DSM Says its Market Positions Remain Strong Despite A Challenging 2013
27 Feb 2014 --- In its full year results statement for 2013, Royal DSM has announced its market positions remain strong, despite a combination of challenges which affected its Nutrition division last year. For the full year of 2013 DSM delivered 18% higher EBITDA, and this was 30% higher in Q4.
The global science-based company, which is active in health, nutrition and materials, said its Nutrition division was impacted by a combination of unrelated market headwinds in 2013. These included a weakness in dietary supplements and fish oil-based Omega 3 markets in the US, soft demand in Western food and beverage markets, and price pressures, especially in vitamin E following weak demand in animal feed markets earlier in the year. Impact from these factors was more pronounced through the end of the year than anticipated, the company said.
Commenting on these results, Feike Sijbesma, CEO/Chairman of the DSM Managing Board, said: “We achieved significant strategic progress in 2013, also demonstrated by an 18% increase in full year EBITDA and strong cash generation. We were pleased with the strong performance in Materials Sciences in Q4. Despite the moderate Q4 results in Nutrition, due to currencies and market weakness, DSM’s market positions remained strong. This business with its broad, global offering across the value chain is well positioned to benefit from the structural megatrends, with the need to nourish a growing and aging global population, living increasingly in urban areas, paying more attention to health and well-being. This will continue to drive increased demand for nutritional ingredients.”
Within Nutrition, sales in the fourth quarter increased 12% compared with Q4 in 2012, driven mainly by acquisitions. In Human Nutrition & Health organic sales growth in Q4 was 1% and volumes were essentially flat due to lower consumer demand in the US for dietary supplements and also fish oil-based Omega 3 dietary supplements. However, Premixes and Infant Nutrition showed good performance, the company said.
DSM Food Specialties had a good Q4 with continues growth in food enzymes and cultures.
Overall the acquisitions also performed well in Q4. Martek, Fortitech and Tortuga exceeded expectations. Ocean Nutrition Canada was confronted with market headwinds towards the end of the year. The integration of acquisitions is well advanced and synergies have been delivering according to plan. DSM said it continues to implement further efficiency improvements in support of its unique business model in Nutrition.
“We remain firmly on track to deliver on our strategy and to create sustainable value with all our clusters,” said Sijbesma. “Therefore we propose a dividend increase of 10%. In the short term our focus will continue on the operational performance of our businesses, supported by our Profit Improvement Program and intensified R&D and innovation programs.”
DSM continues to focus on its strategy ‘driving focused growth’ which it announced in 2010. It marks the shift from an era of intensive portfolio transformation to a strategy of maximising sustainable and profitable growth. The company is fuelled by three main societal trends: global shifts, climate & energy and health & wellness. In Nutrition its 2015 targets remain unchanged: sales growth of GDP +2% with an EBITDA margin of 20-23%.
Looking forward, DSM said it takes a prudent approach, assuming the unfavourable January 2014 foreign exchange rates are maintained for the year. It assumes a continued challenging macro-economic environment, with low growth in Europe, modest growth in the US and a slowdown in the high growth economies.
Due to the transaction announced with JLL Partners, DSM Pharmaceutical Products has been classified as Asset held for Sale and discontinued operations.
By Sonya Hook
