DSM is positioned for strong EBITDA growth and increases dividend
(Thomson Reuters ONE) -
* DSM reports a solid Q4 with EBITDA of ?243 million
* EBITDA full year 2012 of ?1,109 million with growth in all clusters, except
for caprolactam
* Robust performance of Life Sciences driven by Nutrition
* Materials Sciences performed well, except for caprolactam
* Strong cash generation from operating activities of ?730 million in 2012
* Dividend increase proposed to ?1.50 per ordinary share
* Outlook 2013: moving towards EBITDA of ?1.4 billion
Commenting on the results, Feike Sijbesma, CEO/Chairman of the DSM Managing
Board, said:
"In the context of challenging macro-economic conditions, DSM delivered growth
across all clusters in 2012, excluding caprolactam. Nutrition now represents
more than 70% of total EBITDA and has become a high value, global business with
attractive growth prospects across the full value chain."
"The significant strategic progress we made during 2012 through our value
creating acquisitions and the profit improvement initiatives we have taken leave
us well positioned to achieve our long term objectives. In 2013 we will focus on
the operational performance and integration of the acquisitions we completed in
2012 with special attention to capturing synergies. We expect strong EBITDA
growth in 2013, moving towards ?1.4 billion. The Board's proposal to increase
the dividend for the third consecutive year is testament to the stronger DSM we
have built in recent years, with more stable growth and profitability going
forward."
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 Koninklijke
DSM N.V.;
* 'continuing operations' refers to the DSM operations excluding DSM
Elastomers;
* 'discontinued operations' comprise net sales and operating profit (before
depreciation and amortization) of DSM Elastomers up to and including Q2
2011;
* 'core earnings per share' is understood to be earnings per share before
exceptional items and before acquisition related (intangible) asset
amortization.
Overview
Despite ongoing global economic headwinds, DSM continued to deliver solid
operational results in Q4, generating ?243 million in EBITDA, despite a ?100
million lower contribution from its caprolactam activities compared to Q4 2011.
For the full year EBITDA amounted to ?1,109 million, 14% lower compared to
2011. Profit growth in all clusters was more than offset by approximately ?300
million lower results from DSM's caprolactam activities in Polymer Intermediates
and Performance Materials.
Nutrition results in Q4 increased by 6% versus Q4 2011 and full year results
increased by 8%, as a result of contributions from acquisitions and continued
organic growth.
Pharma results in Q4 as well as for the full year 2012 were slightly above the
level of the comparative periods of 2011.
Performance Materials recorded 21% higher EBITDA in Q4 compared to Q4 2011 due
to higher volumes, improved margins and lower costs. Full year EBITDA was 4%
lower due to lower margins in the polyamide-6 value chain (caprolactam effect)
and lower volumes at DSM Dyneema.
As anticipated, Q4 and full year results at Polymer Intermediates declined
significantly versus the same periods in 2011 mainly due to substantially lower
caprolactam margins.
The Innovation Center improved its results for Q4 and the full year as a result
of higher Biomedical sales supported by six months contribution from the Kensey
Nash acquisition.
Q4 2012 EBITDA for Corporate Activities decreased compared to Q4 2011 mainly due
to higher share-based payment costs and one-off items. Full year EBITDA remained
at the same level as the previous year.
Cash provided by operating activities amounted to ?730 million during 2012
versus ?882 million in the prior year. Net debt increased by ?1,350 million
compared to year-end 2011 to a level of ?1,668 million, mainly due to
acquisitions, resulting in a more efficient capital structure.
Business review by cluster
Nutrition
Fourth quarter organic sales growth was 1% compared to Q4 2011 with volume
growth (4%) partially offset by lower prices (-3%). Reported sales were
positively impacted by favorable exchange rates (1%) and the acquisition of
Ocean Nutrition Canada.
Human Nutrition & Health sales were up due to slightly higher prices and good
volume growth. Premixes and Nutritional Lipids recorded double digit growth.
Ocean Nutrition Canada showed strong sales momentum with the first synergy sales
being realized. The Q4 results of Ocean Nutrition Canada were in line with
expectations with sales of ?36 million and EBITDA of ?11 million.
Animal Nutrition & Health sales were somewhat lower due to stable volumes and a
negative price and mix effect.
Personal Care showed stable volumes with somewhat higher prices.
DSM Food Specialties continued its growth especially in enzymes and savory
ingredients.
