HEERLEN, NETHERLANDS -- (Marketwire) -- 04/28/10 --
-- Q1 operating profit from continuing operations EUR 196
million (versus EUR 44 million in Q1 2009 and EUR 149 million in Q4 2009)
-- Organic sales growth from continuing operations +25%
compared to Q1 2009
-- Life Sciences continues to deliver robust results due to
Nutrition
-- Materials Sciences demonstrates further strong recovery
-- Major step in transformation with the sale of DSM Agro and
DSM Melamine
-- Robust cash performance continues with EUR 137 million cash
from operating activities
-- 2010 is expected to be a good year for DSM
Commenting on the results, Feike Sijbesma, Chairman of the DSM
Managing Board, said:
"I am pleased to report that DSM has delivered a very strong start to 2010.
Operating profit from our core businesses is not only up very strongly
compared
to Q1 2009, it has also returned to the level achieved in Q1 2008. This
reflects
the outstanding performance of our Nutrition business, a continuing strong
recovery in our Materials Sciences businesses and cost savings initiatives
taken
last year which already deliver EUR 200 million on an annualized basis.
"Throughout the downturn, DSM has stayed the course - fully committed to
our
customers, innovation and sustainability. The announced sale of DSM Agro
and DSM
Melamine marks another important step in our transformation towards a Life
Sciences and Materials Sciences company. Whilst uncertainties remain in the
medium term economic outlook, the strong Q1 result and continued positive
business conditions give us confidence that 2010 will be a good year for
DSM."
---------------------------------------------------------+-----+-----+----
Net sales |2,088|1,690| 24%
---------------------------------------------------------+-----+-----+----
| | |
---------------------------------------------------------+-----+-----+----
Operating profit before depreciation and amortization | 304| 142|114%
(EBITDA) | | |
---------------------------------------------------------+-----+-----+----
| | |
---------------------------------------------------------+-----+-----+----
Operating profit (EBIT) | 196| 44|345%
---------------------------------------------------------+-----+-----+----
- Nutrition | 138| 141| -2%
---------------------------------------------------------+-----+-----+----
- Pharma | 1| 11|-91%
---------------------------------------------------------+-----+-----+----
- Performance Materials | 43| -17|
---------------------------------------------------------+-----+-----+----
- Polymer Intermediates | 43| -30|
---------------------------------------------------------+-----+-----+----
- Base Chemicals and Materials | 18| -15|
---------------------------------------------------------+-----+-----+----
- Other activities | -47| -46|
---------------------------------------------------------+-----+-----+----
| | |
---------------------------------------------------------+-----+-----+----
Discontinued operations | | |
---------------------------------------------------------+-----+-----+----
Net sales | 142| 147|
---------------------------------------------------------+-----+-----+----
Operating profit before depreciation and amortization | 31| 25|
(EBITDA) | | |
---------------------------------------------------------+-----+-----+----
Operating profit (EBIT) | 22| 13|
---------------------------------------------------------+-----+-----+----
| | |
---------------------------------------------------------+-----+-----+----
Total DSM: | | |
---------------------------------------------------------+-----+-----+----
Net sales |2,230|1,837| 21%
---------------------------------------------------------+-----+-----+----
| | |
---------------------------------------------------------+-----+-----+----
Operating profit (EBIT) | 218| 57|282%
---------------------------------------------------------+-----+-----+----
| | |
---------------------------------------------------------+-----+-----+----
Net profit before exceptional items | 144| 25|476%
---------------------------------------------------------+-----+-----+----
| | |
---------------------------------------------------------+-----+-----+----
Net result from exceptional items | -14| -12|
---------------------------------------------------------+-----+-----+----
| | |
---------------------------------------------------------+-----+-----+----
Net profit | 130| 13|
---------------------------------------------------------+-----+-----+----
| | |
---------------------------------------------------------+-----+-----+----
Net earnings per ordinary share in EUR: | | |
---------------------------------------------------------+-----+-----+----
- before exceptional items, continuing operations | 0.77| 0.07|
---------------------------------------------------------+-----+-----+----
- including exceptional items, total DSM | 0.78| 0.06|
---------------------------------------------------------+-----+-----+---
In this report:
-- 'operating profit' (before depreciation and amortization) is
understood to be operating profit (before depreciation and amortization)
before
exceptional items.
