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• Sales up 8%, driven by 7% organic growth in Nutrition and foreign exchange
• Solid volume growth in Human Nutrition; very strong volume growth in Animal Nutrition
• Nutrition EBITDA: negative impact of vitamin E and Swiss franc largely offset
• Performance Materials EBITDA: improved on lower input costs and cost savings despite soft sales
• Strong operating cash flow of €300 million
• 2015 outlook maintained

third quarter					price /	exch.
2015	2014	yoy	in €m	volume	mix	rates	other
			Group
1,945	1,794	8%	Sales	2%	-1%	6%	1%
287	281	2%	EBITDA
			Nutrition
1,253	1,091	15%	Sales	6%	1%	6%	2%
213	225	-5%	EBITDA
			PM
631	638	-1%	Sales	-3%	-5%	7%	0%
102	87	17%	EBITDA

Commenting on the results, Feike Sijbesma, CEO/Chairman of the DSM Managing Board, said:
"DSM continued to make good progress in Q3 in both EBITDA and cash generation. These results demonstrate the benefits of our focus on improving our operational performance. We are starting to implement the previously announced €125-150 million cost reduction program for the DSM-wide support functions. Tomorrow at our Capital Markets Day, we will announce our strategy and targets for the coming years, as well as an additional efficiency and cost reduction program in Nutrition.

It is increasingly difficult to predict macro-economic developments. Assuming no major changes in current market conditions for the remainder of this year, we maintain our full year outlook to deliver an EBITDA in 2015 ahead of 2014, the increase mainly driven by positive foreign exchange effects."
  
Sales, EBITDA, operating working capital and cash flow refer to continuing operations.

Key figures

third quarter							exch.  rates
2015	2014	+/-		in € million	volume	price/mix		other
				Net sales
1,253	1,091	15%		Nutrition	6%	1%	6%	2%
631	638	-1%		Performance Materials	-3%	-5%	7%
42	40	5%		Innovation Center	-5%	-1%	11%
19	25			Corporate Activities
1,945	1,794	8%		Total continuing operations	2%	-1%	6%	1%
157	529			Discontinued operations
third quarter					January - September
2015	2014	+/-		in € million	2015	2014	+/-
				EBITDA
213	225	-5%		Nutrition	616	650	-5%
102	87	17%		Performance Materials	294	243	21%
0	-4			Innovation Center	-8	-15
-28	-27			Corporate Activities	-88	-94
287	281	2%		Total continuing operations	814	784	4%
3	34			Discontinued operations	94	94
123	132	-7%		Core net profit (continuing operations)	340	360	-6%
106	113	-6%		Net profit before exceptional items,	285	312	-9%
				continuing operations
36	93	-61%		Net profit after exceptional items, total DSM	65	252	-74%
0.70	0.76	-8%		Core EPS (€/share)	1.95	2.08	-6%
0.59	0.64	-8%		Net EPS before exceptional items, continuing operations (€/share)	1.61	1.78	-10%
0.19	0.51	-63%		Net EPS after exceptional items, total DSM (€/share)	0.33	1.41	-77%
300	252			Cash flow from continuing operations	487	387
113	87			Capital expenditures continuing operations (cash, net of customer funding)	321	269
				Net debt	2,395	2,420	*
				* year-end 2014

In this report:

• 'Organic sales growth' is the total impact of volume and price/mix;
• 'Discontinued operations' comprises net sales and operating profit (before depreciation and amortization) of DSM Pharmaceutical Products up to and including 10 March 2014 as well as DSM Fibre Intermediates and DSM Composite Resins up to and including 31 July 2015;
• 'Core net profit' is the net profit from continuing operations before exceptional items and before acquisition related (intangible) asset amortization.

Note: all tables are available in the attached Press release-PDF

Review by cluster

Nutrition

Q3 sales increased 15%, driven by very strong volume growth in Animal Nutrition & Health and solid volume developments in Human Nutrition & Health. As a result of higher prices for some vitamins and other, partly in-sourced, ingredients, the price/mix-effect was slightly positive despite lower vitamin E prices. 
Q3 EBITDA was 5% lower at €213 million versus Q3 2014. Good volume growth and overall positive foreign exchange rates largely offset the negative impact of lower vitamin E prices (of more than €30 million). Positive foreign exchange rates effects mainly associated with the US dollar were partly offset by the negative impact of the Swiss franc, the Brazilian real and the Chinese renminbi. The weakening of the Brazilian real, to which DSM is exposed mainly via its Tortuga business, had a negative EBITDA impact of ~€5 million.

