DSM reports very strong start to 2010 in an improved business environment
(Thomson Reuters ONE) -
· Q1 operating profit from continuing operations ? 196
million (versus ? 44 million in Q1 2009 and ? 149 million in Q4 2009)
· Organic sales growth from continuing operations +25%
compared to Q1 2009
· Life Sciences continues to deliver robust results due to
Nutrition
· Materials Sciences demonstrates further strong recovery
· Major step in transformation with the sale of DSM Agro and
DSM Melamine
· Robust cash performance continues with ? 137 million cash
from operating activities
· 2010 is expected to be a good year for DSM
Commenting on the results, Feike Sijbesma
Managing Board, said:
"I am pleased to report that DSM has delivered a very strong start to 2010.
Operating profit from our core businesses is not only up very strongly compared
to Q1 2009, it has also returned to the level achieved in Q1 2008. This reflects
the outstanding performance of our Nutrition business, a continuing strong
recovery in our Materials Sciences businesses and cost savings initiatives taken
last year which already deliver ? 200 million on an annualized basis.
"Throughout the downturn, DSM has stayed the course - fully committed to our
customers, innovation and sustainability. The announced sale of DSM Agro and DSM
Melamine marks another important step in our transformation towards a Life
Sciences and Materials Sciences company. Whilst uncertainties remain in the
medium term economic outlook, the strong Q1 result and continued positive
business conditions give us confidence that 2010 will be a good year for DSM."
--------------------------------------------------------------+-----------+----
in ? million | first|
| quarter|
--------------------------------------------------------------+-----+-----+----
| 2010| 2009| +/-
--------------------------------------------------------------+-----+-----+----
Continuing operations: | | |
--------------------------------------------------------------+-----+-----+----
| | |
--------------------------------------------------------------+-----+-----+----
Net sales |2,088|1,690| 24%
--------------------------------------------------------------+-----+-----+----
| | |
--------------------------------------------------------------+-----+-----+----
Operating profit before depreciation and amortization | 304| 142|114%
(EBITDA) | | |
--------------------------------------------------------------+-----+-----+----
| | |
--------------------------------------------------------------+-----+-----+----
Operating profit (EBIT) | 196| 44|345%
--------------------------------------------------------------+-----+-----+----
- Nutrition | 138| 141| -2%
--------------------------------------------------------------+-----+-----+----
- Pharma | 1| 11|-91%
--------------------------------------------------------------+-----+-----+----
- Performance Materials | 43| -17|
--------------------------------------------------------------+-----+-----+----
- Polymer Intermediates | 43| -30|
--------------------------------------------------------------+-----+-----+----
- Base Chemicals and Materials | 18| -15|
--------------------------------------------------------------+-----+-----+----
- Other activities | -47| -46|
--------------------------------------------------------------+-----+-----+----
| | |
--------------------------------------------------------------+-----+-----+----
Discontinued operations | | |
--------------------------------------------------------------+-----+-----+----
Net sales | 142| 147|
--------------------------------------------------------------+-----+-----+----
Operating profit before depreciation and amortization | 31| 25|
(EBITDA) | | |
--------------------------------------------------------------+-----+-----+----
Operating profit (EBIT) | 22| 13|
--------------------------------------------------------------+-----+-----+----
| | |
--------------------------------------------------------------+-----+-----+----
Total DSM: | | |
--------------------------------------------------------------+-----+-----+----
Net sales |2,230|1,837| 21%
--------------------------------------------------------------+-----+-----+----
| | |
--------------------------------------------------------------+-----+-----+----
Operating profit (EBIT) | 218| 57|282%
--------------------------------------------------------------+-----+-----+----
| | |
--------------------------------------------------------------+-----+-----+----
Net profit before exceptional items | 144| 25|476%
--------------------------------------------------------------+-----+-----+----
| | |
--------------------------------------------------------------+-----+-----+----
Net result from exceptional items | -14| -12|
--------------------------------------------------------------+-----+-----+----
| | |
--------------------------------------------------------------+-----+-----+----
Net profit | 130| 13|
--------------------------------------------------------------+-----+-----+----
| | |
--------------------------------------------------------------+-----+-----+----
Net earnings per ordinary share in ?: | | |
--------------------------------------------------------------+-----+-----+----
- before exceptional items, continuing operations | 0.77| 0.07|
--------------------------------------------------------------+-----+-----+----
- including exceptional items, total DSM | 0.78| 0.06|
--------------------------------------------------------------+-----+-----+----
In this report:
· 'operating profit' (before depreciation and amortization) is
understood to be operating profit (before depreciation and amortization) before
exceptional items.
