- In Q1 2014 DSM delivered €272 million EBITDA from
continuing operations, in line with expectations
- Q1 2014 EBITDA from continuing operations was €29
million below Q1 2013, of which about €23 million was due to
adverse exchange rate developments
- The impact of the headwinds in Nutrition appear
to have peaked in Q1
- In Performance Materials all business groups
delivered good volume growth
- DSM maintains 2014 outlook, anticipating EBITDA
improvements over the coming quarters
Royal DSM, the Life Sciences and Materials
Sciences company, today reported first quarter EBITDA from
continuing operations of €272 million compared to €301 million in
Q1 2013. This performance was delivered against significant adverse
foreign exchange rates. As expected, Nutrition experienced in Q1
the continued impact of the market headwinds, which also affected
Q4 2013. Materials Sciences was impacted by lower results in
caprolactam.
Commenting on the results, Feike Sijbesma,
CEO/Chairman of the DSM Managing Board, said:
"DSM delivered results in line with expectations,
despite further currency deterioration during the quarter. We are
pleased to report that market conditions in Nutrition began to show
some signs of improvement by the end of the quarter. Our
performance in Q1 demonstrates DSM's strength in Nutrition, owing
to our highly integrated and global business model, benefiting from
the structural megatrends of health and wellness. We also see a
more positive momentum in a number of Performance Materials
end-markets."
"Through maintaining our focus
on the operational performance of the business, benefiting from the
Profit Improvement Program, we continue to execute our near term
initiatives of protecting profitability and improving cash
flow. Therefore, we confirm our outlook
given in January 2014, and anticipate to deliver improving
financial results in the coming quarters."
Key figures
|
|
first quarter |
|
|
|
exch.
rates |
|
|
in €
million |
2014 |
2013 |
+/- |
volume |
price/mix |
other |
|
Net sales |
2,298 |
2,320 |
-1% |
3% |
-3% |
-2% |
1% |
|
Nutrition |
1,047 |
990 |
6% |
4% |
-2% |
-3% |
7% |
|
Performance Materials |
670 |
669 |
0% |
4% |
-2% |
-2% |
0% |
|
Polymer Intermediates |
405 |
437 |
-7% |
2% |
-8% |
-1% |
|
|
Innovation center |
34 |
37 |
-8% |
-5% |
0% |
-3% |
|
|
Corporate Activities |
40 |
55 |
|
|
|
|
|
|
Total continuing operations |
2,196 |
2,188 |
0% |
3% |
-3% |
-3% |
3% |
|
Discontinued operations |
102 |
132 |
-23% |
-2% |
|
|
-21% |
|
|
|
|
|
|
|
|
|
|
|
first
quarter |
|
|
|
|
|
|
in € million |
2014 |
2013 |
+/- |
|
|
|
|
|
EBITDA |
270 |
308 |
-12% |
|
|
|
|
|
Nutrition |
203 |
215 |
-6% |
|
|
|
|
|
Performance Materials |
77 |
79 |
-3% |
|
|
|
|
|
Polymer Intermediates |
20 |
28 |
-29% |
|
|
|
|
|
Innovation Center |
-6 |
-2 |
|
|
|
|
|
|
Corporate Activities |
-22 |
-19 |
|
|
|
|
|
|
Total continuing operations |
272 |
301 |
-10% |
|
|
|
|
|
Discontinued operations |
-2 |
7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core
net profit |
114 |
132 |
-14% |
|
|
|
|
|
Net
profit before exceptional items, |
|
|
|
|
|
|
|
|
continuing operations |
99 |
125 |
-21% |
|
|
|
|
|
Net
profit after exceptional items, total DSM |
81 |
119 |
-32% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core
EPS (€/share) |
0.66 |
0.78 |
-15% |
|
|
|
|
|
Net EPS
before exceptional items, |
|
|
|
|
|
|
|
|
continuing operations (€/share) |
0.57 |
0.71 |
-20% |
|
|
|
|
|
Net EPS
after exceptional items, total DSM (€/share) |
0.45 |
0.69 |
-34% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flow from operations |
-37 |
-49 |
|
|
|
|
|
|
Capital expenditures (cash) |
151 |
152 |
|
|
|
|
|
|
Net
debt |
-2,161 |
-1,841 |
* |
|
|
|
|
|
*
year-end 2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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;
-
'Net profit' is the net profit
attributable to equity holders of Koninklijke DSM N.V.;
-
'Core net profit' is the net
profit from continuing operations before exceptional items and
before acquisition related (intangible) asset
amortization;
-
From 2014 onwards interest
receipts and payments are no longer included in operating
activities in the cash flow statement but reported in investing
activities (interest received) and financing activities (interest
paid). 2013 figures are restated accordingly;
-
All 2013 figures are restated
for the impact of the termination of proportional consolidation for
joint ventures as from 1 Jan 2014 onward.
