DSM delivers strong result improvement in Q3
(Thomson Reuters ONE) - * Q3 operating profit from continuing operations EUR 139 million, more than double Q2 2009 (EUR 58 million) * Strong Life Sciences performance due to robust Nutrition business * Materials Sciences continued strong recovery * Cost savings and efficiency improvements on track to achieve EUR 150 - 200 million on yearly basis by 2010 * Cash flow from operating activities again very strong (Q3 EUR 517 million) * Outlook for the rest of the year remains uncertain; Q4 operating profit currently expected to be lower than Q3, but above Q4 last yearCommenting on the results, Feike Sijbesma, chairman of the DSMManaging Board, said:"DSM delivered strongly improved results for Q3 2009, with ongoingresilience in Nutrition and a further improvement in MaterialsSciences compared to the previous quarters. Our early action toreduce costs, our focus on cash and our commitment to innovation andChina are paying off."We are alert that the economic climate remains uncertain and thatthe path of recovery is likely to prove uneven. However, it seemsthat the first half of 2009 represented the low point for thisrecession and we are showing that we are well placed to capitalize asmarkets improve, which is also reflected in a strong sales volumedevelopment."Throughout these challenging times, DSM is staying the course. Wecompleted the disposal of two non-core businesses and remaincommitted to exiting the remaining non-core operations. Our strategiccommitment to create a Life Sciences and Materials Sciences companyaddressing important global trends via a focus on customers,innovation and sustainability is undiminished. Our robust financialstrength allows us to capture market opportunities as they arise." third quarter in EUR million January - September 2009 2008 +/- 2009 2008 +/- Continuing operations:2,020 2,336 -14% Net sales 5,727 7,045 -19% 257 361 -29% Operating profit before 562 1,011 -44% depreciation and amortization (EBITDA) 139 237 -41% Operating profit (EBIT) 229 685 -67% 119 104 14% - Nutrition 384 292 32% 2 22 -91% - Pharma 16 59 -73% 45 62 -27% - Performance Materials 45 212 -79% 21 19 11% - Polymer Intermediates -5 85 2 85 -98% - Base Chemicals and Materials -60 158 -50 -55 - Other activities -151 -121 Discontinued operations 39 56 -30% Net sales 123 161 -24% 26 34 -24% Operating profit before 80 105 -24% depreciation and amortization (EBITDA) 26 30 -13% Operating profit (EBIT) 72 95 -24% Total DSM:2,059 2,392 -14% Net sales 5,850 7,206 -19% 165 267 -38% Operating profit (EBIT) 301 780 -61% 100 181 -45% Net profit before exceptional 155 535 -71% items 274 - Net result from exceptional 242 - items 374 181 107% Net profit 397 535 -26% Net earnings per ordinary share in EUR: 0.51 0.97 -47% - before exceptional items, 0.62 2.78 -78% continuing operations 2.29 1.10 108% - including exceptional items, 2.40 3.20 -25% total DSMIn 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. and Stamicarbon B.V.OverviewMost of DSM's businesses experienced a further improvement in demandduring Q3, including a strong September. The underlying trend can bedescribed as a mixture of a clear recovery in some end markets(especially China, where sales were 16% higher than Q3 last year) andsome downstream re-stocking in other areas which, however, are stilllower, such as automotive. The year-on-year percentage drop in salesvolumes in the businesses affected by the economic downturn hasreturned to single digit.DSM's Nutrition cluster continued to show resilience and steadygrowth, capitalizing on its strong market position in areas whichwere hardly affected by the downturn. The Pharma results remained lowas expected, due to weak sales.In the Materials Sciences clusters, the results of DSM EngineeringPlastics, DSM Resins and DSM Fibre Intermediates were close to lastyear's level. The combined effects of lower sales volumes and thereduction of inventories were compensated for by lower raw materialprices and the sustained focus on efficiency. Also DSM Dyneemaexperienced a weaker demand than in the same period last year.The operating profit of DSM's core business, Life Sciences andMaterials Sciences, in Q3 2009 (EUR 137 million) was only 10% lowerthan last year's level, during which period DSM was not yet affectedby the downturn.All businesses in Base Chemicals and Materials showed a clearrecovery compared to the previous quarter, which resulted in a smalloperating profit for the cluster as a whole, but a much weaker resultthan in the very good period last year. The main contributors to thisimprovement versus Q2 were DSM Elastomers and DSM Agro.The broad improvement in trading conditions was no reason tocompromise the focus on cash. DSM's net debt of EUR 1,069 million isnow EUR 818 million (43%) lower than a year ago at the start of theeconomic downturn.The disposals of DSM Energy and the urea-licensing activities, aspart of DSM's accelerated Vision 2010 strategy, were