DSM reports positive start to the year with robust Q1 results
(Thomson Reuters ONE) -
* Q1 EBITDA from continuing operations ?306 million (Q1 2011: ?325 million)
* Strong results in Life Sciences due to continued growth in Nutrition
* Materials Sciences showed strong improvement compared to Q4 2011
* Joint venture with POET established to unlock the advanced biofuels
opportunity
* Recently announced planned tender offer to acquire Kensey Nash to establish
DSM Biomedical as new profitable growth platform
* Cautiously optimistic outlook, on the way to achieve 2013 targets
Commenting on the results, Feike Sijbesma, CEO/Chairman of the DSM Managing
Board, said:
"In a challenging business environment, DSM continued to make good progress in
Q1 and the robust results represent a positive start to 2012. In Life Sciences,
Nutrition continued to deliver excellent performance despite the currency
headwinds, benefiting from the acquisition of Martek and continued organic
growth. Materials Sciences delivered an improved performance compared to the
previous quarter in Performance Materials and another good result in Polymer
Intermediates.
"We continue to make important steps in the execution of our strategy. During
the quarter we established the joint venture with US based POET, one of the
world's largest bio-ethanol producers, to unlock the exciting potential of
advanced cellulosic biofuels. Last week we announced the execution of a Merger
Agreement with Kensey Nash and planned tender offer, which will put DSM
Biomedical clearly on the map as the second new growth platform for DSM in
addition to our Bio-based Products & Services business.
"DSM has successfully transformed itself into a Life Sciences and Materials
Sciences company. Our attractive portfolio in health, nutrition and materials
together with our broad geographic spread with a significant presence in high
growth economies and our very strong balance sheet has positioned us well to
deliver shareholder value with stronger, more stable growth and profitability.
We remain cautiously optimistic for 2012 despite the uncertain macro-economic
situation."
Find the tables on www.dsm.com or in the pdf version of the quarterly report.
Overview
The global macro-economic environment did not change materially in Q1 compared
to the end of 2011. The European economy remained weak without showing real
signs of improvement during the quarter, while the US maintained its positive
momentum. The high growth economies, especially China, remained solid, but
growth moderated from last year's levels.
Against this background, the performance of DSM's businesses was robust.
Overall EBITDA (?306 million) was 6% lower than in Q1 2011. This can be almost
completely attributed to the anticipated drop in Polymer Intermediates, which
had record results in 2011.
Nutrition continued its profitable growth. Due to good trading conditions and
the Martek acquisition EBITDA was clearly higher, despite the combined effect
(approximately ?20 million in the quarter) of the stronger Swiss franc compared
to Q1 2011 and the absence of a positive hedge result, which had eased the
impact of the strong Swiss franc in 2011. Compared to Q1 2011 Martek was
included for two additional months.
The Pharma performance remained weak, although first signs of improvement are
visible.
Performance Materials improved its performance compared to Q4 2011 despite the
weak economic conditions but was down against Q1 2011.
Polymer Intermediates continued to perform clearly above its long term trend;
compared to 2011 the business was affected by anticipated lower margins and a
scheduled major plant turnaround.
Cash provided by operating activities was ?97 million in Q1 2012 versus ?23
million in the same quarter of the previous year. Net debt decreased by ?53
million compared to year-end 2011 to a level of ?265 million.
Net sales
Q1 2012 organic sales growth was 1% compared to Q1 2011, but there were great
differences in performance between the individual clusters. The impact of the
Martek acquisition (included for 1 month in Q1 2011) and other, smaller
acquisitions was offset by the 50% deconsolidation of DSM Anti-Infectives
following the establishment of the DSM Sinochem Pharmaceuticals joint venture.
Nutrition continued to show solid growth.
In Pharma both business groups showed organic growth, especially DSM
Pharmaceutical Products.
In Performance Materials, DSM Engineering Plastics and DSM Resins recovered
strongly from the decline in Q4 2011. Pricing was stronger than in Q1 2011. DSM
Dyneema's sales were lower than in Q1 2011.
In Polymer Intermediates sales were clearly lower due to lower prices compared
to the unprecedented levels experienced in 2011, while volumes were affected by
a major plant turnaround.
Net sales in China amounted to USD 456 million, which is at the same level as Q1
2011. The lower sales of Polymer Intermediates were compensated for by higher
sales of other businesses. Sales in high growth economies reached a level of
38% of total sales in Q1 2012.
Business review by cluster
Nutrition
In Q1 2012 sales increased by 13% as a result of the Martek acquisition (7%),
organic sales growth (4%) and currency developments (2%). Prices and volumes
increased, especially in Animal Nutrition and Health.
