more detail. For example,
the Grenzach (Germany) site assessment showed that 1) increased precipitation could lead to site drainage issues and
that 2) increase of drought conditions (not predicted in the desk study) will limit ground water availability and hamper
discharge of cooling water to the river Rhine.
In 2022, we performed transition climate risk assessments for the three business groups of DSM (ANH, HNC and F&B, now
part of TTH). Risks & opportunities with the highest impact were related to policy and legal (carbon pricing, emission
regulations, animal farming practices) as well as market (demand for renewable energy/sustainable raw materials, carbon
footprint, dietary shifts).
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Value chain
We employed desk studies to screen the impact of physical hazards on our value chain:
• In 2022, study of a case for one of our downstream markets for ANH, the Brazilian dairy market
• In 2023, screening of 150 main suppliers' manufacturing sites
• In 2023, investigation of the climate change impacts on main agricultural commodities: pine, orange, lavender,
vanilla, clove and maltodextrin (corn/potatoes)
The exercise run at agricultural level highlighted three take-aways:
• Almost one third of our screened supplies (in volume consumed) are already affected by climate change and the
risk will intensify by 2030, and under the worst scenario (RCP 8.5), 40% of our screened supplies (in volume
consumed) will be considered at risk in 2030
• Most of the seven crop-sourcing areas are becoming more at risk, but potatoes, lavender and corn will
deteriorate the most
• Climate risk varies from crop to crop as this is intrinsic to the individual crop cycle, e.g., corn will be hit by
drought, impacting the flowering and grain production, while pine trees will be mainly impacted by wildfires and
storms
On these screened commodities, we had the opportunity to go deeper with our procurement team so they can take
informed decisions for their strategy and reach out to our suppliers.
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Nature
We increasingly address Climate and Nature as one interlinked topic, as discussed in Climate. Nature, whether it be
biodiversity, or the ecosystem services provided by nature more broadly, helps us adapt to and mitigate climate change.
Working with rather than against nature brings multiple benefits, such as its role in regulating our climate.
Nature is firmly embedded in our strategy. We believe that we can contribute to the protection and restoration of
nature by acting on three pillars: water, biodiversity and resource efficiency. Nature provides us with critical ecosystem
services such as water access, biodiversity as our source of inspiration and innovation for new ingredients, and resource
efficiency as a critical lever in securing the sustained supply of raw materials.
Our evolving approach to nature is aligned with the Nature Positive Roadmap published in November 2023 by Business
for Nature, the World Business Council for Sustainable Development (WBCSD), World Economic Forum (WEF) and Union
for Ethical BioTrade (UEBT).
The protection and restoration of nature cannot be delivered by any company in isolation. Collaboration between various
actors along our value chain is critical to scale up positive impact in any protection and restoration activity. Therefore, we
follow a value chain approach from our environment to our products, and in our own internal operations, whether Science
& Research, Operations or Responsible Sourcing. These functions, along with valued external parties, are envisioning a
new future for how we protect and restore nature, as well as building the revised roadmaps and targets to show progress
toward this future.
In 2023, our key activities included:
• Restore: as part of our biodiversity restoration program, we engaged eight new operating sites in restoration
projects, which measure key nature indicators as part of baseline and monitoring activities
• Protect: in addition to our existing deforestation- and conversion-free ambitions, we are working toward
compliance with the new EU Deforestation Regulation (EUDR) and supporting our suppliers in their journey
• Both Protect and Restore: we continue to develop and sell products that contribute to the protection and
restoration of nature, for example, by reducing pressure on natural resources through UEBT-verified, ethically-
sourced edelweiss for our ALPAFLOR® EDELWEISS CB product
Building an enabling environment
Following the UN Convention on Biological Diversity (CBD) COP15 in Montreal, where dsm-firmenich was represented,
there is a clear and loud call to transition toward ‘Nature Positive’. Nature Positive terminology has evolved since 2021 but
nevertheless still refers to all the efforts society is making to reduce the negative impact on the environment, and
therefore our contribution to the protection and restoration of nature.
To ensure our work on nature is in line with this evolving environment, dsm-firmenich closely follows the work of Business
for Nature (BfN), WEF, WBCSD and UEBT. The latter two support companies in setting their own nature strategy.
Additionally, as the impacts of nature-related dynamics on business are still evolving, as depicted below, we are closely
monitoring the changing landscape of nature related frameworks.
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Source: WEF Report, Sector Transitions to Nature Positive
Within this evolving environment, we recently piloted the initial steps of the Science Based Targets for Nature (SBTN)
guidance. Our involvement in these pilots included modelling of risk-based approaches to biodiversity restoration and
engaging in the new SBTN materiality assessments. This gave us an early engagement with the standards which could
soon be adopted more universally. With these learnings we, along with 20 other pilot companies, can enhance our
evolving nature strategy in line with ‘It’s Now for Nature’ campaign and SBTN’s proposed target-setting guidance. We
work with partners to support us in defining our nature strategy.
BfN is a global coalition of influential partner organization and leading companies to drive credible business action and
policy ambition to achieve a nature-positive economy for all by 2030. Engaged since 2020 in view of COP15 in Montreal
and more recently in 2023, dsm-firmenich was among the tens of businesses who contributed to the elaboration of
guidance for sector-specific actions. This guidance aims to support businesses to identify the actions they should take
to credibly help halt and reverse nature loss and contribute to an equitable, nature-positive economy.
UEBT is a non-profit association that promotes sourcing with respect. UEBT works to regenerate nature and secure a
better future for people through ethical sourcing of ingredients from biodiversity. UEBT is our historical partner since 2013
to support dsm-firmenich in our work on Natural ingredients sourcing. This membership will continue to support our
commitments toward Protect & Restore Nature.
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In our operations
In our own operations, whether in our manufacturing or pre-mix sites, we focus on water stewardship, resource efficiency
and any biodiversity areas that are at risk near to our operations. We deploy a risk-based approach using tools such as
the Worldwide Fund for Nature (WWF) Risk Filter on Water & Biodiversity, and the World Resource Institute (WRI)
Aqueduct tool to design actions to protect and then restore nature.
Water stewardship
Climate change is altering weather patterns and water security around the world, causing shortages and droughts in
some areas and floods in others. The availability of water is a widespread problem, with the WWF estimating that two-
thirds of the world’s population may face water shortages by 2025.
At dsm-firmenich, we also depend on access to water and strive to strengthen our water stewardship in the areas in
which we operate. Our direct dependency is related to our withdrawal of water for our processes and our responsibility
regarding the quality of the discharged water (for more information on water, see the Sustainability statements). Our
dedicated actions with respect to water stress areas will be linked to our below actions on Biodiversity management.
Biodiversity management
Faced with the alarming pace of degradation of vital natural environments, we have a role to play in biodiversity
protection, and biodiversity conservation and restoration, especially in areas where we operate directly. Although our
manufacturing sites are mainly located in already industrialized areas, some of them may be close to protected areas. We
identify the sites that are located close to protected areas using the WWF Risk Filter methodology. Based on the location
of our site, this tool informs us of which of our sites are potentially overlapping with identified protected areas.
Number of dsm-firmenich sites located close to protected areas based on WWF Risk Filter
Using these methods, we can be more informed and take the necessary actions to protect and restore these protected
areas. As an initial step in restoring nature, we engaged eight additional locations with restoration projects, for which we
started to measure key baseline indicators and implemented monitoring activities. For example, our restoration program
in Kunming aims to safeguard the water source that nourishes Shanglongtan Village from pollution and flooding risks.
Through this program, we help mitigate local biodiversity risk and enhance local biodiversity, ensuring the protection of
this vital resources for the community.
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Signage to be implemented in our Kunming program area to create local awareness about the program
Resource efficiency
Resource efficiency is a critical lever to secure the sustained supply and use of raw materials, water access and waste
management. We strictly manage our hazardous and process waste to protect nature by minimizing negative impacts on
human health and the environment. All our sites are required to implement a management system to ensure compliance
with all local regulations, and beyond when possible. Waste management is one of the first steps toward to increased
resource efficiency processes: such waste can also be valorized as starter for other industrial processes. For more
information on waste, please see the Sustainability statements.
In our value chain
Our procurement
We recognize the importance of sourcing practices for raw materials which are dependent on water and natural
feedstocks. We showcase our approach toward preservation of nature, among other positive impact drivers, in our story
Mint with Purpose.
Through Responsible Sourcing, we will continue to strengthen and promote the protection and restoration of nature in our
sourcing practices. This will include efforts such as avoiding deforestation and the degradation of natural ecosystems,
promoting sustainable agriculture, and supporting forest conservation when we use non-timber forest products.
More information our current progress related to Responsible Sourcing and the implication of environmental impact in
our procurement decision-making is provided in Supplier engagement.
We maintain our commitments to no deforestation and no conversion of natural land ecosystems. In order to deliver on
these, we utilize 3
rd
party sustainable schemes such as:
• Palm Oil – Roundtable for Sustainable Palm Oil (RSPO)
• Sugarcane molasses – BonSucro
• Soy – ProTerra
• Corn – Farmer Self-Assessment (FSA) from the Sustainable Agriculture Initiative (SAI)
• Crude Sulfate Turpentine (CST) from paper-industry waste – Forest Stewardship Council (FSC) or Program for
the Endorsement of Forest Certification (PEFC)
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These may not necessarily be sufficient for the upcoming EUDR. As such we are working to reach compliance within the
prescribed timelines, as well as supporting our suppliers through the process.
Our 2023 first assessment demonstrates that in most cases, we are not sourcing from high-risk categories in the EUDR,
however, we will remain diligent and engage with our suppliers by requesting guarantees from them on the due diligence
they take in their value chains on deforestation and engage in subsequent reviews with them.
In 2024, in support of achieving compliance to the regulation:
• We request all suppliers to acknowledge our Supplier Code which lay-out our requirements in deforestation
• We train suppliers on the regulation of which the topic of deforestation will be a key part of the agenda for dsm-
firmenich’s first supplier sustainability day in early 2024
• We ensure that concrete actions are taken in our supply chains when specific nature related risks are identified
by leveraging our due diligence and actions at source with our suppliers on the ground. This all together helps us
to reinforce our traceability capabilities and feedstock certification
In our products
Nature plays a key role in providing us with the inspiration in new product development as well as the resources
necessary to produce our products. We leverage our actions toward the protection and restoration of Nature:
• To inspire the creation of products such as organically and UEBT-verified, ethically-sourced edelweiss from the
Swiss Alps for ALPAFLOR® EDELWEISS CB, and to contribute to the protection of the planet’s natural resources
such as offering via our ‘Circular Collection’ fragrances made 100% with upcycled ingredients. Read more in
Perfumery & Beauty
• In the way we think about our products, we strive to promote and valorize waste from within our own operations
or from other industries such as from cocoa harvest and post-harvest processes. Our upcycled cocoa extract is
obtained by valorizing a condensate recovered during the cocoa processing. It delivers an authentic roasted
profile with caramelic and creamy notes. Read more in Taste, Texture & Health
• In contributing to reduce and avoid the risk of overfishing and its related negative impact on marine ecosystems
thanks to life’s®OMEGA O3020. Read more in Health, Nutrition & Care
• In increasing animal feed efficiency, which consequently supports less feed consumption for similar animal
proteins production. Read more in Animal Nutrition & Health
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Nutrition and Health
As part of our purpose of bringing progress to life, we aim to help address malnutrition in all its forms, including
micronutrient deficiencies, by helping to strengthen food systems globally, to improve equitable access to
adequate nutrition, and consequently to improve health outcomes.
In 2022, a report by The Lancet Global Health concluded that one in two preschool aged children and two out of three
women of reproductive age worldwide suffer from at least one micronutrient deficiency. According to WHO, improved
nutrition leads to improved infant, child and maternal health, stronger immune systems, safer pregnancy and childbirth,
lower risk of non-communicable diseases (such as diabetes and cardiovascular disease), and longevity.
Solving malnutrition is a global challenge, and one that we cannot address alone. We work together with our global
partners, including the World Food Programme (WFP), UNICEF, the Bill & Melinda Gates Foundation (BMGF), and World
Vision International to address the root causes of malnutrition, and shape more just and sustainable food systems across
Africa, Asia, and Latin America. Furthermore, we participate in global networks such as Partners in Food Solutions (PFS) by
leveraging our technical expertise to help increase the growth and competitiveness of African food companies. For
example, our HNC business is proudly supporting the Millers for Nutrition (M4N) initiative, in collaboration with BMGF and
other partners. Lastly, we have made several investments, such as in Africa Improved Foods (AIF) to help increase the
local production of nutritious foods in the African continent.
Partnerships for Nutrition and Health
UN World Food Programme
The dsm-firmenich-WFP partnership ‘Improving Nutrition, Improving Lives’, in place since 2007, aims to solve malnutrition
and contribute to achieving SDG2 (Zero Hunger). During more than 15 years of partnership, both organizations have
helped fight nutritional deficiencies that stunt growth, hinder development, and threaten the lives of one in two people
globally, greatly limiting their potential. Through the partnership we reach 35 million people annually with nutritionally
improved products.
We offer WFP our technical and scientific expertise in nutrition, quality assurance and marketing, as well as financial
assistance, to improve the availability and affordability of fortified, nutritious foods for people in need. dsm-firmenich and
WFP are working together to drive the transformation of food systems, supporting local food companies and value chains
in developing countries to deliver more affordable, fortified, nutritious food options to communities in need. To give one
country example, in Peru, the partnership has supported 67 millers with technical assistance since January 2022 to
produce fortified rice that looks, cooks, and tastes like ordinary rice, but crucially includes essential vitamins and minerals
that help curb micronutrient deficiencies. Fortified rice is now included in three food-based social protection programs
in Peru, resulting in 3.5 million school children receiving fortified rice in their school meals. Additionally, 256 retailers were
trained since mid-2022 to promote the commercialization of fortified rice, enabling greater access to nutritious foods in
the open market.
Through the rice fortification and retail projects of WFP country offices under the partnership, WFP and national
stakeholders leveraged existing platforms to reach an estimated 14 million indirect beneficiaries with fortified rice and
Social Behavior Change and Communication (SBCC) campaigns, with more than 320 million people receiving fortified rice
through social protection programs globally. Furthermore, approximately 450 retailers and millers received technical
support since January 2022 through the partnership.
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Photo: WFP/Mehedi Rahman
UNICEF
Since 2013, UNICEF, dsm-firmenich, and Sight and Life (SAL) have partnered to improve nutrition for women and children.
Built on multiple pillars, the partnership aims to expand the scientific evidence base and proof of viability of targeted
nutritional interventions, to increase awareness of the importance of good nutrition, and to make nutritious food
products accessible to those who need them most. Some examples of the work we do together in Nigeria, India and
Mexico are below.
Creating an enabling environment and scaling up micronutrient powder uptake
The partnership’s main focus in Nigeria is to increase access to vital nutrients during the critical first 1,000 days of life in
order to support optimal physical and cognitive development.
In 2023, we supported the Nigerian government in the following areas: (i) working toward the integration of micronutrient
powders (MNPs) in the essential drugs list, (ii) starting the development of a social behavior change strategy including
MNPs and multiple micronutrient supplementation (MMS) and (iii) defining and managing a pathway to certification for
technically qualified and interested vendors to locally produce MNP / small quantity lipid-based nutrient supplements
(SQLNS). By 2024, we aim to reach up to one million additional children aged 6 to 23 months and up to 200,000
pregnant women in UNICEF-supported humanitarian states.
The social movement on nutrition program
In India, we have worked together since 2019 to enable the platform ImpAct4Nutrition (I4N). This platform engages the
private sector for workforce nutrition and aims to create a social movement around nutrition literacy in support of the
National Nutrition Mission (POSHAN Abhiyaan). At November 2023, I4N had more than 490 pledged corporate partners
and through them the platform has been able to reach more than 2.7 million employees (and families) by using the ACE
(Assets, CSR and Employees engagement) card for Nutrition. Additionally, I4N have reached over 120 million citizens of
India through good nutrition literacy by various means of mass/print and electronic media since January 2023.
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Scaling up maternal and child health interventions among vulnerable population groups in Mexico
In 2023, through the partnership the MMS landscape in Mexico was mapped. This mapping enabled an alignment with
other actors and helped avoid overlap in efforts around demand generation for maternal and child health interventions
and efforts targeted at improving the relevant regulatory environment. In 2023, MMS reached women throughout the
state of Yucatán. By 2024, the partners aim to expand the work in Yucatán and to further states across Mexico.
World Vision International
Our partnership with World Vision International and SAL, with the slogan of ‘Joining Forces for Last-Mile Nutrition’, aims to
bring prosperity and good nutrition to the most vulnerable communities in the Global South. Leveraging the unique
capabilities and know-how of each partner, we design and implement sustainable market-based solutions that bridge
the gap between public and private efforts for improving nutrition and fostering local economic development. In 2023,
the partners continued together in, among others, Rwanda, Ethiopia, and Brazil.
The maize value chain in Rwanda
In Rwanda, the partners collaborate to transform the local maize value chain, by supporting smallholder farmers with
improved post-harvest processes to increase the quality and quantity of their produce. Through a partnership AIF,
smallholder farmers have access to a stable market, while increasing AIF’s access to local, high-quality maize in Rwanda.
In 2023, the program reached over 11,000 farmers, and after positive results, the pilot will be scaled to 20,000 maize
farmers through World Vision’s own programming.
The EGGciting project
In Ethiopia, the partners collaborated on the EGGciting project, focusing on training smallholder farmers in poultry farm
operation and feed management for improved nutrition, safety, quality, sustainability, and livelihoods. Simultaneously, the
program aims to increase the accessibility of nutritious eggs in the local community. After a successful pilot, World Vision
is exploring the scale-up of the model in Ethiopia, in collaboration with local governments.
Social distribution of nutrition in Brazil
In Brazil, the partners aim to empower women in last-mile communities through a distribution model for micronutrient-
enriched products. In this model, women in vulnerable communities are provided with trainings in entrepreneurship and
nutrition, and can sign up to become last mile entrepreneurs to sell nutritious products in their communities. The pilot
was launched in 2022, In collaboration with Omnilife, a producer of cosmetic and nutritionally improved products. Since
then, 50 women have participated in the pilot, with a door-to-door business model. An additional 500 women were
supported with nutrition and entrepreneurship training. A successful closing ceremony of the pilot was held in December
2023.
Africa Improved Foods
AIF is a social enterprise with the mission of helping people in Rwanda and the wider region achieve their full potential
through improved access to nutritious, locally sourced foods. These foods include mineral and vitamin rich porridges that
help meet the nutritional needs of vulnerable population groups such as pregnant and breastfeeding mothers, older
infants, and young children. AIF addresses the food challenges facing Africa by building resilient food systems through
sourcing, manufacturing, and selling nutritious, affordable, and accessible products.
AIF was launched in 2016 in Rwanda as a public private partnership between the Government of Rwanda and a
consortium comprising former DSM, the Dutch Development Bank (FMO), DFID Impact Acceleration Facility managed by
CDC Group plc (CDC), and the International Finance Corporation (IFC), the private sector arm of the World Bank Group.
A recent report published by the Harvard Kennedy School and Endeva, entitled Fortifying Food Markets: Unlocking the
potential of food fortification partnerships to improve nutrition highlighted AIF’s role in increasing accessible and
affordable nutritious foods by improving food safety, reducing malnutrition, and contributing to broader development. AIF
reaches 1.6 million consumers and beneficiaries daily through the WFP, and more than 90,000 children over six months
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old, as well as pregnant and lactating women in Rwanda, now have access to nutritious complementary foods.
Additionally, AIF has contributed more than USD 900 million in discounted net incremental benefits to the African
economy.
AIF’s Kigali factory contributes to the local and regional economy
AIF’s mission is to produce high-quality nutritious foods from local ingredients. Working with smallholder farmers in
Rwanda and across the region, AIF improves their productivity and product quality, and is scaling this further with
partners. AIF is focused on developing robust value chains that address the challenges of climate change and
employment creation in the African food value chain. AIF’s Kigali factory employs over 470 skilled workers, and the
regional procurement of goods and services (such as transportation) has led to indirect economic development across
East Africa. Reaching more than 1.6 million consumers daily, AIF has proven that this model can be profitable while
contributing to SDG 1 (No Poverty), SDG 2 (Zero Hunger) and SDG 13 (Climate Action).
Partners in Food Solutions
PFS works to increase the growth and competitiveness of food companies in Africa. These aims are achieved by inspiring
business leaders and linking highly skilled corporate volunteers from a consortium of leading companies including dsm-
firmenich, Cargill, General Mills, Hershey, Bühler, Ardent Mills, and J.M. Smucker Company with promising entrepreneurs
and other influencers in the food ecosystem. The seven corporate partners have empowered hundreds of entrepreneurs
to work toward stronger, more resilient food value chains across the African continent.
In 2023, dsm-firmenich employees contributed more than 1,894 volunteer hours working with 95 African customer
organizations across eight countries. By sharing expertise, the volunteers were able to assist local entrepreneurs in
growing their businesses and supporting a supplier base of more than 294,000 farmers. In total, 103 dsm-firmenich
volunteers supported 126 service offerings to clients, of which 31 customer organizations are owned or managed by
women (39% of the 95 worked with).
Project B.E.N.®
Project B.E.N.®, which stands for Better Eggs for Nutrition, is a cross-cutting
innovation that addresses the entire egg value chain – from producer to consumer –
saving lives and livelihoods. It smartly increases the production and consumption of
eggs to greatly reduce childhood malnutrition in vulnerable. At the same time,
farmers are able to increase their income due to increased egg productivity, lower
production costs enabled by consistent high-quality inputs (feed, layers, technical
assistance and veterinarian support), access to credit, and access to local more
profitable markets, for example, school feeding programs.
Through an innovative business model called the Egg Hub, we collaborate with local
poultry producers to help transform families into smallholder farmers that produce
and sell eggs in vulnerable communities. The program started in 2021 and so far has
engaged over 250 smallholder poultry farmers (60% women) across more than 80
farms in Peru, Brazil, and Kenya. The smallholder farmers on average experience a
doubling of their income. The farmers reach their break-even point after two years, enabling them to finance at least 30%
of the initial inputs for the next cycle by themselves, while paying back their loans, therefore ensuring the sustainability of
the project. The economies of scale created by the egg hub also help increase the accessibility, affordability, and
aspiration for eggs in the local community.
In 2023 Project B.E.N.® farmers in Latin America and Africa produced more than 22 million eggs impacting more than
450,000 people who consumed at least one egg per week, especially children and women at childbearing age. In Peru,
we conducted a nutritional impact study in 2023 that proved that introducing eggs early on significantly improved
growth velocity and gross motor development in infants who are experiencing growth faltering.
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People
As DSM and Firmenich announced their merger in May 2022 we set forth creating a new, integrated and engaged
organization making us a great company to work with and work for. Close to 30,000 colleagues make the difference
every day to bring progress to life. Their engagement, commitment and dedication ensure that we can delight our
customers and offer innovative solutions.
Coming together as dsm-firmenich has kickstarted an inclusive and comprehensive program to shape a new, shared
culture, carried by values and behaviors that will underpin what we stand for and how we make choices in our day-to-day
delivery with our customers and stakeholders. We announced our new dsm-firmenich values in May 2023 together with
our purpose: We bring progress to life. Having shared values is an essential driver for success in our integration.
Additionally, our priorities have centered around landing a new operating model for dsm-firmenich in which we work
together as a newly formed Group, made of Business Units and Business Partners. Providing clarity to our colleagues
around the world on their new roles and responsibilities has been paramount and we successfully finalized most of our
people appointments by year-end 2023, while executing on our plans for integrated rewards, people development, well-
being, engagement, inclusion and diversity.
The legacy companies have historically put their people at the heart of their organizations. With this shared heritage we
are committed as dsm-firmenich to continue on this track. We are proud of the shared passion and capabilities that will
enable our long-term success.
Safety, health & well-being
The safety, health and well-being of our employees is our key priority and is anchored in our new Safety, Health and
Environment (SHE) policy. The merger provides us with the opportunity to learn from each other and harmonize
approaches and systems to higher maturity levels. Continued volatility in the world around us resulted in additional
challenges, making safety, health and well-being more important than ever.
The merger and global developments in 2023 had a profound impact on our people throughout the year, from higher levels
of personal uncertainty to increased workload levels. In turbulent times like these, we maintained a continuous focus on
the safety, health, and well-being of our employees. The attention for safety & health focuses on three areas to ensure that
they are embedded across our organization. It is our mission to provide an injury-free, healthy and secure workplace to
everyone working in dsm-firmenich. As part of the merger process, new company targets on these three areas are under
development. The first target to be set under this process will be the Frequency index Total Recordable Incident Rate for
employees and contractors (TRIR-all).
2023
Occupational safety
Total Recordable Incident Rate (TRIR)-all
0.31
Total Recordable Incident Rate (TRIR)-own
0.29
Process safety
Process Safety Incident rate
0.28
Occupational health
Health rate-all
0.14
Health cases-all
50
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Safety
Occupational safety
Occupational safety is the safety of our employees and contractors in the workplace.
With a 2023 Safety performance TRIR of 0.31 (for the post-merger period of June – December, 0.30), our result is well
above our long-term target level of 0.20 and clearly not where we want to be. Most (~60%) of the 2023 incidents were
easily avoidable cases (e.g., slips/trips/bumps/handling of tools and equipment) resulting in only minor injuries. The
investigations showed that they were not caused by a lack of procedures, training, or information, but mainly by individual
behavior and awareness.
SHE leadership and SHE culture are key to addressing the continuing rise of behavioral incidents. Therefore, company-
wide initiatives and discussions took place in many different leadership teams focusing on creating the right mindset and
behavior of our people. To support that, we continued improving our SHE culture through the continuing roll-out and
strengthening the effectiveness of our Behavior-Based Safety program (Safestart®).
Frequency Index of Recordable Injuries
Key initiatives
We initiated several close-the-loop activities focusing on intense safety dialogues, especially during the shift handover at
our manufacturing sites. We also started scavenger hunts on the shop floor for hand safety risks and the identification of
slip, trip and fall situations. Additionally, we kept programs running that we benefitted from in recent history like our issue
site programs where we focus on the sites with the most incidents to run dedicated improvement programs. To ensure
our programs, initiatives and systems are fit for purpose for the new company, a detailed review, alignment and shaping
exercise has been conducted after the merger. Priority was given to get the new organization in place, embracing SHE
policy, Life Saving Rules, personal protective equipment (PPE) alignment, reporting and continuation of leadership and
culture development programs. We plan to expand this in 2024 to create one set of policy requirements, procedures, and
a common language for all of dsm-firmenich.
In the first quarter of 2023, we were honored to receive the prestigious Chemical Industry Sector Award for occupational
health and safety excellence in former Firmenich from the Royal Society for the Prevention of Accidents (RoSPA). This
world-leading accolade is a demonstration of our approach of continuous improvement toward the goal of zero harm and
ensuring that all our colleagues and contractors go home safely each day.
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To keep our contractors safe, we employ the same strategies as for our own organization, with a focus on learning from
past incidents and on the robust implementation of our Life-Saving Rules.
Process safety
Process safety refers to the technical safety of our facilities. In 2023, the Process Safety Incident rate ended at 0.28.
Despite improvements in many sites, we had a serious fire incident at our Pinova site in Brunswick (Georgia, USA).
Fortunately, there were no injuries, but the facility damage was so significant that it resulted in the closure of the site.
As with occupational safety, we focused on the sites with the highest number of process safety recordable incidents in
2022 and they delivered a significant 77% incident reduction. Improvements were achieved by self-assessment tools
addressing common technical root causes and specific site improvement plans. The continuing activities around our
behavior-based programs and integration improvement programs contributed as well to this improvement.
Frequency Index of Process safety incidents
In addition to the above, sites integrated all process safety information into a single process safety management system.
We continued to monitor and manage the process safety life cycle, including promoting a ‘first-time-right’ approach and
evaluating its effectiveness. Alongside merger activities we adapted the networks for process safety experts, started to
review our process safety procedures and guidelines.
We continued to strengthen the development of regional and local competences. For example, we delivered dedicated
process safety training modules for shop floor teams and staff, for example, on LOTOTO (Lock Out, Tag Out, Try Out),
handling of self-heating materials, safe powder handling, and bonding and grounding. Furthermore, we conducted 39 fire
protection integrity assessments at affiliates world-wide, reflecting the importance placed on protecting our people and
assets from fire and natural hazards. Audits cover both organizational and technical readiness.
Health & well-being
Occupational health and industrial hygiene
Industrial hygiene focusses on eliminating or minimizing work exposure to health hazards by engineering controls and/or
personal protective equipment while occupational health deals with the effects of exposure, avoiding occupational
diseases and providing needed health care for our workers. In 2023, we recorded a health incident rate for employees
and contractors of 0.14 consisting of 50 occupational health incidents of employees and contractors.
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dsm-firmenich Integrated Annual Report 2023 93
A significant share of health incidents recorded this year (8 out of 50) involved hearing losses recorded in one of our
production sites located in China. This site was acquired in the recent past and this was the first time that hearing tests
had been carried out locally based on dsm-firmenich standards, which are stricter than local legal standards.
Ergonomics remained the leading cause for occupational health injuries. In total 63% of the recorded cases were related
to ergonomics issues. To address that, we are implementing in selected sites a program dedicated to ergonomics, which
covers elements such risk assessment, engineering controls, medical surveillance, and training. In addition, we are rolling
out an innovative training method based on the use of wearable devices that can detect and immediately feedback
unhealthy posture and movements. These devices provide the opportunity to train workers on what constitutes healthy
movement, and to identify tasks that might need to be reengineered.
Besides ergonomics, we have continued to focus on prevention of health hazards in the workplace. We have established
an internal committee that brings industrial hygienists, toxicologists, and product stewardship experts together. This
committee oversees our internal occupational exposure limits for substances not regulated by government agencies.
Another preventive action in 2023 was participating in the global Mental Health and Well-being Program in alignment with
the Global Vitality Office and HR.
To strengthen industrial hygiene for the years to come, we initiated the implementation of a single management system
for all industrial hygiene risk assessments. The system will be rolled out in 2024 and will enable a better sharing of
relevant health data, to easily find and implement our best practices as well as identifying needs for further
improvements.
Employee health & well-being
At dsm-firmenich, living our purpose starts with creating a culture of health and well-being at work, where every
employee is encouraged to make healthy choices. We continuously strive to support our people in pursuing a proactive
and preventative approach to health and well-being, especially during periods of change.
The Global Vitality Office was established in 2023 to help our people make positive choices for their long-term health,
creating a culture of health at work. Drawing on dsm-firmenich’s expertise in nutrition, health and beauty, the Office will
use the health, beauty and nutrition knowledge and experience from the dsm-firmenich organization, and ‘walk the talk’. It
supports this by providing ‘state of the art’ health and vitality information, creating create global campaigns, frameworks,
and standards to guide preventative healthcare measures across the company. Most importantly, it will connect all
Vitality ambassadors in the organization to learn from each other and to make more impact for all colleagues.
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Recent activities and implementations include:
• BoostYourVitality: a dsm-firmenich global vitality platform which connects all vitality initiatives and offers
exclusive access to many informative articles, engaging webinars, lifestyle test, and cutting-edge products to all
dsm-firmenich employees free of charge, as well as, access to products in an integrated webshop for reduced
prices
• dsm-firmenich’s partnership with Thrive Global, a leading behavior change company, to support our people with
resources to improve their well-being and productivity, available to all employees
• To mark World Mental Health Day in October 2023, we organized a global webinar together with Thrive to help
employees spot the warning signs of mental health challenges so that they can build mental resilience, make the
changes they need, and live a happier, healthier, more productive life
• In 2023 we set up a global Mental Health and Well-being Program in alignment with the SHE and HR departments.
In 2024 we will launch this further aiming to increase both employee and leadership awareness, fostering a
supportive and safe workplace, and to provide a support system
We will also develop, implement and sustain practices in this area and monitor their effectiveness and positive impact.
Creating our new organization
The principles of our new operating model
With the design of the operating model framework for dsm-firmenich, we set the fundamental principles on how the
different parts of our organization work together and deliver value, to achieve our vision of being the leading co-creation
and innovation partner in nutrition, health, and beauty. We are structured into four complementary Business Units –
Perfumery & Beauty (P&B), Taste, Texture & Health (TTH), Health, Nutrition & Care (HNC) and Animal Nutrition & Health
(ANH) – and Group Business Partners such as Science & Research, Finance, Human Resources, Digital & Tech,
Communications and are applying the following principles to our operating model.
We operate as one group, united by a common purpose & values. We drive group priorities, strategy and standards
across the company and ensure that we continue to differentiate through Science & Research as well as Sustainability.
We empower our Business Units with a high degree of autonomy to ensure agility and close customer connections in
our market approach. To bring the best service to our customers, the Business Units have full accountability for their
manufacturing plants and Supply Chain as well as Regulatory Services. The Business Unit innovation teams work in
partnership with Group Science & Research to deliver on our ambitions in innovation. In combination with the
accountability for delivery of their profit & loss (P&L) and cash generation, they will be able to make choices faster, play
into customer needs and deliver customized services.
Our Business Partners enable Excellence & Efficiency, by partnering with the Group and the Business Units, helping
them to deliver on their ambitions, serve their customers. In addition, the Business Partners will drive Excellence with
shared centers of expertise, to bring differentiated capabilities to our company. They will also drive Efficiencies by
creating economies of scale.
Transforming principles into organizational designs
We made progress at pace to translate the operating model principles into how our Business Units and Business Partners
are structured and how they operate, ensuring transversal alignment across the company. By the end of 2023, the
implementation of most of the new organizational structures and operating models were completed. In the spirit of being
a force for good and ensuring fairness and equal treatment of candidates from both legacy companies, we followed a
fully transparent selection process for the placement of our employees into new positions. Employee representation
bodies and the relevant works councils were consulted as part of the redesign process.
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Our new values
Organizational culture is the combination of several factors including purpose, values, behaviors and working norms.
Culture has a key role to play in the success of any merger, helping to create a unifying platform to accelerate integration
and achieve synergy value. For that reason, we created a new set of values and will create a new set of behaviors through
the use of an employee survey, top leadership interviews, regional focus groups and external perspectives. Our values
and behaviors approach ensures a systemic narrative, connecting purpose, brand, and values, and underpinned the
launch of our new company.
An employee Pulse Survey conducted in May 2023 showed that 77% of respondents were familiar with our values within a
month. The Survey furthermore showed that 85% found our values inspiring, while 60% believed they were easy to put
into practice. Finally, people viewed our value ‘shape the future’ as the most inspiring (87%).
From September through to the end of the year, the activation campaign continued via a ‘Culture Catalyst’ series of
missions to extend engagement with the values across all regions and enable people to put them into practice.
“I am deeply proud of our purpose, which is embodied in our
values emphasizing innovation, integrity, accountability, and
collaboration. They guide us in our endeavors to bring
progress to life and create a sustainable and prosperous future
together with our people, our customers, and our
communities.”
Mieke Van de Capelle, Chief Human Resources Officer
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dsm-firmenich Integrated Annual Report 2023 96
Developing new behaviors
‘Shaping the Future’ became a reality for our employees in October, when they were invited to participate in a 72-hour
‘Behavior Jam’ session, designed to elicit input for a new set of behaviors and Employee Value Proposition. In total, 21% of
the employee population registered, resulting in 6,668 contributions (comments) in seven languages. We aim to launch
our new behaviors in 2024.
People engagement and development
Employee engagement
Our Pulse Survey also provided us with additional insights on how people felt, how they experienced our integration and
how we could improve the process for them. Almost 17,000 people (59%) responded.
They told us they were proud (83%), engaged (82%), and experienced many positive emotions toward our merger.
Through their comments, people expressed excitement about the future of dsm-firmenich, hope toward the products we
can develop together and curiosity to get to know each other. On top of that, they told us that they believe in our
company purpose and values. Eighty-five percent of respondents consequently said they intended to stay with our
company for the next 12 months.
At the same time, 22% of respondents expressed feelings of uncertainty. We saw a need to increase the change support
to our managers (59%), build trust (70%) and raise value awareness (77%).
In total, over 130 plans were established within our countries to improve our results. The actions we took ranged from
local town halls to communicating transparently about our challenges as a company. A follow up survey was planned for
January 2024 to evaluate the outcomes of these actions.
People development
With the creation of dsm-firmenich, we are building on our existing people development practices and shaping them
more broadly for the integrated organization. Before the merger, each legacy company created various learning
opportunities.
For both legacy companies, extensive learning content remained available throughout the entire year, also post-merger.
In 2023, dsm-firmenich spent on
average eight hours on learning.
In total, more than 220,000 learning
hours were recorded, including more
than 170,000 hours of digital learning
and more than 16,000 hours of
classroom training.
Continuing an earlier initiative of
planting trees in ratio to the number of
hours our employees spent on
development digital learning, 11,750 trees
will be added to the existing forests.
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Leadership and leadership development
We provided our leaders with a platform called ‘The Leadership Connection’, where we host carefully curated resources,
tools, and knowledge-sharing platforms to empower our leaders to excel. Several development tools were made available
post-merger to support the development of our leaders including Gallup Clifton Strengths and Coach Hub:
• Gallup Clifton Strengths – to help individuals and teams identify, understand, and optimize their unique strengths
• Coach Hub – an online coaching platform that supports individual development through a wide range of topics
including leadership skills, career development, personal growth and more
We also merged our partnership with IMD School for Business Management Development (Switzerland) across both
legacy organizations and continued to offer nominated talents the opportunity to participate in IMD leadership, strategy,
digital transformation & innovation and/or operations development programs.
In addition to joint dsm-firmenich leadership development offerings, in 2023 former DSM continued to host leadership
development programs, with a total of 15 run across regions in addition to the Bright Mentoring Program. In former
Firmenich, we continued with the deployment of the ‘Engage People During Change’ leadership development initiative as
well as ‘A Step Forward’, an internal women acceleration program which encompasses mentoring, external coaching, and
community events.
Performance management process
To move toward consistency for dsm-firmenich, we aligned the key principles and timelines for performance
management in 2023. This enabled HR to provide a consistent level of communication and support for both People
Managers and employees. It also ensured that 100% of employees who were eligible to do so, were able to discuss their
performance during the transition to one company process for 2024. Non-eligible employees included those who are on
a prolonged leave of absence (e.g., maternity or sick leave), or newcomers.
Performance discussions remain the foundation to ensure we reach our collective goals and empower personal
development for our employees. A completely aligned performance management process will be launched for the 2024
cycle.
Rewards
One of our key focus areas for the year was to introduce a Short-Term Incentive (STI) framework for the transition year
2023. This framework provides one global and standardized approach, linking STI to the achievement of company
objectives. This means employees eligible for STI will be rewarded based on the same dsm-firmenich objectives for the
transition year 2023. Similarly, a new common Long-Term Incentive (LTI) plan was introduced in 2023.
On Day 1, all employees received a certificate symbolizing ownership of one share in dsm-firmenich, which will result in a
cash settlement through payroll on the first anniversary of the merger.
Another focus was developing our new reward strategy, which will be the foundation for our new, unified reward policies
and practices. This strategy sets out what our rewards aim to do: contribute to optimal well-being by combining the
essential, the desirable and the sustainable – the dsm-firmenich needs, wants and musts. We reward progress in
innovation, growth and achieving winning outcomes together.
We will start implementing our new rewards policies and practices on a country-by-country basis during 2024.
Diversity, Equity and Inclusion
At dsm-firmenich, being a force for good is not optional. Diversity, Equity and Inclusion (DE&I) is a shared responsibility
woven into our daily work to not only benefit our people, customers and communities but to also drive business value.
Equal access to opportunities is a given, belonging is a shared feeling, authenticity is celebrated. Our DE&I strategy
focuses on three pillars:
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Building diverse teams
Providing equal opportunities
Fostering an inclusive culture
We ensure that leadership teams and
the workforce reflect the
demographics of customers,
communities, and the global footprint
We raise awareness and offer
inclusive benefits to provide equal
opportunities
We create an environment where
everyone is treated with respect, feels
valued, heard, and safe
We meet the needs of diverse
customers and promote diversity in
the supply chain by collaborating
with diverse suppliers
We uphold our commitment to pay
parity and to address bias and
discrimination to create an
equitable workplace
We regularly assess our culture's
inclusivity, take steps for
improvement, and empower our
leaders, managers, and colleagues to
promote inclusivity through education
and skills development
We believe a diverse Global Management Team (GMT, consisting of approximately 400 leaders) is an essential
component of business success that deepens our understanding of our global customer base and workforce, and allows
us to attract, retain and develop top global talent. In September 2023, we conducted a voluntary self-identification
survey among our GMT in line with data privacy rules in in the countries of employment. Thirty-five percent of
respondents self-identified as female or non-binary and 40% as ethnically diverse leaders (non-European).
To further promote Gender and Ethnic Diversity within our GMT, the dsm-firmenich Long-term Incentive Plan contains a
Diversity Key Performance Indicator (KPI). For more information, see the Compensation report 2023. We have set the
targets to reach 36% female or non-binary colleagues, 41% of ethnically diverse leaders (non-European) in our GMT at the
end of 2025.
We aim to achieve a gender-balanced organization across all levels. Today, 10,811 women work at dsm-firmenich. The
dsm-firmenich Board of Directors consists of 12 Members, representing eight nationalities, with 33% being female and
67% male. In addition, three out of nine Executive Committee Members are women.
In February 2023, we resecured our Global EDGE certification for former Firmenich for gender equality to the MOVE level
for the second time in a row and reached EDGE ‘LEAD’ certification, the highest obtainable level of certification, for our
efforts on diversity, equity and inclusion in Brazil and Mexico, meeting every single standard across the four pillars of
EDGE’s rigorous assessment: Gender representation, Pay equity, Effectiveness of policies & practices as well as the
inclusiveness of the culture. Additionally, Firmenich USA was awarded ‘EDGE Plus’ for their commitment and effective
policies to eliminate ethnic pay inequality. In 2024, we will run an integrated exercise on pay equity as part of our
commitment on fair and equitable gender pay across the organization. For certain countries, this exercise also addressed
ethnicity, and where possible, will be continued.
Our newly developed DE&I governance model is a structured framework with clear roles and responsibilities to drive
sustainable change, ensuring that our commitments translate into meaningful actions.
We are proud of our five Employee Resources Groups encompassing generations; gender; race, ethnicity and
nationalities; people with diverse abilities; and LGBTIQ+ communities. Through global, regional and local activism and
events, they actively contribute to community building and create an inclusive work environment that fosters
engagement among colleagues with shared backgrounds or interests.
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For example, in June, we celebrated Pride Month with our colleagues, fostering meaningful discussions and educational
webinars to explore strategies for promoting inclusivity within our LGBTIQ+ community.
In November, we celebrated International Day for Tolerance with a week of activities, sponsored by our CEO, focused on
advancing diversity in race, ethnicity, and nationality (REN) as we support a culturally diverse global landscape.
In our Consumer Insights & Sensory
teams, we have integrated Visually
Impaired Panelists into our sensory
teams in six different affiliates (five
different countries) for nearly a decade,
contributing to our teams in P&B, TTH,
and Science & Research (S&R).
Our 36 Visually Impaired Panelists’
sensory abilities bring invaluable insights
that enrich our consumer research,
demonstrating that diversity is a
competitive advantage and how
inclusivity fuels excellence.
Human rights and fair remuneration
Social impact
We want to move through the world in a way that leaves a positive impact on everyone dsm-firmenich touches, allowing a
more equitable and just society. By doing so we positively contribute to creating a world where everyone has the
opportunity to lead a fulfilling life, where communities thrive, and where the planet is sustained for future generations.
We act with intent and create opportunities to make the world more equitable wherever possible, starting with the
workplace. We commit to workplaces where business goals are achieved with respect for people’s dignity and their
human rights.
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Human rights
Across our activities, and the activities of our broader value chain, we always remain committed to the highest
international standards in human rights. These standards include the International Bill of Human Rights (consisting of the
Universal Declaration of Human Rights, the International Covenant on Civil and Political Rights and the International
Covenant on Economic, Social and Cultural Rights) and the International Labor Organization’s Declaration on the
Fundamental Principles and Rights at Work. In addition, the UN Guiding Principles for Business and Human Rights and the
Organisation for Economic Co-operation and Development (OECD) Guidelines for Multinational Enterprises help us
implement our commitment to our ongoing due diligence practices within Responsible Sourcing practices. As a signatory
of UN Global Compact, dsm-firmenich promotes decent work in global supply chains and works toward this goal with our
suppliers.
The above is further stipulated in our Global Human Rights Policy. In our policy annex, we have highlighted the salient
issues to which we will pay heightened attention in our ongoing due diligence process practices. We have structurally
identified human rights risks for our own operations, our supply chain and within our markets. We did this by looking at
severity (scale, scope, irremediability) and likelihood, following the framework set by the United Nations Guiding
Principles. This has resulted in the following list of salient issues, in no particular order:
• Occupational Health & Safety
• Child Labor
• Forced Labor
• Living Wage
• Working Time
• Diversity, Equity & Inclusion
• Discrimination & Harassment
• Freedom of Association & Collective Bargaining
• Community Impacts
Human rights in our operations
With respect to internal human rights due diligence, our Code of Business Ethics serves as an overarching guidance for all
our employees acting on minimum behavioral and ethical principles. With the Human Rights policy as a core foundation,
including the separate internal procedures on labor rights working conditions, we will focus on holding internal entities
accountable for meeting legal and regulatory requirements, adhering to established standards, and being responsive to
the needs and concerns raised by customers. This will be assessed by our internal control framework and our operational
audits. Furthermore, behavior that is at odds with our values can be reported via our ‘speak up’ tools.
For more information, see Business Ethics.
Human rights in our supply chain
Within our Responsible Sourcing practices, we have adopted a human rights due diligence approach. We believe it is
critical to stimulate transformation and positive change through field-based collaborations at source to learn what can
be further improved, but moreover to align on where further embedding on social topics is required in our existing
supplier screening and monitoring.
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This includes the following steps:
• Identify actual and potential human rights impacts, including emerging risks
• Address our findings by implementing respective policies and processes
• Track the effectiveness of our actions and disclose the progress made
• Communicate regularly to our stakeholders on our progress
We recognize that human rights due diligence is a continuous process, and we are eager to continuously evolve our
efforts to further improve our responsible business practices.
For more information on our Responsible Sourcing and our due diligence approach, see Supplier engagement and Mint
with Purpose.
Equitable living standards
We care for our employees and their families by securing a decent standard of living. That is why we commit to pay a
living wage to all our employees in our own operations.
A living wage is the wage required to purchase the goods and services needed to meet a minimum acceptable living
standard for workers and their families. This includes proper access to health, food and nutrition, housing, and education.
Ensuring that people earn a living wage is a critical step toward building a more equitable and inclusive society.
In 2023, we started designing and incorporating a Living Wage approach that would be applicable for dsm-firmenich. In
2024 we will further incorporate the Living Wage approach as part of our integration. And as a next step, we want to
secure the same for more people beyond our workforce, specifically focusing on the most vulnerable workers in
manufacturing and agriculture. We will work with our suppliers, other businesses, governments, and NGOs to create
change and encourage the global adoption of living wage practices.
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Stakeholder engagement
Supplier engagement
Responsible sourcing
At dsm-firmenich, we are committed to driving the most ethical, traceable, and sustainable value chains to achieve
our purpose of bringing progress to life. We leverage our purchasing power to impact people and environment,
positively reinforcing our positive contributions for all our stakeholders across our value chains. Sustainability is
intrinsically embedded in our procurement decision-making processes and is a key factor in meeting the
expectations of our stakeholders.
To support our business growth and maximize our shared value creation, together with our suppliers, customers, and
partners, we have shaped a robust Responsible Sourcing Framework. It serves as a roadmap to drive meaningful progress.
Our supply chain consists of more than 30,000 suppliers, who all play an essential role in developing our business. We
work closely with them through our Responsible Sourcing Program, which strives to support a fact-based and data-
driven strategy to deliver sustainability impacts. It is built on three main intervention pillars through the strategic supply
chains:
• Supplier Sustainability Performance Management
• Due diligence and Sustainability at source
• Supplier Engagement Program ‘Joining Forces: dsm-firmenich and Suppliers in Sustainable Action’
Supplier Sustainability Performance Management
Our Supplier Sustainability Performance Management program embeds climate, nature and people dimensions from the
supplier and material qualification process through to supplier performance monitoring and evaluation. We leverage
ratings such as EcoVadis and CDP to assess supplier performance on company level. At the same time, we scale up our
certification efforts and material certifications coverage through labels such as Roundtable for Sustainable Palm Oil
(RSPO), BonSucro and Union for Ethical Biotrade (UEBT) chain of custody standards to ensure the highest degree of
sustainability and ethics.
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We leverage best-in-class sustainability ratings such as EcoVadis to verify our supply chain partners’ performance on
environmental management, labor and human rights, ethics, and sustainable procurement. If our minimum expectations
are not met, we engage with the relevant supplier to see how we can enable them to improve their score, offering support
where feasible. In 2023, we screened 1,210 of our suppliers on environmental and social criteria through EcoVadis. Of
these, 1,026 were reassessments and 63% of these reassessments received an improved score compared to last year,
highlighting the fact that continuous improvement is also a priority for our suppliers.
As a trustworthy partner to our business stakeholders, we strive to always operate to the highest standards. We only want
to engage with others who commit to operate to the same standards, with the objective of achieving an ethical,
traceable, and sustainable value chain. These standards for suppliers are captured in the principles set forth in our
Supplier Code. All suppliers are expected to follow the dsm-firmenich Supplier Code and all relevant laws and
regulations. We will confirm the adherence to the principles of our Supplier Code; a breach of this Code could lead to a
discontinuation of dsm-firmenich collaboration and to possible legal sanctions and proceedings.
Due diligence and Sustainability at source
We also drive transformation and positive change through field-based collaborations at source for value chains with
increased exposure to sustainability risks or upon request by customers. The latter underlines our belief that driving
sustainability needs to be addressed throughout the full value chain and requires resources and expertise from us, our
customers, and our suppliers. Collaborations materialize in, for example, Sustainability at source projects, conducting
upstream due diligence exercises, supporting our suppliers in obtaining third party verification (on raw material
certification level), or implementing traceability tools and processes.
Sustainability at source projects flowing out of these collaborations typically last three years and should contribute to:
• Nutrition, health, safety, and social impact (ensuring living wages are paid, empowerment of women,
empowerment of local communities, advocating entrepreneurship, abolishing forced labor and/or preventing
child labor)
• Improving climate and the natural environment through sustainable farming practices, regenerative agriculture,
biodiversity conservation or improvement, responsible water consumption, and/or greenhouse gas emission
reductions
• A combination of both of the above
Due diligence assessments are triggered following below-par EcoVadis assessments, risk alert systems, non-conformities
identified during supplier audits, concerns raised by whistle-blowers, or NGO/media investigation, and are aligned with
international standards such as the United Nations Guiding Principles (UNGPs) and the Organisation for Economic Co-
operation and Development (OECD) Guidelines. Based on the findings of these assessments, preventative or remedial
actions are defined in collaboration with the impacted suppliers and are monitored on progress for at least three years.
Suppliers are integrated into the project team, which follows a structured approach to addressing negative impact. This
ensures that all relevant stakeholder requirements are met and sustainability frameworks respected.
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When there is a customer request for increased assurance regarding certification or traceability of a material, our expert
team guides our suppliers through the process. Traceability studies will also support us in preparing for new legislation
like the EU Deforestation Regulation (EUDR) and EU Carbon Border Adjustment Mechanism (CBAM).
At the end of 2023, the Responsible Sourcing team was working on 73 projects (Sustainability at source and due
diligence projects) including field-based collaborations with suppliers to enhance positive impacts for all the
stakeholders:
• In Turkey, we raised awareness on the benefits of education for parents active in the rose-plucking industry, and
contributed to building a network of daycare facilities, allowing woman to work on the fields while ensuring a safe
environment for their children during working hours
• We supported the implementation of labour contracts between farmers and seasonal workers, ensuring fair
working conditions and a living wage the seasonal workers, in Bulgaria where we source rose oil
• In Madagascar, we trained our suppliers on conducting human rights due diligence assessments and how to
implement corrective actions
• We conducted a living wage assessment and implementation of corrective actions for our jasmine suppliers in
India
A further elaboration of actions we took in our mint supply chains is described in our story Mint with Purpose. In 2024,
the Responsible Sourcing team will perform the baseline calculations in order to measure the achievements and impacts.
Supplier Engagement Program ‘Joining Forces’
The global challenges of the next decade are such that dsm-firmenich cannot succeed alone: we must engage our
suppliers on our journey. We seek to inspire our suppliers with a collaborative approach that reinforces the resilience of
our supply chain and contributes to the Group’s strategic objectives. We want to offer our supply chain partners
assurance that they are not on their own, and that they can connect with us, their industry peers and their customers to
jointly drive continuous improvement.
Definition &
prioritization
of mitigating
measures
based on risk
& impact
Informed
decision-
making on risk
mitigation &
elimination
Training, tools,
and guidance
to suppliers
Remediation
of adverse
impacts
Monitoring
and reporting
Identification
& assessment
of adverse
impacts
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In June, we gathered over 100 industry partners from our most important global suppliers, leveraging the existing setup of
our Leadership Event. With the theme ‘joining forces to bring progress to life’, the purpose of this supplier event was to
strategize, exchange ideas, and jointly devise innovative solutions to benefit our valued customers and enhance our
sustainability journey.
During the event, we showcased our newly established organization, shared our purpose and ambitions, presented our
inspiring vision of innovation, outlined our four Business Units, and importantly, emphasized the significance of robust
partnerships.
Hosted by our Chief Procurement Officer (CPO) and Deputy CPO, and kicked off by our CEO Dimitri de Vreeze, the event
revolved around the three main pillars of our Procurement organization: Value delivery (the essential), Innovation (the
desirable) and Responsible sourcing (the sustainable).
We further connected with suppliers throughout the year by means of events, knowledge-sharing sessions, and
capacity-building workshops. For example, in July, we organized a workshop where our scientists, process improvement
managers and commercial leads got together with the manufacturing experts of one of our key suppliers to jointly
identify and plan opportunities to reduce the carbon footprint of benzoic acid, a feed additive supporting digestive
capabilities and the absorption of nutrients.
Going forward, we aim to further raise the bar by launching our Supplier Engagement Program ‘Joining Forces: dsm-
firmenich and Suppliers in Sustainable Action’ with focal points on climate change, nature, and human rights, to support
our partners in their sustainability journey by aligning commitments and actions. Our program will be launched in April
2024, where we invite more than 500 of our key suppliers to connect with us and our customers, jointly kicking off a
journey toward science-based target setting and improving human rights within our value chains. Our objective is to see
the investments return through long, sustainable business relations and stimulate continuous improvement throughout
the industry, not only providing benefits to dsm-firmenich but also to our suppliers’ other customers through materials
with a low (carbon) impact.
Tackling climate change with our value chain
Beyond our own operations, we invite key suppliers to develop detailed plans to reduce their environmental impact, and
we join forces with our supply chain partners to tackle climate change. We continue to develop emission reduction
roadmaps for our raw materials together with key suppliers as part of our reduction ambitions and have also continued to
engage with suppliers to set their own targets. We will continue with this approach going forward. More information on
our achievements and our targets can be found in Scope 3.
Additionally, dsm-firmenich received a top ranking on the CDP Supplier Engagement Leaderboard in 2023 based on our
disclosures in 2022. This recognition highlights our excellence in working with our suppliers to reduce environmental
impacts and risks across our value chain. We will continue to engage with our suppliers and work toward our SBTi in our
direct operations and beyond.
Moving toward deforestation-free supply chains
To achieve deforestation-free supply chains by 2030 (one of our Food System Commitments) we ask our suppliers to
certify their crop-based raw material through third-party, independent certification schemes. In 2023, 71% of our relevant
sourced volume was assessed as deforestation-free. This relates to our Tier 1 supply chain for the crops we source that
are prone to deforestation risks: palm oil and derived products, sugarcane, and direct soy and corn products. We assess
‘deforestation-free’ through certification schemes issued by NGOs such as RSPO, BonSucro and Proterra. We also
leverage RSPO MB certificates for our Palm Oil and derivatives as a way of mitigating risk in our supply chains. However, as
the Segregation model is considered the best approach to demonstrate deforestation-free, we do not include these in
the calculated percentage.
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Obtaining a (supply chain) certificate enables our suppliers to highlight their dedication to deforestation, biodiversity
preservation, and tackling human rights issues, and will be an integral part of dsm-firmenich suppliers’ performance
criteria. We carefully monitor the developments of the EUDR, securing our supply chains for the future. More information
on how we contribute to protecting nature can be found in Nature.
Leveraging the power of partnerships
To scale up our impact, we are an active partner in strategic responsible sourcing coalitions such as Together for
Sustainability (TfS). This industry-leading initiative encourages its members to share their supply chain scores, so we can
leverage the information obtained by other members to improve insights into our supply chain sustainability
performance. We are also active in other forums, such as Sustainability Leaders and Procurement Leaders, where we take
part in cross-functional and cross-industry working groups to learn from like-minded companies’ best practices and
receive in-depth research to integrate into our strategy and daily operations. We continue our sponsorship of the United
Nations Global Compact (UNGC) Decent Work Platform as worldwide impact sponsor to build consensus in the business
community on key principles of decent work.
Investor engagement
We strive to create value for all our stakeholders today and for generations to come through our business and all
along our value chain. This includes our capital providers, who appreciate an increase of the company’s value.
Transparent communication
Transparent and open communication of the accurate financial and relevant non-financial information to the financial
markets is crucial for us. All information is easily publicly accessible via the company website. We actively engage with
investors not only through General Meetings of Shareholders but also through events such as our Investor Days and
Teach-in events, roadshows, and conferences (in person and virtually) as well as individual meetings.
We reach out to both financial and ESG advisors who cover dsm-firmenich on behalf of their financial market clients,
such as brokers, credit rating agencies, proxy advisors, shareholder representative organizations, and ESG rating agencies.
We highly value the investors’ feedback. It is periodically discussed and assessed by the Executive Committee and the
Board of Directors and helps up improve our communication.
In 2023, we engaged with our investors and their representatives on sustainability topics such as the Sustainable
Development Goals (SDGs), climate change, biodiversity, governance, sustainability in supply chain management, human
rights, and diversity, equity and inclusion.
Updating investors on our progress
Since the Capital Markets Day in 2022 in Paris, during which former DSM and former Firmenich outlined the strategic
rationale of the merger, we have kept our analysts and investors updated on the progress of the merger as well as
business, financial and ESG performance during roadshows, conferences, as well as during other one-on-one meetings.
In November 2023 we organized a Teach-in event in Geneva. The event offered the chance to showcase how the two
companies had come together both operationally and culturally using the example of two of our four Business Units –
Perfumery & Beauty and Taste, Texture & Health. We gave multiple presentations and demonstrations on bringing
together the essential, the desirable and the sustainable.
In 2023, our Investor Relations function was ranked again at the top of its sector by Institutional Investor EMEA Research.
dsm-firmenich also was recognized by Mergermarket, winning the main category ‘Deal of the Year’ in their annual
European M&A awards.