completed on 30September and 6 October respectively. The disposal of DSM Energyresulted in a net book profit of EUR 268 million in Q3 and thedisposal of the urea-licensing activities will result in a net bookprofit of around EUR 30 million which will be recognized in Q4.Net salesin EUR million third quarter 2009 2008 differ-ence vol-umes prices exch. other ratesNutrition 702 666 5% 4% -2% 3% 0%Pharma 152 203 -25% -3% -11% -2% -9%Performance 496 580 -15% -8% -9% 1% 1%MaterialsPolymer 246 335 -27% -4% -26% 3% -IntermediatesBase Chemicalsand 328 444 -26% 3% -30% 1% - MaterialsOther activities 96 108Total, continuing 2,020 2,336 -14% -2% -13% 1% 0%operationsDiscontinued 39 56operationsTotal 2,059 2,392Net sales dropped by 14% compared to Q3 2008 but improved by 5%compared to Q2 2009 (volumes +5%, prices +2%, exchange rates -2%).Sales volumes were on average still lower compared to last year'slevel, but the decline was much less than in previous quarters. Thisis a reflection of improvements in end-markets as well as somere-stocking. Nutrition,DSM Anti-Infectives, DSM Agro and DSM Melamine are even showingbetter sales volumes than Q3 last year.Although prices were clearly below last year's level (partly due tolower raw material prices in the Materials Sciences and BaseChemicals and Materials businesses), pricing power was generallystrong. Prices were, on average, increasing during the quarter andmargins were mostly better than last year's (DSM Agro being theimportant exception due to much lower prices).Operating profitAt EUR 139 million, operating profit from continuing operations wassubstantially better than in the last three quarters, but clearlybelow last year's Q3. The decline year-on-year was mainlyattributable to the Base Chemicals and Materials and Pharma clusters.Nutrition sustained its solid performance and remained hardlyaffected by the recession. Volumes were growing again and were abovelast year while prices remained strong. Operating profit wasnegatively affected by underutilization of assets due to inventoryreduction.Pharma was affected by the weak demand at DSM Pharmaceutical Productsand the continued weak pricing at DSM Anti-Infectives.In Performance Materials both DSM Engineering Plastics and DSM Resinsprofited from a recovery in volumes, strong margins and improvedefficiency. DSM Dyneema experienced pressure because of a weakerdemand than last year.Polymer Intermediates recovered sharply from the dramatic drop indemand and margins seen at the end of last year and the beginning ofthis year.In Base Chemicals and Materials, the operating profit of DSMElastomers showed a substantial improvement in this quarter and waspositive again. The improvement in DSM Agro and DSM Melamine was lesspronounced. Both business groups still posted a loss.A number of structural cost-saving actions to address the effects ofthe economic downturn and to strengthen DSM's competitive positionhelped to improve the operating profit in Q3 compared to Q2. DSM ison track to achieve cost savings as a result of these actions ofEUR 150-200 million on a yearly basis, to be fully achieved by 2010.Business review by clusterNutrition+-------------------------------------------------------------------+| third quarter | | in EUR million | January - September ||---------------+---+-------------------------+---------------------|| 2009 | 2008 | | | | 2009 | 2008 ||-------+-------+---+-------------------------+----+--------+-------|| | | | | | | ||-------+-------+---+-------------------------+----+--------+-------|| 702 | 666 | | Net sales | | 2,108 | 2,007 ||-------+-------+---+-------------------------+----+--------+-------|| | | | Operating profit before | | | || | | | depreciation and | | | ||-------+-------+---+-------------------------+----+--------+-------|| 151 | 144 | | amortization | | 481 | 396 ||-------+-------+---+-------------------------+----+--------+-------|| 119 | 104 | | Operating profit | | 384 | 292 |+-------------------------------------------------------------------+Organic sales growth in the cluster was 2% compared to Q3 2008 drivenby DSM Nutritional Products. The improvement came from an increase involume, especially in the animal feed segment where demand slackenedin Q3 2008. Demand for food ingredients in Q3 2009 was still impactedby de-stocking effects in the pipeline. However, in the second partof the quarter demand improved. Following the value-over-volumestrategy, prices in both food and feed ingredients remained robustalthough at slightly lower levels which was compensated for by thestronger dollar. Compared to the second quarter of this year, volumeimprovements continued, but were offset by a weaker dollar. DSM FoodSpecialties' sales were similar to Q3 last year.Operating profit of DSM Nutritional Products continued to be strongin Q3 2009 and increased compared to last year. This was due tofavorable sales developments, production efficiency and good costmanagement and despite underutilization of