EBITDA for the fourth quarter was ?204 million, a 6% increase compared to the
same quarter of 2011, mainly driven by the contribution of Ocean Nutrition
Canada. The EBITDA margin was stable at 22.1%.
Full year organic growth was 2% driven by volumes and stable prices. EBITDA was
?793 million and increased by 8% as a result of continued growth in advanced
forms, premixes and nutritional lipids and contributions from acquisitions.
Pharma
In the fourth quarter, net organic sales growth was 6% compared to Q4 2011 which
was fully due to higher volumes. This volume growth was driven by uneven
delivery patterns in the custom manufacturing business. Prices were stable.
EBITDA for the quarter was ?13 million, slightly better than Q4 2011. This was
mainly caused by increased volumes at DSM Pharmaceutical Products.
Full year organic sales growth was 9%. EBITDA for the full year slightly
increased due to improved volumes at DSM Pharmaceutical Products and somewhat
higher prices at DSM Sinochem Pharmaceuticals. This more than offset the higher
costs partly associated with the startup of the new 6-APA plant for the anti-
infectives business as well as the effect of the 50% deconsolidation of DSM
Sinochem Pharmaceuticals as of 1 September 2011.
Performance Materials
Fourth quarter organic sales growth was 2%. This was owing to a 6% volume growth
especially in DSM Engineering Plastics and DSM Dyneema partly offset by a -4%
price effect, as a result of lower polyamide-6 prices.
EBITDA increased significantly versus Q4 2011. EBITDA of DSM Resins & Functional
Materials showed a major improvement due to strong performance in coatings and
functional materials, as well as cost-saving programs. DSM Engineering Plastics
also showed strong EBITDA improvement, driven by the growth in specialty
polymers, despite lower margins in the polyamide-6 value chain caused by
caprolactam. DSM Dyneema's results were at the same level as Q4 2011.
Full year organic sales development was -4% due to lower volumes (-3%) and lower
prices (-1%).
EBITDA was slightly below last year. The result of DSM Resins & Functional
Materials showed an impressive improvement in 2012 due to cost reductions and
pricing despite weakness in building and construction industries. Strong
underlying improvements at DSM Engineering Plastics were partly offset by the
weakness in the polyamide-6 chain (caprolactam effect). DSM Dyneema's full year
result was below previous year due to the absence of new large vehicle
protection tenders, which had been supporting DSM Dyneema in the first half of
2011.
Polymer Intermediates
Fourth quarter organic sales development was -18% with 11% lower volumes mainly
due to lower material availability as a result of a turnaround in the US.
EBITDA declined significantly mainly due to lower caprolactam prices and
substantially higher benzene prices.
Full year organic sales development was -16% due to 6% lower volumes as a result
of the turnarounds and 10% lower prices. EBITDA was significantly lower. High
benzene prices could not be passed on to the market due to weaker demand for
caprolactam in combination with new production capacity coming on-stream.
Innovation Center
In the fourth quarter, DSM Biomedical showed further improvement mainly driven
by the contribution of Kensey Nash with sales of ?18 million and an EBITDA of ?7
million. All other innovation activities including DSM Bio-based Products &
Services continued at the same activity level.
Full year results showed good sales and EBITDA improvement primarily driven by
continued strong growth in DSM Biomedical, supported by the contribution of
Kensey Nash.
Corporate Activities
In Q4 2012 EBITDA decreased by ?15 million mainly due to the crisis levy (a one-
off tax measure) introduced by the Dutch Government, higher share-based payments
costs and higher project costs.
Full year EBITDA decreased slightly compared to the previous year as additional
costs due to the crisis levy and higher share based payments costs were
compensated for by the book profit on the sale of certain assets at the Chemelot
site in the Netherlands and lower costs in service organizations.
Exceptional items
Total exceptional items in the fourth quarter amounted to ?76 million before tax
(?54 million after tax) including a charge of ?44 million related to the Profit
Improvement Program and ?18 million in acquisition related costs.
Full year exceptional items amounted to ?194 million (?149 million after tax)
comprising provisions, impairments and restructuring costs of ?160 million.
Acquisition related costs amounted to ?34 million.
Net profit
Net finance costs in the fourth quarter amounted to ?31 million compared to ?28
million in Q4 2011.
Full year net finance costs increased by ?12 million compared to the previous
year to a level of ?94 million due to a lower average cash position at lower
average interest rates and ?7 million impairment of certain financial assets.