· 'net profit' is the net profit attributable to equity holders of
Royal DSM N.V.
· 'continuing operations' refers to the DSM operations excluding DSM
Energie Holding B.V., Stamicarbon B.V., DSM Agro and DSM Melamine.
· 'discontinued operations' comprise net sales and operating profit of
DSM Energie Holding B.V up to and including Q3 2009, Stamicarbon B.V. up to and
including Q4 2009, and DSM Agro and DSM Melamine up to and including Q1 2010.
Overview
DSM had a very strong start to the year, which resulted in a significant
improvement in operating profit, not only in comparison with the weak Q1 of
2009 but also in comparison with Q3 and Q4 of last year. DSM benefited from
improved business conditions in most geographic areas and end markets.
The Nutrition cluster showed sustained good performance and the Materials
Sciences businesses continued their recovery. The growth in emerging markets
(especially China) continued to be strong and sales are currently higher than
before the economic downturn. In Materials Sciences and Base Chemicals and
Materials there are indications that in some businesses the strong demand is not
fully aligned with the developments in the end markets, which would imply
downstream re-stocking.
The operating profit of the core activities (continuing activities, excluding
Base Chemicals and Materials) of ? 178 million is back at the level of Q1 2008
(? 176 million), which was one of the strongest first quarters in DSM's history.
The Nutrition cluster continued to show healthy volume growth at price levels
that were comparable to the last quarters of 2009. The Pharma cluster faced
lower volumes compared to Q4 2009.
The Materials Sciences businesses continued to recover, driven by strong growth
in emerging economies and also supported by further improvement in demand in the
automotive, electronics and textile markets.
The Base Chemicals and Materials cluster was significantly reduced in size
reflecting the announced divestment of DSM Agro and DSM Melamine. At the end of
Q1 these businesses were reclassified to assets held for sale and discontinued
operations. The cluster currently contains DSM Elastomers (as the main
activity), DSM Citric Acid, DSM Special Products, and the Maleic Anhydride (and
derivatives) activity. These businesses benefited from the recovery of the
markets with higher volumes at more or less stable price levels.
DSM's focus on cash continued. Working capital increased by ? 153 million mainly
driven by receivables. Adjusted for the effects of the sale of DSM Agro and DSM
Melamine and considerable changes in currency exchange rates, the level of
working capital as a % of sales was comparable to the level at the end of 2009.
Last year's level was achieved after a substantial reduction during 2009. The
strong financial position was maintained and net debt increased slightly to a
level of ? 871 million as a balance of a positive free cash flow and an increase
because of a weaker euro. The cost saving program already delivered substantial
benefits of ? 200 million on an annualized basis.
Net sales
--------------------------------------------------------------------------------
in ? million first quarter
2010 2009 differ-ence organic growth exch. rates other
--------------------------------------------------------------------------------
Nutrition 732 707 4% 6% -2%
Pharma 186 197 -6% -5% -1%
Performance Materials 557 395 41% 41% -3% 3%
Polymer Intermediates 314 139 126% 135% -9%
Base Chemicals and
Materials
196 142 38% 38% 0%
Other activities 103 110
-------------
Total, continuing 2,088 1,690 24% 25% -2% 1%
operations
Discontinued operations 142 147
-------------
Total 2,230 1,837 21% 26% -3% -2%
--------------------------------------------------------------------------------
Organic sales growth for continuing operations was +25% compared to Q1 2009.