Animal Nutrition & Health

Volume: Q3 showed very strong volume growth driven by the premix activities and specialty products in Europe and Latin America. Although underlying business conditions in the global animal feed markets are expected to remain favorable, going forward DSM will face tougher comparative figures for organic growth as from Q4 2014.

Price: As in the first half of this year, the price development compared to Q3 2014 was a combination of significantly lower vitamin E prices and higher prices for a range of other products. Since a substantial part of these other products are in-sourced, these increased prices only have limited benefit at EBITDA level.
  
Human Nutrition & Health

Volume: DSM delivered solid volume growth in spite of the continued soft environment in several key market segments. The dietary supplements businesses continued to show good growth in Europe and Asia and an ongoing mixed picture in the US where sales of fish oil and (multi) vitamin based supplements declined in Q3.
I-Health, DSM's B2C business, continued to deliver double-digit growth. Conditions in the Food & beverage segment are unchanged with good sales development in Europe and Asia and ongoing weak sales in North and South America. Markets for Infant Nutrition are stable, although DSM's sales were relatively weak in Q3 due to timing of orders. 

Price: Prices were slightly lower versus Q3 2014 mainly as a result of lower vitamin E prices and some mix effects.

Food Specialties

Q3 showed good volume growth in Enzymes and Cultures. Also the yeast extract-based savory business is performing increasingly well.
  

Performance Materials

Sales in Q3 decreased by 1% compared to Q3 2014 as a result of overall soft volumes, although strong in specialties, and lower prices reflecting lower input costs.

In DSM Engineering Plastics volumes were slightly down. PA6 polymers sales were weak, amplified by restricted product availability due to temporary production issues. Compounds and specialty products showed good volume growth.

In DSM Resins and Functional Materials volumes declined due to weak demand. Lower prices reflected lower input costs and a less favorable mix. The market environment for the UV curable coating resins business of DSM AGI in Asia remained difficult.

DSM Dyneema delivered modest organic growth versus Q3 2014 mainly due to timing of orders in comparison with Q3 2014.

EBITDA in Performance Materials for the quarter increased by 17% versus Q3 2014. On a structural base, good margin management and efficiency & cost savings programs over recent years contributed positively. The increase in EBITDA was, however, also enhanced by positive foreign exchange effects as well as temporarily strong margin improvements due to low input costs.

EBITDA of DSM Engineering Plastics was substantially up due to higher margins and lower costs.

EBITDA of DSM Resins and Functional Materials was materially up due to continued good margins and lower costs.  

DSM Dyneema showed solid EBITDA growth.

Innovation Center

Sales: DSM Biomedical continues to operate in a challenging US market.

EBITDA in Q3 improved compared to Q3 2014 driven by a stronger focus in the innovation activities, cost savings and positive currency developments.

Corporate Activities

EBITDA in Q3 2015 was in line with the average quarterly run-rate as well as Q3 2014.
  

Key joint ventures and associates

DSM Sinochem Pharmaceuticals (50% DSM) showed a solid financial performance in Q3 supported by favorable exchange rate effects.

DPx holdings (49% DSM): DPx showed a solid performance. Margin was in line with previous quarters. On 8 June 2015 DPx, to be renamed Patheon, has filed a registration statement on Form S-1 with the United States Securities and Exchange Commission relating to the proposed initial public offering of its common stock. The timing of the offering as well as the number of shares to be offered and the price range for the offering have not yet been determined.

ChemicaInvest (35% DSM): Sales in Q3 were lower than last year, with lower caprolactam sales coming from a loss in production following an outage in China and low feedstock costs.

Discontinued operations

Polymer Intermediates and Composite Resins

Discontinued operations comprises net sales and operating profit of DSM Fibre Intermediates and DSM Composite Resins up to and including 31 July 2015. From that date onwards their activities have been transferred to ChemicaInvest.

Financial overview Exceptional items

Exceptional items in the third quarter included non-cash impairment charges of €25 million related to the obsolescence of certain IT assets as a consequence of outsourcing and equipment no longer being used. A charge of €15 million was recognized for the devaluation of financial assets in Venezuela. Restructuring costs and related expenses amounted to €36 million, whilst acquisition related costs and other items were €12 million. Due to these charges a tax benefit of €23 million could be recognized resulting in a total after tax impact of €65 million. Associates reported exceptional items of €6 million after tax.

