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 arising from the acquisition of a business 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 operation includes the goodwill allocated to the operation 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 four 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 four 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 (five to eight years). Costs of software maintenance are expensed when incurred.
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.
Capitalized development expenditure is amortized over the asset’s useful life on a straight-line basis. As long as internally generated intangible assets are under construction, they 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), an impairment test is performed.
If an individual intangible 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, and current business outlooks, and are generally validated by external valuation specialists.
Intangible assets
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 main intangible assets recognized as a result of the merger in 2023 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.
Other significant intangibles were mainly obtained during the acquisitions of 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 2024). The carrying amount of the internally generated intangible assets includes €130 million (2024: €137 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). Out of €107 million capital expenditure on internally generated intangible assets, €82 million (2024: €81 million) relate to software.
|
|
Goodwill |
|
Customer base |
|
Brands and trademarks |
|
Technology and formulas |
|
Software, licenses and patents |
|
Internally generated |
|
Other |
|
Total |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Balance at January 1, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in carrying amount: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Capital expenditure |
|
– |
|
– |
|
– |
|
– |
|
1 |
|
113 |
|
3 |
|
117 |
- Put into operation |
|
– |
|
(1) |
|
4 |
|
11 |
|
53 |
|
(70) |
|
3 |
|
– |
- Disposals and deconsolidations |
|
(47) |
|
(1) |
|
– |
|
– |
|
– |
|
(11) |
|
(1) |
|
(60) |
- Amortization |
|
– |
|
(250) |
|
(69) |
|
(146) |
|
(108) |
|
(25) |
|
(11) |
|
(609) |
- Impairment losses |
|
(50) |
|
(1) |
|
(4) |
|
(55) |
|
(1) |
|
(5) |
|
– |
|
(116) |
- Exchange differences |
|
51 |
|
(32) |
|
(3) |
|
(4) |
|
(1) |
|
(5) |
|
1 |
|
7 |
- Transfers |
|
– |
|
(15) |
|
(16) |
|
31 |
|
10 |
|
(33) |
|
24 |
|
1 |
|
|
(46) |
|
(300) |
|
(88) |
|
(163) |
|
(46) |
|
(36) |
|
19 |
|
(660) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost |
|
11,302 |
|
4,682 |
|
858 |
|
2,068 |
|
1,013 |
|
632 |
|
231 |
|
20,786 |
Amortization and impairment losses |
|
55 |
|
879 |
|
214 |
|
458 |
|
698 |
|
229 |
|
175 |
|
2,708 |
Carrying amount |
|
11,247 |
|
3,803 |
|
644 |
|
1,610 |
|
315 |
|
403 |
|
56 |
|
18,078 |
- Of which acquisition-related |
|
11,247 |
|
3,803 |
|
644 |
|
1,610 |
|
66 |
|
– |
|
17 |
|
17,387 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in carrying amount: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Capital expenditure |
|
– |
|
– |
|
– |
|
– |
|
28 |
|
107 |
|
1 |
|
136 |
- Put into operation |
|
– |
|
– |
|
– |
|
– |
|
93 |
|
(102) |
|
9 |
|
– |
- Disposals and deconsolidations |
|
(1,069) |
|
– |
|
– |
|
(6) |
|
– |
|
(10) |
|
(1) |
|
(1,086) |
- Amortization |
|
– |
|
(245) |
|
(63) |
|
(123) |
|
(110) |
|
(18) |
|
(33) |
|
(592) |
- Impairment losses |
|
(11) |
|
– |
|
(2) |
|
– |
|
(2) |
|
(12) |
|
(6) |
|
(33) |
- Exchange differences |
|
(170) |
|
(4) |
|
3 |
|
(12) |
|
3 |
|
6 |
|
(8) |
|
(182) |
- Reclassification to held for sale |
|
(550) |
|
(191) |
|
(17) |
|
(101) |
|
(41) |
|
(20) |
|
(20) |
|
(940) |
- Transfers |
|
– |
|
– |
|
– |
|
– |
|
– |
|
– |
|
3 |
|
3 |
|
|
(1,800) |
|
(440) |
|
(79) |
|
(242) |
|
(29) |
|
(49) |
|
(55) |
|
(2,694) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost |
|
9,511 |
|
4,301 |
|
816 |
|
1,846 |
|
995 |
|
581 |
|
112 |
|
18,162 |
Amortization and impairment losses |
|
64 |
|
938 |
|
251 |
|
478 |
|
709 |
|
227 |
|
111 |
|
2,778 |
Carrying amount |
|
9,447 |
|
3,363 |
|
565 |
|
1,368 |
|
286 |
|
354 |
|
1 |
|
15,384 |
- Of which acquisition-related |
|
9,447 |
|
3,363 |
|
565 |
|
1,368 |
|
60 |
|
– |
|
– |
|
14,803 |
The disposal of €1,086 million relates to the divestment in June 2025 of the Feed Enzymes business, which was part of the ANH Business Unit. Furthermore, following the classification of the ANH business as held for sale, €940 million was reclassified accordingly at year-end 2025. See also Note 3 Change in the scope of consolidation.
Goodwill
The annual impairment tests of goodwill are performed at year-end. The CGUs dsm-firmenich identified in 2025 are Perfumery & Beauty (P&B), Taste, Texture & Health (TTH), and Health, Nutrition & Care (HNC).
The recoverable amount of the CGUs is based on a value-in-use calculation. More specifically, the cash flow projections in Euros are based on the budget for 2026 as well as the Long Range Planning (LRP), as approved by management. 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 and HNC, which are considered mature businesses, a forecast period of five years is used thereafter applying a terminal value. For TTH, an initial forecast period of seven years was applied, reflecting the remaining period of time during which the identified synergies arising from the merger are expected to continue to contribute to the growth of this CGU.
For HNC, the growth assumptions are based on the growth of the global food markets; 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. The terminal value growth rate is determined with the assumption of inflationary growth. The discount rates applied are based on available market information.
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, 39 basis points and 70 basis points in the pre-tax discount rates of P&B and TTH, or a decrease of 46 basis points in the terminal value growth of P&B would result in recoverable amounts equal to the carrying amounts of these CGUs. The headroom of P&B and TTH amounted to €450 million and €731 million, respectively. The remainder of the sensitivity tests performed indicates that the conclusions of the impairment test of the CGUs would not have been different if a reasonably possible adverse change in any other key parameter had been assumed.
|
|
2025 |
|
2024 |
|---|---|---|---|---|
Perfumery & Beauty (P&B) |
|
4,086 |
|
4,169 |
Taste, Texture & Health (TTH) |
|
3,676 |
|
3,718 |
Health, Nutrition & Care (HNC) |
|
1,685 |
|
1,782 |
Animal Nutrition & Health (ANH) |
|
– |
|
1,578 |
Total |
|
9,447 |
|
11,247 |
|
|
2025 |
|
2024 |
|---|---|---|---|---|
Forecast period (years) |
|
|
|
|
- Mature business |
|
5 |
|
5 |
- Emerging business |
|
7 |
|
10 |
|
|
|
|
|
Terminal value growth |
|
2.0% |
|
2.0% |
|
|
|
|
|
Pre-tax discount rate |
|
|
|
|
P&B |
|
10.2% |
|
9.0% |
TTH |
|
10.1% |
|
8.7% |
HNC |
|
9.9% |
|
8.6% |
|
|
|
|
|
Organic sales growth (year 1–5) |
|
|
|
|
P&B |
|
2%–5% |
|
2%–4% |
TTH |
|
2%–11% |
|
1%–6% |
HNC |
|
0%–6% |
|
0%–7% |