assets due to inventoryreduction. DSM Food Specialties' operating profit continued to beabove last year due to strong performance in enzymes and ARA andfavorable exchange rates.Pharma+-------------------------------------------------------------------+| third quarter | | in EUR million | January - September ||---------------+---+-------------------------+---------------------|| 2009 | 2008 | | | | 2009 | 2008 ||-------+-------+---+-------------------------+-----+-------+-------|| | | | | | | ||-------+-------+---+-------------------------+-----+-------+-------|| 152 | 203 | | Net sales | | 526 | 647 ||-------+-------+---+-------------------------+-----+-------+-------|| | | | Operating profit before | | | || | | | depreciation and | | | ||-------+-------+---+-------------------------+-----+-------+-------|| 14 | 37 | | amortization | | 57 | 105 ||-------+-------+---+-------------------------+-----+-------+-------|| 2 | 22 | | Operating profit | | 16 | 59 |+-------------------------------------------------------------------+Organic sales development of the Pharma cluster continued to be underpressure.DSM Pharmaceutical Products' activity level remained low as a resultof low demand from pharmaceutical companies, delay in approvals andthe loss of some large contracts. DSM Anti-Infectives was facing lowprices. Last year's sales still included the activities of DSMDeretil, which was disposed of at the end of Q3 2008.The operating profit continued to decrease. The lower prices forpenicillin derivatives and low demand at DSM Pharmaceutical Productsled to a lower result compared to last year.Performance Materials+-------------------------------------------------------------------+| third quarter | | in EUR million | January - September ||---------------+---+------------------------+----------------------|| 2009 | 2008 | | | | 2009 | 2008 ||-------+-------+---+------------------------+----+--------+--------|| | | | | | | ||-------+-------+---+------------------------+----+--------+--------|| 496 | 580 | | Net sales | | 1,347 | 1,805 ||-------+-------+---+------------------------+----+--------+--------|| | | | Operating profit | | | || | | | before depreciation | | | || | | | and | | | ||-------+-------+---+------------------------+----+--------+--------|| 72 | 84 | | amortization | | 122 | 275 ||-------+-------+---+------------------------+----+--------+--------|| 45 | 62 | | Operating profit | | 45 | 212 |+-------------------------------------------------------------------+Organic sales development was -17% compared to last year as marketsentiment was lower for all business groups and most regions. TheAsia Pacific region was an exception for most businesses asyear-on-year growth continued. Compared to Q2 of this year, theorganic sales growth was a healthy 10%. Higher volumes, partly due tore-stocking, as well as favorable price developments were observed inall businesses.The operating profit gap narrowed significantly against Q3 of lastyear especially for DSM Engineering Plastics and DSM Resins, with aresult that was more than double Q2 2009. Also DSM EngineeringPlastics moved into positive territory for the quarter. Theseencouraging developments were driven by volume increase, wellstructured cost control programs, price leadership and highermargins. The quarterly result of DSM Dyneema dropped compared to thesame period last year as weaker demand had an impact on this businessas well.Polymer Intermediates+-------------------------------------------------------------------+| third quarter | | in EUR million | January - September ||---------------+---+-------------------------+---------------------|| 2009 | 2008 | | | | 2009 | 2008 ||-------+-------+---+-------------------------+----+-------+--------|| | | | | | | ||-------+-------+---+-------------------------+----+-------+--------|| 246 | 335 | | Net sales | | 600 | 1,003 ||-------+-------+---+-------------------------+----+-------+--------|| | | | Operating profit before | | | || | | | depreciation and | | | ||-------+-------+---+-------------------------+----+-------+--------|| 29 | 27 | | amortization | | 18 | 105 ||-------+-------+---+-------------------------+----+-------+--------|| 21 | 19 | | Operating profit | | -5 | 85 |+-------------------------------------------------------------------+Organic sales development was -30% compared to the same period oflast year driven by lower market prices. With respect to volume, thecontinuing weak market demand in North America has been, to a largeextent, compensated for by sales volume in Europe and Asia(especially China). Compared to the previous quarter, organic salesgrowth was 18% due to much better pricing.The cluster delivered a slightly higher operating profit compared tothe same quarter of last year. Due to the low benzene price in thefirst two months of the quarter, the margins in caprolactam haveimproved. Compared to the previous quarter, the operating profit hasimproved by EUR 17 million.Base