On the Health & Wellness perspective, biotics continues to excel. Biotics have increased OP by like 100% in the first quarter. So we’re doing very well. We’re getting some headwinds from the fibers perspective, but I think that’s a matter of competitive materials. But over time, fibers has a very positive prognosis as all of us are trying to incorporate more protein and fibers in our diet and reduce fats and sugar that’s where the world nutrition trends are moving. And then when you think about the Animal Nutrition side, Animal Nutrition is probably the most undervalued, if you will, story given their potential. Because we are doing a lot of self-help, and that self-help continues to be seen in the P&L. But some of the protein sector issues have impacted the demand there.
I would say there in the Animal Nutrition area is where we’re probably going to see more of the refinement of the portfolio, if you will, just because there are unevenness across sectors in terms of our ability to achieve the right returns on the long-term. So in some part of the sectors, it’s more like self-help. In other parts, it’s more innovation driven. And even if you go to things like pet, where the demand is very strong, there are pieces of the world that are doing exceptionally well for us like Mexico. There are pieces where demand is very strong, like in North America, so maybe we need to fix some supply issues. And there are parts of the world, like maybe like South America, where structurally it becomes a little bit more difficult to make money.
So we are applying different recipes to the different parts of the world. But I still see a very complete Nutrition business, if you will, going forward, more focus on the maybe fewer platforms, fewer customers to be able to execute our pipeline faster. Maybe in the past, we have a big pipeline with a percentage of conversion that we expect it to be higher on a maybe a more focused, concentrated pipeline. That’s the way I tend to think about it.
Ismael Roig: Can I offer a complementary view? I just wanted to offer you a complementary view on Juan’s comments with regard to Animal Nutrition, but I think it also applies to the broader portfolio, which is I fully agree with Juan in the sense that the base business in Animal Nutrition is now experiencing the benefits of the cost improvement programs that we put in place, and we’ve seen that evolution quarter-on-quarter. But to Juan’s observations on a going-forward basis, you will see a business that is looking to become more focused on the specialty side of its portfolio. As Juan alluded to at the beginning, part of the revenue calculation for the platform is partly impacted by the fact that there is a soy mill commodity component to some of the products that are produced.
Over time, it’s a business that will evolve to become more specialty focused, more higher margin focused. I think it bodes well for the growth and margin structure of that business as we look forward into 2025.
Operator: Thank you. Our next question comes from Steven Haynes of Morgan Stanley. Your line is now open. Please go ahead.
Steven Haynes: Maybe just two quick follow-ups on Nutrition. So I think your income was down slightly and based on your kind of prior comments about there being some price component, were your volumes, I guess, organic volumes, positive in the quarter? That would be the first one. And then the second question is on the full year, you mentioned that the recent M&A is kind of coming in ahead of your kind of deal model expectations. How much operating profit contribution are you baking into the full year guide from M&A? Thank you.
Juan Luciano: Yes. Thank you, Steven. So let me tell me that we are very pleased with the 2 M&As. The 2 M&As contributed to revenue in the first quarter and not yet to OP because of start-up costs and all that. But we still expect revenue, even despite the headwinds that I mentioned before relative to commodity prices, moderating in some of our less specialty categories. We expect revenue growth to be in the range of mid-single digit for full year. We expect probably operating profit to be a little bit better than that given that our cost should be down year-over-year. So what was the other question there?
Ismael Roig: Yes. So in terms of overall volume, volume was a complementary question. Overall, we’ve seen volume hold up well. The exception to that would be, obviously, the Specialty Ingredients business and specifically, the impacts of the Decatur East plant. But all of the other elements of our business have generally performed well volume-wise. So you’ve seen a bit of a deterioration of the volume on a revenue basis, but you have seen a general improvement except for the SI business when it came to volume.
Operator: Thank you. Our next question comes from Adam Samuelson of Goldman Sachs. Your line is now open. Please go ahead.
Adam Samuelson: So I guess I got two questions. Maybe first, as we think about the outlook for the year where you talked about improvement in soy meal demand and inclusion ratios later in the year. Can you maybe help us be a bit more specific? Just that doesn’t seem to you as implied by the curves. Most forecasts on poultry supply in different parts of the world don’t really project a sizable uptick in production. So could you just help us a little bit on the areas where you’re actually seeing that or getting that signal from your feed customers? And then an unrelated question, as I think about some of the cost actions and productivity savings that you’ve targeted for this year and next. Would love if you could maybe a bit more specificity to the areas where the $500 million are really coming from, both in terms of the category of spend, but also whether they’re in the operating segments or in corporate unallocated as we think about the outlook for the next couple of years.
Thank you.
Juan Luciano: Yes, sure. Adam, listen, I think what you need to realize, so first of all, we are early in the year, of course, and we are making predictions on Q4. So this is a transition period for the industry, if you will. We’re going from a couple of years of tight supplies to ample supplies. So we’re seeing here a customer base that is very uncovered, if you will, farmer selling that is a little slow. And we’re going to go through that transition. On top of that, you have a proteins industry that was in the unprofitable territory, if you will, and still is for certain for, if you will, beef or some parts of pork, but now it seemed to have based and seeing growth trends in poultry. So we see that in different parts of the world, whether it’s in Thailand, in Turkey, in other parts of the world.
