HEERLEN, NETHERLANDS--(Marketwire - Feb 20, 2013) -
* DSM reports a solid Q4 with EBITDA of EUR243 million
* EBITDA full year 2012 of EUR1,109 million with growth in all clusters,
* Robust performance of Life Sciences driven by Nutrition
* Materials Sciences performed well, except for caprolactam
* Strong cash generation from operating activities of EUR730 million in
* Dividend increase proposed to EUR1.50 per ordinary share
* Outlook 2013: moving towards EBITDA of EUR1.4 billion
Commenting on the results, Feike Sijbesma, CEO/Chairman of the DSM Managing
"In the context of challenging macro-economic conditions, DSM delivered
across all clusters in 2012, excluding caprolactam. Nutrition now
more than 70% of total EBITDA and has become a high value, global business
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
us well positioned to achieve our long term objectives. In 2013 we will
the operational performance and integration of the acquisitions we
2012 with special attention to capturing synergies. We expect strong EBITDA
growth in 2013, moving towards EUR1.4 billion. The Board's proposal to
the dividend for the third consecutive year is testament to the stronger
have built in recent years, with more stable growth and profitability going
In this report:
* 'operating profit' (before depreciation and amortization) is understood
be operating profit (before depreciation and amortization) before
* 'net profit' is the net profit attributable to equity holders of
* 'continuing operations' refers to the DSM operations excluding DSM
* 'discontinued operations' comprise net sales and operating profit
depreciation and amortization) of DSM Elastomers up to and including Q2
* 'core earnings per share' is understood to be earnings per share
exceptional items and before acquisition related (intangible) asset
Despite ongoing global economic headwinds, DSM continued to deliver solid
operational results in Q4, generating EUR243 million in EBITDA, despite a
million lower contribution from its caprolactam activities compared to Q4
For the full year EBITDA amounted to EUR1,109 million, 14% lower compared
2011. Profit growth in all clusters was more than offset by approximately
million lower results from DSM's caprolactam activities in Polymer
and Performance Materials.
Nutrition results in Q4 increased by 6% versus Q4 2011 and full year
increased by 8%, as a result of contributions from acquisitions and
Pharma results in Q4 as well as for the full year 2012 were slightly above
level of the comparative periods of 2011.
Performance Materials recorded 21% higher EBITDA in Q4 compared to Q4 2011
to higher volumes, improved margins and lower costs. Full year EBITDA was
lower due to lower margins in the polyamide-6 value chain (caprolactam
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
The Innovation Center improved its results for Q4 and the full year as a
of higher Biomedical sales supported by six months contribution from the
Q4 2012 EBITDA for Corporate Activities decreased compared to Q4 2011
to higher share-based payment costs and one-off items. Full year EBITDA
at the same level as the previous year.
Cash provided by operating activities amounted to EUR730 million during
versus EUR882 million in the prior year. Net debt increased by EUR1,350
compared to year-end 2011 to a level of EUR1,668 million, mainly due to
acquisitions, resulting in a more efficient capital structure.
Business review by cluster
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
volume growth. Premixes and Nutritional Lipids recorded double digit
Ocean Nutrition Canada showed strong sales momentum with the first synergy
being realized. The Q4 results of Ocean Nutrition Canada were in line with
expectations with sales of EUR36 million and EBITDA of EUR11 million.
Animal Nutrition & Health sales were somewhat lower due to stable volumes
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
EBITDA for the fourth quarter was EUR204 million, a 6% increase compared to
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
EUR793 million and increased by 8% as a result of continued growth in
forms, premixes and nutritional lipids and contributions from acquisitions.
In the fourth quarter, net organic sales growth was 6% compared to Q4 2011
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 EUR13 million, slightly better than Q4 2011.
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
higher prices at DSM Sinochem Pharmaceuticals. This more than offset the
costs partly associated with the startup of the new 6-APA plant for the
infectives business as well as the effect of the 50% deconsolidation of DSM
Sinochem Pharmaceuticals as of 1 September 2011.
Fourth quarter organic sales growth was 2%. This was owing to a 6% volume
especially in DSM Engineering Plastics and DSM Dyneema partly offset by a -
price effect, as a result of lower polyamide-6 prices.
EBITDA increased significantly versus Q4 2011. EBITDA of DSM Resins &
Materials showed a major improvement due to strong performance in coatings
functional materials, as well as cost-saving programs. DSM Engineering
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
EBITDA was slightly below last year. The result of DSM Resins & Functional
Materials showed an impressive improvement in 2012 due to cost reductions
pricing despite weakness in building and construction industries. Strong
underlying improvements at DSM Engineering Plastics were partly offset by
weakness in the polyamide-6 chain (caprolactam effect). DSM Dyneema's full
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
Fourth quarter organic sales development was -18% with 11% lower volumes
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
of the turnarounds and 10% lower prices. EBITDA was significantly lower.
benzene prices could not be passed on to the market due to weaker demand
caprolactam in combination with new production capacity coming on-stream.