Roughly 35% of this ? 400 million increase originated from China. With the
exception of Pharma, all businesses delivered an increase. Nutrition is
continuing its strong performance and although prices are below the top level of
Q1 2009 they are at a similar level compared to recent quarters. In the
Materials Sciences businesses and the non-core Base Chemicals and Materials
cluster, net sales showed a strong increase in automotive, electronics and
textile markets. DSM Dyneema achieved double digit growth and DSM Fibre
Intermediates showed strong demand, especially in China, where the economy is
growing very fast.
Operating profit
Operating profit increased substantially, not only against the weak first
quarter of last year but also compared to the previous quarter.
Nutrition profitability is at a very good level, which is a reflection of the
successful strategy to focus on value via differentiation and innovation. The
year-on-year improvement in operating profit was clearly driven by the Materials
Sciences businesses, which benefited from a strong demand improvement. Despite
strongly increasing raw material prices, margin management was successful in
Materials Sciences, reflecting tight market conditions in some markets.
Cost control programs were successfully implemented in all clusters.
Business review by cluster
Nutrition
--------------------------------------------------------+---------------
in ? million | first quarter
--------------------------------------------------------+------+--------
| 2010 | 2009
--------------------------------------------------------+------+--------
| |
--------------------------------------------------------+------+--------
Net sales | 732 | 707
--------------------------------------------------------+------+--------
Operating profit before depreciation and amortization | 171 | 174
--------------------------------------------------------+------+--------
Operating profit | 138 | 141
--------------------------------------------------------+------+--------
The first quarter saw a continued strong performance of the Nutrition cluster
with similar underlying dynamics in DSM Nutritional Products and DSM Food
Specialties. The food and feed markets experienced a healthy growth compared to
last year. Organic sales growth was +6% compared to Q1 2009, with growth in
animal and human nutrition. While emerging economies such as China and Brazil
are boosting sales growth, all geographies are performing well. Volumes remained
stable and prices were robust compared to Q4 2009.
Operating profit remained strong, broadly in line with both Q1 2009 and Q4
2009, reflecting the resilience of this business. The main drivers were a solid
volume development, strong pricing, a continued focus on value, a strong
production performance and continued strong cost management. Compared with Q1
2009 this improvement was partly offset by negative exchange rate developments.
Pharma
--------------------------------------------------------+---------------
in ? million | first quarter
--------------------------------------------------------+------+--------
| 2010 | 2009
--------------------------------------------------------+------+--------
| |
--------------------------------------------------------+------+--------
Net sales | 186 | 197
--------------------------------------------------------+------+--------
Operating profit before depreciation and amortization | 15 | 25
--------------------------------------------------------+------+--------
Operating profit | 1 | 11
--------------------------------------------------------+------+--------
In Q1 organic sales development in the Pharma cluster was -5%, which was mainly
due to a lower sales value within DSM Anti-Infectives. The activity level at DSM
Pharmaceutical Products remained low as a result of shifts in industry dynamics.
Sales were stable compared to Q1 2009. Lower API sales due to the loss of some
important products in 2009 were offset by the completion of the H1N1 vaccine
shipments in Q1 2010.
The lower operating profit in the cluster was due to the lower sales level and
an unfavorable product mix.
Performance Materials
--------------------------------------------------------+---------------
in ? million | first quarter
--------------------------------------------------------+------+--------
| 2010 | 2009
--------------------------------------------------------+------+--------
| |
--------------------------------------------------------+------+--------
Net sales | 557 | 395
--------------------------------------------------------+------+--------
Operating profit before depreciation and amortization | 75 | 6
--------------------------------------------------------+------+--------
Operating profit | 43 | -17
--------------------------------------------------------+------+--------
Organic sales growth compared to Q1 2009 was a strong +41%. The increase was
most prominent in DSM Engineering Plastics as market sentiment improved
substantially in the automotive and electronics industries with some indications
of re-stocking. DSM Dyneema showed healthy sales growth driven by volumes and a
favorable product mix. DSM Resins realized strong volume improvements although
building and construction related markets remained weak. Compared to Q4 2009,
organic sales growth for the cluster was +15%. This improvement was achieved
across all businesses within the cluster thanks to higher volumes and generally
favorable price developments.
