DSM reports Q3 2014 results
(Thomson Reuters ONE) -
* Q3 2014 EBITDA from continuing operations ?315 million
* Q3 2014 organic sales growth 5% compared to Q3 2013
* Nutrition delivered sequential improvement with Q3 EBITDA ?225 million
* Performance Materials Q3 EBITDA ?91 million, up compared to Q2 2014 and Q3
2013
* Q3 cash flow from operating activities ?301 million
* Full year 2014 outlook in line with current market expectations
Royal DSM, the Life Sciences and Materials Sciences company, today reported
third quarter 2014 EBITDA from continuing operations of ?315 million compared to
?293 million in Q2 2014 and ?331 million in Q3 2013.
Commenting on the results, Feike Sijbesma, CEO/Chairman of the DSM Managing
Board, said:
"In the third quarter DSM delivered improved financial results compared to the
previous quarters with good cash flow generation.
In Nutrition our resilient business model and strong position in the value chain
have enabled us to deliver an increase in result compared to the previous three
quarters, although challenges in some human nutrition end-markets remain and
pricing pressure, particularly in vitamin E, intensified in the latter part of
the third quarter.
In Performance Materials, our continued focus on efficiencies and ongoing cost
control served us well, and we are pleased by the overall performance with all
businesses contributing to increased EBITDA.
Increasing macro-economic uncertainty and continued low consumer confidence are
impacting market dynamics. Some currency rates have developed favorably towards
the end of the third quarter but currencies remain volatile.
We remain committed to our strategy for growth across our Nutrition and
Performance Materials businesses and will continue to pursue strategic actions
for Polymer Intermediates and Composite Resins. We are strongly focused on
operational excellence and delivering efficiencies to protect and enhance our
profitability and cash flow. For the remainder of the year, we anticipate
performance in line with current market expectations."
Key figures
------------------------------------------------------------------------------
third
quarter
2014 2013 +/- in ? million volume price/mix exch. rates other
------------------------------------------------------------------------------
2,323 2,354 -1% Net sales 5% 0% 0% -6%*
1,091 1,065 2% Nutrition 2% 0% 0% 0%
Performance
721 696 4% Materials 4% 0% -1% 1%
Polymer
428 374 14% Intermediates 13% 1% 0%
40 35 14% Innovation Center 14% 0% 0%
43 43 Corporate Activities
Total continuing
2,323 2,213 5% operations 5% 0% 0% 0%
Discontinued
0 141 operations
------------------------------------------------------------------------
third January -
quarter September
2014 2013 +/- in ? million 2014 2013 +/-
------------------------------------------------------------------------
315 343 -8% EBITDA 878 996 -12%
225 241 -7% Nutrition 650 706 -8%
Performance
91 83 10% Materials 256 242 6%
Polymer
23 28 -18% Intermediates 60 83 -28%
-4 -2 Innovation Center -15 -6
-20 -19 Corporate Activities -71 -61
Total continuing
315 331 -5% operations 880 964 -9%
Discontinued
0 12 operations -2 32
Core net profit
(continuing
141 146 -3% operations) 380 431 -12%
Net profit before
exceptional items,
continuing
121 134 -10% operations 330 396 -17%
Net profit after
exceptional items,
93 117 -21% total DSM 252 348 -28%
------------------------------------------------------------------------
0.81 0.84 -4% Core EPS (?/share) 2.20 2.51 -12%
Net EPS before
exceptional items,
continuing
0.69 0.76 -9% operations (?/share) 1.90 2.27 -16%
Net EPS after
exceptional items,
0.51 0.65 -22% total DSM (?/share) 1.41 1.98 -29%
Cash flow from
301 320 operations 390 522
Capital expenditures
138 138 (cash) 406 438
Net debt -2,479 -1,841 **
** year-end 2013
* due to the contribution of DPP to the associate DPx.
In this report:
* 'Organic sales growth' is the total impact of volume and price/mix;
* 'Discontinued operations' comprises net sales and operating profit (before
depreciation and amortization) of DSM Pharmaceutical Products up to and
including 10 March 2014;
* 'Net profit' is the net profit attributable to equity holders of Koninklijke
DSM N.V.;
* 'Core net profit' is the net profit from continuing operations before
exceptional items and before acquisition related (intangible) asset
amortization;
* From 2014 onwards interest receipts and payments are no longer included in
operating activities in the cash flow statement but reported in investing
activities (interest received) and financing activities (interest paid).
2013 figures are restated accordingly;
* All 2013 figures are restated for the impact of the termination of
proportional consolidation for joint ventures as from 1 Jan 2014 onward.
Note: all tables are available in the attached press release-pdf
Review by cluster
Nutrition
Organic sales growth in Q3 was 2% compared to Q3 2013. Volumes were up 2%,
price/mix was flat year-on-year.