-- 'net profit' is the net profit attributable to equity holders of
Royal DSM N.V.
-- 'continuing operations' refers to the DSM operations excluding DSM
Energie Holding B.V., Stamicarbon B.V., DSM Agro and DSM Melamine.
-- 'discontinued operations' comprise net sales and operating profit of
DSM Energie Holding B.V up to and including Q3 2009, Stamicarbon B.V. up
to and
including Q4 2009, and DSM Agro and DSM Melamine up to and including Q1
2010.
Overview
DSM had a very strong start to the year, which resulted in a significant
improvement in operating profit, not only in comparison with the weak Q1 of
2009 but also in comparison with Q3 and Q4 of last year. DSM benefited from
improved business conditions in most geographic areas and end markets.
The Nutrition cluster showed sustained good performance and the Materials
Sciences businesses continued their recovery. The growth in emerging
markets
(especially China) continued to be strong and sales are currently higher
than
before the economic downturn. In Materials Sciences and Base Chemicals and
Materials there are indications that in some businesses the strong demand
is not
fully aligned with the developments in the end markets, which would imply
downstream re-stocking.
The operating profit of the core activities (continuing activities,
excluding
Base Chemicals and Materials) of EUR 178 million is back at the level of Q1
2008
(EUR 176 million), which was one of the strongest first quarters in DSM's
history.
The Nutrition cluster continued to show healthy volume growth at price
levels
that were comparable to the last quarters of 2009. The Pharma cluster faced
lower volumes compared to Q4 2009.
The Materials Sciences businesses continued to recover, driven by strong
growth
in emerging economies and also supported by further improvement in demand
in the
automotive, electronics and textile markets.
The Base Chemicals and Materials cluster was significantly reduced in size
reflecting the announced divestment of DSM Agro and DSM Melamine. At the
end of
Q1 these businesses were reclassified to assets held for sale and
discontinued
operations. The cluster currently contains DSM Elastomers (as the main
activity), DSM Citric Acid, DSM Special Products, and the Maleic Anhydride
(and
derivatives) activity. These businesses benefited from the recovery of the
markets with higher volumes at more or less stable price levels.
DSM's focus on cash continued. Working capital increased by EUR 153 million
mainly
driven by receivables. Adjusted for the effects of the sale of DSM Agro and
DSM
Melamine and considerable changes in currency exchange rates, the level of
working capital as a % of sales was comparable to the level at the end of
2009.
Last year's level was achieved after a substantial reduction during 2009.
The
strong financial position was maintained and net debt increased slightly to
a
level of EUR 871 million as a balance of a positive free cash flow and an
increase
because of a weaker euro. The cost saving program already delivered
substantial
benefits of EUR 200 million on an annualized basis.
Net sales
--------------------------------------------------------------------------
in EUR million first quarter
differ- organic exch. other
2010 2009 ence growth rates
--------------------------------------------------------------------------
Nutrition 732 707 4% 6% -2%
Pharma 186 197 -6% -5% -1%
Performance Materials 557 395 41% 41% -3% 3%
Polymer Intermediates 314 139 126% 135% -9%
Base Chemicals and
Materials
196 142 38% 38% 0%
Other activities 103 110
-------------
Total, continuing 2,088 1,690 24% 25% -2% 1%
operations
Discontinued operations 142 147
-------------
Total 2,230 1,837 21% 26% -3% -2%
--------------------------------------------------------------------------
Organic sales growth for continuing operations was +25% compared to Q1
2009.
