HEERLEN, THE NETHERLANDS--(Marketwire - Aug 7, 2012) -
* Q2 EBITDA from continuing operations EUR290 million (Q2 2011: EUR339
* Life Sciences continues to deliver robust performance, driven by
* Materials Sciences improved, except for caprolactam which had an EBITDA
impact of - EUR70 million
* Q2 cash flow from operating activities at EUR197 million, higher than
comparable and prior quarter
* Profit Improvement Program announced: expected annual EBITDA benefits
EUR150 million by 2014
* Interim dividend of EUR0.48 declared, in line with DSM's dividend
* Outlook 2012 largely unchanged with the exception of caprolactam
Commenting on the results, Feike Sijbesma, CEO/Chairman of the DSM Managing
"Despite the challenging macro-economic environment, I am pleased that DSM
able to deliver another robust set of results demonstrating the strength of
strategy, as evidenced by the ongoing strong performance of Nutrition. Our
Sciences clusters accounted for around 70% of Q2 EBITDA. This strength has
helped to offset the weakness caused by caprolactam in Materials Sciences.
other Materials Sciences businesses improved despite a challenging
"The global outlook for the second half of the year is more uncertain due
part to Europe's inability to find an effective and sustainable solution to
financial challenges facing the Eurozone. Because of the increased economic
uncertainty, we are announcing today a Profit Improvement Program that
structural cost reduction and other initiatives that will generate EUR150
EBITDA benefits by 2014.
"While we remain cautious on the macro-economic outlook for the rest of the
year, the robustness of our portfolio reinforces our confidence that DSM's
strategic focus is the right one. As evidenced by the recent Kensey Nash
Ocean Nutrition Canada acquisitions, we continue to deliver on our strategy
investing in new, exciting growth opportunities. We are confident that the
Profit Improvement Program, together with our broad geographic spread with
significant presence in high growth economies and our very strong balance
leaves us well placed to face the near term challenges. We continue to
our strategy to achieve stronger, more stable growth and profitability for
overall also based on our sustainable innovative solutions addressing the
Find the tables on www.dsm.com or in the pdf version of the quarterly
The world economy developed less positively than expected, mainly due to
continuing Eurozone challenges, which are prolonging weak consumer
resulting in a recession in parts of Europe. China experienced an economic
slowdown owing to weaker exports though growth is still at a high level.
continued to grow, although at a moderate level.
Despite these developments the results of DSM were robust and in line with
expectations, with the exception of Polymer Intermediates.
The Q2 EBITDA (EUR290 million) was 14% lower than in Q2 2011. The drop in
was fully attributable to Polymer Intermediates, which had experienced
results in 2011 which were not expected to continue. The combined effect of
weakness in caprolactam on DSM Fiber Intermediates and DSM Engineering
in Q2 amounted to EUR70 million.
Nutrition once again delivered a strong performance. With acquisitions in
Nutrition cluster such as Martek in 2011 and Ocean Nutrition Canada in 2012
is moving towards achieving EUR4 billion in Nutrition sales.
Pharma had a relatively good quarter, partly supported by temporarily
than usual deliveries in DSM Pharmaceutical Products.
Performance Materials' performance was slightly below Q2 2011 and in line
Q1 2012. The negative impact of caprolactam on DSM Engineering Plastics was
partly compensated for by improved results in DSM Resins, which began to
from the restructuring programs announced in 2011.
The EBITDA of Polymer Intermediates declined significantly versus the very
Q2 2011 result.
Cash provided by operating activities amounted to EUR197 million in Q2 2012
EUR133 million in the same quarter of last year and EUR97 million in Q1.
increased by EUR464 million compared to Q1 2012 to a level of EUR729
other things due to the acquisition of Kensey Nash.
Q2 2012 organic sales development was -3% compared to Q2 2011. The decline
due mainly to volumes in Performance Materials and pricing in Polymer
Nutrition continued to deliver organic growth through increasing volumes as
The two Pharma businesses also showed organic growth via volumes as well as
In Performance Materials, the development of organic growth was mainly due
lower volumes at DSM Engineering Plastics and DSM Resins.
Polymer Intermediates sales decreased mainly due to lower prices.
DSM initiates Profit Improvement Program
Considering the economic uncertainty, especially in Europe, and challenging
developments in some markets, DSM has decided to implement a company wide
Improvement Program, mainly focused on cost reductions and efficiency
improvements, but also on sales growth and pricing. This program, which
implemented over the next 18 months, is expected to deliver structural
EBITDA benefits of EUR150 million by 2014. This program is in addition to
already announced restructuring initiatives at DSM Resins that will deliver
annual savings of EUR25-30 million by 2013.