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dsm-firmenich Integrated Annual Report 2023 107
Engaging with the market about sustainability
As a company formed of two global sustainability leaders, we are determined to keep growing our positive impact – for
the good of people, climate, and nature.
In 2023, we engaged with investors, including pension funds, to discuss their responsibility in long-term value creation for
their customers, but also for the society and the environment their participants live in. We actively participated in
projects of the World Business Council for Sustainable Development (WBCSD). We also participated in FCLT (Focusing
Capital on the Long Term) projects. We are committed to staying ahead in sustainability reporting and ensuring we report
against new and future requirements of regulating authorities. These include the EU Sustainable Finance Action Plan, EU
Green deal, EU Taxonomy, EU Corporate Sustainability Reporting Directive and Sustainable Finance Disclosure Regulation
(SFDR).
We continued our engagement with leading ESG Ratings and Benchmarks advisors to the financial sector, including
Sustainalytics, MSCI, Moody’s-Vigeo and ISS-ESG. We also engaged with IIGCC (Institutional Investors Group on Climate
Change) on a net-zero transition plan, as well as with Share Action, an organization working directly with investors to drive
up standards for responsible investment.
Community engagement
We engage with the communities and regions where we are located. These engagements address local needs across a
variety of topics. While it is not possible to list all of our engagements, below we highlight a few examples from across our
global footprint.
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Partnerships
World Business Council for Sustainable Development
We are a member of the World Business Council for Sustainable Development (WBCSD) and participate in various
working groups and coalitions. Our Chief Sustainability Officer (CSO), Katharina Stenholm, is a WBCSD Council member,
and a Board member of the Agri-Food pathway.
In 2023, we played a role in various programs such as the Agri-Food pathway, the CFO Network, the Business Commission
to Tackle Inequality, and Reporting Matters.
In May 2023 WBCSD and 60 business and civil society leaders published ‘Tackling inequality: an agenda for business
action’. Specifically, within the Agri-Food pathway, we participated in stakeholder dialogues with private sector, NGO and
academics about scaling up nutritious and sustainable plant-based and diversified proteins, summarized in the
publication in ‘Meat & dairy analogues: Opportunities, challenges and next steps’. We contributed to the insights to living
incomes in the Equitable Livelihoods project, further shaping of Regenerative Agriculture metrics within the Positive
Agriculture group and participated in the Positive Nutrition group.
World Economic Forum
dsm-firmenich is a strategic partner of the World Economic Forum (WEF) and we actively participated in both virtual and
in-person events throughout 2023, including the Annual Meeting in Davos in January. Both Dimitri de Vreeze and
Geraldine Matchett were present during the International Business Council (IBC) meeting in August 2023. We are a
member of the Agriculture, Food and Beverage industry community. Next to this industry group we participate in
initiatives of WEF’s Centres for Nature and Climate, Health and Healthcare and New Economy and Society, as well as C-
suite communities that bring together leaders fulfilling the same position across organizations to collaborate and drive
progress on common issues.
Within the Centre for Nature and Climate a very active leadership community is the Alliance of CEO Climate Leaders. This
community, that our CEO is a member of, is committed to reaching net-zero emissions by 2050 at the latest. We as
dsm-firmenich have committed to the Scope 3 upstream action plan of the Alliance to scale collaborative action across
value chains and drive impact. The action plan offers a guiding framework to achieve near-term supply chain emissions
reductions by collaborating with suppliers toward decarbonization. We remain actively engaged with the Alliance, driving
forward decarbonization initiatives by setting key priorities for 2024.
The SDG Tent
During the 2023 Annual Meeting in Davos we convened for the last time the SDG Tent, a venue for discussing business
engagement for achieving the SDGs. Joining forces with Proctor & Gamble, Bain, Salesforce, Philips, The Nature
Conservancy and others, the SDG Tent was again home to several successful events on resilient food systems and the
future of food, regenerative farming, climate action and carbon in healthcare systems. As of the 2024 Annual Meeting
Royal Philips N.V. has taken over the baton in setting up the SDG Tent during the WEF Annual Meeting in Davos.
UN Global Compact
We have been a signatory to the UN Global Compact (UNGC) through DSM since 2007, and through Firmenich since
2008 and commit to annually communicate on progress in implementing The Ten Principles of the UNGC in the areas of
human rights, child and forced labor, the environment and anti-corruption. We were members of the Global Compact
CFO Taskforce, UNGC Network Switzerland & Liechtenstein, Global Compact Network Nederland, and were a Global
Compact Impact Sponsor for Labour and Decent Work. Within the latter for example, we joined the Think Lab on Living
Wage and contributed to the Living Wage Analysis Tool. We also joined the Business and Human Rights Accelerator to
learn about Living Wage in the supply chain.
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Swiss Food & Nutrition Valley
Swiss Food & Nutrition Valley (SFNV) is a purpose-driven, nationwide, not-for-profit association that strengthens and
promotes food system innovation, with international engagement. Firmenich, now dsm-firmenich, was one of the Valley’s
founding partners and has been represented on the Executive Committee since its creation. With 150 Valley partners
from corporates, governments, accelerators, academia and research, SMEs and startups, SFNV is the reference in the area
of food and nutrition in Switzerland. Partners collaborate to address the most pressing challenges in food, agriculture and
nutrition through five Impact Platforms focused on Precision Nutrition, Sustainable Proteins, Food Systems 4.0,
Sustainable Farming, and Sustainable Packaging.
At the end of 2023, as part of an SFNV initiative to demonstrate the uniqueness of the Swiss food ecosystem by
leveraging a broad, value chain driven approach, we submitted two proposals to explore how ‘nutrition personalization’
can be incorporated into daily breakfast habits and how consumers can enjoy a plant-based or hybrid dairy drink as a
part of a healthy diet. Subject to project approvals, we look forward to actively developing these collaborative projects in
2024.
ERT
In 2023 dsm-firmenich joined the European Round Table for Industry (ERT). The ERT focuses on creating a strong, open
and competitive Europe, promoting sustainable growth, jobs and prosperity for all. ERT members include CEOs and
Chairs from around 60 of Europe’s largest companies in the industrial and technological sector.
Dutch Sustainable Growth Coalition
The Dutch Sustainable Growth Coalition (DSGC) is a CEO-led coalition of eight multinational corporations which aims to
drive sustainable growth business models that combine economic profitability with environmental and social progress.
The coalition of CEOs uses their leadership for the development toward a future-proof world and sustainable growth. The
DSGC stimulates activities and international cooperation, in value chains and between sectors, that contribute to the
achievement of the SDGs. Every year the DSGC organizes a meeting with the Dutch government. In 2023, this meeting
focused on climate, circular economy and international corporate responsibility. Moreover, the DSGC organized
knowledge exchange sessions between company experts and ministries, for example around Scope 3 emissions. DSGC is
supported by VNO-NCW and facilitated by Accenture.
ESG ratings
Sustainability is at the heart of our business, but we like to think of it in also in material terms. This is reflected by our
inclusion in several ESG benchmarks and ratings, many of which rate us a (sector) leader. Given the large number of
prevailing ESG benchmarks, participating in each and every one of them is not feasible for any company, so we annually
review and prioritize our participation. We are in favor of further consolidation and standardization of the ESG
benchmarks, as we believe this will encourage more companies to participate than is currently the case. Our annual
review of the ESG benchmarks in which to participate is based on the following criteria:
• Recognition and use by our stakeholders, including our investors
• Transparency of methodology
• Primary reliance on publicly accessible information
• Avoidance of additional administrative work
• Provision of sufficient feedback to participating companies to enable them to make meaningful year-on-year
improvements
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Our priorities in 2023, and the outcomes, are listed below:
• For 2023, CDP assessed DSM as A- for climate and A- for water, and Firmenich as A- for climate, A for water and
A- for forests
• We hold Platinum CSR Ratings from EcoVadis for DSM and Firmenich. The Platinum ratings places us in the top
1% of companies assessed in our industries
• dsm-firmenich received a low-risk rating from ISS QualityScore since our creation, including lowest risk (1 out of
10) in Governance. ISS ESG confirmed dsm-firmenich as ‘Prime’ according to its rating methodology. Our rating
of B- puts us in the top decile relative to our industry group
• dsm-firmenich is a constituent of the FTSE4Good Index, which is designed to measure the performance of
companies demonstrating specific ESG practices
• At the time of publication, MSCI had not assessed dsm-firmenich. MSCI’s most recent rating of DSM was ‘AAA’,
• Sustainalytics assessed DSM and Firmenich as being at low risk of experiencing material financial impacts from
ESG factors, with both companies included in the Sustainalytics’ 2024 Top-Rated ESG Companies List
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Sustainability statements
Non-Financial Reporting Policy
Reporting policy and justification of choices made
This is the first Integrated Annual Report of dsm-firmenich, which was formed by the merger between DSM and
Firmenich. In this report, we report for the calendar year 2023. Our previous reports were the DSM Integrated Annual
Report, published on 2 March 2023 and the Firmenich ESG Report, published on 12 September 2022.
We publish our Report exclusively in a digital format. It is available as an online version and as a pdf.
In the Management Report, we explain our vision and policy with respect to sustainability practices and report on our
activities. We are in favor of convergence in reporting standards and frameworks, moving to globally accepted non-
financial reporting standards. Currently, we recognize and participate in a number of initiatives that are driving toward
that goal.
The basis for the non-financial reporting is the Swiss Code of Obligations - the Sustainability Report as described in
Article 964b consists of all the information within the Sustainability section of this Report. Our double materiality
approach and our disclosures in the Sustainability Statements use elements from the EU Corporate Sustainability
Reporting Directive and European Sustainability Reporting Standards. However, they are not yet in compliance with these
Standards, as they are only applicable for reporting over 2024 in 2025. We highlight areas of relevance to our company in
the Sustainability Performance section, namely Climate and Nature, Nutrition and Health, and People. Our reporting is also
based on voluntary non-financial reporting guidelines as follows.
Global Reporting Initiative
dsm-firmenich has reported in accordance with the Global Reporting Initiative (GRI) Standards for the period 1 January
2023 to 31 December 2023. A detailed overview of how we report according to the GRI Standards indicators, including a
reference to relevant sections in this Report, is provided in the GRI Content Index, available on our Integrated Annual
Report website. Due to the merger, many of the policies, procedures and metrics have not been integrated yet. As such,
we are reporting an omission on information being unavailable or incomplete. This will be developed in the coming period,
with further integration. Any gaps in the GRI disclosures in the GRI Content Index below are currently not available due to
this reason. dsm-firmenich provides information on the Management of material topics (GRI 3-3) for the most material
topics only. We do not provide detailed information on the Management of other topics as we do not believe they are
material enough to do so. These topics are managed through our standard business processes and policies.
UN Sustainable Development Goals
We have also aligned our approach with the Sustainable Development Goals (SDGs). We are familiar with the
opportunities and responsibilities that the SDGs represent for our business. We embrace all the SDGs, but we have
chosen to highlight the goals which most closely align with our business activities, and our people and operations. In this
Report, we include the SDGs in our reporting process, for example by mapping SDG reporting priorities in our value
creation model, in Our approach to Sustainability, and in the solutions that we highlight.
The Taskforce on Climate-related Financial Disclosures
The recommendations from the Taskforce on Climate-related Financial Disclosures (TCFD) are a set of climate-related
financial disclosures for use by companies to provide information to their stakeholders which are mandatory under Swiss
law. This Report contains our TCFD-relevant disclosures on Governance, Strategy, Risk Management, and Metrics and
Targets. For information on how we report against the TCFD recommendations, see the Sustainability Statements.
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dsm-firmenich Integrated Annual Report 2023 112
Other reporting frameworks
We align with the recommendations of the International Integrated Reporting Council <IR> Framework where possible. The
intention of the <IR> Framework is to provide additional guiding principles and content elements for an integrated report.
We use this framework to present an integrated view of how the company creates value for stakeholders.
UN Global Compact
We are a signatory to the UN Global Compact (UNGC) and commit to annually report on progress in implementing The
Ten Principles of the UNGC in the areas of human rights, child and forced labor, the environment and anti-corruption
through the UNGC Communication on Progress (CoP) platform. Our Code of Business Ethics, our Supplier Code, and, until
they are replaced with new Group policies, our legacy policies and procedures are the current foundations on which we
apply the standards of the UNGC.
Selection of topics
The topics covered in this Report were selected on the basis of our materiality analysis, which assessed the relevance
and impact of selected topics for our company and various stakeholders. The sustainability data in the Integrated Annual
Report is qualitative as well as quantitative – the qualitative information can also contain quantitative elements. The
Materiality matrix and the process by which it is created is reported on in Our approach to sustainability, with the
management approach in the Sustainability statements.
Scope
The sustainability data in this Report cover all entities that belong to the scope of the Consolidated financial statements.
As this is the first year of reporting for dsm-firmenich, no comparative data is available for 2022.
Acquisitions and divestments
The People data for newly acquired companies are reported from the first full month after the acquisition date. The
Safety, Health and Environmental data for companies acquired in the:
• First half of a given year (‘year x’) are included in the reporting scope of the year after acquisition (‘year x+1’)
• Second half of a given year (‘year y’) are included in the reporting scope of the year following the first full year
after acquisition (‘year y+2’)
Divested companies
Environmental data are reported until the moment control of the company is transferred, and social data until the end of
the month in which control of the company is transferred. The date in which control of the company is transferred
generally coincides with the date a divestment is closed, and control of the shares is transferred to the new owner.
Environmental methodology
Our progress on the key environmental performance indicators is collected and evaluated twice a year for all sites. The
data are based on these sites’ own measurements and calculations, which in turn are founded on definitions, methods
and procedures established at group level. Due to the merger, some of these may be based on definitions, methods and
procedures defined prior to the merger.
The site managers of reporting units are responsible for the quality of the data. Data are collected using measurements
and calculations in the production processes, information from external parties (e.g., on waste and external energy) and
estimates based on expert knowledge. Reporting units have direct insight into their performance compared to previous
years and are required to provide justifications for any deviations above the threshold. For most parameters, the
threshold is set at 10%.
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dsm-firmenich Integrated Annual Report 2023 113
Scope 3 greenhouse gas emissions are calculated on the basis of activity data and emission factors (greenhouse gas
emitted per unit of material or activity, usually kg, km or euro, depending on the category). Emission factors are obtained
from a variety of sources, including suppliers, in-house LCA models and from industry databases. Emission factors are
chosen that are considered most representative and reliable. Activity data is based on spend, volume, distance or
number of employees, depending on the category. Data is on the basis of a 12-month timeframe and is obtained from a
number of internal systems.
The year-on-year comparability of the data can be affected by changes in our portfolio as well as by improvements to
measurement and recording systems at the various sites. As this is the first year of reporting, no comparative data is
available, however, in subsequent year, whenever impact is relevant, this will be stated in the Report.
Social methodology
Social data are collected per Business Unit and consolidated at corporate level.
Metrics on workforce and workforce composition, and inflow and outflow are reported based on the year-end figures.
Due to the merger, inflow and outflow is measured versus the first full month after the merger.
Employee engagement and the Inclusion index are measured via a survey that is conducted on an annual basis.
Safety and health metrics are reported on a 12-month rolling average. Divestments are included in the rolling average for
the months prior to transfer of control of the company. Occupational health cases and training hours are reported on the
basis of the year-end figures.
Sustainable Portfolio Steering
Due to the merger and ongoing integration activities, quantitative reporting on portfolio steering will be paused while a
review of the methodology is undertaken. A qualitative update on the progress of this review will be provided in the
meantime.
Food System Commitments
The Food System Commitments are a set of measurable commitments that make the company’s societal impact explicit.
The Commitments are aimed at addressing urgent societal and environmental challenges linked to how the world
produces and consumes food. They are grouped into the areas: Health for People, Health for Planet, Healthy Livelihoods.
Health for People
• Help close the micronutrient gap of 800 million vulnerable people by 2030
• Support the immunity of half a billion people by 2030
Health for Planet
• Enable double-digit on-farm livestock emission reduction by 2030
• Reach 150 million people with nutritious, delicious, sustainably produced plant-based foods by 2030
Healthy Livelihoods
• Support the livelihoods of 500,000 smallholder farmers by 2030
Our Basic Commitments are:
• Deforestation-free in our primary supply chains by 2030
• Good workforce nutrition for all employees by 2030
Sustainability – Sustainability statements
dsm-firmenich Integrated Annual Report 2023 114
The impact of the Commitments is based on scientific or other third-party evidence demonstrating a link between the
products and services provided by the company to its customers and the substantiated societal impact of the
commitment. The calculation of the level of impact is based on estimates and assumptions. The required level of
supporting evidence for estimates and assumptions is assessed using a risk-based approach, looking at objectivity,
sensitivity, and the underlying basis of the estimate. The assessment and supporting evidence for the estimates and
assumptions are documented and are updated annually.
In 2024, the Food Systems Commitments will be re-evaluated for their strategic fit with the company given the context
of the merger.
General Information
The Sustainability Statements have been structured using the topics of a selection of the topical standards of the European
Sustainability Reporting Standards (ESRS), however, they are not reported according to the ESRS Disclosure Requirements.
We have actively participated in various consultations and engagements regarding the ESRS and collaborated on
consultation feedback through groups such as the Dutch Accounting Standards Board (‘Raad van de Jaarverslaggeving’)
since the first drafts were published in early 2022.
In 2023, dsm-firmenich performed a detailed gap assessment against the Disclosure Requirements of the ESRS to prepare
ourselves for the legislation. The gap assessment indicated that we are aligned with a substantial part of the ESRS that are
in our reporting scope. Through closing reporting gaps over 2024, we aim to achieve full compliance, taking into account
the phase-in requirements.
Geographic distribution of manufacturing and premix locations
Sustainability – Sustainability statements
dsm-firmenich Integrated Annual Report 2023 115
Environmental information
Climate Change
Scope 1 and 2 emissions
2023
(x 1,000 tonnes)
Total CO
2
e emissions (Scope 1 and 2)
- Market-based
915.4
- Location-based
1,208.9
Total Scope 1 CO
2
e emission
606.6
Total Scope 2 CO
2
e emissions
- Market-based
308.8
- Location-based
602.3
Total biogenic CO
2
emissions from combustion of biofuels
66.0
Scope 3 emissions
2023
(x 1,000 tonnes)
Total CO
2
e emissions (Scope 3)
1,2
9,996.0
1 Purchased goods and services
7,912.5
Other upstream categories
779.4
- 2 Capital goods
97.6
- 3 Fuels
204.2
- 4 Transport & Distribution
242.7
- 5 Waste treatment
129.6
- 6 Business travel
23.0
- 7 Employee commuting
63.4
- 8 Leased assets
18.9
12 End-of-life treatment
252.5
15 Investments
327.0
Other downstream categories
724.3
- 9 Transport & Distribution
303.4
- 10 Processing of sold products
40.1
- 11 Use of sold products
380.8
1 Scope 3 emissions reporting excludes emissions from businesses divested in 2023.
2 Non-reported categories (13 and 14) are considered not material in line with 'Guidance for Accounting & Reporting Corporate GHG emissions in the
Chemical Sector Value Chain' for Scope 3 GHG reporting published by WBCSD.
Sustainability – Sustainability statements
dsm-firmenich Integrated Annual Report 2023 116
Energy
2023
TJ
MWh
Total (net) energy consumption
19,300
Total fuel consumption
10,500
- Non-renewable fuel consumption
9,800
- Renewable fuel consumption
700
Total electricity purchased
4,700
1,316,000
- Purchased non-renewable electricity
160,500
- Purchased renewable electricity
1,155,500
Renewable electricity self-generated with ownership
20
5,500
Total purchased heat and cooling
4,100
Total energy exported
800
- Non-renewable + renewable electricity, exported
146,000
- Total heat exported
300
Pollution
Emissions to air and water
2023
(tonnes)
Emissions to air
Volatile Organic Compounds (VOC)
2,700
Nitrogen oxide (NOₓ)
600
Sulfur dioxide (SO₂)
20
Emissions to water
Chemical Oxygen Demand (COD)
3,000
Water and marine resources
Our approach to define water-stress locations is based on WRI Aqueduct (v4.0 - World Resources Institute) freshwater
data. Following an extraction of the database based on our locations, we retain those with ‘Extremely High’ or ‘High’ risks
based on the time horizon of today or by 2030 using the scenario ‘Business as usual’. More information on the tool can
be found here. Below analysis excludes the Materials divestments.
Once-through cooling (OTC) refers to the continuous flow of water used only for cooling purposes which is returned to
the same source immediately after use.
Sustainability – Sustainability statements
dsm-firmenich Integrated Annual Report 2023 117
Water stress - distribution of our sites linked to water-stress areas
Share of dsm-firmenich locations by water-stress
Sustainability – Sustainability statements
dsm-firmenich Integrated Annual Report 2023 118
Water withdrawal, discharge and consumption
2023
(x 1,000m³)
Total water withdrawal
104,400
- Fresh surface water (OTC)
77,400
- Fresh surface water (non-OTC)
5,500
- Fresh ground water
9,100
- Brackish water/sea water
0
- Third party source
11,500
- Other¹
800
Total water discharge
98,600
- to environment (OTC)
77,400
- to environment (non-OTC)²
9,800
- to offsite treatment (3
rd
party destinations)
11,400
Water consumption
5,800
1 Other withdrawal includes water from processing of raw materials, and rain water.
2 Water discharge to environment (non-OT) is to fresh and brackish water.
Resource use and circular economy
Waste by disposal method
2023
(tonnes)
Process-related non-hazardous waste excluding recycled waste
34,700
Landfill
9,000
Offsite incineration with heat recovery
19,600
Offsite incineration without heat recovery
3,500
Other¹
2,600
Process-related hazardous waste excluding recycled waste
67,500
Landfill
1,400
Offsite incineration with heat recovery
51,700
Offsite incineration without heat recovery
13,500
Other¹
900
Total recycled waste (hazardous and non-hazardous)
129,700
1 Waste reported as ‘other’ refers to waste sent for a disposal method or path that does not precisely align with the main categories.
Other Environmental Information
Environmental fines and non-monetary sanctions
2023
Fines (in €)
259,000
Non-monetary sanctions
13
Sustainability – Sustainability statements
dsm-firmenich Integrated Annual Report 2023 119
Social information
Own workforce
Workforce by gender
Female
Male
Not disclosed/
Unknown
2023
Total
#
% of
row
#
% of
row
#
% of
row
#
Permanent
9,462
35.5%
17,178
64.5%
3
0.01%
26,643
Temporary
372
60.4%
244
39.6%
0
0.0%
616
Total
9,834
36.1%
17,422
63.9%
3
0.0%
27,259
Non-integrated acquisitions
977
47.8%
1,065
52.2%
0
0.0%
2,042
Total headcount
10,811
36.9%
18,487
63.1%
3
0.01%
29,301
Workforce by region
Female
Male
Not disclosed/
Unknown
Non-integrated
acquisitions
2023
Total
#
% of
column
#
% of
column
#
% of
column
#
% of
column
#
Switzerland
1,091
11.1%
2,556
14.7%
0
0%
0
0%
3,647
Netherlands
769
7.8%
1,014
5.8%
0
0%
0
0%
1,783
Rest of EMEA
2,788
28.4%
4,889
28.1%
0
0%
169
8.3%
7,846
North America
1,534
15.6%
2,627
15.1%
0
0%
100
4.9%
4,261
Latin America
1,184
12.0%
2,170
12.5%
3
100.0%
263
12.9%
3,620
China
1,253
12.7%
2,280
13.1%
0
0%
1131
55.4%
4,664
Rest of Asia
1,215
12.4%
1,886
10.8%
0
0%
379
18.6%
3,480
Total headcount
9,834
100.0%
17,422
100.0%
3
100.0%
2042
100.0%
29,301
Additional workforce diversity metrics
Female
Male
Not disclosed /
unknown
2023
Total
% by age category¹
<26 years
2.8%
3.4%
0%
6%
26-35 years
10.4%
15.3%
0.01%
26%
36-45 years
11.3%
19.3%
0%
31%
46-55 years
8.1%
16.2%
0%
24%
>55 years
3.5%
9.6%
0%
13%
Unknown²
0.0%
0.1%
0%
0%
% by nationality¹
Chinese
4.8%
8.4%
0%
13%
American
4.7%
7.9%
0.01%
13%
French
4.0%
8.2%
0%
12%
Brazilian
2.8%
5.1%
0%
8%
German
1.6%
4.5%
0%
6%
Dutch
2.2%
3.5%
0%
6%
Sustainability – Sustainability statements
dsm-firmenich Integrated Annual Report 2023 120
Indian
1.5%
3.7%
0%
5%
Swiss
1.4%
3.6%
0%
5%
British
0.8%
2.0%
0%
3%
Mexican
0.9%
1.6%
0%
3%
Other²
11.4%
15.2%
0%
27%
% female by seniority¹
Executives
34.4%
65.6%
0%
2%
Management
37.4%
62.6%
0%
11%
Other²
36.0%
64.0%
0.01%
87%
1 Due to the merger, some of the definitions, methods and procedures may be based on definitions, methods and procedures defined prior to the merger.
2 Non-Integrated Acquisitions are excluded from the breakdowns.
Inflow and outflow
Female
Male
Not disclosed
/ unknown
2023
Total
Inflow¹
Total number of new hires (excluding acquisitions)
547
1,011
2
1,560
Acquisitions
45
44
0
89
Total inflow
592
1,055
2
1,649
% new hires by region
Netherlands
0.6%
1.2%
0.0%
1.7%
Switzerland
2.8%
6.3%
0.0%
9.0%
Rest of EMEA
9.3%
17.3%
0.0%
26.6%
North America
9.0%
18.8%
0.1%
27.9%
Latin America
5.2%
9.0%
0.0%
14.2%
China
1.7%
4.4%
0.0%
6.0%
Rest of Asia
6.6%
7.8%
0.0%
14.4%
Outflow
Voluntary resignations
349
708
0
1,057
Total outflow (excluding divestments)
548
1,360
2
1,910
Divestments
24
42
0
66
Total outflow
572
1,402
2
1,976
Voluntary resignations (%)
3.2%
3.8%
3.6%
Total turnover (%)
5.3%
7.6%
6.7%
1 Inflow and outflow are only reported as of the first full month following the date of the merger.
Sustainability – Sustainability statements
dsm-firmenich Integrated Annual Report 2023 121
Governance information
Reporting period
This section describes the Sustainability governance framework starting from 18 April 2023, the first day of trading of the
Company’s shares on Euronext Amsterdam (the ‘First Trading Date’).
Sustainability governance framework
Board of Directors
As the Board of Directors is the highest executive oversight body, it has the ultimate authority on matters relating to
Sustainability, including climate. Furthermore, the Board of Directors has established a Sustainability Committee that is
responsible for reviewing sustainability and the sustainability performance of the company. See the Board of Directors
and Sustainability Committee for more information on their responsibilities and activities.
Executive Committee
By way of delegation of the Board for Directors, the Executive Committee, led by our CEO, is responsible for the
management of the company, including pursuing leadership on sustainability, and implementing the sustainability
strategy. Among other items, the Executive Committee approved, with the Board of Director’s endorsement, the science-
based targets that were submitted for validation in early 2024 to the Science Based Targets initiative. See the Executive
Committee for more information on the composition and roles of the Executive Committee.
Functional Leadership of Sustainability
Functional Leadership Teams (LT) have been established to manage specific sustainability-related topics. These teams
are chaired by a senior executive.
Sustainability at Group level
At Group level, sustainability is steered by the Global Sustainability Leadership Team (GSLT). The GSLT is comprised of a
group of senior sustainability leaders representing Group Sustainability, the Business Units, and relevant functions. The
GSLT is chaired by the Chief Sustainability Officer (CSO) who has a direct reporting line to the CEO. The GSLT drives the
sustainability agenda of the company and ensures that this is translated into the Business Units’ and functions’
sustainability strategies. Key topics on the GSLT agenda include climate, nature, social impact (including human rights),
nutrition and sustainability reporting.
The GSLT is supported in their work by the Group Sustainability function, under the leadership of the CSO, a group of
experts that identify emerging sustainability trends, provide topical expertise, and support the company on cross-
cutting sustainability themes. Furthermore, Business Unit sustainability teams ensure the identification and management
of Business-Unit-specific topics, priorities and strategies.
Operations, and Safety, Health and Environment & Security
The Operations Leadership Team drives excellence and competitive advantage in operations. It defines our Operations
strategy and ensures a consistent application of our operational standards, through providing joint direction, community
building, and identifying and jointly executing synergies and value creation. The SHE & Security (SHE&S) Leadership Team
ensure our SHE&S are fit for purpose to safeguard people’s and customer’s safety and health, and to protect the
environment and out assets. It sets the relevant strategy, policy, requirements, and standards to deliver on these. These
Leadership Teams are supported by Functional Leadership Teams and Functional Networks that connect the overarching
strategies and standards with the functional and Business Unit planning and execution.
Sustainability – Sustainability statements
dsm-firmenich Integrated Annual Report 2023 122
Human Resources
The Human Resources Leadership Team (HRLT) is responsible for the holistic human resources (HR) agenda. It is chaired
by the Chief Human Resources Officer, who is a member of the Executive Committee. The HRLT, comprised of the Heads
of the Group HR expertise areas and Business Unit HR Heads, sets the strategic direction for HR and ensures alignment
between the Group and the Business Unit HR agendas. It is supported by the extended LT which discusses cross-cutting
HR projects, and provides inspiration and expertise on HR topics, including improvement opportunities and best
practices.
Procurement
The Procurement Leadership Team (PLT) is responsible for ensuring the implementation of our Responsible Sourcing
Framework, and reviews progress on a regular basis. Our Chief Procurement Officer (CPO), who chairs the PLT, reports
directly to the CEO, and is responsible for deploying the Framework within our supply chain. The Framework and strategy,
together with guidance and priority setting, is defined by the Responsible Sourcing team, which is overseen by the Head
of Responsible Sourcing, who maintains a dual reporting line to the CPO as well as the CSO. The Sustainability Leadership
Team (SLT) acts as a sparring partner to ensure our Responsible Sourcing strategy is in line with the Group’s ambitions
and commitments.
Other information
Material topic explanations
Environment
Animal welfare
Having practices and rules in place for the consistent care, welfare, treatment and testing of research animals. This topic
also covers enhancing lifetime animal performance and general animal welfare by producing high quality food for them.
Biodiversity & nature
Sustainably managing and minimizing dsm-firmenich’s impact on ecosystems and biodiversity, which includes activities
such as resource use, land cultivation, deforestation and food supply chains. This topic focuses on preserving and
restoring natural diversity and ecosystems in land, water and marine environments. This is essential to ensure business
sustainability, particularly in perfumery, which relies on natural ingredients. Dsm-firmenich must assess and address
biodiversity risks and impacts to ensure its long-term success.
Climate change adaptation
The management of physical risks associated with climate change by building an adaptive business model and capacities
as well as having resilience plans in place.
Climate change mitigation
Reducing the impact on climate change by reducing pollutants, especially the greenhouse gas emissions generated
directly and indirectly (Scopes 1-3) through, i.e., purchased materials, agricultural activities, transportation, energy
consumption (efficiency and use of renewable energy) or travel. Setting ambitious emission reduction targets, developing
a robust decarbonization program, supporting to reduce emissions along the value chain and implementing other
mitigation activities additionally ensure environmental compliance and overall emission reductions to move towards net
zero.
Regenerative agriculture
Addressing the issues of agricultural expansion and unsustainable farming practices by adopting sustainable and
regenerative methods to cope with growing land and water scarcity and decreasing soil health in agricultural systems (i.e.,
more sustainable animal protein production).
dsm-firmenich Integrated Annual Report 2023 123
Sustainability – Sustainability statements
Renewable raw materials
Trading off social and environmental impacts against costs is becoming more important with a strong focus on moving
away from scarce raw materials to renewable, available and accessible ones.
Waste and plastics management
Minimizing waste production, designing out waste and plastics (especially single-use plastics), increasing waste reuse
and recycling and managing the lifecycle impacts of dsm-firmenich’s products, including hazardous and non-hazardous
waste, effluents and pollution generated by the company’s operations and manufacturing processes. Integrating
circularity and next-life use principles into all aspects of business strategy from raw material/ingredient procurement,
packaging and product design to go-to-market, after-sales service and end-of-life treatments to maximize and maintain
the value of dsm-firmenich’s products for as long as possible.
Water management
Limiting withdrawal, consumption, use, waste-water generation and discharges in dsm-firmenich’s own operations and
developing solutions to support their value chain partners in water stewardship. This topic refers to reducing the reliance
on water resources and minimizing impacts of operations on water, which may be influenced by regional differences in
the availability and quality of and competition for water resources (i.e., areas of high water stress).
Society
Diversity, equity & inclusion
Promoting the values of diversity, equity and inclusion within dsm-firmenich and beyond by guaranteeing equal
treatment, equal pay for equal work and equal opportunities to all employees, indifferent of race, gender, ethnicity,
religion, sexual orientation, disabilities or other personal traits. It is about building a workplace free from any form of
discrimination, harassment or violence that ensures fair and transparent hiring and promotion practices and respectful
interactions between employees.
Employee well-being
Fostering and contributing to employee health and well-being at work and beyond, including physical, mental, social,
financial and purpose-related aspects (i.e., fulfilment). This also includes treating all employees equally, especially with
regards to living wage, and respecting employee rights, conducting empowerment and engagement activities and
ensuring work-life balance.
Health, nutrition, taste, and food security
Contributing to nutrient sufficiency as well as the health and well-being of end-consumers and society as a whole by
providing access to ingredients used in health-promoting beauty and wellness products as well as nutrient-dense, tasty
foods. This topic also entails deploying methods and tools to conserve scarce land and water resources to ensure long-
term food security. Moreover, it refers to preventing food loss and waste, through bio-protection and a focus on
extending shelf life.
Occupational health & safety
Creating and maintaining a safe and healthy workplace environment that is free of injuries, fatalities, and illness (both
chronic and acute). Measures to achieve this are having safety management plans in place, developing training
requirements for employees and contractors, and conducting regular audits of own operations.
Sustainability – Sustainability statements
dsm-firmenich Integrated Annual Report 2023 124
Partnerships and relationship management
This topic refers to a variety of stakeholders and how to engage with them, i.e., by ensuring transparent cooperation with
partners and parties within the value chain, minimizing negative impacts on local communities and protecting their
economic, social, cultural, civil and political rights, or addressing changes in consumer behavior, educating consumers in
making the right diet choices and elevating the customer and consumer experience.
Respect of human rights
Ensuring that human rights and universal workers' rights are respected in dsm-firmenich's own operations and across its
value chain, i.e., through the abolishment of human trafficking, forced or child labor and modern slavery, while
guaranteeing the freedom of association, right to collective bargaining and a fair salary, among others. This is achieved by
implementing strong due diligence and risk assessment processes, as well as mitigation and remediation measures
where needed.
Talent attraction, development & retention
Dsm-firmenich sees people as differentiators, therefore talent attraction, development, engagement and retention are
key success factors. The topic includes, but is not limited to, recruitment, career path offerings, performance and
compensation management and skills and competency development. It additionally refers to strengthening employer as
well as brand attractiveness through competitive wages, fringe benefits, attractive working conditions and initiatives that
foster employee engagement and human capital development.
Governance
Corporate governance, business ethics & transparency
Having clearly defined (sustainability) governance structures in place that ensure oversight through the Board of
Directors and adequate execution at operational level. Establishing good business conduct and integrity through the
highest professional and ethical standards and complying with international standards to fight anti-competitive
practices, i.e., fraud, corruption and bribery. It is also about acting with integrity and being transparent in all company-
related activities, including reporting, non-misleading sales and marketing practices and transparent tax management.
Cybersecurity & information security
Guaranteeing that the rights to data privacy as well as the protection of the data of individuals, companies and other
entities are safeguarded and access to IT systems, networks and data is assured at all times. Robust processes and
systems as well as strict data handling and security practices are needed to prevent IT system failures and major
information security/cybersecurity incidents, among others.
Innovation, digital & technology
Promoting innovation at dsm-firmenich and along the value chain to reduce the environmental footprint of products,
increase climate resilience, optimize the use of inputs (i.e., towards more sustainable agricultural practices), contribute to
sustainable and healthy solutions, improve organizational efficiency as well as enhance customer satisfaction while
incorporating new technologies in an ethical and constructive manner. This topic also includes benefitting from digital
tools and Artificial Intelligence to advance own operations, business models and activities across the value chain by
strengthening (internal) scientific capabilities, managing innovation effectively, and promoting eco-friendly innovation.
Sustainability – Sustainability statements
dsm-firmenich Integrated Annual Report 2023 125
Product quality, safety & impact
Guaranteeing the highest product quality, safety, including ingredient disclosure and certification standards. This involves
controlling and minimizing all possible safety risks and adverse effects on customers, consumers, animal health, the
environment and society as a whole. In detail, it involves liability, product testing, data transparency, customer support
and market withdrawals. Principles of responsible and sustainable product stewardship and governance, sustainable
portfolio steering, and responsible value creation can create positive impacts and competitive advantages.
Responsible & transparent sourcing
Minimizing exposure to sustainability-related risks in the supply chain and corresponding financial and reputational
damages while maximizing the supply chain's reliability. Ensuring quality and traceability (i.e., of ingredients) throughout
supply chains by screening, selecting, monitoring, auditing and engaging with suppliers on issues such as environmental
protection, responsible raw material sourcing, business conduct and human rights.
Taskforce on Climate-related Financial Disclosures
The mapping table provided below provides guidance on how dsm-firmenich has reported against the TCFD
Requirements. These disclosures are aligned with the Swiss Ordinance on Climate Matters which came into force on 1
January 2024.
Sustainability – Sustainability statements
dsm-firmenich Integrated Annual Report 2023 126
TCFD elements
Recommended disclosures
References in this report
Governance
1. Management’s oversight on climate-related risks and
opportunities
Sustainability governance
framework
2. Management’s role in assessing and managing
climate-related risks and opportunities
Climate adaptation and
transition plans
Sustainability governance
framework
Strategy
1. Description of climate-related risks and opportunities
Climate adaptation and
transition plans
2. Impact of climate-related risks on the company’s
business activities and strategic and financial planning
Climate adaptation and
transition plans
3. Resilience of the organization’s strategy
Climate change mitigation
Climate adaptation and
transition plans
Risk management
1. The company’s processes for identifying and
assessing climate-related risks
Climate adaptation and
transition plans
Risk Management
2. The company’s processes for managing climate-
related risks
Climate adaptation and
transition plans
3. Integration of processes for identifying, assessing and
managing climate-related risks into the company’s
general risk management system
Climate adaptation and
transition plans
Risk Management
Metrics and
targets
1. Metrics with which the company assesses climate-
related risks and opportunities
Climate change mitigation
2. Disclosure of Scope 1, Scope 2 and Scope 3 GHG
emissions
Scope 1 and 2
Scope 3
3. Targets used to manage climate-related opportunities
and risks against performance
Scope 1 and 2
Scope 3
Sustainability – Assurance report of the independent auditor
dsm-firmenich Integrated Annual Report 2023 127
Assurance report of the independent auditor
To: the General Meeting and the Board of Directors of DSM-Firmenich AG
Report on the assurance engagement on the sustainability information 2023
included in the Integrated Annual Report
Our qualified opinion
We have performed a reasonable assurance engagement on the non-financial information in the sections ‘About dsm-
firmenich’, ’Letter to our Stakeholders’, ‘Strategy’ and ‘Sustainability’ included in the Integrated Annual Report for 2023
(hereafter: the ‘sustainability information’) of DSM-Firmenich AG. (hereafter 'the Company'), based in Kaiseraugst,
Switzerland.
In our opinion, except for the effects of the matter described under ‘Basis for our qualified opinion’ section of our report,
the sustainability information is prepared, in all material respects, in accordance with the GRI Standards and the
Company’s internally developed supplemental reporting criteria as included in the ‘Reporting Criteria’ section of our
report and as disclosed in the section ‘Non-Financial Reporting Policy’ included in the chapter ‘Sustainability Statements’
of the Integrated Annual Report.
Basis for our qualified opinion
Scope 3 emissions are calculated amongst others on the basis of spend data and emission factors. We have observed
limitations with regards to the reconciliation of the spend data with the financial information underlying the consolidated
2023 financial statements of the Company. Consequently, we have not been able to perform sufficient assurance
procedures over the completeness of spend data and therefore an uncertainty remains regarding the completeness of
Scope 3 emissions as included in the sustainability information.
We have performed our reasonable assurance engagement on the sustainability information in accordance with Dutch
law, including Dutch Standard 3000A ’Assurance-opdrachten anders dan opdrachten tot controle of beoordeling van
historische financiële informatie (attest-opdrachten) (assurance engagements other than audits or reviews of historical
financial information (attestation engagements)). This engagement is aimed to obtain reasonable assurance. Our
responsibilities under this standard are further described in the ‘Our responsibilities for the assurance engagement on
the sustainability information’ section of our report.
We are independent of the Company in accordance with the ‘Verordening inzake de onafhankelijkheid van accountants
bij assurance-opdrachten’ (ViO, Code of Ethics for Professional Accountants, a regulation with respect to independence).
Furthermore, we have complied with the ‘Verordening gedrags- en beroepsregels accountants’ (VGBA, Dutch Code of
Ethics for Professional Accountants).
We believe that the assurance evidence we have obtained is sufficient and appropriate to provide a basis for our
qualified opinion.
Reporting Criteria
The sustainability information is prepared in accordance with the Sustainability Reporting Standards of the Global
Reporting Initiative (GRI Standards) and the Company’s internally developed supplemental reporting criteria as disclosed
in the section ‘Non-Financial Reporting Policy’ included in the chapter ‘Sustainability Statements’ of the Integrated
Annual Report. The GRI Standards used are listed in the GRI Content Index as referenced to in the chapter ‘Global
Reporting Initiative.
Sustainability – Assurance report of the independent auditor
dsm-firmenich Integrated Annual Report 2023 128
The comparability of sustainability information between entities and over time may be affected by the absence of a
uniform practice on which to draw, to evaluate and measure this information. This allows for the application of different,
but acceptable, measurement techniques.
Consequently, the sustainability information needs to be read and understood together with the reporting criteria used.
Materiality
Based on our professional judgement we determined materiality levels for each relevant part of the sustainability
information as included in the Integrated Annual Report. When evaluating our materiality levels, we considered
quantitative and qualitative considerations as well as the relevance of information for both stakeholders and the
Company.
Scope of the assurance engagement of the group
The Company is the head of a group of components. The sustainability information incorporates the consolidated
information of this group of components to the extent as disclosed in the ‘Non-Financial Reporting Policy’ of the
Integrated Annual Report.
Our assurance procedures for the assurance engagement of the group consisted of assurance procedures at corporate
and component level. Our selection of components in scope of our assurance procedures is primarily based on the
component's individual contribution to the consolidated sustainability information. Furthermore, our selection of
components considered relevant reporting risks and geographical spread.
By performing our assurance procedures at corporate and component level, we have been able to obtain sufficient and
appropriate assurance evidence about the Company's reported sustainability information to provide an opinion about
the sustainability information.
Our key assurance matters
Key assurance matters are those matters that, in our professional judgement, were of most significance in our assurance
engagement on the sustainability information. We have communicated the key assurance matter to the Managing Board
and the Supervisory Board. The key assurance matters are not a comprehensive reflection of all matters discussed.
These key assurance matters were addressed in the context of our assurance engagement on the sustainability
information as a whole and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
The impact of the merger and performance on the Company’s Food System Commitments were determined to be key
assurance matters as these assessments are inherently subject to assumptions and management judgement, whereas
the determination of other important sustainability indicators on Safety, Health and Environment and Human Resources
require such judgement to a lesser extent.
Sustainability – Assurance report of the independent auditor
dsm-firmenich Integrated Annual Report 2023 129
The impact of the merger
Description
The effects of the merger between DSM and Firmenich on the sustainability information is complex due to the
harmonization of processes and reporting definitions.
The sustainability information includes data from DSM and Firmenich, each as from 1 January 2023 (the 'reporting
period'). This is different from the financial statements, in which the financial information of Firmenich is
consolidated as from merger date as required under International Financial Reporting Standards. As this is the first
year of reporting for the Company, no comparative data is available for 2022
Our response
• We have performed assurance procedures on the sustainability information starting with an assessment of the
newly established sustainability governance framework.
• We performed additional inquiries with topic owners in order to understand the processes within the Company,
and to
gain further insight into the harmonization of processes, we conducted additional site visits.
• We examined the non-financial reporting policy and reporting definitions by reviewing documentation, such as
reporting manuals, and by inquiring key personnel.
Our observation
We have determined that the non-financial reporting policy and reporting definitions are appropriately applied
within the Company. We also consider the disclosure on the merger and the reporting period in the Integrated
Annual Report as being adequate.
Sustainability – Assurance report of the independent auditor
dsm-firmenich Integrated Annual Report 2023 130
Food System Commitments
Description
The Company reports on a set of performance indicators related to Food System Commitments ('FSCs'). The FSCs
are quantifiable commitments on the environmental or societal impact in global food systems of the Company
together with its partners in its value chain. The FSCs, grouped in the areas Health for People, Health for Planet,
Healthy Livelihoods and Basic commitments, are explained in the ‘Food Systems Commitments’ section of the
Integrated Annual Report. The FSCs the Company reports on over 2023 are defined as listed below:
• Help close the micronutrient gap of 800 million vulnerable people by 2030
• Support the immunity of half a billion people by 2030
• Enable double-digit on-farm livestock emission reduction by 2030
• Support the livelihoods of 500,000 smallholder farmers across the value chain together with our partners by
2030
• Deforestation-free in our primary supply chains by 2030
• Good workforce nutrition by 2030
The performance indicators related to the FSCs are significant to our assurance engagement since we identified
that they serve as material indicators for the Company to report on their societal reach and impact on global food
systems. Also, the assessment of commitment is inherently subject to uncertainties as a result of estimates,
assumptions and judgement.
Our response
• For each FSC we obtained an understanding of the reporting process, applicable definitions, applied reporting
criteria and methodologies, performed walkthrough procedures and evaluated the design and implementation
of relevant internal controls.
• We inquired the Company’s staff Members involved in the FSC reporting process and inspected internal
documentation to understand the application of these definitions, applied reporting criteria and
methodologies. Methodologies were supported with individual assessments of applied estimates and
assumptions per FSC, which we consider to be critical in validating the (external) reference sources applied for
each FSC.
• We challenged underlying evidence, such as sales and purchase volumes, market studies and external
(scientific) research on relevant topics, such as but not limited to: greenhouse gas emissions (e.g. methane),
intake dosages, crop yield factors, lives reached overlap factors, attendance statistics for educational webinars
and certifications related to deforestation programs. We assessed external sources used for its relevance and
reliability.
• We assessed whether the reporting criteria, estimates, assumptions and definitions are adequately disclosed
in the Integrated Annual Report.
Our observation
We consider that the definitions and criteria for the performance indicators related to FSCs as described in the
Company's internally developed methodology documents and reporting criteria as disclosed in the section 'Non-
Financial Reporting Policy' included in the chapter ‘Sustainability Statement’ of the Integrated Annual Report have
been appropriately applied and that the estimates and assumptions are adequately explained. We also consider
the disclosure on the performance indicators, related to FSCs, in the Integrated Annual Report as being adequate.
Sustainability – Assurance report of the independent auditor
dsm-firmenich Integrated Annual Report 2023 131
Corresponding information not assured
The Science Based Targets baseline information related to scope 1 + 2 GHG emission reduction of Firmenich and DRT as
included in chapter ‘Sustainability performance’ has not been part of this reasonable assurance engagement.
Consequently, the corresponding sustainability information and thereto related disclosures for the period are not assured
with reasonable assurance. Our opinion is not modified in respect of this matter.
Limitations to the scope of our assurance engagement
The sustainability information includes prospective information such as ambitions, strategy, plans, expectations and
estimates. Prospective information relates to events and actions that have not yet occurred and may never occur. We do
not provide any assurance on the assumptions and achievability of this prospective information.
References to external sources or websites in the Integrated Annual Report are not part of the sustainability information
as included in the scope of our assurance engagement. Therefore, we do not provide assurance on this information.
Our opinion is not modified in respect to these matters.
Responsibilities of the Managing Board and the Supervisory Board for the sustainability information
The Executive Committee of the Company is responsible for the preparation and fair presentation of the sustainability
information in accordance with the reporting criteria as included in the ‘Reporting Criteria’ section of this report,
including the identification of stakeholders and the definition of material matters.
The Executive Committee is also responsible for selecting and applying the reporting criteria and for determining that
these reporting criteria are suitable for the legitimate information needs of stakeholders, considering applicable law and
regulations related to reporting.
The choices made by the Executive Committee regarding the scope of the sustainability information and the reporting
policy are summarized in the chapter ‘Non-Financial Reporting Policy’ of the Integrated Annual Report.
Furthermore, the Executive Committee is responsible for such internal control as it determines is necessary to enable the
preparation of the sustainability information that is free from material misstatements, whether due to error or fraud.
The Board of Directors is, amongst other things, responsible for overseeing the Company's sustainability reporting
process.
Our responsibilities for the assurance engagement on the sustainability information
Our responsibility is to plan and perform our assurance engagement in a manner that allows us to obtain sufficient and
appropriate assurance evidence for our opinion.
Our assurance engagement has been performed with a high, but not absolute, level of assurance, which means we may
not have detected all material misstatements due to error or fraud during our assurance engagement.
Misstatements can arise from errors or fraud and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the decisions of users taken on the basis of the sustainability information. The
materiality affects the nature, timing and extent of our assurance procedures and the evaluation of the effect of
identified misstatements on our opinion.
We apply the ‘Nadere Voorschriften Kwaliteitssystemen’ (NVKS, regulations for quality management systems) and
accordingly maintain a comprehensive system of quality management including documented policies and procedures
regarding compliance with ethical requirements, professional standards and other relevant legal and regulatory
requirements.
132
Sustainability – Assurance report of the independent auditor
We have exercised professional judgement and have maintained professional skepticism throughout the assurance
engagement, in accordance with the Dutch Standard 3000A, ethical requirements and independence requirements.
Our assurance included among others:
• Performing an analysis of the external environment and obtaining an understanding of relevant sustainability themes
and issues, and the characteristics of the Company;
• Evaluating the appropriateness of the reporting criteria used, their consistent application and related disclosures in
the sustainability information. This includes the evaluation of the results of the stakeholders' dialogue and the
reasonableness of estimates made by management of the Company;
• Obtaining an understanding of the systems and processes for collecting, reporting and consolidating the
sustainability information, including obtaining an understanding of internal control relevant to our assurance
engagement, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal
control;
• Evaluating the procedures performed by the Company’s Corporate Operational Audit department;
• Identifying and assessing the risks if the sustainability information is misleading or unbalanced, or contains material
misstatements, whether due to errors or fraud. Designing and performing further assurance procedures responsive
to those risks, and obtaining assurance evidence that is sufficient and appropriate to provide a basis for our opinion.
The risk that the sustainability information is misleading or unbalanced, or the risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from errors. Fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal control. These further procedures included
among others:
o Inquiry with management and relevant staff of the Company at corporate and component level responsible
for the sustainability strategy, policies and results;
o Inquiry with relevant staff of the Company responsible for providing the information for, carrying out internal
control procedures on, and consolidating the data in the sustainability information;
o Determining the nature and extent of the assurance procedures at corporate and component level. For this,
the nature, size and/or risk profile of these components were decisive. Based thereon we selected the
components to visit. The visits to production sites in the China, Switzerland, Germany, France and the United
Kingdom were aimed at, on a component level, validating source data and evaluating the design,
implementation and operation of controls and validation procedures;
o Obtaining assurance evidence that the sustainability information reconciles with underlying records of the
Company;
o Evaluating relevant internal and external documentation, on a test basis, to determine the reliability of the
information in the sustainability information; and
o Performing an analytical review of the data and trends.
• Evaluating the consistency of the sustainability information with the information in the Integrated Annual Report
which is not included in the scope of our assurance engagement;
• Evaluating the overall presentation and content of the sustainability information; and
• Considering whether the sustainability information as a whole, including the disclosures, reflects the purpose of the
reporting criteria used.
We communicate with the Board of Directors regarding, among other matters, the planned scope and timing of the
assurance engagement and significant findings, including any significant findings in internal control that we identify during
our assurance engagement.
Amstelveen, 28 February 2024
KPMG Accountants N.V.
P.J. Groenland – van der Linden RA
dsm-firmenich Integrated Annual Report 2023
dsm-firmenich Integrated Annual Report 2023 133
Risk Management
Our risk management framework is based on the COSO Enterprise Risk Management model. It supports the Group,
our Business Units and Business Partners functions in managing risks that might prevent us from achieving our
strategic, financial, and operational objectives and in protecting company assets, including reputation. It also
supports compliance with laws and regulations, as well as reliable financial and non-financial reporting.
Our approach to Risk Management
The building blocks of our risk management framework are shown in the diagram. Governance and culture form the
foundation, on which the pillars of the risk management process – strategy & objective setting, risk identification &
assessment, risk mitigation & control activities, monitoring & improvement – are standing to protect our value & integrity.
Communication & reporting ensures the connection between the pillars and sharing of adequate information with
internal and external stakeholders. The building blocks are summarized in the paragraphs below.
Risk management framework
Governance & culture
As part of our Corporate Governance, the Board of Directors has delegated the management of the Group to the CEO
and the Executive Committee, except where this is restricted by law and other regulations. Furthermore, the Executive
Committee, with the approval of the Board of Directors, has determined the Operating Model Framework as guidance for
Risk management – Our approach to Risk Management
dsm-firmenich Integrated Annual Report 2023 134
the operations of, and cooperation within, the Group, the Business Units and Business Partners, who are therefore jointly
responsible for achieving our objectives and managing the associated risks.
To further implement this, the following roles and responsibilities are assigned, in line with the Three Lines Model:
• First line: the responsibility for identifying, assessing, and managing risks is an integral part of the responsibility
of each manager
• Second line: Business Partner functions provide expertise and support, and monitor compliance for their
functional area. They define objectives for the function, group policies and standards, and efficient and robust
business processes including controls
• Third line: the Corporate Operational Audit department provides independent, objective assurance and advice
regarding the effectiveness of governance, risk management, and control activities
The Board of Directors has approved our values as well as our Code of Business Ethics. The Executive Committee and
management are a role model for living out the Code of Business Ethics and ensure compliance with it. This ‘tone at the
top’ supports effective risk management by creating risk awareness and giving it appropriate priority. In combination,
these elements form the governance and culture foundation of our risk management framework.
Strategy & objective-setting
Our Group strategy and objectives are determined by the Board of Directors, supported by the Executive Committee.
The Group strategy and objectives are translated into specific plans and priorities for Business Unit and Business Partner
leadership and elaborated in further detail for lower levels in the organization.
Risk identification & assessment
The realization of an ambitious strategy will always entail risks. To enable informed decision-making, these risks are
identified and assessed at all levels in the organization. Risk assessments may focus on various topics (e.g., Safety, Health
and Environment (SHE), security, climate) and are regularly updated. At least once per year, the Executive Committee
discusses the material risks for the company as part of the Group risk assessment, and the Board of Directors reviews
and approves these material risks. For more information, see Material risks and uncertainties.
Risk mitigation & control activities
Mitigating actions and controls are defined and implemented for the most relevant risks. Controls include policies,
standards, Segregation of Duties (SoD) management, business continuity management and business performance
reviews. Control activities, which can be preventive or detective, are integrated into our business processes and are
executed by the first line.
Monitoring & improvement
The Internal Control department within Legal, Regulatory, Risk & Compliance owns the Internal Control Framework. It
defines the standard set of key controls that must be performed by the first line and it aims to ensure reliable financial
reporting, mitigate fraud risks and safeguard our assets. The effectiveness of the key controls is independently tested by
the Internal Control department.
The effectiveness of the design and the operation of our overall risk management framework is evaluated by the Audit &
Risk Committee of the Board of Directors to support the Board Statements.
Communication & reporting
Reviewing of risks and incidents takes place via structured processes, and if needed on an ad-hoc basis. Twice per year
all Business Units and Business Partners report their material risks and incidents to the CEO. These are discussed in the
Executive Committee as well as the Audit & Risk Committee.
Risk management – Material risks and uncertainties
dsm-firmenich Integrated Annual Report 2023 135
Material risks and uncertainties
Risk assessments are performed at all levels in the organization and can focus on varying topics. Material risks for
our Business Units and Business Partner functions are reported to our CEO twice a year via the Risk & Incident
Report and are shared with the Executive Committee. In addition to this, the Executive Committee has a separate
discussion on what the material risks for the Group are. These together form the basis for the risk disclosures
below.
Our risk profile
The below list details the five most important short-term risks that might have material impact within three years and
have the potential to prevent us from successfully implementing our strategy and achieving our targets, despite the
mitigations in place. For each of these risks, the mitigating actions we are taking to reduce our exposure are described.
These risks are labeled as top risks either because the exposure on dsm-firmenich’s EBITDA is an indicative €45 million
or more, or because they have a major non-financial impact, such as on the company's reputation.
Top risks and related mitigating actions
Digital transformation
Risk description
Having an integrated digital backbone is essential to
implement efficient and robust business processes
that meet the expectations of our customers.
Therefore, successful execution of our digital
transformation roadmap is important to deliver on our
strategic and financial targets.
The implementation of this roadmap is complex. This,
in combination with some resource constraints, means
there is a risk that the digital transformation roadmap
is not implemented according to plan or does not
bring the full benefits as aimed for.
Mitigations
In the new operating model, the Business Partners have
allocated dedicated resources to drive digitally-enabled
process excellence. Furthermore, the capacity and
capability in Digital & Tech are being strengthened.
The Group Investment Committee supports the
Executive Committee to manage the project portfolio,
set the right priorities and allocate resources accordingly.
All key projects are subject to quality reviews by a multi-
disciplinary, independent team of experts at specific
moments throughout project implementation.
Geopolitical instability
Risk description
dsm-firmenich operates globally and could therefore
be affected by geopolitical instability and related
economic decline, such as:
• Trade restrictions, raw material and energy
shortages and supply disruptions, hampering our
ability to supply our customers
• Lower economic growth and declining disposable
income impacting demand for our products
• Inflation, putting pressure on our margins
Mitigations
Our business continuity management governance and
processes are strengthened as part of the
implementation of the new operating model. To reduce
the impact of possible disruptions preventive actions are
taken, such as reducing single-source positions,
qualifying back-up manufacturing sites, optimizing safety
stocks.
Risk management – Material risks and uncertainties
dsm-firmenich Integrated Annual Report 2023 136
Continuous monitoring of possible disruptions in our
supply chains enables us to act with speed as and when
needed.
We hedge part of our exposure to purchasing price
fluctuations and currency fluctuations.
In economic downturns, we have the flexibility to offer
solutions to serve the changing needs of our customers
and end-consumers.
Commodity markets
Risk description
dsm-firmenich operates in highly competitive markets.
There is a risk that some competitors may benefit from
a lower cost position and where we cannot
differentiate ourselves sufficiently, this could impact
our sales volumes and margins.
Mitigations
We prioritize high-growth and higher-margin market
segments. To address the needs of customers and end-
consumers in these segments, we develop innovative
products and services and offer differentiating value
propositions. We use our wide-ranging expertise, our
scientific, technical and data-driven innovation
capabilities, and our broad portfolio of natural and
renewable ingredients.