Operating profit for Q1 2010 improved by ? 60 million compared to Q1 2009, when
the industry was in the midst of the economic downturn. Increased volumes,
favorable price developments and active cost and margin management contributed
to the result improvement despite increasing raw material prices. Operating
profit improved by ? 19 million against Q4 2009, spread across all businesses.
Polymer Intermediates
--------------------------------------------------------+---------------
in ? million | first quarter
--------------------------------------------------------+------+--------
| 2010 | 2009
--------------------------------------------------------+------+--------
| |
--------------------------------------------------------+------+--------
Net sales | 314 | 139
--------------------------------------------------------+------+--------
Operating profit before depreciation and amortization | 51 | -22
--------------------------------------------------------+------+--------
Operating profit | 43 | -30
--------------------------------------------------------+------+--------
Organic sales growth was +135% compared to Q1 2009, when the downturn for
Polymer Intermediates was at its strongest. Compared to Q4 2009, volumes
increased by +5% and prices by +17% reflecting increasing raw material prices
(which could be passed on) and strong demand especially in China, where the
economy is growing very fast.
As a result, compared to Q1 2009 as well as Q4 2009, operating profit showed a
significant increase for both the caprolactam and the acrylonitrile businesses.
Base Chemicals and Materials
--------------------------------------------------------+---------------
in ? million | first quarter
--------------------------------------------------------+------+--------
| 2010 | 2009
--------------------------------------------------------+------+--------
| |
--------------------------------------------------------+------+--------
Net sales | 196 | 142
--------------------------------------------------------+------+--------
Operating profit before depreciation and amortization | 25 | -7
--------------------------------------------------------+------+--------
Operating profit | 18 | -15
--------------------------------------------------------+------+--------
Organic sales growth amounted to +38% compared to Q1 2009 and +14% compared to
Q4 2009. At DSM Elastomers net sales improved due to a pick-up in the automotive
industry as well as some re-stocking.
The operating profit of ? 18 million was mainly driven by DSM Elastomers as a
result of a higher sales value combined with higher margins.
Other activities
---------------------------------------------------------+---------------
in ? million | first quarter
---------------------------------------------------------+------+--------
| 2010 | 2009
---------------------------------------------------------+------+--------
| |
---------------------------------------------------------+------+--------
Net sales | 103 | 110
---------------------------------------------------------+------+--------
Operating profit before depreciation and amortization | -33 | -34
---------------------------------------------------------+------+--------
Operating profit | -47 | -46
---------------------------------------------------------+------+--------
of which: | |
---------------------------------------------------------+------+--------
- Defined Benefit Plans | -18 | -18
---------------------------------------------------------+------+--------
- Innovation Center | -15 | -15
---------------------------------------------------------+------+--------
- Other | -14 | -13
---------------------------------------------------------+------+--------
The operating profit of Other activities remained at the same level.
Exceptional items
In view of the announced sale of DSM Agro and DSM Melamine these business were
reclassified to assets held for sale at the end of Q1 2010. The businesses are
valued at fair value less costs to sell upon reclassification, resulting in a
loss of ? 17 million (? 14 million after tax) that is reported as exceptional
item.
Net profit
Net profit increased from ? 13 million in Q1 2009 to ? 130 million in Q1 2010.
Net earnings per share increased to ? 0.78 per ordinary share in Q1 2010 versus
? 0.06 in Q1 2009.
Net finance costs amounted to ? 21 million in Q1 2010, ? 6 million lower than
last year mainly as a result of a lower average net debt.
The effective tax rate for the first quarter was 25%, the same as last year.
Cash flow, capital expenditure and financing
Cash flow from operating activities in Q1 amounted to ? 137 million.