Roughly 35% of this EUR 400 million increase originated from China. With
the
exception of Pharma, all businesses delivered an increase. Nutrition is
continuing its strong performance and although prices are below the top
level of
Q1 2009 they are at a similar level compared to recent quarters. In the
Materials Sciences businesses and the non-core Base Chemicals and Materials
cluster, net sales showed a strong increase in automotive, electronics and
textile markets. DSM Dyneema achieved double digit growth and DSM Fibre
Intermediates showed strong demand, especially in China, where the economy
is
growing very fast.
Operating profit
Operating profit increased substantially, not only against the weak first
quarter of last year but also compared to the previous quarter.
Nutrition profitability is at a very good level, which is a reflection of
the
successful strategy to focus on value via differentiation and innovation.
The
year-on-year improvement in operating profit was clearly driven by the
Materials
Sciences businesses, which benefited from a strong demand improvement.
Despite
strongly increasing raw material prices, margin management was successful
in
Materials Sciences, reflecting tight market conditions in some markets.
Cost control programs were successfully implemented in all clusters.
Business review by cluster
Nutrition
--------------------------------------------------------+---------------
in EUR million | first quarter
--------------------------------------------------------+------+--------
| 2010 | 2009
--------------------------------------------------------+------+--------
| |
--------------------------------------------------------+------+--------
Net sales | 732 | 707
--------------------------------------------------------+------+--------
Operating profit before depreciation and amortization | 171 | 174
--------------------------------------------------------+------+--------
Operating profit | 138 | 141
--------------------------------------------------------+------+--------
The first quarter saw a continued strong performance of the Nutrition
cluster
with similar underlying dynamics in DSM Nutritional Products and DSM Food
Specialties. The food and feed markets experienced a healthy growth
compared to
last year. Organic sales growth was +6% compared to Q1 2009, with growth in
animal and human nutrition. While emerging economies such as China and
Brazil
are boosting sales growth, all geographies are performing well. Volumes
remained
stable and prices were robust compared to Q4 2009.
Operating profit remained strong, broadly in line with both Q1 2009 and Q4
2009, reflecting the resilience of this business. The main drivers were a
solid
volume development, strong pricing, a continued focus on value, a strong
production performance and continued strong cost management. Compared with
Q1
2009 this improvement was partly offset by negative exchange rate
developments.
Pharma
--------------------------------------------------------+---------------
in EUR million | first quarter
--------------------------------------------------------+------+--------
| 2010 | 2009
--------------------------------------------------------+------+--------
| |
--------------------------------------------------------+------+--------
Net sales | 186 | 197
--------------------------------------------------------+------+--------
Operating profit before depreciation and amortization | 15 | 25
--------------------------------------------------------+------+--------
Operating profit | 1 | 11
--------------------------------------------------------+------+--------
In Q1 organic sales development in the Pharma cluster was -5%, which was
mainly
due to a lower sales value within DSM Anti-Infectives. The activity level
at DSM
Pharmaceutical Products remained low as a result of shifts in industry
dynamics.
Sales were stable compared to Q1 2009. Lower API sales due to the loss of
some
important products in 2009 were offset by the completion of the H1N1
vaccine
shipments in Q1 2010.
The lower operating profit in the cluster was due to the lower sales level
and
an unfavorable product mix.
Performance Materials
--------------------------------------------------------+---------------
in EUR million | first quarter
--------------------------------------------------------+------+--------
| 2010 | 2009
--------------------------------------------------------+------+--------
| |
--------------------------------------------------------+------+--------
Net sales | 557 | 395
--------------------------------------------------------+------+--------
Operating profit before depreciation and amortization | 75 | 6
--------------------------------------------------------+------+--------
Operating profit | 43 | -17
--------------------------------------------------------+------+--------
Organic sales growth compared to Q1 2009 was a strong +41%. The increase
was
most prominent in DSM Engineering Plastics as market sentiment improved
substantially in the automotive and electronics industries with some
indications
of re-stocking. DSM Dyneema showed healthy sales growth driven by volumes
and a
favorable product mix. DSM Resins realized strong volume improvements
although
building and construction related markets remained weak. Compared to Q4
2009,
organic sales growth for the cluster was +15%. This improvement was
achieved
across all businesses within the cluster thanks to higher volumes and
generally
favorable price developments.
