DSM to Sell Citrique Belge Business, Sets Strong Growth Targets for Nutrition

After the closure of DSM’s citric acid manufacturing plant in Wuxi (China) in Q1 2009, DSM’s citric acid business consisted only of the Citrique Belge operations, located in Tienen (Belgium).

Sep 23 2010 --- Royal DSM N.V. has reached an agreement regarding the sale of Citrique Belge to Adcuram. The intended sale is expected to close in Q4 2010, subject to regulatory and other customary approvals and notifications.

The intended sale of Citrique Belge is a result of DSM’s ambitions to focus on Life Sciences and Materials Sciences. As announced in September 2007, DSM’s citric acid interests do not fit with this focus. After the closure of DSM’s citric acid manufacturing plant in Wuxi (China) in Q1 2009, DSM’s citric acid business consisted only of the Citrique Belge operations, located in Tienen (Belgium).

Both parties have agreed not to disclose financial details at this time. Net sales of Citrique Belge in 2009 were above € 100 million. DSM expects to report a book loss of around € 40 million as a result of the transaction, albeit the transaction represents a very reasonable multiple on profits made by the unit. Approximately 250 employees will transfer to the new owner upon closing.

Stephan Tanda, Member of the DSM Managing Board and responsible for Citrique Belge, commented: “The sale of Citrique Belge is yet another step forward for DSM in its ongoing transformation towards a Life Sciences and Materials Sciences company. With the intended sale to Adcuram, a privately owned group with a long-term approach, I have every confidence in a good future for the company under new ownership. I would like to thank all Citrique Belge employees for their ongoing support and substantial contribution to DSM.”

Thomas Probst, Member of the Adcuram Board commented: “With the acquisition of Citrique Belge, we follow our strategy to invest in leading chemical businesses. Also, it shows our commitment to invest outside Germany. We will invest heavily in Citrique Belge to grow the business and to further improve its leading position in the industry. We are proud that DSM chose Adcuram as the best new owner of this reputable company.” After transactions with Bayer and Dow, this is Adcuram´s third acquisition from a leading international chemical group.

Citrique Belge is one of the major producers of citric acid world-wide. The product is used as a pH regulator and flavor enhancer in soft drinks, fruit juices, sweets, jams and jellies. It is also used as a binding agent in biodegradable detergents and in other applications such as antioxidant. Citrique Belge has been producing citric acid since 1929.

The news came before DSM announced ambitious new targets as key elements of its new strategy, DSM in motion: driving focused growth. This strategy further builds on Vision 2010, a phase of portfolio transformation during which DSM achieved most of its targets despite the economic downturn.

DSM has reported that it expects the high growth economies to contribute from currently ~32% towards 50% of DSM’s total net sales by 2015. Over 70% of DSM’s total growth in the period to 2015 is expected to come from high growth economies. DSM will continue its strong focus on China and expects to more than double its China sales to > $ 3.0 billion by 2015, supported by intended capital expenditures of $ 1 billion.

Commenting on the strategy announcement, Feike Sijbesma, CEO/Chairman of the DSM Managing Board, said: "We are very proud of what we have achieved with our Vision 2010 strategy over the past five years. We have met most of our targets but even more importantly, we have demonstrated that we made the right decisions for the long-term future of the company. With our transformation into a Life Sciences and Materials Sciences company largely completed, our focus now is on growth.”

“We have set ambitious sales and profitability targets. To realize these, we will take all four growth drivers, which are High Growth Economies, Innovation, Sustainability and Acquisitions & Partnerships, to the next level. By strengthening our regional presence, we will further adjust our organization to become truly global. As we enter this new and exciting phase for our company I have every confidence our 22,000 employees will deliver on our objectives."

DSM announced that it is aiming for “continued value growth”for its Nutrition cluster. The aspirations for the Nutrition cluster are a sales growth of 2% above GDP and a sustainable EBITDA-margin level of more than 20% towards 23%. Building on the successful value creation of the past years, the Nutrition cluster will focus on further improving the quality of earnings and leveraging the scale and scope of its global activities. This will be done by growing and strengthening the core of the cluster’s businesses while also developing new business areas. The focus will be on structural cost improvements, building on the successful differentiation and innovation strategy, expansion of its premix network and pursuing acquisitions and partnerships.