The effective tax rate before exceptional items for the full year was 18% versus
19% in 2011. Net profit before exceptional items in the fourth quarter decreased
by ?43 million to a level of ?75 million (Q4 2011: ?118 million).
Net profit before exceptional items for the full year amounted to ?437 million
compared to ?615 million in 2011.
As a result of exceptional items total net profit in the fourth quarter
decreased by ?64 million to ?21 million (Q4 2011: ? 85 million).
Total net profit for the full year amounted to ?288 million compared to ?814
million in 2011. This was due to the lower operating profit in 2012 and the
restructuring and acquisition costs which were included in the exceptional items
of 2012. In 2011 exceptional items included the book profit on divestments
(?262 million).
Net earnings per ordinary share (continuing operations, before exceptional
items) amounted to ?2.58 versus ?3.53 in 2011.
Dividend
DSM's dividend policy is to provide a stable and preferably rising dividend. DSM
proposes to increase the dividend by ?0.05 to ?1.50 per ordinary share. This
will be proposed to the Annual General Meeting of Shareholders to be held on 3
May 2013. An interim dividend of ?0.48 per ordinary share having been paid in
August 2012, the final dividend would then amount to ?1.02 per ordinary share.
The dividend will be payable in cash or in the form of ordinary shares at the
option of the shareholder. Dividend in cash will be paid after deduction of 15%
Dutch dividend withholding tax. The ex-dividend date is 7 May 2013.
Cash flow, capital expenditure and financing
Cash provided by operating activities amounted to ?183 million in the fourth
quarter (Q4 2011: ?403 million) resulting in a full year total of ?730 million
(2011: ?882 million).
Operating working capital as a percentage of sales amounted to 20.7% at the end
of 2012. Excluding acquisitions it amounted to 20.0%.
Total cash used for capital expenditure in the fourth quarter amounted to ?212
million (Q4 2011: ?173 million). Cash flow related to capital expenditure for
the full year 2012 was ?686 million compared to ?477 million in 2011.
At year-end 2012 net debt amounted to ?1,668 million and gearing was 22%
reflecting a more efficient capital structure.
Profit Improvement Program
In Q2 2012 DSM launched a company-wide Profit Improvement Program (on top of the
previously announced program in DSM Resins & Functional Materials), mainly
focused on cost reductions and efficiency improvements, but also on sales growth
and pricing. This program is fully on track and is expected to deliver
structural annual EBITDA benefits of ?150 million by 2014 of which more than
half is expected in 2013. One-off cash costs for the Profit Improvement Program
recognized in 2012 were approximately ?120 million, in line with the guidance
given in Q2.
DSM continued to look for opportunities to expand this program, and this has
resulted in an increase in the program's scope to ?200-250 million in benefits.
The one-off cash cost related to this extension of the Profit Improvement
Program are expected to be in the order of ?70-80 million. The benefits
following this extension are expected to be fully achieved by 2015.
DSM in motion: driving focused growth
DSM in motion: driving focused growth is the strategy that the company embarked
on in September 2010. It marks the shift from an era of intensive portfolio
transformation to a strategy of maximizing sustainable and profitable growth.
DSM's strategic focus on Life Sciences (Nutrition and Pharma) and Materials
Sciences (Performance Materials and Polymer Intermediates) is fueled by three
main societal trends: Global Shifts, Climate & Energy and Health & Wellness. DSM
aims to meet the unmet needs resulting from these societal trends with
innovative and sustainable solutions.
Below is an overview of DSM's strategic achievements in 2012.
High Growth Economies: from reaching out to being truly global
Sales to High Growth Economies accounted for 38% of total sales in 2012 versus
39% of total sales in 2011. The decrease was mainly due to lower caprolactam
sales in China.
Net sales to China amounted to USD 1.7 billion versus USD 2.0 billion in 2011,
mainly due to lower sales prices at DSM Polymer Intermediates.
To achieve its 2015 target for High Growth Economies, DSM continued its global
re-organization of its operations. The headquarter of DSM Sinochem
Pharmaceuticals is in Singapore. The headquarter of DSM Engineering Plastics was
moved to Singapore in 2012 and the headquarter of DSM Fibre Intermediates is now
in Shanghai (China).
The acquisition of Tortuga in Brazil will more than double DSM's workforce in
Latin America to around 2,000 people.