Operating profit for Q1 2010 improved by EUR 60 million compared to Q1
2009, when
the industry was in the midst of the economic downturn. Increased volumes,
favorable price developments and active cost and margin management
contributed
to the result improvement despite increasing raw material prices. Operating
profit improved by EUR 19 million against Q4 2009, spread across all
businesses.
Polymer Intermediates
--------------------------------------------------------+---------------
in EUR million | first quarter
--------------------------------------------------------+------+--------
| 2010 | 2009
--------------------------------------------------------+------+--------
| |
--------------------------------------------------------+------+--------
Net sales | 314 | 139
--------------------------------------------------------+------+--------
Operating profit before depreciation and amortization | 51 | -22
--------------------------------------------------------+------+--------
Operating profit | 43 | -30
--------------------------------------------------------+------+--------
Organic sales growth was +135% compared to Q1 2009, when the downturn for
Polymer Intermediates was at its strongest. Compared to Q4 2009, volumes
increased by +5% and prices by +17% reflecting increasing raw material
prices
(which could be passed on) and strong demand especially in China, where the
economy is growing very fast.
As a result, compared to Q1 2009 as well as Q4 2009, operating profit
showed a
significant increase for both the caprolactam and the acrylonitrile
businesses.
Base Chemicals and Materials
--------------------------------------------------------+---------------
in EUR million | first quarter
--------------------------------------------------------+------+--------
| 2010 | 2009
--------------------------------------------------------+------+--------
| |
--------------------------------------------------------+------+--------
Net sales | 196 | 142
--------------------------------------------------------+------+--------
Operating profit before depreciation and amortization | 25 | -7
--------------------------------------------------------+------+--------
Operating profit | 18 | -15
--------------------------------------------------------+------+--------
Organic sales growth amounted to +38% compared to Q1 2009 and +14% compared
to
Q4 2009. At DSM Elastomers net sales improved due to a pick-up in the
automotive
industry as well as some re-stocking.
The operating profit of EUR 18 million was mainly driven by DSM Elastomers
as a
result of a higher sales value combined with higher margins.
Other activities
---------------------------------------------------------+---------------
in EUR million | first quarter
---------------------------------------------------------+------+--------
| 2010 | 2009
---------------------------------------------------------+------+--------
| |
---------------------------------------------------------+------+--------
Net sales | 103 | 110
---------------------------------------------------------+------+--------
Operating profit before depreciation and amortization | -33 | -34
---------------------------------------------------------+------+--------
Operating profit | -47 | -46
---------------------------------------------------------+------+--------
of which: | |
---------------------------------------------------------+------+--------
- Defined Benefit Plans | -18 | -18
---------------------------------------------------------+------+--------
- Innovation Center | -15 | -15
---------------------------------------------------------+------+--------
- Other | -14 | -13
---------------------------------------------------------+------+--------
The operating profit of Other activities remained at the same level.
Exceptional items
In view of the announced sale of DSM Agro and DSM Melamine these business
were
reclassified to assets held for sale at the end of Q1 2010. The businesses
are
valued at fair value less costs to sell upon reclassification, resulting in
a
loss of EUR 17 million (EUR 14 million after tax) that is reported as
exceptional
item.
Net profit
Net profit increased from EUR 13 million in Q1 2009 to EUR 130 million in
Q1 2010.
Net earnings per share increased to EUR 0.78 per ordinary share in Q1 2010
versus
EUR 0.06 in Q1 2009.
Net finance costs amounted to EUR 21 million in Q1 2010, EUR 6 million
lower than
last year mainly as a result of a lower average net debt.
The effective tax rate for the first quarter was 25%, the same as last
year.
Cash flow, capital expenditure and financing
Cash flow from operating activities in Q1 amounted to EUR 137 million.
Cash flow related to capital expenditure in Q1 2010 amounted to EUR 98
million
compared to EUR 116 million in Q1 2009.