Chemicals and Materials+-------------------------------------------------------------------+| third quarter | | in EUR million | January - September ||---------------+---+-------------------------+---------------------|| 2009 | 2008 | | | | 2009 | 2008 ||-------+-------+---+-------------------------+----+-------+--------|| | | | | | | ||-------+-------+---+-------------------------+----+-------+--------|| 328 | 444 | | Net sales | | 854 | 1,262 ||-------+-------+---+-------------------------+----+-------+--------|| | | | Operating profit before | | | || | | | depreciation and | | | ||-------+-------+---+-------------------------+----+-------+--------|| 21 | 104 | | amortization | | -9 | 211 ||-------+-------+---+-------------------------+----+-------+--------|| 2 | 85 | | Operating profit | | -60 | 158 |+-------------------------------------------------------------------+Organic sales development was -27% compared to last year, which wasmainly caused by lower fertilizer prices, as volumes were comparableto last year. Q3 showed a healthy growth of 16% compared to thesecond quarter. In all businesses, sales are recovering, from thefirst half year's trough.The operating profit of the cluster was much lower than Q3 2008 dueto lower prices at DSM Agro. Compared to the previous quarteroperating profit recovered and was slightly positive again.Especially DSM Elastomers showed a good recovery to a level which wascomparable to last year. The main cause for the overall recovery ofthe cluster is the fact that the volumes are picking up again.Furthermore the fixed costs saving programs were contributingconsiderably to the result.Other activities+-------------------------------------------------------------------+| third quarter | | in EUR million | January - September ||---------------+---+-------------------------+---------------------|| 2009 | 2008 | | | | 2009 | 2008 ||-------+-------+---+-------------------------+-----+-------+-------|| | | | | | | ||-------+-------+---+-------------------------+-----+-------+-------|| 96 | 108 | | Net sales | | 292 | 321 ||-------+-------+---+-------------------------+-----+-------+-------|| | | | Operating profit before | | | || | | | depreciation and | | | ||-------+-------+---+-------------------------+-----+-------+-------|| -30 | -35 | | amortization | | -107 | -81 ||-------+-------+---+-------------------------+-----+-------+-------|| -50 | -55 | | Operating profit | | -151 | -121 ||-------+-------+---+-------------------------+-----+-------+-------|| | | | of which: | | | ||-------+-------+---+-------------------------+-----+-------+-------|| -18 | -2 | | - Defined Benefit | | -56 | -3 || | | | Plans | | | ||-------+-------+---+-------------------------+-----+-------+-------|| -15 | -16 | | - Innovation Center | | -43 | -42 ||-------+-------+---+-------------------------+-----+-------+-------|| -17 | -37 | | - Other | | -52 | -76 |+-------------------------------------------------------------------+The main difference in the result of Other activities compared to Q32008 was the higher result at the captive insurance company whichposted a substantial loss last year as a consequence of the ammoniaoutage. This broadly offset the (non cash) increase in IFRS pensioncosts for defined benefit plans.Exceptional itemsIn total, exceptional items after tax amounted to a profit of EUR 274million in Q3 2009.Due to the sale of DSM Energie Holding B.V. to TAQA a net book profitof EUR 268 million was realized.As a result of a reduction in entitlements under certain definedbenefit plans a gain of EUR 11 million (EUR 16 million before tax)was posted.Net profitMainly due to the sale of DSM Energie Holding B.V. the net profitincreased by EUR 193 million compared to Q3 2008 to a level of EUR374 million.Net earnings per share (continuing operations, before exceptionalitems) decreased by 47% compared to Q3 last year to EUR 0.51, butwas substantially above Q2 (EUR 0.09).Net finance costs amounted to EUR 30 million which represents anincrease of EUR 5 million compared to the previous year. Higheraverage long term debt and lower interest income as a result ofunfavorable interest rate developments were partly offset by a higheraverage cash balance.The effective tax rate decreased to 23% for the first three quartersof 2009 versus 25% for the year 2008 due to changes in the geographicdistributions of taxable results.Cash flow, capital expenditure and financingAs a result of DSM's continued strong focus on cash, Cash flow fromoperating activities increased to EUR 950 million currentyear-to-date compared to EUR 518 million in the first three quartersof 2008. Q3 2009 operating cash flow amounted to EUR 517 millionversus EUR 237 million in Q3 2008.Cash used for capital expenditure in the first three quarters of 2009amounted to EUR 337 million compared to EUR 387 million in the firstthree quarters of 2008 (Q3 2009 EUR 102 million versus Q3 2008 EUR129 million).Net debt showed a strong decrease