Fine Fragrance in pole position: DSM-Firmenich‘s Q2 beat increases confidence in both growth and margin delivery. Strong Fragrance momentum, resilient demand across TTH and HNC, easing FX headwinds and improving cash conversion drive estimate upgrades and a higher PT.

Research evidence excerpt

Fine Fragrance in pole position: DSM-Firmenich‘s Q2 beat increases confidence in both growth and margin delivery. Strong Fragrance momentum, resilient demand across TTH and HNC, easing FX headwinds and improving cash conversion drive estimate upgrades and a higher PT.

gful unwind. Notably, the c.1% pre-buy benefit identified in

Q1 did not reverse in Q2, and management continues to describe current trading and July Price Performance Exchange-AEX

demand as consistent with recent trends. Our forecasts do not assume a material H2 volume 52 Week range EUR 87.68-53.86

unwind but we do prudently assume a modest moderation in three-year stacked growth

through Q4 to reflect some customer inventory normalisation risk. We increase our 2026/27

group OSG assumptions to 4.9%/4.7% (from 4.3%/4.2%) vs. 2026 company guidance of upper

end of 2-4%.

Margin targets look less stretched: The Q2 margin beat increases our confidence that DSFIR

can move closer to its medium-term profitability ambitions. DSFIR delivered ahead of

Source: LSEG Data & Analytics, Bloomberg

expectations despite a significant FX drag, with management noting Q2 margins would have Link to Barclays Live for interactive charting

been around 70bps higher absent currency headwinds. FX pressures are expected to ease

meaningfully, with H2 headwinds guided at approximately €25m versus more than €60m in H1,

European Chemicals & Ingredients

supporting sequential margin progression. In addition, the newly announced restructuring

Alex Sloane

programme targeting c.1,000 job reductions should begin contributing from late 2026, with the +44 (0)20 3555 0645

bulk of benefits supporting 2027 profitability when DSFIR target a 100bps further step-up in alexander.sloane@barclays.com

margin.