DSM reports “solid nine months” amid challenging COVID-19 environment
03 Nov 2020 --- Royal DSM reports a “solid first nine months in a challenging COVID-19 environment,” with a continuing robust performance in Q3, despite significant adverse foreign exchange effects.
According to the company, group sales stable and adjusted EBITDA was down by 3 percent. Nutrition sales increased by 4 percent and organic sales were up 5 percent.
Overall, the adjusted net profit was down 8 percent to €544 million (US$636 million).
Total group net profit was €453 million (US$529 million).
DSM reported “a solid Q3” despite significant adverse foreign exchange effects. “The first nine months of 2020 were impacted by the COVID-19 pandemic, with Nutrition overall performing well in this environment and Materials significantly affected,” Geraldine Matchett and Dimitri de Vreeze, co-CEOs, explain.
“During this period, we have taken timely actions to protect profitability and cash flow generation, while we continued to execute our long term strategy. We closed two acquisitions in Nutrition, including the Erber Group in October, and announced the divestment of our Resins and Functional Materials businesses.”
DSM’s businesses performed in line with company expectations for Q3 as set out in early August.
On October 1, 2020, DSM completed the acquisition of the majority of assets of the Erber Group, an essential step in the expansion of its specialty Animal Nutrition and Health solutions, for an enterprise value of €980 million (US$1,146 million).
COVID-19’s impact
In the first nine months, DSM estimates that Nutrition saw a slightly positive impact on sales from COVID-19.
The company will continue to monitor the evolution of COVID-19 and its potential impact on the different end markets it operates in and is prepared to take further actions if needed.
These include the distribution of immunity-optimizing products to communities, healthcare workers and employees and their families and the production of viral test equipment and disinfectant.
DSM also joined several global collaborative “Build Back Better” initiatives.
On October 1, 2020, DSM completed the acquisition of the Erber Group's majority of assets.
Outlook for 2020
DSM suspended its overall earnings outlook for the full year 2020 earlier this year owing to COVID-19 related uncertainties in Materials.
For Nutrition, DSM indicated it expected to deliver at least a mid-single-digit increase in Adjusted EBITDA for 2020, which is unchanged.
Trading conditions during Q3 were in line with expectations as communicated in August with the Q2 results. Nutrition performed well, despite a significant negative foreign exchange effect of minus 6 percent.
Edited by Elizabeth Green
