DSM Volume Growth Up 7%, Nutrition Sales Down

26/10/06 Dutch chemical giant DSM has reported a good Q3 result with solid volume growth (+7%) and higher selling prices (+4%) At EUR 209 million, the Operating profit from continuing operations for the third quarter of 2006 was slightly lower (EUR 6 million; 3%) than in the excellent Q3 2005. Net profit amounted to EUR 140 million, down 7% from the third quarter of 2005 (EUR 151 million).

The Operating profit from continuing operations for the first nine months of 2006 was EUR 649 million, up EUR 42 million (7%) from the first nine months of 2005. Net profit for the first nine months was EUR 458 million, up 10% (EUR 43 million). The net profit included a positive contribution of EUR 26 million from exceptional items (EUR 10 million negative in 2005).

Commenting on DSM’s third quarter results, Peter Elverding, Chairman of the DSM Managing Board, said: “We had a good third quarter, in line with our expectations. Increased energy prices and raw materials costs had the anticipated effects on the results of this quarter, preventing us from reaching the high level achieved in the same period last year. We confirm our expectation that the operating profit for the fourth quarter will be better than that of last year. For the full year I expect a 6 to 8% higher operating profit”.

Sales in the nutrition cluster were slightly lower as higher sales volumes were offset by the negative effects of slightly lower selling prices and exchange rates and the contractual phasing-out of the phytase tolling activities. All businesses in this cluster faced higher costs for energy and raw materials and higher innovation expenditure. Compared to the excellent Q3 2005, DSM Nutritional Products achieved solid volume growth at slightly lower prices. DSM Nutritional Products’ operating profit decreased because of shutdowns and negative exchange-rate effects. DSM Food Specialties’ sales and operating profit decreased due to the contractual phasing-out of the phytase tolling business. The losses at DSM Special Products (benzoic acid and benzaldehyde derivatives) increased compared to Q2 2006 due to the increase in raw-material costs.