Note: all tables are available in the
attached Press release-PDF
Review by
cluster
Nutrition
Sales in the first quarter increased by 6%
compared to Q1 2013. Organic sales growth was 2% compared to Q1
2013, as a result of 4% higher volumes and 2% lower prices.
Currencies had a negative impact of 3%, while acquisitions (mainly
Tortuga) had a positive impact of 7%.
EBITDA for Q1 was
€203 million, down 6% from Q1 2013. The positive impact of the
organic growth and the contribution from acquisitions was offset by
negative foreign exchange developments, lower prices in some
vitamins and a less favorable business mix, resulting in an EBITDA
margin slightly below DSM's target range of 20-23%.
Human Nutrition &
Health net sales were €423 million in Q1. Organic sales
declined by 1% compared to Q1 2013, with volumes flat and
prices/mix down slightly. As expected, the US dietary supplements
markets (vitamins and fish oil based Omega 3) were down
significantly, while dietary supplements in Europe and Asia
performed well. Good growth was also realized in i-Health and in
premixes. Western food & beverage markets in general remained
soft.
Compared to Q4 2013, prices were down 3% mainly
due to a less favorable product mix, while volumes were up almost
14%, due to seasonal effects and some restocking.
Animal Nutrition and
Health net sales were €466 million in Q1. Organic sales
growth in Q1 was 7% with volumes up 10% compared to the weak Q1
2013 when the animal feed markets were still being impacted by the
high commodity prices resulting from the 2012 drought. Improving
market conditions in animal feed drove volume growth, albeit
tempered by ongoing animal diseases in certain regions, with strong
performance in premix. Volumes for our key vitamins, especially
vitamin E, remained flat. Prices were down 3% from Q1 2013
due to lower vitamin prices, especially vitamin E.
Compared to Q4 2013, volumes were down 6% mainly
attributable to seasonality. Overall, prices were slightly lower
(-1%), with vitamin E prices stabilizing in Q1. Higher vitamin spot
prices in March had no significant impact on Q1 pricing, as DSM
primarily supplies on a contract basis.
In Q1 2014, Tortuga delivered sales of €64 million
and an EBITDA of €10 million.
DSM Food
Specialties delivered a solid performance in Q1 with good
organic growth in enzymes and cultures. The integration of Cargill
and DSM's cultures businesses was concluded according to plan. The
combined businesses are generating value for DSM's customers,
resulting in significant growth opportunities.
Performance Materials
Organic sales growth in Q1 2014 was 2%
compared to Q1 2013 with 4% volume growth and 2% lower prices.
Adverse currency effects amounted to 2%. DSM Engineering
Plastics showed good volume growth, despite the negative impact of
the severe winter in the US on PA 6 production. Prices were
slightly higher. DSM Resins & Functional Materials saw good
volume growth, while prices were down due to price/mix effects. In
DSM Dyneema, sales were supported predominantly by higher
volumes.
EBITDA in
Performance Materials for the quarter was 10% above the
underlying result of Q1 2013, as that quarter benefited from a €9
million book profit related to the sale of distribution activities
in DSM Resins & Functional Materials. In DSM Engineering
Plastics, EBITDA was up substantially from the previous year as a
result of good volume growth, slightly higher prices and the impact
of cost reductions, which were partly offset by negative exchange
rates. Underlying EBITDA at DSM Resins & Functional
Materials was up, driven by good volume growth and continued
cost control. DSM Dyneema delivered a substantially higher
EBITDA than Q1 2013, owing to higher volumes and an improved cost
base.