EBITDA remained strong and was higher than Q1 2011. The better performance was
due to strong sales performance and the additional two months' contribution of
Martek in combination with a favorable US dollar exchange rate and a positive
effect from continued cost management. This more than compensated for the
negative impact (in total approximately ?20 million) of the strong Swiss franc
and the absence of the hedge gain as realized in Q1 2011.
Pharma
In Q1 2012 organic sales growth was 20%, mainly due to a better sales
performance at DSM Pharmaceutical Products and slightly better prices at DSM
Sinochem Pharmaceuticals. Pharma sales were negatively impacted by the 50%
deconsolidation of DSM Anti-Infectives due to the establishment of the DSM
Sinochem Pharmaceuticals joint venture. This was partly compensated for by the
shift in reporting of the Maleic Anhydride and Derivatives business from
Corporate activities back into the Pharma cluster because DSM is no longer
actively trying to divest this business.
EBITDA for the quarter increased compared to last year due to higher volumes at
DSM Pharmaceutical Products and the contribution from the Maleic Anhydride and
Derivatives business.
Performance Materials
In Q1 2012 organic sales development was -5% compared to Q1 2011, mainly due to
lower volumes, which were partly offset by higher prices at DSM Engineering
Plastics and DSM Resins. DSM Dyneema faced lower volumes in the tender driven
vehicle protection business, while pricing was flat.
Q1 2012 EBITDA nearly doubled compared to the previous quarter, driven by DSM
Engineering Plastics and DSM Resins reporting a recovery in both volumes and
margins. As expected, EBITDA was lower versus the same period last year, which
was mainly due to lower vehicle protection business at DSM Dyneema.
Polymer Intermediates
In line with expectations, Q1 2012 organic sales development was -9% compared to
Q1 2011, due to 6% lower prices and 3% lower volumes. Caprolactam prices were
lower compared to the same period last year, especially in Asia. Acrylonitrile
prices increased significantly after year-end but were still below Q1 2011.
As expected, Q1 2012 EBITDA was clearly below Q1 2011, which was partly caused
by the planned turnaround of the caprolactam plant in the Netherlands. On
average, margins were below the excellent Q1 2011. The financial performance in
Q1 2012, however, was well above the historical average of the cluster.
Innovation Center
DSM and POET, one of the world's largest bio-ethanol producers, established a
joint venture to commercially demonstrate and license cellulosic bio-ethanol,
based on combined, proprietary and complementary technologies. This is an
important step in extending DSM's leadership position in the field of cellulosic
bio-ethanol technology. In collaboration with Roquette, good progress was made
with the construction of the commercial-scale bio-based succinic acid plant in
Italy, with startup expected in Q4 2012.
Corporate activities
The lower sales in Q1 2012 compared to Q1 2011 were the result of the
deconsolidation of Sitech Manufacturing Services in mid 2011 and the re-
integration of the Maleic Anhydride and Derivatives business into the Pharma
cluster.
EBITDA in Q1 2012 was in line with Q1 2011 since higher share-based payments
cost, following the increase of the share price, were compensated for by lower
project related costs.
Net profit
Net finance costs decreased by ?10 million compared to Q1 2011 to a level of ?11
million, driven by favorable hedging results.
The effective tax rate was 19%, in line with the full year 2011.
Net profit decreased from ?166 million in Q1 2011 to ?145 million in Q1 2012,
mainly as a result of lower operating profit within Polymer Intermediates as
well as the divestment of DSM Elastomers, which still contributed to the result
of Q1 2011.
Net earnings per ordinary share (continuing operations, before exceptional
items) amounted to ?0.87 in Q1 2012 compared to ?0.91 in Q1 2011.
Cash flow, capital expenditure and financing
Cash provided by operating activities was ?97 million (Q1 2011: ?23 million).
Cash flow related to capital expenditure amounted to ?126 million compared to
?72 million in Q1 2011. The increase is among other things due to the
investments of Polymer Intermediates in relation to the maintenance turnaround
and the building of the second caprolactam line in China.
Net debt decreased by ?53 million compared to year-end 2011 and stood at ?265
million (gearing 4%).
DSM in motion: driving focused growth
DSM in motion: driving focused growth marks the shift from an era of intensive
portfolio transformation to a strategy for the coming years of maximizing
sustainable and profitable growth of 'the new DSM'. The current businesses
compose the new core of DSM in Life Sciences and Materials Sciences. Below is an
update on DSM's achievements and progress in the first quarter of 2012.
DSM acquired certain assets, licenses and other agreements in the area of food
enzymes and oilseed processing from Verenium for a total consideration including
transaction and related expenses of USD 37 million. The transaction has been
completed. The acquisition includes Verenium's oilseed processing business and
IP portfolio, licenses for certain food enzymes and access to biodiversity
libraries that Verenium will create using proprietary technology. The 2012 sales
of these businesses are estimated at about USD 15 million, and are expected to
grow rapidly in the coming years.
