DSM Reports Good Third Quarter
Sales in the nutrition cluster increased by 7%. This was the balance of higher sales volumes, higher selling prices and negative exchange-rate effects (mainly US dollar). Compared to Q3 2006, DSM Nutritional Products achieved solid volume growth.
25/10/07 Dutch chemical giant DSM has reported a strong thid quarter. Net sales from continuing operations in Q3 2007 were up 4% from Q3 2006 due to organic growth (+5%). The effect of exchange-rate developments on DSM's net sales was 2% negative. The US dollar was on average 7% lower against the euro, and the Japanese yen 9%. Sales volumes in Industrial Chemicals were negatively affected by the unplanned outage of the European caprolactam plant (as already mentioned in the Q2 report) and planned turnarounds in acrylonitrile and the Chinese caprolactam plant.
Q3 operating profit from continuing operations amounted to EUR 214 million, EUR 5 million above Q3 2006. The unfavorable impact of exchange rates, the phasing-out of contracts related to the Roche Vitamins acquisition, and the unplanned outage of the European caprolactam plant plus increased innovation expenditure were more than compensated for by the strong underlying business development.
The negative effects mentioned above amounted to almost EUR 50 million (of which around EUR 10 million related to the Roche contracts) in Q3 compared to last year. All clusters contributed to offsetting these negative effects. In Nutrition, volumes and market share increased, while the downward trend in vitamin prices was reversed. In Pharma, DSM Anti-Infectives was able to profit strongly from the shift in the demand-supply balance for penicillin by increasing prices of penicillin-related products. Performance Materials is sustaining its very positive volume trend and Industrial Chemicals further increased its margin.
Sales in the nutrition cluster increased by 7%. This was the balance of higher sales volumes, higher selling prices and negative exchange-rate effects (mainly US dollar). Compared to Q3 2006, DSM Nutritional Products achieved solid volume growth. The downward price trend in some of the main vitamins was reversed, supported by the differentiation strategy (e.g. Quali-C branding). The situation in carotenoids was unchanged because of running yearly contracts. DSM Nutritional Products' operating profit decreased, mainly because of the strong negative impact of the US dollar, the phasing-out of contracts with Roche, innovation expenditure and costs related to moving the activities of the Gonglu site to Xinghuo (both in China). DSM Food Specialties' sales and operating profit decreased due to lower sales volumes (the remaining effect of the phasing-out of phytase tolling) and higher innovation costs. DSM Special Products (benzoic acid and benzaldehyde) showed a profit this quarter due to higher sales volumes and margins.