Net profit

Financial income and expense in Q3 2015 amounted to -€28 million compared to -€26 million in Q3 2014.

The effective tax rate in Q3 2015 remained 18%, equal to the full year 2014.

Net profit from continuing operations, before exceptional items in Q3 2015 amounted to €106 million compared to €113 million in Q3 2014.

Net earnings per ordinary share (continuing operations, before exceptional items) amounted to €0.59 in Q3 2015 compared to €0.64 in Q3 2014.

Cash flow, capital expenditure and financing

Cash provided by operating activities from continuing operations in Q3 2015 was €300 million (Q3 2014: €252 million).

Operating working capital (continuing operations) expressed as a percentage of annualized sales amounted to 24.9% compared to 26.3% at year-end 2014, in line with DSM's ambition to further reduce operating working capital. In Nutrition, operating working capital as a percentage of annualized sales declined from 34% at year-end 2014 to 32%. The operating working capital in absolute terms increased by €32 million from €1,903 million at year-end of 2014 to €1,935 million at the end of Q3 2015.

Cash used for capital expenditure net of customer funding (continuing operations) amounted to €113 million in Q3 2015 compared to €87 million in Q3 2014.

Net debt decreased by €468 million compared to Q2 2015, reflecting the good operating cash flow and a positive development in mark-to-market value of financial derivatives held as well as the proceeds from the sale of the Polymer Intermediates and Composite Resins activities of €282 million.

Outlook 2015

The volatility in currencies, including the strengthening of the Swiss franc and the US dollar against the Euro, and the recent weakening of the Brazilian real will have a mixed effect on DSM's 2015 results compared to 2014. Based on current exchange rates and the 2015 hedge effects, an overall annual positive impact on 2015 EBITDA is estimated at approximately €35 million.

The negative price impact of vitamin E on DSM's 2015 EBITDA is estimated to be approximately €100 million compared to 2014.

It is increasingly difficult to predict the macro-economic developments. Assuming current market conditions will continue for the remainder of the year, DSM maintains its full year outlook: DSM aims to deliver an EBITDA in 2015 ahead of 2014, the increase mainly driven by positive foreign exchange effects. 

Additional information

Today DSM will hold a conference call for investors and analysts from 09.00 to 9.45 CET. Details on how to access this call can be found on the DSM website, www.dsm.com.

Tomorrow, 4 November 2015, DSM will issue a press release at 7.15 CET on the information to be discussed at tomorrow's Capital Markets Day, where DSM will update the markets on DSM's strategy and targets. DSM will organize a conference call for the media tomorrow on both the Q3 results and the highlights of the Capital Markets Day from 09.00 AM to 09.30 AM CET. Details on how to access this call can be found on the DSM website, www.dsm.com. The DSM Capital Markets Day can be followed live via Video webcast from 13.30-19.00 hrs (CET). The presentations can be found on www.dsm.com as from 13.30 hrs (CET).
  

Important dates

Capital Markets Day                                      Wednesday, 4 November 2015
Full year results 2015                                    Wednesday, 17 February 2016
Report for the first quarter of 2016                          Tuesday, 26 April 2016
Annual General Meeting of Shareholders 2016              Friday, 29 April 2016
Report for the second quarter of 2016                     Tuesday, 2 August 2016
Report for the third quarter of 2016                  Thursday, 3 November 2016

Heerlen, 3 November 2015

The Managing Board

Feike Sijbesma, CEO/Chairman
Geraldine Matchett, CFO
Stephan Tanda
Dimitri de Vreeze
  

DSM - Bright Science. Brighter Living.(TM)

Royal DSM is a global science-based company active in health, nutrition and materials. By connecting its unique competences in Life Sciences and Materials Sciences DSM is driving economic prosperity, environmental progress and social advances to create sustainable value for all stakeholders simultaneously. DSM delivers innovative solutions that nourish, protect and improve performance in global markets such as food and dietary supplements, personal care, feed, medical devices, automotive, paints, electrical and electronics, life protection, alternative energy and bio-based materials. DSM and its associated companies deliver annual net sales of about €10 billion with approximately 25,000 employees. The company is listed on Euronext Amsterdam. More information can be found at www.dsm.com.

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For more information:

DSM Corporate Communications Herman Betten tel. +31 (0) 45 5782017  e-mail media.contacts@dsm.com

DSM Investor Relations Dave Huizing tel. +31 (0) 45 5782864 e-mail investor.relations@dsm.com

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