In all our Business Units we focus on maximizing
operational performance and apply strict cost control.
We launched the vitamin transformation program to
improve profitability, structurally reduce our exposure to
price fluctuations, and deliver significant cost savings.
Talent availability
Risk description
The success of dsm-firmenich depends on its
employees, including - but not limited to - scientists,
researchers, perfumers, flavorists, and experts in digital
and data science.
In view of the tight labor market, the ongoing
challenges of the macro-economic environment, and
the demands associated with any major merger and
integration process, there is a risk that we cannot
attract, retain, develop, and engage the people with the
required expertise, experience and mindset needed for
the implementation of our strategy.
Mitigations
We successfully implemented the new operating model
and organization and have launched our new purpose
and values. Throughout the entire process we frequently
connect with our employees to update them on the
status of the integration and the challenges we face as a
company. We answer their questions and address their
concerns.
Building on this foundation, we are executing our plans
for integrated rewards, people development, well-being,
engagement, and Diversity, Equity & Inclusion.
Risk management – Material risks and uncertainties
dsm-firmenich Integrated Annual Report 2023 137
We continue to monitor retention rates as well as
employee engagement and take action as and when
needed.
Cyber attack
Risk description
As external cyber threats remain high, dsm-firmenich
is exposed to the risk of cyber attacks. This could lead
to discontinuity of operations and loss of integrity or
confidentiality of information.
Mitigations
We are implementing a single, integrated cyber security
framework, building on the strengths of both legacy
companies and covering the domains of information
technology, operations technology and R&D laboratory
systems.
Since the ‘human firewall’ remains critically important, we
have intensified our phishing tests to keep employee
awareness high – something that is especially important
during times of change.
To mitigate the impact of a potential cyber attack, we are
strengthening our business continuity plans and disaster
recovery plans.
Other important risks
In 2023, certain competition authorities commenced an industry-wide investigation into the fragrances sector. As part
thereof, unannounced inspections were carried out at several Firmenich offices and Firmenich received a subpoena from
the Antitrust Division of the United States Department of Justice. The company is fully cooperating with the authorities.
The investigations are expected to continue at least until next year. As per the date of release of this Report, no further
update on the status or outcome of the investigation is available. In addition, multiple lawsuits have been filed against the
company in the USA and Canada relating to the investigation.
There are also more generic business risks, such as business continuity, sourcing, intellectual property, tax, changing
legislation and regulations, and increasing non-financial reporting requirements. Our risk management framework is set
up to adequately monitor and respond to these risks.
Information relating to sustainability risks, such as climate, biodiversity and water-related risks is disclosed in Climate
adaptation and transition plans, Nature – In our Operations and the Sustainability statements.
All relevant risks are taken into account in the preparation of our financial statements.
138
Governance and Compensation
Reporting period
The Governance and Compensation section describes the Company’s governance framework starting from 18 April 2023,
the first day of trading of the Company’s shares on Euronext Amsterdam (the ‘First Trading Date’). For the Governance
Framework in place prior to the First Trading date, please see the Offering Circular.
Governance
Building on the solid legacies of DSM and Firmenich, our governance framework constitutes the foundational
principles of our long-term objective to create value along the triple bottom line of economic performance,
environmental quality, and social responsibility.
Preliminary remarks
On 8 May 2023, DSM and Firmenich merged to become dsm-firmenich, innovator in nutrition, health and beauty. The
parent company of the combination, DSM-Firmenich AG, is a company organized under Swiss law, whose shares are
listed on the Amsterdam stock exchange (Euronext Amsterdam).
As a Swiss company, the key applicable governance requirements to DSM-Firmenich AG (also referred to as the
‘Company’) are the Swiss Code of Obligations (CO), and the standards established by the Swiss Code of Best Practice for
Corporate Governance. Due to its listing on Euronext Amsterdam, the Company is subject to the Dutch Financial
Supervision Act and is subject to the relevant reporting requirements of the Dutch Decree on Transparency for issuing
entities subject to the Dutch Act on Financial Supervision. The SIX Directive on Information relating to Corporate
Governance is not applicable to the Company, as the Company is not listed on the SIX Swiss Exchange.
Governance Framework
The Company’s internal corporate governance framework is based on its Articles of Association (the ‘Articles of
Association’). The Organizational Regulations of the Board of Directors, its Committees and of the Executive Committee
(the ‘Board Regulations’) further clarify the duties, powers and regulations of
the governing bodies of the Company.
The Board of Directors has established four Committees: the Audit & Risk
Committee, the Sustainability Committee, the Compensation Committee and
the Governance & Nomination Committee. These Committees assist
the Board of Directors in its work. The duties and functioning of the
Committees are laid down in Committee Charters.
Except where otherwise provided by law, the Articles of Association and the Board Regulations, all areas of management
are fully delegated by the Board of Directors, with the power to sub-delegate, to the CEO and the Executive Committee.
dsm-firmenich Integrated Annual Report 2023
Governance and Compensation – Group structure, capital structure and shares
dsm-firmenich Integrated Annual Report 2023 139
Group structure, capital structure and shares
Group structure
DSM-Firmenich AG and Group companies
DSM-Firmenich AG is the parent company of the dsm-firmenich Group (the ‘Group’ or ‘dsm-firmenich’). DSM-Firmenich
AG is a Company organized under Swiss law with its registered office at Wurmisweg 576, 4303 Kaiseraugst, Switzerland.
The Group’s operating businesses are organized into four Business Units: Perfumery & Beauty, Taste, Texture & Health,
Health, Nutrition & Care and Animal Nutrition & Health. The principal subsidiaries of the Group are shown in Note 3
Investments to the Parent company financial statements.
Significant Shareholders
Shareholdings of 3% or more in the Company must be disclosed to the Dutch Authority for the Financial Markets (AFM).
Information about substantial holdings and gross short position of shares can be found here.
Cross-shareholdings
As at 31 December 2023, DSM-Firmenich AG had no cross-shareholdings.
Capital structure
Share capital
As at 31 December 2023, the share capital of DSM-Firmenich AG amounted to €2,656,763.88, divided into 265,676,388
fully paid-up registered shares with a par value of €0.01 each. In addition, the Company has conditional capital of
€132,838.19 (corresponding to 13,283,819 registered shares with a par value of €0.01 each) for employee benefit plans
and equity-linked financing instruments.
For the period until 18 April 2028, the Company has a capital band authorizing the Board of Directors to conduct one or
more capital increases within an upper limit of €265,676.39 (corresponding to 26,567,639 registered shares with a par
value of €0.01). The upper limit is reduced to the extent that new shares are issued under the conditional capital. For a
description of the terms and conditions of the issuance of conditional and capital increases under the capital band,
please refer to Art. 3a, 3b and 3c of the Articles of Association.
Shares are listed on Euronext Amsterdam under symbol DSFIR (ISIN CH1216478797). In the United States, a sponsored
unlisted American Depositary Receipts (ADR) program is offered by Deutsche Bank Trust Co. Americas under symbol DR
(ISIN US7802491081), with four ADRs representing the value of one share.
Multi-deposit structure
The shares have a multi-deposit structure in which they are deposited in the central security depositories (CSDs) of both
the Netherlands and Switzerland. This means that the shares can be held either via Euroclear Nederland (‘Euronext
shares’; ISIN CH1216478797) or via the Company’s share register at SIX SIS in Switzerland (‘SIX SIS shares’; ISIN
CH1267772122).
The shares can only be traded on Euronext Amsterdam. Settlement of the shares is possible through the facilities of
Euroclear Nederland. SIX SIS shares can be exchanged into Euronext Shares and vice-versa at any time.
If requested by a Shareholder, the Company facilitates, through ABN AMRO Bank N.V. Corporate Broking & Issuer Services
(email: contact.dsm-firmenich@nl.abnamro.com, telephone +31 20 6286070), the transfer of their shares from the
facilities of Euroclear Nederland to the facilities of SIX SIS, and vice versa. Shareholders wishing to do so should contact
their custodian bank or broker, which has to contact ABN AMRO, to affect such transfers.
Governance and Compensation – Group structure, capital structure and shares
dsm-firmenich Integrated Annual Report 2023 140
Changes in capital
Since the completion of the merger, there have been no changes to the Company’s share capital. For changes in the
share capital prior to the completion of the merger, please refer to Note 6 Share capital to the Parent company financial
statements.
Convertible bonds and options
There are no bonds, warrants or options or other securities granting rights to shares other than options and share units
(PSUs and RSUs) granted under equity-based participation plan of employees.
Merger-related accelerated book-building and dividend
Accelerated book-building
On 25 May 2023, the Company executed a share placement of 6,696,477 ordinary shares. These shares, representing
approximately 2.5% of the Company’s share capital, were sold to institutional investors, at a price of €109.50 per share.
The Company intends to use these total proceeds of €733 million to fund the cash consideration payable in relation to
the buy-out procedure of the DSM Shareholders that had not tendered.
Dividend
On 29 June 2023, as part of the settlement of the merger of DSM and Firmenich, the Extraordinary General Meeting
approved the payment of a dividend per share in the amount of €1.60. The dividend was fully paid out of the reserve
from capital contributions. The dividend payment was paid without deduction of any Swiss withholding tax.
Share price
From the First Trading Date until the end of 2023 the share price decreased by 22%. The highest price in that period was
€120.72 (24 April 2023), the lowest one €76.13 (24 October 2023).
Share price development
Governance and Compensation – Group structure, capital structure and shares
dsm-firmenich Integrated Annual Report 2023 141
Geographical spread of shares outstanding
in %
2023
Switzerland
37
North America
22
Continental Europe
21
UK & Ireland
12
Netherlands
6
Rest of World
2
Governance and Compensation – Board of Directors
dsm-firmenich Integrated Annual Report 2023 142
Board of Directors
Composition
According to the Articles of Association and the Board Regulations, the Board of Directors is composed of between
nine and 12 non-executive Members (save for extraordinary circumstances).
Term and Election
Members of the Board of Directors (including the Chairman) are elected by the General Meeting on an individual basis
and for a term of one year, ending with the conclusion of the next General Meeting. Re-election is permitted. According
to Art. 3.2 of the Board Regulations, a Board of Directors member's mandate shall be for a maximum term of 10 years.
Furthermore, unless terminated earlier, the Board of Directors Members’ mandate shall automatically terminate on the
date of the General Meeting called to approve the accounts for the financial year in which such Board of Directors
member has attained the age of 70. These limits support dsm-firmenich’s commitment to renew the Board of Directors
on an ongoing basis, in accordance with international best practice.
Members of the Board of Directors
The Members of the Board of Directors of DSM-Firmenich AG were elected at the General Meeting of Danube AG (now
DSM-Firmenich AG) held in Kaiseraugst on the First Trading Date (with all Members being appointed with immediate
effect save for Sze Cotte-Tan, who was appointed effective 1 May 2023). As at 31 December 2023, the Board of Directors
is composed of 12 Members, all of whom are non-executive.
Thomas Leysen, Chairman of the Board of Directors and
Member of the Compensation Committee since 2023
Thomas Leysen has spent a large part of his career at Umicore, which was
transformed under his leadership from a metals producer to a materials technology
group with leading positions in battery materials, automotive catalysts, and precious
metals recycling. He was CEO of the company until 2008, after which he became
Chairman of the Board of Directors. He has long been committed to the promotion
of sustainability development, and was the founding chair of The Shift, a coalition of
businesses and non-governmental organizations in Belgium. He was Chairman of
the Federation of Enterprises in Belgium between 2008 and 2011. Between 2011
and 2020, he was Chairman of the Board of KBC Group, a banking and insurance
group with activities mainly in Belgium, Central Europe and Ireland. He was Member
of the Supervisory Board of Royal DSM N.V. since 2020 and served as its Chair from
2021 to 2023, when DSM and Firmenich merged.
Nationality
Belgian
Year of Birth
1960
Education
Master’s degree, Law, Katholieke Universiteit Leuven (Belgium)
Listed Company Boards
• Umicore: Non-Executive Chair of the Supervisory Board
Non-Listed Company Boards
• Mediahuis: Non-Executive Chair of the Board
Other Memberships
• King Baudouin Foundation US: Chair of the Foundation
• Flemish Heritage Council: Council Chair
• Mayer van den Bergh Museum: Chair of the Board of Trustees
Governance and Compensation – Board of Directors
dsm-firmenich Integrated Annual Report 2023 143
Patrick Firmenich, Vice-Chair of the Board of Directors and
Chair of the Governance & Nomination Committee since
2023
Patrick Firmenich served as CEO of Firmenich, the world’s largest privately owned
fragrance and taste company, from 2002 to 2014. He joined the Board of Firmenich
in 2002, and served as its Chairman from 2016 to 2023, when DSM and Firmenich
merged. Throughout his tenure at Firmenich, Patrick demonstrated his
entrepreneurial leadership by significantly advancing Firmenich’s global position
through organic and inorganic growth and succeeded in transforming the
organization to continuously respond to client needs and the market environment.
He sustained Firmenich’s significant investment in R&D and its legacy of game-
changing technologies, while developing an ambitious sustainability strategy for the
company, which led to the company achieving world-class Health, Safety &
Environmental performance. Patrick first joined Firmenich in 1990 and spent a
decade successfully leading the strategic development of the company’s
International Fine Fragrance business in New York and Paris before being appointed
to the Executive Committee in 1999. Prior to joining Firmenich, Patrick held several
positions in the legal and banking sectors, including working as an international
investment bank analyst. Until the end of 2023, he was Non-Executive Director of
Jacobs Holding AG. In 2020, Patrick won the EY Entrepreneur of the Year™
Switzerland award for Family Business.
Nationality
Swiss
Year of Birth
1962
Education
• Master’s degree, Law, University of Geneva. Admitted to the Geneva Bar.
• MBA, INSEAD, Fontainebleau (France)
Listed Company Boards
• UBS AG: Non-Executive Director
Non-Listed Company Boards
N/A
Other Memberships
• INSEAD World Foundation: Board Member
• INSEAD: Board Member
• Swiss Board Institute Advisory Council: Council Member
Sze Cotte-Tan, Member of the Board of Directors and of the
Sustainability Committee since 2023
Sze has more than 26 years' industry experience in food and nutrition
spanning across Asia Pacific, Europe and North America. She is currently Executive
Director of the Singapore Institute of Food and Biotechnology Innovation, A*STAR
Research Entities. Her last executive role in the industry was Executive Vice
President and Chief Technology Officer of CJ Cheil Jedang, a South Korean food
conglomerate, during which she played a pivotal role to expand its innovation
footprints and transformed R&D into a strategic growth driver of the company’s
ambition to become a key player in the global food and nutrition scene. Prior to that,
Sze held several roles in Nestlé including Centre Director of R&D, Singapore, and R&D
Director in strategic business units for nutrition, healthcare in Vevey (Switzerland).
As a food scientist by training, Sze brings a wealth of knowledge in the areas of
Governance and Compensation – Board of Directors
dsm-firmenich Integrated Annual Report 2023 144
product and process mastership, consumer and sensory science, and organization
change management.
Nationality
Singaporean
Year of Birth
1969
Education
• Ph.D in Food Sciences, University of Leeds (UK)
• MBA, Simon Business School, University of Rochester (USA)
Listed Company Boards
N/A
Non-Listed Company Boards
• Singapore Institute of Food and Biotechnology, A*STAR Research Entities:
Executive Director
• Foodplant, a subsidy of the Singapore Institute of Technology: Non-Executive
Chair
• Clay Capital: Member of the Advisory Committee
Other Memberships
N/A
Antoine Firmenich, Member of the Board of Directors and
Chair of the Sustainability Committee and Member of the
Audit & Risk Committee since 2023
Antoine Firmenich has been the CEO & Managing Director of Aquilus Pte Ltd in
Singapore since 2008. He is a founding partner of Alatus Capital, a value investment
management firm which has worked over the past decade and a half with a number
of preeminent global foundations, pension funds, endowments, and discerning long-
term investors. Over the last 16 years, Antoine has been increasingly involved in
sustainability and climate issues, specifically supporting basic research projects on
several continents, and driving high impact investment and policy initiatives
centered on health and education, and the long-term health of oceans and coastal
ecosystems. Prior to his current role, Antoine worked at Firmenich in a number of
leadership roles within both Ingredients and Flavors divisions, which included
responsibility for the Flavors division Sweet Goods Global Business Unit, its Savory
Global Business Unit and for all Encapsulated solutions. Antoine was appointed
Board Member of Firmenich in 2009, which is a position he held until 2023 when
DSM and Firmenich merged. He has served on a number of other corporate boards,
including SIX listed Nobel Biocare, the world’s largest dental implant and digital
dentistry company (since then taken over by Danaher).
Nationality
Swiss
Year of Birth
1965
Education
• Bachelor of Science in Life Sciences, Massachusetts Institute of Technology
(USA)
• Ph.D in Biochemistry, Stanford University School of Medicine (USA)
• MBA, Stanford University Graduate School of Business (USA)
Listed Company Boards
N/A
Non-Listed Company Boards
• Aquilus Pdt Ltd (Singapore): Managing Director
• Aquilus Management Ltd (Bermuda): Executive Director
• Alatus Capital: Co-Founder & Non-Executive Director
Other Memberships
• Stanford Interdisciplinary Lifesciences Council (SILC): Nominated Member
• MAC3: Managing Director
Governance and Compensation – Board of Directors
dsm-firmenich Integrated Annual Report 2023 145
Carla Mahieu, Member of the Board of Directors and Chair of
the Compensation Committee since 2023
Carla Mahieu was appointed to Aegon’s global Management Board in 2016 and
served as its Executive Vice President and Global Head of Human Resources of
Aegon until 2021. Prior to that, she was Philips’ Senior Vice President Corporate
Human Resource Management and worked for Spencer Stuart as Director,
Consultant, and Principal. Carla started her career with Shell in 1984, where she
worked for 15 years and held various management positions within Human
Resources, Communications and Corporate Strategy. She has served as a member
of the Koninklijke BAM Groep and of the Board of the Duisenberg School of Finance
(Netherlands). She was a Member of the Supervisory Board of Royal DSM N.V. during
a two-year tenure, until DSM and Firmenich merged in 2023.
Nationality
Dutch
Year of Birth
1959
Education
Master’s degree in Economics, University of Amsterdam (Netherlands)
Listed Company Boards
• Arcadis: Non-Executive Board Member
Non-Listed Company Boards
• VodafoneZiggo Group B.V. Netherlands: Non-Executive Director
Other Memberships
• Stichting Continuiteit Post NL: Board Member
• Priority Foundation of Arcadis: Board Member
Erica Mann, Member of the Board of Directors and Member
of the Sustainability Committee since 2023
Erica Mann has over 30 years’ experience in roles of increasing responsibility across
the healthcare industry. She is a former executive Board Member of Bayer AG (DAX)
and former CEO and Global President of Bayer’s Consumer Health Division. She was
the first woman to be appointed to Bayer’s Management Board in the company’s
150-year history. She is a true global citizen who has lived and worked on four
continents and has deep experience in emerging markets and extracting strategy
from trends with a strong focus on culture & risk management. Erica was the first
woman to serve as Chair of the World Self Medication Industry Association, the
global association for the over-the-counter drug industry. She was a Member of the
Supervisory Board of Royal DSM N.V. during a four-year tenure, until DSM and
Firmenich merged in 2023. She was listed in Fortune’s ‘Most Powerful Women
International’ both in 2016 (ranked #40) and 2017 (ranked #36).
Nationality
Australian
Year of Birth
1958
Education
• ND Analytical Chemistry, Tshwane University of Technology (South Africa)
• Marketing Management, Damelin College (South Africa)
Listed Company Boards
• Kellanova (formerly The Kellogg Company): Non-Executive Board member
• Perrigo Company: Non-Executive Board member
Non-Listed Company Boards
N/A
Other Memberships
N/A
Governance and Compensation – Board of Directors
dsm-firmenich Integrated Annual Report 2023 146
Frits van Paasschen, Member of the Board of Directors,
Member of the Audit & Risk Committee and Member of the
Compensation Committee since 2023
After spending the first few years of his career in management consulting with the
Boston Consulting Group and McKinsey & Co, Frits Van Paasschen joined Disney
Consumer Products and later Nike. Within Nike he was the President for the
Americas & Africa and later for EMEA. Frits then became the CEO of Coors Brewing
Company. His last executive position held was CEO of Starwood Hotels and Resorts.
In January 2017, Frits published ‘The Disruptor’s Feast’, subtitled: How to avoid being
devoured in today’s rapidly changing global economy. Frits is advisor to private
equity firm TPG and Russell Reynolds, and CEO and Founder of the Disruptor’s Feast
Advisory. He was a Member of the Supervisory Board of Royal DSM N.V. during a six-
year tenure, until DSM and Firmenich merged in 2023.
Nationality
Dual Dutch-US
Year of Birth
1961
Education
• Bachelor of Arts in Economics and Biology, Amherst College (USA)
• MBA, Harvard Business School (USA)
Listed Company Boards
• Williams Sonoma: Non-Executive Director
• Sonder: Non-Executive Director
• Amadeus IT Group: Non-Executive Director
Non-Listed Company Boards
• CitizenM Hotels: Non-Executive Director
• J Crew Group: Non-Executive Director
Other Memberships
N/A
Pradeep Pant, Member of the Board of Directors and
Member of Governance & Nomination Committee since
2023
Pradeep Pant has over 37 years’ experience leading brands and businesses in the
FMCG sector in both mature and emerging markets. He is a former Executive Vice
President and President, Asia-Pacific, Eastern Europe, Middle East and Africa of
Mondelēz International, where he oversaw the integration of major acquisitions as
well as the successful transition from Kraft Foods to Mondelēz in 2012. Prior to this,
Pradeep was regional Managing Director Asia, Africa and Middle East for the leading
multinational dairy company Fonterra, before which he had a 19-year career at the
Gillette Corporation spanning marketing, sales and general management across
global emerging markets. Since 2015, Pradeep has been President of his own
consulting firm, Pant Consulting Pte Ltd. He was a Member of the Supervisory Board
of Royal DSM N.V. during a seven-year tenure, until DSM and Firmenich merged in
2023.
Nationality
Singaporean
Year of Birth
1953
Education
• Bachelor of Arts in Economics, University of Delhi (India)
• Master’s degree in Management Studies, Jamnalal Bajaj Institute of Management
Studies of Mumbai University (India)
Governance and Compensation – Board of Directors
dsm-firmenich Integrated Annual Report 2023 147
Listed Company Boards
Max India Ltd.: Non-Executive Director
Non-Listed Company Boards
• Pant Consulting Pte Ltd: President
• NIVA BUPA Health Insurance Co. Ltd.: Non-Executive Director
• Nurasa Holding Pte Ltd and Nurasa Pte Ltd: Chair of the Board
• Antara Senior Living & MAX Life Insurance Co. Ltd: Non-Executive Director
Other Memberships
LKC School of Business at Singapore Management University: Dean’s Fellow
André Pometta, Member of the Board of Directors and
Member of Compensation Committee since 2023
André joined Firmenich in 1997 in the Fragrance division and spent most of his
career working for customers in China, Southeast Asia, Eastern Europe, and the
Middle East, where he successfully led and implemented strategies that delivered
significant growth with local customers in emerging markets. He was appointed
President of Firmenich China in 2008 and was a member of Firmenich’s Flavor
Executive Team until 2013. He played an active role in the restructuring of the
division, building a culture of customer & consumer centricity, and was instrumental
in establishing China as its own independent region within the organization. Prior to
Firmenich, André worked for the Zuellig Group in the Philippines, where he held
various positions in sales, marketing, and operations. He was a Board Member of
Sentarom SA (the holding company of the Firmenich family) and served at its
Chairman from 2021 to 2023 (when Sentarom merged with Firmenich). André was
also member of the Board of Firmenich during a 20-year tenure, until DSM and
Firmenich merged in 2023. In the past years, André has been active in innovative
projects with investors, successful entrepreneurs, and executives. He advises and
supports businesses and start-ups in the fields of social integration, hospitality,
clean tech, and health.
Nationality
Swiss
Year of Birth
1965
Education
Bachelor of Science in Economics, HEC Lausanne (Switzerland)
Listed Company Boards
N/A
Non-Listed Company Boards
• White Lobster: Non-Executive Director
• Noyb SA (+affiliates): Non-Executive Director
Other Memberships
N/A
Governance and Compensation – Board of Directors
dsm-firmenich Integrated Annual Report 2023 148
John Ramsay, Member of the Board of Directors and Chair of
the Audit & Risk Committee since 2023
John Ramsay started his career at KPMG before entering the corporate world in
1984, when he joined ICI. He held several, increasingly senior, accounting and finance
positions within ICI, which would later become AstraZeneca. John played a leading
role in planning and executing the merger of AstraZeneca’s agribusiness with
Novartis, including the integration and disposal of various businesses post-merger.
He also played a leading role in the formation and stock exchange listing of the
Syngenta business and became its Group Controller in 2001. In that role, he had to
build up the group’s finance function from scratch, establishing the organization and
reporting systems after the IPO. His last executive position was Chief Financial
Officer (CFO) and Interim CEO of Syngenta AG which he held until 2016. He has
served as Non-Executive Board Member of G4S and was a was a Member of the
Supervisory Board of Royal DSM N.V. during a six-year tenure, until DSM and
Firmenich merged in 2023.
Nationality
British
Year of Birth
1957
Education
Chartered Accountant
Listed Company Boards
• RHI Magnesita N.V.: Non-Executive Director
• Croda International PLC: Non-Executive Director
• Babcock International PLC: Non-Executive Director
Non-Listed Company Boards
N/A
Other Memberships
N/A
Richard Ridinger, Member of the Board of Directors and of
the Governance & Nomination Committee since 2023
Richard Ridinger has extensive experience in science-driven organizations. His most
recent role was as the CEO of Lonza, a global leader in Life Sciences, which he held
until 2019. In this position, he strengthened Lonza’s market position in relevant
markets, and drove competitive capabilities and productivity improvement in critical
areas. Prior to becoming CEO at Lonza, Richard was responsible for Care Chemicals,
the largest group at Cognis, a former division of Henkel, with approximately 3,000
employees. A trained chemical engineer, his experience spans process
development, production management, product and marketing management,
leading global Business Units, and responsibility for leading a worldwide specialty
chemicals group. Richard has served as Chairman of the Advisory Committee of
Zentiva, and Board Member of Evolva Holding AG and SHL Medical AG. He was a
Member of the Board of Firmenich during a seven-year tenure, until DSM and
Firmenich merged in 2023.
Nationality
German
Year of Birth
1958
Education
Master’s degree in Chemical Engineering, University of Karlsruhe (Germany)
Listed Company Boards
Brenntag SE: Chair of the Supervisory Board
Non-Listed Company Boards
• Recipharm AB: Chairman of the Board
• Novo Holdings: Member of the Advisory Board
Governance and Compensation – Board of Directors
dsm-firmenich Integrated Annual Report 2023 149
Other Memberships
N/A
Corien Wortmann, Member of the Board of Directors,
Member of the Sustainability Committee and Member of the
Audit & Risk Commmittee since 2023
Corien Wortmann has served as Chair of the Board of ABP Pension Fund, a world
leader in responsible investing, from 2015 to 2022. She has been a Member of the
European Parliament for the European People’s Party from (EPP) 2004 to 2014, and
the EPP’s Vice President Economy, Finance and Environment. She is currently a Non-
Executive Member and Vice Chair of the Board of Directors of Aegon Ltd, Member of
the Capital Market Advisory Board of the AFM, Board Member of the Impact
Economy Foundation and Chair of the Supervisory Board of Netspar, a scientific
network on pensions. She has served as Chair of the Supervisory Board of Save the
Children (Netherlands), as Jury Member of the Business Woman of the Year Prize at
Veuve Clicquot, as Co-Chair of the European High Level Expert Group Next CMU. She
was a Member of the Supervisory Board of DSM N.V. during a two-year tenure, until
DSM and Firmenich merged in 2023.
Nationality
Dutch
Year of Birth
1959
Education
Master’s Degree in Political Science and Economics, Vrije Universiteit Amsterdam
(Netherlands)
Listed Company Boards
Aegon N.V: Non-Executive Vice-Chair of the Board
Non-Listed Company Boards
N/A
Other Memberships
• Impact Economy Foundation: Advisory Board Member
• Netspar: Chair of the Supervisory Board
• Capital Markets Advisory Board of the Dutch Financial Markets Authority:
Member
• Koninklijke Hollandsche Maatschappij der Wetenschappen: Member
Nominated Directors
‘Nominated Directors’ are those Members of the Board of Directors that are nominated by a Firmenich Shareholder (as
such term is defined in Art. 4.4. of the Articles of Association) in accordance with the terms of Art. 18 of the Articles of
Association. Any Firmenich Shareholder whether alone or together with other Firmenich Shareholders, holding 8.5% or
more of the Company's issued share capital shall have the right to nominate for election one member to the Board of
Directors, provided that only such persons shall be nominated who have the appropriate expertise, skills and reputation
for such a mandate as verified by the Governance & Nomination Committee. Any Firmenich Shareholder, whether alone
or together with other Firmenich Shareholders, holding 17% or more of the Company's issued share capital, has the right
to nominate two Members for the Board of Directors. These nomination rights are for a maximum of three Nominated
Directors in total.
As at 31 December 2023, the Nominated Directors are Patrick Firmenich, Antoine Firmenich and André Pometta.
Governance and Compensation – Board of Directors
dsm-firmenich Integrated Annual Report 2023 150
Independence
Art. 3.2 of the Board Regulations outline the independence criteria, which require a majority of the Board of Directors
Members to be non-executive and independent. An Independent Director means:
• The Member has never been a Member of the Executive Committee or was a Member of the Executive
Committee more than three years ago; and
• The Member has never served as lead auditor of the Group’s external auditor or served as the lead auditor more
than two years ago; and
• The Member does not have significant business relationships with the Group
A Nominated Director or a director that has been a Nominated Director is not regarded as an Independent Director.
Diversity
The Board of Directors prioritizes and embraces diversity in the broadest sense. The Board of Directors considers that
diversity of gender, age, nationality, ethnicity, experience, background and thought is a key factor to its success and
effectiveness. It is a critical area of focus and a key criterion for the selection and nomination of new Members of the
Board of Directors and Executive Committee.
Board of Directors diversity profile
The composition as of 31 December 2023, in terms of nationality, gender and age, is shown in the following charts:
1
One Member of Board of Directors has dual nationality. Each of these is counted as a half in the above chart.
Governance and Compensation – Board of Directors
dsm-firmenich Integrated Annual Report 2023 151
Skills
Skills
Thomas
Leysen
Patrick
Firmenich
Sze
Cotte-
Tan
Antoine
Firmenich
Carla
Mahieu
Erica
Mann
Frits van
Paassche
n
Pradeep
Pant
André
Pometta
John
Ramsay
Richard
Ridinger
Corien
Wortmann
dsm-firmenich Business
Finance & Audit /
Accounting
Sustainability /ESG
R&D
Operations & Manufacturing
Sales & Marketing
HR management, including
compensation
Data/Digital/Cybersecurity
Risk Management/
Compliance/Legal
Public Affairs
Succession planning
The Governance & Nomination Committee ensures effective succession plans for the Board of Directors, the CEO and
the Executive Committee. Candidates who meet the selection criteria are interviewed by the Board of Directors and the
Governance & Nomination Committee makes a recommendation to the full Board of Directors, who ultimately decide on
the appointments, subject to the powers of the General Meeting to elect the Members of the Board of Directors.
Conflict of interest and permitted external mandates
Pursuant to the Board Regulations, any Member of the Board of Directors or of the Executive Committee who believes
that he or she has a conflict of interest, or that there is potential for such a conflict, must discuss the matter with the
Chairman of the Board of Directors (or, for Executive Committee Members, with the CEO in consultation with the
Chairman), who then proposes to the Board of Directors a solution appropriate to the intensity of the conflict of interest.
According to Art. 22 of the Articles of Association, a Member of the Board of Directors shall hold no more than: 1) up to
four mandates in listed firms; and 2) up to four mandates in non-listed firms. A Member of the Executive Committee shall
hold no more than: 1) one mandate in listed firms; and 2) up to three mandates in non-listed firms. A ‘mandate’ means any
membership in the Board of Directors, the executive management or the Advisory Board, or any comparable function
under foreign law, of a firm with an economic purpose. Mandates in the Company or any entity controlled by, or
controlling, the Company, shall not be deemed to be a mandate for purposes of Art. 22 of the Articles of Association.
The Governance & Nomination Committee annually reviews the number of mandates held by the Board of Directors and
Executive Committee Members.
Evaluation of the Board of Directors
According to Art. 3.11 of the Board Regulations, the Board of Directors performs a complete review of its performance on a
three-year cycle. The first complete Board of Directors review cycle will therefore take place in 2026. In the years leading
to 2026, the Board of Directors will perform annual self-assessments consisting of a questionnaire combined with one-
on-one interviews between the Chairman and each Member of the Board of Directors. The outcome of the self-
assessment will be shared by the Chairman with the Board of Directors.
The Role of the Board of Directors and its Committees
The Board of Directors is the highest executive oversight body of the Company. It resolves on all business matters which
are not reserved to the Shareholders by law or by the Articles of Association. In accordance with Art. 20 of the Articles of
Governance and Compensation – Board of Directors
dsm-firmenich Integrated Annual Report 2023 152
Association, the Board of Directors may establish one or more Board Committees to assist the Board of Directors in
preparing certain decisions in the areas of its competence. The Board of Directors has established four Committee: the
Audit & Risk Committee, the Sustainability Committee, the Compensation Committee and the Governance &
Nomination Committee. Other than the authority of the Audit & Risk Committee to approve the financial trading
updates of the first and third financial quarters, the Board of Directors has not delegated decisions to the Committees.
Responsibilities of the Board of Directors
Principal duties
In accordance with Swiss law, the Articles of Association and the Board Regulations, the principal duties of the Board of
Directors include:
• The ultimate direction and strategy of the Company and Group and determining the Company and Group’s
organization
• The overall structuring of the accounting system, financial controls and financial planning
• The appointment and dismissal of those persons to whom the management is delegated
• The supervision of persons to whom the management of the Company is delegated, especially with a view to
their compliance with the law
• The compilation the Integrated Annual Report (financial & non-financial) and other reports that are subject to
mandatory approval by the Board of Directors
• The preparation of the Shareholder’s Annual General Meeting (the ‘General Meeting’) and the implemention of its
resolutions
• All decisions relating to the ascertainment of changes in capital
• Filing a motion for debt-restructuring moratorium and notifying the courts in the event of over-indebtedness
• Regular review of the Group’s culture
• Decisions on the budget, the setting of financial targets, the definition of the Group’s capital strucuture and the
annual investment budget
• Consideration of, and approval of recommendations made by the Board Committees
Number of meetings
Since the First Trading Date, the Board of Directors has held seven meetings. These include five regular meetings (in May,
June, July, October and December) and two additional special meetings to deal with ad hoc matters. Board Committees
typically meet the day prior to the regular Board of Director meetings.
Number of meetings held between the First Trading Date and 31 December 2023
7
Number of Members
12
Meeting attendance
98%
Thomas Leysen (Chairman)
7
Patrick Firmenich (Vice-Chair)
7
Sze Cotte-Tan
7
Antoine Firmenich
7
Erica Mann
7
Carla Mahieu
7
Frits van Paasschen
7
Pradeep Pant
7
André Pometta
6
John Ramsay
7
Richard Ridinger
7
Corien Wortmann
7
Average length of meetings: 4-5 hours (regular)
Governance and Compensation – Board of Directors
dsm-firmenich Integrated Annual Report 2023 153
The Board of Directors also adopted four written circular resolutions as part of the merger-related closing steps.
On-boarding
As part of the Board of Directors’ on-boarding program, the Board of Directors attended several workshops in 2023,
where Members of the Executive Committee and senior management presented the four Business Units (with particular
focus on the vitamins business) and sustainability themes. The Board of Directors visited the Company production sites
in Sisseln (Switzerland) and Geneva (Switzerland) as well as the laboratories in Geneva (Switzerland) and the Biotech
Campus in Delft (Netherlands). Individual Members of the Board of Directors had the opportunity to visit Company
operations around the world in the context of other travel commitments
Audit & Risk Committee
According to the Board Regulations and the Audit & Risk Committee Charter, the Audit & Risk Committee must be
chaired by an Independent Director. The Committee must be composed of at least three Members of the Board of
Directors, of which one is a Nominated Director. The principle duties of the Audit & Risk Committee include:
• Review the financial statements of the Company and the Group
• Review the effectiveness of internal controls over financial reporting
• Review and evaluate the internal controls in place to ensure integrity and accuracy of the Company’s non-
financial reporting
• Approve the release of the Group’s Q1 and Q3 results to the market
• Review the Company capital structure
• Make annual dividend proposal to the Board of Directors
• Oversee the external auditors that audit the Company’s financial statements and non-financial report and review
their performance; make recommendations on the appointment, re-appointment or removal of the external
auditor for the attention of the Board of Directors (regarding the election of such auditor at the General Meeting)
• Review periodic reports of the Corporate Operational Audit function
• Review the Enterprise Risk Management (ERM) governance and methodology and review significant risks and
related mitigation plans
• Review the process for monitoring compliance within the Group of the Code of Business Ethics
Number of meetings held between First Trading Date and 31 December 2023
5
Number of Members
4
Meeting attendance
100%
John Ramsay (Chair)
5
Antoine Firmenich
5
Frits van Paasschen
5
Corien Wortmann
5
Average length of meetings: 2 hours
The Audit & Risk Committee also adopted one circular resolution as part of the merger-related settlement steps.
Sustainability Committee
According to the Board Regulations and Sustainability Committee Charter, the Sustainability Committee is chaired by an
Independent Director or a Nominated Director. The Committee must be composed of at least three Members of the
Board, of which one is a Nominated Director. The principle duties of the Sustainability Committee include:
• Review the Company’s sustainability strategy and goals
• Define and periodically review the Company’s sustainability metrics
• Review the Company’s non-financial reporting obligations
• Periodically review the Company’s sustainability performance against peer groups
• Review regulatory developments relating to sustainability
Governance and Compensation – Board of Directors
dsm-firmenich Integrated Annual Report 2023 154
• Ensure the interests of the relevant stakeholders are included in the Company’s strategy, targets and policies
Number of meetings held between First Trading Date and 31 December 2023
3
Number of Members
4
Meeting attendance
100%
Antoine Firmenich (Chair)
3
Sze Cotte-Tan
3
Erica Mann
3
Corien Wortmann
3
Average length of meetings: 2 hours
Compensation Committee
In accordance with Swiss law and the Articles of Association, the Members of the Compensation Committee are
appointed by the General Meeting. According to the Board Regulations and the Compensation Committee Charter, the
Compensation Committee must be chaired by an Independent Director or the Chairman of the Board. The Compensation
Committee is composed of at least three Members, including one Nominated Director. The principle duties of the
Compensation Committee include:
• Develop a compensation strategy in line with the principles described in the Articles of Association
• Review principles and design of short and Long-Term Incentive (LTI) / equity plans
• Propose to the Board the aggregate maximum compensation for the Board and the Executive Committee, for
approval by the General Meeting
• Periodically review the level of Board and Executive Committe compensation against peer groups
• Review and propose to the Board the target total direct compensation levels and the mix of compensation for
the CEO and the Executive Committee Members
• In cooperation with the other Committees, propose to the Board of Directors specific incentive targets
• Review the annual performance results against targets and recommend the compensation of Executive Members
to the Board of Directors for approval
• Prepare and recommend the annual compensation report to the Board of Directors for approval
Number of meetings held between the First Trading Date and 31 December 2023
6
Number of Members
4
Meeting attendance
100%
Carla Mahieu (Chair)
6
Thomas Leysen
6
Frits van Paasschen
6
André Pometta
6
Average length of meetings: 1 hour
Governance & Nomination Committee
According to the Board Regulations and the Governance & Nomination Committee Charter, as long as at least two
Nominated Directors are on the Board of Directors, the Governance & Nomination Committee is chaired by a Nominated
Director. The Committee is composed of at least three Members, including one Nominated Director. The principle duties
of the Governance & Nomination Committee include:
• Periodically review the Articles of Association, Board Regulations and Committee Charters and recommend
changes to the Board of Directors for the purpose of fostering good corporate governance and Shareholders’
rights
Governance and Compensation – Board of Directors
dsm-firmenich Integrated Annual Report 2023 155
• Annually review the external mandates held by the Board of Directors and Executive Committee Members to
ensure compliance with Art. 22 of the Articles of Association
• Support the Board of Directors in period evaluation of the Board of Directors’ performance
• Review the composition and size of the Board of Directors in order to ensure the right level of diversity
• Prepare and maintain a succession plan for the Chairman of the Board of Directors and the CEO
• Receive nominations for Nominated Directors and assess each application to determine if the applicant meets
the requirements (appropriate expertise, skills and reputation)
• Make recommendations to the Board of Directors for the appointment and or dismissal of Members of the
Executive Committee; assess and recommend to the Board of Directors whether Members of the Board of
Directors should stand for re-election
• Periodically review the independent status of all Board of Directors and Executive Committee Members and any
resulting disclosure requirement
Number of meetings held between the First Trading Date and 31 December 2023
5
Number of Members
4
Meeting attendance
100%
Patrick Firmenich (Chair)
5
Carla Mahieu
5
Pradeep Pant
5
Richard Ridinger
5
Average length of meetings: 1 hour
Chairman of the Board of Directors
The Chairman of the Board of Directors is appointed by the General Meeting. Among his duties, the Chairman:
• Ensures the Board of Directors fulfills its functions
• Maintains regular and frequent contact with the CEO as well as other Executive Committee Members and
reviews with the CEO the major strategic projects before submission to the Board of Directors
• Where appropriate and or requested, supports the CEO in participating in and giving input to public relations
activities and contacts with the authorities
• Reviews actual and potential conflicts of interest a Board of Directors member may have and propose to the
Board of Directors how the conflict should be handled
• Liaises with the Vice-Chair of the Board of Directors and keep him apprised of key issues
• In the event of extraordinary events of high urgency, orders immediate measures
Delegation of management
In accordance with Art. 20.2 of the Articles of Association and Art. 4 of the Board Regulations, the Board of Directors
delegates the management of the Company and the Group to the CEO and to the Executive Committee Members, within
and subject to the powers of the Board of Directors reserved by law (in particular Art. 716a CO), the Articles of
Association and the Board Regulations. The CEO organizes the Executive Committee and sets the responsibility of each
Executive Committee Member.
Governance and Compensation – Board of Directors
dsm-firmenich Integrated Annual Report 2023 156
Information and control instruments vis-à-vis the Executive Committee
To ensure the Board of Directors is fully informed about all matters that materially impact dsm-firmenich, the Board of
Directors has at its disposal an information and controls system that includes the following instruments:
• The Board of Directors is, at each of its regular meetings, informed on material matters involving the Group’s
business and on the latest available consolidated financial results. The entire Executive Committee is regularly
invited to attend the Board of Directors meetings, in order to report on current developments, significant
projects and events. Selected senior managers are regularly invited to attend Board of Director meetings, to
report on areas of the business for which they are responsible
• At each of its regular meetings, the Board of Directors receives updates from each of Quality and Safety,
alternatively
• The Board of Directors visits at least one dsm-firmenich country operation per year, during which Members of
the Board of Directors meet members of senior local management. Additionally, Members of the Board of
Directors are invited to visit country operations when travelling, to allow the opportunity of meeting local and
regional senior management and getting first-hand information on local and regional developments
• The Chairman has regular meetings with the CEO and may request information on any matter relating to dsm-
firmenich. The Chairman receives the minutes of the Executive Committee meetings. The CEO informs the
Chairman immediately of any extraordinary event
• The Chairman has a standing invitation to all Committee meetings and is present in all Committee meetings
• The CEO attends all Committee meetings, Committee meetings are also attended by Executive Committee
Members and members of the senior management
• All Members of the Board of Directors have access to the minutes and materials of the Committee meetings
Additional information and control instruments include dsm-firmenich’s internal audit function, named Corporate
Operational Audit. The mission of Corporate Operational Audit is to enhance and protect organizational value by
providing risk-based and objective assurance, advice, and insight. The scope of internal audit activities encompasses,
but is not limited to, objective examinations of evidence for the purpose of providing independent assessments on the
adequacy and effectiveness of governance, risk management, and control processes for the Group. Findings are
communicated in the form of an internal audit report, which is shared with Executive Committee and the Audit & Risk
Committee. The Audit & Risk Committee reviews and monitors management’s responsiveness to internal audit findings
and recommendations. The Head of Corporate Operational Audit reports administratively to the CFO and has
a functional reporting line to the Chair of the Audit & Risk Committee. He regularly meets with the Chair of the Audit &
Risk Committee for interim updates.
Furthermore, dsm-firmenich has an internal risk management process, that focuses on identifying and managing risks
and opportunities in all areas of strategic, operational, financial, regulatory, legal and compliance risks including those
linked to climate change. The material risks are reported to the Audit & Risk Committee and to the Board of Directors
twice annually. For more detail on risk management please refer to Our approach to Risk Management.
Governance and Compensation – Executive Committee
dsm-firmenich Integrated Annual Report 2023 157
Executive Committee
Responsibilities
In accordance with Art. 4.3 of the Board Regulations, the responsibilities of the Executive Committee include:
• Ensuring the unity and cohesion of the Group
• Managing the Company resources (incl. human, financial, intellectual)
• Presenting strategies to the Board of Directors for approval
• Driving the development of business and achieving strategic plans
• Submitting to the Board of Directors for approval the annual budget of expenditures and investments
• Organizing proper information sharing inside and outside the Company
• Proposing to the Board of Directors the appropriate organization model to achieve the Group’s objectives set by
the Board of Directors
• Proposing to the Compensation Committee remuneration policies and plans
• Ensuring compliance with law and the Code of Business Ethics
• Pursuing leadership in sustainability and implementing the strategy
Composition
The Board of Directors appointed the Members of the first Executive Committee of dsm-firmenich on the First Trading
Date. As at 31 December 2023, the Executive Committee is composed of nine Members.
Dimitri de Vreeze, Chief Executive Officer since 2023
Dimitri de Vreeze has held the position of CEO of dsm-firmenich since 1 September
2023. Previously, he served as DSM’s Co-CEO from 2020, having joined the company in
1990. Starting in Finance, he took on leadership roles in various Business Units around
the world before being named Young Captain of the Year in the Netherlands in 2006. He
was appointed to DSM’s Managing Board in 2013, and was instrumental in setting DSM’s
strategy and executing its transformation journey to a fully focused health, nutrition, and
bioscience company, including the development of DSM’s Food System Commitments, a
series of quantifiable 2030 targets aimed at addressing urgent societal and
environmental challenges linked to how the world produces and consumes food. He
chairs the Young Captain Foundation, awarding and elevating young leadership potential,
and is also the Chair of the ALV United World College Maastricht, bringing together
young people from all directions of life to work together toward a peaceful and
sustainable future.
Nationality
Dutch
Year of Birth
1967
Education
• Master’s in Business Economics, University of Groningen (Netherlands)
• Master’s in Finance and Control from Maastricht University (Netherlands)
Governance and Compensation – Executive Committee
dsm-firmenich Integrated Annual Report 2023 158
Emmanuel Butstraen, Business Unit President Perfumery &
Beauty since 2023 and Chief Integration Officer since 2023
Emmanuel Butstraen is Chief Integration Officer and was appointed as the new President
of Perfumery & Beauty business effective 1 July 2023. He joined Firmenich as President of
Taste & Beyond in 2018 and drove the business’s transformation to becoming the global
innovation partner of choice to the food and beverage industry, leading growth across the
Group’s three segments: Beverages, Sweet Goods, and Savory. Creating winning solutions
for customers with a focus on enhanced well-being, Emmanuel put Firmenich’s expertise
to work making healthier choices taste great, from sugar and salt reduction to plant
proteins, clean-label offerings, and functional nutrition solutions. Prior to joining Firmenich,
Emmanuel was President of Solvay’s Novecare global Business Unit, preceded by 17 years
with BASF, where he served as Strategy Senior VP of the Agricultural Products division.
Nationality
French
Year of Birth
1968
Education
• Master’s in Agricultural Engineering, University of Lille (France)
• MBA, University of Lille (France)
Mieke Van de Capelle, Chief HR Officer since 2023
Mieke Van de Capelle joined Firmenich as Chief Human Resources Officer in 2016. She
was responsible for leading the Global Human Resources, Sustainability, and Corporate
Communications functions, setting the company’s strategy and winning culture as a
responsible business, with the additional responsibility of being the Secretary of the
Governance and Compensation Committee of the Board of Directors. Under her
leadership, Firmenich became one of only seven companies worldwide to obtain the
EDGE global certification for gender equality and was recognized with Ethical
Corporation’s global Diversity & Inclusion Award. A seasoned leader with more than 20
years of broad consumer goods experience, Mieke has worked across Europe, the USA,
and Asia.
Nationality
Belgian
Year of Birth
1974
Education
• Master’s in International Communication Strategy, University of Burgundy (France)
• Master’s in Philology from Ghent University (Belgium)
• Diplomas in Business Administration and Management and Organizational
Leadership, IMD Business School (Switzerland)
Listed Company Boards
• Spadel: Non-Executive Director
Governance and Compensation – Executive Committee
dsm-firmenich Integrated Annual Report 2023 159
Philip Eykerman, Business Unit President Health, Nutrition & Care
since 2023
Philip Eykerman joined DSM in 2011 as Executive Vice-President Corporate Strategy &
Acquisitions, responsible for strategy development, improvement programs, and corporate
transactions. He later took on additional responsibilities, including for DSM’s Food
Specialties Business Unit. In 2020, Philip was appointed to lead all of DSM’s activities in
human nutrition and health, establishing and leading the Health, Nutrition & Care business
alongside his responsibility for M&A. Before joining DSM, Philip was a partner at McKinsey
& Company, and the leader of McKinsey’s Chemicals Practice in Benelux and France.
He is a Member of the Advisory Board of the Rotterdam School of Management.
Nationality
Belgian
Year of Birth
1968
Education
• Master’s in Chemical Engineering, KU Leuven (Belgium)
• Master’s Refinery Engineering, French Petroleum Institute (France)
Ivo Lansbergen, Business Unit President Animal Nutrition &
Health since 2023
Ivo Lansbergen joined DSM in 1997 and held several positions across the company’s
various Business Units before being appointed to lead the Animal Nutrition & Health
business in 2019. He transformed the organization, reinforcing its position as a
customer-focused partner in the development of feed ingredients for the global food
supply chain. Supported by complementary acquisitions, Ivo strengthened the
business’s expertise and reputation as a leading provider of solutions for farm
productivity and sustainability throughout the value chain, including as a pioneer in the
fast-emerging area of technology-driven precision nutrition and health. Ivo is an
experienced global executive, having worked in science-based industries across Europe
and Asia during his career.
Nationality
Dutch
Year of Birth
1973
Education
• Master’s in Chemical Engineering, University of Enschede (Netherlands)
Governance and Compensation – Executive Committee
dsm-firmenich Integrated Annual Report 2023 160
Patrick Niels, Business Unit President Taste, Texture & Health
since 2023
Patrick Niels started his international career at DSM in 1991 when he joined Gist-Brocades,
which DSM subsequently acquired in 1998. He went on to hold various leadership roles
across the company, in pharmaceuticals, materials, and nutrition, including spending nine
years in the USA. He oversaw the transformation of multiple businesses, creating high-
performing growth teams centered around the shift to sustainability. Patrick built DSM’s
Food & Beverage business, which was established by combining the company’s activities
and capabilities from three former areas in 2021, to serve the fast-moving global industry
with sustainable solutions for taste, texture, and health.
Nationality
Dutch
Year of Birth
1968
Education
• Master’s in Business Administration, Nyenrode Business University (Netherlands)
• MBA, Emory University (USA)
Dr. Sarah Reisinger, Chief Science & Research Officer since
2023
Sarah Reisinger has driven Firmenich toward new frontiers of scientific excellence,
building on the company’s legacy of industry-leading innovation. By embracing new
technology to deliver breakthrough solutions in a fast-changing world, she has
harnessed a multidisciplinary and global approach to research and development. Sarah
combines an extensive background in biotechnology with a strong track record in
ingredients and technology development for the consumer goods industry. Prior to
joining Firmenich in 2018, she held pivotal roles at Ginkgo Bioworks, Intrexon, and Amyris,
having started her career in the field of biology and cancer therapeutics. She is Chair of
EuropaBio.
Nationality
American
Year of Birth
1979
Education
• Bachelor in Science, Biology, Harvey Mudd College (USA)
• Master’s in Plant Biology, University of California, Berkeley (USA)
• Ph.D. in Microbiology, University of California, Berkeley (USA)
Governance and Compensation – Executive Committee
dsm-firmenich Integrated Annual Report 2023 161
Ralf Schmeitz, Chief Financial Officer since 2023
Ralf Schmeitz was appointed Chief Financial Officer (CFO) of dsm-firmenich in September
2023, marking a significant milestone in his journey with the company. He initially joined
the company in 2006 under its previous identity, DSM, and his path has been marked by
outstanding achievements and a track record of strong performance. Ralf has played a
pivotal role in propelling the transformation of the Finance function and in navigating
substantial portfolio changes. Prior to his CFO role, Ralf held the position of Head of Group
Finance, overseeing Finance & Control, Treasury and Taxation. In his last role at former
DSM, he held the position of Group Controller, spearheading both the Business Controlling
and Accounting teams. Ralf began his career at PwC, laying strong foundations and
building financial and strategic acumen, and then moved to Hewlett Packard, where he
assumed diverse leadership responsibilities in Finance.
Nationality
Dutch
Year of Birth
1972
Education
• Master’s degree, Economics, Maastricht University (Netherlands)
• Master’s degree Accountancy, Maastricht University (Netherlands)
• Master’s degree in Business Valuation, Erasmus University, Rotterdam (Netherlands)
Jane Sinclair, Chief Legal, Risk and Compliance Officer since
2023
Jane Sinclair joined Firmenich in 2016, bringing more than 30 years of international
experience in FMCG, pharmaceuticals, and research companies. With extensive
experience in emerging and mature markets, Jane is dedicated to bringing progress to
life by fostering enduring trust through responsible business practices that benefit
current and future generations. In addition to being the General Counsel, Jane led the
Firmenich Legal & Compliance functions with direct oversight of Legal; Intellectual
Property; Quality, Health, Safety & Environment; Regulatory; Business Ethics; and Trade
Compliance. With her commitment to responsible business, the company's leadership in
environmental, safety and regulatory stewardship has been recognized globally. Prior to
joining Firmenich, Jane worked in multiple senior roles in Asia Pacific, the US, Europe and
Australia for Abbott, AbbVie, Genea, and The Coca-Cola Company. She is Board Member
of the National Safety Council (USA).
Nationality
Australian
Year of Birth
1962
Education
• LLB in Asian Studies and Law, Australian National University
• MBA, Deakin University (Australia)
• INSEAD International Directors Program
Governance and Compensation – Executive Committee
dsm-firmenich Integrated Annual Report 2023 162
Executive Committee diversity profile
Changes to the Executive Committee in 2023
In May 2023, the Board of Directors decided to evolve the then existing Co-CEO structure, and appointed Dimitri de
Vreeze as sole CEO of dsm-firmenich, effective 1 September 2023. As of the same date, Géraldine Matchett, until then
Co-CEO (and holding CFO responsibility), stepped down from the Executive Committee to further her career elsewhere,
in full alignment and with the thanks of the Board of Directors for her 10+ years of leadership and impact. Ralf Schmeitz,
previously Group Controller, was appointed Chief Financial Officer and Member of the Executive Committee effective 1
September 2023. While retaining his role as Chief Integration Officer, Emmanuel Butstraen was appointed President of
the Perfumery & Beauty business with effect from 1 July 2023. On the same date, Ilaria Resta left dsm-firmenich, following
her decision to pursue external career opportunities.
Governance and Compensation – Shareholder participation
dsm-firmenich Integrated Annual Report 2023 163
Shareholder participation
General Meeting
Convening
The General Meeting is held within six months after the end of the financial year (31 December). It is convened by the
Board of Directors (or, if necessary by the external auditors, liquidators or by the representatives of the bondholders).
One or more shareholders who together represent at least 5% of the Company’s share capital or the voting rights may
convene a General Meeting. Shareholders who together represent at least 0.5% of the Company’s share capital or voting
rights may request that an item be placed on the agenda of a General Meeting, provided they submit details thereof to
the Company at least 50 calendar days in advance of the General Meeting.
Calling
The General Meeting is called at least 20 calendar days in advance through publication in the Swiss Official Gazette of
Commerce. Invitations to the General Meeting and supporting materials are published on the Company’s website.
Voting rights and representation of shares
Only those Shareholders entered in the share register as Shareholders with voting rights until the record date designated
by the Board of Directors (and as indicated in the invitation to the General Meeting) are entitled to vote at the General
Meeting. Shareholders entitled to vote are entitled to give a proxy to a third party (who is not a Shareholder) or give
voting instructions to the Independent Proxy (Christian Hochstrasser, c/o ThomannFischer, Elisabethenstrasse 30, 4010
Basel, Switzerland) via the available electronic voting platform available or in writing. All early voting on the electronic
voting platform and all written instructions sent to the Company are deemed an authorization and instruction of the
Independent Proxy. The Independent Proxy informs dsm-firmenich only within the limits of Swiss law about voting trends
(i.e., keeps all instructions received as confidential until three working days prior to the General Meeting).
The 2024 General Meeting will be held in a hybrid format, i.e., physically in Kaiseraugst (Switzerland), but with the option
for Shareholders to attend virtually with full participation possibilities. Shareholders wishing to attend virtually must notify
their willingness to participate in the meeting no later than the date and time indicated in the invitation to the General
Meeting.
Powers and quorum
The General Meeting is the supreme governing body of the Company. Its powers are listed in Art. 10 of the Articles of
Association. Unless otherwise stipulated by law or by the Articles of Association, resolutions are passed by an absolute
majority of the votes represented at the General Meeting. Art. 16 of the Articles of Association lists the resolutions that
require a qualified majority of the votes.
Governance, Ethics and Compensation – Change of control and defense measures
dsm-firmenich Integrated Annual Report 2023 164
Change of control and defense measures
The rules on the duty to make an offer are described in Art. 4.4 and 6 of the Articles of Association.
There are not any change of control clauses. In the event of change of control, the Board of Directors may in its sole
discretion decide on an accelerated vesting of share units granted under equity-based remuneration plans, or take other
decisions considered necessary, to the extent that the vesting shall have an outcome that is deemed reasonable given
the circumstances.
Governance, Ethics and Compensation – Auditors
dsm-firmenich Integrated Annual Report 2023 165
Auditors
Mandate and term of office
KPMG AG was appointed as Group and statutory auditors of DSM-Firmenich AG for the financial year 2023. The
responsible licensed audit experts are Petra Groenland-van der Linden and Carlos Alvarez, with Petra Groenland-van der
Linden as Auditor in charge. The Audit & Risk Committee and the Board of Directors reconsider on an annual basis
whether the external auditors should be proposed for re-election to the General Meeting.
