Corbion reviews algae business strategy due to lower sales than expected
Wednesday, January 29, 2020
Corbion has been reviewing its current business strategy. Despite significant sales growth in 2019, the company reports that Algae Ingredients sales are developing slower than expected. Customer adoption of key product, an alternative source of omega-3 fatty acids for the aquaculture industry, is taking longer than anticipated.
Under IFRS, this generated a triggering event for an impairment test. At this stage, the current carrying value of the assets is estimated to be impaired by approximately €40 million. The net impact on the FY 2019 net result amounts to approximately -€25 million as the impairment loss is partly offset by a significant reduction in the value of the earn-out provision to former SB Renewable Oils joint venture partner.
As part of the current strategic review, the company decided to continue to invest in Algae Ingredients focusing on two main product categories, Omega-3 (AlgaPrime DHA) and algae-based proteins (in cooperation with Nestlé). In addition, Corbion will significantly reduce its cost base in Algae Ingredients.
“I am a firm believer in the potential of algae technology. The current strategic review has already led to the decision to continue to invest in Algae Ingredients. However, pushing into new territories with revolutionary new ingredients goes hand in hand with timelines to commercial success that are inherently difficult to predict. Going forward, we will be more selective in our target markets, and significantly reduce our cost base of Algae Ingredients. As we indicated earlier, Algae Ingredients is developing slower than expected which required us to review the asset value, subsequently followed by an impairment,” said Olivier Rigaud, CEO at Corbion.
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