Polymer Intermediates
Organic sales development was -6% compared to the
same quarter of 2013, with 2% higher volumes and 8% lower prices.
Sales were negatively impacted by currency effects of 1%. Volumes
were up due to increased caprolactam production from the new
2nd line in
China. This increase was largely offset by severe winter related
outages of caprolactam production in the US.
EBITDA for
the quarter declined compared to Q1 2013, driven by lower
caprolactam margins due to the ongoing challenging business
environment with lower prices and high benzene costs. In
addition, disruptions of caprolactam production resulted
in higher costs.
Innovation Center
Sales in Q1 2014
were lower than Q1 2013 due to DSM Biomedical. Underlying growth in
DSM Biomedical is well on track.
EBITDA declined as
a combination of lower sales, a negative currency impact in
Biomedical and increased costs resulting from intensified
innovation programs. The cellulosic bioethanol plant that DSM
is building together with POET is nearing completion and is
scheduled to start up by the end of Q2 2014.
Corporate Activities
EBITDA in Q1 2014
was in line with DSM's expectations as well as with Q1 2013.
Discontinued
activities
Discontinued activities in Q1 2014 reflects the contribution of DSM
Pharmaceutical Products until the closing of the transaction with
JLL Partners. EBITDA declined due to seasonal factors and closing
of the transaction before the end of the quarter.
Pharma activities and other
associates
DSM stopped proportional consolidation of joint
ventures in line with IFRS, with all 2013 numbers restated
accordingly. The net result of these ventures is included in
Share of profit of associates / joint
ventures.
The announced venture combining Patheon and DSM
Pharmaceutical Products started at 11 March 2014, resulting in a
new privately held company, named DPx. The total book loss amounted
to €130 million. Further details are provided in the notes to the
financial statements in this report. The new company started well,
experiencing very healthy customer demand in Q1 2014.
Total Q1 2014 sales of joint ventures amounted to
€105 million (100% base) of which €98 million coming from DSM
Sinochem Pharmaceuticals (Q1 2013: €94 million) which realized good
organic sales growth, mainly driven by prices.
Financial
overview
Exceptional items
Total exceptional items in
the first quarter amounted to a loss of €26 million before tax (€19
million after tax). This includes €37 million in expenses related
to the restructuring activities of which €28 million as a result of
the structural organizational changes and post integration
streamlining of DSM Nutritional Products, as well as €11 million in
acquisition related and other costs. The final book loss on the
contribution of DSM Pharmaceutical Products to DPx amounted to €130
million (as specified in the notes to these interim statements).
This is lower than the amount that was recognized upon
classification of the business as asset held for sale at the end of
2013, and therefore €22 million of the loss was reversed in the
first quarter.
Net profit
Financial income and
expense in Q1 2014 amounted to -€23 million compared to -€30
million in Q1 2013 due to positive interest rate hedge results.
The effective tax rate in
Q1 2014 was 18%, in line with the full year 2013.
Net profit, continuing
operations before exceptional items in Q1 2014 decreased by
€26 million compared to Q1 2013 and stood at €99 million.
Net earnings per ordinary share
(continuing operations, before exceptional items) amounted to
€0.57 in Q1 2014 compared to €0.71 in Q1 2013.
Cash flow, capital expenditure and
financing
Cash provided by operating
activities in Q1 2014 was -€37 million (Q1 2013: -€49
million).
Operating working capital
increased from €1,843 million at year-end of 2013 to €2,074 million
at the end of Q1 2014 due to higher inventories and receivables
(expressed as a percentage of annualized sales this represents
23.6%, in line with Q1 2013).
Cash used for capital
expenditure amounted to €151 million in Q1 2014 compared to
€152 million in Q1 2013.
Net debt increased by €320
million compared to year-end 2013 and stood at €2,161 million
(gearing 26%).