Auditing fees
The auditing fees paid to KPMG in its capacity as statutory and Group auditor for the 2023 consolidated financial
statements amount to €11,154,000, including fees for services related to the review of non-financial information. In
addition, KPMG provided audit and assurance services amounting to €2,477,000, and non-audit services amounting to
€155,000 for tax services, and €49,000 for other various non-audit services. The scope of the audit of the 2023
consolidated financial statements and respective audit fees were approved by the Audit & Risk Committee and defined
in an engagement and fee letter signed by the CEO and the CFO. All other services were (pre-)approved in accordance
with applicable policies.
Information to the Audit & Risk Committee
KPMG attended (all) five Audit & Risk Committee meetings held since the First Trading Date, which include two private
sessions without the presence of management. The lead auditor and the Chair of the Audit Committee meet prior to
each Audit & Risk Committee in order to prepare the meeting.
Auditor Rotation
The Audit Rules of the European Union require DSM BV (which is a directly and wholly owned affiliate of DSM-Firmenich
AG) to rotate its external auditor for the financial year 2025. This rotation will concurrently require a rotation of the DSM-
Firmenich AG statutory and Group auditor in 2025, as a major part of the Group’s business is represented in the entities
held directly/indirectly by DSM BV. In view of this requirements, the Audit & Risk Committee initiated an auditor selection
process in the third quarter of 2023 and mandated a Selection Committee to conduct a tender process.
The Selection Committee consisted of the Chair of the Audit & Risk Committee, the CEO, and the CFO. The Selection
Committee oversaw the execution of the tender process, which was performed by a Tender Team consisting of the
employees from the Finance and Procurement teams. The amended Audit Directive (2014/56/EU) and the Audit
Regulation (537/2014/EU) of the European Union, which prescribe specific requirements on the appointment of statutory
auditors or audit firms, were considered in the audit tender process. In addition, the Selection Committee considered the
report of the Dutch Authority for the Financial Markets (AFM) published in February 2021, which provides
recommendations on the external auditor selection. The auditor selection criteria which were validated by the Audit &
Risk Committee, emphasize the requirements for independence, the ability to provide financial & non-financial
assurance, global footprint, quality ratings, and an excellent professional knowledge network of IT, systems processes &
controls.
Considering the results of the audit tender process and the recommendation of the Selection Committee, the Audit &
Risk Committee, in February 2024, recommended to the Board of Directors the appointment of PricewaterhouseCoopers
AG as external auditor starting from the financial year 2025. The Board of Directors approved the recommendation
(subject to the powers of the General Meeting).
Governance and Compensation – Board Statement
dsm-firmenich Integrated Annual Report 2023 166
Board Statement
This report includes the dsm-firmenich 2023 Management Report as well as the Consolidated financial statements for
the purpose of the Dutch Act on Financial Supervision (Wet Financieel Toezicht), section 5:25c.
Per the Dutch Decree on Transparency for issuing entities subject to the Dutch Act on Financial Supervision (Besluit
Transparantie uitgevende instellingen Wft) article 10, the Directors declare that, to the best of their knowledge:
• The Consolidated financial statements have been prepared in accordance with the applicable reporting
requirements
• The Management Report gives a true and fair view of the development and performance of the business, the
position of the company as well as the principal risks and uncertainties the company faces. The Report also
contains information on major events that took place after year-end, if applicable, as well as future
developments
Thomas Leysen, Chairman of the Board of Directors
Dimitri de Vreeze, Chief Executive Officer
Governance, Ethics and Compensation – Closed periods
dsm-firmenich Integrated Annual Report 2023 167
Closed periods
According to our Group’s Insider Trading Policy, the Board of Directors, the Executive Committee (including the CEO) and
employees who have (or may have) access to material non-public information (such persons are referred to as
’Designated Persons’) are banned from trading in Group financial securities during closed periods.
Closed periods for Members of the Board of Directors and Executive Committee are the periods starting the 29
th
day
after a financial release until the next financial release (which however shall never be shorter than 30 calendar days
before a financial release). Closed periods for Designated Persons are: a) the periods two months prior to the publication
of the annual financial statements of the Group; and b) the periods starting on the first day of a quarter until the
publication of the Group’s quarterly financial statements for that quarter (which however shall never be shorter than 30
days before a financial release).
The following closed period periods applied from the First Trading Date to 31 December 2023:
Closed periods for Board of Directors and Executive Committee
• 16 March up to and including 1 May 2023
• 30 May up to and including 1 August 2023
• 30 August up to and including 30 October 2023
• 28 November up to and including 14 February 2024
Closed periods for Designated Persons
• 1 April up to and including 1 May 2023
• 1 July up to and including 1 August 2023
• 1 October up to and including 31 October 2023
• 14 December up to and including 14 February 2024
Information policy
The Company is committed to open and consistent communication with shareholders and other stakeholders.
The Company uses its website to share and ensure rapid and equitable distribution of information, such as:
• Share performance, analyst consensus and the financial calendar are available here
• Press releases are available here
• Corporate governance documents are available here
Major announcements are accompanied by a live presentation broadcast on the internet. Furthermore, throughout the
year, the Investor Relations team engages with investors (current or prospective) and relevant sell-side analysts in virtual
and in-person meetings, conference calls, roadshows, broker conferences, or other events. In certain cases, Members of
the Executive Committee also participate in meetings with the financial community.
The Investor Relations team can be contacted via e-mail at investors@dsm-firmenich.com.
Governance, Ethics and Compensation – Compensation report 2023
dsm-firmenich Integrated Annual Report 2023 168
Compensation report 2023
On behalf of the Board of Directors and the Compensation Committee, we here present the very first compensation
report of DSM-Firmenich AG. The report has a somewhat atypical nature. DSM-Firmenich AG (the Company) is the
parent company of the merger combination DSM and Firmenich. This report concerns the remuneration from the
first date the Company stock was traded on Euronext Amsterdam (18 April 2023). For this reason, there will be no
comparison with the previous year. The actual 2023 remuneration will be considered against the background of the
remuneration philosophy and principles set for the new Company. Furthermore, the actual remuneration provided
in 2023 is reviewed against the maximum total amount of remuneration as approved by the General Meetings held
on 18 April 2023 and 29 June 2023 respectively.
Category of one
As a newly established company in a category of one, domiciled in Switzerland, dsm-firmenich required a new
remuneration set-up, fit for the purpose of the new entity, its combined business, and its leadership team. DSM and
Firmenich historically had different remuneration schemes for their respective boards and executive committees,
primarily due to their domiciles and industry. Furthermore, the new Company is substantially larger and more complex
than each of the former separate entities. We therefore developed a greenfield approach tailored to our new operating
model, business strategy, and market references.
Consultation of stakeholders
At the inception of the new Company, the compensation approach was validated by the legal representatives of the then
shareholders at the General Meeting of Danube AG (renamed DSM-Firmenich AG) on 18 April 2023. The meeting
approved the maximum total amount of remuneration for the Board of Directors for the period until the Extraordinary
General Meeting (EGM) of DSM-Firmenich AG on 29 June 2023, and the maximum total amount of remuneration for the
Executive Committee for the (remaining term of the) financial year 2023. As we aim to be transparent regarding the
remuneration of the Board of Directors and the Executive Committee, we have thoroughly consulted with investors and
shareholder representatives to obtain their feedback on the proposed remuneration structure. We are grateful for their
active engagement and constructive dialogue. The information used in this respect can be viewed on the Company
website. Our investors and shareholder representatives embraced the proposed remuneration structure and its
underlying philosophy and considerations. Their feedback and recommendations have been taken into account in the
proposals for the Board of Directors remuneration over the period between the EGM of 29 June 2023 until the 2024
Annual General Meeting (AGM) as well as the for the Executive Committee Members over the financial year 2024. All
proposals were approved at the EGM on 29 June 2023: 97.18% voted in favor of the proposed maximum amount of
remuneration for the Board of Directors, while 96.97% of the votes cast were in favor of the proposed maximum amount
of remuneration for the Executive Committee.
First quarter 2023
This compensation report covers the period starting 18 April 2023 until 31 December 2023. Obviously, no reference can
be made to remuneration provided in previous years. Between 1 January 2023 and 18 April 2023, the then responsible
Members of the respective legacy boards and executive committees were compensated on the basis of approved
policies and practices at DSM and Firmenich separately.
The business in 2023
dsm-firmenich seeks to tackle the opportunity between what society needs, what people individually want, and what the
planet demands in the areas of nutrition, health, and beauty. We therefore creatively apply proven science and draw on
our data-driven innovation capabilities as well as exceptional standards of operational excellence. In close cooperation
dsm-firmenich Integrated Annual Report 2023 169
Governance and Compensation – Compensation report 2023
with our customers, we create solutions that are essential for life as well as desirable for consumers yet simultaneously
more sustainable for the planet.
The Company is well advanced in the integration process, while our customers are positive toward our enhanced
business proposition. This gives confidence regarding the delivery of our synergy targets.
We operated in a tough macro-economic environment in 2023, characterized by unprecedented low vitamin prices, but
also by a continued destocking cycle and negative foreign exchange effects. In this challenging context, Perfumery &
Beauty recorded good performance while performance in Taste, Texture & Health was solid. Health, Nutrition & Care, but
especially Animal Nutrition & Health, were weak on exceptionally low vitamin prices and destocking. A vitamin
transformation program, as well as cash flow generation were made key priorities in 2023.
Early 2024, the Company announced the initiation of a process to separate out the Animal Nutrition & Health (ANH)
business from the Group. This should strongly reduce our exposure to vitamins earnings volatility and reduce our capital
intensity in line with our long-term strategy. We believe that the full potential of our attractive and future-oriented ANH
business could be best realized through a different ownership structure.
In view of the economic environment and especially the historically low vitamins prices, revenue and margins lagged
behind expectations, whereas we delivered a very strong performance on cash. Consequently, the Short-Term Incentive
achievement was below target. Our workforce has, remained very engaged, driving a successful integration. We remain
very confident of achieving our integration objectives as well as securing lasting performance from our Business Units.
This report has been prepared in compliance with Article 734 et seqq. of the Swiss Code of Obligations. It comprises
information required under the Swiss Code of Obligations and considers the Swiss Code of best practice for corporate
governance.
In 2023, we
embarked on a journey, building a new Company with the distinct purpose to bring progress to life. This is a
journey we undertake together with all our stakeholders and on which we will continue to seek dialogue with investors
and shareholder representatives regarding remuneration matters.
Carla Mahie
u
Chair Compensation Committee
Governance and Compensation – Compensation report 2023
dsm-firmenich Integrated Annual Report 2023 170
2023 Remuneration at a glance
Board of Directors (BoD)
To ensure independence, the Members of the Board of
Directors receive a fixed fee partially in cash and partially in
Restricted Share Units (RSUs); the committee fees are
provided in cash. RSUs are subject to a three-year vesting
period.
Applicable fee structure BoD on annual basis
Fixed fee
Cash
RSUs
(In CHF)
Chairman
Vice Chair
Member
400,000
122,500
100,000
400,000
122,500
100,000
Committee fees
Cash
RSUs
Chair Audit & Risk
Chair other committees
Member Audit & Risk
Member other committees
40,000
30,000
25,000
20,000
n.a.
n.a.
n.a.
n.a.
Members of the Board of Directors are not subject to a
minimum shareholding requirement.
The below table concerns the actual (2023) and estimated
(2024) remuneration provided for the period from 18 April
2023 until the 2024 Annual General meeting on 7 May 2024,
compared to the total maximum remuneration as approved by
the General Meetings on 18 April 2023 and 29 June 2023
respectively.
Approved and provided compensation BoD
Total Compensation
Approved
Provided
(In € thousand, considering the 2023 Average
Fx rate*)
18 April 2023 until AGM 7 May 2024
4,579
3,769
* Fees are determined and paid in CHF; reporting herein is based on €. During
the year payments are converted to €. The 2023 Average Fx rate is €1 =
CHF0.97176.
The total compensation excluding social security
contributions remains within the approved amount.
As at 31 December 2023 the Members of the Board of
Directors held 16,078,901 shares and 18,239 RSUs.
Executive Committee (ExCo)
We want to attract and retain qualified leaders who can
shape our future, rewarding progress in innovation and
growth. We focus on long-term stakeholder value, aim to be
competitive within the relevant market, and strive to align
rewards with the Company’s strategy and sustainability
ambitions. The below table provides an overview of target
Total Direct Compensation. In addition to Base Salary, Total
Direct Compensation consists of the Short-Term Incentive
and the Long-Term Incentive.
Total Target Direct Compensation ExCo
Target STI
Target LTI
(In % of Annual Base Salary)
CEO
Other ExCo Members
100%
85% or 100%
200%
120% or 100%
The minimum shareholding obligation is 300% (of annual
Base Salary) for the CEO and 100% for other ExCo Members,
to be accrued in a five-year period.
The total compensation excluding social security
contributions awarded to the Members of the Executive
Committee over the period from 18 April 2023 until 31
December 2023 is within the maximum amount of total
compensation for the same period as approved by the
General Meeting on 18 April 2023 (see below table).
Approved and provided compensation ExCo
Total Compensation
Approved
Provided
(In € thousand), considering the 2023
Average Fx rate*)
18 April 2023 until 31 December 2023
38,590
20,418
* Fees are determined and paid in CHF; reporting herein is based on €. During
the year payments are converted to €. The Average Fx rate is €1 = CHF0.97176.
On 31 December 2023 the CEO held 82,453 shares. The other
Members of the Executive Committee in total held 91,267
shares.
Governance
Remuneration decisions are governed by the Swiss Code of Obligations and the Company’s Articles of Association.
The prospective maximum remuneration for the Board of Directors and the Executive Committee is subject to a binding
vote at the General Meeting.
The General Meeting casts a non-binding vote on the Compensation Report.
Governance and Compensation – Compensation report 2023
dsm-firmenich Integrated Annual Report 2023 171
Compensation governance
As determined by the Swiss Code of Obligations and the Articles of Association, the remuneration of the Board of
Directors and the Executive Committee is subject to approval by the General Meeting of Shareholders, upon a proposal
by the Board of Directors. The governance for setting the compensation is laid out in the below overview.
Remuneration of
Proposal by
Approval by
Board of Directors as a whole
Board of Directors
General Meeting of Shareholders
Executive Committee as a whole
Board of Directors
General Meeting of Shareholders
Chair of the Board of Directors; CEO
1
Compensation Committee
Board of Directors
Members of the Board of Directors
Compensation Committee
Board of Directors
Members of the Executive Committee
Compensation Committee
Board of Directors
1 CEO will not attend (those parts of the) meetings if items are discussed involving him individually.
Considering proposals of the Compensation Committee, the Board of Directors shall approve the terms and conditions of
Short- and Long-Term Incentive plans (to be settled in cash or equity), including the performance targets. Furthermore,
the Board of Directors approves the terms and conditions of employment arrangements of the Board of Directors and
the Executive Committee and may provide for adjustment mechanisms or claw-back of incentive-based compensation.
Regarding equity compensation plans, the Board of Directors shall determine the plan specifics, such as, but not limited
to, grant value, vesting requirements, blocking, and/or lock-up periods and forfeiture conditions.
Governed by the Compensation Committee charter, the Compensation Committee comprises four independent non-
Executive Directors, to be appointed for one year by the General Meeting of Shareholders. For the period from 18 April
until the 2024 AGM, the Committee Members are: Carla Mahieu (Chair), Thomas Leysen, Frits van Paasschen, and André
Pometta. The Chair determines the agenda, while the Chief Human Resources Officer (CHRO) and relevant experts
prepare and provide materials for the Compensation Committee meetings. The Compensation Committee may invite the
CEO or other Executives to their meetings as deemed necessary. They have an advisory role and no voting rights. This is
also the case for external experts and advisors that may be engaged during the year to provide legal and external market
insights.
Annual agenda Compensation Committee
1
st
Half of financial year
2
nd
Half of financial year
Actual remuneration Board of Directors and
Executive Committee Members, backward-
looking
Remuneration Board of Directors and Executive
Committee, forward-looking
STI and LTI actual performance achievement,
backward-looking
STI and LTI target performance measures,
forward-looking
Trends in remuneration, governance, and
regulatory requirements
Validation compliance checks with rewards
principles
Validation of annual Compensation Report
Preparation for AGM
Market benchmarking for Board of Directors and
Executive Committee remuneration
Stakeholder consultation
Review of incentive design and alignment to strategy
Preview annual Compensation report
Governance and Compensation – Compensation report 2023
dsm-firmenich Integrated Annual Report 2023 172
The shareholders are involved in the decisions concerning the remuneration of the Board of Directors and the Executive
Committee. The General Meeting has a binding vote on the maximum remuneration for the Board of Directors and the
Executive Committee. In accordance with the Articles of Association, such a binding vote has a prospective nature and
concerns the maximum remuneration for the period until the next General Meeting (Board of Directors) or the following
calendar (i.e., financial) year (Executive Committee). We submit a compensation report to the General Meeting (non-
binding vote), inviting the shareholders to express their opinion on the remuneration in the previous year.
The below table provides an overview of the relevant decisions on compensation (to be) made by the respective general
meeting of shareholders.
Remuneration decisions
1 The General Meeting on 18 April 2023 approved the maximum remuneration for the Board of Directors from 18 April until 29 June 2023.
Currency
As determined by the Articles of Association, the Company currency is Euro. The remuneration of the Members of the
Board of Directors and the Members of the Executive Committee is determined and paid in Swiss Francs (CHF). For
Members of the Executive Committee employed by a non-Swiss entity, an average conversion rate to Euro applies. For
the purpose of establishing the maximum remuneration amounts for the Board of Directors and the Executive Committee
as approved by the General Meetings, a 1-to-1 conversion rate for CHF to € was assumed (‘Assumed Fx rate’). For
accounting purposes, payments during the year provided in CHF were converted to € using a monthly average rate. The
2023 average exchange rate was €1 = CHF0.97176 (‘Average Fx Rate’). These converted amounts, plus any items (cash or
equity) provided for in Euro, represent the actual remuneration. In accordance with the Swiss Code of Obligations (art.
734 para. 2 in connection with art. 958d, para. 3), the actual remuneration stated in Euro must be expressed in local
currency (i.e., CHF) as well. In line with the accounting principles, the year-end Fx rate equal to €1 = CHF0.9260 (‘Year-
end Fx rate’) applies in this respect. Amounts calculated by this means are referred to as ‘CHF Value’.
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dsm-firmenich Integrated Annual Report 2023 173
Remuneration of the Board of Directors
Set-up of the remuneration of the Board of Directors
The Remuneration approach is designed to engage qualified independent directors who possess the right balance of
personal skills, competencies, and experience required to execute the responsibilities and tasks assigned to the Board of
Directors by law or by the Articles of Association. To ensure the Company provides a fair and competitive remuneration,
regular benchmarks are conducted. As it is market practice to review the remuneration of the Board of Directors against
practices in the country of domicile, the companies included in the Swiss Market Index (SMI) serve as the benchmark
(excluding companies whose compensation levels are considered materially higher than the SMI companies). The fees
set, are below the median of the reference group.
The remuneration consists of a Base Fee and Committee Fees. The fees aim to ensure that the Members of the Board of
Directors utilize their skills and competences to the maximum extent possible and reflects the nature of responsibilities
and the time spent. At his request, the Chair does not receive any fees concerning his participation in any of the
Committees. To safeguard independence, fees are not linked to the achievement of any predefined individual or
Company performance targets.
The fees for the Members of the Board of Directors, are set and paid in CHF. As of 18 April 2023, Base Fees and
Committee Fees on annual basis are set as included in the below table.
Fees Board of Directors
Base Fee
Committee Fee
CHF
CHF
Chairman Board of Directors
800,000
Vice-Chair Board of Directors
245,000
Member Board of Directors
200,000
Chair Audit Committee
40,000
Member Audit Committee
25,000
Chair other Committees
30,000
Member other Committees
20,000
To align the interests of the Members of the Board of Directors with other stakeholders, half of the Base Fee is awarded in
Restricted Share Units (RSUs) i.e., the right to receive a dsm-firmenich share at vesting. It is explicitly noted that RSUs are
not tied to any individual or Company performance targets. The grant of RSUs is subject to the following guidelines:
• The number of RSUs to be granted will be calculated considering the average share price of the dsm-firmenich
share over a reference period
• RSUs do not carry voting rights and do not provide eligibility for dividend payments
• Vesting and holding period: 3 years, starting at grant date
• The possibility to conduct a sell-to-cover transaction at vesting to settle taxes due at the respective moment in
time
• Upon leaving the Board, all outstanding RSUs recorded as unvested at termination date shall vest, subject to a
holding obligation of the vested shares of a minimum of one year
The Company pays employer contributions to social security systems in line with applicable laws in any relevant
geography. These amounts are not included in the maximum amount for remuneration of the Board of Directors as
approved by the General Meeting. Other than mandatory contributions to the company pension plan (‘second pillar’)
applicable because of Swiss regulations, the fees are not pensionable.
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dsm-firmenich Integrated Annual Report 2023 174
No mandatory shareholding requirement applies for the Members of the Board of Directors. No loans will be provided to
the Members of the Board of Directors.
Expenses incurred in fulfilling duties are reimbursed, to be paid upon submission of a statement of expenses.
Remuneration Board of Directors in 2023
Assignment to Committees
Ms. Sze Cotte-Tan joined the Board of Directors as of 1 May 2023, whereas the other Members were appointed with
effect from 18 April 2023. During 2023, no further changes occurred in the composition of the Board of Directors. The
Members of the Board of Directors are assigned to the various Committees.
Committee overview
Audit & Risk
Compensation
Governance &
Nomination
Sustainability
Thomas Leysen (Chairman)
Member
Patrick Firmenich (Vice-Chair)
Chair
Sze Cotte-Tan
Member
Antoine Firmenich
Member
Chair
Carla Mahieu
Chair
Member
Erica Mann
Member
Frits van Paasschen
Member
Member
Pradeep Pant
Member
André Pometta
Member
John Ramsay
Chair
Richard Ridinger
Member
Corien Wortmann
Member
Member
Remuneration provided to the Members of the Board of Directors in 2023
Considering the decision that 50% of the Base Fee will be awarded in cash and the remaining 50% in equity, the below
table provides an overview of the total cash remuneration between 18 April to 31 December 2023 and the RSU grant.
Remuneration Board of Directors 2023 (from 18 April 2023 until 31 December 2023) - Audited
In €
Base Fee
in cash
Committee
Fees¹
Other²
Number of
RSUs
granted
Face value
at grant³
Remuneration
excl. social
security
contributions
Social security
contributions⁴
Total
Remune-
ration
Thomas Leysen (Chairman)
312,049
-
-
4,791
384,288
696,337
-
696,337
Patrick Firmenich (Vice-Chair)
95,565
21,712
4,561
1,468
117,749
239,587
10,401
249,988
Sze Cotte-Tan
5
70,672
13,740
-
1,198
96,092
180,504
7,569
188,073
Antoine Firmenich
78,012
39,805
57,856
1,198
96,092
271,765
10,443
282,208
Carla Mahieu
78,012
36,187
-
1,198
96,092
210,291
9,326
219,617
Erica Mann
78,012
14,475
-
1,198
96,092
188,579
21,692
210,271
Frits van Paasschen
78,012
32,568
-
1,198
96,092
206,672
-
206,672
Pradeep Pant
78,012
14,475
-
1,198
96,092
188,579
6,256
194,835
André Pometta
78,012
14,475
4,561
1,198
96,092
193,140
8,293
201,433
John Ramsay
78,012
28,949
-
1,198
96,092
203,053
16,156
219,209
Richard Ridinger
78,012
14,475
57,856
1,198
96,092
246,435
14,765
261,200
Corien Wortmann
78,012
32,568
-
1,198
96,092
206,672
9,647
216,319
Total
1,180,394
263,429
124,83
4
18,239
1,462,957
3,031,614
114,548
3,146,162
Governance and Compensation – Compensation report 2023
dsm-firmenich Integrated Annual Report 2023 175
CHF Value
Base Fee
in cash
Committee
Fees
1
Other
2
Number of
RSUs
granted
Face value
at grant
3
Remuneration
excl. social
security
contributions
Social security
contributions
4
Total
Remune-
ration
Thomas Leysen (Chairman)
288,957
-
-
4,791
355,850
644,807
-
644,807
Patrick Firmenich (Vice-Chair)
88,493
20,105
4,223
1,468
109,035
221,856
9,631
231,487
Sze Cotte-Tan
5
65,442
12,723
-
1,198
88,981
167,146
7,009
174,155
Antoine Firmenich
72,239
36,859
53,575
1,198
88,981
251,654
9,670
261,324
Carla Mahieu
72,239
33,509
-
1,198
88,981
194,729
8,636
203,365
Erica Mann
72,239
13,404
-
1,198
88,981
174,624
20,087
194,711
Frits van Paasschen
72,239
30,158
-
1,198
88,981
191,378
-
191,378
Pradeep Pant
72,239
13,404
-
1,198
88,981
174,624
5,793
180,417
André Pometta
72,239
13,404
4,223
1,198
88,981
178,847
7,679
186,526
John Ramsay
72,239
26,807
-
1,198
88,981
188,027
14,960
202,987
Richard Ridinger
72,239
13,404
53,575
1,198
88,981
228,199
13,672
241,871
Corien Wortmann
72,239
30,158
-
1,198
88,981
191,378
8,933
200,311
Total
1,093,043
243,935
115,596
18,239
1,354,695
2,807,269
106,070
2,913,339
1 Positions of the Members of the Board of Directors explained in previous paragraph. Committee Fees are provided in cash.
2 Concerns fees for the Scientific Advisory Board and second pillar pension contributions if required.
3 Face value at grant – number of share units granted times opening price at grant date. For the total number of RSUs granted, the fair value used for
accounting purposes in accordance with the International Financial Reporting Standards (IFRS) amounts to €1,443,799 (CHF Value: 1,336,958).
4 (Estimated) social security contributions by the Employer based on 2023 remuneration in any relevant jurisdiction.
5 Appointed on 1 May 2023.
The Company has not provided any loans to the Members of the Board of Directors, nor were payments made by
subsidiaries of dsm-firmenich (except for payments to Members of the Scientific Advisory Board, as included under
‘Other’). No payments have been made to persons closely connected to the Members of the Board of Directors (i.e.,
Associated Persons, defined as their spouse, their children under 18 years of age, legal entities owned or controlled by
them, or any person acting as their fiduciary) (Audited).
Compensation voting
The General Meeting of Danube AG (renamed DSM-Firmenich AG) on 18 April 2023 approved a maximum total amount of
remuneration for the Board of Directors of €850,000 (CHF850,000 applying the Assumed Fx rate) for the period starting
18 April 2023 until 29 June 2023. In establishing the amounts, the Assumed Fx rate (EUR 1 = CHF1) was considered. The
EGM of DSM-Firmenich AG on 29 June 2023 approved (97.18% in favor) a maximum total amount of remuneration for the
Board of Directors of €3.6 million (CHF3.6 million based on Assumed Fx rate) for the period 29 June 2023 until the next
AGM (7 May 2024). Since the underlying assumptions are the same, the two amounts are herein combined into one
overall maximum total amount of remuneration for the Board of Directors of €4.45 million (CHF4.45 million) covering the
period starting 18 April 2023 and ending 7 May 2024 (386 days). The approved amount was based on the following
considerations:
• The amount does not include the company-related portion of social security contributions paid in line with
applicable laws in any relevant geography
• Share price development and exchange rate fluctuations are not included
• Other than mandatory contributions to the company pension plan (‘second pillar’) applicable because of local
Swiss regulations, the fees are not pensionable
• An amount of €160,000 (CHF160,000) is included to cover the fees of the Members of the Board of Directors
who also are a member of the Scientific Advisory Board
• An amount was included to cover for unforeseen circumstances as well as offset an appreciation of the share
price on grant date compared to the reference (average price over August 2023) used to determine the number
of RSUs
The below table provides an overview of the total maximum amount of remuneration as approved by the General Meeting
for the period 18 April 2023 until 7 May 2024 and the actual remuneration (excluding social security contributions)
Governance and Compensation – Compensation report 2023
dsm-firmenich Integrated Annual Report 2023 176
awarded in 2023 and to be paid over the period 1 January 2024 until 7 May 2024, thereby considering the Average Fx rate
that applied for 2023).
Approved maximum total amount of remuneration and actual remuneration Board of Directors from 18
April until 7 May 2024 - Audited
Approved maximum remuneration
Actual remuneration excluding
social security contributions
x thousand
€
CHF
€
CHF
Total Remuneration Assumed Fx rate
4,450
4,450
3,524
3,524
Total Remuneration Average Fx rate
4,579
4,450
3,769
3,663
The total remuneration provided in 2023 to the Members of the Board of Directors amounted to €3,031,614 (excluding
social security charges for the account of the Company). This includes the value of the RSU grant: €1,462,957 based on
the face value (i.e., opening price) at the grant date. It is estimated that the total remuneration for the Board of Directors
for the period 1 January 2024 until 7 May 2024 will amount to €737,461. Added to the remuneration provided in 2023, the
total amount of €3,769,075 remains within the approved maximum amount.
Shareholding
By the end of 2023, the Members of the Board of Directors, including Associated Persons, held 16,078,901 ordinary shares
and 18,239 RSUs. The below table provides an overview, detailing:
• The number of Ordinary dsm-firmenich shares held by each individual member of the Board of Directors on 31
December 2023
• The number of outstanding RSUs held by each individual Member of the Board of Directors, granted in 2023
Shareholding Board of Directors - Audited
Number of Shares held
on 31 December 2023
Number of RSUs held on
31 December 2023
Thomas Leysen (Chairman)
20,035
4,791
Patrick Firmenich (Vice-Chair)
4,548,829
1,468
Sze Cotte-Tan
-
1,198
Antoine Firmenich
3,519,236
1,198
Carla Mahieu
-
1,198
Erica Mann
-
1,198
Frits van Paasschen
-
1,198
Pradeep Pant
-
1,198
André Pometta
7,985,013
1,198
John Ramsay
1,788
1,198
Richard Ridinger
4,000
1,198
Corien Wortmann
-
1,198
Total
16,078,901
18,239
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Remuneration Executive Committee
Remuneration set-up
Remuneration philosophy
Our remuneration philosophy aims to attract and retain qualified leaders who can shape our future, rewarding progress in
innovation and growth, and achieving outstanding outcomes together. Our remuneration principles are in line with how
the top executives of listed companies in the EU and Switzerland are rewarded. In line with the business strategy, the new
remuneration approach focuses on creating long-term stakeholder value. In addition, dsm-firmenich considers it
important to align compensation not only with financial targets but also with sustainability goals and ambitions. The key
elements of the compensation philosophy and implementation guidelines are set out below.
Key elements of the compensation philosophy and implementation guidelines
Reward long term stakeholder value
Remuneration strategies and outcomes are tied to the
purpose of the Company and reflect the long-term
value created for its varied stakeholders.
Simplicity and transparency
Straightforward design and transparent communication
to all stakeholders are essential.
Fair and competitive rewards
Reward opportunities reflect competitive practices of
peer companies, guaranteeing pay equity and
competitiveness on total remuneration, securing pay for
performance and rewarding superior, sustainable value
creation.
Alignment with applicable governance practices
Our rewards methodology will reflect appropriate best
practice and corporate governance standards.
Aligned with group strategy and sustainability
ambitions
Group performance and leadership in sustainability
commitments are reflected in rewards design.
Individual choice and diversity
We strive to enable our people to make personal choices
on benefit offerings in line with their needs throughout
different phases of life.
Benchmarking
Total compensation for the Executive Committee is regularly reviewed through benchmarking against the market to
ensure we can attract and retain talented leaders who bring progress to life and to ensure that we remain competitive.
The benchmarking includes a quantitative review of remuneration level, but also a qualitative review of best practices as
well as developments regarding remuneration in the public domain.
In view of the quantitative analysis, a labor market peer group has been defined, based on the following considerations:
• Manufacturing companies headquartered in Europe (mix of companies based in Switzerland, the Netherlands,
and other countries); US companies excluded
• Acknowledging recommendations by shareholder representatives, selected peer group companies are
comparable in size and complexity. Indicators considered in this respect include market capitalization, revenue,
and number of employees
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dsm-firmenich Integrated Annual Report 2023 178
Labor market peer group
Company
Country
Company
Country
ABB
Switzerland
Heineken
Netherlands
AkzoNobel
Netherlands
Henkel
Germany
Alcon
Switzerland
Kerry Group
Ireland
ASML Holding
Netherlands
Koninklijke Philips
Netherlands
Beiersdorf
Germany
Lonza Group
Switzerland
Chocoladefabriken Lindt & Sprüngli
Switzerland
Merck KGA
Germany
Danone
France
Reckitt Benckiser
United Kingdom
Givaudan
Switzerland
Sika
Switzerland
Positioning
The new remuneration model developed for the merged Company (greenfield approach) reflects the position of dsm-
firmenich in the selected peer group. The maximum Total Direct Compensation opportunity for the CEO has been
positioned at the median of the peer group, while the at-target opportunity has been set slightly above the median,
reflecting the scope of a single CEO position. There is a strong focus on long-term value creation in pay mix design:
maximum payout can only be achieved by delivering exceptional performance.
This greenfield approach also applies to the other Executive Committee Members. The greenfield serves as the
remuneration reference for existing and future Executive Committee appointments, considering the scope and
responsibilities of the role. Total remuneration for the individual Executive Committee Members is around the median of
the peer group.
Remuneration structure Executive committee at a glance
Base salary
Pension & other
benefits
Short-Term Incentive
Long-Term Incentive
Shareholding obligation
Purpose and link to strategy
Fixed pay considering
scope of the role,
competencies and skill
set
Securing health and
well-being, risk
protection, and post-
employment income
Incentive aligning short-
term business objectives/
drivers with strategic
company objectives.
Driving pay for
performance
Focus on long-term value
creation, ensuring that
business decisions are in
the long-term interests of
all stakeholders
Aligning the reward of
Executives to the
interests of
stakeholders
Vehicle / delivery
Cash
Subject to plan rules
(cash settled)
Cash
Performance Share Units
(PSUs); three-year vesting
period subject to
performance indicators
Executive Committee
Members obliged to
hold Company shares
Timing
Monthly
Subject to plan rules
Accrual in respective
financial year. Pay-out at
end of Q1 of the
consecutive year
Performance and vesting
period: three consecutive
financial years, starting with
the year of grant
Five years to meet the
obligation
Opportunity
Considering responsi-
bilities of the role, mar-
ket competitiveness,
internal equity and
competences, skill set
Broadly aligned with the
wider workforce (in
country of employment)
and considering market
practice
Target level (in % Annual
Base Salary):
- CEO: 100%
- Other: 85% or 100%
Target level (in % Annual
Base Salary):
- CEO: 200%
- Other: 120% or 100%
In % Annual Base Salary
- CEO: 300%
- Other: 100%
Governance and Compensation – Compensation report 2023
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Minimum pay-out is 0%,
maximum pay-out is
capped at 200% of target.
Threshold: No STI pay-out
if actual Adjusted EBITDA
is less than 75% of
budgeted Adjusted
EBITDA
Maximum vesting capped
at 150% or 200% of target
Performance measures
Changes to be based
on changes in
responsibilities,
performance,
contribution, and
benchmarking
Targets are set by the Board of Directors and for 2023
on financial and sustainability objectives as well as
KPIs related to the merger. Their respective weighting
is as follows:
STI LTI
Exposure to dsm-
firmenich share price
Pay mix
The direct compensation of the Executive Committee Members is approved by the Board of Directors, and comprises:
• Total Direct compensation (Base salary, Short-Term Incentive, Long-Term Incentive)
• Benefits, including pension benefits and risk insurances, company car, and social security contributions
Total Direct Compensation is strongly linked to the short- and long-term success of the Company. The incentive plans
are designed to link award opportunities to business performance. For the CEO, 75% of the at-target Total Direct
Compensation is linked to incentive programs. Outstanding business performance and achievements may result in pay-
out or vesting above target while performance that remains below expectation results in lower compensation or no pay-
out or vesting. Each of the components is further explained hereafter.
Pay-mix Executive Committee
Pay-mix CEO: at-target and maximum
Average Pay-mix other Members Executive Committee:
at-target and maximum
25%
17%
25%
33%
50% 50%
0%
20%
40%
60%
80%
100%
Target Maximum
LTI
STI
Base salary
33%
21%
31%
39%
36%
40%
0%
20%
40%
60%
80%
100%
Target Maximum
Governance and Compensation – Compensation report 2023
dsm-firmenich Integrated Annual Report 2023 180
Base salary
With reference to the Total Direct Compensation benchmark, base salary is set acknowledging the scope of
responsibilities, competencies, skills, and competitive market data. It is the foundation to determine the Short- and Long-
Term incentive opportunity. Base salary is reviewed annually and may be adjusted considering the responsibilities in the
role, performance, and contribution of the Executive Committee Members as well as market movements.
Pension and other benefits
The CEO participates in an international pension plan, while the Members of the Executive Committee participate in the
local pension plan of the country in which their employment resides. The benefits to be accrued under the respective
(international) plans are similar to the plans applicable to the workforce in the respective countries (the international plan
mirrors the Swiss pension scheme). Typical other benefits include a company car and risk insurances in the event of
death in service or full disability. In specific situations, temporary housing or typical expatriation benefits may be
foreseen.
Short-Term Incentive
The Short-Term Incentive (STI) scheme is designed to reward short-term (operational) performance within the long-term
objective of creating sustainable value and growth, considering the interests of all stakeholders. For at-target
performance, the annual STI opportunity amounts to 85% or 100% of annual base salary. The maximum pay-out is
capped at 200% of target.
For each goal, a target will be set corresponding to a 100% pay-out. In addition, a floor defines the level of performance
below which no pay-out will be made, while the cap represents the level of performance at which the maximum pay-out
is 200% of the target opportunity. Pay-out levels between floor, target, and the cap are calculated by linear extrapolation.
Final assessment of target achievement is at the sole discretion of the Board of Directors. The STI is subject to an overall
threshold. If the actual Adjusted EBITDA over the performance year does not reach 75% of the budgeted Adjusted EBITDA
of the year, no STI will be awarded at all.
Long-Term Incentive
The Long-Term Incentive (LTI) is designed to ensure long-term value creation and alignment with the interests of all
stakeholders and supports the retention of talented leaders.
The LTI scheme is a rolling cliff plan covering a three-year performance period. Any grant will be subject to goals set by
the Board of Directors. For each goal, a target will be set corresponding to the level of performance that will result in an
at-target vesting (i.e., 100% of the target is achieved). In addition, a floor defines the level of performance below which no
vesting will take place, while the cap represents the level of performance at which the maximum vesting is earned.
Achievement between floor, target, and the maximum are calculated by linear extrapolation. Final assessment of target
achievement is at the sole discretion of the Board of Directors.
The at-target grant level for the CEO represents 200% of base salary; maximum vesting is capped at 150% of target. For
other Executive Committee Members, the at-target grant is set at 120% or 100% of base salary, with maximum vesting
capped at 150% or 200% of target respectively.
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Main plan features:
• The grant will be provided for in Performance Share Units (PSUs), i.e., the right to receive - upon vesting - one
ordinary dsm-firmenich share, provided the vesting criteria are met
• Vesting is subject to continued employment and the achievement of the performance goals set for the
respective grant
• Vesting and holding period: three years starting at the grant date
• Performance period: three financial years starting on 1 January of the year of grant
• The number of PSUs to be granted is determined by the base salary at the grant date and the average share
price over the reference period to be set by the Board of Directors
• At vesting, Grantees may elect a sell-to-cover in order to cover the withholding of social security contributions
and withholding of taxes due at the vesting date
Share ownership guidance
To align the interests of the Executive Committee Members even further with those of our stakeholders, the Members of
the Executive Committee are required to hold a minimum multiple of their annual base salary in dsm-firmenich ordinary
shares equivalent to:
• CEO: three times annual base salary
• Other Members: one annual base salary
The required value must be accrued within a five-year period. Only shares in the form of fully vested shares obtained
upon the vesting of PSUs granted under a company program or shares privately acquired on the open market are
considered.
Goal setting
A broader set of key performance indicators is in place for dsm-firmenich, some of which feature in our incentive
programs. This relates to targets that reflect our financial performance and sustainability goals, since bringing progress to
life goes hand in hand with profitable growth. The design of our Short- and Long-Term Incentive plans emphasizes the
importance of building long-term growth opportunities. Our goals underpin our commitment to contribute to a better
world, while at the same time generating profitable growth in line with our key strategic goals.
Concerning our incentive programs, the Board of Directors will set goals, their weight, and targets (i.e., the metric) for
each performance year or equity grant. The weighting shall reflect the importance of both financial and sustainability
aspirations. In doing so, the Board of Directors may respond in an agile way to business needs and/or strategy
adjustments in a changing environment. In doing this, the Board of Directors shall:
• Derive goals from the Company strategy
• Focus on objectives instrumental to achieving long-term value creation
• Consider historical performance, business outlook and circumstances, and priorities
• Take into account stakeholders’ expectations
• Ensure that targets are stretching, in order to drive competitive advantage while discouraging excessive risk-
taking
No individual goals are included.
For 2023, a goal related to the delivery of G&A (General & Administrative expenses) synergies via the merger has been
defined. Following the end of an applicable performance period, the Board of Directors will, at their sole discretion,
compare the actual performance to the targets that were set and will assess their achievement. Within the limits of
business-sensitive information, dsm-firmenich will give stakeholders insight into target-setting and achievement.
Governance and Compensation – Compensation report 2023
dsm-firmenich Integrated Annual Report 2023 182
Employment terms and conditions
All employment agreements of the Members of the Executive Committee include a clause prohibiting (changes in) pay
to be executed if such (change in) remuneration is not included in the maximum amount of remuneration approved by
the General Meeting. Members of the Executive Committee have an employment agreement for an indefinite period of
time and are subject to a notice period of six or twelve months. During this period (unless there was a termination for
cause), entitlement to base salary and STI continues. Unvested Long-Term incentives grants are forfeited on the
effective date of a resignation or termination for cause. In other cases of a termination of employment, unvested LTI
grants will vest on a pro rata basis on the effective date of such termination. In accordance with Swiss law, no severance
payments or change in control provisions are agreed or paid. Non-compete provisions will be activated on a case-by-
case basis and are in line with the Swiss Code of Obligations. The Board of Directors may at its discretion recover
variable remuneration awarded on the basis of incorrect data, provided that such recovery is required by law and/or will
result in the re-statement of annual accounts. This right of recovery shall expire three (3) years from the date of the
adoption by the General Meeting of the annual accounts in which the (last instalment of the) applicable variable
remuneration has been accounted for.
Remuneration Executive Committee in 2023
Composition Executive Committee
Members of the Executive Committee were appointed on 18 April 2023. In May 2023, the Board of Directors decided to
evolve the then existing Co-CEO structure, and appointed Dimitri de Vreeze as sole CEO of dsm-firmenich, effective 1
September 2023. No changes were made in Dimitri de Vreeze’s remuneration in this connection.
As from the same date, Géraldine Matchett, until then Co-CEO (and holding CFO responsibility), stepped down from the
Executive Committee to further her career elsewhere, in full alignment and with the thanks of, the Board of Directors for
more than ten years of leadership and impact. She will remain employed during the agreed notice period and will leave
the organization on 31 May 2024. During the notice period, contractually agreed arrangements (base salary, Short- and
Long-Term Incentive, benefits) remain in force until the date employment is effectively terminated. No new LTI grant is
made during the notice period. The agreed non-compete arrangement, effective for a six-month period, includes
payment of base salary (excl. benefits and incentives). No severance is paid. If Géraldine Matchett accepts another role
prior to the scheduled termination date and within the term of the non-compete arrangement, the Company’s
obligations will be reduced during the garden leave period by income awarded to her in such other role. Actual payments
will be included in the remuneration report concerning the year in which the payments actually are or will be conducted.
In view of these changes, the Board of Directors appointed Ralf Schmeitz as a Member of the Executive Committee and
Chief Financial Officer (CFO) as of 1 September 2023. The Board of Directors has established his remuneration in line with
the established remuneration set-up referred to herein.
While retaining his role as Chief Integration Officer, Emmanuel Butstraen was appointed President of the Perfumery &
Beauty business with effect from 1 July 2023. On the same date, Ilaria Resta left dsm-firmenich, following her decision to
pursue external career opportunities. In accordance with Swiss law, no severance was paid to her, while any eligibility
under the dsm-firmenich incentive schemes and benefit programs was cancelled on the same date.
Base salary
Base salaries were set in line with the market benchmark. On an annual basis, the CEO’s base salary was set at CHF1.350
million (€1.389 million based on the Average Fx Rate).
Governance and Compensation – Compensation report 2023
dsm-firmenich Integrated Annual Report 2023 183
Pension and other benefits
The total contribution to the pension plan for the CEO amounted to €127,573 (CHF Value: 118,133). For the Members of the
Executive Committee (including former Members), the amount is €670,407 (CHF Value: 620,797). The spend on other
benefits, such as a company car and risk insurances in the event of death in service or full disability, as well as housing
and other benefits of international assignments, amounted to €1,382,117 (CHF Value: 1,279,840).
Short-Term Incentive (STI)
On an annual basis, the at-target STI opportunity is set at 100% of base salary for the CEO. The at-target STI for other
Members of the Executive Committee is on annual basis set at 85% or 100% of base salary. The maximum pay-out is
capped at 200% of the at-target opportunity.
For 2023, a new STI framework has been designed containing the goals as described below. Targets have been set against
the new performance criteria of the two merged entities post-closing. The 2023 STI payout prior to closing of the merger
was settled in accordance with legacy plan rules for the first quarter of 2023 for DSM legacy Executive Committee
Members, whereas for Firmenich Executive Committee Members it was paid through May 2023.
Overview 2023 STI goals
Goal
Type
Goal
Weight
Definition
Financial goals
(Weight: 60%)
Adjusted EBITDA
30%
Sum of the operating profit plus depreciation, amortization and
impairments, adjusted for material items of profit/loss following acquisi-
tions/divestments, restructurings, impairments, and other
circumstances deemed necessary
Adjusted gross
operating free
cash flow
15%
Cash flow from operating activities, corrected for the cash flow of the
Alternative Performance Measures (APM) adjustments, minus the cash
flow of capital expenditures
Organic sales
growth
15%
Sales growth, excluding the impact of acquisitions, divestments, and
currency changes
Merger
synergy
(10%)
Merger synergy
performance
10%
Progress made on delivery of G&A savings
Note: cost synergies are also included in short-term financial goals
Sustainability
goals (30%)
Safety
15%
Total Recordable Incidents All Rate: (i) including supervised and non-
supervised contractors and (ii) excluding Health incidents
Engagement
15%
Work engagement: Degree to which employees are passionate about
their work and find their work meaningful
For each goal, a pay-out curve is defined:
• If the defined target is achieved, the pay-out is equal to the at-target percentage times base salary times the
weight assigned to the respective goal
• A minimum floor is set for each goal; an achievement below this threshold results in no pay-out
• Over-performance results in a pay-out exceeding 100%, where the maximum achievement is capped at 200% of
the ‘at-target’ weighting of the respective goal
• Between floor and target respectively target and cap, a linear calculation determines the achievement and pay-
out
Governance and Compensation – Compensation report 2023
dsm-firmenich Integrated Annual Report 2023 184
In case of a fatality during the year, the Safety target will not result in a pay-out. If the achieved Adjusted EBITDA is below
75% of the budgeted Adjusted EBITDA, no STI payment will be made, regardless of the achievements against the other
goals.
STI target definition and achievement
Post-merger financial targets were set for the second half of the year. The performance of the Perfumery & Beauty and
Taste businesses remained strong, while Ingredients Solutions showed resilience. The Animal Nutrition & Health as well as
the Health, Nutrition & Care businesses were impacted by record low vitamin prices and continued destocking.
Considering the combined result of the businesses, the sales growth target as well as the target on Adjusted EBITDA were
not achieved. Cash flow generation resulted in an achievement above target, as did Merger G&A cost synergies.
The overall Safety performance improved slightly compared to combined pre-merger levels. The achievement fell short of
the target but reached the pay-out floor.
Our workforce has shown continued strong engagement, resulting in overachievement on the Engagement KPI versus
target.
The achievement on the 2023 STI goals set for the second half of financial year 2023 resulted in a pay-out (to be
effectuated April 2024) as included in the below table.
STI pay-out 2023 - Audited
€
CHF Value
CEO Dimitri de Vreeze
841,875
779,576
Total Executive Committee excl. CEO
2,289,292
2,119,884
Members ExCo for part of reporting period
841,875
779,576
Total Executive Committee
3,973,042
3,679,036
Long-Term incentive (LTI)
In view of the merger, it was decided to postpone the 2023 grant to 31 July 2023 (regular grant date 31 March). The
performance period starts on the same date and ends on 31 December 2025. The vesting is set for 31 March 2026. PSUs
have been granted to the Members of the Executive Committee. On an annual basis, the at-target LTI opportunity for the
CEO is set at 200% of base salary (vesting is capped at 150% of the number of PSUs granted at-target). For the other
Members of the Executive Committee, the at-target grant is set at 120% of base salary (vesting is capped at 150% of the
number of PSUs granted at-target) or at 100% of base salary (vesting is capped at 200% of the number of PSUs Units
granted at-target).
The 2023 grant is implemented by dividing the at-target grant value (% of base salary) by the average opening price of
the dsm-firmenich share on the Amsterdam stock exchange in June 2023 (i.e., €97.38). The table below provides an
overview of the number of share units granted, the face value (opening price on the date of grant) of such grant as well
as the fair value (acc. to IFRS rules) of such grant.
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dsm-firmenich Integrated Annual Report 2023 185
Overview 2023 LTI grant - Audited
Number of
PSUs
granted
Face value
Fair value
€
CHF Value
€
CHF Value
CEO Dimitri de Vreeze
27,727
2,795,991
2,589,088
2,708,096
2,507,697
Total Executive Committee excl. CEO
49,428
4,984,320
4,615,480
4,827,633
4,470,388
Members ExCo for part of reporting period
10,783
1,087,358
1,006,894
1,053,176
975,241
Total Executive Committee
87,938
8,867,669
8,211,462
8,588,905
7,953,326
The grant is provided in PSUs, subject to the goals and targets included in the table below.
Overview goals 2023 LTI grant
Goal
Type
Goal
Weight
Definition
Financial goals
(Weight: 50%)
Total Shareholder
Return (TSR)
25%
Sum of capital gain and dividends paid, representing the total
return to shareholders; the relative ranking (within the peer group)
reflects the overall performance relative to our peers
Core Return on Capital
Employed (CROCE)
25%
Operating profit as percentage of weighted average capital
employed adjusted for depreciation and amortization of merger
related accounting adjustments and Alternative Performance
Measures (APM) Adjustments
Sustainability
goals (50%)
Absolute greenhouse
gas reduction
25%
Absolute greenhouse gas reduction of Scope 1 and 2 emissions
aligned with the new SBTi validated target line of dsm-firmenich
Diversity and Inclusion
25%
% of gender and ethnic diversity of dsm-firmenich global
management team
For each goal, a pay-out curve is defined:
• If the defined target is achieved, the vesting shall be equal to the number of granted PSUs at-target times the
weight assigned to the respective goal
• A minimum floor is set for each goal; an achievement below this threshold results in no vesting related to the
respective goals
• Over-performance results in a vesting exceeding the at-target level, where the maximum achievement is capped
at 150% or 200% of the at-target weighting of the respective goal
• Between floor and target and cap, a linear calculation determines the achievement and vesting
Governance and Compensation – Compensation report 2023
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Targets and vesting scheme 2023 LTI grant
The below scheme provides an overview of the targets and their vesting scheme of the 2023 LTI grant.
Total remuneration
With reference to the remarks made in the chapter on Currency, the total remuneration excluding social security
contributions to the Members of the Executive Committee amounts to €20,418,000.
No loans were provided to Members of the Executive Committee, while no payments have been made by any subsidiary
of the Company. Neither DSM-Firmenich AG nor any of its subsidiaries made payments to Associated Persons of
Members of the Executive Committee (Audited).
Vesting formula TSR
Compared to peer group, if dsm-firmenich TSR is
• Below median: No vesting
• @ median: Floor (80% vesting)
• @ 60
th
percentile: Target (100% vesting)
• ≥ 80
th
percentile: Cap (150% or 200% vesting)
Vesting formula reduction of greenhouse gas emissions
If dsm-firmenich GHG reduction over the 2023–2025 is
• < 11.5% No vesting
• ≥ 11.5% Floor (50% vesting)
• Equals 14% Target (100% vesting)
• ≥ 17.5% Cap (150% or 200% vesting)
Vesting formula Diversity and inclusion
If female/non-binary ratio and ethnicity ratio at the end of the performance period is
Fem./non-binary Ethnicity
• < 35% < 40% No vesting
• 35% 40% Floor (50% vesting)
• 36% 41% Target (100% vesting)
• ≥ 37% ≥ 42% Cap (150% or 200% vesting)
Vesting formula Core ROCE
If Core ROCE is
• < 7% No vesting
• ≥ 7% Floor (50% vesting)
• 8% Target (100% vesting)
• ≥ 9% Cap (150% or 200% vesting)
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dsm-firmenich Integrated Annual Report 2023 187
Total remuneration Executive Committee 2023 (from 18 April until 31 December 2023) - Audited
In €
Base salary Pension
contri.¹
Other
benefits²
Total Fixed
Remune-
ration
Short-
Term
Incentive
(STI)³
Number of
PSUs
granted⁴
Face value
at grant⁵
Total
Variable
Remune-
ration
Remune.
excl. social
security
contri.
Social
security
contri.⁶
Total
Remune-
ration
Dimitri de Vreeze,
CEO 976,321 127,573 141,210 1,245,104 841,875 27,727 2,795,991 3,637,866 4,882,970 10,613 4,893,583
ExCo members,
excl. CEO 3,267,178 543,720 899,076 4,709,974 2,289,292 49,428 4,984,320 7,273,612 11,983,586 347,816 12,331,402
Members ExCo
for part of
reporting period 1,153,693 126,687 341,831 1,622,211 841,875 10,783 1,087,358 1,929,233 3,551,444 111,657 3,663,101
Total ExCo 5,397,192 797,980 1,382,117 7,577,289 3,973,042 87,938 8,867,669 12,840,711
20,418,000
470,086
20,888,086
CHF Value
Base
salary
Pension
contri.¹
Other
benefits²
Total
Fixed
Remune-
ration
Short-
Term
Incentive
(STI)³
Number
of PSUs
granted⁴
Face
value at
grant⁵
Total
Variable
Remune-
ration
Remune.
excl.
social
security
contri.
Social
security
contri.⁶
Total
Remune-
ration
Dimitri de Vreeze, CEO
904,073
118,133
130,760
1,152,966
779,576
27,727
2,589,088 3,368,664 4,521,630
9,828
4,531,458
ExCo members, excl. CEO
3,025,407 503,485
832,544 4,361,436 2,119,884
49,428
4,615,480
6,735,364 11,096,800
322,078
11,418,878
Members ExCo for part of reporting
period
1,068,320
117,312 316,536
1,502,168
779,576
10,783
1,006,8
94 1,786,47
0
3,288,638 103,394
3,392,032
Total ExCo
4,997,800
738,930 1,279,840 7,016,570 3,679,036
87,938
8,211,462 11,890,498 18,907,068 435,300 19,342,368
1 Employer contributions to pension plans.
2 Health and welfare benefits, company car and other benefits, incl. international assignment benefits if applicable.
3 Short-Term Incentive (STI); annual cash settled incentive, accrued in reporting period based on performance in the reporting period, payable in 2024.
4 Performance Share Units granted 31 July 2023, to vest 31 March 2026.
5 Face value at grant – number of PSUs granted times opening price at grant date. For the total number of PSUs granted, the fair value used for accounting
purposes in accordance with the International Financial Reporting Standards (IFRS) amounts to €8,588,905 (CHF Value: 7,953,326).
6 Social security contributions by the Employer based on 2023 remuneration.
Shareholding obligation
In addition to the vested performance shares under the dsm-firmenich Long-Term Incentive plan (or equity-based plans
applicable at Royal DSM), Members of the Executive Committee invested in dsm-firmenich stock. These shares were
bought through private transactions with private funds. The below table provides an overview of the number of shares
held at year-end by the Members of the Executive Committee (including Associated Persons). The CEO significantly
exceeds the shareholding obligation (300% of base salary). Depending on whether the legacy company had a cash-
settled (Firmenich) or equity-settled (DSM) Long-Term Incentive plan, various other Members of the Executive
Committee exceed the shareholding obligation (100% of base salary).
Shareholding Executive Committee - Audited
Number of Shares held on 31 December 2023
Dimitri de Vreeze (Chief Executive Officer)
82,453
Emmanuel Butstraen (President Perfumery & Beauty and Chief
Integration Officer)
-
Mieke Van de Capelle (Chief Human Resources Officer)
-
Philip Eykerman (President Health Nutrition & Care)
75,073
Ivo Lansbergen (President Animal Nutrition & Health)
3,895
Patrick Niels (President Taste, Texture & Health)
10,998
Sarah Reisinger (Chief Science & Research Officer)
-
Jane Sinclair (Chief Legal, Risk and Compliance Officer)
-
Ralf Schmeitz (Chief Financial Officer)
1,301
Total
173,720
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Compensation voting
The General Meeting of Danube AG (renamed DSM-Firmenich AG) on 18 April 2023 approved a maximum total amount of
remuneration for the Executive Committee of €37.5 million for the period from 18 April 2023 to 31 December 2023. In
establishing the amount, the Assumed Fx rate (EUR 1 = CHF 1) was considered.
The approved maximum total amount of remuneration includes the fixed base salary, benefits, and the maximum STI that
can be achieved. Regarding the LTI, the amount included represents the at target value of the grant as a percentage of
Annual Base Salary. The number of PSUs is calculated considering the average share price over a reference period.
Therefore, the approved maximum amount includes an amount to offset an eventual appreciation of the share price on
the grant date compared to the reference period (average price over June 2023). An amount of €2.8 million is included
for other and unforeseen items. This amount concerns, among others, obligations toward Executive Committee Members
following international assignment arrangements agreed by the legacy companies prior to the appointment to the
Executive Committee of dsm-firmenich and will otherwise be used to cover unforeseen circumstances such as changes
in regulatory requirements.
The approved amount does not include the company-related portion of contributions to social security systems paid in
line with applicable laws and regulations in any geography, nor does it include foreign exchange rate fluctuations.
Obligations towards Executive Committee Members confirmed by the legacy companies prior to the appointment into
the Executive Committee of dsm-firmenich are not included in the approved amount. This includes but is not limited to
special payments by Royal DSM and Firmenich SA as referred to in the Offering Circular (issued 22 November 2022) or
the vesting or exercise of Long-Term Incentives granted prior to the Settlement Date (as such term is defined in the
Offering Circular).