EBITDA for Q3 was ?225 million, down 7% compared to Q3 2013, as a result of
currencies (mainly the stronger Swiss franc) and lower volumes in Human
Nutrition & Health. Compared to Q2 2014 EBITDA increased by 1%.
The EBITDA margin of 20.6% was within DSM's target range of 20-23%.
Human Nutrition & Health net sales were ?406 million in Q3 2014 in line with Q2
2014. Organic sales development was negative at -2% compared to Q3 2013 owing to
lower volumes.
Volumes were impacted by lower vitamins and fish-oil based Omega-3 sales for
dietary supplements in the US. Sales in infant nutrition continued to be
affected by destocking.
Although Western food & beverage markets remained sluggish, markets in high
growth economies continued to develop well. Demand for premixes stayed healthy.
The momentum for dietary supplements outside the US was positive and demand for
DSM's consumer business i-Health remained robust.
Animal Nutrition & Health net sales were ?527 million in Q3 2014 up 2% compared
to Q2 2014. Organic sales growth was 4% driven by global volume growth with
strong performance from the premix businesses. The impact of the significantly
lower spot prices for Vitamin E was still limited in Q3.
DSM Food Specialties delivered strong organic growth and continued to gain
market share in both enzymes and cultures.
Performance Materials
Organic sales growth in Q3 2014 was 4% compared to Q3 2013. Overall sales were
fully driven by volume growth as prices were flat. Adverse currency effects
amounted to 1%. Volumes in DSM Resins and Functional Materials were flat. DSM
Engineering Plastics continued to show healthy volume growth in compounds and
specialty materials. In DSM Dyneema, sales benefited from higher volumes.
EBITDA in Performance Materials for the quarter was up by 10% compared to Q3
2013, largely driven by good volume growth, cost control and better
efficiencies, resulting in improved margins. All three businesses contributed to
this growth, with a particularly strong performance in DSM Engineering Plastics.
Polymer Intermediates
Organic sales growth in Q3 2014 was 14% compared to the same quarter last year,
with higher volumes (13%) and relatively flat price/mix effects (+1%). Sales
benefited from the increased caprolactam production from the second line in
China.
EBITDA for the quarter declined compared to Q3 2013 due to lower caprolactam
margins and the maintenance stops in US and China.
Innovation Center
Organic sales growth in Q3 2014 was 14% compared to Q3 2013 due to solid growth
in DSM Biomedical and DSM Advanced Surfaces. On 3 September, POET-DSM Advanced
Biofuels officially opened its first commercial cellulosic ethanol plant in
Emmetsburg, Iowa. The plant is in the start-up phase and expects to realize
first commercial sales in Q4.
EBITDA declined due to intensified innovation programs. DSM Biomedical performed
well.
Corporate Activities
EBITDA in Q3 2014 was in line with Q3 2013.
Pharma activities and other associates
Total Q3 2014 sales of joint control entities amounted to ?108 million on a
100% base (Q3 2013: ?95 million) of which ?99 million from DSM Sinochem
Pharmaceuticals (Q3 2013: ?86 million).
DPx Holdings (49% DSM) realized total sales (100%) of ?384 million from May up
to and including July with good margins. The DSM share in the net result of DPx
was impacted by ?25 million exceptional items (before tax) related to
integration, restructuring and realization of synergies of the new company.
Financial overview
Exceptional items
Total exceptional items from fully consolidated companies in the third quarter
amounted to a loss of ?7 million before tax (?6 million after tax) mainly due to
ongoing restructuring projects.
Net profit
Financial income and expense in Q3 2014 amounted to -?30 million compared to
-?37 million in Q3 2013.
The effective tax rate in Q3 2014 was 18%, in line with the full year 2013.
Net profit from continuing operations before exceptional items in Q3 2014
amounted to ?121 million compared to ?134 million in Q3 2013.
Net earnings per ordinary share (continuing operations, before exceptional
items) amounted to ?0.69 in Q3 2014 compared to ?0.76 in Q3 2013.
Cash flow, capital expenditure and financing
Cash provided by operating activities in Q3 2014 was at a good level of ?301
million (Q3 2013: ?320 million).
Operating working capital increased from ?1,843 million at year-end of 2013 to
?2,203 million at the end of Q3 2014 due to higher inventories, receivables and
currency effects. Expressed as a percentage of annualized sales this represents
23.7%, equal to end of Q3 2013.
Cash used for capital expenditure amounted to ?138 million in Q3 2014 which is
at the same level as Q3 2013.
Net debt increased by ?638 million compared to year-end 2013 and stood at ?2,479
million.
