DSM reports growth in food ingredients business amid macroeconomic headwinds

01 Nov 2022 --- With energy costs weighing down productivity in Europe, DSM has lowered its full year 2022 outlook.

However, the Dutch nutrition giant’s Food & Beverage arm delivered growth with volumes up 3% and strong pricing of 11% with Dairy, Baking, Beverages and Hydrocolloids performing particularly well.

The company disclosed that its businesses delivered a “solid performance” in the first nine months of 2022, with sales up 19% and organic sales growth of 10%.

In particular, the company reports its Food & Beverage division recorded 12% organic sales growth, while the value was 10% for Health, Nutrition & Care and 8% for Animal Nutrition & Health.

“All our businesses delivered good organic growth during the third quarter. We continue to counter rising energy and raw material prices, which accelerated especially in Europe, albeit with a time lag. Market demand remained resilient across our three businesses in a challenging macroeconomic environment,” comments Geraldine Matchett, co-CEO.

Meanwhile, Dimitri de Vreeze, co-CEO, mirrors a positive outlook for DSM’s mid-term financial targets.

“Since their announcements back in May, good progress has been made toward closing the divestment of DSM Engineering Materials to Advent International and LANXESS, and our forthcoming merger with Firmenich,” he remarks.

“These significant steps will lead to the establishment of DSM-Firmenich, a purpose-led creation and innovation partner in nutrition, beauty and well-being.”

The Dutch nutrition giant now expects its adjusted EBITDA for its health, nutrition and bioscience, and corporate activities to increase by low-single digits.

Nine-month overview
Q3 saw strong organic sales growth, with ongoing solid end-use demand in an increasingly inflationary environment.

Meanwhile, Health, Nutrition & Care delivered strong growth with pricing 8% and solid sales volumes 3% with strong performance within its Early Life Nutrition segment.

Animal Nutrition & Health volumes were in-line with a strong prior year that had delivered 14% volume growth. Pricing increased 6% in Q3, in comparison to 11% in H1, reflecting lower pass-through costs and lower vitamin prices.

Health Nutrition & Bioscience Adjusted EBITDA was up 3%, with an 8% contribution from acquisitions and foreign exchange effects.

The Adjusted EBITDA margin for these businesses was 17.5%, compared to 20.5% in the prior year period, with a 150 bps dilutive mathematical effect from price increases and foreign exchange effects.

Innovation pipeline
DSM continues to perform strongly in its innovation rollouts, recently unveiling its first portfolio of all-in-one cultures for fermented milk products.

These are developed using a new AI-powered platform. According to the company, this is “just the start of using AI to solve the F&B industry’s biggest challenges.”

In September, Royal DSM has expanded its cheese portfolio into the growing plant-based market. Executives at the company spoke exclusively with FoodIngredientsFirst on developments in the sector.

Over the summer, DSM acquired Brazilian animal nutrition tech company Prodap. Global precision farming has seen bullish growth recently driven by a demand for efficiency, traceability and improved animal welfare.

In March, the supplier extended its DelvoGuard bioprotective culture range to combat food waste in yogurts while simultaneously balancing taste and texture. The launch included four new DelvoGuard bioprotective cultures, which allow yogurt manufacturers to extend shelf life naturally.

Edited by Benjamin Ferrer