Approved maximum total amount of remuneration and actual remuneration Executive Committee
1
from
18 April until 31 December 2023 - Audited
Approved maximum remuneration
Actual remuneration excluding
social security contributions
x thousand
€
CHF
€
CHF
Total Remuneration Assumed Fx rate
37,500
37,500
19,841
19,841
Total Remuneration Average Fx rate
38,590
37,500
20,418
19,841
Approved maximum
remuneration
Actual remuneration excluding
social security contributions
x thousand
€
€
Fixed remuneration & Benefits Average Fx rate
11,180
7,145
Maximum STI accrued over 2023 Average Fx rate
11,592
3,973
LTI (face value at grant date) Average Fx rate
13,063
8,868
Other and unforeseen Average Fx rate
2,755
432
Total remuneration Average Fx rate
38,590
20,418
1 Includes the CEO, the Members of the Executive Committee as at 31 December 2023 and Members of the Executive Committee who stepped down or
were appointed in 2023.
As the above table demonstrates, the total remuneration excluding social security contributions provided in 2023 to all
Members of the Executive Committee (including Members who stepped down or were appointed in 2023) amounts to
€20,418 million and remains within the approved maximum total amount of remuneration €38,590 million. Against the
Average Fx rate, the total remuneration provided in 2023 amounts to CHF19,841 million.
Governance and Compensation – Compensation report 2023
dsm-firmenich Integrated Annual Report 2023 189
Other mandates
According to Article 22 of the Articles of Association, the Members of the Board of Directors and the Executive
Committee may accept mandates outside dsm-firmenich subject to defined limitations. A Member of the Board of
Directors shall hold no more than up to four mandates in listed firms and up to four mandates in non-listed firms. A
Member of the Executive Committee shall hold no more than one mandate in listed firms and up to three mandates in
non-listed firms. The below overview concerns the other mandates with listed or non-listed firms with an economic
interest held by the Members of the Board of Directors and the Executive Committee.
Overview other mandates – Audited
Thomas Leysen
Umicore (L)
1
: Non-Executive Chair of the Supervisory Board
Mediahuis (N)
2
: Non-Executive Chair of the Board
Patrick Firmenich
UBS AG (L): Non-Executive Director
Sze Cotte-Tan
Singapore Institute of Food and Biotechnology, A*STAR Research
Entities (N): Executive Director
Foodplant, a subsidiary of the Singapore Institute of Technology (N):
Non-Executive Chair
Clay Capital (N): Member of the Advisory Committee
Antoine Firmenich
Aquilus Pdt Ltd (Singapore) (N): Managing Director
Aquilus Management Ltd (Bermuda) (N): Executive Director
Alatus Capital (N): Co-Founder & Non-Executive Director
Erica Mann
Kellanova (L): Non-Executive Board member
Perrigo Company (L): Non-Executive Board member
Carla Mahieu
Arcadis (L): Non-Executive Board member
VodafoneZiggo Group B.V. Netherlands (N): Non-Executive Director
Frits van Paasschen
Williams Sonoma (L): Non-Executive Director
Sonder (L): Non-Executive Director
Amadeus IT Group (L): Non-Executive Director
CitizenM Hotels (N): Non-Executive Director
J Crew Group (N): Non-Executive Director
Pradeep Pant
Max India Ltd. (L): Non-Executive Director
Pant consulting Pte Ltd (N): President
NIVA BUPA Health Insurance Co. Ltd.(N): Non-Executive Director
Nurasa Holding Pte Ltd and Nurasa Pte Ltd (N): Chair of the Board
Antara Senior Living & MAX Life Insurance Co. Ltd (N): Non-Executive
Director
André Pometta
White Lobster (N): Non-Executive Director
Noyb SA (+affiliates) (N): Non-Executive Director
John Ramsay
RHI Magnesita N.V. (L): Non-Executive Director
Croda International PLC (L): Non-Executive Director
Nabcock International PLC (L): Non-Executive Director
Richard Ridinger
Brenntag SE (L): Chair of the Supervisory Board
Recipharm AB (N): Chairman of the Board
Novo Holdings (N): Member of the Advisory Board
Corien Wortmann
Aegon N.V. (L): Non-Executive Vice Chair of the Board
Mieke van de Capelle
Spadel (L): Non-Executive Director
1 Listed company.
2 Non-listed company.
Outlook
At the 2024 General Meeting of Shareholders, shareholders will be asked to vote on the total maximum amount of
remuneration both for the Board of Directors for the period until the 2025 AGM and for the Executive Committee for the
financial year 2025. For now, no major changes are expected. Furthermore, at the 2024 AGM an advisory vote is
requested for the 2023 Compensation Report. We will continue to seek the dialogue with investors and other
stakeholders and will keep monitoring societal trends and market practices.
190
Governance and Compensation – Report of the statutory auditor
Report of the statutory auditor
To: the General Meeting of DSM-Firmenich AG, Kaiseraugst.
Report on the Audit of the Compensation Report
Opinion
We have audited the Compensation report of DSM-Firmenich AG (the Company) for the year ended 31 December 2023.
The audit was limited to the information pursuant to Art. 734a-734f of the Swiss Code of Obligations (CO) in the tables
and disclosures marked ‘audited’ on pages 174 to 189 of the Compensation Report.
In our opinion, the information pursuant to Art. 734a-734f CO in the accompanying Compensation Report complies with
Swiss law and the Company’s articles of incorporation.
Basis for Opinion
We conducted our audit in accordance with Swiss law and Swiss Standards on Auditing (SA-CH). Our responsibilities
under those provisions and standards are further described in the ‘Auditor’s Responsibilities for the Audit of the
Compensation Report’ section of our report. We are independent of the Company in accordance with the provisions of
Swiss law and the requirements of the Swiss audit profession, and we have fulfilled our other ethical responsibilities in
accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Other Information
The Board of Directors is responsible for the other information. The other information comprises the information included
in the annual report, but does not include the tables and disclosures marked ‘audited’ in the Compensation Report, the
consolidated financial statements, the stand-alone financial statements and our auditor’s reports thereon.
Our opinion on the Compensation Report does not cover the other information and we do not express any form of
assurance conclusion thereon.
In connection with our audit of the Compensation Report, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the audited financial information in the
Compensation Report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we
are required to report that fact. We have nothing to report in this regard.
Board of Directors' Responsibilities for the Compensation Report
The Board of Directors is responsible for the preparation of a Compensation Report in accordance with the provisions of
Swiss law and the Company’s articles of incorporation, and for such internal control as the Board of Directors determines
is necessary to enable the preparation of a Compensation Report that is free from material misstatement, whether due
to fraud or error. The Board of Directors is also responsible for designing the remuneration system and defining individual
remuneration packages.
Auditor’s Responsibilities for the Audit of the Compensation Report
Our objectives are to obtain reasonable assurance about whether the information pursuant to Art. 734a-734f CO is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with
Swiss law and SA-CH will always detect a material misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of this Compensation Report.
dsm-firmenich Integrated Annual Report 2023
Governance and Compensation – Report of the statutory auditor
dsm-firmenich Integrated Annual Report 2023 191
As part of an audit in accordance with Swiss law and SA-CH, we exercise professional judgement and maintain
professional skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement in the Compensation Report, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud
is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Company’s internal control
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made
We communicate with the Board of Directors or its relevant committee regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that
we identify during our audit.
We also provide the Board of Directors or its relevant committee with a statement that we have complied with relevant
ethical requirements regarding independence, and to communicate with them all relationships and other matters that
may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or
safeguards applied.
KPMG AG
Petra Groenland van der Linden Carlos Alvarez
Licensed Audit Expert Licensed Audit Expert
Auditor in Charge
Basel, 28 February 2024
dsm-firmenich Integrated Annual Report 2023 192
Consolidated financial statements
The financial statements of dsm-firmenich include the consolidated financial statements and the parent company
financial statements. dsm-firmenich (the ‘Company’ or the ‘Group’) is a new company following the merger
between DSM and Firmenich on 8 May 2023. The merger has brought together one of the largest innovation and
creation communities in nutrition, health, and beauty. With 30,000 employees and capabilities built on more than a
century of pioneering science activities, dsm-firmenich has been established to play a leading role in the
reinvention, manufacturing, and combination of vital nutrients, flavors, and fragrances.
The merger was effective on 8 May 2023 through an exchange offer by the Company to the DSM shareholders for all DSM
ordinary shares and the contribution of all Firmenich Shares to the Company against issuance of DSM-Firmenich ordinary
shares representing 34.5% of the total issued share capital of the Company and payment of an amount in cash of €3.5
billion.
The parent company of the Group, DSM-Firmenich AG, is domiciled in Kaiseraugst (Switzerland) and listed on the
Euronext Amsterdam stock exchange. These consolidated financial statements comprise DSM-Firmenich AG and its
subsidiaries (the ‘Group’). The consolidated financial statements are prepared in accordance with IFRS, which includes
Firmenich from the merger date onwards. See also Note 1 General Information.
A list of main participations of the Group can be found in Note 3 Investments to the Parent company financial
statements.
The financial year 2023 covers the period from 1 January 2023 to 31 December 2023. The Board of Directors of DSM-
Firmenich AG approved these consolidated financial statements for issue on 28 February 2024. They are subject to the
approval by the Annual General Meeting on 7 May 2024.
Consolidated income statement
x € million
Notes
2023
2022
Continuing operations
Net sales
5
10,627
8,390
Cost of sales
5
(8,016)
(5,700)
Gross profit
2,611
2,690
Marketing & Sales
5
(1,512)
(1,235)
Research & Development
5
(652)
(295)
General & Administrative
5
(1,015)
(534)
Other operating income
5
188
107
Other operating expense
5
(117)
(51)
Operating profit (loss)
(497)
682
Finance income
6
133
71
Finance expense
6
(283)
(159)
Profit (loss) before tax
(647)
594
Income tax expense
7
18
(124)
Share of net profit of associates and joint ventures
10
(6)
12
Other results related to associates and joint ventures
10
(1)
(7)
Net profit (loss) from continuing operations
(636)
475
Net profit from discontinued operations
3
2,789
1,240
Net profit for the period
2,153
1,715
Consolidated financial statements
dsm-firmenich Integrated Annual Report 2023 193
- Holders of shares parent company 17 2,131 1,694
- Non-controlling interests 16 16 15
- Dividend on cumulative preference shares 16 6 6
Earnings per share (EPS) total (in €): 2
- Basic EPS 9.14 9.80
- Diluted EPS 9.13 9.77
Earnings per share (EPS) continuing operations (in €): 2
- Basic EPS (2.82) 2.64
- Diluted EPS (2.82) 2.63
The accompanying notes are an integral part of these consolidated financial statements.
See Note 2 Alternative performance measures for the reconciliation to Adjusted EBITDA of €1,443 million (2022: €1,395
million) and other adjusted IFRS performance measures.
Consolidated statement of comprehensive income
x € million Notes 2023 2022
Net profit for the period 2,153 1,715
Other comprehensive income
Remeasurements of defined benefit liability 24 (94) 10
Fair value changes in other participating interests and other financial
instruments 11 (65) (61)
Related tax 22 (10)
Items that will not be reclassified to profit or loss (137) (61)
Exchange differences on translation of foreign operations 16
- Change for the period 135 264
- Reclassified to the income statement on loss of significant influence 6 (16)
Hedging reserve 16
- Change for the period 34 (6)
- Reclassified to the income statement (7) 53
Equity accounted investees – share of other comprehensive income - -
Related tax (1) (7)
Items that may subsequently be reclassified to profit or loss 167 288
Total other comprehensive income 30 227
Total comprehensive income for the period, net of tax 2,183 1,942
Attributable to:
- Holders of shares parent company 17 2,176 1,930
- Non-controlling interests 16 7 12
Attributable to:
x € million Notes 2023 2022
Consolidated financial statements
dsm-firmenich Integrated Annual Report 2023 194
Consolidated balance sheet at 31 December
x € million
Notes
2023
2022
Assets
Goodwill and intangible assets
8
18,738
5,147
Property, plant and equipment
9
5,549
3,576
Deferred tax assets
7
228
95
Prepaid pension costs
24
44
19
Share in associates and joint ventures
10
130
61
Derivatives
23
46
82
Other non-current assets
11
691
295
Non-current assets
25,426
9,275
Inventories
12
3,390
2,339
Trade receivables
13
2,553
1,508
Income tax receivables
13
107
36
Other current receivables
13
183
78
Derivatives
23
42
42
Financial investments
14
107
125
Cash and cash equivalents
15
2,456
2,755
Assets held for sale
3
6
1,245
Current assets
8,844
8,128
Total assets
34,270
17,403
Equity and liabilities
Shareholders' equity
22,908
10,743
Non-controlling interests
17
162
102
Equity
16
23,070
10,845
Deferred tax liabilities
7
1,751
476
Employee benefit liabilities
24
520
287
Provisions
18
142
50
Borrowings
19
4,114
2,978
Derivatives
23
8
4
Other non-current liabilities
20
146
205
Non-current liabilities
6,681
4,000
Employee benefit liabilities
24
49
5
Provisions
18
34
45
Borrowings
19
716
86
Derivatives
23
28
23
Trade payables
21
2,071
1,415
Income tax payables
21
177
64
Other current liabilities
21
1,436
490
Liabilities held for sale
3
8
430
Current liabilities
4,519
2,558
Total equity and liabilities
34,270
17,403
Consolidated financial statements
dsm-firmenich Integrated Annual Report 2023 195
Consolidated statement of changes in equity (Note 16)
x € million
Share capital
Share
premium
Treasury
shares
Other
reserves
Retained
earnings
Shareholders
' equity
Non-
controlling
interests
Total
Equity
Balance at 1 January
2022
328
471
(177)
156
8,540
9,318
79
9,397
Total comprehensive
income
-
-
-
230
1,700
1,930
12
1,942
Dividend
-
-
-
-
(459)
(459)
-
(459)
Options / performance
shares granted
-
-
-
34
-
34
-
34
Options / performance
shares vested /
canceled
-
-
-
(29)
29
-
-
-
Repurchase of shares
-
-
(210)
-
-
(210)
-
(210)
Reissued shares
-
-
191
-
(50)
141
-
141
Acquisition (divestment)
of subsidiary with NCI
-
-
-
-
-
-
(4)
(4)
Transfer
-
-
-
(28)
17
(11)
11
-
Other changes
-
-
-
-
-
-
4
4
Balance at 31 December
2022
328
471
(196)
363
9,777
10,743
102
10,845
.
Total comprehensive
income
-
-
-
116
2,060
2,176
7
2,183
Dividend
-
(425)
-
-
(157)
(582)
-
(582)
Options / performance
shares granted
-
-
-
23
-
23
-
23
Options / performance
shares vested /
canceled
-
-
-
(23)
23
-
-
-
Reissued shares
-
-
63
-
(39)
24
-
24
Repurchase of shares
-
-
(256)
-
-
(256)
-
(256)
Cancellation of shares
(67)
(2)
345
-
(276)
-
-
-
Liability to non-tendered
shareholders DSM N.V.
(10)
(42)
-
-
(597)
(649)
-
(649)
Issued new shares
(including swap DSM N.V.
into DSM-Firmenich AG)
(248)
11,758
-
-
-
11,510
-
11,510
Expenditures issuance
new shares
-
(29)
-
-
-
(29)
-
(29)
Acquisition of subsidiary
with NCI
-
-
-
-
-
-
48
48
Divestment of subsidiary
with NCI
-
-
-
-
-
-
(4)
(4)
Remuneration on deeply
subordinated fixed rate
resettable perpetual
notes
-
-
-
-
(28)
(28)
-
(28)
Transfer
-
-
-
(5)
(4)
(9)
9
-
Other changes
-
-
-
-
(15)
(15)
-
(15)
Balance at 31 December
2023
3
11,731
(44)
474
10,744
22,908
162
23,070
Consolidated financial statements
dsm-firmenich Integrated Annual Report 2023 196
Consolidated cash flow statement (Note 26)
x € million
2023
2022
Operating activities
Net profit for the period
2,153
1,715
Share of profit of associates and joint ventures (including discontinued operations)¹
7
(5)
Income tax expenses (including discontinued operations)¹
19
190
Profit before tax (including discontinued operations)¹
2,179
1,900
Finance income and expense (including discontinued operations)¹
151
94
Operating profit (including discontinued operations)¹
2,330
1,994
Depreciation, amortization and impairments (including discontinued operations)¹
1,307
652
EBITDA (including discontinued operations)¹
3,637
2,646
- (Gain) or loss from disposals
(2,845)
(1,024)
- Acquisition- / divestment-related
171
4
- Changes in provisions
33
(33)
- Changes in employee benefits
(51)
(15)
- Share-based compensation
23
34
- Income taxes paid / received
(179)
(131)
- Other non-cash items
316
(19)
Operating cash flow before changes in working capital
1,105
1,462
Changes in:
Inventories
89
(442)
Trade receivables
49
(133)
Trade payables
126
116
Changes in operating working capital
264
(459)
Changes in non-operating working capital
(104)
(38)
Changes in working capital
160
(497)
Cash provided by operating activities
1,265
965
1 The Consolidated cash flow statement includes an analysis of all cash flows in total, therefore including both continuing and discontinued operations. For the amounts related to
discontinued operations split by activities and a reconciliation of profit from continuing operations to total, including discontinued operations, see Note 3 Change in the scope
of the consolidation.
Consolidated financial statements
dsm-firmenich Integrated Annual Report 2023 197
Consolidated cash flow statement (Note 26) continued
x € million
2023
2022
Cash provided by operating activities
1,265
965
Investing activities
Capital expenditure for intangible assets
(129)
(138)
Capital expenditure for property, plant and equipment
(555)
(506)
Proceeds from disposal of property, plant and equipment
16
17
Payments regarding drawing rights
(8)
(7)
Acquisition of subsidiaries
(3,691)
(74)
Disposal of subsidiaries
3,533
1,366
Payments for short-term financial investments
(150)
(638)
Proceeds from short-term financial investments
195
1,001
Other financial assets (incl. associates):
- Dividends received
10
4
- Capital payments and acquisitions
(15)
(33)
- Proceeds from disposals
10
30
- Additions to loans granted
(35)
(152)
- Repayment of loans granted
33
-
Interest received
60
6
Cash from / (used in) investing activities
(726)
876
Financing activities
Contributions from non-controlling interests
-
5
Acquisition of non-controlling interests
1
-
Proceeds from borrowings
15
51
Repayment of borrowings
(549)
(29)
Payments of lease liabilities
(73)
(57)
Change in debt to credit institutions
(7)
(21)
Proceeds from re-issued treasury shares
24
25
Proceeds from issuing new shares
733
-
Repurchase of shares
(256)
(210)
Remuneration on deeply subordinated fixed rate resettable perpetual notes
(28)
-
Dividend paid
(582)
(345)
Interest paid
(61)
(52)
Other
(37)
(12)
Cash (used in) / from financing activities
(820)
(645)
Cash and cash equivalents at the beginning of the period
2,755
1,561
Net increase / (decrease) in cash and cash equivalents
(281)
1,196
Effect of movements in exchange rates on cash held
(18)
(2)
Cash and cash equivalents at the end of the period
2,456
2,755
dsm-firmenich Integrated Annual Report 2023 198
Consolidated financial statements – Notes to the consolidated financial statements
Notes to the consolidated financial statements
1 General information
Basis of preparation
In 2023, the basis of preparation was impacted by the merger of equals between DSM and Firmenich. The Group’s
consolidated financial statements have been prepared in accordance with IFRS Accounting Standards as issued by the
International Accounting Standards Board (IASB) and Swiss law.
The merger transaction was accounted for as a business combination using the acquisition method of accounting under
IFRS 3. DSM N.V. in substance was identified as the acquirer via its prior subsidiary DSM-Firmenich AG. Following the
acquisition method of accounting under IFRS 3, the Firmenich results are included in the consolidated financial
statements as of the merger date 8 May 2023. The comparative numbers included in these consolidated financial
statements reflect the historical financial information as reported by DSM N.V. in the past.
In the following notes all amounts are shown in millions of euros (€), unless otherwise stated.
Changes in accounting policies
dsm-firmenich adopted International Tax Reform – Pillar Two Model Rules (Amendments to IAS 12) upon their release on
23 May 2023. dsm-firmenich applies the temporary mandatory exception from deferred tax accounting for the top-up
tax, which is effective immediately.
Pillar Two legislation has been enacted or substantively enacted in a number of jurisdictions in which dsm-firmenich
operates. Since the newly enacted tax legislation is not yet in effect in these jurisdictions in 2023, there is no current tax
impact for the group for the year ended 31 December 2023.
dsm-firmenich is actively monitoring developments and the global legislative status of Pillar Two implementation in the
jurisdictions where we operate. Furthermore, an assessment is made regarding the potential Pillar Two impact. Based on
this assessment and considering the jurisdictions where the Pillar Two legislation is currently enacted or substantively
enacted, dsm-firmenich does not expect Pillar Two to have a material impact for financial year 2024.
Other new or amended standards that are effective from 1 January 2023 do not have a material effect on dsm-
firmenich’s consolidated financial statements. In addition, new or amended standards effective after 1 January 2023 were
neither adopted early, nor expected to have significant impact.
Group material accounting policies
The below information outlines the general Group material accounting policies. Other specific material accounting
policies that management considers to be the most important for the presentation of the financial position and results of
dsm-firmenich’s operations are included in the relevant notes and applied throughout the consolidated financial
statements.
Principles of consolidation
As a parent company, DSM-Firmenich AG is exposed, or has a right, to the variable returns from its involvement with its
subsidiaries and has the ability to affect the returns through its power over the subsidiaries. The financial data of
subsidiaries are fully consolidated. Non-controlling interests in the Group's equity and profit and loss are stated
separately. Subsidiaries are consolidated from the acquisition date until the date on which dsm-firmenich ceases to have
control. From the acquisition date onwards, all intra-group balances and transactions and unrealized profits or losses
from intra-group transactions are eliminated.
dsm-firmenich Integrated Annual Report 2023 199
Consolidated financial statements – Notes to the consolidated financial statements
A joint arrangement is an entity in which dsm-firmenich holds an interest and which is jointly controlled by dsm-
firmenich and one or more other venturers under a contractual arrangement. A joint arrangement can either be a joint
venture whereby dsm-firmenich and the other partner(s) have rights to the net assets of the arrangement, or a joint
operation where dsm-firmenich and the partner(s) have rights to the assets and obligations for the liabilities of the
arrangement. For joint ventures, the investment in the net assets is recognized and accounted for in accordance with the
equity method, see also Note 10 Associates and joint arrangements. For a joint operation, assets, liabilities, revenues,
and expenses are recognized in the financial statements of dsm-firmenich in accordance with the contractual
entitlement or obligations of dsm-firmenich.
Foreign currencies
The Group's presentation currency is the euro (€), which is also the parent company's functional currency.
Each entity of the Group records transactions and balance sheet items in its functional currency. Transactions
denominated in a currency other than the functional currency are recorded at the spot exchange rates prevailing at the
date of the transactions.
Monetary assets and liabilities denominated in a currency other than the functional currency of the entity are translated
at the closing rates. Exchange differences resulting from the settlement of these transactions and from the translation of
monetary items are recognized in the income statement.
Non-monetary items that are measured on the basis of historical costs denominated in a currency other than the
functional currency continue to be translated against the rate at initial recognition and will not result in exchange
differences.
On consolidation, the balance sheets of subsidiaries that do not have the euro as their functional currency are translated
into euros at the closing rate. The income statements of these entities are translated into euros at the average rates for
the relevant period. The functional currency in which goodwill paid on acquisition is recorded is based on the business
case underlying the corresponding business combination. Exchange differences arising from the translation of the net
investment in entities with a functional currency other than the euro are recorded in Other comprehensive income. The
same applies to exchange differences arising from borrowings and other financial instruments insofar as those
instruments hedge the currency risk related to the net investment. On disposal of an entity with a functional currency
other than the euro, the cumulative exchange differences relating to the translation of the net investment are recognized
in profit or loss.
The currency exchange rates that were used in preparing the consolidated financial statements are listed below for the
most important currencies.
Exchange rate at Average exchange rate 1 euro = 31 December 2023 2022 2023 2022 US dollar 1.11 1.07 1.08 1.05 Swiss franc 0.93 0.98 0.97 1.00 Brazilian real 5.36 5.64 5.40 5.44 Chinese renminbi 7.85 7.36 7.66 7.08
dsm-firmenich Integrated Annual Report 2023 200
Consolidated financial statements – Notes to the consolidated financial statements
Emission rights
dsm-firmenich is subject to legislation encouraging reductions in greenhouse gas emissions and has been awarded
emission rights (principally CO
2
emission rights) in a number of jurisdictions. Emission rights are reserved for meeting
delivery obligations and are recognized at cost. Income is recognized when surplus emission rights are sold to third
parties. When actual emissions exceed the emission rights available to dsm-firmenich, a liability is recognized for the
expected additional costs.
Significant accounting estimates and judgments
The preparation of the consolidated financial statements requires management to make estimates that affect the
application of accounting policies and the reported amounts of assets and liabilities, income and expenses, disclosure of
contingent assets and liabilities at the date of the financial statements. Actual outcomes could differ from those
estimates. The estimates are based on historical experience and other factors, including expectations of future events
that are believed to be reasonable under the circumstances.
Furthermore, the application of the Group’s accounting policies may require management to make judgments, apart
from those involving estimates, that can have a significant effect on the amounts recognized in the financial statements.
Areas of management estimates and judgments that have the most significant effect on the amounts recognized in the
financial statements are disclosed along with the material accounting policies in the relevant notes.
Presentation of Consolidated income statement
dsm-firmenich presents expenses in the Consolidated income statement in accordance with their function. This allows
the presentation of gross profit on the face of the income statement, which is a widely used performance measure in the
industry. The composition of the costs allocated to the individual functions is explained below.
Cost of sales encompasses all manufacturing costs (including raw materials, employee benefits, and depreciation and
amortization) related to goods and services captured in net sales. These are measured at their actual cost based on
weighted average cost, or FIFO.
Marketing & Sales relates to the selling and marketing of goods and services, and also includes all costs that are directly
related to the sale of goods, but are not originated by the manufacturing of the goods (e.g., outbound freight).
Research & Development consists of:
• Research, which is defined as original and planned investigation undertaken with the prospect of gaining new
scientific or technical knowledge and understanding
• Development, which is defined as the application of research findings or other knowledge to a plan or design for
the production of new or substantially improved materials, devices, products, processes, systems or services
before the start of commercial production or use that do not meet the accounting requirements for
capitalization
General & Administrative relates to the strategic and governance role of the general management of the company as
well as the representation of dsm-firmenich as a whole in the financial, political, or business community. It also relates to
business support activities of staff departments that are not directly related to the other functional areas.
Consolidated financial statements – Notes to the consolidated financial statements
dsm-firmenich Integrated Annual Report 2023 201
2 Alternative performance measures
Accounting policy
In monitoring the financial performance of dsm-firmenich, management uses certain Alternative performance measures
(APMs) not defined by IFRS. These APMs should not be viewed in isolation as alternatives to the equivalent IFRS measures
and should be used as supplementary information in conjunction with the most directly comparable IFRS measures.
APMs do not have standardized meaning under IFRS and therefore may not be comparable to similar measures
presented by other companies.
APM adjustments
To arrive at these APMs, adjustments are made for material items of income and expense arising from circumstances
such as acquisitions and divestments, restructuring, impairments, and other events (i.e., APM adjustments). Other APM
adjusting events include site closure costs, environmental cleaning, litigation settlements, or other non-operational
(contractual) arrangements. Except for items related to acquisition and integration costs incurred in the first year from
the acquisition date (including non-recurring inventory value adjustments) as well as adjustments due to previously
recognized APM adjusting events, the threshold for APM adjustments is €10 million.
Estimates and judgments
Significant judgment in using APMs relates to the identification of material items in the consolidated income statement
as ‘APM adjustments’.
Definitions
The APMs used are:
• Earnings before interest, tax, depreciation and amortization (EBITDA) is the IFRS metric operating profit plus
depreciation, amortization, and impairments
• Adjusted earnings before interest, tax, depreciation and amortization (Adj. EBITDA) is EBITDA adjusted for
material items of profit or loss, as defined under ‘APM adjustments’
• Adjusted operating profit (Adj. EBIT) is the IFRS metric operating profit adjusted for material items of profit or
loss, as defined under ‘APM adjustments’
• Core adjusted EBIT (Core adj. EBIT) is calculated as the IFRS metric operating profit adjusted for material items
of profit or loss, as defined under ‘APM adjustments’, and adjusted for the impact of the Firmenich purchase
price allocation (PPA) – see also Note 3 Change in the scope of consolidation
• Adjusted net profit (Adj. net profit) is the IFRS metric net profit adjusted for material items of profit or loss, as
defined under ‘APM adjustments’
• Core adjusted net profit (Core adj. net profit) is the IFRS metric net profit from continuing operations adjusted
for material items of profit or loss, as defined under ‘APM adjustments’, and adjusted for the impact of the
Firmenich purchase price allocation (PPA) – see also Note 3 Change in the scope of consolidation
• Adjusted gross operating free cash flow (AGOFCF) is defined as the IFRS metric operating profit plus
depreciation, amortization, and impairments, adjusted for material items of profit or loss, as defined under ‘APM
adjustments’, corrected for changes in the working capital, minus capital expenditures. This metric is based on
continuing operations
• Adjusted earnings per share (Adj. EPS) is calculated as the net profit available to holders of ordinary shares
adjusted for material items of profit or loss, as defined under ‘APM adjustments’, divided by the average number
of ordinary shares outstanding
• Core adjusted earnings per share (Core adj. EPS): is calculated as the net profit from continuing operations
available to holders of ordinary shares adjusted for material items of profit or loss, as defined under ‘APM
Consolidated financial statements – Notes to the consolidated financial statements
dsm-firmenich Integrated Annual Report 2023 202
adjustments’, and adjusted for the impact of the Firmenich purchase price allocation (PPA) – see also Note 3
Change in the scope of consolidation, divided by the average number of ordinary shares outstanding
• Capital employed is the total of the carrying amount of intangible assets and property, plant and equipment,
inventories, trade receivables and other receivables, less trade payables, other current liabilities, investment
grants and customer funding. Average capital employed is calculated as the average of the capital employed at
the end of the preceding five quarters, including the current quarter
APM adjustments
APM adjustments mainly impact the EBITDA, operating profit, net profit, and EPS and can be specified as follows:
2023
2022
APM Adjustments (continuing operations)
- Acquisitions/divestments
363
4
- Restructuring
234
87
- Other
36
-
- Impairments/(reversals) of PPE, goodwill, and intangible assets
294
(6)
- Financial income and expense
34
8
- Income tax related to adjustments
(135)
(15)
- Adjustments to result from associates and joint ventures
-
2
Total APM adjustments (income)/expense
826
80
2023
The main APM adjustments in 2023 are listed below:
• Acquisition (merger) and divestment costs of €363 million relate mainly to the merger and integration between
DSM and Firmenich, including the impact of the inventory step up of €197 million, following the purchase price
allocation of Firmenich
• Restructuring costs of €234 million relate mainly to restructuring projects, following the announced restructuring
of the vitamin asset footprint, the closure of the Pinova ingredients plant and restructuring costs following the
merger
• Impairments of PPE, goodwill, and intangible assets of €294 million are mainly related to the vitamins business.
Due to the weakening of the vitamins market, the company has taken several measures, including the
restructuring of its vitamin asset footprint, to significantly reduce the costs. This includes the closure of the
Xinghuo vitamin B6 plant in China and the refocusing of the company’s vitamin C activities on its specialty
Quali®-C from Dalry (UK) only. The production of vitamin C in Jiangshan, China, which had already been
significantly reduced since the end of 2022, was completely shut down in mid-May. dsm-firmenich is committed
to the sale of its vitamin C business in Jiangshan (China), and therefore classified end of 2023 the assets and
liabilities as held for sale
• Other costs of €36 million and financial income and expense of €34 million mainly include the overnight
devaluation of the Argentine Peso of more than 50% at the inauguration of the new president, together with
several litigation costs.
2022
The main APM adjustments in 2022 are as follows:
• Restructuring costs of €87 million relate mainly to restructuring projects, following the new strategy in 2022 and
the announced intention for the merger with Firmenich, including the redundancy schemes associated with the
dismissal of employees and costs of termination of contracts
dsm-firmenich Integrated Annual Report 2023 203
Consolidated financial statements – Notes to the consolidated financial statements
Reconciliation Alternative performance measures (continuing operations)
A reconciliation of the APMs to the most directly comparable IFRS measures can be found in the table Alternative
performance measures below.
2023
2022
Operating profit (loss)
(497)
682
Depreciation, amortization and impairments
1,307
622
EBITDA
810
1,304
APM adjustments to EBITDA:
- Acquisitions/divestments
363
4
- Restructuring
234
87
- Other
36
-
Total APM adjustments to EBITDA
633
91
Adjusted EBITDA
1,443
1,395
Operating profit (loss)
(497)
682
APM adjustments to Operating profit:
- APM adjustments to EBITDA
633
91
- Impairments/(reversals) of PPE and Intangible assets
294
(6)
Total APM adjustments to operating profit
927
85
Adjusted operating profit
430
767
PPA adjustments dsm-firmenich
184
-
Core adjusted EBIT
614
767
Net profit (loss) from continuing operations
(636)
475
APM adjustments to net profit from continuing operations:
- Operating profit
927
85
- Financial income and expense
34
8
- Result relating to associates / joint ventures
-
2
Income tax related to APM adjustments
(135)
(15)
Total APM adjustments to net profit from continuing operations
826
80
Adjusted net profit from continuing operations
190
555
PPA adjustments dsm-firmenich
190
-
Core adjusted net profit from continuing operations
380
555
Profit attributable to non-controlling interests
(16)
(13)
Dividend on Cumulative Preference Shares
(6)
(6)
Core adjusted net profit continuing operations available to holders of ordinary
shares
358
536
Adjusted net profit continuing operations available to holders of ordinary shares
168
536
Consolidated financial statements – Notes to the consolidated financial statements
dsm-firmenich Integrated Annual Report 2023 204
2023
2022
Capital employed
Intangible assets
18,738
5,147
Property, plant and equipment
5,549
3,576
Investment grants / drawing rights
(70)
(55)
Inventories
3,390
2,339
Current receivables
2,843
1,622
Current liabilities
(3,684)
(1,969)
Capital employed at 31 December
26,766
10,660
Average capital employed
Capital employed at 1 January
10,660
10,014
Capital employed at 31 March
10,775
10,229
Capital employed at 30 June
26,954
10,626
Capital employed at 30 September
27,724
11,402
Capital employed at 31 December
26,766
10,660
Average capital employed
20,576
10,586
Adjusted EBITDA
1,441
1,725
Change working capital, total group
160
(497)
Capital expenditures, total group
(692)
(651)
Excluding discontinued operations
(53)
(126)
Adj. gross operating free cash flow
856
310
The below table reflects the earnings per share (EPS) related to continuing operations and to total earnings including
discontinued operations.
2023 2022 Continuing Total Continuing Total operations operations Earnings per share (EPS) Average number of ordinary shares outstanding (x million) 233.2 233.2 172.8 172.8 Effect of dilution due to share options (x million) 0.2 0.2 0.5 0.5 Diluted average number of ord. shares outstanding (x million) 233.4 233.4 173.3 173.3 . x € million Net profit available to holders of ordinary shares (658)2,131456 1,694 Adjusted net profit available to holders of ordinary shares 168 161 536 776 Core adj. net profit available to holders of ordinary shares 358 351 536 776 . in € EPS (2.82) 9.14 2.64 9.80 Diluted EPS (2.82) 9.13 2.63 9.77 Adj. EPS 0.72 0.69 3.10 4.49 Diluted Adj. EPS 0.72 0.69 3.09 4.48 Core adj. EPS 1.54 1.51 3.10 4.49
Consolidated financial statements – Notes to the consolidated financial statements
dsm-firmenich Integrated Annual Report 2023 205
3 Change in the scope of consolidation
Accounting policy
Business combinations
Business combinations are accounted for using the acquisition method from the moment control is transferred to the
Group. The cost of an acquisition is measured as the aggregate of the consideration transferred, including assets
transferred, shares issued, and liabilities incurred, measured at acquisition date fair value. Acquisition-related costs
incurred are expensed, except if related to the issue of debt or equity securities.As of the acquisition date, identifiable
assets acquired, liabilities assumed, and any non-controlling interest in the acquiree are recognized separately from
goodwill. Identifiable assets acquired and the liabilities assumed are measured at acquisition date fair value. For each
business combination, dsm-firmenich elects whether it measures the non-controlling interest in the acquiree at fair value
or at the proportionate share of the acquiree’s identifiable net assets. Any contingent consideration payable is measured
at fair value at the acquisition date; subsequent changes in the fair value of the contingent consideration resulting from
events after the acquisition date are recognized in profit or loss.
For business combinations with the acquisition date in the prior reporting period, comparative information is revised in
case adjustments are made during the measurement period to the provisional amounts, determined as part of the
purchase price allocation (PPA), based on information available at the acquisition date.
Non-current assets and disposal groups held for sale
Non-current assets and disposal groups (assets and liabilities relating to an activity that is to be sold) are classified as
‘held for sale’ if their carrying amount is to be recovered principally through a sales transaction rather than through
continuing use. The reclassification takes place when the assets are available for immediate sale and the sale is highly
probable. These conditions are usually met as from the date on which a letter of intent or agreement to sell is ready for
signing. Non-current assets and disposal groups held for sale are measured at the lower of carrying amount and fair value
less costs to sell. Non-current assets held for sale are not depreciated or amortized.
Discontinued operations
Discontinued operations comprise those activities that were disposed of during the period or which were classified as
held for sale at the end of the period and represent a separate major line of business or geographical area that can be
clearly distinguished for operational and financial reporting purposes. Classification as a discontinued operation occurs
when the operation meets the criteria to be classified as held for sale.
Estimates and judgments
Key estimates dsm-firmenich makes in the accounting for changes in the scope of consolidation relate to the
determination of fair values for assets acquired and liabilities assumed in business combinations. These estimates are
based on historical quoted market prices, experience, and validated by external valuation specialists, where deemed
necessary by management.
Merger and acquisitions
In 2023, dsm-firmenich acquired businesses for a total consideration of €290 million (in 2022: €77 million). The
consideration related to the business combination of DSM and Firmenich amounted to €14,277 million.
Merger of equals between DSM and Firmenich
DSM (headquartered in the Netherlands) and Firmenich (headquartered in Switzerland) entered into a business
combination agreement on 30 May 2022 (as amended) to establish one group, dsm-firmenich, a dynamic new creation
and innovation partner in nutrition, health and beauty.
dsm-firmenich Integrated Annual Report 2023 206
Consolidated financial statements – Notes to the consolidated financial statements
On 8 May 2023, the business combination was completed. The merger unites Firmenich's industry-leading Perfumery and
Taste businesses and associated co-creation capabilities with DSM's Health and Nutrition portfolio and renowned
scientific expertise. The identified synergies from the merger include both revenue and cost synergies.
The merger was effected in the second quarter of 2023 through an exchange offer by the Company to the DSM
shareholders for all DSM ordinary shares; the subscription of 6,696,477 shares in DSM-Firmenich AG by Goldman Sachs
at nominal value for the purposes of placing such shares in the market; and the contribution of all Firmenich shares to the
Company against issuance of 91,658,354 dsm-firmenich ordinary shares representing 34.5% of the total issued share
capital of the Company and payment of an amount in cash of €3.5 billion. In determining the consideration related to the
share contribution, the share price of the dsm-firmenich ordinary shares on 8 May 2023 was used.
In accordance with IFRS 3, this merger is to be accounted for as a business combination, in which DSM-Firmenich AG - a
former subsidiary of Koninklijke DSM N.V. – was identified as the acquirer. The purchase price was provisionally allocated
to identifiable assets and liabilities of Firmenich, pending final confirmation of the valuator. This allocation resulted in a
goodwill amount of €8,251 million (of which €8,035 million is non-tax-deductible and €216 million is tax-deductible), and
intangible assets for technology of €1,044 million, customer relations of €3,407 million and trade names of €648 million.
The fair value step-ups related to identifiable assets and liabilities of Firmenich resulted in additional depreciation and
amortization expenses amounting to €184 million and additional finance expenses amounting to €6 million. These
amounts are included in the PPA adjustments made to derive the Core adjusted EBIT and Core adjusted net profit from
continuing operations, see also Note 2 Alternative performance measures.
The goodwill arising from the merger relates to synergies from complementary product offerings, especially within the
newly formed segments TTH and P&B; leveraging on the diverse geographic presence of Firmenich (including strong local
community and continued establishments at a global level) with an aim to strengthen the overall product offerings of the
company; and increased ability to accelerate growth by addressing shifts in consumer preferences and customer needs
driven by global trends. As the Firmenich workforce does not qualify for separate recognition as an intangible asset under
IFRS, it was valued to estimate a contributory asset charge for the valuation of the intangible assets and rationalize part
of the residual goodwill.
The merger contributed €3,110 million to net sales, €312 million to operating result and €624 million to Adjusted EBITDA
during the period from 8 May until 31 December 2023. If the merger had occurred on 1 January 2023, additional net sales
would have been approximately €4,807 million, operating result €506 million and Adjusted EBITDA €958 million.
Adare Biome
On 1 July 2023, dsm-firmenich acquired a 100% interest in Adare Biome, headquartered in Houdan (France) for a total
cash consideration of €290 million. Adare Biome is a pioneer in the development and manufacturing of postbiotics, a
rapidly emerging segment of the gut health market. All identified synergies of this acquisition are revenue synergies.
In accordance with IFRS 3, the purchase price was provisionally allocated to identifiable assets and liabilities acquired,
pending final confirmation of the local valuator. This allocation resulted in a non-tax-deductible goodwill amount of €146
million and intangible assets for technology of €105 million, customer relations of €45 million and trade names of €11
million.
The goodwill relates to the value of future intangible assets, the Culturelle® synergy and the assembled workforce. As the
Adare Biome workforce does not qualify for separate recognition as an intangible asset under IFRS, it was valued to
estimate a contributory asset charge for the valuation of technology and rationalize part of the residual goodwill.
The acquisition of Adare Biome contributed €12 million to net sales, -€5 million to operating result and €2 million to
Adjusted EBITDA during the second half year. If the acquisition had occurred on 1 January 2023, additional net sales
would have been approximately €29 million, operating result -€5 million and Adjusted EBITDA €6 million.
dsm-firmenich Integrated Annual Report 2023 207
Consolidated financial statements – Notes to the consolidated financial statements
Finalization of Prodap PPA
In the reporting year, the Purchase Price Allocation (PPA) related to the acquisition of Prodap in Brazil in 2022 was
finalized without any changes in relation to the purchase price allocation as disclosed in the annual report of 2022.
Valuation techniques intangible assets
Part of a PPA is the recognition of intangible assets which are recognized apart from goodwill. The valuation techniques
dsm-firmenich used for measuring the fair value of these intangible assets in 2023 were as follows:
The acquired technology of Firmenich was valued by applying the relief-from-royalty (RfR) method, a form of the income
approach whereby the value of an asset is estimated by capitalizing the royalties saved as a result of owning the asset.
Technology was identified the key business driver and leading intangible assets of Adare Biome, and therefore the multi-
period excess earnings method (MEEM) was applied to value it.
The trade names were valued by applying the RfR method, a form of the income approach whereby the value of an asset
is estimated by capitalizing the royalties saved as a result of owning the asset.
The fair values of customer relationships were determined by applying the MEEM approach, considering the present
value of the projected cash flow revenues and adjusted for retention.
The favourable contract has been valued using the incremental cash flows (ICF) approach.
Summary merger and acquisitions in 2023
The accounting of the merger and the acquisitions upon closing impacted dsm-firmenich’s consolidated balance sheet
2023 as shown in the below table (measured at the date of acquisition).
Impact merger and acquisitions on balance sheet in 2023
Fair value Firmenich Adare Other Total (merger) Biome acquisitions Assets Intangible assets 5,229 161 1 5,391 Property, plant and equipment 2,012 17 -2,029Other non-current assets 718 - 718 Inventories 1,335 8 -1,343Receivables and other current assets 1,324 13 -1,337Cash and cash equivalents 284 1 -285Total assets 10,902 200 1 11,103 Non-controlling interests and liabilities Non-controlling interests 48 - - 48 Non-current liabilities 3,153 46 -3,199Current liabilities 1,675 10 -1,685Total non-controlling interests and liabilities 4,876 56 -4,932Net assets 6,026 144 1 6,171 Acquisition price (in cash) 3,500 290 2 3,792 Acquisition price (issued dsm-firmenich shares) 10,777 - - 10,777 Consideration 14,277 290 2 14,569 Goodwill 8,251 146 1 8,398 Acquisition costs recognized in APM adjustments (excluding inventory step-up) 157 4 -161
dsm-firmenich Integrated Annual Report 2023 208
Consolidated financial statements – Notes to the consolidated financial statements
The fair value of the acquired receivables is based on the gross contractual amounts, adjusted for estimated contractual
cash flows not expected to be collected.
Part of the contingent liabilities recognized relate to ongoing audits covering tax filings for periods prior to the merger of
DSM and Firmenich. There is no assurance that the tax authorities conducting these tax audits follow dsm-firmenich’s
application and interpretation of local tax laws underlying these filings.
Divestments
Divestment of Engineering Materials
On 1 April 2023, the company completed the divestment of its Engineering Materials business (DEM) to Advent
International and LANXESS. Prior to this divestment, the results of this business (the ‘disposal group’) were reclassified to
discontinued operations.
Summary of divestments in 2023
See below table for the book result of the divestments that took place in the reporting year.
Engineering Materials (DEM) Other Total Assets Goodwill and intangible assets (217)-(217) Property, plant and equipment (374)-(374) Other non-current assets (32)-(32) Inventories (329)-(329) Receivables and other current assets (264)(1)(265) Cash and cash equivalents (161)(8)(169) Total assets (1,377) (9)(1,386)Non-controlling interests and liabilities Non-current liabilities (74)-(74) Current liabilities (439)(5)(444) Total liabilities (513)(5)(518) Net assets (864)(4)(868) Non-controlling interest (3)-(3) Net assets dsm-firmenich shareholders (861)(4)(865) Consideration (net of selling costs, translation differences and net debt) 3,689 1 3,690 Book result 2023 2,828 (3)2,825Income tax (38)-(38) Net book result 2,790 (3)2,787
Impact on comprehensive income
The impact of the business that has been presented as discontinued operations in the income statement and statement
of comprehensive income, is presented in the below tables.
Consolidated financial statements – Notes to the consolidated financial statements
dsm-firmenich Integrated Annual Report 2023 209
2023 2022 Continuing Discontinued Total Continuing Discontinued Total operations operations operations operations Net sales 10,627 388 11,015 8,390 2,090 10,480 Adjusted EBITDA 1,443 (2)1,4411,395 330 1,725 EBITDA 810 2,827 3,637 1,304 1,342 2,646 Total expenses 11,151 (2,439) 8,712 7,708 778 8,486 Adjusted operating profit 430 (2)428767 304 1,071 Operating profit (497)2,8272,330 682 1,312 1,994 Financial income and expense (150)(1)(151)(88)(6)(94)Profit (loss) before income tax expense (647)2,8262,179 594 1,306 1,900 Income tax expense 18 (37)(19)(124)(66)(190) Results related to associates and joint ventures (7)-(7)5- 5 Net profit (loss) for the year (636)2,7892,153 475 1,240 1,715 Of which: - Attributable to non-controlling interests16 - 16 13 2 15 - Dividend on Cumulative Preference Shares6 - 6 6 - 6 - Available to holders of ordinary shares(658)2,7892,131 456 1,238 1,694 Earnings per share (EPS) - Net basic EPS(2.82) 11.96 9.14 2.64 7.16 9.80
The operating profit in discontinued operations amounting to €2,827 million comprises the regular activities of the DEM
business in the first three months of the reporting year (-€2 million) and the book profit on the sale of the DEM business
on 1 April 2023 (€2,827 million) and other APM adjustments (€2 million). The business results reclassified to discontinued
operations include also intercompany recharges that ceased to be earned/incurred on disposal. Corporate costs have
been excluded from the reclassification to discontinued operations. The comparative numbers in the Income statement
and the Statement of comprehensive income are re-presented as if the activities of the DEM business had been
discontinued from the start of the comparative year 2022. In addition, these comparative numbers also include eight
months of results related to former DSM’s Protective Materials business, which was divested in September 2022.
See also the section Assets and liabilities held for sale.
2023 2022 Net profit from discontinued operations 2,789 1,240 Other comprehensive income Remeasurements of defined benefit pension plans - 1 Fair value changes in Other participating interests and other financial instruments -(1)Items that will not be reclassified to profit or loss - - Exchange differences on translation of foreign operations - Change for the year(4)(44)Items that may subsequently be reclassified to profit or loss (4)(44)Total comprehensive income discontinued operations 2,785 1,196 Of which: - Attributable to non-controlling interests- 1 - Available to equity holders of dsm-firmenich2,785 1,195
dsm-firmenich Integrated Annual Report 2023 210
Consolidated financial statements – Notes to the consolidated financial statements
Impact on cash flow statement
The impact of the business that has been included as discontinued operations in the cash flow statement is shown in the
following table.
2023 2022 Net cash provided by / (used in): - Operating activities70 190 - Investing activities3,517 1,291 Net change in cash and cash equivalents 3,587 1,481
See also Note 26 Notes to the cash flow statement.
Assets and liabilities held for sale
Jiangshan
The production of vitamin C in Jiangshan, China, which had already been significantly reduced since the end of 2022, was
completely shut down in mid-May. dsm-firmenich is committed to the sale of its vitamin C business in Jiangshan (China),
and therefore classified end of 2023 the assets and liabilities as held for sale.
Impact on balance sheet
The impact of the reclassification of the regarding activities on the dsm-firmenich consolidated balance sheet is
presented in the following table.
2023 Assets Non-current assets Other non-current assets 1 Current assets Inventories 4 Receivables 1 Total assets 6 Liabilities Non-current liabilities 2 Current liabilities 6 Total liabilities 8 Net assets (2)
Consolidated financial statements – Notes to the consolidated financial statements
dsm-firmenich Integrated Annual Report 2023 211
4 Segment information
Accounting policy
dsm-firmenich has segmented its operations by business activity from which revenues are earned and expenses
incurred. These operating results are regularly reviewed by the Executive Committee (ExCo), dsm-firmenich’s Chief
Operating Decision Maker (CODM), to make decisions about resources to be allocated to the operating segments and
assess their performance. dsm-firmenich uses Adjusted EBITDA as the main indicator to evaluate the consolidated
performance as well as the performance per operating segment. Discrete financial information is available for each
identified operating segment.
The same accounting policies that are applied for the consolidated financial statements of dsm-firmenich are also
applied for the operating segments. Prices for transactions between segments are determined on an arm’s length basis
at market-based prices. Segment results, assets and liabilities include items directly attributable to a segment as well as
those that can reasonably and consistently be allocated. Interest income, interest expense, and income tax expense or
income are not allocated to segments as these amounts are not included in the measure of segment profit or loss
reviewed by the ExCo, or otherwise regularly provided to the ExCo. Selected information on a country and regional basis
is provided in addition to the information about operating segments.
Operating segments
Following the merger, dsm-firmenich is organized into four distinct Business Units:
• Perfumery & Beauty (P&B) creates premium scents with proven benefits, using the best and largest palette of
natural, synthetic, and biotech ingredients. This Business Unit mainly consists of Firmenich’s former Fragrance
and Ingredients businesses and DSM’s former Personal Care & Aroma Ingredients business
• Taste, Texture & Health (TTH) helps customers create food and beverage products that are delicious, nutritious,
affordable, and sustainable. Providing enjoyment and nourishment for consumers, business success for
customers, and better health for people and planet. This Business Unit mainly consists of Firmenich’s former
Taste & Beyond business and DSM’s former Food & Beverage business
• Health, Nutrition & Care (HNC) provides people a way to look after their health by adding critical nutrients to
diet. Driving medical innovation forward, speeding up recovery, and enhancing quality of life. This Business Unit
mainly consists of DSM’s former Health, Nutrition & Care business, excluding the former Personal Care & Aroma
Ingredients business
• Animal Nutrition & Health (ANH) delivers healthy animal proteins efficiently and sustainably, harnessing power
of data to make animal farming practices more sustainable, productive, and transparent
For 2023, these Business Units have been identified as the reportable operating segments of dsm-firmenich.
Any consolidated activities outside the four reportable operating segments above are reported as the reportable
segment ‘Corporate Activities’. These consist of corporate operating and service activities that are not further allocated
to the operating segments.
dsm-firmenich does not have a single external customer that represents 10% or more of total sales.
Consolidated financial statements – Notes to the consolidated financial statements
dsm-firmenich Integrated Annual Report 2023 212
Geographical information
Switzer- Nether- Rest of North Latin China Rest of Total land lands EMEA America America Asia 2022 Net sales (by destination) In € millions 156 402 2,305 1,869 1,507 803 1,348 8,390 In % 2 5 26 22 18 10 17 100 . Workforce at year-end (headcount)¹ 2,232 2,642 4,366 2,618 2,302 4,591 1,931 20,682 Intangible assets and property, plant and equipment at year-end (carrying amount) 1,852 1,304 2,105 2,143 404 774 141 8,723 .
2023 Net sales (by destination) In € millions 204 424 3,103 2,420 1,653 997 1,826 10,627 In % 2 4 29 23 16 9 17 100 . Workforce at period-end (headcount) 3,647 1,783 7,953 4,264 3,617 4,664 3,373 29,301 Intangible assets and property, plant and equipment at period-end (carrying amount) 15,474 1,665 3,147 2,600 506 612 283 24,287
1 Refers to total group, including discontinued operations.
Reportable segments
Perfumery Taste, Health, Animal Corporate Total Discontinued TOTAL & Beauty Texture Nutrition Nutrition Activities continuing operations & Health & Care² & Health operations 2023 Net sales 2,619 2,471 2,246 3,223 68 10,627 388 11,015 Adjusted EBITDA¹ 579 437 377 128 (78)1,443(2)1,441EBITDA 417 361 355 (30)(293)810 2,827 3,637 Adjusted operating profit¹ 317 169 158 (80)(134)430 (2)428Operating profit 154 93 118 (504)(358)(497)2,8272,330 Capital expenditures 112 86 129 252 121 700 5 705 Adjusted EBITDA margin (in %) 22.1 17.7 16.8 4.0 13.6 (0.5) 13.1 .2022 Net sales 1,545 2,990 3,784 71 8,390 2,090 10,480 Adjusted EBITDA¹ 266 678 546 (95)1,395330 1,725 EBITDA 245 669 523 (133)1,3041,342 2,646 Adjusted operating profit¹ 136 429 351 (149)767304 1,071 Operating profit 115 420 328 (181)6821,312 1,994 Capital expenditures 99 103 309 61 572 64 636 Adjusted EBITDA margin (in %) 17.2 23.0 14.4 16.6 15.8 16.5
1 See Note 2 Alternative performance measures for the reconciliation to IFRS performance measures.
2 The 2022 figures for Health, Nutrition & Care include the Personal Care & Aroma Ingredients business, which was transferred to Perfumery & Beauty following the merger.
Consolidated financial statements – Notes to the consolidated financial statements
dsm-firmenich Integrated Annual Report 2023 213
5 Net sales and costs
Accounting policy
Revenue from contracts with customers is recognized by identifying the contract and its performance obligations as well
as determination and allocation of the transaction price to these performance obligations. Net sales represent the
invoice value less estimated rebates, cash discounts, and indirect taxes. No element of financing is deemed present as
sales are made with a short-term credit term.
The payment terms are determined per business segment on a customer basis. dsm-firmenich has neither specific
obligations for returns or refunds, nor specific warranties or other related obligations.
Sale of goods
At dsm-firmenich, revenue related to the sale of goods is recognized in the income statement when the performance
obligation is satisfied. This is at the point in time when transfer of control of the goods passes to the buyer. Fulfilment of
the performance obligations related to goods sold is measured using the commercial shipment terms as an indicator for
the transfer of control. Revenue recognized is measured at the fair value of the contractual transaction price allocated to
the performance obligation that is satisfied.
Rendering of services
Income coming from the rendering of services is recognized when the service, i.e., the performance obligation, has been
performed. Fulfillment of the performance obligations for services rendered is identified according to the individual
contract. The revenue recognized is measured at the fair value of the contractual transaction price allocated to the
performance obligation that is satisfied.
Licensing (royalties)
Income related to the sale or licensing of technologies or technological expertise is recognized in the income statement
either at a point in time or over time, depending on when the contractually identified performance obligations are
satisfied. Performance obligations related to license income include the transfer of rights and obligations associated with
those technologies. License income is reported in Net sales when the income is part of the ordinary and recurring
activities of the business and, if this is not the case, it is reported in Other operating income.
Net sales
2023 2022 Goods sold 10,410 8,191 Services rendered 205 193 Royalties 12 6 Total 10,627 8,390
Consolidated financial statements – Notes to the consolidated financial statements
dsm-firmenich Integrated Annual Report 2023 214
Disaggregation of net sales
2023 2022 Perfumery & Beauty 2,619 - Taste, Texture & Health 2,471 1,545 Health, Nutrition & Care 2,246 3,784 - Dietary supplements and I-Health1,017 - - Early life nutrition 411 - - Pharma 285 - - Biomedical solutions 204 - - Other 329 - Animal Nutrition & Health 3,223 2,990 - Essential Products2,434 - - Performance Solutions 789 - Corporate Activities 68 71 Total 10,627 8,390
Total costs
In 2023, total operating costs (the total costs included in operating profit) amounted to €11.2 billion, €3.5 billion higher
than in 2022, when these costs stood at €7.7 billion, which is mainly caused by the merger. Total operating costs in 2023
included Cost of sales amounting to €8.0 billion (2022: €5.7 billion); gross profit as a percentage of net sales stood at
25% (2022: 32%).
Employee benefit costs 2023 2022 Wages and salaries 2,009 1,353 Social security costs 262 169 Pension costs (see also Note 24) 159 102 Share-based compensation (see also Note 27) 29 35 Total 2,459 1,659
Depreciation, amortization and impairments 2023 2022 Amortization of intangible assets 477 234 Depreciation of property, plant and equipment owned 428 325 Depreciation of right-of-use assets 75 49 Impairment losses 327 14 Total 1,307 622
For impairment losses see Note 2 Alternative performance measures.
Consolidated financial statements – Notes to the consolidated financial statements
dsm-firmenich Integrated Annual Report 2023 215
Other operating income
2023 2022 Release of provisions -10Gain on sale of assets and activities 17 31 Insurance benefits 53 12 Amendments / settlements to pension plans -2Earn-out payments and other settlements 57 9 Lease income 4 7 Royalties 2 4 Sale of emission rights 8 - Sundry 47 32 Total 188 107
Other operating expense 2023 2022 Additions to provisions 22 4 Exchange differences 13 18 Acquisitions / disposals 59 3 Damages w.r.t insurance -4Sundry 23 22 Total 117 51
6 Finance income and expense
2023 2022 Finance income Interest income 95 22 Fair value change in derivatives 28 46 Sundry 10 3 Total finance income 133 71
Finance expense Interest expense (134)(101)Interest relating to lease liabilities (8)(6)Interest relating to defined benefit plans (8)(3)Fair value change in derivatives (33)(14)Capitalized interest during construction 4 3 Exchange differences (73)(2)Unwinding of discounted payables (22)(23)Sundry (9)(13)Total finance expense (283)(159)Total finance income and expense (150)(88)
In 2023, the interest rate applied in the capitalization of interest during construction was 2.5% (same as in 2022). The
increase in exchange differences is mainly caused by the devaluation of the Argentine peso.