DSM in motion: driving focused growth
Strategy update
DSM is firmly committed to its strategy, which has delivered and will continue
to deliver sustainable value. DSM in motion: driving focused growth is the
strategy that the company embarked on in September 2010, which was updated in
September 2013. The next update is planned for Q4 2015.
DSM will continue to pursue strategic actions for Polymer Intermediates
(caprolactam and acrylonitrile) and Composite Resins.
Below are some highlights of DSM's Q3 2014 achievements.
High Growth Economies: from reaching out to being truly global
Sales to High Growth Economies reached 43% of total sales in Q3 2014 compared to
42% in Q3 2013. Sales in China amounted to USD 519 million, versus USD 445
million in Q3 2013 which was mainly due to higher caprolactam sales in DSM Fibre
Intermediates.
Innovation: from building the machine to doubling innovation output
Examples of innovations, recently launched are:
* Dyneema Purity(®) Radiopaque fiber, the newest addition to DSM's medical
Dyneema Purity(®) fiber portfolio.
* Toyota Tsusho launched a new generation of 100% recyclable, waterproof high
performance membranes for clothing made from DSM's Arnitel(®) VT, a very
flexible thermoplastic polyester-based elastomer.
* Rapidase(®) Pro Color for colored berry juice, an enzyme for industrial
fruit juice production that achieves 95% juice extraction
Sustainability: from responsibility to business driver
In India DSM opened a 1MW solar facility at its premises in Pune. It
demonstrates and showcases the performance of DSM's innovations in solar
technology (anti-reflective coatings) and will also reduce the plant's
CO(2) footprint by using the clean energy generated by the solar plant to meet
25% of the site's electricity needs.
DSM was once again named as a worldwide sustainability leader in the Materials
Industry group in the Dow Jones Sustainability World Index. DSM has consistently
been recognized for integrating sustainability into its business, having been
ranked among the very top leaders in the sector five times and having held the
worldwide sustainability leader position in the Materials industry group
(formerly known as the chemicals super-sector) six times since 2004.
Acquisitions & Partnerships: from portfolio transformation to driving focused
growth
POET-DSM Advanced Biofuels LLC, a joint venture of DSM and POET, proved its
revolutionary technology that converts agricultural residue into renewable fuel
at the official opening of its first commercial cellulosic ethanol plant in
Emmetsburg, Iowa. At full capacity, it will convert 770 tons of biomass per day
to produce ethanol at a rate of 20 million gallons per year, later ramping up to
25 million gallons per year.
Outlook 2014
Increasing macro-economic uncertainty and continued low consumer confidence are
impacting market dynamics. Some currency rates have developed favorably towards
the end of the third quarter but currencies remain volatile. Barring unforeseen
circumstances, DSM is on track to meet current market expectations.
Capital Markets Day
On 5 November 2014, DSM will provide investors with an update on its strategic
progress at its annual Capital Markets Day which will be held in London, United
Kingdom. The DSM Capital Markets Day can be followed live via audio webcast from
15.00-18.00 hrs (CET). The presentations can be found on www.dsm.com as from
15.00 hrs (CET) on 5 November.
Additional information
Today DSM will hold a conference call for the media from 08.00 AM to 08.30 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 Q3 result 2014 can be found in
the Presentation to Investors, which can be downloaded from the Investors
section of the DSM website.
Important dates
Capital Markets Day Wednesday, 5 November
2014
Full year results 2014 Wednesday, 11 February
2015
Report for the first quarter of 2015 Wednesday, 29 April 2015
Report for the second quarter of 2015 Tuesday, 4 August 2015
Report for the third quarter of 2015 Tuesday, 3 November 2015
Heerlen, 4 November 2014
The Managing Board
Feike Sijbesma, CEO/Chairman
Rolf-Dieter Schwalb, CFO
Stefan Doboczky
Geraldine Matchett
Stephan Tanda
Dimitri de Vreeze
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 simultaneously. DSM
delivers innovative solutions that nourish, protect and improve performance in
global markets such as food and dietary supplements, personal care, feed,
medical devices, automotive, paints, electrical and electronics, life
protection, alternative energy and bio-based materials. DSM's 24,500 employees
deliver annual net sales of around ?10 billion. The company is listed on NYSE
Euronext. More information can be found at www.dsm.com.
Or find us on:
For more information:
DSM Corporate Communications DSM Investor Relations
Herman Betten Dave Huizing
tel. +31 (0) 45 5782017 tel. +31 (0) 45 5782864
e-mail media.contacts(at)dsm.com e-mail investor.relations(at)dsm.com
Presentation to Investors:
http://hugin.info/130663/R/1868237/656633.pdf
Press release-pdf:
http://hugin.info/130663/R/1868237/656634.pdf
This announcement is distributed by GlobeNewswire on behalf of
GlobeNewswire 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 GlobeNewswire
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