In the fourth quarter, DSM Biomedical showed further improvement mainly
by the contribution of Kensey Nash with sales of EUR18 million and an
EBITDA of EUR7
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
continued strong growth in DSM Biomedical, supported by the contribution of
In Q4 2012 EBITDA decreased by EUR15 million mainly due to the crisis levy
off tax measure) introduced by the Dutch Government, higher share-based
costs and higher project costs.
Full year EBITDA decreased slightly compared to the previous year as
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
site in the Netherlands and lower costs in service organizations.
Total exceptional items in the fourth quarter amounted to EUR76 million
(EUR54 million after tax) including a charge of EUR44 million related to
Improvement Program and EUR18 million in acquisition related costs.
Full year exceptional items amounted to EUR194 million (EUR149 million
comprising provisions, impairments and restructuring costs of EUR160
Acquisition related costs amounted to EUR34 million.
Net finance costs in the fourth quarter amounted to EUR31 million compared
million in Q4 2011.
Full year net finance costs increased by EUR12 million compared to the
year to a level of EUR94 million due to a lower average cash position at
average interest rates and EUR7 million impairment of certain financial
The effective tax rate before exceptional items for the full year was 18%
19% in 2011. Net profit before exceptional items in the fourth quarter
by EUR43 million to a level of EUR75 million (Q4 2011: EUR118 million).
Net profit before exceptional items for the full year amounted to EUR437
compared to EUR615 million in 2011.
As a result of exceptional items total net profit in the fourth quarter
decreased by EUR64 million to EUR21 million (Q4 2011: EUR 85 million).
Total net profit for the full year amounted to EUR288 million compared to
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
of 2012. In 2011 exceptional items included the book profit on divestments
Net earnings per ordinary share (continuing operations, before exceptional
items) amounted to EUR2.58 versus EUR3.53 in 2011.
DSM's dividend policy is to provide a stable and preferably rising
proposes to increase the dividend by EUR0.05 to EUR1.50 per ordinary share.
will be proposed to the Annual General Meeting of Shareholders to be held
May 2013. An interim dividend of EUR0.48 per ordinary share having been
August 2012, the final dividend would then amount to EUR1.02 per ordinary
The dividend will be payable in cash or in the form of ordinary shares at
option of the shareholder. Dividend in cash will be paid after deduction of
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 EUR183 million in the
quarter (Q4 2011: EUR403 million) resulting in a full year total of EUR730
(2011: EUR882 million).
Operating working capital as a percentage of sales amounted to 20.7% at the
of 2012. Excluding acquisitions it amounted to 20.0%.
Total cash used for capital expenditure in the fourth quarter amounted to
million (Q4 2011: EUR173 million). Cash flow related to capital expenditure
the full year 2012 was EUR686 million compared to EUR477 million in 2011.
At year-end 2012 net debt amounted to EUR1,668 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
previously announced program in DSM Resins & Functional Materials), mainly
focused on cost reductions and efficiency improvements, but also on sales
and pricing. This program is fully on track and is expected to deliver
structural annual EBITDA benefits of EUR150 million by 2014 of which more
half is expected in 2013. One-off cash costs for the Profit Improvement
recognized in 2012 were approximately EUR120 million, in line with the
given in Q2.
DSM continued to look for opportunities to expand this program, and this
resulted in an increase in the program's scope to EUR200-250 million in
The one-off cash cost related to this extension of the Profit Improvement
Program are expected to be in the order of EUR70-80 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
on in September 2010. It marks the shift from an era of intensive portfolio
transformation to a strategy of maximizing sustainable and profitable
DSM's strategic focus on Life Sciences (Nutrition and Pharma) and Materials
Sciences (Performance Materials and Polymer Intermediates) is fueled by
main societal trends: Global Shifts, Climate & Energy and Health &
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
39% of total sales in 2011. The decrease was mainly due to lower
sales in China.
Net sales to China amounted to USD 1.7 billion versus USD 2.0 billion in
mainly due to lower sales prices at DSM Polymer Intermediates.
To achieve its 2015 target for High Growth Economies, DSM continued its
re-organization of its operations. The headquarter of DSM Sinochem
Pharmaceuticals is in Singapore. The headquarter of DSM Engineering
moved to Singapore in 2012 and the headquarter of DSM Fibre Intermediates
in Shanghai (China).
The acquisition of Tortuga in Brazil will more than double DSM's workforce
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
further strategic progress. The bio-succinic acid facility in Italy is
in the start-up process. DSM and BP have extended their cooperation on the
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
sales by 2015. Innovation sales, defined as sales created by new products
applications introduced in the past five years, accounted for 18% of total
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
growth driver as well.