Compared to year-end 2009 net debt increased by EUR 41 million to EUR 871
million,
representing a gearing level of 14%. This increase was the balance of a
decrease
due to a positive free cash flow and an increase because of a weaker euro.
Workforce
Compared to year-end 2009 the workforce decreased by 133. The workforce
stood at
22,605 at the end of Q1 2010, representing an overall decrease of 1,447
since
the start of the cost saving program at the end of Q3 2008.
Progress update on DSM Strategy Vision 2010
DSM's acceleration of the strategic program Vision 2010 - Building on
Strengths,
announced in September 2007, focuses on delivering faster growth, higher
margins
and improved earnings quality from the company's portfolio. The strategy
will
transform DSM into a Life Sciences and Materials Sciences company capable
of
sustainable growth fueled by important societal trends.
The key drivers - market-driven growth and innovation, increased presence
in
emerging economies and operational excellence - remain at the heart of
DSM's
strategy.
Improving earnings quality
To date, DSM has made substantial progress with the portfolio
transformation.
Following the divestment of DSM Energy and the urea licensing subsidiary
Stamicarbon BV last year and the announced sale of DSM Agro and DSM
Melamine
this quarter (with an expected closing in Q2 2010) a significant proportion
of
the planned divestment program will have been completed. The selling
process for
most of the remaining businesses in Base Chemicals and Materials is
underway.
Other actions to improve the portfolio included the closure of the citric
acid
plant in Wuxi (China) and the reduction in the number of DSM Anti-
Infectives'
sites (e.g. closure of Strängnäs (Sweden) where mainly clavulanic acid was
produced, a management buy out of the side chain business DSM Deretil
(Spain)
and the closure of the loss-making DSM Anti-Infectives site in Egypt as
communicated in April, the costs of which are to be recognized in Q2 2010).
Only a limited number of smaller acquisitions and venturing investments
have
been made, the most important one being the acquisition of The Polymer
Technology Group by DSM Biomedical.
A large proportion of group revenues and earnings are now in high margin,
high
quality businesses that have significantly lower cyclicality. A testament
to
the quality of this business is that by the first quarter of 2010 profits
from
these core operations were at the same level as in 2008.
Further progress in the first quarter
DSM realized record sales in China in Q1 2010. Net sales more than doubled
compared to Q1 2009 to USD 405 million, driven by the Materials Sciences
clusters although Nutrition also showed a very healthy double digit sales
growth. Compared to Q4 2009, sales in China increased by 8%. DSM expects to
achieve the USD 1.5 billion target for 2010. The focus on and efforts put
into
the development of DSM's position in China are clearly paying off.
DSM Engineering Plastics announced that it has signed the contracts with
Mitsubishi Chemical Corporation (MCC) enabling DSM to acquire MCC's
Novamid®
polyamide business in exchange for DSM's Xantar® polycarbonate business.
The
transaction is subject to various external approvals. Closing is expected
in Q2
2010.
DSM has acquired full control of the polyamide 6 polymerization facility of
Nylon Polymer Company, LLC (NPC) in Augusta (Georgia, USA). Previously Shaw
Industries and DSM Chemicals North America were joint venture partners in
NPC. As a result of the transaction, the facility was fully integrated into
DSM
Engineering Plastics' activities as of 1 January 2010.
DSM Nutritional Products (Animal Nutrition & Health) reached agreement to
acquire the industrial premix business from Bayer Korea in March 2010. The
acquired business will be fully integrated in DNP Korea Ltd., which will
supply
the Korean customers with high quality products. The transaction will be
completed after approval has been received from the Korean authorities.
DSM also opened a new plant for the production of wet polyesters and other
specialty resins in Meppen (Germany). Total investment costs amounted to
EUR 15
million.
In the Emerging Business Areas, where DSM is developing at least two
new growth platforms, DSM White Biotechnology made further progress in its
cooperation with Roquette. The demonstration plant produced the first
commercial
bio-based succinic acid in Q1 2010. The development of DSM Biomedical is
also
well on track.