during the first three quarters of2009 to a level of EUR 1,069 million (EUR 1,781 million at year-end2008) as a result of a strong reduction of operating working capitaland the cash proceeds from the sale of DSM Energy.WorkforceFollowing the restructuring programs the workforce decreased overallby 1,147 compared to the end of Q3 2008, the beginning of theeconomic downturn, and stood at 22,905.Progress update on DSM Strategy Vision 2010DSM's acceleration of the strategic program Vision 2010 - Building onStrengths, announced in September 2007, focuses on delivering fastergrowth, higher margins and improved earnings quality from thecompany's portfolio. The strategy will transform DSM into a LifeSciences and Materials Sciences company capable of sustainable growthfueled by important societal trends.The key drivers - market-driven growth and innovation, increasedpresence in emerging economies and operational excellence - remain atthe heart of DSM's strategy.In Q3 2009 sales in China amounted to USD 334 million, whichrepresents an increase of 16% relative to the comparable period oflast year. Year-to-date sales amounted to USD 813 million being adecrease of 11% compared to year-to-date previous year.On 30 October 2009 DSM announced that the contracts to establishnutrition and anti-infectives joint ventures in China with NorthChina Pharmaceutical Group Corporation Ltd. (NCPC) are suspended.Both parties are maintaining their ongoing business relationships. Atthe same time, DSM will look for alternative solutions for theprospective partnerships. DSM will continue to explore otheropportunities for further growth in China through strategiccooperation, also in the areas of nutritional products andanti-infectives.In India, DSM Anti-Infectives inaugurated its new plant at Toansa forthe production of Ampicillin, one of the most widely used first linesof therapy for combating bacterial infections. In this new facility,DSM Anti-Infectives implements the newly developed enzymatic processfor production of Ampicillin.In September 2007 DSM announced that, as a result of the acceleratedshift towards Life Sciences and Materials Sciences, a number ofbusinesses which do not fit in with the accelerated strategy would becarved out and disposed of.DSM has made progress with the planned disposals. On 30 September2009 the sale of DSM Energie Holding B.V. to TAQA Abu Dhabi NationalEnergy Company PJSC was finalized. Included in the scope are theparticipations which DSM had in oil and gas exploration and the 40%participation in Noordgastransport B.V. DSM reported a book profit ofEUR 268 million after tax on the sale as an exceptional item in theincome statement in Q3 2009.On 6 October 2009 the sale of the urea-licensing subsidiaryStamicarbon B.V. to Maire Tecnimont was completed. DSM will report abook profit of about EUR 30 million after tax on the sale as anexceptional item in the income statement for Q4 2009.The disposal process for DSM Elastomers, DSM Agro and DSM Melamine isunderway. As reported earlier, DSM has slowed down the process inview of the current financial and economic environment but still aimsto complete the disposals by the end of 2010.DSM regained its number one position in the chemical industry sectorin the Dow Jones Sustainability World Index. This is a recognition ofDSM's continuous efforts in sustainability, an important element ofthe strategy Vision 2010. From 2004 to 2006 DSM was named theworldwide sustainability No. 1 in this sector. In 2007 and 2008 itranked amongst the top leaders in the sector.During the quarter, DSM announced and introduced many newinnovations. More information can be found in the innovation sectionat www.dsm.com.OutlookDuring Q3 2009 DSM saw a continuation of the trends that were visibleat the end of the second quarter with ongoing robust performance inNutrition and a further improvement in Materials Sciences. Despitethe improved performance in Q3 2009 compared to the previous quarter,demand is still fragile and the economic outlook remains uncertain.The movements in inventories in the value chain as well as thedevelopment of end-demand are difficult to separate and predict. DSMwill continue to focus on cash and cost, whilst maintaining itsstrategic commitment to customers, innovation and sustainability.It is expected that the current business conditions in Nutrition willremain strong with an ongoing increase in demand and sustained pricelevels in both the food and feed markets. The Nutrition cluster isexpected to achieve full year results somewhat above the 2008 level.Pharma results are expected to be substantially lower than last yearalthough the results of DSM Pharmaceutical Products are expected tobe strong in the last quarter of the year due to temporary additionaldemand related to the H1N1 flu.In Materials Sciences and Base Chemicals and Materials businessconditions have clearly improved in Q3 2009 compared to Q2 2009. Atthis moment there is still limited clarity on demand