- Q2 2014 EBITDA from continuing operations €293
million
- Q2 2014 EBITDA includes negative currency effect
of about €29 million and a €16 million impact from the fire at a
nutrition plant in Switzerland
- Nutrition delivered improved result versus last
two quarters with €222 million EBITDA
- Performance Materials Q2 EBITDA of €88 million up
compared to Q2 2013 and Q1 2014
- Q2 cash flow from operating activities €126
million
- Interim dividend of €0.55 per ordinary share
- Full year 2014 outlook in line with current
market expectations
Royal DSM, the Life Sciences
and Materials Sciences company, today reported second quarter 2014
EBITDA from continuing operations of €293 million compared to €332
million in Q2 2013, and €272 million in Q1 2014. Nutrition showed
improvement compared to the last two quarters. Performance
Materials continued its encouraging underlying trend and delivered
higher results. Polymer Intermediates was negatively impacted by
lower caprolactam margins.
Commenting on the results, Feike Sijbesma,
CEO/Chairman of the DSM Managing Board, said: "DSM delivered improved results versus the first quarter,
despite persistent currency headwinds. Performance Materials saw
continued positive momentum in a number of end-markets, whereas
Polymer Intermediates has seen weaker business conditions for
caprolactam.
Market conditions in Nutrition
have shown some improvement with good Animal Nutrition performance
in Q2, while Human Nutrition still operates in a low growth macro
environment for some end-markets due to ongoing pressure on
consumer spending. In this environment, the resilience of our
integrated value chain is demonstrated by robust margins,
highlighting the quality of our Nutrition business. In addition we
are undertaking initiatives in the US to reinforce the
attractiveness of our dietary supplements end-user
categories.
We continue to focus on
efficiencies to protect profitability and improve cash flow in the
current environment. Despite the weakness in
caprolactam, we continue to anticipate to deliver improving
financial results in the coming quarters."
Key figures
|
|
|
|
|
|
|
|
|
|
second quarter |
|
|
|
|
|
exch.
rates |
|
|
2014 |
2013 |
+/- |
|
in €
million |
volume |
price/mix |
other |
|
2,288 |
2,421 |
-5% |
|
Net sales |
5% |
-2% |
-3% |
-5% |
|
1,073 |
1,111 |
-3% |
|
Nutrition |
2% |
-1% |
-5% |
1% |
|
702 |
709 |
-1% |
|
Performance Materials |
3% |
-2% |
-3% |
1% |
|
429 |
375 |
14% |
|
Polymer Intermediates |
25% |
-8% |
-3% |
|
|
38 |
39 |
-3% |
|
Innovation Center |
2% |
0% |
-5% |
|
|
46 |
48 |
|
|
Corporate Activities |
|
|
|
|
|
2,288 |
2,282 |
0% |
|
Total continuing operations |
6% |
-2% |
-4% |
0% |
|
0 |
139 |
|
|
Discontinued operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
second
quarter |
|
|
|
first
half |
|
|
|
2014 |
2013 |
+/- |
|
in € million |
2014 |
2013 |
+/- |
|
|
293 |
345 |
-15% |
|
EBITDA |
563 |
653 |
-14% |
|
|
222 |
250 |
-11% |
|
Nutrition |
425 |
465 |
-9% |
|
|
88 |
80 |
10% |
|
Performance Materials |
165 |
159 |
4% |
|
|
17 |
27 |
-37% |
|
Polymer Intermediates |
37 |
55 |
-33% |
|
|
-5 |
-2 |
|
|
Innovation Center |
-11 |
-4 |
|
|
|
-29 |
-23 |
|
|
Corporate Activities |
-51 |
-42 |
|
|
|
293 |
332 |
-12% |
|
Total continuing operations |
565 |
633 |
-11% |
|
|
0 |
13 |
|
|
Discontinued operations |
-2 |
20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
125 |
153 |
-18% |
|
Core
net profit |
239 |
285 |
-16% |
|
|
|
|
|
|
Net
profit before exceptional items, |
|
|
|
|
|
110 |
137 |
-20% |
|
continuing operations |
209 |
262 |
-20% |
|
|
78 |
112 |
-30% |
|
Net
profit after exceptional items,
total DSM |
159 |
231 |
-31% |
|
|
|
|
|
|
|
|
|
|
|
|
0.73 |
0.89 |
-18% |
|
Core
EPS (€/share) |
1.39 |
1.67 |
-17% |
|
|
0.64 |
0.80 |
-20% |
|
Net EPS
before exceptional items, continuing operations (€/share) |
1.21 |
1.51 |
-20% |
|
|
0.45 |
0.64 |
-30% |
|
Net EPS
after exceptional items,
total DSM (€/share) |
0.90 |
1.33 |
-32% |
|
|
|
|
|
|
|
|
|
|
|
|
126 |
251 |
|
|
Cash
flow from operations |
89 |
202 |
|
|
|
117 |
148 |
|
|
Capital expenditures (cash) |
268 |
300 |
|
|
|
|
|
|
|
Net
debt |
-2,393 |
-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 Q2 declined by 3% compared
to Q2 2013, as organic growth and the contribution of new
consolidations was offset by 5% weaker currencies. Organic sales
growth was 1% versus Q2 2013, with volume growth (2%) partly offset
by lower prices (-1%).