The program contains several projects. DSM Nutritional Products is
competitiveness of key vitamins (Bs and C) with restructuring projects in
Grenzach, Germany and Dalry, United Kingdom. In Switzerland projects have
started to reduce the Swiss franc dependency via cost reductions. The LTP
in Sweden is being closed. In Martek efficiency gains are being realized
integration into the global Nutrition business. In Pharma, the Percivia
venture will focus on the existing PER.C6(®) technology licensing
Biosimilar product development business of Percivia is being terminated.
reductions are also ongoing in all other areas in the Pharma cluster.
In Materials Sciences, programs designed to ensure DSM's global
are being executed. At DSM Dyneema the organization is being aligned with
development of the vehicle protection business and further programs to
accelerate the growth will be implemented. At DSM Engineering Plastics a
comprehensive program will be executed to cut fixed costs, to improve the
operational efficiency and margin management and to accelerate the growth
innovative specialty products. DSM Resins will intensify its program that
started in 2011.
The above-mentioned actions result in provisions and related other cash
for a total amount of EUR62 million, which were recognized as an
in Q2. Additional costs will need to be recognized in the second half of
In the second half of the year programs which aim to standardize and off
transactional services in accounting and ICT services will start to have
As a result of this program DSM expects the global headcount to be reduced
approximately 1000 positions. One-off cash costs for the Profit Improvement
Program are expected to total about EUR125 million, half of which has been
recognized as an exceptional item in Q2. The remainder is expected to be
recognized as an exceptional item in the second half of 2012.
DSM will continue to look for opportunities to expand this Profit
The Profit Improvement Program will help DSM to meet its ambitious
targets as well as reinforcing DSM's continued strong balance sheet and
financial position. As a result, DSM will be even better placed to capture
growth opportunities both now and in the future while maintaining its
course as outlined in DSM in motion: driving focused growth with all four
drivers (High Growth Economies, Innovation, Sustainability and Acquisitions
Partnerships) firmly in place.
Business review by cluster
In the second quarter of 2012 sales growth in Nutrition was 7% compared to
2011, supported by healthy organic growth (2%) in all segments. More
exchange rates added 5%. Growth fundamentals for the business remained
and unchanged. In Q2 2012, DSM announced the acquisition of Ocean Nutrition
Canada, which will further contribute to the sustainable growth of the
moving towards EUR4 billion in sales. The acquisition was finalized at the
beginning of Q3.
Feed markets continued to experience strong demand for animal protein in
geographic areas. Food markets continued growth in all regions and segments
some softening in Europe. The cross-selling of Martek products through the
global sales network resulted in double digit growth of Nutritional Lipids
infant nutrition outside USA.
EBITDA for the cluster further increased to EUR195 million as a result of
growth at stable margins. This more than compensated for the negative
the strong Swiss franc and the absence of the hedge gain as realized in Q2
In Q2 2012 net sales growth was 2%, despite the negative impact from the
deconsolidation of DSM Sinochem Pharmaceuticals. Organic sales growth was
caused by higher volumes and prices from both DSM Sinochem Pharmaceuticals
DSM Pharmaceutical Products.
EBITDA for the quarter increased compared to last year. In addition to the
improved performance of both businesses, the cluster EBITDA also benefited
a one-off effect coming from the restructuring of the Biosimilar
the same time, DSM impaired these assets. These factors compensated for the
negative effect of the 50% deconsolidation of DSM Sinochem Pharmaceuticals
In Q2 2012 sales growth was 1% compared to Q2 2011, with positive currency
developments and the impact of acquisitions more than compensating for
volumes in DSM Engineering Plastics and DSM Resins. DSM Dyneema delivered
volume growth, despite the absence of new large vehicle protection tenders.
Q2 2012 EBITDA was below Q2 last year, which was fully due to lower margins
the polyamide-6 value chain of DSM Engineering Plastics offsetting the
performance in the rest of DSM Engineering Plastics' portfolio. DSM Resins
showed strong improvement of its results due to better margins and the
implementation of cost saving actions and despite ongoing subdued market
conditions, mainly in building and construction in Europe. DSM Dyneema's
was in line with the prior year.
Sales development was -8% compared to Q2 2011, due to 11% lower prices and
lower volumes, partly compensated for by 6% more favorable currencies.
prices declined significantly during the quarter due to uncertain
conditions causing weakening customer demand and destocking and due to some
smaller new entrants.