Consolidated financial statements – Notes to the consolidated financial statements
dsm-firmenich Integrated Annual Report 2023 216
7 Income tax
Accounting policy
Income tax expense is recognized in the income statement except to the extent that it relates to an item recognized
directly in Other comprehensive income or Shareholders’ equity.
Current tax is the expected tax payable or receivable on the taxable income for the year, using tax rates enacted at the
balance sheet date, and any adjustment to tax payable with respect to previous years. The current tax position also
reflects any uncertainty related to income taxes. Current tax assets and liabilities are offset only if certain criteria are
met.
Deferred tax assets and liabilities are recognized for the expected tax consequences of temporary differences between
the carrying amount of assets and liabilities and their tax base. Deferred tax assets and liabilities are measured at the tax
rates that have been enacted or substantially enacted at the balance sheet date, and reflect any uncertainty related to
income taxes and are expected to apply when the related deferred tax assets are realized or the deferred tax liabilities
are settled. Deferred tax assets, including assets arising from losses carried forward and tax credits, are reassessed over
time and recognized to the extent that it is probable that future taxable profits will be available against which the
deductible temporary differences and unused tax losses can be utilized. Deferred tax assets and liabilities are stated at
nominal value.
Deferred taxes are not provided for the following temporary differences: the initial recognition of goodwill, the initial
recognition of assets or liabilities that affect neither accounting nor taxable profit, and differences relating to
investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. Deferred tax assets
and deferred tax liabilities are offset and presented net when there is a legally enforceable right to offset, and the assets
and liabilities relate to income taxes levied by the same taxation authority.
Estimates and judgments
Key estimates for income tax generally relate to uncertain tax positions that could result from different interpretation of
tax legislation by local tax authorities in the countries where dsm-firmenich operates. For the measurement of the
uncertainty, dsm-firmenich uses the most likely amount or the expected value method to estimate the underlying risk.
This requires judgements and final outcome may deviate from the estimates.
Income tax
The income tax benefit on continuing operations was €18 million, which represents an effective income tax rate of 2.8%
(2022: tax expense of €124 million, representing an effective income tax rate of 21.0%). The amount excludes tax expense
from discontinued operations of €37 million (2022: €66 million) and can be broken down as follows.
Consolidated financial statements – Notes to the consolidated financial statements
dsm-firmenich Integrated Annual Report 2023 217
2023 2022 Current tax (expense) / benefit: - Current year(179)(121)- Prior-year adjustments2 16 - Tax credits compensated2 3 - Non-recoverable withholding tax(13)(5)Total current tax (expense) / benefit (188)(107)Deferred tax (expense) / benefit: - Originating from temporary differences and their reversal245 (16) - Prior-year adjustments3 (17) - Change in tax rate(10)15- Changes arising from write-down of deferred tax assets(41)7- Changes in previously and newly recognized tax losses and tax credits9 (6) Total deferred tax (expense) / benefit 206 (17) Total tax (expense) / benefit 18 (124) Of which related to: - Taxable result excl. APM adjustments(117)(139)- APM adjustments135 15
The relationship between the income tax rate in Switzerland and the effective tax rate on the taxable result can be
explained as follows.
Effective tax rate (continuing operations) In % 2023 2022 Domestic income tax rate 16.3 25.8 Tax effects of: - Deviating rates19.3 (5.0) - Change in tax rates1.5 (2.1) - Tax-exempt income and non-deductible expense(2.5) 0.6 - Other effects2.7 0.9 Effective tax rate taxable result, excl. APM adjustments 37.3 20.2 APM adjustments (see Note 2) (34.5) 0.8 Total effective tax rate 2.8 21.0
The total effective tax rate on the taxable result in 2023 was 2.8% (2022: 21.0%), excluding APM adjustments this was
37.3% (2022: 20.2%). In 2022 the domestic income tax rate of the Netherlands was applicable for DSM BV as parent
company. As in 2023 the parent company changed to DSM-Firmenich AG, the statutory rate of Switzerland applies as of
2023.
The effective tax rate in 2023 compared to the Swiss statutory rate as well as compared to the effective tax rate prior
year, was negatively impacted by the geographical spread mainly due to the lower vitamin prices and profitability,
changes in tax rates under local tax law in various countries and non-deductible expenses. The balance of the deferred
tax assets and deferred tax liabilities increased by €1,142 million owing to the changes presented in the following table.
Consolidated financial statements – Notes to the consolidated financial statements
dsm-firmenich Integrated Annual Report 2023 218
Deferred tax assets and liabilities 2023 2022 Balance at 1 January Deferred tax assets 95 203 Deferred tax liabilities (476)(490)Total (381)(287)Changes: - Income tax income / (expense) in income statement193 (52) - Income tax: change in tax percentage-15Total income statement 193 (37) - Income tax expense in OCI21 (17) - Acquisitions and disposals(1,264) (6) - Exchange differences(108)(13)- Reclassification to held for sale16 (21) Balance at 31 December (1,523) (381) Of which: - Deferred tax assets228 95 - Deferred tax liabilities(1,751) (476)
In various countries, dsm-firmenich has taken standpoints regarding its tax position which may at any time be
challenged, or have already been challenged, by the tax authorities, because the authorities in question interpret the law
differently. For particular tax treatments for which there exists uncertainty that they are accepted by tax authorities,
dsm-firmenich either recognizes a liability or reflects the uncertainty in the recognition and measurement of its current
and deferred tax assets and liabilities.
The deferred tax assets and liabilities relate to the following balance sheet items.
Deferred tax assets and liabilities by balance sheet item
2023 2022 Deferred tax Deferred tax Deferred tax Deferred tax assets liabilities assets liabilities Intangible assets 54 (1,485) 28 (368) Property, plant and equipment 29 (279)15(181) Right-of-use assets -(40)-(34)Financial assets 59 (18)28(25) Inventories 82 (20)36(46) Receivables 11 (22)5(22) Lease liabilities non-current 31 -25- Other non-current liabilities 1 (88) 1 (2) Non-current provisions 73 (46)41- Other current liabilities 68 (2)66(6) Lease liabilities current 10 -11- 418 (2,000) 256 (684) Tax losses carried forward 59 -47Set-off (249)249(208)208Total 228 (1,751) 95 (476)
No deferred tax assets were recognized for loss carryforwards amounting to €566 million (2022: €153 million).
dsm-firmenich Integrated Annual Report 2023 219
Consolidated financial statements – Notes to the consolidated financial statements
Unrecognized loss carryforwards amounting to €93 million will expire in the years up to and including 2028 (2022: €54
million up to and including 2027), €1 million between 2029 and 2033 (2022: €30 million between 2028 and 2032) and
the remaining €472 million in 2034 and beyond (2022: €69 million between 2033 and beyond). In addition, an amount of
€9 million (2022: €17 million) of withholding taxes was unrecognized.
No deferred tax liability is recognized on temporary differences relating to unremitted retained earnings of subsidiaries
as the group is able to control the timings of the reversal of these temporary differences and it is probable that they will
not reverse in the foreseeable future. The amount of unremitted retained earnings on which no deferred tax liability has
been provided for represents €2,253 million (2022: €857 million).
The valuation of deferred tax assets depends on the probability of the reversal of temporary differences and the
utilization of tax loss carryforwards, tax credits and withholding tax. Deferred tax assets are recognized for future tax
benefits arising from temporary differences and for tax loss carryforwards to the extent that the tax benefits are
probable. dsm-firmenich has to assess the likelihood that deferred tax assets will be recovered from future taxable
profits. Deferred tax assets are reduced if, and to the extent that, it is not probable that all or some portion of the
deferred tax assets will be realized. In the event that actual future results differ from estimates, and depending on tax
strategies that dsm-firmenich may be able to implement, changes to the measurement of deferred taxes could be
required, which could have an impact on the company's financial position and profit for the year.
8 GoodwilI and intangible assets
Accounting policy
Goodwill
Goodwill represents the excess of the cost of an acquisition over dsm-firmenich’s share in the net fair value of the
identifiable assets and liabilities in a business combination. Goodwill paid on acquisition of subsidiaries is included in
intangible assets. Goodwill paid on acquisition of joint ventures or associates is included in the carrying amount of these
entities. Goodwill recognized as an intangible asset is tested for impairment annually, and when there are indications that
the carrying amount may exceed the recoverable amount. A gain or loss on the disposal of an entity includes the carrying
amount of goodwill relating to the entity sold.
Intangible assets acquired as part of a business combination
Intangible assets acquired in a business combination are recognized at fair value on the date of acquisition and
subsequently amortized on a straight-line basis over their expected useful lives. The expected useful lives vary from 4 to
20 years.
Separately acquired intangible assets
Separately acquired licenses, patents, application software and other purchased rights are carried at historical cost less
straight-line amortization and less any impairment losses. The expected useful lives vary from 4 to 20 years.
Capital expenditure that is directly related to the development of application software is recognized as an intangible
asset and amortized over its estimated useful life (5 to 8 years). Costs of software maintenance are expensed when
incurred.
Consolidated financial statements – Notes to the consolidated financial statements
dsm-firmenich Integrated Annual Report 2023 220
Internally generated intangible assets
Research costs are expensed when incurred. Development expenditure is capitalized if the recognition criteria are met
and if it is demonstrated that it is technically feasible to complete the asset; that the entity intends to complete the
asset; that the entity is able to sell the asset; that the asset is capable of generating future economic benefits; that
adequate resources are available to complete the asset; and that the expenditure attributable to the asset can be
reliably measured. Development expenditure that meets the recognition criteria is amortized over the asset’s useful life
on a straight-line basis.
As long as internally generated intangible assets are under construction, these intangible assets are not amortized as
they are not yet available for use. Instead, they are subject to a review for impairment annually, or more frequently if
events or circumstances indicate this is necessary. Any impairment is charged to the income statement as it arises.
Impairment of non-financial assets
When there are indications that the carrying amount of a non-financial asset (goodwill, an intangible asset or an item of
property, plant and equipment) may exceed the estimated recoverable amount (the higher of its value in use and fair
value less costs of disposal), the possible existence of an impairment loss is investigated. If an asset does not generate
largely independent cash flows, the recoverable amount is determined for the cash generating unit (CGU) to which the
asset belongs. In assessing the value in use, the estimated future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market interest rates and the risks specific to the asset or CGU.
When the recoverable amount of a non-financial asset or a CGU is less than its carrying amount, the carrying amount is
impaired to its recoverable amount and an impairment charge is recognized in profit or loss. An impairment loss is
reversed when there has been a change in estimate that is relevant for the determination of the asset’s recoverable
amount since the last impairment loss was recognized. Impairment losses for goodwill are never reversed.
Estimates and judgments
Key estimates and judgments dsm-firmenich makes in the accounting for goodwill and intangible assets relate to:
• The amortization period of intangible assets, which depends on their useful lives
• The determination of CGUs, which depends on the capacity of the asset or group of assets to generate
independent cash flows
• The estimation and allocation of future cash flows, growth rates, discount rates and fair values minus costs of
disposal for the impairment testing of goodwill and intangible assets. These estimates are based on historical and
current market rates, quoted prices, experience, current business outlooks, and validated by external valuation
specialists, where deemed necessary by management
Consolidated financial statements – Notes to the consolidated financial statements
dsm-firmenich Integrated Annual Report 2023 221
Goodwill and intangible assets
Goodwill Customer Brands and Technology Software, Internally Other Total base trademarks and formulas licenses generated and patents Balance at 1 January 2022 Cost 2,943 1,140 117 898 592 570 659 6,919 Amortization and impairment losses 14 468 52 161 395 174 345 1,609 Carrying amount 2,928 672 65 737 197 396 314 5,309 Changes in carrying amount: - Capital expenditure- - - - 8 130 -138- Put into operation- - - - 90 (100)10- - Acquisitions 52 11 4 17 -2-86- Disposal subs(46) - (7)(7)(4)(64)- Amortization-(66)(10)(58)(49)(34)(23)(240)- Impairment losses(4)-- -(3)5 -(2)- Exchange differences80 14 3 16 6 10 -129- Reclassification to held for sale(26)-- - - (11) (182)(219)- Transfers-22 -22 (1)-(43)-- Other - 1 8 (1)210 56 (19)(3)(2)52(6)(240)(162) Balance at 31 December 2022 Cost 2,989 1,249 124 1,005 612 576 270 6,825 Amortization and impairment losses 5 596 62 270 363 186 196 1,678 Carrying amount 2,984 653 62 735 249 390 74 5,147 - Of which acquisition related2,984 653 62 735 2 -364,472 . Changes in carrying amount: - Capital expenditure-1- - 2 124 2 129 - Put into operation-22 1 57 (62)-- - Acquisitions8,398 3,451 658 1,149 71 52 10 13,789 - Disposal subs- - - - (1)-- (1) - Amortization-(178)(40)(118)(83)(38)(20)(477)- Impairment losses(28)(3)(3)(13)(6)(13)(4)(70)- Exchange differences(61)17430 53 8 13 (5)212 - Reclassification to held for sale- - - - -2-2 - Transfers- - 22 (34)40 (29)65 - Other-31 -24-(26)2 8,309 3,450 670 1,038 112 49 (37)13,591Balance at 31 December 2023 Cost 11,315 4,880 837 2,174 813 676 258 20,953 Amortization and impairment losses 22 777 105 401 452 237 221 2,215 Carrying amount 11,293 4,103 732 1,773 361 439 37 18,738 - Of which acquisition-related11,293 4,103 732 1,773 76 -1117,988
The amortization and impairment losses of goodwill and intangible assets are included in Cost of sales, Marketing & Sales,
Research & Development and General & Administrative expenses.
Where dsm-firmenich acquired entities in business combinations in the past, they were accounted for by the acquisition
method, resulting in recognition of mainly goodwill, customer- and marketing-related, and technology-based intangible
assets.
The amounts assigned to the acquired assets and liabilities are based on assumptions and estimates about their fair
values. In making these estimates, management consults independent, qualified appraisers where appropriate.
The merger of equals between DSM and Firmenich, which is accounted for as a business combination under IFRS 3,
resulted in the recognition of a significant amount of additional intangible assets. More specifically, the main intangible
assets provisionally recognized as result of the merger are customer relationships for €3,407 million, technology for
€1,044 million, and trademarks for €648 million. Furthermore, an amount of €8,251 million was recognized as goodwill.
dsm-firmenich Integrated Annual Report 2023 222
Consolidated financial statements – Notes to the consolidated financial statements
Other significant intangibles were mainly obtained during the acquisitions of Erber Group and Glycom in 2020, and F&F
Amyris and First Choice Ingredients in 2021. Intangible assets are amortized on a straight-line basis and subject to
impairment trigger testing. There are no intangible assets with an indefinite useful life (same as in 2022).
The carrying amount of the internally generated intangible assets includes €133 million (2022: €143 million) that relates
mainly to strategic projects which are not being amortized yet. The recoverable amount of these projects was estimated
based on the present value of the future cash flows expected to be derived from the projects (value-in-use).
Goodwill
The CGUs dsm-firmenich identified in 2023 were Perfumery & Beauty (P&B), Taste, Texture & Health (TTH), Health,
Nutrition & Care (HNC), and Animal Nutrition & Health (ANH).
Goodwill per Cash generating unit
2023 2022 Perfumery & Beauty (P&B) 4,191 - Taste, Texture & Health (TTH) 3,739 544 Health, Nutrition & Care (HNC) 1,784 1,429 Animal Nutrition & Health (ANH) 1,579 1,011 Total 11,293 2,984
The annual impairment tests of goodwill are performed in the fourth quarter. The recoverable amount of the CGUs is
based on a value-in-use calculation.
The cash flow projections are derived from dsm-firmenich’s business plan as adopted by the Board and updated
periodically — for example when the strategy is updated. More specifically, the cash flow projections are based on the
budget for 2024, as approved by management, which is extrapolated throughout the remainder of the forecast period using
management’s internal forecasts. The key assumptions in the cash flow projections relate to the market growth for the
CGUs and the related revenue projections, EBITDA developments, and the rates used for discounting cash flows. For the
CGUs P&B, HNC and ANH, which are considered mature businesses, a forecast period of five years is applied before they
come to a terminal value. For TTH, an initial forecast period of ten years was applied, reflecting the extended period of time
during which the identified synergies arising from the merger are expected to contribute to the growth of this CGU. The
terminal value growth rate is determined with the assumption of inflationary growth.
Consolidated financial statements – Notes to the consolidated financial statements
dsm-firmenich Integrated Annual Report 2023 223
Key assumptions for goodwill impairment tests
2023 2022 Forecast period (years) - Mature business5 5 - Emerging business10 10 Terminal value growth 2.0% 1.5% Pre-tax discount rate P&B 8.7% TTH 8.6% HNC 7.9% 9.1% ANH 9.2% 10.7% Organic sales growth (year 1–5) P&B 1%–4% TTH 3%–8% HNC 6%–8% 5%–8% ANH 4%–8% 4%–7%
For ANH and HNC, the growth assumptions are based on the growth of the global food and feed markets, and the vitamin
transformation program; for TTH on the growth assumptions of the global food and beverage markets; and for P&B on the
growth assumptions of the global fragrances and personal care markets. A sensitivity test was performed on the
impairment tests of the CGUs and showed that the conclusions of these tests would not have been different if a
reasonable possible adverse change in key parameters had been assumed.
Based on the sensitivity tests performed on the impairment test of the CGUs P&B and TTH, it was identified that a
reasonably possible adverse change in the pre-tax discount rate could cause the carrying amount of these CGUs to
exceed their recoverable amount. Holding all other factors constant, increases of, respectively, 127 basis points and 156
basis points in the pre-tax discount rates of P&B and TTH would result in recoverable amounts equal to the carrying
amounts of these CGUS. The headroom of P&B and TTH amounted to €1,794 million and €2,032 million, respectively. The
remainder of the sensitivity tests performed indicate that the conclusions of the impairment test of the CGUs would not
have been different if a reasonably adverse change in any other key parameter had been assumed.
Consolidated financial statements – Notes to the consolidated financial statements
dsm-firmenich Integrated Annual Report 2023 224
9 Property, plant and equipment
Accounting policy
Property, plant and equipment owned
Items of Property, plant and equipment owned are measured at cost less depreciation calculated on a straight-line basis
over their estimated useful lives and less any impairment losses. Borrowing costs during construction are capitalized
when the underlying asset under construction meets the recognition criteria of a qualifying asset.
Subsequent expenditure is capitalized only when it is probable that future economic benefits associated with the item
will flow to the Group. Expenditures relating to major scheduled turnarounds are capitalized and depreciated over the
period up to the next turnaround.
The estimated remaining lives of assets are reviewed every year, taking account of commercial and technological
obsolescence as well as normal wear and tear. The initially assumed expected useful lives are in principle as follows:
• Buildings 10–50 years
• Plant and equipment 4–15 years
• Land is not depreciated
An item of property, plant and equipment owned is derecognized upon disposal or when no future economic benefits are
expected to arise from the continued use or the sale of the asset. Any gain or loss arising on derecognition of the asset is
recorded in profit or loss.
Right-of-use assets (leases)
dsm-firmenich mainly leases offices, warehouses, vehicles, machinery, and other equipment.
The Group recognizes a right-of-use asset and a lease liability at the lease commencement date. Right-of-use assets are
measured at cost less any depreciation on a straight-line basis over the expected lease term, less any impairment losses,
and adjusted for remeasurements of the lease liability. In line with the initially assumed expected useful life of the
corresponding asset class within Property, plant and equipment, the minimum expected lease term for building leases is
in principle 10 years. However, the contractual terms or specific circumstances could require applying the shorter non-
cancellable period in determining the expected lease term. For vehicle leases, the expected lease term is set equal to the
contractual term (4–5 years).
Impairment of Property, plant and equipment
If there is an indication of impairment, the carrying amount of an item of Property, plant and equipment or the cash
generating unit (CGU) to which it belongs is reviewed and the recoverable amount of the asset or the CGU is estimated.
An impairment loss is recognized if the carrying amount of an asset or CGU exceeds its recoverable amount. An
impairment loss is reversed when there has been a change in estimate that is relevant for the determination of the
asset’s recoverable amount since the last impairment loss was recognized.
Estimates and judgments
Key estimates and judgments dsm-firmenich makes in the accounting for items of property, plant and equipment relate
to:
• The depreciation period of items of property, plant and equipment, which depend on their useful lives
• The determination of the lease term for lease contracts based on assessment of available renewal options.
Estimates are based on the underlying asset class, past practices and current business outlooks
• The estimation and allocation of future cash flows, growth rates, discount rates and fair values minus costs of
disposal for the impairment testing of items of property, plant and equipment. These estimates are based on
historical and current market rates, experience, and current business outlooks
Consolidated financial statements – Notes to the consolidated financial statements
dsm-firmenich Integrated Annual Report 2023 225
Composition of Property, plant and equipment
2023 2022 Property, plant and equipment owned 5,156 3,402 Right-of-use assets 393 174 Total 5,549 3,576
Property, plant and equipment owned Land and Plant and Under Not used for Total buildings equipment construction operating activities Balance at 1 January 2022 Cost 2,108 5,707 564 8 8,387 Depreciation and impairments 946 3,673 1 -4,620Carrying amount at 1 January 2022 1,162 2,034 563 8 3,767 Changes in carrying amount: - Capital expenditure7 48 443 -498- Put into operation70 303 (373)-- - Acquisitions2 1 - - 3 - Disposals and deconsolidations(55)(161)(22)-(238) - Depreciation(71)(271)- - (342) - Impairment losses(2)(16)- - (18) - Exchange differences28 42 9 -79- Reclassification to held for sale(55)(243)(42)-(340) - Transfer to RoU assets2 (2)(6)(2)(8)- Other changes2 (1)-- 1 (72)(300)9 (2)(365)Balance at 31 December 2022 Cost 1,929 4,625 572 6 7,132 Depreciation and impairments 839 2,891 - - 3,730 Carrying amount at 31 December 2022 1,090 1,734 572 6 3,402 . Changes in carrying amount: - Capital expenditure13 48 510 -571- Put into operation38 259 (297)-- - Acquisitions960 684 222 -1,866- Disposals and deconsolidations(5)10(12)-(7) - Depreciation(107)(321)- - (428) - Impairment losses(68)(200)18 -(250)- Exchange differences51 (34)(4)-13- Reclassification to held for sale(5)-- -(5)- Other reclassifications65 129 (200)-(6) 942 575 237 -1,754Balance at 31 December 2023 Cost 2,956 5,642 809 6 9,413 Depreciation and impairments 925 3,332 - - 4,257 Carrying amount at 31 December 2023 2,031 2,310 809 6 5,156
dsm-firmenich Integrated Annual Report 2023 226
Consolidated financial statements – Notes to the consolidated financial statements
In 2023, impairment losses of €250 million (2022: €18 million) were recognized on Property, plant and equipment, which
mainly relate to the impairment of the Jiangshan site (€119 million) and the impairment of the vitamin B6 production line
on the Xinghuo site (€106 million). See also Note 2 Alternative performance measures. For acquisitions, see Note 3
Change in the scope of consolidation.
Right-of-use assets Land and Plant and Total buildings equipment Balance at 1 January 2022 136 61 197 Changes in carrying amount: New leases / terminations 8 14 22 Remeasurements 12 - 12 Depreciation (33)(17)(50) Derecognition (2) - (2) Exchange rate differences 4 1 5 Reclassification to held for sale (6) (4) (10) (17) (6) (23) Balance at 31 December 2022 Cost 219 92 311 Depreciation and impairments (100)(37)(137) Carrying amount at 31 December 2022 119 55 174 . Changes in carrying amount: Acquisition 130 33 163 New leases / terminations 117 21 138 Depreciation (48)(27)(75) Exchange rate differences 1 (1) - Impairments (7) - (7) 193 26 219 Balance at 31 December 2023 Cost 430 128 558 Depreciation and impairments (118)(47)(165) Carrying amount 312 81 393
For the disclosures on the lease liabilities that correspond with the right-of-use assets, see Note 19 Borrowings.
Consolidated financial statements – Notes to the consolidated financial statements
dsm-firmenich Integrated Annual Report 2023 227
10 Associates and joint arrangements
Accounting policy
An associate is an entity over which dsm-firmenich has significant influence but no control or joint control, usually
evidenced by a shareholding that entitles dsm-firmenich to between 20% and 50% of the voting rights. A joint venture is
an entity over which dsm-firmenich has joint control and is entitled to its share of the net assets and liabilities.
Investments in associates and joint ventures are initially recognized at cost, including transaction costs. Subsequent to
initial recognition, these investments are accounted for by the equity method, which involves recognition in the income
statement of dsm-firmenich’s share of the associate’s or joint venture’s profit or loss for the year determined in
accordance with the accounting policies of dsm-firmenich. Any other results at dsm-firmenich in relation to associated
companies are recognized under Other results related to associates and joint ventures. dsm-firmenich’s interest in an
associate or joint venture is carried in the balance sheet at its share in the net assets of the associate or joint venture
together with goodwill paid on acquisition, less any impairment loss.
When dsm-firmenich’s share in the loss of an associate or joint venture exceeds the carrying amount of that entity, the
carrying amount is reduced to zero. No further losses are recognized unless dsm-firmenich has responsibility for
obligations relating to the entity.
Associates and joint ventures
The following table analyses, in aggregate, the carrying amount and share of profit of associates and joint ventures.
2023 2022 Associates Joint Total Total ventures Balance at 1 January 53 8 61 64 - Share of the profit of associates and joint ventures(6)-(6)10- Other comprehensive income(3)-(3)-- Capital payments 5 -54 - Dividends received(2)-(2)(2)- Acquisitions67 7 74 - - Disposals - - - (9) - Other1 -1(6) Balance at 31 December 115 15 130 61
For acquisitions, see Note 3 Change in the scope of consolidation. This mainly includes the 49% share in Essential Labs,
LLC.
Joint operations
The operations Veramaris®
3
(2017) and Avansya (2019) are accounted for in accordance with IFRS 11 for joint operations.
dsm-firmenich therefore recognizes their amounts for the assets, liabilities, revenues and expenses in accordance with
the contractual entitlement and obligations of dsm-firmenich, see also Note 1 General Information.
3
This trademark is owned by Veramaris V.O.F.
Consolidated financial statements – Notes to the consolidated financial statements
dsm-firmenich Integrated Annual Report 2023 228
11 Other financial assets
Accounting policy
Other financial assets comprise loans to associates and joint ventures, other participating interests and other long-term
investments and receivables.
Other participating interests comprise equity interests in entities in which dsm-firmenich has no significant influence.
dsm-firmenich generally applies the irrevocable election upon initial recognition to present subsequent changes in the
fair values of these interests in Other comprehensive income (OCI). Fair value changes in OCI will not be recycled through
profit and loss upon disposal of the interest. All dividends received will be presented in profit or loss.
dsm-firmenich’s business model objective for loans granted is ‘held-to-collect contractual cash flows only’. Held to
collect loans, other receivables and other deferred items, for which the contractual cash flows consist solely of principal
and interest, are measured at amortized cost, using the effective interest method, which generally corresponds to the
nominal value, less an adjustment for expected credit loss. Upon disposal of these assets, the gain or loss is recognized in
profit or loss. Other long-term investments and receivables, for which the contractual cash flows are not solely principal
and interest, are recognized at fair value, with changes in fair value recognized in profit or loss.
Loans Other Other Other Total associates participating receivables and joint interests ventures Balance at 1 January 2022 1 191 31 4 227 Changes: - Charged to the income statement- - 1 (1)-- Disposals -(24)- - (24) - Capital payments-28- - 28 - Loans granted / prepayments1 -127-128- Repayments / (receipts)- - 1 3 4 - Exchange differences- - (7) -(7)- Transfers- - 16 -16- Changes in fair value-(66)- - (66) - Expected credit loss (ECL) adjustmentand impairments- - (11) -(11)- Reclassification from/to held for sale-(4)- - (4) - Other changes- - - 4 4 Balance at 31 December 2022 2 125 158 10 295 . Changes: - Charged to the income statement- - (1) -(1)- Acquisitions7 491 33 7 538 - Disposals-(10)- - (10) - Capital payments-10- - 10 - Loans granted / prepayments3 -13-16- Repayments / (receipts)- - - (4)(4)- Exchange differences-23(1)(1)21 - Transfers- - (24) 4 (20) - Changes in fair value through OCI-(65)- - (65) - Changes in fair value through incomestatement-(5)- - (5) - Other changes(1)7(89)(1)(84)
Consolidated financial statements – Notes to the consolidated financial statements
dsm-firmenich Integrated Annual Report 2023 229
Balance at 31 December 2023 11 576 89 15 691
For acquisitions, see Note 3 Change in the scope of consolidation. This includes 21.8% of Robertet SA's share interests
for €433 million, representing approximately 11% of voting rights. At 31 December 2023, this investment amounts to €416
million.
‘Changes in fair value’ consists mainly of the value decrease of our minority share in Amyris, Inc. (-€24 million) and the
value decrease of our minority share in Robertet SA (-€42 million). These changes are posted to the Fair value reserve in
Other comprehensive income.
12 Inventories
Accounting policy
Inventories are stated at the lower of cost and net realizable value. The cost of intermediates, work-in-progress and
finished goods includes directly attributable costs and related production overhead expenses.
Net realizable value is determined as the estimated selling price in the ordinary course of business, less the estimated
costs of completion and the estimated costs necessary to make the sale. Products whose manufacturing cost cannot be
calculated because of joint cost components are stated at net realizable value after deduction of a margin for selling and
distribution efforts. Allowances for slow-moving and obsolete inventories have been made.
Cost is generally determined using the weighted average cost formula, unless the nature of the inventories warrants the
use of the first in, first out (FIFO) method of valuation.
2023 2022 Raw materials and consumables 1,018 596 Intermediates and finished goods 2,446 1,809 3,464 2,405 Adjustments to lower net realizable value (74)(66)Total 3,390 2,339 Changes in the adjustment to net realizable value 2023 2022 Balance at 1 January (66)(82)Additions charged to income statement (65)(31)Utilization / reversals 109 20 Exchange differences 5 (2) Disposal 27 15 Transfer (57)(10)Reclassification to held for sale (27)24Balance at 31 December (74)(66)
Consolidated financial statements – Notes to the consolidated financial statements
dsm-firmenich Integrated Annual Report 2023 230
13 Current receivables
Accounting policy
Current receivables, for which the contractual cash flows are solely principal and interest, are initially recognized at fair
value plus any directly attributable transaction costs. Subsequent to initial recognition, they are measured at amortized
cost, which generally corresponds to their nominal, non-discounted value, less an adjustment for expected credit loss.
Loss allowances for trade receivables are always measured at lifetime expected credit loss – see also Note 23 Financial
Instruments and risks.
2023 2022 Trade receivables Trade accounts receivable 2,161 1,306 Other trade receivables 343 182 Deferred items 62 31 Receivables from associates 2 1 2,568 1,520 Expected credit loss (15)(12)Total Trade receivables 2,553 1,508 Income tax receivable 107 36 Other current receivables Other taxes and social security contributions 16 23 Employee-related receivables 7 3 Acquisition-/disposal-related receivables 5 7 Interest 4 1 Loans 69 24 Other receivables 81 8 Deferred items 1 12 Total Other current receivables 183 78 Total current receivables 2,843 1,622
Information about the expected credit loss that relates to trade accounts receivable resulting in a loss allowance is
included under Credit risk in Note 23 Financial instruments and risks.
Deferred items comprised €63 million (2022: €43 million) in prepaid expenses that include advance payments for any
expenditure that would have otherwise been made during the next 12 months.
Consolidated financial statements – Notes to the consolidated financial statements
dsm-firmenich Integrated Annual Report 2023 231
14 Current investments
Accounting policy
Current investments are initially recognized at fair value plus any directly attributable transaction costs. Subsequent to
initial recognition, they are measured at amortized cost using the effective interest method.
Deposits with banks with a maturity between three and 12 months are classified as current investments.
2023 2022 Fixed term deposits 107 125 Total 107 125
All fixed-term deposits have been placed with institutions with a high credit rating in line with our counterparty policy.
The purpose of the deposits is either to meet short-term cash commitments, or to manage liquidity to such extent that
yields are optimized while allowing dsm-firmenich sufficient freedom in fulfilling its (strategic) goals.
For more information regarding the counterparty policy, see Note 23 Financial instruments and risks.
15 Cash and cash equivalents
Accounting policy
Cash and cash equivalents comprise cash at banks and in hand and deposits held at call with banks with a maturity of
less than three months at inception.
Deposits will be classified as ‘cash equivalent’ if held at banks with a maturity of less than three months at inception.
Deposits will be classified as ‘current investments’ if the maturity is more than three months but less than or equal to
one year. Bank overdrafts are included in current liabilities. Included in cash and cash equivalents are investments in
money-market funds that do not meet the SPPI (Solely Payments of Principal & Interest) criterion but are held to meet
short-term cash demand. Money-market fund investments have been placed with institutions with a high credit rating in
line with our counterparty policy.
Cash and cash equivalents are measured at amortized cost, or at fair value through profit and loss.
Composition of cash and cash equivalents 2023 2022 Deposits 384 23 Money-market funds 931 1,493 Cash at bank and in hand 1,139 1,221 Payments in transit 2 18 Total 2,456 2,755
The purpose of the deposits and money-market funds is either to meet short-term cash commitments, or to manage
liquidity to such an extent that yields are optimized, while allowing dsm-firmenich sufficient freedom in fulfilling its
(strategic) goals.
Cash at year-end 2023 was not being used as collateral and therefore was not restricted (same as in 2022).
dsm-firmenich Integrated Annual Report 2023 232
Consolidated financial statements – Notes to the consolidated financial statements
In a few countries, dsm-firmenich faces cross-border foreign exchange controls and/or other legal restrictions that limit
its ability to make these balances available at short notice for general use by the group. The amount of cash held in these
countries was €211 million at year-end 2023 (2022: €105 million). The cash will generally be invested or held in the
relevant country and, given the other liquidity resources available to the Group, does not significantly affect the ability of
the Group to meet its obligations.
For more information regarding the counterparty policy, see Note 23 Financial instruments and risks.
16 Equity
Accounting policy
dsm-firmenich classifies ordinary shares and other financial instruments, for which settlement of the contractual
obligations is at the sole discretion of dsm-firmenich, as equity.
The price paid for repurchased dsm-firmenich shares (treasury shares) is deducted from dsm-firmenich shareholders’
equity until the shares are reissued. Treasury shares are presented in the treasury share reserve. When treasury shares
are sold or reissued, the amount received is recognized as an increase in equity.
Dividend to be distributed to holders of ordinary shares is recognized as a liability when the Annual General Meeting of
Shareholders approves the profit appropriation.
Movements in equity
2023 2022 Balance at 1 January 10,845 9,397 Net profit for the year 2,153 1,715 Other comprehensive income 30 227 Options / share units granted 23 34 Dividend (582)(459)Proceeds from issuance of new ordinary shares 11,510 - Expenditures related to issuance of new shares (29)-Proceeds from reissue of ordinary shares 24 141 Acquisition of NCI without a change in control 48 - Acquisition (divestment) of subsidiary with NCI (4)(4)Repurchase of shares (256)(210)Liability i.r.t. buy-out non-tendered shares DSM N.V. (649)-Other changes (43)4Balance at 31 December 23,070 10,845
Share capital
On 31 December 2023, the capital amounted to €2.7 million, consisting of 265.7 million ordinary shares. All DSM-
Firmenich AG shares have a nominal value of €0.01 each. The outstanding shares provide an entitlement of one vote per
share at the General Meeting of Shareholders. All rights attached to the company’s shares held by the Group (treasury
shares) are suspended until those shares are reissued.
Consolidated financial statements – Notes to the consolidated financial statements
dsm-firmenich Integrated Annual Report 2023 233
Share capital movements Total Nominal Issue price Share issuance 1 Date of / share valuepremium value issuance Quantity (in €) (in € million) (in € million) (in € million) DSM N.V. shares swapped into dsm-firmenich shares - 1st offer period 20 April 2023 150,742,711 DSM N.V. shares swapped into dsm-firmenich shares - 2nd offer period 3 May 2023 16,578,846 Issued dsm-firmenich shares - compensate for non-tendered shares DSM N.V. 8 May 2023 6,696,477 109.50 0 733 733 Issued dsm-firmenich shares - issued to shareholders Firmenich International SA 8 May 2023 91,658,354 117.58 1 10,776 10,777 Total 11,510
1 Nominal value per DSM-Firmenich AG share is €0.01.
In 2023, a total of 167.3 million DSM N.V. shares were exchanged for DSM-Firmenich AG shares (ratio 1:1), 6.7 million new
shares were issued and placed in the stock market, and 91.7 million DSM-Firmenich AG new shares were granted to the
former Firmenich owners. All shares issued are fully paid.
A number of 6.7 million DSM N.V. shares were not tendered; the company has commenced a statutory buy-out procedure
to acquire these shares, and recognized a liability of €649 million at the end of the reporting period.
Prior to the merger, Koninklijke DSM N.V. was the parent of the Group. The changes in the number of issued and
outstanding shares in 2022 and 2023 until 8 May are shown in the following table.
Development issued and outstanding shares Koninklijke DSM N.V.
Issued Issued Treasury shares shares shares Ordinary Cumprefs A Ordinary Balance at 1 January 2022 174,786,029 44,040,000 1,817,299 Reissue of shares in connection with share-based payments (617,967) Repurchase of shares 1,330,000 Dividend in the form of ordinary shares (818,700) Balance at 31 December 2022 174,786,029 44,040,000 1,710,632 Number of treasury shares at 31 December 2022 (1,710,632) Number of shares outstanding at 31 December 2022 173,075,397 44,040,000 . Balance at 1 January 2023 174,786,029 44,040,000 1,710,632 Reissue of shares in connection with share-based payments (280,021) Shares DSM N.V. swapped to DSM-Firmenich AG shares (167,321,557) (662,616) Cancellation of shares (767,995) (44,040,000) (767,995) Non-tendered shares recognized as liability (6,696,477) Balance at 31 December 2023 - - -
On 28 April 2023, 44.0 million outstanding Cumulative preference shares A Koninklijke DSM N.V. were repurchased for the
amount of €256 million. On 31 May 2023, all Cumulative preference shares A and C were canceled.
As of the completion of the merger, DSM-Firmenich AG is the new parent of the Group. The changes in the number of
issued and outstanding shares starting 8 May are shown in the following table.
Consolidated financial statements – Notes to the consolidated financial statements
dsm-firmenich Integrated Annual Report 2023 234
Development issued and outstanding shares DSM-Firmenich AG
Issued shares Treasury shares Ordinary Ordinary Balance at 1 January 2023 - - Issue of new shares via tender process 167,321,557 Issue of new shares via placement in the market 98,354,831 Swap treasury shares DSM N.V. to DSM-Firmenich AG 662,616 Reissue of shares in connection with share-based payments (270,044) Balance at 31 December 2023 265,676,388 392,572 Number of treasury shares at 31 December 2023 (392,572) Number of shares outstanding at 31 December 2023 265,283,816
Share premium
The share premium increased by €11,260 million mainly due to the issuance of new shares (€11,758 million), partly offset
by the dividend distribution out of share premium on 6 July 2023 of €425 million by DSM-Firmenich AG.
Treasury shares
In 2023, the Group did not repurchase own shares to fulfill its obligations under the share-based compensation plans. At
31 December 2023, dsm-firmenich possessed 0.4 million ordinary shares, or 0.15% of the share capital, for servicing
share-option rights and share plans. The average purchase price of the ordinary treasury shares as at 31 December 2023
was €112.34.
Other reserves in Shareholders’ equity
Translation Hedging Reserve for Fair value Total reserve reserve share-based reserve compensation Balance at 1 January 2022 177 (77)3917 156 Changes: Fair-value changes of derivatives -(6)- - (6) Release to income statement (16)53- - 37 Fair-value changes of other financial assets - - - (61)(61)Exchange differences 267 - - - 267 Options and performance shares granted - - 34 -34Options and performance shares exercised/canceled - - (29) -(29)Transfer to retained earnings - - - (28)(28)Income tax (4)(3)- - (7) Total changes 247 44 5 (89)207Balance at 31 December 2022 424 (33)44(72)363. Changes: Fair-value changes of derivatives -34- - 34 Release to income statement 6 (7)-- (1) Fair-value changes of other financial assets - - - (65)(65)Exchange differences 144 - - - 144 Options and performance shares granted - - 23 -23Options and performance shares exercised/canceled - - (23) -(23)Transfer to retained earnings - - - (5)(5)Income tax -(1)-54 Total changes 150 26 -(65)111 Balance at 31 December 2023 574 (7)44(137)474
dsm-firmenich Integrated Annual Report 2023 235
Consolidated financial statements – Notes to the consolidated financial statements
The increase in the Translation reserve in 2023 is mainly caused by a weakening of the euro against the Swiss franc
versus a strengthening against the US dollar and Chinese renminbi. As a consequence, the total value of the subsidiaries
increased, which led to a positive exchange difference of €144 million.
Additional information on the reserves is provided in Note 6 Share capital to the Parent company financial statements.
Dividend
Prior to the merger, dividend was paid to the holders of cumulative preference shares A and of non-tendered ordinary
shares of Koninklijke DSM N.V. In the subsequent period, the Group paid a dividend to the holders of ordinary shares of
DSM-Firmenich AG.
Dividend distribution in the reporting year
2023 2022 Shareholders Koninklijke DSM N.V. Per cumulative preference share A: €0.14 (2022: €0.13) 6 6 Interim dividend ordinary shares: (2022: 0.93) -161Final dividend ordinary shares: €22.58 (2022: €1.70) 151 292 Shareholders DSM-Firmenich AG Per ordinary share: €1.60 425 Total 582 459
Deeply subordinated fixed rate resettable perpetual notes
Firmenich International SA issued deeply subordinated fixed rate resettable perpetual notes for the amount of €750
million on 3 June 2020 with a coupon of 3.75% payable annually at the sole discretion of the issuer until the first reset
date i.e. 3 September 2025. Thereafter, the interest rate is reset every 5 years. In 2023, the remuneration on the deeply
subordinated fixed rate resettable perpetual notes amounts to €28 million. In accordance with the provisions of IAS 32
Financial Instruments – Presentation, this instrument is accounted for in equity.
17 Non-controlling interests
Accounting policy
Non-controlling interests in subsidiaries are measured at the proportionate share of the subsidiaries’ identifiable net
assets.
2023 2022 Andre Yimante Anthea Other Total Pectin Aroma % of non-controlling interest 25% 25% 50% Balance at 1 January 46 47 -9102 79 Changes: - Share of profit/charged to incomestatement5 8 3 -1615 - Acquisitions- - 18 30 48 - - Divestments - - - (4)(4)(4) - Transfers-9-911 - Capital payments- - - - -4- Exchange differences(3)(3)-(3)(9)(3)Total changes 2 14 21 23 60 23
Consolidated financial statements – Notes to the consolidated financial statements
dsm-firmenich Integrated Annual Report 2023 236
Balance at 31 December 48 61 21 32 162 102
The shareholding by dsm-firmenich in Yimante Health Ingredients (Jingzhou) Company Ltd. is 75%. The profit will be
distributed in a 50:50 proportion. The impact of this arrangement has led to a transfer of €9 million (2022: €11 million)
within equity from shareholders’ equity to non-controlling interest.
For acquisitions, see Note 3 Change in the scope of consolidation.
Not fully-owned subsidiaries on a 100% basis 2023 2022 Andre Yimante Anthea Other Total Pectin Aroma Assets Intangible assets 42 20 - 60 122 92 Property, plant and equipment 38 127 23 87 275 310 Other non-current assets 2 37 1 55 95 91 Inventories 42 18 14 69 143 68 Receivables 35 47 11 93 186 109 Current investments 51 - - - 51 44 Cash and cash equivalents 1 7 13 82 103 41 Total assets 211 256 62 446 975 755 . Liabilities Provisions (non-current) 10 1 3 10 24 14 Borrowings (non-current) - - - 95 95 167 Other non-current liabilities - 1 - 8 9 2 Borrowings and derivatives (current) - 66 5 3 74 50 Other current liabilities 8 21 12 118 159 112 Total liabilities 18 89 20 234 361 345 Net assets (100% basis) 193 167 42 212 614 410 Net sales 95 219 42 264 620 159 Net profit for the year 21 35 6 8 70 56 Cash provided by / (used in) operating activities 15 55 10 74 154 91
Consolidated financial statements – Notes to the consolidated financial statements
dsm-firmenich Integrated Annual Report 2023 237
18 Provisions
Accounting policy
Provisions are recognized when there is a present legal or constructive obligation as a result of past events, when it is
probable that an outflow of resources will be required to settle the obligation, and when a reliable estimate of the amount
can be made. The underlying assumptions in the recognition of provisions are based on historical experience and other
factors, including expectations of future events that are believed to be reasonable under the circumstances.
In cases where the effect of the time value of money is material, provisions are measured at the present value of the
expenditures expected to be required to settle the obligation. Where discounting is used, the increase in the provision
due to the passage of time is recognized as financial expense.
Differences between the final obligations and the initial estimates are recognized in the consolidated income statement
in the period in which such determination is made.
Estimates and judgments
Key estimates made in the accounting for provisions relate to the estimates made in determining the likelihood and
timing of potential cash flows included in their measurement.
Restructuring Environmental Other Total costs and costs provisions termination benefits Balance at 1 January 2022 53 37 34 124 Of which current 49 4 10 63 Changes: - Additions44 - 8 52 - Releases(15)(5)(8)(28)- Uses(41)(3)(7)(51)- Other change- - (2) (2) Total changes (12)(8)(9)(29)Balance at 31 December 2022 41 29 25 95 Of which current 39 2 4 45 . Changes: - Acquisition3 -4649 - Additions102 4 40 146 - Releases(9)-(21)(30)- Uses(66)(3)(16)(85)- Other change1 3 (3) 1 Total changes 31 4 46 81 Balance at 31 December 2023 72 33 71 176 Of which current 25 3 6 34
In cases where the effect of the time value of money is material, provisions are measured at the present value of the
expenditures expected to be required to settle the obligation. The rate used for discounting decreased from 4.2% to
3.5%. Depending on the risk profile, the discount rates used at the end of 2023 vary from 3.5% to 5.7% (2022: 4.2% to
5.8%). The balance of provisions measured at present value increased by less than €2 million in 2023 in view of the
passage of time (similar to 2022).
Consolidated financial statements – Notes to the consolidated financial statements
dsm-firmenich Integrated Annual Report 2023 238
The provisions for restructuring costs and termination benefits mainly relate to the costs of redundancy schemes
connected to the dismissal of employees and costs of termination of contracts. These provisions generally have a term
of one to three years.
The restructuring program following up on the change in strategy, aiming to concentrate on Health, Nutrition and
Bioscience, which was launched at the end of 2021, was finalized in 2023, with €8 million being used during the year.
Furthermore, a restructuring program following up on (the preparation of) the merger of DSM with Firmenich, which was
launched in 2022, was also continued. An additional €8 million was recognized for this program, and €9 million was used
during the year. Following the announcement of the closure of the Pinova ingredients plant, a provision of €52 million was
created, of which €23 million was used so far. In addition, a restructuring provision of €26 million was created, following
the announced restructuring of the vitamin asset footprint, of which €12 million was used so far. The other additions to
the provisions for restructuring costs and termination benefits in 2023 relate mainly to the various smaller restructuring
projects (same as in 2022).
The provisions for environmental costs relate to soil clean-up obligations, among other things. These provisions have an
average life of around 30 years.
Several items have been combined under Other provisions, for example, demolition costs, onerous contracts and legal
claims. These provisions have an average life of one to 10 years.
19 Borrowings
Accounting policy
Borrowings
Borrowings, including bonds, are not held for trading and are initially recognized at fair value of the proceeds received, net
of transaction costs. Subsequently, borrowings are stated at amortized cost using the effective interest method with any
discount or premium on the borrowing amortized over the applicable term. The corresponding interest expenses are
recorded as financial expense in profit or loss.
Lease liabilities
The lease liability is initially measured at the present value of the lease payments that are not paid at the
commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined,
the Group’s incremental borrowing rate. Generally, dsm-firmenich uses its incremental borrowing rate as the discount
rate. In determining the incremental borrowing rate, dsm-firmenich applies the practical expedient to use a single
discount rate to portfolios of leases with reasonably similar characteristics, as reflected in the contractual currency and
expected lease term of these contracts.
In general, dsm-firmenich splits the contractual consideration into a lease and a non-lease component based on their
relative stand-alone prices. For vehicle leases, however, dsm-firmenich applies the practical expedient not to make this
split but rather accounts for the fixed consideration as a single lease component.
Over time, the lease liability is increased by the interest expense related to the unwinding of the lease liability and
decreased by the lease payments made. The lease liability is remeasured when dsm-firmenich reassesses or modifies
the contractual terms and conditions, including indexation.
Payments related to short-term leases (leases with a term shorter than 12 months) are recognized on a straight-line basis
in profit or loss.
Consolidated financial statements – Notes to the consolidated financial statements
dsm-firmenich Integrated Annual Report 2023 239
Borrowings 2023 2022 Total Of which Total Of which current current Bonds 4,133 500 2,741 - Private loans 254 104 116 14 Lease liabilities 415 84 179 44 Credit institutions 28 28 28 28 Total 4,830 716 3,064 86
In agreements governing loans with a residual amount at year-end 2023 of €4,133 million (31 December 2022: €2,741
million), negative pledge clauses have been included that restrict the provision of security.
At 31 December 2023, there was €1,340 million in borrowings outstanding with a remaining term of more than 5 years (at
31 December 2022, €1,044 million).
The schedule of repayment of borrowings is as follows.
A breakdown by currency is given in the following table.
On balance, total borrowings increased by €1,766 million due to the following changes.
Borrowings by maturity 2023 2022 2023 - 86 2024 716 558 2025 633 579 2026 1,560 775 2027 and 2028 581 528 After 2028 1,340 538 Total 4,830 3,064
Borrowings by currency 2023 2022 EUR 4,283 2,833 CNY 140 80 USD 142 84 CHF 102 20 BRL 23 19 Other 140 28 Total 4,830 3,064
Consolidated financial statements – Notes to the consolidated financial statements
dsm-firmenich Integrated Annual Report 2023 240
Movements of borrowings 2023 2022 Balance at 1 January 3,064 3,098 Loans taken up 15 51 Repayments (549)(29)Unwinding (interest) 28 9 Acquisitions / consolidation changes 2,195 9 Transfers 28 - Disposals (2)(28)Reclassification to held for sale -(8)Changes in debt to credit institutions -(21)New lease arrangements (incl. remeasurements) 128 34 Payment of lease liabilities (73)(57)Exchange differences (4)6Balance at 31 December 4,830 3,064
A breakdown of bonds is given below.
Bonds
Nominal amount 2023 2022 EUR loan 2.38% 2014—2024 500 500 500 EUR loan 1.00% 2015—2025 500 500 499 EUR loan 0.75% 2016—2026 750 749 749 EUR loan 0.25% 2020—2028 500 498 496 EUR loan 0.63% 2020—2032 500 496 498 CHF loan 1.00% 2020—2023 475 - EUR loan 1.38% 2020—2026 750 711 EUR loan 1.75% 2020—2030 750 679 Total 4,725 4,133 2,741
The bonds issued by DSM B.V. have a fixed interest rate and are listed on the AEX.
• The 2.375% EUR bond 2014–2024 of €500 million was pre-hedged by means of forward starting swaps, resulting
in an effective interest rate for this bond of 3.97%, including the settlement of the pre-hedge
• The 1% EUR bond 2015–2025 of €500 million was pre-hedged by means of forward starting swaps, resulting in
an effective interest rate for this bond at 3.65%, including the settlement of the pre-hedge
• The 0.75% EUR bond 2016–2026 of €750 million was pre-hedged by means of a collar resulting in an effective
interest rate for this bond of 1.08%, including the settlement of the pre-hedge
• The 0.25% EUR bond 2020–2028 of €500 million has an effective interest rate of 0.29%
• The 0.625% EUR bond 2020–2032 of €500 million has an effective interest rate of 0.70%
The bonds issued by Firmenich Productions Participations SAS (guaranteed by Firmenich International SA) have a fixed
interest rate and are listed on the Euronext Dublin.
• The 1.375% EUR bond 2020–2026 of €750 million has an effective interest rate of 3.18%
• The 1.750% EUR bond 2020–2030 of €750 million has an effective interest rate of 3.47%
Consolidated financial statements – Notes to the consolidated financial statements
dsm-firmenich Integrated Annual Report 2023 241
The 1% CHF bond 2020-2023 of CHF475 million issued by Firmenich Productions Participations SAS was redeemed on 19
December 2023.
A breakdown of private loans is given below.
Private loans 2023 2022 CNY loan 128 63 Other loans 126 53 Total 254 116
A breakdown of the lease liabilities is given below.
Lease liabilities by maturity 2023 2022 2023 - 49 2024 92 40 2025 77 28 2026 56 20 2027 40 15 2028 33 10 After 2028 196 50 Total undiscounted lease liabilities at 31 December 494 212 Lease liabilities included in the Balance Sheet at 31 December 415 179 Current 84 44 Non-current 331 135
In addition to the contractual lease commitments, dsm-firmenich has identified explicit renewal options available to
dsm-firmenich, which are currently not reasonably certain to be exercised and are therefore not included in the
measurement of the lease. The associated future lease payments which are uncommitted and optional for dsm-
firmenich, are estimated around €181 million (undiscounted; 2022: €86 million). The interest expense on the lease
liabilities was €8 million (2022: €6 million) and the total repayments of the lease liabilities amounted to €73 million in
2023 (2022: €57 million). These cash flows are reported as financing cash flows. dsm-firmenich’s policy regarding
financial risk management is described in Note 23 Financial instruments and risks.
20 Other non-current liabilities
Accounting policy
Other liabilities are measured at amortized cost, which generally corresponds to the nominal value, or at fair value
through profit and loss. The latter is mainly applied to acquisition-related liabilities.
Government grants are recognized at their fair value if there is reasonable assurance that the grant will be received and
all related conditions will be complied with. Cost grants, which are grants that compensate dsm-firmenich for expenses
incurred, are recognized as income over the periods necessary to match the grant on a systematic basis to the cost that
it is intended to compensate. If the grant is an investment grant, its fair value is initially recognized as deferred income in
Other non-current liabilities and then released to profit or loss over the expected useful life of the relevant asset.
Consolidated financial statements – Notes to the consolidated financial statements
dsm-firmenich Integrated Annual Report 2023 242
2023 2022 Investment grants / customer funding 70 55 Deferred items 30 25 Acquisition-/divestment-related liabilities 45 123 Other 1 2 Total 146 205
The change in the Other non-current liabilities includes the impact of the merger, and the settlement of an earn-out
liability relating to a previous acquisition. See also Note 3 Change in the scope of the consolidation.
21 Current liabilities
Accounting policy
Other liabilities are measured at amortized cost, which generally corresponds to the nominal value, or at fair value
through profit and loss. The latter is mainly applied to acquisition-related liabilities.
2023 2022 Trade payables Received in advance 8 4 Trade accounts payable 2,063 1,410 Notes and cheques due - 1 Total Trade payables 2,071 1,415 Income tax payable 177 64 Other current liabilities Other taxes and social security contributions 85 46 Interest 135 23 Pensions 2 2 490Investment creditors 146 118 Employee-related liabilities 310 246 Payables associates and joint ventures relating to cash facility 3 2 Acquisition-/divestment-related liabilities 748 53 Other 7 - Total Other current liabilities 1,436 Total current liabilities 3,684 1,969
Included in trade accounts payable are amounts due to suppliers which could be part of a supply chain finance
arrangement between the supplier and a third-party bank. dsm-firmenich suppliers have the option to enter into such
supply chain finance arrangements with third party banks, which provides them with the option of earlier payment based
on terms linked to dsm-firmenich’s investment grade credit rating. If a supplier chooses to participate in such an
arrangement, this does not impact the classification of the trade payable for dsm-firmenich, as these supply chain
finance arrangements are concluded between the banks and the suppliers and do not alter the payment conditions
between the supplier and dsm-firmenich. Therefore, these amounts remain classified as trade payables.
In acquisition-/divestment-related liabilities, an amount of €649 million is related to the statutory buy-out of non-
tendered shares of DSM N.V. See further Note 16 Equity.
Consolidated financial statements – Notes to the consolidated financial statements
dsm-firmenich Integrated Annual Report 2023 243
22 Contingent liabilities and other financial obligations
The contingent liabilities and other financial obligations in the following table are not recognized in the balance sheet.
Guarantee obligations are principally related to VAT and duties on the one hand and to financing obligations of
associated companies or related third parties on the other. Guarantee obligations will only lead to a cash outflow when
called upon. At year-end, no obligations had been called upon. Most of the outstanding orders for projects under
construction will be completed in 2024. Other relates mainly to contingent liabilities in contracts for catalysts.
Litigation
dsm-firmenich has a process in place to monitor legal claims periodically and systematically. dsm-firmenich is involved
in several legal proceedings, most of which are related to the ordinary course of business. dsm-firmenich does not
expect these proceedings to result in liabilities that have a material effect on the company's financial position. In cases
where it is probable that the outcome of the proceedings will be unfavorable, and the financial outcome can be
measured reliably, a provision has been recognized in the financial statements and disclosed in Note 18 Provisions.
In 2015, an award was issued against DSM Sinochem Pharmaceuticals India Private Ltd. (DSP India) in a protracted
arbitration case in India going back to 2004 involving a joint venture that DSP India had formed with Hindustan
Antibiotics Ltd., which suspended its operations in 2003. DSP India (renamed to Centrient Pharmaceuticals after
divestment by former DSM in 2018) is covered by an indemnity from DSM B.V. for this case. In 2015, DSP India made an
application with the Civil Court in Pune (India) to set aside the arbitral award. The award amounts to INR 127.5 crore (€14
million as at year-end 2023) excluding interest of 12% per year as of 2004. In 2019, former DSM provided the Bombay
High Court a bank guarantee of INR 150 crore (€16 million as at year-end 2023). At the end of 2023, the application
proceedings were still pending. dsm-firmenich views this case as unfounded and is of the opinion that the likelihood of
the award being ultimately set aside is high. Therefore, no liability is recognized in respect of this case.
In 2019, Brazilian tax authorities disagreed with certain tax treatment as applied by the company in 2014–2016, which
would have an effect on such prior year income tax returns of around BRL 100 million (€19 million as at year-end 2023),
including penalties and interest. dsm-firmenich views this case as unfounded and considers that the possibility of
winning this case is high, as confirmed by external legal counsel. Therefore, no liability relating to this case is recognized.
During 2023 no relevant developments took place that alter this view.
In 2023, certain competition authorities commenced an industry-wide investigation into the fragrances sector. As part
thereof, unannounced inspections were carried out at several Firmenich offices and Firmenich received a subpoena from
the Antitrust Division of the United States Department of Justice. The company is fully cooperating with the
authorities. The investigations are expected to continue at least until next year. As per the date of release of this report,
no further update on the status or outcome of the investigation is available. In addition, multiple lawsuits have been filed
against the company in the USA and Canada relating to the investigations.