EBITDA for Q2 was
€222 million, down 11% compared to Q2 2013. The combination of good
demand in Animal Nutrition and the continued soft consumer demand
in some of DSM's Human Nutrition end-markets resulted in total into
a modest organic growth of 1%, which was offset by the foreign
exchange impact. The EBITDA margin of 20.7% reflecting the
significant impact of foreign exchange rates compared to Q2 2013
was within DSM's target range of 20-23%.
Human Nutrition &
Health net sales were €403 million in Q2. Organic sales
development was negative at -6% compared to Q2 2013 owing to lower
volumes. The price/mix development was flat.
Sales in dietary supplements for vitamins and
fish-oil based Omega-3 in the US were down versus the same period
last year. Recovery of these end-markets is slower than expected.
Promotional initiatives and industry wide campaigns are being
launched to support the vitamins and Omega-3 dietary supplements
markets. Momentum for dietary supplements outside the US continued
to be positive. Demand for i-Health remained robust.
Sales in infant nutrition were weaker compared to
the same period last year due to the after-effects from the false
botulism scare, with China and South East Asia markets being the
most affected. Furthermore, recent changes in Chinese regulatory
policy have created additional uncertainty for the industry. As a
result infant nutrition suppliers have reduced their
inventories.
Food & beverage markets have continued to show
sluggish growth, while demand for premixes stayed healthy. In order
to stimulate growth, "A-label" customers are investing in new
product launches, promotional campaigns and acceleration of
innovations.
Animal Nutrition and
Health net sales were €519 million in Q2. Organic sales
growth in Q2 was 5% driven by good global volume growth. Overall,
the price/mix effect was flat.
Market conditions in animal feed continued to
improve in Q2 as premix businesses showed strong performance.
Vitamin E volumes and prices were lower versus the same period last
year.
DSM Food
Specialties delivered good organic growth in enzymes and
cultures driven by a continued focus on innovation and high margin
applications.
Performance
Materials
Organic sales
growth in Q2 2014 was 1% compared to Q2 2013 with 3% volume growth
driven by improved market demand and 2% lower prices. Adverse
currency effects amounted to 3%. DSM Engineering Plastics showed
good volume growth, while polyamide 6 prices were slightly lower,
due to lower caprolactam prices. DSM Resins & Functional
Materials saw good volume growth, while prices were down due to
lower input costs and some product mix effects. DSM Dyneema Q2
sales were lower compared to same period last year as a result of
the timing of large orders.
EBITDA in
Performance Materials for the quarter was up by 10% compared to Q2
2013 largely driven by volume growth, good cost control and
improved efficiencies. DSM Resins & Functional Materials showed
a strong improvement in EBITDA. DSM Engineering Plastics also
reported a higher EBITDA despite lower results in the polyamide 6
value chain. In Q2 DSM Dyneema delivered EBITDA that was in line
with last year after a substantially higher EBITDA in Q1.
Polymer Intermediates
Organic sales
growth in Q2 was 17% compared to the same quarter of 2013, with 25%
higher volumes and 8% lower prices. Sales were negatively impacted
by currency effects of 3%. Volumes were up due to increased
caprolactam production from the 2nd line in
China.
EBITDA for the
quarter declined compared to Q2 2013 resulting from the maintenance
stop of the caprolactam plants in Europe and lower caprolactam
margins resulting from lower prices, while benzene costs remained
high. Acrylonitrile results were in line with last year.
Innovation Center
Sales in Q2 2014
were slightly down compared to Q2 2013 due to negative currency
effects (-5%). Organic growth in DSM Biomedical is progressing
well, with new products in the pipeline. DSM Advanced Surfaces
continues to make progress by testing its new anti-reflecting
coatings at large solar parks. In Bio-based Products and Services
the second generation advanced biofuels plant of the POET/DSM joint
venture in Iowa is in the start-up phase.
EBITDA declined due
to increased costs resulting from intensified innovation programs.
The underlying business did well.
Corporate Activities
EBITDA in Q2 2014
benefitted from lower project costs, but the captive insurance was
negatively impacted by a fire at an intermediates plant at DSM
Nutritional Products in Sisseln, Switzerland. Of the total damages
caused by the fire, an amount of €15 million is retained by DSM's
captive insurances and as such accounted for in Q2. Nutrition
incurred €1 million. Costs above these €16 million are covered by
external insurers.
Pharma activities and other
associates
Total Q2 2014 sales of joint ventures amounted to
€116 million (100% base) of which €108 million coming from DSM
Sinochem Pharmaceuticals (Q2 2013: €98 million).
DPx Holdings (49% DSM) realized total sales (100%)
of €217 million from 11 March up to and including April with good
margins. The DSM share in the net result of DPx was impacted by €25
million exceptional items related to the formation and start-up of
the new company.