Q2 2012 EBITDA was significantly below the record levels of 2011. This was
to weak margins arising from increasing benzene prices combined with
caprolactam prices. At the end of the quarter, margins were significantly
the levels at the beginning of the quarter. Acrylonitrile margins declined
In addition, the decline in EBITDA was also caused by the turnaround of the
caprolactam plant in the Netherlands, which was the largest turnaround
in DSM's caprolactam history.
Results were above the usual level as a result of somewhat higher
sales as well as lower costs. The acquisition of Kensey Nash was completed
June 22; Kensey Nash will contribute to the EBITDA as from Q3 2012 by about
million for the second half of the year. This acquisition positions DSM as
major supplier to the medical device industry, where Kensey Nash is a
biomaterial products for tissue repair and regeneration. Good progress was
in biofuels with new approvals gained for enzymes (Dong Energy, Denmark)
yeasts (GraalBio, Brazil) for cellulosic bioethanol.
The lower sales in Q2 2012 compared to Q2 2011 were the result of the
deconsolidation of Sitech Manufacturing Services mid 2011 and the
of the Maleic Anhydride and Derivatives business into the Pharma cluster.
EBITDA in Q2 2012 improved compared to Q2 2011, mainly as a result of lower
share-based payments cost, lower costs in shared service organizations and
In Q2 total exceptional items amounted to a loss of EUR92 million before
million after tax). In connection with the implementation of the Profit
Improvement Program, restructuring provisions were recognized for an amount
EUR58 million together with related other costs of EUR4 million. In
impairment charges of EUR26 million were recognized that were mainly
the restructuring of the asset base of the Dalry facility of DNP
Products and the closure of the LTP plant. Acquisition related costs in the
period amounted to EUR4 million.
Net finance costs increased by EUR11 million compared to Q2 2011 to a level
million, as a result of an impairment of Other participating interest and
negative effects from exchange rate and interest rate developments.
The effective tax rate was 18%, being 1% lower than full year 2011.
Net profit before exceptional items decreased by EUR52 million compared to
2011 to a level of EUR114 million, which was due to the lower operating
within Polymer Intermediates.
Total net profit showed a decrease of EUR351 million compared to Q2 2011 to
level of EUR41 million. This was due to the fact that Q2 2011 included the
profit on the sale of DSM Elastomers and the result on the sale of the
shares (total profit of EUR226 million), while in Q2 2012 restructuring
impairments were included for EUR73 million.
Net earnings per ordinary share (continuing operations, before exceptional
items) amounted to EUR0.67 in Q2 2012 compared to EUR0.97 in Q2 2011.
Cash flow, capital expenditure and financing
Cash provided by operating activities was EUR197 million in Q2 2012 which
higher than the comparable (EUR133 million) and the previous quarter (EUR97
Cash flow related to capital expenditure amounted to EUR162 million in Q2
compared to EUR88 million in Q2 2011. The increase is among other things
the confluence of several large projects across all business groups.
Net debt increased by EUR411 million compared to year-end 2011 and stood at
million (gearing 11%).
DSM's policy is to provide a stable and preferably rising dividend. It has
decided to pay an interim dividend of EUR0.48 per ordinary share for the
2012. As usual, this represents one third of the total dividend paid for
previous year. The interim dividend is no indication of the total dividend
2012. The dividend will be payable in cash or in the form of ordinary
the option of the shareholder. Dividend in cash will be paid after
15% Dutch dividend withholding tax. The ex-dividend date is 8 August 2012.
interim dividend will be payable as from 30 August 2012.
DSM in motion: driving focused growth
DSM in motion: driving focused growth marks the shift from an era of
portfolio transformation to a strategy for the coming years of maximizing
sustainable and profitable growth of 'the new DSM'. The current businesses
compose the new core of DSM in Life Sciences and Materials Sciences.
DSM's 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 and Energy and Health and Wellness.
aims to meet the unmet needs resulting from these societal trends with
innovative and sustainable solutions.
It is DSM's ambition to fully leverage the unique opportunities in Life
and Materials Sciences, using four growth drivers (High Growth Economies,
Innovation, Sustainability and Acquisitions & Partnerships) and bringing
four drivers to the next level.
Below is an update on DSM's achievements and progress with regard to each
four growth drivers.
High Growth Economies: from reaching out to being truly global
Sales to High Growth Economies reached a level of 39% of total sales in Q2
versus 37% in Q2 2011 driven by the Nutrition and Performance Materials
that showed strong double digit growth numbers in the High Growth
Net sales to China amounted to USD 430 million, versus USD 489 million in
2011 which was fully due to lower sales prices at Polymer Intermediates.