But I think the main issue is that pricing is doing its effect. So you see some trade flows changing. We see some soybean oil being exported out of the U.S., as we see used cooking oil coming into the U.S. We’re starting to see maybe Brazil becoming less of an exporter of soybean oil, maybe more competition in mills, but the U.S. is still very competitive in mill. So I think that we will have to see all that shift during the year. What we are seeing is we’re looking at our customers, we’re looking at our book. And we just think that, again, with 1 billion gallon more of RGD capacity in the U.S. with 500,000 tons more soybean oil coming from the biodiesel mandate in Brazil, that will be a very big determinant of crush margins for the year. With that, I think Ismael will cover the drive for excellence profitability.
Ismael Roig: Yes. Adam, on the drive for excellence, we’re actually quite encouraged by the progress. As Juan mentioned during the remarks, we have more than 1,200 initiatives, but they can be grouped into substantial areas or themes of effort and focus, working on plant process optimization, working on business process optimization, also very important on supply chain and demand fulfillment , which is part of the challenges that we’ve had in Nutrition. So these would be the large buckets that we’re working on. And we’ve seen the platform progress very well. And we have at least about 1/3rd line of sight of the $500 million already for 2024. So we’re very encouraged about the ability of this drive for excellence impacting 2024 already in the measures that I’ve just outlined.
Operator: Thank you. Our next question comes from Ben Kallo of Baird. Your line is now open. Please go ahead.
Ben Kallo: Just how do we think about or you think about the dynamic of the blenders tax credit changing over to a producers tax credit and the carbon intensity being a factor for overall soy oil demand in the U.S. next year?
Juan Luciano: Yes. Thank you, Ben, for the question. So as you know, the $1 blenders tax credit will expire at the end of ’24 and transition to a production tax credit. And this will be administered by the US Treasury. They issued guidance on, I think, at the end of last year that will allow the use of grid CA modeling in addition to CORSIA. Of course, we favor including grid. We’re successful in grid being officially included. We’re still delayed in the EPA ruling on that. So I think that we have been doing a lot of advocacy in encouraging government officials to make sure that we remove this uncertainty out of the equation here. I think that a transition without guidance of whether the crop-based biofuels will generate credits will create a very difficult price discovery mechanism in the coming months, as participants are trying to begin locking 2025 volume.
So I think that’s an important clarification that needs to happen. These are industries that are investing in the U.S., and I think that providing regulatory certainty are very important for those investments to come to fruition on time and as expected.
Ben Kallo: Just a follow-up there. What are you seeing with the renewable diesel refiners, producers in terms of them transitioning to using waste fats or other materials?
Juan Luciano: Yes. Listen, there is a reality in the world that palm oil production is flat and not being able to cope with demand. So we know that the U.S. and renewable green diesel was going to have to be met with a lot of feedstocks, of which soybean oil is an important component. But of course, the industry is trying to gather every kind of feedstock that they can find. And there was inventory of used cooking oil. The U.S. has imported a lot of that, but still is not going to be enough because how much are you going to grow the used cook oil inventory around the world to supply, as I said, an industry is going to have 1 billion gallon more capacity this year. So we still expect that we are adjusting to these temporary imports of used cook oil. But we still expect that soybean oil will recover their percentage of the used from maybe 30% to again, the 40% we used to be.
Operator: Thank you. Our next question comes from Salvator Tiano of Bank of America. Your line is now open. Please go ahead.
Salvator Tiano: I just had a follow-up. So as we look a little bit into a couple of items, can you help us understand the Green Bison contribution now? So for example, the process volume growth that you showed, roughly how much came from that? And also, I believe you had the $10 million non-controlling interest loss. Well, I guess, the JV, among others, are the loss. So how much, I guess, of that was the Green Bison JV, and at which point do you expect it to turn into a profitable JV on a net income basis, so for that NCI line?
Juan Luciano: Yes. Salvator, maybe I give you what I have at the top of my mind. But we were very pleased with the increase in volumes in oilseeds or in crush during the first quarter. It was 9% increase. Part of that was Spiritwood coming online, part of that were our plants improvements in general across the footprint. Part of that was Paraguay and Ukraine also coming to crush. So that all happened at different points in the quarter. So I don’t have a full recollection of what happened to what volume at any part of the quarter. The Green Bison joint venture will be a contributor to profit during 2024. So it’s ramping up. It’s going to get to full capacity very soon. So it will be a meaningful contributor. I don’t have top of my head what was the contribution on first quarter, to be honest.
Operator: Thank you. Our next question comes from Heather Jones of Heather Jones Research. Your line is now open. Please go ahead.
Heather Jones: Just wanted to ask really quickly what exactly you’re doing for the dry mills as far as sustainability sourcing? And the doubling of your region acreage, is that related to like proactively getting ahead of this EU deforestation regime or more stringent carb requirements? Just wondering what’s driving that?