In line with its continuous efforts to improve its cost base and
to strengthen its competitive position, at the beginning of the second
quarter
DSM announced a number of structural cost-saving actions, such as the
closure of
the loss-making DSM Anti-Infectives site in Egypt. In Germany, DSM
Nutritional
Products started a project to improve the viability and competitiveness of
the
Grenzach site.
During the quarter, DSM announced and introduced many new innovations. More
information can be found in the innovation section at www.dsm.com.
Outlook
Most of the markets that are relevant to DSM saw a strong recovery in the
first
quarter with activities in emerging markets well above pre-crisis levels.
Going
forward, continued growth is expected. Of course there are still macro-
economic
risks that could affect the sustainability of this global recovery. Whilst
DSM
has been capturing growth opportunities, a focus on cash generation and
cost
saving programs remain important. This will secure financial flexibility
and a
strong balance sheet to take advantage of opportunities that will arise.
The food and feed markets are expected to grow in line with GDP in 2010.
The
Nutrition cluster is expected to achieve sustained good performance with
results
approaching those of last year, with an ongoing increase in demand and
relatively stable price levels in both the food and feed markets.
For Pharma, results are expected to be lower than in 2009 due to ongoing
challenges at DSM Pharmaceutical Products and continued low prices at DSM
Anti-Infectives. The Pharma cluster clearly has some very tough quarters
ahead
of it.
DSM is experiencing recovery in its Materials Sciences end markets and has
seen
additional demand in the automotive, electronics and textile markets.
Demand in
building and construction and marine markets remained at relatively low
levels
compared to the pre-recession situation. The favorable business conditions
are
currently expected to continue, although with a potentially lower impact on
demand in the later part of 2010 from re-stocking. Strict margin management
is
being applied to pass on the increasing costs of raw materials in the
current
favorable trading conditions. DSM Dyneema is on track to return to double
digit
sales growth in 2010. Sales volumes in Polymer Intermediates are expected
to be
somewhat lower in Q2 and Q3 2010 due to planned turnarounds. Results in the
Performance Materials and Polymer Intermediates clusters are expected to be
substantially better than in 2009.
Operating profit in the non-core Base Chemicals and Materials is expected
to be
clearly positive in 2010.
The strong Q1 2010 results and the continued positive business conditions
give
DSM confidence that 2010 will be a good year for the company.
Additional information
Today DSM will hold a conference call for the media from 8.30 AM - 09.00 AM
CET
and a conference call for investors and analysts from 10.00 AM - 11.00 AM
CET.
Details on how to access these calls can be found on the DSM website,
www.dsm.com. Also, information regarding
DSM's Q1 2010 results can be found in the Presentation to Investors, which
can
be downloaded from the Investors section.
Important dates
Report for the second quarter: Tuesday, 3 August 2010
Report for the third quarter: Tuesday, 2 November 2010
Annual Report 2010: Wednesday, 23 February 2011
Annual General Meeting of Shareholders: Thursday, 28 April 2011
DSM - the Life Sciences and Materials Sciences Company
Royal DSM N.V. creates solutions that nourish, protect and improve
performance.
Its end markets include human and animal nutrition and health, personal
care,
pharmaceuticals, automotive, coatings and paint, electrical and
electronics,
life protection and housing. DSM manages its business with a focus on the
triple
bottom line of economic prosperity, environmental quality and social
equity,
which it pursues simultaneously and in parallel. DSM has annual net sales
of
about EUR 8 billion and employs some 22,700 people worldwide. The company
is
headquartered in the Netherlands, with locations on five continents. DSM is
listed on Euronext Amsterdam. More information: www.dsm.com.
For more information
DSM, Corporate Communications
tel.: +31 (45) 5782421
e-mail: media.relations@dsm.com
Investors
DSM, Investor Relations
tel.: +31 (45) 5782864
e-mail: investor.relations@dsm.com
internet: www.dsm.com
[HUG#1409069]
Press release-pdf: http://hugin.info/130663/R/1409069/361683.pdf