Percivia LLC (a 50:50 joint venture between Crucell N.V. and Royal DSM) will, as
part of a restructuring, focus on the existing PER.C6(®) technology licensing
business. The biosimilar product development business of Percivia will be
terminated.
DSM Pharmaceutical Products and Agennix AG signed a new contract under which DSM
will continue to manufacture talactoferrin for Agennix.
DSM announced that it would make further investments in its Kaohsiung
polymerization facility in Taiwan to upgrade and develop the company's specialty
polyamide capabilities for its Novamid(®) and Akulon(®) polyamide engineering
plastic business.
DSM and POET, one of the world's largest bio-ethanol producers, announced a
joint venture to commercially demonstrate and license cellulosic bio-ethanol,
the next step in the development of biofuels, based on their proprietary and
complementary technologies. The joint venture, POET-DSM Advanced Biofuels, LLC,
is scheduled to start production in the second half of 2013 at one of the first
commercial scale cellulosic ethanol plants in the US, for which ground breaking
took place in Q1 2012.
On 3 May 2012 DSM announced the execution of a Merger Agreement and planned
tender offer for all of the issued and outstanding shares of Kensey Nash, a US
based, NASDAQ traded, technology-driven biomedical company, to strengthen and
complement DSM Biomedical's business and capabilities. With the anticipated
acquisition of Kensey Nash, DSM Biomedical will be firmly established as a
profitable growth platform for DSM. Subject to a successful tender offer
process, Hart-Scott-Rodino clearance and customary conditions, the transaction
is expected to close around the end of Q2 2012.
Outlook
DSM made a good start to the year, supported by positive momentum in the US,
continued progress of high growth economies and a return to more normal trading
conditions in Performance Materials compared to Q4 2011. However, the global
economic outlook is still uncertain and conditions remain weak in Europe.
DSM's expectations for the year are broadly in line with its previous guidance.
In addition to the already announced restructuring initiatives at DSM Resins,
DSM is preparing further cost reduction programs.
In Nutrition, the impact of the substantial strengthening of the Swiss franc in
2011 was mitigated by a ?50 million currency hedge gain, a benefit which will
not be repeated in 2012. Despite this, DSM anticipates that it will make further
progress, with EBITDA expected to be above 2011.
Business conditions in Pharma are likely to remain challenging, although DSM
anticipates that it will make further strategic progress. DSM expects to deliver
a slightly improved EBITDA despite the 50% deconsolidation of the anti-
infectives business.
Trading conditions in Materials Sciences have normalized compared to Q4 2011 but
continue to be volatile and the end market outlook is uncertain owing to weak
consumer sentiment in some of DSM's key geographies. In addition, increasing
input costs remain a risk. Nevertheless, based on current insights, EBITDA is
expected to be somewhat higher than in 2011.
In Polymer Intermediates prices and margins continue to be volatile. Results
will be impacted in Q2 as a consequence of the end Q1 turnaround and in the
second half year by two more planned turnarounds in caprolactam. For Polymer
Intermediates another strong year is expected, at a level above the historical
average, but EBITDA will be clearly lower than the exceptional result in 2011.
Overall DSM remains cautiously optimistic for the year 2012, on its way to
achieve the 2013 targets.
Important dates
Annual General Meeting of Shareholders Friday, 11 May 2012
Report for the second quarter Tuesday, 7
August 2012
Report for the third quarter Tuesday, 6
November 2012
DSM - Bright Science. Brighter Living.(TM)
Royal DSM is a global science-based company active in health, nutrition and
materials. By connecting its unique competences in Life Sciences and Materials
Sciences DSM is driving economic prosperity, environmental progress and social
advances to create sustainable value for all stakeholders. DSM delivers
innovative solutions that nourish, protect and improve performance in global
markets such as food and dietary supplements, personal care, feed,
pharmaceuticals, medical devices, automotive, paints, electrical and
electronics, life protection, alternative energy and bio-based materials. DSM's
22,000 employees deliver annual net sales of about ? 9 billion. The company is
listed on NYSE Euronext. More information can be found at www.dsm.com
For more information
Media
DSM, Corporate Communications
tel.: +31 (45) 5782421
e-mail: media.relations(at)dsm.com
Investors
DSM, Investor Relations
tel.: +31 (45) 5782864
e-mail: investor.relations(at)dsm.com
Financial overview-pdf:
http://hugin.info/130663/R/1609684/511327.pdf
Press release-pdf:
http://hugin.info/130663/R/1609684/511328.pdf
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other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: DSM N.V. via Thomson Reuters ONE
[HUG#1609684]
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Datum: 08.05.2012 - 07:15 Uhr
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