Innovation: from building the machine to doubling innovation output
DSM's Emerging Business Area Bio-based Products & Services continues to make
further strategic progress. The bio-succinic acid facility in Italy is currently
in the start-up process. DSM and BP have extended their cooperation on the joint
development of advanced bio-diesel. DSM successfully produced its first
commercial batch of advanced C5 yeast for cellulosic ethanol producers. The
construction of the POET-DSM Advanced Biofuels facility in Emmetsburg, Iowa
(USA), is proceeding according to plan.
DSM is targeting innovative products and solutions to account for 20% of total
sales by 2015. Innovation sales, defined as sales created by new products and
applications introduced in the past five years, accounted for 18% of total sales
in 2012, the same as in 2011. DSM is firmly on track to reach its 2015
innovation sales target.
Sustainability: from responsibility to business driver
As part of its strategy, DSM in motion: driving focused growth, DSM has
formulated the ambition to go to the next level in sustainability:
sustainability remains a core value and a responsibility to contribute to
society, but in addition DSM is now developing sustainability into a strategic
growth driver as well.
DSM believes sustainability will be a key differentiator and value driver in the
coming decades. The company is uniquely positioned to capture new opportunities
across the value chain. Sustainability is an integral part of the company's
operations, actions and decisions.
ECO+ is DSM's strategic concept for promoting the development of sustainable,
innovative products and solutions with ecological benefits. Products qualify as
ECO+ when their environmental footprint is reduced compared with competing
products or solutions. Typical examples are DSM's engineering plastics that
enable customers to produce lower-drag, lighter-weight and therefore more fuel-
efficient cars. Another example is Brewers Clarex(TM), which enables brewers to
prevent chill haze without having to cool their beers to sub-zero temperatures.
In 2015 DSM aims for at least 80% of its innovation pipeline to be ECO+ products
or solutions and in 2015 their share of total net sales is expected to grow
towards 50%.
DSM is developing a People+ strategy for measurably improving the lives of
consumers, workers and communities across the value chains in which the company
is active. People+ will do for the 'people' dimension of People, Planet and
Profit what ECO+ has done for 'planet', giving further impetus to sustainability
as a business driver for the company. DSM refined its People+ strategy in 2012
and also defined and road tested new metrics for it.
Acquisitions & Partnerships: from portfolio transformation to driving focused
growth
In 2012 DSM announced eight acquisitions to strengthen its competences and
market positions along its three other strategic growth drivers: High Growth
Economies, Innovation and Sustainability. Since 2010 DSM has invested ?2.8
billion in acquisitions, of which ?2.4 billion in Nutrition, while applying
highly disciplined strategic and financial criteria.
In 2012 DSM strengthened its industry leadership in the biomedical field with
the acquisition of Kensey Nash, positioning DSM Biomedical as a profitable
growth platform. DSM joined forces with POET LLC to commercially demonstrate and
license cellulosic ethanol in the POET-DSM Advanced Biofuels joint venture.
In the Nutrition cluster DSM successfully completed the acquisition of Ocean
Nutrition Canada, the leading global provider of fish-oil derived nutritional
products to the dietary supplement and food and beverage markets. With this
acquisition DSM strengthens and complements its Nutritional Lipids growth
platform, established after the acquisition of Martek in 2011. DSM can now
uniquely offer a full product range in the rapidly growing nutritional lipids
category, offering both fish oil derived omega-3 fatty acids and microbially
derived nutritional lipids.
DSM entered into a definitive agreement to acquire Tortuga, a privately held
Brazilian company. Tortuga is a leading company in nutritional supplements with
a focus on pasture raised beef and dairy cattle. The company is headquartered in
Sao Paulo, Brazil with approximately 1,200 employees. The transaction is
expected to close at the end of Q1 2013. DSM also acquired the Italian animal
health and nutrition premix specialist, Cilpaz Srl.
DSM acquired Cargill's cultures and enzymes business, a globally leading
manufacturer of cultures and enzymes for the dairy and meat industries with
manufacturing operations in Wisconsin (USA) and France. The company also
acquired certain assets, licenses and other agreements in the area of food
enzymes and oilseed processing from Verenium.
DSM also completed the acquisition of Fortitech, Inc., a privately held company
based in Schenectady (New York, USA), a leader in customized, value-added food
ingredient blends for food & beverage, infant nutrition and dietary supplements
industries.