2023 2022 Guarantee obligations on behalf of associates and third parties 170 178 Outstanding orders for projects under construction 15 6 Other 131 104 Total 316 288
Consolidated financial statements – Notes to the consolidated financial statements
dsm-firmenich Integrated Annual Report 2023 244
23 Financial instruments and risks
Policies on financial risks
As an international company, dsm-firmenich is exposed to financial risks in the normal course of business. A major
objective of Group Treasury is to minimize the impact of market, liquidity and credit risk on the value of the company and
its profitability. In order to achieve this, a systematic financial and risk management system has been established.
Furthermore an internal control framework is in place, and the controls are monitored and tested periodically.
The derivatives contracts used by dsm-firmenich are entered into exclusively in connection with the corresponding
underlying transaction (hedged item) relating to normal operating business. The instruments used are customary
products, such as currency swaps, cross-currency interest rate swaps, collars, forward exchange contracts and interest
rate swaps.
An important element of dsm-firmenich’s capital management is the allocation of cash flow. dsm-firmenich primarily
allocates cash flow to investments aimed at strengthening its business positions and securing the payment of dividends
to its shareholders. The remaining cash flow is further used for acquisitions and partnerships that strengthen dsm-
firmenich’s competences and market positions. The net debt to equity ratio (gearing) is 8.8 (2022: 0.8), see also Note 25
Net debt.
Liquidity risk
Liquidity risk is the financial risk that an entity does not have and/or cannot access enough liquid cash and/or assets to
meet its obligations. This can happen if the entity’s credit rating falls, or when it experiences sudden unexpected cash
outflows or an unexpected drop in cash inflows, or some other event that causes counterparties to avoid trading with or
lending to the entity. Additionally, an entity can be indirectly exposed to market liquidity risk if the financial markets on
which it depends are subject to loss of liquidity.
The primary objective of liquidity management is to optimize the corporate cash position, among other things, by
securing availability of sufficient liquidity for execution of payments by dsm-firmenich entities, at the right time and in
the right place.
At 31 December 2023, dsm-firmenich had cash and cash equivalents of €2,456 million (2022: €2,755 million).
At the end of 2023, DSM B.V. has a committed credit facility amounting to €1.0 billion, maturing on 28 May 2025. The
agreement for the committed credit facility has neither financial covenants nor material adverse changes clauses. The
committed credit facility links the interest rate to dsm-firmenich’s greenhouse gas (GHG) emission reduction. Next to
that there is another credit facility of former Firmenich amounting to CHF 0.75 billion, maturing on 4 March 2025. At year-
end 2023, no loans had been taken up under the committed credit facilities.
The bridge financing facility contracted in 2022 by former DSM was cancelled in 2023 and there were no drawings under
the facility.
In 2023, a bridge financing facility amounting to €1.0 billion was contracted by DSM B.V., maturing on 13 December 2025
and there is no drawing under the facility at year-end.
Furthermore, DSM B.V. has a commercial paper program amounting to €2.0 billion (2022: €2.0 billion). The company will
use the commercial paper program to a total of not more than €1.0 billion (2022: €1.0 billion). At 31 December 2023, no
commercial paper had been issued (same as 2022).
Consolidated financial statements – Notes to the consolidated financial statements
dsm-firmenich Integrated Annual Report 2023 245
dsm-firmenich has no derivative contracts to manage currency risk or interest rate risk outstanding under which margin
calls by the counterparty would be permitted.
Floating-rate and fixed-rate borrowings and monetary liabilities analyzed by maturity are summarized in the following
table. Borrowings excluding credit institutions are shown after taking into account related interest rate derivatives in
designated hedging relationships. dsm-firmenich manages financial liabilities and related derivative contracts on the
basis of the remaining contractual maturities of these instruments. The remaining maturities presented in the following
table provide an overview of the timing of the cash flows related to these instruments. Financial assets are not linked to
financial liabilities in order to meet cash outflows on these liabilities.
Financial liabilities
Carrying Within 1 1 to 2 years 2 to 3 years 3 to 4 years 4 to 5 After 5 amount year years years 2022 Borrowings 3,064 86 558 579 775 22 1,044 Monetary liabilities 2,110 1,969 45 59 15 10 12 Guarantees 178 14 28 - - - 136 Derivatives 27 23 3 1 - - - Interest payments 100 27 27 15 10 4 17 Cash at redemption¹ 9 2 2 1 1 1 2 Total 5,488 2,121 663 655 801 37 1,211 .
2023 Borrowings 4,830 716 633 1,560 39 542 1,340 Monetary liabilities 3,747 3,690 35 6 3 3 10 Guarantees 170 18 1 4 - - 147 Derivatives 36 28 - 8 - - - Interest payments 201 52 41 33 18 18 39 Cash at redemption¹ 119 27 27 24 12 12 17 Total 9,103 4,531 737 1,635 72 575 1,553 1 Difference between nominal redemption and amortized costs.
The following table reflects the exposure of the derivatives to liquidity risk. It contains the cash flows from derivatives
with positive fair values and from derivatives with negative fair values so as to provide a complete overview of the
derivative-related cash flows. The amounts are gross and undiscounted.
Derivatives cash flow 2023 2024 2025 2026 2027 Total 2022 Inflow 2,287 52 33 29 4 2,405 Outflow (2,270) (52) (34) (33) (4) (2,393) 2023 Inflow 2,608 23 13 5 2,649 Outflow (2,591) (23) (21) (4) (2,639)
Consolidated financial statements – Notes to the consolidated financial statements
dsm-firmenich Integrated Annual Report 2023 246
Market risk
Market risk can be subdivided into interest rate risk, currency risk and price risk.
Interest rate risk
Interest rate risk is the risk that adverse movements of interest rates lead to high costs on interest-bearing debt or
assets, which negatively impact the company’s capability to honor its commitments. The aim is to minimize the interest
rate risks associated with the financing of the company and thus at the same time optimizing the net interest costs. This
translates into a certain desired profile of fixed-interest and floating-interest positions, including cash and cash
equivalents, with the floating-interest position not exceeding 60% of net debt.
There were no outstanding fixed-floating interest rate swaps (end of 2022 none).
The following analysis of the sensitivity of borrowings, assets and related derivatives to interest rate movements assumes
an instantaneous 1% change in interest rates for all maturities from their level on 31 December 2023, with all other
variables held constant. A 1% reduction in interest rates would result in a €23 million pre-tax loss in the income
statement and equity on the basis of the composition of financial instruments on 31 December 2023, as floating-rate
borrowings are more than compensated for by floating-rate assets (mainly cash). The opposite applies in the case of a
1% increase in interest rates. The sensitivity of financial instruments with a floating interest rate on 31 December 2023 to
changes in interest rates is set out in the following table.
For more information regarding fixed or floating interest, see Note 19 Borrowings.
Sensitivity to change in interest rate
Currency risk
Currency risk is the risk that adverse movements of foreign currencies negatively impact the results of operations and
the financial condition of the company, for example due to losses on assets or liabilities in foreign currencies. The aim is
to hedge 100% of the currency risks resulting from sales and purchases at the moment of recognition of the receivables
and payables. This is realized by transferring at spot rates the respective exposures to the Group, which are,
consequently (on a netted basis), hedged externally.
In addition, operating companies may — under strict conditions — opt for hedging currency risks from firm commitments
and forecast transactions. The currencies giving rise to these risks are primarily USD, CHF and JPY. The risks arising from
currency exposures are regularly reviewed and hedged when appropriate. dsm-firmenich uses currency forward
contracts, spot contracts, and average-rate currency forwards and options to hedge the exposure to fluctuations in
foreign exchange rates. At year-end, these instruments had remaining maturities of less than one year. For the hedging of
currency risks from firm commitments and forecast transaction cash flows, hedge accounting is applied. Hedge
accounting is not applied for hedges of recognized trade receivables and trade payables hedged with short-term
derivatives.
2023 2022 Carrying Sensitivity Carrying Sensitivity amount amount +1%(1%) +1%(1%) Loans to associates and joint ventures 4 - - 2 - - Current investments 107 1 (1)1251 (1) Cash and cash equivalents 2,456 25 (25)2,75528 (28) Short-term borrowings (716)(1)1 (86)-- Long-term borrowings (4,114) (2)2(2,978) (1)1
Consolidated financial statements – Notes to the consolidated financial statements
dsm-firmenich Integrated Annual Report 2023 247
To hedge intercompany loans, receivables and payables denominated in currencies other than the functional currency of
the subsidiaries, dsm-firmenich uses currency swaps or forward contracts.
The following analysis of the sensitivity of net borrowings and derivative financial instruments to currency movements
against the euro assumes a 10% change in all foreign currency rates against the euro from their level on 31 December
2023, with all other variables held constant. A +10% change indicates a strengthening of the foreign currencies against the
euro. A -10% change represents a weakening of the foreign currencies against the euro.
Sensitivity to change in exchange rate
2023 2022 Carrying Sensitivity Carrying Sensitivity amount amount +10% (10%) +10% (10%) Loans to associates and joint ventures 4 - - 2 - - Current investments 107 8 (8) 125 5 (5) Cash and cash equivalents 2,456 48 (48) 2,755 29 (29) Short-term borrowings (excluding lease liabilities) (604) (9) 9 (42) (4) 4 Long-term borrowings (excluding lease liabilities) 3,783 (10) 10 (2,843) (6) 6 Lease liabilities (415) (32) 32 (179) (14) 14 Currency forward contracts (12) (43) 43 1 14 (14) Average-rate forwards used for economic hedging¹ 25 (5) 5 18 (19) 19 Other derivatives 40 1 (1) 78 1 (1) 1 Fair-value change reported in Hedging reserve.
Sensitivity changes on these positions will generally be recognized in profit or loss or in the translation reserve in equity,
with the exception of the instruments for which cash flow hedge accounting or net-investment hedge accounting is
applied.
In case of a strengthening or weakening of the euro against USD, CHF and CNY (being the key currencies), this would
affect the translation of financial instruments denominated in these currencies taking into account the effect of hedge
accounting and assuming all other variables being constant.
Profit or loss Equity Strengthening Weakening Strengthening Weakening EUR USD (10% movement) (61) 61 (366) 366 CHF (10% movement) 8 (8) (299) 299 CNY (10% movement) (343) 343 (81) 81
Price risk
Financial instruments that are subject to changes in stock exchange prices or indexes are subject to a price risk. At year-
end 2023, mainly other participating interests are subject to price risks.
Consolidated financial statements – Notes to the consolidated financial statements
dsm-firmenich Integrated Annual Report 2023 248
Credit risk
Credit risk is the risk that a (commercial or financial) counterparty may not be able to honor a financial commitment
according to the contractual agreement with dsm-firmenich. The company manages the credit risk to which it is exposed
by applying credit limits per institution and by dealing exclusively with institutions that have a high credit rating.
At the balance sheet date, there were no significant concentrations of credit risks.
For all financial assets measured at amortized cost, the estimation of the loss allowance for doubtful accounts receivable
is based on an expected credit loss (ECL) model.
For trade receivables, dsm-firmenich uses an allowance matrix to measure the lifetime ECL for trade receivables. The loss
rates depend among other things on the specified aging categories and are based on historical write-off percentages,
taking market developments into account.
For other financial assets, dsm-firmenich applies an ECL model that reflects the size and significance of dsm-firmenich’s
exposure to credit loss. The ECL is based on the allocation of a credit risk grade which is based on data that is
determined to be predictive of the risk of loss (including but not limited to external ratings, audited financial statements,
management accounts and cash flow projections and available press information about customers) and applying
experienced credit judgement. Credit risk grades are defined using qualitative and quantitative factors that are indicative
of the risk of default and are aligned to external credit rating definitions from Moody’s.
Risk of default is herewith considered as the risk of bankruptcy, or any legal impediment to the timely payment of either
interest and/or principal, as well as missed or delayed disbursement of either interest and/or principal.
The loss allowance on non-current financial assets that has been taken into consideration at the end of 2023 was €0
million (2022: €2 million).
With regard to treasury activities (for example cash, cash equivalents and derivatives held with banks or financial
institutions) it is ensured that financial transactions are only concluded with counterparties that have at least a Moody’s
credit rating of A3 for long-term instruments. At Business Unit level, outstanding receivables are continuously monitored
by management. Appropriate allowances are made for any credit risks that have been identified in line with the expected
credit loss policy.
The development of the outstanding trade accounts receivable per aging category is as follows.
2023 2022 Neither past due nor impaired 2,008 1,117 1–29 days overdue 100 69 30–89 days overdue 29 100 90 days or more overdue 24 20 Total 2,161 1,306
Consolidated financial statements – Notes to the consolidated financial statements
dsm-firmenich Integrated Annual Report 2023 249
The table below provides information about the credit risk exposure per aging category and the ECL for trade accounts
receivable of €15 million at 31 December 2023 (31 December 2022: €12 million), see Note 13 Current receivables.
2023 2022 Weighted Gross Expected Weighted Gross Expected average loss carrying credit loss average loss carrying credit loss rate amount rate amount Neither past due nor impaired 0.1% 2,008 (2) 0.1% 1,117 (1) 1–29 days overdue 0.3% 100 - 0.0% 69 - 30–89 days overdue 1.2% 29 - 1.0% 100 (1) 90 days or more overdue 54.2% 24 (13) 53.0% 20 (10) Total 2,161 (15) 1,306 (12)
The changes in the expected credit loss for trade accounts receivable are as follows.
2023 2022 Balance at 1 January (12) (23) Net remeasurement of expected credit loss (5) 7 Deductions 1 3 Disposals - 1 Exchange differences 1 - Balance at 31 December (15) (12)
The maximum exposure to credit risk is represented by the carrying amounts of financial assets that are recognized in
the balance sheet, including derivative financial instruments. Former DSM has International Swaps and Derivatives
Association (ISDA) agreements in place with its financial counterparties that allow for the netting of exposures in case of
a default of either party, but do not meet the criteria for offsetting in the balance sheet. The following table presents the
carrying amounts of the derivative financial instruments subject to these agreements. No significant agreements or
financial instruments were available at the reporting date that would reduce the maximum exposure to credit risk.
Exposure to credit risk related to derivatives 2023 2022 Receivables from derivatives presented in the balance sheet 88 124 Related amounts not offset in the balance sheet (14) (23) Net amount 74 101 Liabilities from derivatives presented in the balance sheet (36) (27) Related amounts not offset in the balance sheet 14 23 Net amount (22) (4)
Consolidated financial statements – Notes to the consolidated financial statements
dsm-firmenich Integrated Annual Report 2023 250
Notional value of derivative financial instruments
2023 2022 Non-Current Total Non-Current Total current current Cross-currency interest rate swaps (25) (31) (56) (29) (87) (116) Forward exchange contracts, currency options, currency swaps (2) (905) (907) (7) (973) (980) Other derivatives - (5) (5) - (1) (1) Total (27) (941) (968) (36) (1,061) (1,097)
Information about financial assets is presented in Note 10 Associates and joint arrangements, Note 11 Other financial
assets, Note 13 Current receivables, Note 14 Current investments and Note 15 Cash and cash equivalents.
dsm-firmenich may grant corporate guarantees for credit support of subsidiaries and associates, to get access to credit
facilities which are necessary for their operating working capital needs and which cannot be funded by the corporate
cash pools and/or for bank guarantees needed for local governmental requirements. Information on guarantees is
presented in Note 22 Contingent liabilities and other financial obligations.
Hedge accounting
dsm-firmenich uses derivative financial instruments to manage financial risks relating to business operations and does
not enter into speculative derivative positions. The purpose of cash flow hedges is to minimize the risk of volatility of
future cash flows. These may result from a recognized asset or liability or a forecast transaction that is considered highly
probable (firm commitment). dsm-firmenich determines the existence of an economic relationship between the hedging
instrument and hedging item based on currency, amount and timing of their respective cash-flows. The hedge ratio is
dependent on the risk analysis related to the specific cash flow, and can vary from 50% to 100%. Changes in fair value as
a result of changes in interest (for cash flows hedges) or as a result of changes in exchange rate (for firm commitment
hedges) are recognized in Other comprehensive income (Hedging reserve), and ineffectiveness (mainly as a result of
changes in timing of the hedged transactions) will be recognized in the income statement. As soon as the forecast
transaction is realized (the underlying hedged item materializes), the amount recognized in the Other comprehensive
income will be reclassified to the income statement. In case the hedged future transaction is a non-financial asset or
liability, the gain or loss recognized in Other comprehensive income will be included in the cost of acquisition of the asset
or liability.
The purpose of a hedge of a net investment is to reduce the foreign currency translation risk of an investment in a
company whose functional currency is not the euro. Changes in fair value are recognized in Other comprehensive income
(Translation reserve), and ineffectiveness will be recognized in the income statement. The amount recognized in Other
comprehensive income will be reclassified to the income statement, upon divestment of the respective foreign
subsidiary.
The purpose of a fair value hedge is to hedge the fair value of assets or liabilities reflected on the balance sheet. Changes
of fair value in hedging instruments, as well as hedged items, will be recognized in the income statement.
Consolidated financial statements – Notes to the consolidated financial statements
dsm-firmenich Integrated Annual Report 2023 251
Cash flow hedges
In 2023, former DSM hedged USD 498 million (2022: USD 611 million) of its 2024 projected net cash flow in USD against
the EUR by means of average-rate currency forward contracts at an average exchange rate of USD 1.10 per EUR for the
four quarters of 2024. Each quarter, the relevant hedges for that quarter will be settled and recognized in the income
statement.
In 2023, former DSM also hedged JPY 7,535 million (2022: JPY 5,687 million) of its 2024 projected net cash flow in JPY
against the EUR by means of average-rate currency forward contracts at an average exchange rate of JPY 147.11 per EUR
for the four quarters of 2024. Former DSM also hedged the projected CHF obligations against the EUR, namely CHF 393
million (2022: CHF 417 million) at an average exchange rate of CHF 0.95 per EUR. These hedges have fixed the exchange
rate for part of the USD and JPY receipts and CHF payments in 2024. Cash flow hedge accounting is applied for these
hedges. As a result of similar hedges concluded in 2022 for the year 2023, €24 million positive was recognized in the
2023 operating profit of the segments involved in accordance with the realization of the expected cash flows. There was
no ineffectiveness in relation to these hedges.
Net investment hedges
The partial hedging of the currency risk associated with the translation of former DSM’s CHF-denominated investments
was zero at end of 2023 (same as 2022).
Cash flow hedges Foreign currency risk Inventory purchases Other¹ 2022 Nominal amount hedged item 29 194 Carrying amount assets 1 18 Carrying amount liabilities - - Line item balance sheet Derivatives Derivatives Change in the value of the hedging instrument 4 (28) Costs of hedging recognized in OCI 4 1 Reclassified from hedging reserve to income statement 10 30 Line item income statement Cost of sales Sales . 2023 Nominal amount hedged item 12 108 Carrying amount assets 1 25 Carrying amount liabilities - (1) Line item balance sheet Derivatives Derivatives Change in the value of the hedging instrument - (6) Costs of hedging recognized in OCI - (30) Reclassified from hedging reserve to income statement 2 (24) Line item income statement Cost of sales Sales
Fair value of financial instruments
The fair value of derivatives and long-term instruments are based on calculations, quoted market prices or quotes
obtained from intermediaries.
The portfolio of derivatives consists of average-rate forward contracts that are valued against average foreign exchange
forward rates obtained from Bloomberg and other derivatives that are valued using a discounted cash flow model,
Consolidated financial statements – Notes to the consolidated financial statements
dsm-firmenich Integrated Annual Report 2023 252
applicable market yield curves and foreign exchange spot rates. Inputs for the fair value calculations represent
observable
market data that are obtained from external sources that are deemed to be independent and reliable.
dsm-firmenich uses the following hierarchy for determining the fair value of financial instruments:
• Level 1: quoted prices in active markets for identical assets or liabilities
• Level 2: other techniques for which all inputs that have a significant effect on the fair value are observable, either
directly or indirectly
• Level 3: techniques that use inputs that have a significant effect on the fair value that are not based on
observable market data
The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their
levels in the fair value hierarchy. It does not include fair value information for the financial assets and financial liabilities
measured at amortized cost if the carrying amount is a reasonable approximation of the fair value.
Fair value of financial instruments
Carrying amount Fair Value Amort. Fair value FVTPL FVOCI Total Level 1 Level 2 Level 3 Total Cost hedging instr. Assets 2022 Non-current derivatives - 4 78 - 82 - 82 - 82 Other participating interests - - - 125 125 27 62 36 125 Non-current loans to associates and JVs 2 - - - 2 Other non-current receivables 158 - - - 158 Trade receivables 1,508 - - - 1,508 Other current receivables 78 - - - 78 Current derivatives - 42 - - 42 - 42 - 42 Current investments 125 - - - 125 Cash and cash equivalents 1,262 - 1,493 - 2,755 1,493 - - 1,493 Liabilities 2022 Non-current borrowings (2,978) - - - (2,978) (2,432) - - (2,432) Non-current derivatives - (4) - - (4) - (4) - (4) Other non-current liabilities (82) - (123) - (205) - - (123) (123) Current borrowings (86) - - - (86) - - - - Current derivatives - (23) - - (23) - (23) - (23) Trade payables (1,415) - - - (1,415) Other current liabilities (490) - - - (490) . Assets 2023 Non-current derivatives - 2 44 - 46 - 46 - 46 Other participating interests - - - 576 576 467 78 31 576 Non-current loans to associates and JVs 11 - - - 11 Other non-current receivables 104 - - - 104 Trade receivables 2,553 - - - 2,553 Other current receivables 183 - - - 183 Current derivatives - 42 - - 42 - 42 - 42 Current investments 107 - - - 107 Cash and cash equivalents 1,526 - 931 - 2,456 931 - - 931 Liabilities 2023 Non-current borrowings (4,114) - - - (4,114) (3,482) - - (3,482) Non-current derivatives - (3) (5) - (8) - (3) (5) (8) Other non-current liabilities (101) - (45) - (146) - - (45) (45) Current borrowings (716) - - - (716) (498) - - (498) Current derivatives - (28) - - (28) - (28) - (28) Trade payables (2,071) - - - (2,071) Other current liabilities (1,436) - - - (1,436)
Consolidated financial statements – Notes to the consolidated financial statements
dsm-firmenich Integrated Annual Report 2023 253
24 Employee benefits
Accounting policy
Short-term employee benefits
Short-term employee benefits are generally recognized as an expense in the period the employee renders services to
dsm-firmenich.
Post-employment benefits: Defined contribution plans
For dsm-firmenich’s defined contribution plans, the obligations are limited to the payment of contributions, which are
recognized as Employee benefit costs.
Post-employment benefits: Defined benefit plans
For defined benefit plans, the aggregate of the value of the defined benefit obligation and the fair value of plan assets for
each plan is recognized as a net defined benefit liability or asset. Defined benefit obligations are determined using the
projected unit credit method. Plan assets are recognized at fair value. If the fair value of plan assets exceeds the present
value of the defined benefit obligation, a net asset is only recognized to the extent that the asset is available for refunds
to the employer or for reductions in future contributions to the plan. Defined benefit pension costs consist of three
elements: service costs, net interest, and remeasurements. Service costs are part of Employee benefit costs and consist
of current service costs. Past service costs and results of plan settlements are included in Other operating income or
expense. Net interest is part of Finance income and expense and is determined on the basis of the value of the net
defined benefit asset or liability at the start of the year, and on the interest on high-quality corporate bonds.
Remeasurements are actuarial gains and losses, the return (or interest cost) on net plan assets (or liabilities) excluding
amounts included in net interest and changes in the effect of the asset ceiling. These remeasurements are recognized in
Other comprehensive income as they occur and are not recycled through profit or loss at a later stage.
Post-employment defined benefit plans include pension plans and other post-employment benefits.
Other employee benefits
The service cost, the net interest on the net defined liability (asset) and remeasurements of the net defined liability
(asset) related to other long-term employee benefits, such as jubilee and incentive plans, are recognized in profit or loss.
Estimates and judgments
Management makes assumptions regarding variables such as discount rate, future salary increases, life expectancy, and
future healthcare costs. Management consults with external actuaries regarding these assumptions at least annually for
significant plans. Changes in these key assumptions can have a significant impact on the projected defined benefit
obligations, funding requirements and periodic costs incurred.
The Employee benefit liabilities of €569 million (2022: €292 million) consist of €388 million related to pensions (2022:
€247 million), €58 million related to other post-employment benefits (2022: €16 million) and €123 million related to
other employee benefits (2022: €29 million). See also the table below.
2023 2022 Employee benefit liabilities Pension plans and other post-employment benefits 446 263 Other employee benefits 123 29 Total 569 292 Of which current 49
5
Consolidated financial statements – Notes to the consolidated financial statements
dsm-firmenich Integrated Annual Report 2023 254
The Group operates a number of defined benefit plans and defined contribution plans throughout the world, the assets
of which are generally held in separately administered funds. The pension plans are generally funded by payments from
employees and from the relevant group companies. The Group also provides certain additional healthcare benefits to
retired employees in the US and Switzerland.
Post-employment benefits are employee benefits (other than termination benefits and short-term employee benefits)
that are payable after the completion of employment. Post-employment benefit accounting is intended to reflect the
recognition of post-employment benefits over the employee’s approximate service period, based on the terms of the
plans and the investment and funding.
The charges for post-employment benefit costs recognized in the income statement (Note 5 Net sales and costs) relate
to the following.
Post-employment benefit costs
2023
2022
Defined benefit plans:
- Current service costs pension plans
55
38
- Other post-employment benefits
4
3
Defined contribution plans
100
61
Total pension costs included in employee benefit costs
159
102
- Pension costs included in Other operating (income) / expense
(1)
(2)
Total in operating profit, continuing operations
158
100
Pension costs included in Financial income and expense
8
3
Total continuing operations
166
103
Discontinued operations
4
19
Total
170
122
Of which:
- Defined contribution plans
103
79
- Defined benefit plans
67
43
For 2024, costs for the defined benefit plans relating to pensions are expected to be €86 million (2023: €40 million).
Changes in net liabilities of the post-employment benefits recognized in the balance sheet are shown in the following
overview.
Consolidated financial statements – Notes to the consolidated financial statements
dsm-firmenich Integrated Annual Report 2023 255
Funded and
unfunded
defined
benefit
obligations
Fair value of
plan
assets
Impact of
minimum
funding
requirement/
asset ceiling
Net liabilities/
(assets)
recognized in
the
balance sheet
Balance at 1 January 2022
2,156
(1,887)
-
269
Included in income statement:
- Current service cost
40
-
-
40
- Interest expense / (income)
19
(16)
-
3
Total included in income statement
59
(16)
-
43
Included in other comprehensive income:
- Loss / (gain) from change in financial assumptions
(500)
-
-
(500)
- Return on plan assets excluding interest income
-
369
-
369
- Asset ceiling change, excluding movement through income statement
-
-
126
126
Total included in other comprehensive income
(500)
369
126
(5)
Other
- Benefits paid (including transfers in and out)
(84)
70
-
(14)
- Contributions by plan participants
19
(19)
-
-
- Employer contributions
-
(42)
-
(42)
- Currency translation adjustment and other
63
(68)
3
(2)
- Reclassification held for sale
(5)
-
-
(5)
Total other
(7)
(59)
3
(63)
Balance at 31 December 2022
1,708
(1,593)
129
244
.
Net defined benefit assets
(19)
Net defined benefit liabilities
263
Total
244
.
- Current service cost
59
3
-
62
- Interest (expense) / income
74
(69)
3
8
Total included in income statement
133
(66)
3
70
Included in other comprehensive income:
- Loss / (gain) from change in demographic assumptions
(6)
-
-
(6)
- Loss / (gain) from change in financial assumptions
203
-
-
203
- Experience loss / (gain)
20
-
-
20
- Return on plan assets excluding interest income
-
(61)
-
(61)
- Asset ceiling change, excluding movement through income statement
-
-
(62)
(62)
Total included in other comprehensive income
217
(61)
(62)
94
Other
- Benefits paid (including transfers in and out)
(186)
154
-
(32)
- Contributions by plan participants
44
(44)
-
-
- Employer contributions
-
(63)
-
(63)
- Settlements
(190)
186
-
(4)
- Balance sheet transfer
3
-
-
3
- Acquisition / disposals
1,480
(1,407)
18
91
- Currency translation adjustment and other
130
(136)
5
(1)
Total other
1,281
(1,310)
23
(6)
.
Balance at 31 December 2023
3,339
(3,030)
93
402
.
Net defined benefit assets
(44)
Net defined benefit liabilities
446
Total
402
The fair value of the plan assets consists of 78% of quoted assets (2022: 94%).
Consolidated financial statements – Notes to the consolidated financial statements
dsm-firmenich Integrated Annual Report 2023 256
Pension-plan assets by category
2023
2022
Equities
843
389
Bonds
1,061
730
Derivatives
1
-
Property
577
350
Insurance policies
48
1
Other
417
108
Cash and bank deposits
83
15
Total plan assets
3,030
1,593
The pension-plan assets include neither ordinary dsm-firmenich shares nor property occupied by dsm-firmenich. In
2024, dsm-firmenich is expected to contribute €79 million (actual 2023: €67 million) to its defined benefit plans in the
core countries.
The countries with the most significant defined benefit obligations for dsm-firmenich are specified in the following table.
Defined benefit plans in core countries
Switzerland
United
States of
America
United
Kingdom
Germany
Other
countries
Total
Defined benefit plans 2022
Funded and unfunded defined benefit
obligations
1,096
201
159
244
8
1,708
Fair value of plan assets
(1,228)
(203)
(154)
(8)
-
(1,593)
Net excess of liabilities/(assets) over
obligations
(132)
(2)
5
236
8
115
Unrecognized assets due to asset ceiling
124
4
1
-
-
129
Net excess of liabilities/(assets) over
obligations recognized
(8)
2
6
236
8
244
.
Composed of
Net defined benefit assets
(9)
(10)
-
-
-
(19)
Net defined benefit liabilities
1
12
6
236
8
263
Total changes
(8)
2
6
236
8
244
.
Defined benefit plans 2023
Funded and unfunded defined benefit
obligations
2,633
197
210
256
43
3,339
Fair value of plan assets
(2,621)
(196)
(200)
(10)
(3)
(3,030)
Net excess of liabilities/(assets) over
obligations
12
1
10
246
40
309
Unrecognized assets due to asset ceiling
93
-
-
-
-
93
Net excess of liabilities/(assets) over
obligations recognized
105
1
10
246
40
402
.
Composed of
Net defined benefit assets
(30)
(14)
-
-
-
(44)
Net defined benefit liabilities
135
15
10
246
40
446
Total changes
105
1
10
246
40
402
Consolidated financial statements – Notes to the consolidated financial statements
dsm-firmenich Integrated Annual Report 2023 257
The main actuarial assumptions for the year (weighted averages) are:
Actuarial assumptions for major plans
Switzerland
United States of
America
United Kingdom
Germany
2022
Discount rate
2.20%
5.40%
4.80%
3.70%
Price inflation
1.25%
0.00%
3.35%
0.00%
Salary increase
2.25%
3.00%
0.00%
3.20%
Pension increase
0.00%
0.00%
3.15%
2.60%
.
2023
Discount rate
1.30%
5.00%
4.50%
3.20%
Price inflation
1.25%
0.00%
3.15%
2.20%
Salary increase
2.25%
3.00%
0.00%
2.80%
Pension increase
0.00%
0.50%
2.93%
2.20%
The above mentioned actuarial assumptions are harmonized for all defined benefit plans in a country.
Sensitivities of significant actuarial assumptions
The discount rate, the future increase in wages and salaries and the pension increase rate were identified as significant
actuarial assumptions. The following impacts on the defined benefit obligation are to be expected.
• A 0.25% increase/decrease in the discount rate would lead to a decrease/increase of 2.9% (2022: 2.5%) in the
defined benefit obligation
• A 0.25% increase/decrease in the expected increase in salaries/wages would lead to an increase/decrease of
0.3% (2022: 0.3%) in the defined benefit obligation
• A 0.25% increase/decrease in the expected rate of pension increase would lead to an increase/decrease of less
than 1.6% (2022: 0.6%) in the defined benefit obligation
The sensitivity analysis is based on realistically possible changes as at the end of the reporting year. Each change in a
significant actuarial assumption was analyzed separately as part of the test. Interdependencies were not taken into
account.
Main defined benefit plans description
The dsm-firmenich Group companies have various pension plans, which are geared to the local regulations and practices
in the countries in which they operate. As these plans are designed to comply with the statutory framework, tax
legislation, local customs, and economic situation of the countries concerned, it follows that the nature of the plans
varies from country to country. The plans are based on local legal and contractual obligations.
dsm-firmenich‘s current policy is to offer defined contribution retirement benefit plans to new employees wherever
possible. However, dsm-firmenich still has a (small) number of defined benefit pension and healthcare schemes from the
past or in countries where legislation does not allow us to offer a defined contribution scheme. Generally, these schemes
have been funded through external trusts or foundations, where dsm-firmenich faces the potential risk of funding
shortfalls.
Consolidated financial statements – Notes to the consolidated financial statements
dsm-firmenich Integrated Annual Report 2023 258
The most significant defined benefit schemes are:
• DSM Nutritional Products (DNP) AG Pension Plan in Switzerland (DNP AG)
• Pension Plan at Firmenich SA in Switzerland
• DSM UK Pension Scheme in the UK
• Consolidated Pension Plan of DSM North America, Inc. in the US
• Pension plan at Firmenich, Inc. in the US
• Pension Plan at DSM Nutritional Products GmbH in Germany (DNP GmbH)
For each plan, the following characteristics are relevant:
DNP AG Pension Plan in Switzerland
The DNP AG Pension Plan is a typical Swiss Cash Balance plan. For accounting purposes, this plan is qualified as a defined
benefit plan. It is a contribution-based plan, with no promise of indexation for on-going pensions. The Swiss state minimal
requirements for occupational benefit plans have however to be respected.
The purpose of the plan is to protect the (legacy) DSM employees against the economic consequences of retirement,
disability and death. The employer and employees pay contributions to the pension plan at rates set out in the pension
plans rules based on a percentage of salary. The amount of the retirement account can be taken by the employee at
retirement in the form of pension or capital.
The weighted average duration of the defined benefit obligation is 10.8 years (2022: 10.0 years) which could be seen as
an indication of the maturity profile of the scheme.
According to the Swiss Federal Law on Occupational Retirement, Survivors and Disability (LPP/BVG), the Swiss Pension
plans are managed by independent and legally autonomous entities which have the legal structure of foundation. The
Pension Boards are composed of equal numbers of employee and employer representatives. Each year, the Pension
Boards decide the level of interest, if any, to apply to the retirement accounts in accordance with the pension policy.
It is also responsible for the investment of the assets and defining the investment strategy for long-term returns with an
acceptable level of risk. The plan assets are collectively invested (no individual investment choice).
Firmenich SA Pension Plan in Switzerland
The Firmenich SA Pension Plan is a typical Swiss Cash Balance plan. For accounting purposes, this plan is qualified as a
defined benefit plan. It is a contribution-based plan, with no promise of indexation for on-going pensions. The Swiss state
minimal requirements for occupational benefit plans have however to be respected.
The purpose of the plan is to protect the (legacy) Firmenich employees against the economic consequences of
retirement, disability and death. The employer and employees pay contributions to the pension plan at rates set out in
the pension plans rules based on a percentage of salary. The amount of the retirement account can be taken by the
employee at retirement in the form of pension or capital.
The weighted average duration of the defined benefit obligation is 14.3 years which could be seen as an indication of the
maturity profile of the scheme.
According to the Swiss Federal Law on Occupational Retirement, Survivors and Disability (LPP/BVG), the Swiss Pension
plans are managed by independent and legally autonomous entities which have the legal structure of foundation. The
Pension Boards are composed of equal numbers of employee and employer representatives. Each year, the Pension
Boards decide the level of interest, if any, to apply to the retirement accounts in accordance with the pension policy. It is
also responsible for the investment of the assets and defining the investment strategy for long-term returns with an
acceptable level of risk. The plan assets are collectively invested (no individual investment choice).
Consolidated financial statements – Notes to the consolidated financial statements
dsm-firmenich Integrated Annual Report 2023 259
DSM UK Pension Scheme
The DSM UK Pension Scheme was closed as of 30 September 2016 for all pension accruals. An unconditional indexation
policy is applicable for the vested pension rights.
The weighted average duration of the defined benefit obligation is 13.9 years (2022: 14.3 years), which could be seen as
an indication of the maturity profile of the scheme.
The pension plan is managed and controlled by a dsm-firmenich company pension fund. The Board of Trustees consists
of representatives of the employer and the employees who have an independent role. Till last year, there were two
company guarantees in place: (1) a guarantee from DNP AG (capped at GBP 14 million) related to the 2012 valuation, and
(2) a guarantee from Royal DSM (capped at GBP 11 million) related to arrangements with respect to former UK
divestments. Both guarantees were surrendered by a one-time payment of the company.
There is a long-term de-risking strategy for the DSM UK Pension Scheme in place with the objective to align the
company’s intentions and the Trustees responsibility with respect to this plan.
Consolidated Plan of DSM North America, Inc. in the US
The Consolidated Plan in the US has been closed to new entrants since 2014. As of 31 December 2016, the plan was
closed for pension accrual of the non-unionized employees, and as a result of the DRF divestment in 2021, it was fully
frozen for all unionized employees as well. In December 2023, all pension liabilities within the plan were fully settled with
an insurance company.
As a result of the settlement, the weighted average duration of the defined obligations is 0.0 years (2022: 9.7 years).
The pension plan was managed and controlled by a DSM company pension fund. The pension fund will finalize the last
formalities and will finally be liquidated.
Pension plan at Firmenich, Inc. in the US
The plan provides benefits on a defined benefit basis, and is closed to all new employees. The plan was also frozen to the
majority of current employees for future benefit accruals. The grandfathered Group of participants to the defined benefit
plan continue to accrue benefits which are payable at retirement and on death in service. With exceptions for optional
lump sum amounts for certain sections of the plan, the benefits are paid out as annuities.
The US pension plan is qualified under and is managed in accordance with the requirements of US federal law. In
accordance with federal law the assets of the plan are legally separate from the employer and are held in a pension trust.
The law requires minimum and maximum amounts that can be contributed to the trust, together with limitations on the
amount of benefits that may be provided under the plan. There are named fiduciaries that are responsible for ensuring
the plan is managed in accordance with the law. The fiduciaries are responsible for defining the investment strategy for
long-term returns with an acceptable level of risk as well as the oversight of the investment of plan assets. The
employees do not contribute to the plan and the employer contributes to the plan amounts which are at least equal to
the minimum required by the law and not more than the maximum that would limit the tax deductibility of the
contributions.
The weighted average duration of the defined benefit obligation is 9.6 years which could be seen as an indication of the
maturity profile of the scheme.
DNP GmbH Pension Plan in Germany
The DNP GmbH Pension Plan in Germany has been closed to new entrants as of 31 December 2008. The accrual is still
applicable for employees who have been participating in the plan since 2008. The pension plan is a final-pay pension
plan (averaged over the last 12 months prior to retirement) and service-related benefit.
Consolidated financial statements – Notes to the consolidated financial statements
dsm-firmenich Integrated Annual Report 2023 260
The liability is on the balance sheet of DSM Nutritional Products GmbH. No assets are allocated to this liability. All
reimbursements will be paid out by the local company.
The weighted average duration of the defined benefit obligation is 12.0 years (2022: 12.9 years), which could be seen as
an indication of the maturity profile of the scheme.
Other employee benefits
Other employee benefits comprise jubilees, long-term incentive (LTI) plans to senior management and deferred
compensation liabilities. The changes in other employee benefits are listed below.
Other employee benefits
Balance at 1 January 2022
40
Of which current
5
Changes:
- Additions
(3)
- Uses
(4)
- Reclassification to held for sale
(4)
Total changes
(11)
Balance at 31 December 2022
29
Of which current
4
.
Changes:
- Acquisition
97
- Additions
54
- Releases
(15)
- Uses
(43)
- Other change
1
Total changes
94
Balance at 31 December 2023
123
Of which current
49
25 Net debt
The development of the components of net debt is as follows.
Cash and Current Non-Current Derivatives Total cash investments current borrowings equivalents borrowings Balance at 1 January 2022 1,561 489 (2,995) (103) 29 (1,019) Change from operating activities 965 - (9) - 65 1,021 Change from investing activities 876 (364) 7 20 - 539 Reclassification from non-current to current - - 40 (40) - - Transfers (58) - 17 39 2 - Dividend (345) - - - - (345) Interest (52) - - - - (52) Proceeds from reissued shares 25 - - - - 25 New/unwinding leases - - (34) - - (34) Repurchase of shares (210) - - - - (210) Other (5) - - - (5) (10)
Consolidated financial statements – Notes to the consolidated financial statements
dsm-firmenich Integrated Annual Report 2023 261
Change from financing activities (645)-23 (1)(3) (626)Exchange differences (2)-(4)(2)6 (2) Total changes 1,194 (364)1717 68 932 Balance at 31 December 2022 2,755 125 (2,978) (86)97(87) . Change from operating activities 1,265 - - - (49)1,216Change from investing activities (726)(18)(1,652) (569)- (2,965)Reclassification from non-current to current - - 578 (578)-- Transfers (610)-90 516 4 - Dividend and remuneration perpetual notes (610)-- - - (610) Interest (61)-(19)-- (80) Proceeds from (re)issued shares 757 - - - - 757 New/unwinding leases - - (136) - - (136) Repurchase of shares (256)-- - - (256) Other (40)-- - - (40) Change from financing activities (820)-513 (62)4(365) Exchange differences (18)-3 1 -(14)Total changes (299)(18)(1,136) (630)(45) (2,128)Balance at 31 December 2023 2,456 107 (4,114) (716)52 (2,215)
In 2023, the gearing (net debt / equity plus net debt) was 8.8% (in 2022: 0.8%).
26 Notes to the cash flow statements
The cash flow statement provides an explanation of the changes in cash and cash equivalents. It is prepared on the basis
of a comparison of the balance sheets at 1 January and 31 December. Changes that do not involve cash flows, such as
changes in exchange rates, amortization, depreciation, impairment losses and transfers to other balance sheet items, are
eliminated.
Changes in working capital due to the acquisition or disposal of consolidated companies are included under Investing
activities.
The Consolidated cash flow statement includes an analysis of all cash flows in total, therefore including both continuing
and discontinued operations. For the amounts related to discontinued operations split by activities and a reconciliation
of results from continuing operations to total, see Note 3 Change in the scope of the consolidation.
Most of the changes in the cash flow statement can be traced back to the detailed statements of changes for the
balance sheet items concerned. For those balance sheet items for which no detailed statement of changes is included,
the table below shows the link between the change according to the balance sheet and the change according to the cash
flow statement.
Consolidated financial statements – Notes to the consolidated financial statements
dsm-firmenich Integrated Annual Report 2023 262
Change in operating working capital 2023 2022 Operating working capital Balance at 1 January 2,432 2,330 Balance at 31 December 3,872 2,432 Balance sheet change 1,440 102 Adjustments: - Exchange differences47 (63) - Changes in consolidation (including acquisitions and disposals)(1,899) 399 - Transfers/non-cash value adjustments148 21 Total change in operating working capital according to the cash flow statement (264)459
In 2023, the operating working capital continuing operations was €3,872 million (2022: €2,432 million), which amounts to
31.1% of annualized fourth-quarter net sales (2022: 29.0%).
Acquisition of subsidiaries of €3,691 million consists of the cash related part of the consideration for Firmenich
International SA of €3,500 million, Adare Biome of €290 million and acquisition/earn-out related costs of €184 million,
offset partly by the cash held by the acquired entities of €285 million. The disposal of subsidiaries, businesses and
associates of €3,533 million consists primarily of the cash impact of the divestment of the Engineering Materials
business for €3,553 million. See also Note 3 Change in the scope of the consolidation.
27 Share-based compensation
Accounting policy
Share-based compensation at dsm-firmenich consists of the granting of Performance Share Units (PSUs) and Restricted
Share Units (RSUs), and stock option plans to eligible employees.
PSUs and RSUs generally vest after three years on the achievement of predefined vesting conditions. The cost of PSUs
and RSUs is measured by reference to the fair value of the dsm-firmenich shares on the date on which the PSUs and
RSUs were granted or modified. The cost is recognized in profit or loss (Employee benefit costs) during the vesting
period, together with a corresponding increase in equity. Vesting conditions other than market conditions are considered
by adjusting the number of equity instruments, so that the amount recognized during the vesting period in employee
benefit costs is based on the number of share units that eventually vest.
Estimates and judgments
Key estimates related to share-based compensation costs for PSUs and RSUs are the estimation of fair values of the
shares on the grant or modification date, and the number of shares that will vest. An independent third party conducts
the fair value calculation as far as vesting is tied to market conditions, using the Monte Carlo method.
Restricted- and Performance Share Unit Plan
The dsm-firmenich Restricted- and Performance Share Unit Plan provides rules for the grant of RSUs and/or PSUs to
eligible employees. Considering the plan rules that allow multiple grant dates, best practice is to effectuate the grant of
share units on the last trading day at the Amsterdam Stock Exchange in March. In principle PSUs will be granted; RSUs
may be granted in specific circumstances.
Consolidated financial statements – Notes to the consolidated financial statements
dsm-firmenich Integrated Annual Report 2023 263
Subject to the plan and considering the effective date of the merger, the 2023 grant was conducted per 31 July 2023.
This grant concerned the Members of the Executive Committee and the Global Management Team (i.e., the group of
senior leaders composed of employees eligible for an LTI grant under policies applicable at both legacy companies). The
performance period of this grant ends 31 December 2025, vesting will be effectuated 31 March 2026.
The number of share units to be granted is based on job level, contribution, and the face value of the dsm-firmenich
share over a reference period. As a result, the number of share units to be granted annually will fluctuate with the share
price development.
RSUs and PSUs are subject to a vesting period of 3 years starting at the grant date. Vesting of RSUs is subject to
continued employment until the vesting date (‘time vesting’). In addition, vesting of PSUs is also subject to the
achievement of predefined performance targets at the end of the performance period. In view of the merger of equals
between DSM and Firmenich, it was decided (as included in the Offering Circular) that the PSUs granted under DSM’s
Long-Term Incentive plan in 2021 and 2022, respectively, shall vest against the average of the vesting result achieved over
the vesting that occurred in 2020, 2021 and 2022. Non-vested share units will be forfeited. If employment is terminated
prior to the vesting date, specific rules regarding vesting and forfeitures apply.
As included in the Offering Circular, all rights of eligible persons recorded as outstanding immediately prior to the
settlement of the merger related to equity grants made under DSM legacy plans related to DSM stock, such as PSUs,
RSUs or stock options, have been exchanged for equivalent rights related to dsm-firmenich stock (‘roll-over’).
In line with the Articles of Association and the respective plan rules, fifty percent of the Base Fee due to the Members of
the Board of Directors has been delivered in RSUs. The 2023 grant was implemented on 30 September 2023 and
concerns the period between 18 April 2023 and the 2024 AGM. In principle, the vesting term is three years. However, if a
board mandate ceases for whatever reason within such vesting period, outstanding unvested RSUs will vest (in full or pro-
rated) as per the effective date of such cessation, subject to a one year holding period.
The 2023 grant of PSUs under the dsm-firmenich Restricted- and Performance Share Unit Plan to Members of the
Executive Committee and other eligible employees is based on the at target level; in 2023 this concerned 398,886 share
units.
The grant to the Members of the Board of Directors concerns 50% of the applicable Base Fee and involved 18,239 RSUs in
2023.
Overview of share units granted to Members of the Board of Directors
Year of grant
Outstanding at
31 Dec. 2022
In 2023
Outstanding at
31 Dec. 2023
Share price
at date of
grant (€)
Expiry date
Granted
Vested
Forfeited/
expired
2023
-
18,239
-
-
18,239
80.21
18 Apr 2026
At former DSM, grants to the Executive Committee were based on the maximum number to vest while the grant to other
eligible employees is – as of 2021 – based on the ‘at-target’ grant level (in previous years this was the ‘maximum number’
that could vest). This ‘at-target’ grant level includes RSUs as well as PSUs. The 2020 grant vested 31 March 2023. The
vesting percentage for the Managing Board / Executive Committee was 105% of the at target grant (or 70% of the
maximum to vest i.e., the number initially granted). For other eligible employees, all outstanding RSUs vested the vesting
date, while the vesting % for the PSUs was 135% of the at target grant. In total 56,088 RSUs and 85,435 PSUs vested.
Consolidated financial statements – Notes to the consolidated financial statements
dsm-firmenich Integrated Annual Report 2023 264
Overview of share units Executive committee and other eligible employees
Year of
grant
Outstanding at
31 Dec. 2022
In 2023
Outstanding at
31 Dec. 2023
Share price
at date of
grant (€)
Expiry date
Granted
Vested¹
Forfeited/
expired
2020
104,118
15,942
(118,897)
(1,163)
-
103.50
31 Mar 2023
2021
89,667
-
(13,398)
(2,178)
74,091
144.30
31 Mar 2024
2022
86,053
180
(10,011)
(3,033)
73,189
162.50
31 Mar 2025
2023
-
319,317
(1,546)
(4,571)
313,200
97.67
31 Mar 2026
2023 Total
279,838
335,439
(143,852)
(10,945)
460,480
at
31 Dec. 2021
at
31 Dec. 2022
2022 Total
236,833
90,486
(35,885)
(11,596)
279,838
1 Restricted- and Performance Share Units may partly vest upon termination of employment in connection with, for example, divestments, retirement or
early retirement.
In September 2022, a group of senior key employees (excluding the Co-CEOs) at DSM received an RSU grant, which was
subject to completion of the merger between DSM and Firmenich. As the merger was completed, the RSUs were finally
granted. Upon vesting, the respective grant will be settled in cash.
These cash-settled RSUs vest in September 2025 and have a fair value on 31 December 2023 of €92.00.
Overview of cash-settled RSUs
Year of
grant
Outstanding at
31 Dec. 2022
In 2023
Outstanding at
31 Dec. 2023
Share price
at date of
grant (€)
Expiry date
Granted
Vested
Forfeited/
expired
2022
102,166
194
(4,141)
(4,130)
94,089
117.45
30 Sep 2025
Measurement of fair value
The following assumptions were used to determine the fair value of the equity-settled share units at grant date.
Assumptions equity-settled share units
2023
2022
Share units granted to ExCo and other executives
Risk-free rate¹
2.79%
0.25%
Expected share life in years
3
3
Nominal share life in years
3
3
Share price in €¹
100.50
162.50
Expected dividend in €
1.00
2.50
Fair value of share granted in €
97.67
156.37
Share units granted to Board of Directors
Risk-free rate¹
3.45%
Expected share life in years²
1
Nominal share life in years
1
Share price in €¹
80.13
Expected dividend in €
1.00
Fair value of share granted in €
79.16
1 The differences in the risk-free rate and share price are due to different grant dates.
2 The performance period of the share unit is one year, it vests however only after three years.
Consolidated financial statements – Notes to the consolidated financial statements
dsm-firmenich Integrated Annual Report 2023 265
Share-based compensation
An amount of €29 million is included in the costs for wages and salaries for share-based compensation (2022: €35
million).
The following table specifies the share-based compensation.
Share-based compensation 2023 2022 Stock options -7Equity-settled share units 23 27 Cash-settled share units 6 1 Total expense 29 35
28 Related parties
Accounting policy
dsm-firmenich has identified its key management personnel and its associates and joint ventures as related parties. For
associates and joint ventures, see also Note 10 Associates and joint arrangements.
Key management personnel are those persons having authority and responsibility for planning, directing and controlling
the activities of the entity, directly or indirectly, as defined by IAS 24 ‘Related Parties’. IAS 24 requires disclosure of key
management personnel split in the total of short-term employee benefits (salary and short-term incentive), post-
employment (pension expenditure) and other long-term benefits, termination benefits and share-based payment cost
(share-based compensation).
Transactions with associates and joint ventures
2023 2022 Sales to 12 18 Purchases from 105 35 Loans to 11 1 Receivables from 17 17 Payables to 5 4 Interest from - 1 Commitments to 6 -
dsm-firmenich may issue guarantees as credit enhancement of associates to acquire bank facilities for these associates.
dsm-firmenich has provided guarantees to third parties for debts of associates for an amount of €28 million (2022: €60
million). Expected credit losses for receivables from related parties amount to zero (same as 2022).
Other related-parties disclosures relate entirely to key management of dsm-firmenich, being represented by the
company’s management. For further details about their remuneration, see below.
Key management personnel
For the period January 2023 until March 2023, the Supervisory Board, the Managing Board, and the Executive Committee
of former DSM meet the definition of key management personnel. As of April 2023, the Members of the Board of Directors
and the Members of the Executive Committee of dsm-firmenich meet the definition of key management personnel.
Personnel expenses are recognized in the regarding service period. Personnel expenses relating to the remuneration of the
Consolidated financial statements – Notes to the consolidated financial statements
dsm-firmenich Integrated Annual Report 2023 266
Supervisory Board (SB), the Managing Board (MB), and the Executive Committee (EC) of former DSM over the regarding
service period are shown in below table.
Remuneration expenses SB, MB, and EC of former DSM
x € thousand 2023 2022 Base salary / Supervisory Board fees 2,391 6,521 Employer pension contribution 471 1,197 Short-Term Incentive¹ 869 3,399 Share-based compensation² 2,518 7,778 Other³ 16,562 6,612 Total 22,811 25,507
1 Short-Term Incentive based on target level minus weight of Adjusted EBITDA target.
2 Represents the expenses of Performance Share Units (PSUs) awarded according to IFRS rules. These costs are considered over the vesting period and
therefore cover several years.
3 Includes benefits, severance payments for ExCo Members that left the Company because of the merger, special payments as included in the Offering
Circular (issued 22 November 2022) related to the merger, settlement DSM STI Deferral and Matching Plan, social security contributions and obligations
following Article 32bb of the Dutch Wage Tax Act (1964).
The above table shows the remuneration expenses for the Supervisory Board, Managing Board and Executive Committee
of former DSM who were in function until 18 April 2023.
Members of the Executive Committee of former DSM are entitled to the remaining rights of their prior LTI (Long-Term
Incentive) plan, which consists of share-based payments. The share-based payment costs included for the reporting
period relate to the pro-rata part of the full 2023 costs.
The Members of the Board of Directors (BoD) and Executive Committee (ExCo) of dsm-firmenich were appointed
effective 18 April 2023. The remuneration over the period starting 18 April 2023 up to and including 31 December 2023 is
shown in the below table.
Remuneration expenses BoD and ExCo DSM-Firmenich AG over the period 18 April 2023 until 31 December 2023 x € thousand 2023 2022 Base salary / Committee fee in cash 6,841 Employer pension contribution 807 Short-Term Incentive 3,973 Share-based compensation¹ 4,401 Other 1,498 Subtotal 17,520 Employer social securities 585 Total 18,105
1 Represents the expenses of Performance Share Units (PSUs) awarded according to IFRS rules. These costs are considered over the vesting period and
therefore cover several years.
Consolidated financial statements – Statutory Auditor’s Report
dsm-firmenich Integrated Annual Report 2023 267
29 Events after the balance sheet date
On 13 February 2024, DSM-Firmenich AG completed the voluntary tender offer of 8 January 2024 for 4,163,287 DSM B.V.
ordinary shares for a total consideration amounting to €400 million. dsm-firmenich now holds 98.5% of the shares of
DSM B.V. The company will seek to acquire the remaining 1.5% shares through the statutory buy-out procedure at the
Enterprise Chamber of the Amsterdam Court of Appeal, which started on 17 July 2023.
On 15 February 2024, dsm-firmenich announced the initiation of a process to carve-out and separate out the Animal
Nutrition & Health (ANH) business from the Group. The company believes that the full potential of the ANH business
could be best realized through a different ownership structure for which all potential separation options will be
considered. dsm-firmenich would expect to be in a position to separate the business in the course of 2025.
dsm-firmenich Integrated Annual Report 2023 268
Consolidated financial statements – Statutory Auditor’s Report
Statutory Auditor’s Report
To: the General Meeting of DSM-Firmenich AG, Kaiseraugst.
Report on the audit of the Consolidated Financial Statements
Opinion
We have audited the consolidated financial statements of DSM-Firmenich AG and its subsidiaries (the Group), which
comprise the consolidated balance sheet as at 31 December 2023, the consolidated income statement, consolidated
statement of comprehensive income, the consolidated statement of changes in equity and the consolidated cash flow
statement for the year then ended, and notes to the consolidated financial statements, including material accounting
policy information.
In our opinion, the consolidated financial statements (pages 192 to 267) give a true and fair view of the consolidated
financial position of the Group as at 31 December 2023, and of its consolidated financial performance and its
consolidated cash flows for the year then ended in accordance with IFRS Accounting Standards and comply with Swiss
law.
Basis for opinion
We conducted our audit in accordance with Swiss law, International Standards on Auditing (ISA) and Swiss Standards on
Auditing (SA-CH). Our responsibilities under those provisions and standards are further described in the “Auditor’s
Responsibilities for the Audit of the Consolidated Financial Statements” section of our report. We are independent of the
Group in accordance with the provisions of Swiss law, together with the requirements of the Swiss audit profession, as
well as those of the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional
Accountants (including International Independence Standards) (IESBA Code), and we have fulfilled our other ethical
responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
ACCOUNTING FOR THE MERGER BETWEEN DSM AND FIRMENICH
VALUATION OF GOODWILL
VITAMIN TRANSFORMATION PROGRAM
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the
consolidated financial statements of the current period. These matters were addressed in the context of our audit
of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters.
Consolidated financial statements – Statutory Auditor’s Report
dsm-firmenich Integrated Annual Report 2023 269
ACCOUNTING FOR THE MERGER BETWEEN DSM AND FIRMENICH
Key audit matter
On 30 May 2022, Koninklijke DSM N.V. and
Firmenich SA entered into a business combination
agreement in which the shareholders agreed to enter a
merger of equals by combining the businesses of DSM
and Firmenich. The merger was completed through an
exchange offer to the DSM shareholders for all DSM or-
dinary shares, and the contribution of all Firmenich
shares (against 34.5% of the total issued share capital
and payment of EUR 3,500 million).
The transaction was closed on 8 May 2023 and is ac-
counted for as a business combination.
As part of the acquisition accounting, IFRS Accounting
Standards require the recognition and measurement of
the identifiable assets acquired and liabilities assumed
at their fair values. As a result, DSM-Firmenich recog-
nized goodwill of EUR 8,251 million, representing the
difference of the total consideration paid and the fair
value of Firmenich's net assets.
Given the size and the judgment applied by manage-
ment in the provisional purchase price allocation,
specifically the valuation of identified intangible assets
and property, plant and equipment, we consider it a key
audit matter.
Our response
We have made inquiries of management to gain an un-
derstanding of the acquisition and the valuation
process undertaken by the Group in relation to the
Firmenich acquisition accounting and tested the related
design and implementation of the relevant controls.
We obtained and read the underlying legal agreements
and other transaction related documents and assessed
the accounting treatment of various terms.
We obtained the fair value assessment of intangible as-
sets and property, plant and equipment prepared by
third party valuation experts engaged by the company
to assist management with the purchase price
accounting. We assessed the third party valuation firm's
qualifications, experience and expertise regarding the
assets being valued.