Cash flow related to capital expenditure in Q1 2010 amounted to ? 98 million
compared to ? 116 million in Q1 2009.
Compared to year-end 2009 net debt increased by ? 41 million to ? 871 million,
representing a gearing level of 14%. This increase was the balance of a decrease
due to a positive free cash flow and an increase because of a weaker euro.
Workforce
Compared to year-end 2009 the workforce decreased by 133. The workforce stood at
22,605 at the end of Q1 2010, representing an overall decrease of 1,447 since
the start of the cost saving program at the end of Q3 2008.
Progress update on DSM Strategy Vision 2010
DSM's acceleration of the strategic program Vision 2010 - Building on Strengths,
announced in September 2007, focuses on delivering faster growth, higher margins
and improved earnings quality from the company's portfolio. The strategy will
transform DSM into a Life Sciences and Materials Sciences company capable of
sustainable growth fueled by important societal trends.
The key drivers - market-driven growth and innovation, increased presence in
emerging economies and operational excellence - remain at the heart of DSM's
strategy.
Improving earnings quality
To date, DSM has made substantial progress with the portfolio transformation.
Following the divestment of DSM Energy and the urea licensing subsidiary
Stamicarbon BV last year and the announced sale of DSM Agro and DSM Melamine
this quarter (with an expected closing in Q2 2010) a significant proportion of
the planned divestment program will have been completed. The selling process for
most of the remaining businesses in Base Chemicals and Materials is underway.
Other actions to improve the portfolio included the closure of the citric acid
plant in Wuxi (China) and the reduction in the number of DSM Anti-Infectives'
sites (e.g. closure of Strängnäs (Sweden) where mainly clavulanic acid was
produced, a management buy out of the side chain business DSM Deretil (Spain)
and the closure of the loss-making DSM Anti-Infectives site in Egypt as
communicated in April, the costs of which are to be recognized in Q2 2010).
Only a limited number of smaller acquisitions and venturing investments have
been made, the most important one being the acquisition of The Polymer
Technology Group by DSM Biomedical.
A large proportion of group revenues and earnings are now in high margin, high
quality businesses that have significantly lower cyclicality. A testament to
the quality of this business is that by the first quarter of 2010 profits from
these core operations were at the same level as in 2008.
Further progress in the first quarter
DSM realized record sales in China in Q1 2010. Net sales more than doubled
compared to Q1 2009 to USD 405 million, driven by the Materials Sciences
clusters although Nutrition also showed a very healthy double digit sales
growth. Compared to Q4 2009, sales in China increased by 8%. DSM expects to
achieve the USD 1.5 billion target for 2010. The focus on and efforts put into
the development of DSM's position in China are clearly paying off.
DSM Engineering Plastics announced that it has signed the contracts with
Mitsubishi Chemical Corporation (MCC) enabling DSM to acquire MCC's Novamid(®)
polyamide business in exchange for DSM's Xantar(®) polycarbonate business. The
transaction is subject to various external approvals. Closing is expected in Q2
2010.
DSM has acquired full control of the polyamide 6 polymerization facility of
Nylon
Polymer Company, LLC (NPC) in Augusta (Georgia, USA). Previously Shaw
Industries and DSM Chemicals North America were joint venture partners in NPC.
As a result of the transaction, the facility was fully integrated into DSM
Engineering Plastics' activities as of 1 January 2010.
DSM Nutritional Products (Animal Nutrition & Health) reached agreement to
acquire the industrial premix business from Bayer Korea in March 2010. The
acquired business will be fully integrated in DNP Korea Ltd., which will supply
the Korean customers with high quality products. The transaction will be
completed after approval has been received from the Korean authorities.