Innovation: from building the machine to doubling innovation output
Innovation sales - measured as sales from innovative products and
introduced in the last five years - reached 18% of total net sales in Q2,
to the company's 2015 target of approximately 20%.
Sustainability: from responsibility to a business driver
The share of Eco+ products in DSM's running business portfolio has
gradually to 42% in the first half of 2012 from 39% the same period a year
earlier. This is aligned with DSM's efforts of expanding Eco+ products in
portfolio and shows that Eco+ products are increasingly well received by
customers. In the first half of 2012, the share of Eco+ products in DSM's
innovation pipeline was 65%.
In June, DSM received two Sustainability Awards from investment fund SAM,
on SAM's yearly corporate sustainability assessment. The awards represent
recognition for DSM's Gold status and for being Sustainability Leader in
Chemical Sector of the Dow Jones Sustainability World Index.
Acquisitions & Partnerships: from portfolio transformation to driving
DSM completed the acquisition of Kensey Nash a leading supplier to the
device industry. The acquisition strengthens and complements DSM's
business, one of the Emerging Business Areas of DSM. The acquisition
DSM Biomedical as a profitable growth platform for DSM.
DSM successfully completed the acquisition of Ocean Nutrition Canada, the
leading global provider of fish-oil derived nutritional products to the
supplement and food & beverage markets. The acquisition strengthens and
complements DSM's newly established, global Nutritional Lipids growth
Nutritional Lipids are the largest, double digit growing segment of the
nutritional ingredients market.
In July, DSM announced the acquisition of Cilpaz Srl, the Italian animal
nutrition premix specialist. Although relatively minor in size, this
underlines DSM's strategy of focused growth. Continued value growth in the
Nutrition cluster is a key component of this strategy.
To date DSM has completed EUR1.7 billion worth of growth enhancing
since it embarked on its current strategic plan less than two years ago.
EUR1.3 billion has been spent in the Nutrition cluster as the company
further improve its attractive portfolio in health, nutrition and materials
deliver shareholder value with stronger, more stable growth and
Considering the economic uncertainty, especially in Europe, and challenging
developments in some markets, DSM has decided to implement a company wide
Improvement Program that is expected to generate annual recurring EBITDA
benefits of around EUR150 million by 2014. Benefits for 2012 are estimated
limited. One-off cash costs for the Profit Improvement Program are expected
total about EUR125 million, half of which has been recognized as an
item in Q2. The remainder is expected to be recognized as an exceptional
the second half of 2012. This program is in addition to the already
restructuring initiatives at DSM Resins which will deliver annual savings
EUR25-30 million by 2013.
Nutrition continues to demonstrate its resilience with EBITDA now expected
clearly above 2011. Ocean Nutrition Canada will add about EUR20 million in
for the remainder of the year.
Business conditions in Pharma are likely to remain challenging, although
anticipates that it will make further strategic progress. DSM expects to
a slightly improved EBITDA despite the 50% deconsolidation of the
Based on current insights regarding economic developments, trading
Performance Materials continue to be volatile and are not expected to
the remainder of the year. Full year EBITDA is expected to be in line with
despite the weak market conditions for caprolactam.
The adverse market conditions for Polymer Intermediates that materialized
end of Q2 are not expected to improve significantly during the remainder of
year. The results will be further impacted as a consequence of turnaround
shutdowns of the caprolactam plants in China and North America in the
half of the year. DSM expects EBITDA to be clearly below the exceptional
Overall, DSM is cautious with regard to the economic outlook for the
of 2012. DSM's expectations for the year are broadly in line with its
cluster guidance, with the exception of the weakness in caprolactam.
Assuming no further deterioration of the economic conditions, and based on
strategy, financial strength, and the additional actions now taken, DSM
move towards the 2013 strategic targets.
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 first half year result 2012
be found in the Presentation to Investors, which can be downloaded from the
Investors section of the DSM website.
Ex interim dividend quotation Wednesday, 8 August 2012
Record date Friday, 10 August 2012
Interim dividend payable Thursday, 30 August 2012
Report for the third quarter 2012 Tuesday, 6 November 2012
Annual Report 2012 Wednesday, 20 February 2013
Report for the first quarter 2013 Thursday, 2 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.
22,000 employees deliver annual net sales of about EUR9 billion. The
listed on NYSE Euronext. More information can be found at www.dsm.com
Presentations to Investors Q2 Results 2012 -
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Source: DSM N.V. via Thomson Reuters ONE