With the assistance of our in-house valuation special-
ists, we assessed whether the methodologies and mod-
els used to value intangible assets and property, plant
and equipment are appropriate. We challenged the
main assumptions and judgements that affected the
valuation by comparing these with market data and our
experience of similar transactions.
We also evaluated the presentation and disclosure of
the transaction in the consolidated financial
statements.
For further information on accounting for the merger between DSM and Firmenich refer to the following:
• Note 3. Change in the scope of consolidation
Consolidated financial statements – Statutory Auditor’s Report
dsm-firmenich Integrated Annual Report 2023 270
VALUATION OF GOODWILL
Key audit matter
As of 31 December 2023, the consolidated financial
statements included goodwill amounting to EUR 11,293
million.
Goodwill is assessed for impairment by management at
least annually by determining the recoverable amount
(the higher of its value in use and fair value less costs of
disposal), which is then compared to the carrying
amount.
Management applies judgment in assessing the cash
flow projections of the (groups of) cash generating units
at which level goodwill is allocated and determining the
relevant valuation assumptions.
Valuation of goodwill is a key audit matter because the
impairment test process is complex. It involves a high
degree of management judgment and assumptions,
such as cash flow forecasts, growth rates and discount
rates of the CGUs, being used in the Group’s impairment
tests.
As disclosed in note 29 to the financial statements and
announced on 15 February 2024, DSM-Firmenich AG
announced the initation of a process to carve-out and
separate out the Business Unit Animal Nutrition & Health
(ANH from the Group). Management considered the
effects of the decision in the preparation of the
Our response
We obtained and documented our understanding of the
impairment testing process, the sensitivity analysis and
tested the design and implementation of the relevant
controls therein.
We assessed the determination of the CGUs taking into
account the IFRS accounting standards and our
knowledge of the organisation, structure and govern-
ance of the DSM-Firmenich Group.
We evaluated the accuracy of impairment tests, the
reasonableness of the key assumptions used to
determine the recoverable amounts – including long
term growth rates and discount rates based on our
understanding of the related CGUs’ cash flow
projections – and the methodology used by
management to prepare its cash flow forecasts.
We involved our in-house valuation specialists with
specialized skills and knowledge who assisted in
assessing the reasonableness of the discount rates and
long term growth rates through testing the source
information underlying their determination, and in
developing a range of independent estimates and
comparing those to the discount and long term growth
rates applied by management.
We assessed the Group’s ability to accurately prepare
cash flow projections for their CGUs by comparing the
actual financial performance to the projections made
earlier.
We also considered the adequacy of the disclosures on
impairment testing and sensitivity tests in the consoli-
dated financial statements. We have also considered
the accuracy of the disclosure regarding the ANH sepa-
ration.
For further information on valuation of goodwill refer to the following:
• Note 8. Goodwill and intangible assets
• Note 29. Events after the balance sheet date
consolidated financial statements.
Consolidated financial statements – Statutory Auditor’s Report
dsm-firmenich Integrated Annual Report 2023 271
VITAMIN TRANSFORMATION PROGRAM
Key audit matter
During 2023 the Group decided to implement a vitamin
transformation program to enable acceleration of
strategic actions. This company-wide program is
designed to improve the profitability of its vitamin
activities and structurally reduce exposure to volatility
from price fluctuations.
The plan included a restructuring of the vitamin asset
footprint resulting in the closure of the vitamin B6 plant
in Xinghuo (China) and the termination of vitamin C pro-
duction in the plant in Jiangshan (China).
As the company has ceased to use these plants, man-
agement prepared an impairment assessment for the
plants and related assets on a stand-alone basis. Based
on the impairment assessment, losses for the affected
property, plant and equipment were recognized in the
amount of EUR 106 million for the vitamin B6 Xinghuo
plant respectively EUR 119 million for the vitamin C
Jiangshan plant. Furthermore, a liability was recognized
for remaining contractual obligations.
As per 31 December 2023 the assets and liabilities re-
lated to the vitamin C business in Jiangshan are classi-
fied as held for sale.
Given the financial impact and the non-recurring nature
of these events, the accounting for these impairments
is significant to our audit of the financial statements.
Our response
We inquired management and inspected relevant docu-
mentation to gain an understanding of the vitamin
transformation program. Further, we evaluated manage-
ment’s assessment of impairment indicators as a result
of the restructuring of the vitamins assets footprint for
the Xinghuo and Jiangshan plants in China and tested
the design and implementation of the relevant controls
therein.
As a result of the identified impairment indicators, the
management has prepared impairment tests. We as-
sessed the results of management’s impairment tests
and evaluated the appropriateness of the recoverable
amount determined for both plants.
For both plants we inspected underlying documentation,
amongst others related to internal and external commu-
nication of the closure and applicable contractual obli-
gations.
In addition for the closure of the Xinghuo vitamin B6
plant, we performed a site visit and observed that the
plant is no longer in use. We enquired local employees
and management about future plans and relevant gov-
ernment regulations.
We also considered the adequacy of the disclosures on
the impairments in the consolidated financial statements.
For further information on the assets and liabilities held for sale and the impairments related to the vitamin
transformation program refer to the following:
• Note 3. Change in the scope of consolidation
• Note 9. Property, plant and equipment
Other information
The Board of Directors is responsible for the other information. The other information comprises the information included
in the annual report, but does not include the consolidated financial statements, the stand-alone financial statements of
the company, the compensation report and our auditor’s reports thereon.
Our opinion on the consolidated financial statements does not cover the other information and we do not express any
form of assurance conclusion thereon.
dsm-firmenich Integrated Annual Report 2023 272
Consolidated financial statements – Statutory Auditor’s Report
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial
statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we
are required to report that fact. We have nothing to report in this regard.
Board of Directors’ Responsibilities for the Consolidated Financial Statements
The Board of Directors is responsible for the preparation of the consolidated financial statements that give a true and fair
view in accordance with IFRS Accounting Standards and the provisions of Swiss law, and for such internal control as the
Board of Directors determines is necessary to enable the preparation of consolidated financial statements that are free
from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the Board of Directors is responsible for assessing the Group’s ability
to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern
basis of accounting unless the Board of Directors either intends to liquidate the Group or to cease operations, or has no
realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with
Swiss law, ISA and SA-CH will always detect a material misstatement when it exists. Misstatements can arise from fraud
or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with Swiss law, ISA and SA-CH, we exercise professional judgment and maintain
professional skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient
and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made.
• Conclude on the appropriateness of the Board of Directors’ use of the going concern basis of accounting and, based
on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast
significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial
statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group
to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the
disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a
manner that achieves fair presentation.
Consolidated financial statements – Statutory Auditor’s Report
273
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities
within the Group to express an opinion on the consolidated financial statements. We are responsible for the
direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion.
We communicate with the Board of Directors or its relevant committee regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that
we identify during our audit.
We also provide the Board of Directors or its relevant committee with a statement that we have complied with relevant
ethical requirements regarding independence, and communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or
safeguards applied.
From the matters communicated with the Board of Directors or its relevant committee, we determine those matters that
were of most significance in the audit of the consolidated financial statements of the current period and are therefore
the key audit matters. We describe these matters in our auditor’s report, unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh
the public interest benefits of such communication.
We have also been engaged by the Board of Directors to assess whether the consolidated financial statements have
been prepared, in all material respects, in compliance with the requirements laid down in the ESEF Regulation.
Report on Other Legal and Regulatory Requirements
In accordance with Art. 728a para. 1 item 3 CO and PS-CH 890, we confirm that an internal control system exists, which
has been designed for the preparation of the consolidated financial statements according to the instructions of the
Board of Directors.
We have checked the compliance of the consolidated financial statements of the Group as at 31 December 2023 with the
relevant requirements set out in the ESEF Regulation that are applicable to the consolidated financial statements.
For the Group it relates to:
• The consolidated financial statements prepared in a valid xHTML format;
• The XBRL markup of the consolidated financial statements uses the core taxonomy and the common rules on
markups specified in the ESEF regulation.
In our opinion, the consolidated financial statements of the Group as at 31 December 2023, identified as DSM-
Firmenich_consolidated_ESEF_31-12-2023.zip have been prepared, in all material respects, in compliance with the
requirements laid down in the ESEF Regulation.
We recommend that the consolidated financial statements submitted to you be approved.
Carlos Alvarez
Licensed Audit Expert
KPMG AG
Petra Groenland van der Linden Licensed
Audit Expert
Auditor in Charge
Basel, 28 February 2024
dsm-firmenich Integrated Annual Report 2023
dsm-firmenich Integrated Annual Report 2023 274
Parent company financial
statements
Balance sheet at 31 December of DSM-Firmenich AG Notes 2023 2023 2022 2022 EUR Values in EUR Values in x million CHF CHF Assets Cash and cash equivalents - - 1 1 Other short-term receivables from companies in which the entity holds an investment 2 626 580 - - Other short-term receivables from other group companies 2 711 658 - - Prepaid expenses and accrued income 1 1 - - Total current assets 1,338 1,239 1 1 Investments 3 34,123 31,599 - - Total non-current assets 34,123 31,599 - - Total assets 35,461 32,838 1 1 . Liabilities and shareholders' equity Trade accounts payable to third parties 4 4 - - Short-term liabilities 4 649 601 - - Other short-term payables to third parties 4 2 2 - - Other short-term payables to other group companies 4 51 47 - - Accrued expenses 5 6 6 - - Total current liabilities 712 660 - - Total non-current liabilities - - - - Total liabilities 712 660 - - Share capital 6 3 3 - - Legal capital reserves: - Reserves from capital contributions 7 23,145 21,432 1 1 - Other capital reserves 7 7,687 7,118 - - Legal retained earnings - Reserves for treasury shares 8 44 41 - - Available earnings: - Profit brought forward - - - - - Profit for the period 3,870 3,584 - - Total shareholders' equity 34,749 32,178 1 1 Total liabilities and shareholders' equity 35,461 32,838 1 1
The accompanying notes are an integral part of these parent company financial statements.
Parent company financial statements
dsm-firmenich Integrated Annual Report 2023 275
Income statement of DSM-Firmenich AG Notes 2023 2023 2022 2022 EUR Values in EUR Values in x million CHF CHF Dividend income 9 3,924 3,634 - - Other operating income 11 20 19 - - Other finance income 12 15 14 - - Total income 3,959 3,666 - - Personnel expenses 10 15 14 - - Other operating expenses 11 55 51 - - Finance expense 12 19 18 - - Total expenses 89 82 - - Profit for the period 3,870 3,584 - - The accompanying notes are an integral part of these parent company financial statements.
Parent company financial statements - Notes to the parent company financial statements
dsm-firmenich Integrated Annual Report 2023 276
Notes to the parent company financial statements
1 Principles
General aspects
DSM-Firmenich AG is a stock corporation (Aktiengesellschaft) incorporated and domiciled in Switzerland. The Company
is based in Kaiseraugst, Switzerland. DSM-Firmenich AG is the holding company of the operating companies of the dsm-
firmenich Group, who is a leading supplier in nutrition, health and beauty.
The fiscal year-end of DSM-Firmenich AG (formerly Danube AG, ‘the Company’) is 31 December. These financial
statements of DSM-Firmenich AG were prepared in accordance with Swiss Law on Accounting and Financial Reporting
(32
nd
title of the Swiss Code of Obligations). Where not prescribed by law, the significant accounting and valuation
principles applied are described below.
On 8 May 2023, the company published interim financial statements due to the dividends distributed during the year.
The financial statements are presented in euros (EUR or €); the Swiss franc (CHF) values are presented for the purposes
of comparison and have been calculated by applying the period-end FX-rate. The comparative figures of the period
ending 31 December 2022 were audited in CHF; the EUR amounts are presented for the purposes of comparison. All
values in the financial statements are rounded to the nearest million, except when otherwise indicated.
Any main accounting policies applied in the preparation of these financial statements that are not already specified by
law, i.e., by the Swiss Code of Obligations, are outlined below in the applicable notes.
Currency
The Company’s currency – as legally determined by the Articles of Association – is EUR, which is also the functional
currency. The Company changed its currency, i.e., the denomination of its share capital in the Articles of Association of
the Company, from CHF to EUR as of 1 January 2023 as adopted by the Extraordinary General Meeting on 18 April 2023.
The Company has determined that for DSM-Firmenich AG as the holding company the primary economic environment is
in EUR due to its public listing in EUR on the Euronext in Amsterdam (Netherlands) as of 18 April 2023.
Transactions in foreign currencies are recorded at the exchange rate at the date of the transaction. Assets and liabilities
denominated in a foreign currency are translated into EUR at period-end exchange rates.
As required by the Swiss Code of Obligations (cf. art. 958d para. 3), the financial statements are also presented in the
national currency, being CHF. The following EUR/CHF exchange rates have been applied in these financial statements to
translate the balance sheet and income statement:
• Closing rate on 31.12.2022: 0.9847
• Closing rate on 31.12.2023: 0.9260
For the opening balance sheet as at 1 January 2023, the last audited balances in CHF have been translated to EUR with
the closing rate EUR/CHF 0.9847.
x thousand Share capital Reserves from capital contributions Opening balance in CHF as of 1 January 2023 100 600 Opening balance in EUR as of 1 January 2023 - translated at closing date 102 609
Parent company financial statements - Notes to the parent company financial statements
dsm-firmenich Integrated Annual Report 2023 277
Summary of the accounting policies
Cash and cash equivalents
Cash and cash equivalents comprise bank balances.
Investments
Investments in companies where the entity holds an investment are valued at acquisition cost less adjustments for
impairment of value.
Foregoing a cash flow statement and additional disclosures in the notes
As DSM-Firmenich AG has prepared its consolidated financial statements in accordance with a recognised accounting
standard (IFRS), it has decided to forego presenting additional disclosures as well as a cash flow statement in accordance
with the law.
Information on balance sheet and income statement items
2 Other short-term receivables
Other short-term receivables from companies in which the entity holds an investment
A receivable from DSM B.V. of €626 million (CHF 580 million) representing the non-tendered shares in the share capital
of DSM N.V. (now DSM B.V.) that DSM-Firmenich AG will acquire through a buy-out-procedure.
Other short-term receivables from other group companies
A receivable of €692 million (CHF 640 million) from the in-house cash pool.
A receivable from other group companies of €20 million (CHF 18 million) composed of recharges of corporate service
costs and remuneration of key personnel (disclosed in Other operating income).
3 Investments
Companies in which DSM-Firmenich AG holds an investment are valued at acquisition cost less adjustments for
impairment of value.
x million Domicile Carrying amount Carrying amount Nominal share Share in capital / at 31.12.2023 at 31.12.2023 capital voting rights in EUR values in CHF at 31.12.2023 in % at 31.12.2023 Company DSM B.V. Heerlen (NL) 19,846 18,378 € 261 96.1 / 96.1 Firmenich International SA Satigny (CH) 14,277 13,221 CHF 41 100 / 100 Total 34,123 31,599
The investments consist of the direct equity share in DSM B.V. and in Firmenich International SA.
Parent company financial statements - Notes to the parent company financial statements
dsm-firmenich Integrated Annual Report 2023 278
The DSM business was transferred into the Company via the first and second capital increase event in the context of the
tender procedure involving the exchange of shares of DSM N.V. After the second capital increase, the Company holds a
total of 167,321,557 DSM N.V. ordinary shares, representing approximately 96.1% of DSM's aggregate issued and
outstanding ordinary share capital. The acquisition cost amounts to €19.8 billion (CHF 18.4 billion). The remaining 3.9% of
DSM’s ordinary shares (6,696,477) are being acquired via a buy-out procedure in accordance with section 2:359c of the
Dutch Civil Code (DCC). The buy-out price will be the closing price of the DSM-Firmenich AG share on 3 May 2023,
which is €116.00.
The Firmenich shareholders contributed 8,019,000 shares out of 8,100,000 shares (100% minus any treasury shares held
by Firmenich International SA) in the capital of Firmenich International SA to DSM-Firmenich AG in exchange for
91,658,354 DSM-Firmenich ordinary shares via the fourth capital increase and €3.5 billion (CHF 3.5 billion) in cash. At the
balance sheet date, the previous Firmenich shareholders own in aggregate 34.5% of DSM-Firmenich AG’s issued capital.
A review for impairment was performed based on current market considerations, assessing whether market
expectations on delivering the merger results of the initial deal closed in May 2023 significantly changed until 31
December 2023. This review did not lead to an impairment of the Company’s investments in the period.
Parent company financial statements - Notes to the parent company financial statements
dsm-firmenich Integrated Annual Report 2023 279
The significant indirect investees in which DSM-Firmenich AG has control are the following:
Company name Country Share % Currency Share capital in thousands Indirect investees via DSM B.V. DSM Nutritional Products Australia Pty Limited Australia 100 AUD 17,500 DSM Austria GmbH Austria 100 EUR 35 DSM Produtos Nutricionais Brasil S.A. Brazil 100 BRL 1,624,415 DSM Nutritional Products Canada Inc. Canada 100 USD 228,000 DSM Vitamins (Shanghai) Ltd. China 100 USD 66,950 DSM Andre Pectin, Co. Ltd. (formerly: Yantai Andre Pectin, Co. Ltd.) China 75 CNY 313,000 DSM Vitamins Trading (Shanghai) Co., Ltd. China 100 USD 200 DSM Nutritional Products France SAS France 100 EUR 63,998 DSM Nutritional Products GmbH Germany 100 EUR 1,000 Istituto delle Vitamine S.p.A. Italy 100 EUR 2,580 DSM Japan K.K. Japan 100 JPY 100,000 DSM Nutritional Products Mexico SA de CV Mexico 100 MXN 10,000 DSM NL Services B.V. Netherlands 100 EUR 15,882 DSM Food Specialties B.V. Netherlands 100 EUR 453 DSM Finance B.V. Netherlands 100 EUR 1,849,336 DSM Nutritional Products Iberia SA Spain 100 EUR 261 DSM Nutritional Products Europe AG Switzerland 100 CHF 1,000 DSM Nutritional Products AG Switzerland 100 CHF 50,000 DSM Nutritional Products, LLC United States 100 USD 129,829 DSM Holding Company USA, Inc. United States 100 USD 1 DSM Biomedical Inc. United States 100 USD 302 I-Health, Inc. United States 100 USD 0.1 DSM Food Specialties USA, Inc. United States 100 USD 0.1 First Choice Ingredients, Inc. United States 100 USD 0.3 Indirect investees via Firmenich International SA Firmenich & Cia. Ltda. Brazil 100 BRL 83,115 Firmenich Aromatics (China) Co., Ltd. China 100 CNY 564,605 ArtSci Biology Technologies Co. Ltd China 90 CNY 20,000 Les Dérivés Terpéniques et Résiniques France 100 EUR 19,961 Firmenich Aromatics Production (India) Private Limited India 100 INR 2,322,400 PT Firmenich Indonesia Indonesia 100 IDR 5,305,000 PT Firmenich Aromatics Indonesia Indonesia 100 IDR 45,097,500 Firmenich de Mexico S.A. de C.V. Mexico 100 MXN 104,327 Firmenich Asia Private Ltd. Singapore 100 SGD 6,000 Firmenich SA Switzerland 100 CHF 30,000 Firmenich Finance SA Switzerland 100 CHF 100 Firmenich, Inc. United States 100 USD 31,350 Chem-Fleur Incorporated United States 100 USD 27,641 MCP Foods Inc. California United States 100 USD 5,000 Intercit Incorporated United States 100 USD 567 Firmenich DISC Inc. United States 100 USD 3 Aromatic Technologies, Inc. United States 100 USD 163,603
Parent company financial statements - Notes to the parent company financial statements
dsm-firmenich Integrated Annual Report 2023 280
4 Short-term liabilities and payables
Short-term liabilities
DSM-Firmenich AG acquired on 8 May 2023 Firmenich International SA by issuing 91,658,354 shares and paying €3.5
billion cash to the sellers of the Firmenich business in exchange for 8,019,000 shares out of 8,100,000 shares (100%
minus any treasury shares held by Firmenich International SA) of Firmenich International SA. The cash amount was
funded by a loan amounting to €3.5 billion (CHF 3.5 billion) granted by DSM N.V. According to the loan agreement, the
usage of that loan amount is limited to the financing (directly or indirectly) of the cash component of the acquisition of
the Firmenich shares, and the payment of costs, expenses and fees in connection with that transaction.
The loan has an initial maximum maturity term of 12 months with the option to extend this up to two times within the first
six months. The interest rate is calculated based on the EURIBOR in relation to the relevant interest period plus a margin
based on the runtime of the loan (varying from 0.25% per annum in case of a utilization period of 6 months at maximum
to 0.55% per annum for a utilization period of 18–24 months). The loan was redeemed in 2023 upon receipt of upstream
dividends from DSM B.V.
DSM-Firmenich AG will acquire via a buy-out procedure in accordance with section 2:359c of the Dutch Civil Code
(DCC) the remaining 3.9% of DSM B.V.’s ordinary shares (6,696,477) The buy-out price agrees to the closing price of the
dsm-firmenich share on 3 May 2023, which is €116.00. A liability towards the non-tendered shareholders of DSM B.V. has
been recognised in the amount of €649 million (CHF 601 million) including €24 million (CHF 22 million) of accrued
interest.
Other short-term payables to third parties
An amount of €1 million (CHF 1 million) payable to pension funds is included in Other short-term payables to third parties.
Other short-term payables to other group companies
The outstanding amount on Other short-term payables to group companies reflects the charges by DSM Services B.V. to
DSM-Firmenich AG for its share in the merger transaction costs (€49 million / CHF 45 million) and in the costs of the
Investor Relations department.
5 Accrued expenses
Accrued expenses are mainly related to remuneration of key personnel.
6 Share capital
On 31 December 2022, the Company's share capital amounted to CHF 100,000, divided into 100,000 fully paid-up
registered shares with a par value of CHF 1.00 each.
On 20 April 2023, DSM-Firmenich AG decreased the share capital of the Company from CHF 100,000 to CHF 0 and
changed the currency of its share capital from CHF to EUR with retrospective effect from 1 January 2023. Subsequently,
DSM-Firmenich AG increased its share capital in four tranches. The tranches were completed on the following dates:
• First capital increase on 20 April 2023
• Second capital increase on 3 May 2023
• Third capital increase on 8 May 2023
• Fourth capital increase on 8 May 2023
Parent company financial statements - Notes to the parent company financial statements
dsm-firmenich Integrated Annual Report 2023 281
x thousand EUR Values in CHF Nominal capital Opening balance in CHF on 1 January 2023 100 Capital decrease of 100,000 shares at CHF 1.00 on 20.04.2023 (100) Share capital increases Capital increase of 150,742,711 shares at €0.01 on 20.04.2023 1,507 1,481 Capital increase of 16,578,846 shares at €0.01 on 03.05.2023 166 163 Capital increase of 6,696,477 shares at €0.01 on 08.05.2023 67 66 Capital increase of 91,658,354 shares at €0.01 on 08.05.2023 917 901 Closing balance on 31 December 2023 2,657 2,611
The first and second capital increases were executed to facilitate the tender procedure whereby the DSM N.V. ordinary
shares were exchanged for DSM-Firmenich AG’s ordinary shares (ratio 1:1).
The third capital increase was facilitated via investment bank Goldman Sachs, which subscribed to 6,696,477 million
DSM-Firmenich ordinary shares at nominal value. Subsequently the shares were placed in the market which resulted in a
paid-in capital surplus of €732 million (CHF 678 million).
Via the fourth capital increase, DSM-Firmenich AG issued ordinary shares to Firmenich’s shareholders as part of the
agreed consideration to contribute 8,019,000 shares out of 8,100,000 shares (100% minus any treasury shares held by
Firmenich International SA) of the capital of Firmenich International SA.
On 31 December 2023, the total number of issued DSM-Firmenich AG ordinary shares amounted to 265,676,388.
7 Legal capital reserves
The Legal capital reserves result from the events as explained in Note 6 Share capital. The share issuance costs have
been offset against the Legal capital reserves.
x million EUR Values in CHF Legal capital reserves - Cash contributions 2022 (opening balance 1 January 2023) 1 1 - Decrease share capital to zero on 20.04.2023 - - - Capital increase 1 - contribution in kind on 20.04.2023 17,975 16,644 - Capital increase 2 - contribution in kind on 03.05.2023 1,870 1,732 - Capital increase 3 - 08.05.2023 (issued at nominal value) - - - Capital increase 4 - contribution in kind on 08.05.2023 10,776 9,979 - Paid-in capital surplus¹ 732 678 - Dividend distribution (425) (394) - To reserve for treasury shares (44) (41) - Accrued interest on announced buy-out DSM N.V. shares (24) (22) - Other expenditures related to the share issuance (29) (27) Closing balance on 31 December 2023 30,832 28,550 Of which: - Reserves from capital contributions 23,145 21,432 - Other capital reserves 7,687 7,118
1 Related to capital increase 3, see also Note 6 Share capital.
Parent company financial statements - Notes to the parent company financial statements
dsm-firmenich Integrated Annual Report 2023 282
On 6 June 2023, the Board of Directors proposed to the extraordinary shareholders' meeting an extraordinary dividend
distribution. The extraordinary shareholders' meeting held on 29 June 2023, approved the appropriation of available
earnings as proposed by the Board of Directors. The extraordinary dividend of €425 million (CHF 394 million) was paid
out of the capital contribution reserve on 6 July 2023.
Reconciliation Legal capital reserves and Share premium as per consolidated financial statements EUR Values in CHF x million 31.12.2023 31.12.2023 Legal capital reserves as per statutory financial statements of DSM-Firmenich AG30,832 28,550 Capital increase 1 - contribution in kind on 20.04.2023 (17,975) (16,645) Capital increase 2 - contribution in kind on 03.05.2023 (1,870) (1,732) Reserve for treasury shares 44 41 Accrued interest on announced buy-out DSM N.V. shares 24 22 Included in the legal capital reserves (19,777) (18,314) Opening share premium as per consolidated financial statements 471 436 Cancellation of ordinary shares DSM N.V. (2)(2)Swap shares DSM N.V. into DSM-Firmenich AG 248 230 Liability to non-tendered shareholders DSM N.V. (42)(39)Other 1 1 Included in the share premium as per consolidated financial statements 676 626 Share premium as per consolidated financial statements 11,731 10,862
8 Reserve for treasury shares
DSM-Firmenich AG holds no treasury shares.
Of the issued capital, 392,572 DSM-Firmenich AG ordinary shares were held by its investment DSM B.V. on 31 December
2023. The acquisition value of these shares amounts to €44.1 million (CHF 40.8 million), for which a Legal capital reserve
has been recognized. The average cost price per share is €112.34 (CHF 104.03).
The Reserve for treasury shares has been built by reducing the Reserve from capital contributions accordingly.
9 Dividend income
Dividends received in 2023 were in the amount of €3,778 million (CHF 3,498 million) from DSM B.V. and €146 million (CHF
135 million) from Firmenich International SA.
10 Personnel expenses
Personnel expenses relate to the remuneration of the Members of the Board of Directors and Executive Committee. The
Members of the Board of Directors and Executive Committee were appointed on 18 April 2023.
x million EUR Values in CHF Board of Directors fees and remuneration 2 2 Executive Committee remuneration 13 12 Total 15 14
dsm-firmenich Integrated Annual Report 2023 283
Parent company financial statements - Notes to the parent company financial statements
11 Other operating income and expenses
Other operating income
Other operating income comprises the recharge of the remuneration of the BU heads of the Group to the principal
entities of these BUs amounting to €5 million (CHF 5 million), and the recharge of corporate costs of €14 million (CHF 13
million) to DSM Services B.V.
Other operating expenses
Other operating expenses mainly relate to merger related transaction costs as well as audit and other consultancy costs.
12 Other finance income and expense
The other finance income and expenses relate mainly to interest expenses on the short-term loan from DSM N.V., see also
Note 4 Short-term liabilities and payables and interest income and interest expense in relation to the in-house cash
pool.
Other information
Personnel
The annual average number of full-time employees for financial year 2023, as well as the previous year, does not exceed
250.
Guarantees
DSM-Firmenich AG acts as guarantor to the €1 billion bridge facility setup 13 December 2023, with DSM B.V. as the
borrower.
Participation rights
granted in 2023
Performance Share Units (PSUs) are granted to the Members of the Board of Directors, and Restricted Share Units (RSUs)
to the Members of the Executive Committee. See below tables reflecting the grants in the year 2023.
Granted RSUs to Members of the Board of Directors
Number of RSUs Value at opening price Fair value (IFRS) granted EUR Value in CHF EUR Value in CHF x thousand x thousand x thousand x thousand Grant of RSUs to members Board of Directors in 2023 18,239 1,463 1,355 1,444 1,337
Granted PSUs to Members of the Executive Committee
Number of PSUs Value at opening price Fair value (IFRS) granted EUR Value in CHF EUR Value in CHF x thousand x thousand x thousand x thousand Grant of PSUs to members Executive Committee in 2023 87,938 8,868 8,211 8,589 7,953
Major shareholders (above 5%)
Shareholders who hold a substantial position in DSM-Firmenich AG, should notify this immediately to the Netherlands
Authority for the Financial Market (AFM). DSM-Firmenich AG has not received notifications of any shareholder holding
more than 5% of its share capital.
Events after the balance sheet date
On 13 February 2024, DSM-Firmenich AG completed the voluntary tender offer of 8 January 2024 for 4,163,287 DSM B.V.
ordinary shares for a total consideration amounting
to €400 million (CHF 370 million). DSM-Firmenich AG now holds
98.5% of the shares of DSM B.V. The company will seek to acquire the remaining 1.5% shares through the statutory buy-
out procedure at the Enterprise Chamber of the Amsterdam Court of Appeal, which started on 17 July 2023.
dsm-firmenich Integrated Annual Report 2023 284
Parent company financial statements – Notes to the parent company financial statements
Appropriation of earnings available for distribution
The Board of Directors proposes to the next General Meeting of Shareholders the following appropriation of available
earnings.
EUR x million 31.12.2023 Distribution capacity Legal capital reserves 30,832 Profit brought forward - Profit for the period 3,870 Non-distributable Legal capital reserves (1) Reserves available for distribution 34,701 Legal capital reserves 30,832 - Reserves from capital contributions 23,145 - Other statutory reserves 7,687 Available earnings 3,870 Proposed dividend payment¹ 663 Balance of legal capital reserves after dividend to be carried forward 30,417 - Balance of Reserves from capital contributions to be carried forward 22,730 - Balance of Other statutory reserves 7,687 Balance of available earnings to be carried forward 3,622
1 These figures are based on the share capital issued as at 31 December 2023, and may change depending on the number of shares issued as at the
dividend record date. Treasury shares held by DSM-Firmenich AG or its wholly owned subsidiaries do not receive dividends.
The Board of Directors of DSM-Firmenich AG approved the financial statements on 28 February 2024. It proposes to the
General Meeting to pay a dividend of €2.50 per share which will be paid out of the capital contribution reserves and
available earnings. The dividend is based on the number of issued and outstanding ordinary shares at 8 May 2024.
The ex-dividend date is 9 May 2024, the dividend record date is 10 May 2024, and the payment date is 16 May 2024.
This proposal is subject to adoption of the resolution by the General Meeting of Shareholders to be held on 7 May 2024.
dsm-firmenich Integrated Annual Report 2023 285
Parent company financial statements – Statutory Auditor’s Report
Statutory Auditor’s Report
To: the General Meeting of DSM-Firmenich AG, Kaiseraugst.
Report on the audit of the Financial Statements
Opinion
We have audited the financial statements of DSM-Firmenich AG (the Company), which comprise the balance sheet as at
31 December 2023, and the income statement for the year then ended, and notes to the financial statements, including a
summary of significant accounting policies.
In our opinion, the financial statements (pages 274 to 284) comply with Swiss law and the Company’s Articles of
incorporation.
Basis for opinion
We conducted our audit in accordance with Swiss law and Swiss Standards on Auditing (SA-CH). Our responsibilities
under those provisions and standards are further described in the “Auditor’s Responsibilities for the Audit of the Financial
Statements” section of our report. We are independent of the Company in accordance with the provisions of Swiss law,
together with the requirements of the Swiss audit profession and we have fulfilled our other ethical responsibilities in
accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
VALUATION OF INVESTMENTS
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the
financial statements of the current period. These matters were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on
these matters.
Parent company financial statements – Statutory Auditor’s Report
dsm-firmenich Integrated Annual Report 2023 286
VALUATION OF INVESTMENTS
Key audit matter
The Company carries investments of EUR 34,123 million
(CHF 31,599 million) as at 31 December 2023.
The investments consist of the direct equity shares in
DSM B.V. and in Firmenich International SA and are
valued at acquisition cost less impairment, if any.
In determining whether the valuation of the investments
is appropriate or not, management compares the
recoverable amount (the higher of its value in use and
fair value less costs of disposal) with the carrying
amount. Management makes assumptions in particular
in relation to external data source used to determine
the market value. Value in use calculated by
management is based on the valuation of goodwill
recognized within the investments’ consolidated
financial statements.
As a result, the valuation of the investments is a Key
Audit Matter.
Our response
We obtained and documented our understanding of the
impairment testing process and tested the design and
implementation of the relevant controls therein.
We also examined, with the support of internal valuation
specialists, the impairment assessment prepared by the
management:
• We evaluated the methodical and mathematical
accuracy of the impairment assessment.
• We challenged the external data source used to
determine the investments’ market value and com-
pared it with publicly available data.
We also assessed the proper presentation in the
financial statements.
For further information on the valuation of investments refer to the following:
• Note 3. Investments
Other information
The Board of Directors is responsible for the other information. The other information comprises the information included
in the annual report, but does not include the consolidated financial statements, the stand-alone financial statements of
the Company, the compensation report and our auditor’s reports thereon.
Our opinion on the financial statements does not cover the other information and we do not express any form of
assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the financial statements or our knowledge
obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we
are required to report that fact. We have nothing to report in this regard.
Board of Directors’ Responsibilities for the Financial Statements
The Board of Directors is responsible for the preparation of the financial statements in accordance with the provisions of
Swiss law and the Company’s articles of incorporation, and for such internal control as the Board of Directors determines
is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the Board of Directors is responsible for assessing the Company’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern
Parent company financial statements – Statutory Auditor’s Report
dsm-firmenich Integrated Annual Report 2023 287
basis of accounting unless the Board of Directors either intends to liquidate the Company or to cease operations, or has
no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with
Swiss law and SA-CH will always detect a material misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with Swiss law and SA-CH, we exercise professional judgment and maintain
professional skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud
is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Company’s internal control
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made
• Conclude on the appropriateness of the Board of Directors’ use of the going concern basis of accounting and, based
on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast
significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements
or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence
obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to
cease to continue as a going concern
We communicate with the Board of Directors or its relevant committee regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that
we identify during our audit.
We also provide the Board of Directors or its relevant committee with a statement that we have complied with relevant
ethical requirements regarding independence, and communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or
safeguards applied.
From the matters communicated with the Board of Directors or its relevant committee, we determine those matters that
were of most significance in the audit of the financial statements of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report, unless law or regulation precludes public disclosure about the
matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report
because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits
of such communication.
Parent company financial statements – Statutory Auditor’s Report
dsm-firmenich Integrated Annual Report 2023 288
Report on Other Legal and Regulatory Requirements
In accordance with article 728a para. 1 item 3 CO and PS-CH 890, we confirm that an internal control system exists, which
has been designed for the preparation of financial statements according to the instructions of the Board of Directors.
We further confirm that the proposed appropriation of available earnings and the proposed repayment of legal capital
reserve comply with Swiss law and the company’s articles of incorporation. We recommend that the financial statements
submitted to you be approved.
KPMG AG
Petra Groenland van der Linden Carlos Alvarez
Licensed Audit Expert Licensed Audit Expert
Auditor in Charge
Basel, 28 February 2024
dsm-firmenich Integrated Annual Report 2023
289
Other information
dsm-firmenich figures: five-year summary
Reporting period
The five-years summary includes information that is presented in accordance with IFRS, which includes Firmenich from
the merger date onwards. All figures are including discontinued operations unless stated otherwise, see also Note 3
Change in the scope of the consolidation.
Balance sheet
x € million 2023 2022 2021 2020 2019
Assets
Goodwill and intangible assets 18,738 5,147 5,309 4,440 3,515
Property, plant and equipment 5,549 3,576 3,964 3,775 4,040
Deferred tax assets 228 95 203 240 217
Share in associates and joint ventures 130 61 64 93 155
Derivatives 46 82 48 61 27
Other financial assets 735 314 302 317 265
Non-current assets 25,426 9,275 9,890 8,926 8,219
Inventories 3,390 2,339 2,297 1,879 2,019
Current receivables 2,843 1,622 1,697 1,483 1,698
Derivatives 42 42 30 48 19
Current investments 107 125 489 43 688
Cash and cash equivalents 2,456 2,755 1,561 871 800
Assets held for sale 6 1,245 56 1,096 -
Current assets 8,844 8,128 6,130 5,420 5,224
Total assets 34,270 17,403 16,020 14,346 13,443
Equity and liabilities
Shareholders' equity 22,908 10,743 9,318 7,399 7,731
Non-controlling interests 162 102 79 88 104
Equity 23,070 10,845 9,397 7,487 7,835
Deferred tax liabilities 1,751 476 490 431 296
Employee benefit liabilities 520 287 323 414 413
Provisions 142 50 96 123 120
Borrowings 4,114 2,978 2,995 3,484 2,464
Derivatives 8 4 9 1 7
Other non-current liabilities 146 205 280 163 145
Non-current liabilities 6,681 4,000 4,193 4,616 3,445
Employee benefits liabilities 49 5 21 42 43
Provisions 34 45 68 61 48
Borrowings 716 86 103 102 189
Derivatives 28 23 40 13 18
Current liabilities 3,684 1,969 2,188 1,771 1,865
Liabilities held for sale 8 430 10 254 -
Current liabilities 4,519 2,558 2,430 2,243 2,163
Total equity and liabilities 34,270 17,403 16,020 14,346 13,443
Other information – dsm-firmenich figures: five-years summary
dsm-firmenich Integrated Annual Report 2023 290
Income statement
x € million 2023 2022 2021 2020 2019
Net sales 11,015 10,480 9,468 9,038 9,010
Net sales from continuing operations 10,627 8,390 7,269 - -
Adjusted EBITDA¹ 1,441 1,725 1,842 1,650 1,684
EBITDA 3,637 2,646 2,370 1,476 1,586
Adjusted operating profit (EBIT)¹ 428 1,071 1,167 1,011 1,075
Operating profit (EBIT) 2,330 1,994 1,689 736 954
Operating profit (EBIT) from continuing operations (497) 682 711 - -
Financial income and expense (151) (94) (106) (67) (92)
Income tax expense (19) (190) (245) (129) (152)
Share of the profit of associates and joint ventures (7) 5 342 (32) 54
Net profit for the year 2,153 1,715 1,680 508 764
Net profit attributable to non-controlling interests 16 15 4 2 6
Net profit available to equity holders of the parent company 2,137 1,700 1,676 506 758
Dividend on Cumulative Preference Shares (6) (6) (6) (7) (8)
Net profit available to holders of ordinary shares 2,131 1,694 1,670 499 750
Key figures and financial ratios
Capital employed 26,766 11,473 11,019 10,557 9,311
Capital expenditure:
- Intangible assets and Property, plant and equipment 700 636 614 622 623
- Acquisitions 14,569 77 754 1,579 585
Disposals 3,559 1,413 1,941 46 44
Depreciation, amortization and impairments 1,307 652 681 740 632
Net debt (2,215) (87) (1,019) (2,577) (1,144)
Dividend 582 167 438 420 425
Workforce at 31 December, headcount 29,301 20,682 21,358 23,127 22,174
Financial ratios¹
Current assets / current liabilities 1.96 3.15 2.52 2.42 2.42
Equity / total assets 0.67 0.62 0.59 0.52 0.58
Gearing (net debt / equity plus net debt) in % 8.8% 0.8% 9.7% 26.0% 13.0%
Adjusted EBITDA / net sales in % 13.1% 16.5% 19.5% 18.3% 18.7%
Adjusted EBITDA / financial income and expense 12.3 20.1 17.4 24.6 18.3
1 In presenting and discussing dsm-firmenich’s financial position, operating results and cash flows, dsm-firmenich uses certain Alternative performance
measures (APMs) not defined by IFRS. These APMs are used because they are an important measure of dsm-firmenich’s business development and
management performance. A full reconciliation of IFRS performance measures to the APMs is given in Note 2 Alternative performance measures.
Other information – Concepts and ratios
dsm-firmenich Integrated Annual Report 2023 291
Concepts and ratios
General
Biosciences
Biosciences
4
are any of the sciences that deal with living organisms.
Business Partners
Business Partners enable excellence and efficiency, by partnering with the Group and the Business Units, helping them to
deliver on their ambitions, serve their customers. In addition, the Business Partners will drive excellence with shared
centers of expertise, to bring differentiated capabilities to our company.
Category of one
Our ambition is to be more than just a merger of two brilliant companies, each with its own incredible talent and history,
but to be seen as a category of one, unique in the world, and something that our customers and stakeholders are proud
to be a part of.
Integrated Reporting <IR> Framework – value creation model
The value creation model is based on the International Integrated Reporting Council's Integrated Reporting <IR>
Framework and gives an overview of how we create value for our stakeholders based on six capital inputs.
• Human capital
• Societal & relationship capital
• Natural capital
• Financial capital
• Intellectual capital
• Manufactured capital
Plant-forward
A trend descriptor coined by Innova Market Insights in 2021 to signal the plant-based foods category’s push toward
broader consumer appeal and expansion into more market categories and regions of the world.
Sustainability
Bio-based
Bio-based refers to a material that is derived from a biological source, i.e., a living organism. This includes, but is not
limited to, materials derived from plants, animals and fungi.
Circular economy
Circular economy refers to an economy that is restorative and in which materials flows are of two types: biological
nutrients, designed to re-enter the biosphere safely, and technical nutrients, which are designed to circulate at high
quality without entering the biosphere throughout their entire lifecycle.
The Free Dictionary
Other information – Concepts and ratios
dsm-firmenich Integrated Annual Report 2023 292
Chemical Oxygen Demand
Chemical Oxygen Demand (COD)is an indicator of the degree of pollution of wastewater by organic substances.
Eco-efficiency
Eco-efficiency is a concept (created in 1992 by the WBCSD) that refers to the creation of more goods and services while
using less resources and creating less waste and pollution throughout their entire life cycle.
Energy
Primary energy is energy that has not yet been subjected to a human engineered conversion process. It is the energy
contained in unprocessed fuels.
Final (consumed) energy is the energy that is consumed by end-users. The difference between primary energy and final
consumed energy is caused by the conversion process between the two as well as any transmission losses.
Equal pay and gender pay gap
Equal pay is a legal requirement for men and women to be paid the same for performing the same or similar work or work
that has been rated as being of equal value (by job evaluation). The gender pay gap zooms in on the difference between
what men typically earn overall in an organization compared to women, irrespective of their role or seniority.
Frequency index (Safety)
The Frequency Index is a way to measure safety performance. The number of accidents of a particular category per 100
employees per year.
Total Recordable Incident Rate
The Total Recordable Incident Rate (TRIR) is the number of recordable injuries per 100 dsm-firmenich employees and
contractor employees in the past 12 months. The ‘TRIR-own’ refers only to dsm-firmenich employees.
TRIR rate = 100 * (# of recordable incidents (past 12 months) / average effective manpower (past 12 months))
Process Safety Incidents
The PSI rate is the number of Process Safety Incidents per 100 dsm-firmenich employees and contractor employees in
the past 12 months.
PSI rate = 100 * (# of PSIs (past 12 months) / average effective manpower (past 12 months))
Occupational health
The Occupational health rate is the number of occupational health cases per 100 dsm-firmenich employees and
contractor employees in the past 12 months.
REC rate = 100 * (# of health cases (past 12 months) / average effective manpower (past 12 months))
Global South
The term Global South is used to describe countries whose economies are not yet fully developed and which face
challenges such as low per capita income, excessive unemployment, and a lack of valuable capital. These countries are
located largely in the southern hemisphere.
Greenhouse gas emissions
dsm-firmenich applies the Greenhouse Gas Protocol, which defines greenhouse gas emissions (GHG) as “atmospheric
gases that absorb and emit radiation within the thermal infrared range and that contribute to the greenhouse effect and
Other information – Concepts and ratios
dsm-firmenich Integrated Annual Report 2023 293
global climate change.” We report GHGs based on their global warming potential over 100 years in carbon dioxide
equivalent (CO
2
e).
Scope 1 and 2
Scope 1: Direct GHG emissions occur from sources that are owned or controlled by the company (i.e., emissions from
combustion in owned or controlled boilers, furnaces, vehicles, etc.).
Scope 2: Indirect GHG emissions relate to the generation of purchased energy (i.e., electricity, heat or cooling)
consumed by the company. Purchased energy is defined as energy that is purchased or otherwise brought into the
organizational boundary of the company. Scope 2 emissions physically occur at the facility where the energy is
generated.
Market-based emissions
Reflects GHG emissions from electricity supplies (Scope 2) that companies have purposely chosen (or their lack of
choice) and contracted. Corresponding emission factors:
• Supplier specific emission factor (provided by the supplier)
• Residual emission factor (country-based grid factor, corrected for allocated purchased electricity from
renewable resources)
Location-based emissions
Reflects the average GHG emissions intensity of grids on which electricity consumption (Scope 2) occurs (using mostly
national grid-average emission factor data). Corresponding emission factor: in most cases, the country emission factor.
Scope 3
Scope 3 emissions are all indirect emissions (not included in Scope 2) that occur in the value chain of the reporting
company, including both upstream and downstream emissions.
Net-zero emissions
The Intergovernmental Panel on Climate Change states: “net-zero emissions are achieved when anthropogenic emissions
of greenhouse gases to the atmosphere are balanced by anthropogenic removals over a specified period. Where multiple
greenhouse gases are involved, the quantification of net-zero emissions depends on the climate metric chosen to
compare emissions of different gases (such as global warming potential, global temperature change potential, and others,
as well as the chosen time horizon)”.
GRI
The Global Reporting Initiative (GRI) has developed Sustainability Reporting Guidelines that strive to increase the
transparency and accountability of economic, environmental, and social performance. The GRI was established in 1997 in
partnership with the UN Environment Programme. It is an international, multi-stakeholder and independent institution
whose mission is to develop and disseminate globally applicable Sustainability Reporting Guidelines. These Guidelines
are for voluntary use by organizations for reporting on the economic, environmental, and social dimensions of their
activities, products and services.
Guarantee of origin
A guarantee of origin (GO)is defined in EU Directive 2009/28/EC as “an electronic document which has the sole function
of providing proof to a final customer that a given share or quantity of energy was produced from renewable sources as
required by Article 3(6) of Directive 2003/54/EC.” The requirements of a GO are explained in Article 15 of the same
Directive.
Other information – Concepts and ratios
dsm-firmenich Integrated Annual Report 2023 294
Living wage
The remuneration received for a standard working time by an employee in a particular place sufficient to afford a decent
standard of living for the employee and his/her family. Elements of a decent standard of living include food, water,
housing, education, healthcare, transport, clothing, and other essential needs, including provision for unexpected events.
Loss of Primary Containment
Loss of Primary Containment (LOPC) is an unplanned or uncontrolled release of material from the container that is in
direct contact with the material.
Mass-balance
Mass-balance accounting is a well-known approach that has been designed to trace the flow of materials through a
complex value chain. The mass-balance approach provides a set of rules for how to allocate the bio-based and/or
recycled content to different products to be able to claim and market the content as ‘bio’-based or ‘recycled’-based.
NOx
Nitrogen oxides. These gases are released mainly during combustion.
Renewable resource
A natural resource which is replenished by natural processes at a rate comparable to, or faster than, its rate of
consumption by humans or other users. The term covers perpetual resources such as solar radiation, tides, winds and
hydroelectricity as well as fuels derived from organic matter (bio-based fuels).
Safety, Health and Environment (SHE)
Our policy is to maintain business activities and produce products that do not adversely affect safety or health, and that
fit with the concept of sustainable development. The company does this by setting the following objectives: to provide
an injury-free and incident-free workplace; to prevent all work-related disabilities or health problems; to control and
minimize the risks associated with our products for their whole life cycle and to choose production processes and
products such that the use of raw materials and energy is minimized; to evaluate and improve our practices, processes
and products continuously in order to make them safe and acceptable to its employees, the customers, the public and
the environment.
SOx
Sulfur oxide. This gas is formed during the combustion of fossil fuels.
VOC
Volatile organic compounds. The term covers a wide range of chemical compounds, such as organic solvents, some of
which can be harmful.
Water use and water consumption
Water use includes water used for ‘once-through cooling’ that is returned to the original water source after use. Water
consumption is the portion of water used that is not returned to the original water source after being withdrawn.
Financial
General
This report includes information that is presented on a pro forma basis (‘pro forma figures’) as well as other alternative
performance measures (APMs), and information that is presented in accordance with IFRS as issued by the International
Accounting Standard Board (‘figures on an IFRS basis’). Please refer to the section below for the definitions as applied.
Other information – Concepts and ratios
dsm-firmenich Integrated Annual Report 2023 295
Pro forma
In preparing the pro forma figures, the financial results of Firmenich and DSM have been combined as if the merger had
occurred on 1 January 2022, and with purchase price allocation adjustments included as of 8 May 2023.
APM adjustments
In presenting and discussing dsm-firmenich’s financial position, operating results and net results, management uses
certain other alternative performance measures (APMs) not defined by IFRS. To arrive at these APMs, adjustments are
made for material items of income and expense arising from circumstances such as acquisitions and divestments,
restructuring, impairments and other events (i.e., APM adjustments).
For an overview of the APMs and the reconciliations to the most directly reconcilable IFRS metric, please see Note 2
Alternative performance measures to the Consolidated Financial Statements. In calculating financial profitability ratios,
use is made of the average of the opening and closing values of balance sheet items in the year under review.
Capital expenditures
Capital expenditures (CAPEX) include all investments in intangible assets and property, plant and equipment.
Core capital employed
Core capital employes is defined as capital employed, adjusted for the impact of the Firmenich purchase price allocation
(PPA) – see also Note 3 Change in the scope of consolidation. Average core capital employed is calculated as the
average
of the core capital employed at the end of the preceding five quarters, including the current quarter.
Core adjusted return on capital employed (ROCE)
Core adjusted return on capital employed (Core adj. ROCE) is core adjusted EBIT as a percentage of average core
capital employed.
Disposals
This includes the disposal of intangible assets and property, plant and equipment as well as the disposal of participating
interests and other securities.
Earnings per share
Net profit available to holders of ordinary shares, divided by the average number of ordinary shares outstanding. The
financial indicators per ordinary share are calculated on the basis of the average number of ordinary shares outstanding
(average daily number). In calculating Shareholders’ equity per ordinary share, however, the number of shares outstanding
at year-end is used.
Net debt
Net debt is the total of current and non-current borrowings less cash and cash equivalents, current investments and the
net position of derivatives.
Operating working capital
The total of inventories and trade receivables, less trade payables. See also Working capital.
Organic sales growth
Organic sales growth is the sales growth excluding the impact of acquisitions, divestments, and currency impacts.
Return on capital employed (ROCE)
Other information – Concepts and ratios
dsm-firmenich Integrated Annual Report 2023 296
ROCE is the adjusted operating profit from continuing operations as a percentage of
average capital employed.
R&D expenditure
R&D expenditure relates to all efforts done across the company to develop new products or improve existing products
and processes. As such, R&D expenditure includes all costs and capitalized expenditures that relate to Research &
Development, as well as costs incurred by other departments to support R&D activities.
Total Shareholder Return
Total Shareholder Return (TSR) is capital gain plus dividend paid.
Working capital
The total of inventories and current receivables, less current payables. See also Operating working capital.
Other information – Abbreviations
dsm-firmenich Integrated Annual Report 2023 297
Abbreviations
2’-FL
2’-Fucosyllactose
ACE
Assets, CSR and Employees engagement
ADR
American Depositary Receipts
AFM
Autoriteit Financiële Markten (The Dutch Authority for the Financial Markets)
AGM
Annual General Meeting of Shareholders
AGOFCF
Adjusted Gross Operating Free Cash Flow
AI
Artificial Intelligence
AIF
Africa Improved Foods
AMFEP
Association of Manufacturers and Formulators of Enzyme Products
ANH
Animal Nutrition & Health
API
Active Pharmaceutical Ingredient
APM
Alternative Performance Measures
ASC
Aquaculture Stewardship Council
B.E.N.
Better Eggs for Nutrition
BfN
Business for Nature
BLS+
Brighter Living Solutions plus
BMGF
Bill & Melinda Gates Foundation
CBAM
Caron Border Adjustment Mechanism
CBD
Convention on Biological Diversity
CDC
Commonwealth Development Corporation, nowadays know as British International Investment
CDE
Concept Development Engine
CDP
Carbon Disclosure Project
CEO
Chief Executive Officer
CFO
Chief Financial Officer
CGU
Cash Generating Unit
CHC
Firmenich Consumer Health Care
CHRO
Chief Human Resources Officer
CIMAP
Central Institute of Medicinal and Aromatic Plants
CO
2
e
Carbon dioxide equivalent
COD
Chemical Oxygen Demand
CODM
Chief Operating Decision Maker
CoP
Communication on Progress – UNGC platform
COs
World Food Programme Country Offices
COSO
The Committee of Sponsoring Organizations of the Treadway Commission
CPHI
Convention on Pharmaceutical Ingredients
CPO
Chief Procurement Officer
CSD
Central Security Depository
CSO
Chief Sustainability Officer
CSR
Corporate Social Responsibility
CSRD
Corporate Sustainability Reporting Directive
CST
Crude Sulfate Turpentine
DCC
Dutch Civil Code
DE&I
Diversity, Equity and Inclusion
DFID
Department for International Development
DHA
Docosahexaenoic Acid
Other information – Abbreviations
dsm-firmenich Integrated Annual Report 2023 298
DSFIR
dsm-firmenich, as listed on Euronext Amsterdam
EBIT
Earnings Before Interest and Taxes
EBITDA
Earnings Before Interest, Taxes, Depreciation and Amortization
ECL
Expected Credit Loss
EFSA
European Food Safety Authority
EGM
Extraordinary General Meeting
EPA
Eicosapentaenoic Acid
EPD
Environmental Product Declaration
EPP
European People’s Party
EPS
Earnings Per Share
ERM
Enterprise Risk Management
ERT
European Round Table for Industry
ESG
Environmental, Social and Governance
ESRS
European Sustainability Reporting Standards
EUDR
European Union Deforestation Regulation
ExCo
Executive Committee
FCLT
Focusing Capital on the Long Term
FEMA
Flavor Extract Manufacturers' Association
FIFO
First in, first out
FMO
De Nederlandse Financierings-maatschappij voor Ontwikkelingslanden (Dutch Entrepeneurial
Development Bank)
FSA
Farmer Self-Assessment
FSC
Forest Stewardship Council
G&A
General & Administrative
GALS
Gender Action Learning System
GBF
Global Biodiversity Framework
GHG
Greenhouse gas
GMO
Genetically Modified Organisms
GMT
Global Management Team
GNC
Governance & Nomination Committee
GO
Guarantee of origin
GRI
Global Reporting Initiative
GSLT
Global Sustainability Leadership Team
HMO
Human Milk Oligosaccharides
HNC
Health, Nutrition & Care
HR
Human Resources
HRLT
Human Resources Leadership Team
I4N
ImpAct4Nutrition
IASB
International Accounting Standards Board
IBC
International Business Council
ICF
Incremental Cash Flows
IFC
International Finance Corporation
IFRS
International Financial Reporting Standards
IIGCC
Institutional Investors Group on Climate Change
IMD
International Institute for Management Development
IOFI
International Organization of the Flavor Industry
IP
Intellectual Property
Other information – Abbreviations
dsm-firmenich Integrated Annual Report 2023 299
IPCC
Intergovernmental Panel on Climate Change
IPO
Initial Public Offering
IR
Integrated Reporting
ISDA
International Swaps and Derivatives Association
ISSB
International Sustainability Standards Board
IUCN
International Union for Conservation of Nature
KPI
Key Performance Indicator
LCA
Life Cycle Assessment
LGBTIQ+
Lesbian, Gay, Bisexual, Transgender, Intersex and Queer
LGG
Lactobacillus rhamnosus Goldin Gorbach
LNnT
Lacto-N-neotetraose
LOTOTO
Lock-Out, Tag-Out, Try-Out
LSFF
Large-Scale Food Fortification
LT
Leadership team
LTI
Long-Term Incentive
M&A
Mergers and Acquisitions
M4N
Millers for Nutrition
MEEM
Multi-period Excess Earnings Method
MMS
Multiple Micronutrient Supplement
MNP
Micronutrient Powder
MSC
Marine Stewardship Council
NCI
Non-Controlling Interests
NGO
Non-Governmental Organization
OCI
Other Comprehensive Income
OECD
Organisation for Economic Co-operation and Development
P&B
Perfumery & Beauty
PEA
Polyesteramide
PEF
Product Environmental Footprint
PEFC
Program for the Endorsement of Forest Certification
PFS
Partners in Food Solutions
PPA
Purchase Price Allocation; also Power Purchase Agreement
PPE
Personal Protective Equipment; also Property, Plant and Equipment
PRI
Principles for Responsible Investment
PSU
Performance Share Unit
RCP
Representative Concentration Pathways
RE
Renewable Electricity
REC
Renewable Energy Certificate
REN
Race, Ethnicity & Nationality
RfR
Relief-from-Royalty
ROCE
Return on Capital Employed
RoSPA
Royal Society for the Prevention of Accidents
RSPO
Roundtable for Sustainable Palm Oil
RSU
Restricted Share Unit
SAI
Sustainable Agriculture Initiative
SAL
Sight and Life
SBCC
Social Behavior Change and Communication
SBT
Science Based Target
Other information – Abbreviations
dsm-firmenich Integrated Annual Report 2023 300
SBTi
Science Based Targets initiative
SBTN
Science Based Targets for Nature
SDG
Sustainable Development Goal
SFDR
Sustainable Finance Disclosure Regulation
SFE
Supercritical Fluid Extraction
SHE
Safety, Health and Environment
SILC
Stanford Interdisciplinary Lifesciences Council
SoD
Segregation of Duties
SPF
Sun Protection Factor
SPPI
Solely Payments of Principal & Interest
SQLNS
Small Quantity Lipid-Based Nutrient Supplements
STI
Short-Term Incentive
TCFD
Taskforce on Climate-related Financial Disclosures
TfS
Together for Sustainability
TRIR
Total Recordable Incident Rate
TSR
Total Shareholder Return
TTH
Taste, Texture & Health
UEBT
Union for Ethical BioTrade
UN
United Nations
UNGP
United Nations Guiding Principle
WBCSD
World Business Council for Sustainable Development
WEF
World Economic Forum
WFP
United Nations World Food Programme
WRI
World Resource Institute
WWF
Worldwide Fund for Nature
You cannd the Integrated Annual Report 2023 online at
annualreport.dsm-rmenich.com/2023/
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