DSM profits fall but reports solid H1 2020 results amid COVID-19 challenges

04 Aug 2020 --- In DSM Food Specialties’ first half-year results, issued today, the company’s Nutrition segment delivered a steady performance in light of the COVID-19 pandemic. Pushed up demand in this context was driven in part by stocking – especially packaged foods in food and beverage and early life nutrition – while the company notes end user demand for immunity-optimizing products remained strong.

DSM outlines adjusted net profit down by 4 percent to €399 million (US$471 million), with net profit at €270 million (US$319 million).

Geraldine Matchett and Dimitri de Vreeze, Co-CEOs at DSM, comment: “Our teams continued to successfully navigate the challenging global environment, with Q2 developments in line with the expectations we set out in May. Business conditions for Nutrition were good overall in the first half, with spikes in demand for Animal Nutrition in Q1 and Human Nutrition in Q2 as end-markets reacted in response to COVID-19.” 

DSM’s Nutrition segment delivered robust organic sales growth of 9 percent, including an up to 2 percent COVID-19 effect, with 11 percent growth in Human Nutrition, which “saw additional COVID-19 driven demand across all end markets.”

Normalized trading conditions
By the end of the quarter, Human Nutrition saw more normalized trading conditions. Animal Nutrition (9 percent organic growth) saw continued overall solid business conditions, although the company notes that the large stock building effects of Q1 began to partly reverse in the second half of the quarter.

“Early in the year we launched the Fit for Growth program in Nutrition. The new organizational structure, which enables a more differentiated go-to-market approach, is in place and we are now working on further building out our specialty business. Our recent acquisitions all add to our specialty solutions offerings, accelerating our growth strategy,” DSM’s Co-CEOs note.

“The global human impact of the COVID-19 pandemic is a clear lesson and therefore we have joined several of the ‘Build Back Better’ initiatives. As a purpose-led organization, we believe it is more important than ever for the world to commit to a more sustainable, fair and resilient future.”

On 12 June 2020, DSM announced the acquisition of the majority of assets of the Erber Group, an important step in the expansion of its specialty Animal Nutrition and Health solutions, for an enterprise value of €980 million (US$1.2 billion). 

Biomin and Romer Labs, the acquired businesses of the Erber Group, will enable DSM with a new arm in mycotoxin risk management, gut health performance management and food and feed safety diagnostic solutions. The acquisition is expected to complete in Q4 2020 subject to regulatory approval. To finance the acquisition, DSM has issued two long-term bonds for €1 billion (US$1.2 billion). 

Edited by Benjamin Ferrer