DSM believes sustainability will be a key differentiator and value driver
coming decades. The company is uniquely positioned to capture new
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
innovative products and solutions with ecological benefits. Products
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
efficient cars. Another example is Brewers Clarex™, which enables
prevent chill haze without having to cool their beers to sub-zero
In 2015 DSM aims for at least 80% of its innovation pipeline to be ECO+
or solutions and in 2015 their share of total net sales is expected to grow
DSM is developing a People+ strategy for measurably improving the lives of
consumers, workers and communities across the value chains in which the
is active. People+ will do for the 'people' dimension of People, Planet and
Profit what ECO+ has done for 'planet', giving further impetus to
as a business driver for the company. DSM refined its People+ strategy in
and also defined and road tested new metrics for it.
Acquisitions & Partnerships: from portfolio transformation to driving
In 2012 DSM announced eight acquisitions to strengthen its competences and
market positions along its three other strategic growth drivers: High
Economies, Innovation and Sustainability. Since 2010 DSM has invested
billion in acquisitions, of which EUR2.4 billion in Nutrition, while
highly disciplined strategic and financial criteria.
In 2012 DSM strengthened its industry leadership in the biomedical field
the acquisition of Kensey Nash, positioning DSM Biomedical as a profitable
growth platform. DSM joined forces with POET LLC to commercially
license cellulosic ethanol in the POET-DSM Advanced Biofuels joint venture.
In the Nutrition cluster DSM successfully completed the acquisition of
Nutrition Canada, the leading global provider of fish-oil derived
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
category, offering both fish oil derived omega-3 fatty acids and
derived nutritional lipids.
DSM entered into a definitive agreement to acquire Tortuga, a privately
Brazilian company. Tortuga is a leading company in nutritional supplements
a focus on pasture raised beef and dairy cattle. The company is
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
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
based in Schenectady (New York, USA), a leader in customized, value-added
ingredient blends for food & beverage, infant nutrition and dietary
In sustainability DSM set a number of ambitious aspirations in 2010 and in
the company made good progress toward meeting them, as evidenced by the
* DSM was once again among the leaders in the chemical industry sector in
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
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
compared to 2008. Including 2012 energy efficiency improved by 14%
* In 2012 DSM executed its fifth worldwide Employee Engagement Survey.
main element in the survey is the measurement of DSM's Employee
Index, the percentage of employees scoring favorable on a combination
four attributes: commitment, pride, advocacy and satisfaction. The
Engagement Index measured in 2012 again was close to the high
norm and improved versus 2011.
* DSM has started the People+ program, a strategy for measurably
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
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
The Profit Improvement Program that was launched in August 2012 is fully on
track and is expected to deliver structural annual EBITDA benefits of
million by 2014 of which more than half is expected in 2013. As
has expanded the profit improvement initiative and now expects to achieve
another EUR50-100 million in benefits on top of the EUR150 million. The
following this extension are expected to be fully achieved by 2015.
Nutrition is expected to show clearly higher results than in 2012 due to
growth moving towards the target of 2% above GDP and the acquisitions.
Business conditions in Pharma are likely to remain challenging though DSM
confident of being able to deliver substantially better results
the usual uneven delivery patterns between quarters.
Performance Materials is expected to show improved results in 2013, despite
expected negative effects of caprolactam especially compared to the first
Polymer Intermediates is expected to show lower results than in 2012.
For the Innovation Center the activity level will be in line with 2012,
EBITDA clearly improving following the full year contribution of Kensey
Overall, based on current economic assumptions, DSM expects a step-up in
during 2013 due to stronger organic growth, supported by DSM's Profit
Improvement Program and as the benefits of acquisitions and a more
portfolio start to have impact. In 2013 the focus will be on the
performance and integration of the acquisitions DSM completed in 2012 with
special attention to capturing synergies. Overall, based on current
assumptions, the above will enable DSM to move towards its 2013 EBITDA
Today DSM will hold a conference call for the media from 07.30 AM to 08.00
CET and a conference call for investors and analysts from 09.00 AM to 10.00
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.
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.™
Royal DSM is a global science-based company active in health, nutrition and
materials. By connecting its unique competences in Life Sciences and
Sciences DSM is driving economic prosperity, environmental progress and
advances to create sustainable value for all stakeholders. DSM delivers
innovative solutions that nourish, protect and improve performance in
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.
23,500 employees deliver annual net sales of around EUR9 billion. The
listed on NYSE Euronext. More information can be found at www.dsm.com.
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Presentation to investors full year results 2012-pdf:
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Source: DSM N.V. via Thomson Reuters ONE