for the lastquarter of the year, which is traditionally a weaker quarter. Inaddition there are signs that some re-stocking occurred in Q3 2009.Furthermore, feedstock prices remain volatile which might affectmargins - positively or negatively. The operating result ofPerformance Materials is expected to be lower in Q4 2009 compared toQ3 2009. At Polymer Intermediates operating profit is expected to bearound break-even in 2009. The Base Chemicals and Materials clusteris expected to be clearly loss-making in 2009.The outlook for the rest of the year remains uncertain. However, theQ4 operating profit from continuing operations is currently expectedto be lower than in Q3 2009, but above Q4 last year.Condensed consolidated statement of income for the third quarter third quarter 2009 in EUR million third quarter 2008before excep- total before excep- totalexcep- tional excep- tionaltional Items tional Items items items 2,059 - 2,059 net sales 2,392 - 2,392 283 283 566 operating profit before 395 - 395 depreciation and amortization (EBITDA) 165 283 448 operating profit (EBIT) 267 - 267 26 - 26 operating profit from 30 - 30 discontinued operations 139 283 422 operating profit from 237 - 237 continuing operations -30 - -30 net finance costs -25 - -25 0 - 0 share of the profit of 0 - 0 associates 109 283 392 profit before income tax 212 - 212 expense -24 -9 -33 income tax expense -54 - -54 85 274 359 net profit from continuing 158 - 158 operations 15 - 15 net profit from 22 - 22 discontinued operations 100 274 374 profit for the period 180 - 180 0 - 0 minority interests 1 - 1 100 274 374 net profit 181 - 181 100 274 374 net profit 181 - 181 -2 - -2 dividend on cumulative -2 - -2 preference shares 98 274 372 net profit used for 179 - 179 calculating earnings per share 118 - 118 depreciation and 128 - 128 amortization 92 capital expenditure 128 -6 acquisitions 9 net earnings per ordinary share in EUR 0.60 1.69 2.29 - net earnings, total DSM 1.10 - 1.10 0.51 1.69 2.20 - net earnings, continuing 0.97 - 0.97 operations 162.3 average number of ordinary shares 162.0 (x million) 162.3 number of ordinary shares, end of 162.2 period (x million) 22,905 workforce at end of period *23,591 7,423 of which in the *7,452 Netherlands* Year-end 2008.This report has not been audited.Condensed consolidated statement of income January - SeptemberJanuary - September 2009 in EUR million January - September 2008 before excep- total before excep- total excep- tional excep- tional tional Items tional Items items items 5,850 - 5,850 net sales 7,206 - 7,206 642 248 890 operating profit 1,116 - 1,116 before depreciation and amortization (EBITDA) 301 233 534 operating profit 780 - 780 (EBIT) 72 - 72 operating profit 95 - 95 from discontinued operations 229 233 462 operating profit 685 - 685 from continuing operations -90 - -90 net finance costs -61 - -61 -1 - -1 share of the profit 0 - 0 of associates 138 233 371 profit before 624 - 624 income tax expense -32 9 -23 income tax expense -157 - -157 106 242 348 net profit from 467 - 467 continuing operations 47 - 47 net profit from 70 - 70 discontinued operations 153 242 395 profit for the 537 - 537 period 2 - 2 minority interests -2 - -2 155 242 397 net profit 535 - 535 155 242 397 net profit 535 - 535 -7 - -7 dividend on -7 - -7 cumulative preference shares 148 242 390 net profit used for 528 - 528 calculating earnings per share 341 15 356 depreciation and 336 - 336 amortization 322 capital expenditure 376 -2 acquisitions 154 net earnings per ordinary share in EUR 0.91 1.49 2.40 - net earnings, 3.20 - 3.20 total DSM 0.62 1.49 2.11 - net earnings, 2.78 - 2.78 continuing operations 162.3 average number of ordinary 164.9 shares (x million) 162.3 number of ordinary shares, 162.2 end of period (x million) 22,905 workforce at end of *23,591 period 7,423 of which in the *7,452 Netherlands* Year-end 2008.This report has not been audited.Consolidated balance sheetin EUR million 30 September 2009 year-end 2008intangible assets 1,175 1,200property, plant and equipment 3,478 3,641deferred tax assets 372 392prepaid pension costs 164 137associates 23 19other financial assets 201 176 -------- --------non-current assets 5,413 5,565inventories 1,447 1,765trade receivables 1,405 1,525other receivables 121 107financial derivatives 104 86current investments 4 4cash and cash equivalents 1,147 601 -------- --------current assets 4,228 4,088assets held for sale 44 - -------- --------total assets 9,685 9,653in EUR million 30 September 2009 year-end 2008shareholders' equity 4,849 4,633minority interests 61 62 -------- --------equity 4,910 4,695deferred tax liabilities 110 122employee benefits liabilities 298 314provisions 132 190borrowings 2,041 1,559other non-current liabilities 43 65 -------- --------non-current liabilities 2,624 2,250employee benefits liabilities 26 33provisions 82 82borrowings 188 734financial derivatives 95 179trade payables 1,171 1,188other current liabilities 565 492 -------- --------current