2 Alternative performance measures

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 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

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

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.

The below table reflects the earnings per share (EPS) related to continuing operations and to total earnings including discontinued operations.