23 Financial instruments and risks

The primary objective of liquidity management is to optimize the corporate cash position, among other means by securing availability of sufficient liquidity for the execution of payments by dsm-firmenich entities, at the right time and in the right place.

At December 31, 2025, dsm-firmenich had cash and cash equivalents of €1,782 million (2024: €2,667 million).

dsm-firmenich has a €1.8 billion revolving credit facility (RCF). The syndicated facility, which dsm-firmenich entered into in 2024 with a group of 15 banks, has a tenor of five years and two one-year extension options. The RCF neither contains financial covenants nor material adverse change clauses. At year-end 2025, no loans had been taken up under the committed credit facilities.

On December 13, 2024, dsm-firmenich concluded a €1.0 billion bridge facility to provide additional financial flexibility in light of upcoming bond maturities. The agreement neither contains financial covenants nor material adverse change clauses. The issuance by dsm-firmenich of a €750 million bond on February 25, 2025 reduced the undrawn amount of the bridge financing facility to €250 million. The remaining undrawn amount was cancelled on March 7, 2025.

Furthermore, DSM B.V. has a commercial paper program amounting to €2.0 billion (2024: €2.0 billion). At December 31, 2025, there were no ECP outstanding (2024: there were no ECP outstanding).

Floating-rate and fixed-rate borrowings and monetary liabilities analyzed by maturity are summarized in the following table.

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.

The ‘Derivatives cash flow’ table below 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 to provide a complete overview of the derivative-related cash flows. The amounts are gross and undiscounted.

Price risk

Financial instruments that are subject to changes in stock exchange prices or indexes are subject to a price risk. At year-end 2025, mainly other participating interests are subject to price risks.

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 December 31, 2025, with all other variables held constant. A 1% reduction in interest rates would result in a €18 million pre-tax loss in the income statement and equity on the basis of the composition of financial instruments on December 31, 2025, 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.

For more information regarding fixed or floating interest, see Note 19 Borrowings.

The following table assumes a 10% change in all foreign currency rates against the euro from their level on December 31, 2025, with all other variables constant. A +10% change indicates a strengthening of the foreign currencies against the euro, and vice-versa.

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.

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 taken into consideration at the end of 2025 was €4 million (2024: €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 first table on the following page provides information about the credit risk exposure per aging category and the ECL for trade accounts receivable of €14 million at December 31, 2025 (December 31, 2024: €20 million), see Note 13 Current receivables.

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. dsm-firmenich 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 table ‘Notional value of derivative financial instruments’ further below 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.

Information about financial assets is presented in Note 10 Associates and joint arrangements, Note 11 Other non-current assets, Note 13 Current receivables, Note 14 Financial 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.

The changes in the expected credit loss for trade accounts receivable can be found in the two tables below.

dsm-firmenich hedges the long-term forecasted exposure to currency risks from firm commitments and forecast transactions. The currencies involved are primarily USD and CHF. CNY has significant exposure for the Group. However, it does not meet the threshold for cash flow hedging.

In 2025, dsm-firmenich hedged USD 859 million (2024: USD 1,129 million) of its 2026 projected net cash flow in USD against the euro by means of average-rate currency forward contracts at an average exchange rate of USD 1.14 per EUR for the four quarters of 2026. Each quarter, the relevant hedges for that quarter will be settled and recognized in the income statement.

In 2025, dsm-firmenich also the projected CHF obligations against the EUR, namely CHF 322 million (2024: CHF 380 million) at an average exchange rate of CHF 0.92 per EUR. These hedges have fixed the exchange rate for part of the USD and CHF payments in 2026. Cash flow hedge accounting is applied for these hedges. In 2025, €34 million profit was recognized in the 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.

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.