DSM in motion: driving focused growth
Strategy
update
DSM is firmly committed to its strategy, which has delivered and
will continue to deliver sustainable value. DSM in motion: driving focused growth is the strategy that the
company embarked on in September 2010. It marks the shift from an
era of intensive portfolio transformation to a strategy of
maximizing sustainable and profitable growth. DSM's strategic focus
on Life Sciences and Materials Sciences is fueled by three main
societal trends: Global Shifts, Climate & Energy and Health
& Wellness. DSM aims to meet the unmet needs resulting from
these societal trends with innovative and sustainable
solutions.
In Nutrition DSM continues to implement further
post-integration improvements (affecting some 210 FTE's) in support
of its unique business model, emphasizing increasingly local
solutions in addition to its strong global product positions. This
will result in a positive impact of €50 million per annum by 2015
which will be partially reinvested into external (open) innovation
and local, front-line support. Related one-off costs of €28 million
were recognized in this quarter.
Below are some highlights of DSM's Q1 2014
achievements.
High Growth Economies: from reaching out to being
truly global
In India, DSM inaugurated its Fortitech® Premixes
plant in Vadodara, Gujarat. The plant covers 10,000 square meters
and will be a "one-stop shop" for food, beverage and pharmaceutical
manufacturers looking for ingredient fortification as an important
way to differentiate their products. The new plant will service the
South Asian market.
Innovation: from building the machine to doubling
innovation output
For its Biomedical operations, DSM opened a plant (the only one of
its kind) dedicated solely to the production of medical-grade
fibers, in Greenville, North Carolina (USA). It also opened its
first in-house medical coating service plant in Exton, Pennsylvania
(USA).
Sustainability: from responsibility to business
driver
DSM's advanced cellulosic yeast product was named the 'Breakthrough
Technology of the Year' by Green Power Conferences.
Acquisitions & Partnerships: from portfolio
transformation to driving focused growth
JLL Partners and DSM announced the successful completion of the
transaction announced in November 2013 combining DSM Pharmaceutical
Products and Patheon Inc. into a new privately held company, named
DPx, in which DSM holds a 49% share. DPx is leading global contract
development and manufacturing organization (CDMO) for the
pharmaceutical industry with anticipated 2014 sales of around USD 2
billion (full year pro-forma), a strong EBITDA and operational cash
flow and more than 8,000 employees. The new company started
well.
Outlook unchanged
For 2014 DSM takes a prudent approach, assuming
the unfavorable January 2014 foreign exchange rates are maintained
for the year. Furthermore, DSM 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.
Based on the above, DSM targets for 2014 to
improve its business performance to at least offset the negative
currency impact of €70 million at January 2014 exchange rates.
Comparable EBITDA in 2013 from continuing
operations after new accounting rules for joint ventures amounted
to €1,261 million.
Additional information
Today DSM will hold a conference call for the
media from 08.00 AM to 08.30 AM CET and a conference call for
investors and analysts from 09.00 AM to 10.00 AM CET. Details on
how to access these calls can be found on the DSM website,
www.dsm.com. Also, information regarding DSM's Q1 result 2014 can
be found in the Presentation to Investors, which can be downloaded
from the Investors section of the DSM website.
Important dates
Annual General Meeting of Shareholders
Wednesday, 7 May
2014
Ex-dividend quotation date 2014
Friday, 9 May 2014
Report for the second quarter of 2014
Tuesday, 5 August
2014
Report for the third quarter of 2014
Tuesday, 4 November
2014
Capital Markets Day
Wednesday, 5 November 2014
Full year results 2014
Wednesday, 11 February 2015
Heerlen, 6 May 2014
The Managing Board
Feike Sijbesma, CEO/Chairman
Rolf-Dieter Schwalb, CFO
Stefan Doboczky
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's 24,500 employees deliver annual net
sales of around €10 billion. The company is listed on NYSE
Euronext. More information can be found at www.dsm.com.
Or find us on:
For more
information:
DSM
Corporate Communications Herman Betten
tel. +31 (0) 455782017
e-mail media.contacts@dsm.com |
DSM
Investor Relations Dave Huizing
tel. +31 (0) 45 5782864
e-mail investor.relations@dsm.com |
Press release-pdf
Presentation to investors-PDF
This
announcement is distributed by NASDAQ OMX Corporate Solutions on
behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: DSM N.V. via Globenewswire
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