DSM Performance Lifted by Nutrition Business, Maintains Goals
5 Nov 2013 --- Royal DSM has reported a third quarter EBITDA of €342 million compared to €270 million in Q3 2012. This improvement of 27% was realized despite an ongoing challenging macro-economic environment. Commenting on the results, Feike Sijbesma, CEO/Chairman of the DSM Managing Board, said: “I am pleased to report increased profitability in all our business clusters despite the initial impact from adverse currency movements and a continued challenging macro-economic environment. Nutrition continued its good performance notwithstanding some headwinds that emerged towards the end of Q3. Materials Sciences also delivered solid performance with higher profits.”
“Our focus remains on the full integration of acquisitions and delivery of synergies, which together with continued success in our wide-ranging Profit Improvement Program will help improve DSM’s returns. Current trading conditions are similar to those experienced at the end of Q3, while foreign exchange rates deteriorated. Nevertheless, we are firmly on track to deliver a significant increase in EBITDA for the full year. The 2013 outlook given at our Capital Markets Day remains unchanged.”
Sales in Q3 rose 12% for Nutrition compared to Q3 2012, mainly driven by acquisitions. Organic sales growth was 2% compared to Q3 2012. Currencies had a -4% impact on sales compared to Q3 2012. EBITDA for Q3 was €242 million, up 20% from Q3 2012. The increase was driven by acquisitions, organic growth and the Profit Improvement Program. The EBITDA margin of 22.8% was again at the upper end of DSM’s target range. The favorable product mix was partly offset by the initial impact from adverse currency movements.
Human Nutrition & Health delivered 5% organic growth compared to Q3 2012, mainly driven by volume. Compared to the previous quarter, organic sales development was -5% driven by the soft demand faced by Food & Beverage customers in developed markets. Moreover, demand for fish oil based Omega 3 dietary supplements was impacted by sharp retail price increases as the entire value chain pushed through higher raw materials prices. Infant nutrition and premixes performed well. In Q3 Fortitech realized sales of €47 million and EBITDA of €12 million, in line with expectations.
Animal Nutrition & Health delivered an organic sales growth of 1% compared to Q3 2012, driven by the continued recovery in global animal protein production. However, this recovery remains fragile creating price pressure towards the end of the quarter especially in vitamin E. In addition, poultry and aquaculture protein markets continued to be impacted by diseases in several high growth economies. In Q3 Tortuga delivered sales of €76 million and EBITDA of €15 million, in line with expectations. DSM Food Specialties showed sales growth driven by the contribution of the acquired cultures and enzymes business.
DSM warned that ehe challenging macro-economic environment experienced during the first three quarters of 2013 continues, with little or no growth in Europe. Asia continues to show good levels of economic activity, though at more modest levels, while the US maintains a modest rate of recovery.
Nutrition is expected to show clearly higher results than in 2012 due to organic growth moving towards the target of 2% above GDP and the acquisitions made, with EBITDA margins well within the 20-23% range. However, the recovery in animal protein markets remains fragile, currently leading to some pricing pressure especially in vitamin E. Additionally, fish oil-based Omega 3 sales are being impacted by somewhat lower consumer demand following recent sharp retail price increases. Overall, the compelling growth drivers of the Nutrition business remain unchanged.