DSM also opened a new plant for the production of wet polyesters and other
specialty resins in Meppen (Germany). Total investment costs amounted to ? 15
million. In the Emerging Business Areas, where DSM is developing at least two
new growth platforms, DSM White Biotechnology made further progress in its
cooperation with Roquette. The demonstration plant produced the first commercial
bio-based succinic acid in Q1 2010. The development of DSM Biomedical is also
well on track. In line with its continuous efforts to improve its cost base and
to strengthen its competitive position, at the beginning of the second quarter
DSM announced a number of structural cost-saving actions, such as the closure of
the loss-making DSM Anti-Infectives site in Egypt. In Germany, DSM Nutritional
Products started a project to improve the viability and competitiveness of the
Grenzach site.
During the quarter, DSM announced and introduced many new innovations. More
information can be found in the innovation section at www.dsm.com.
Outlook
Most of the markets that are relevant to DSM saw a strong recovery in the first
quarter with activities in emerging markets well above pre-crisis levels. Going
forward, continued growth is expected. Of course there are still macro-economic
risks that could affect the sustainability of this global recovery. Whilst DSM
has been capturing growth opportunities, a focus on cash generation and cost
saving programs remain important. This will secure financial flexibility and a
strong balance sheet to take advantage of opportunities that will arise.
The food and feed markets are expected to grow in line with GDP in 2010. The
Nutrition cluster is expected to achieve sustained good performance with results
approaching those of last year, with an ongoing increase in demand and
relatively stable price levels in both the food and feed markets.
For Pharma, results are expected to be lower than in 2009 due to ongoing
challenges at DSM Pharmaceutical Products and continued low prices at DSM
Anti-Infectives. The Pharma cluster clearly has some very tough quarters ahead
of it.
DSM is experiencing recovery in its Materials Sciences end markets and has seen
additional demand in the automotive, electronics and textile markets. Demand in
building and construction and marine markets remained at relatively low levels
compared to the pre-recession situation. The favorable business conditions are
currently expected to continue, although with a potentially lower impact on
demand in the later part of 2010 from re-stocking. Strict margin management is
being applied to pass on the increasing costs of raw materials in the current
favorable trading conditions. DSM Dyneema is on track to return to double digit
sales growth in 2010. Sales volumes in Polymer Intermediates are expected to be
somewhat lower in Q2 and Q3 2010 due to planned turnarounds. Results in the
Performance Materials and Polymer Intermediates clusters are expected to be
substantially better than in 2009.
Operating profit in the non-core Base Chemicals and Materials is expected to be
clearly positive in 2010.
The strong Q1 2010 results and the continued positive business conditions give
DSM confidence that 2010 will be a good year for the company.
Additional information
Today DSM will hold a conference call for the media from 8.30 AM - 09.00 AM CET
and a conference call for investors and analysts from 10.00 AM - 11.00 AM CET.
Details on how to access these calls can be found on the DSM website,
www.dsm.com <../628750/Maildata/Temp/www.dsm.com>. Also, information regarding
DSM's Q1 2010 results can be found in the Presentation to Investors, which can
be downloaded from the Investors section.
Important dates
Report for the second quarter: Tuesday, 3 August 2010
Report for the third quarter: Tuesday, 2 November 2010
Annual Report 2010: Wednesday, 23 February
2011
Annual General Meeting of Shareholders: Thursday, 28 April 2011
DSM - the Life Sciences and Materials Sciences Company
Royal DSM N.V. creates solutions that nourish, protect and improve performance.
Its end markets include human and animal nutrition and health, personal care,
pharmaceuticals, automotive, coatings and paint, electrical and electronics,
life protection and housing. DSM manages its business with a focus on the triple
bottom line of economic prosperity, environmental quality and social equity,
which it pursues simultaneously and in parallel. DSM has annual net sales of
about ? 8 billion and employs some 22,700 people worldwide. The company is
headquartered in the Netherlands, with locations on five continents. DSM is
listed on Euronext Amsterdam. More information: www.dsm.com
For more information
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
internet: www.dsm.com
[HUG#1409069]
Press release-pdf: http://hugin.info/130663/R/1409069/361683.pdf
Unternehmensinformation / Kurzprofil:
Datum: 28.04.2010 - 07:15 Uhr
Sprache: Deutsch
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