DSM to Cut Up to 1100 Support Jobs, Nutrition Efficiencies to Follow in November
25 Aug 2015 --- DSM has revealed adjustments to its organizational and operating model. Following recent portfolio changes, these adjustments aim to create a more agile, focused and cost efficient organization, with a stronger business and market focus and globally leveraged support functions. The initiatives will result in a reduction in headcount of 900-1100 FTEs, of which approximately half in the Netherlands and to be fully implemented by the end of 2017. The company currently has about 4,400 support functions in place, so the move will affect approximately 20% of support functions.
The structural savings from the reduced headcount and lower spend are estimated at €125-150 million compared to 2014, to be fully achieved by end of 2017. One-off restructuring charges, including severance costs, are estimated at €150-175 million before tax.
This new organizational model will apply to Finance, HR, Legal, IT, Business Services, Indirect Sourcing, Communications and Corporate departments as well as the Regional centers. In addition, DSM will implement efficiency measures in its major R&D centers globally.
In addition to the changes above, DSM is developing a business (growth) improvement and efficiency program for the Nutrition business that will be communicated at the Capital Markets Day on 4 November 2015, at which moment the company will also communicate strategy and goals for the years to come.
“We will then tell more about our growth and efficiency programs in our Nutrition business, going together with an update of our strategy for the years to come. This is another program that is mainly not in the Netherlands, as the Nutrition business is mainly operating out of Switzerland, US, China etc., with a very small part in the Netherlands,” Feike Sijbesma, CEO/Chairman of the Managing Board, Royal DSM told a conference call this morning.
Sijbesma would not rule out further redundancies in Nutrition later this year, however. “What we are doing today is very much focusing on growing the business after a period of acquisitions and portfolio changes. We now said that we want to fully focus on operational performance and the business focus on growth. By doing that we said that we would fully focus on the prime functions like R&D, innovation, sourcing, manufacturing and selling the product. That is what we need to do. By bundling them we can make reduced costs and make ourselves more competitive. In November, we will go further in saying what you can exactly expect in Nutrition,” he added.
After a period of major acquisitions, DSM will now mainly focus on organic growth. Sijbesma confirmed that the company is not busy with any large acquisitions at this moment and does not expect anything in the short term, while this program is running. “I believe that it is healthy for a company to focus on integration and operational performance and focus on organic growth after a period of acquisitions and portfolio adjustment,” he said.
DSM also announced that it will strengthen its management structure by establishing an Executive Committee, enabling faster strategic alignment and operational execution by increasing focus on the development of the business, innovation and people. The members of the Executive Committee will be the Managing Board members Feike Sijbesma (CEO/Chairman), Geraldine Matchett (CFO), Stephan Tanda (Life Sciences) and Dimitri de Vreeze (Materials Sciences), as well as Chris Goppelsroeder (Nutritional Products), Philip Eykerman (Strategy and M&A), Rob van Leen (R&D and Innovation) and Peter Vrijsen (Human Resources).
by Robin Wyers