liabilities 2,127 2,708liabilities held for sale 24 - -------- --------total equity and liabilities 9,685 9,653capital employed 5,890 6,558equity / total assets 51% 49%net debt 1,069 1,781gearing (net debt / equity plus 18% 28%net debt)operating working capital (OWC) 1,681 2,102OWC / net sales 21.7% 22.6%Condensed consolidated cash flow statement January - Septemberin EUR million 2009 2008Cash and cash equivalents at 601 369beginning of periodOperating activities:- net profit plus 753 870depreciation and amortization- change in working capital 414 -474- other changes: - book profit DSM Energie -268 -Holding B.V. - other 51 122 ------- ---------cash flow from operating 950 518activitiesInvesting activities:- capital expenditure -337 -387- acquisitions -16 -104- sale of subsidiaries 237 7- disposals 2 -- other -28 -70 --------- ---------net cash used in investing -142 -554activitiesdividend -205 -220net cash used in / from -45 270financing activitieschanges in consolidation andexchange differences -12 20 --------- ---------Cash and cash equivalents at 1,147 403end of periodCondensed statement of recognized income and expense January - Septemberin EUR million 2009 2008Exchange differences on translation of foreign -39 50operationsChanges in actuarial gains and losses and asset 0 -61ceilingOther changes 71 -22Income tax expense -21 32 --------- --------Total income and expense directly recognized in 11 -1equityProfit for the period 395 537 --------- --------Recognized income and expense for the period 406 536of which minority interests -4 7Condensed statement of changes in equity January - Septemberin EUR million 2009 2008Balance at beginning of period 4,695 5,383Changes:- recognized income and expense for the period 406 536- dividend -206 -222- repurchase of ordinary shares - -250- proceeds from reissue of ordinary shares 1 47- other changes 14 15 --------- ---------Balance at end of period 4,910 5,509Condensed segment reportJanuary -September2009 Continuing operations Discon- Total Nutrition Pharma Perform- Polymer Base Other Elimina- Total tinued ance Interme- Chemicals activities tion operations Materials diates and MaterialsNet sales 2,108 526 1,347 600 854 292 - 5,727 123 5,850Supplies to 47 14 17 187 111 24 -400 - - -otherclustersTotal 2,155 540 1,364 787 965 316 -400 5,727 123 5,850suppliesOperatingprofitbeforedepreciationand 481 57 122 18 -9 -107 - 562 80 642amortizationOperating 384 16 45 -5 -60 -151 - 229 72 301profitTotal assets 4,011 1,371 2,656 787 1,065 9,235 -9,484 9,641 44 9,685Workforce 7,237 4,248 4,763 1,322 1,838 3,447 - 22,855 50 22,905end ofperiodJanuary -September2008 Continuing operations Disccon- Total Nutrition Pharma Perform- Polymer Base Other Elimina- Total tinued ance Interme- Chemicals activities tion operations Materials diates and MaterialsNet sales 2,007 647 1,805 1,003 1,262 321 - 7,045 161 7,206Supplies to 29 21 24 312 218 24 -628 - - -otherclustersTotal 2,036 668 1,829 1,315 1,480 345 -628 7,045 161 7,206suppliesOperatingprofitbeforedepreciationand 396 105 275 105 211 -81 - 1,011 105 1,116amortizationOperating 292 59 212 85 158 -121 - 685 95 780profitTotal assets 3,835 1,445 2,706 710 1,333 8,730 -9,106 9,653 - 9,653*Workforce 7,043 4,401 4,978 1,427 2,305 3,385 - 23,539 52 23,591end ofperiod ** Year-end 2008Notes to the financial statements * Accounting policiesThe consolidated financial statements of DSM for the year ended 31December 2008 were prepared according to International FinancialReporting Standards (IFRS) as adopted by the European Union and validas of the balance sheet date. The same accounting policies areapplied in the current interim financial statements, as of 30September 2009. These statements are in compliance with IAS 34'Interim Financial Reporting' and need to be read in conjunction withthe Annual Report 2008 and the discussion by the Managing Boardearlier in this interim report. Neither pensions and similarobligations nor plan assets are subject to interim revaluation. * AuditThese interim financial statements have not been audited. * Scope of the consolidationAcquisitions since the end of 2008, both individually and inaggregate, were immaterial with respect to IFRS disclosurerequirements. DSM Special Products, which was reported as adiscontinued operation in the first nine months of 2008 is now partof the Base Chemicals and Materials cluster. Comparatives have beenrepresented to align with the reclassification.DSM completed the sale of DSM Energie Holding B.V. (DSM Energy) toTAQA Abu Dhabi National Energy Company PJSC on 30 September 2009. Thedisposal consists of the participations which DSM has in oil and gasexploration and pipelines, including the 40% participation inNoordgastransport B.V. In view of the disposal the related activitiesare reported as discontinued operations and comparatives have beenrepresented. The impact of the deconsolidation of these activities onthe DSM financial statements is presented in the table below: in EUR