Sustainability
In sustainability DSM set a number of ambitious aspirations in 2010 and in 2012
the company made good progress toward meeting them, as evidenced by the
following highlights:
* DSM was once again among the leaders in the chemical industry sector in the
Dow Jones Sustainability World Index. Since 2004 DSM has held the top
position six times.
* In 2012 the percentage of ECO+ solutions in the innovation pipeline was
80%, equal to the aspiration set at 80%. ECO+ solutions as a percentage of
running business increased to 43%. DSM is on its way toward the 50%
aspiration for 2015.
* DSM is on track with its drive to improve energy efficiency by 20% by 2020
compared to 2008. Including 2012 energy efficiency improved by 14% compared
to 2008.
* In 2012 DSM executed its fifth worldwide Employee Engagement Survey. The
main element in the survey is the measurement of DSM's Employee Engagement
Index, the percentage of employees scoring favorable on a combination of
four attributes: commitment, pride, advocacy and satisfaction. The Employee
Engagement Index measured in 2012 again was close to the high performance
norm and improved versus 2011.
* DSM has started the People+ program, a strategy for measurably improving
people's lives. The program was further defined in 2012, including
developing a new tool to measure the impact on people.
Today DSM is publishing its third integrated annual report, after having
published separate annual and triple P reports for more than a decade. More
information on DSM's progress in sustainability can be found in this report.
Outlook
The challenging macro-economic environment experienced during Q4 2012 has
continued into 2013, with low growth in Europe. Asia continues to show good
levels of economic activity whilst the US has maintained a modest rate of
recovery.
The Profit Improvement Program that was launched in August 2012 is fully on
track and is expected to deliver structural annual EBITDA benefits of ?150
million by 2014 of which more than half is expected in 2013. As anticipated, DSM
has expanded the profit improvement initiative and now expects to achieve
another ?50-100 million in benefits on top of the ?150 million. The benefits
following this extension are expected to be fully achieved by 2015.
Nutrition is expected to show clearly higher results than in 2012 due to organic
growth moving towards the target of 2% above GDP and the acquisitions.
Business conditions in Pharma are likely to remain challenging though DSM is
confident of being able to deliver substantially better results notwithstanding
the usual uneven delivery patterns between quarters.
Performance Materials is expected to show improved results in 2013, despite the
expected negative effects of caprolactam especially compared to the first half
of 2012.
Polymer Intermediates is expected to show lower results than in 2012.
For the Innovation Center the activity level will be in line with 2012, with
EBITDA clearly improving following the full year contribution of Kensey Nash.
Overall, based on current economic assumptions, DSM expects a step-up in EBITDA
during 2013 due to stronger organic growth, supported by DSM's Profit
Improvement Program and as the benefits of acquisitions and a more resilient
portfolio start to have impact. In 2013 the focus will be on the operational
performance and integration of the acquisitions DSM completed in 2012 with
special attention to capturing synergies. Overall, based on current economic
assumptions, the above will enable DSM to move towards its 2013 EBITDA target of
?1.4 billion.
Additional information
Today DSM will hold a conference call for the media from 07.30 AM to 08.00 AM
CET and a conference call for investors and analysts from 09.00 AM to 10.00 AM
CET. Details on how to access these calls can be found on the DSM website,
www.dsm.com. Also, information regarding DSM's full year 2012 result can be
found in the Presentation to Investors, which can be downloaded from the
Investors section of the DSM website.
Important dates
Report for the first quarter 2013 Thursday, 2 May 2013
Annual General Meeting of Shareholders Friday, 3 May 2013
Report for the second quarter 2013 Tuesday, 6 August 2013
Report for the third quarter 2013 Tuesday, 5 November 2013
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
23,500 employees deliver annual net sales of around ?9 billion. The company is
listed on NYSE Euronext. More information can be found at www.dsm.com.
Or find us on:
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
www.dsm.com
Presentation to investors full year results 2012-pdf:
http://hugin.info/130663/R/1679441/548438.pdf
Press release-pdf:
http://hugin.info/130663/R/1679441/548437.pdf
Financial summary-pdf:
http://hugin.info/130663/R/1679441/548439.pdf
This announcement is distributed by Thomson Reuters on behalf of
Thomson Reuters clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
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#1679441]
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Datum: 20.02.2013 - 06:30 Uhr
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