million property, plant and equipment -80 inventories -2 receivables -12 cash and cash equivalents -73 total assets -167 provisions -99 other non-current liabilities -5 current liabilities -24 total liabilities -128 net asset value -39 sales price 309 book profit 270 tax -2 net book profit 268The impact of the disposal on the cash flow statement is presented inthe next table:in EUR million January-September 2009 Full year 2008net cash provided by operating 63 98activitiesnet cash used in investing -5 -8activitiesnet cash used in financing -2 -4activitiesnet change in cash and cash 56 86equivalentsBefore disposal DSM Energy was reported in the segment Base Chemicalsand Materials segment and DSM's 40% participation inNoordgastransport B.V. was reported in the segment Other activitiessegment. * Related party transactionsTransactions with related parties are conducted at arm's lengthconditions. In the first nine months of 2009 these transactions werenot material to DSM as a whole. No loans were granted to members ofthe Managing Board or to members of the Supervisory Board. Inaccordance with the remuneration policy stock options and restrictedshares were awarded to members of the Managing Board in the firstnine months of 2009. * RisksDSM has a risk management system in place. A description of thesystem and an overview of potentially important risks for DSM isprovided in the Annual Report 2008 and in the governance section onwww.dsm.com. DSM has reviewed the developments and incidents in thefirst half year of 2009 at the time of issuance of the report for thefirst half-year. On the basis of that assessment DSM concluded thatthe most important risks and responses as reported in the AnnualReport 2008 were still applicable. * SeasonalityIn cases where businesses are significantly affected by seasonal orcyclical fluctuations in sales this is discussed in the 'Businessreview by cluster' earlier in this report. * Dividends paidOn 21 April the final dividend of EUR 0.80 per share for the year2008 was paid to holders of ordinary shares and a dividend of EUR0.15 per share was paid to holders of cumulative preference shares A.In addition to the final dividend for 2008 the interim dividend ofEUR 0.40 per ordinary share and EUR 0.08 per cumulative preferenceshare was recognized in the second quarter of 2009 and paid on 28August. The total distribution to shareholders in the first ninemonths amounted to EUR 205 million and was recorded against retainedearnings. * BorrowingsIn Q1 2009 a EUR 500 million 5.75% bond was issued which will be duein 2014. Part of the proceeds from the bond was used to repay the USD250 million 6.75% loan that matured in the second quarter. * Material events subsequent to the interim periodOn 6 October 2009 DSM completed the agreement with Maire TecnimontS.p.A. for the sale of DSM's urea-licensing subsidiary StamicarbonB.V. The business has been reclassified as held-for-sale since theend of the first half and reported as discontinued operations. Priorperiod figures have been adjusted accordingly. Beforereclassification Stamicarbon B.V. was reported in the segment BaseChemicals and Materials segment. From the end of the first halfdepreciation and amortization have no longer been recognized forthese activities in accordance with the applicable accountingstandards.Heerlen, 3 November 2009The Managing BoardFeike Sijbesma, chairmanJan Zuidam, deputy chairmanRolf-Dieter Schwalb, CFONico GerarduStephan TandaImportant datesAnnual results 2009: Wednesday,24 February 2010Annual General Meeting of Shareholders: Wednesday, 31 March 2010Report for the first quarter: Wednesday,28 April 2010Report for the second quarter: Tuesday, 3August 2010Report for the third quarter: Tuesday, 2November 2010DSM - the Life Sciences and Materials Sciences CompanyRoyal DSM N.V. creates innovative products and services in LifeSciences and Materials Sciences that contribute to the quality oflife. DSM's products and services are used globally in a wide rangeof markets and applications, supporting a healthier, more sustainableand more enjoyable way of life. End markets include human and animalnutrition and health, personal care, pharmaceuticals, automotive,coatings and paint, electrical and electronics, life protection andhousing. DSM has annual net sales of EUR 9.3 billion and employs some23,500 people worldwide. The company is headquartered in theNetherlands, with locations on five continents. DSM is listed onEuronext Amsterdam. More information: www.dsm.comFor more informationDSM, Corporate Communicationstel.: +31 (45) 5782421e-mail: media.relations(at)dsm.comInvestorsDSM, Investor Relationstel.: +31 (45) 5782864e-mail: investor.relations(at)dsm.cominternet: www.dsm.comhttp://hugin.info/130663/R/1352134/327018.pdfThis announcement was originally distributed by Hugin. The issuer is solely responsible for the content of this announcement.
Datum: 03.11.2009 - 07:16 Uhr
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