Financial
overview
Exceptional items
Total exceptional items
from fully consolidated companies in the
second quarter amounted to a loss of €10 million before tax (€8
million after tax). This includes €12 million in expenses related
to ongoing restructuring activities.
Net profit
Financial income and
expense in Q2 2014 amounted to -€36 million equal to Q2
2013.
The effective tax rate in
Q2 2014 was 18%, in line with the full year 2013.
Net profit from continuing
operations before exceptional items in Q2 2014 amounted to
€110 million compared to €137 million in Q2 2013.
Net earnings per ordinary share
(continuing operations, before exceptional items) amounted to
€0.64 in Q2 2014 compared to €0.80 in Q2 2013.
Cash flow, capital expenditure and
financing
Cash provided by operating
activities in Q2 2014 was €126 million (Q2 2013: €251
million).
Operating working capital
increased from €1,843 million at year-end of 2013 to €2,178 million
at the end of Q2 2014 due to higher inventories and receivables.
Expressed as a percentage of annualized sales this represents 23.8%
compared to 23.2% in Q2 2013.
Cash used for capital
expenditure amounted to €117 million in Q2 2014 compared to
€148 million in Q2 2013.
Net debt increased by €552
million compared to year-end 2013 and stood at €2,393 million
(gearing 29%).
Interim dividend
DSM's policy is to provide a stable and preferably
rising dividend. It has been decided to pay an interim dividend of
€0.55 per ordinary share for 2014. As usual, this represents one
third of the total dividend paid for the previous year. The interim
dividend should not be taken as an indication of the total dividend
for the year 2014. The dividend will be payable in cash or in the
form of ordinary shares, at the option of the shareholder. Dividend
in cash will be paid after deduction of 15% Dutch dividend
withholding tax. The ex-dividend date is 6 August 2014. The interim
dividend will be payable as from 27 August 2014.
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, which was updated in
September 2013. The next update is planned for Q4 2015. DSM in
motion: driving focused growth 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.
Below are some highlights of DSM's Q2 2014
achievements.
High Growth Economies: from reaching out to being
truly global
Sales to High Growth Economies reached a level of 42% of total
sales in Q2 2014 versus 39% in Q2 2013. Sales in China amounted to
USD 487 million, versus USD 395 million in Q2 2013, largely driven
by substantially higher volumes for caprolactam resulting from the
second caprolactam facility.
DSM opened its China Animal Nutrition Center in
Bazhou, south of Beijing. With its focus on swine and poultry
nutrition and the capabilities to conduct world-class scientific
and application research, the facility will support the development
of tailored solutions to meet the needs of the fast growing poultry
and swine markets in China.
Innovation: from building the machine to doubling
innovation output
Innovation sales in the first half of 2014 - measured as sales from
innovative products and applications introduced in the last five
years - amounted to 18% of total sales equal to the first half of
2013, which is close to DSM's 2015 target of approximately 20%.
Examples of innovations, recently launched are:
-
The world's first high-heat plastic air intake
manifold with integrated charge air cooler made from
Stanyl® Diablo, DSM's
high temperature resistant polyamide 46.
-
Rapidase® Pro Color,
DSM's fruit enzymes that help to obtain the highest possible juice
yield.
-
A high intensity sweetener platform based on
fermentation of steviol glycosides, the sweet tasting molecules
present in Stevia plants. This breakthrough technology will provide
clean taste and a secure and scalable supply.
-
A new coagulant, Maxiren® XDS
that helps cheese producers to maximize their value.
Sustainability: from responsibility to business
driver
It is DSM's goal to have an injury and incident-free working
environment. DSM has set itself the target of reducing the
Frequency Index of Recordable Injuries by 50 percent or more by the
year 2020 compared to 2010. This will require an index score that
is less than or equal to 0.25 by 2020, compared to the 0.57
achieved in 2010. At the end of the first half of 2014 this index
amounted to 0.43.
The share of ECO+ products in DSM's innovation
pipeline was well above 90% in H1 2014, higher than the 2015
aspiration of 80%. The Eco+ share in the running business in H1
2014 was slightly ahead of the 45% in 2013, well on track towards
the 2015 aspiration of 50%. DSM's energy efficiency is well on
target: 16% improvement in the first half year of 2014 compared to
2008. The aspiration calls for a 20% improvement in 2020 compared
to 2008. Greenhouse-gas emissions in CO2 equivalents
were 7% less than in 2008. DSM's aspiration is a 25% reduction by
2020, compared to 2008.
In India DSM completed construction of a 1MW solar
facility adjacent to its plant in Ranjangaon.
Acquisitions & Partnerships: from portfolio
transformation to driving focused growth
DSM reached agreement to acquire Aland (HK) Holding Limited
("Aland"), a Hong Kong-based company producing vitamin C in
mainland China. Subject to customary conditions, the transaction is
expected to close in the next six to nine months.
DSM and Niaga, a Netherlands-based provider of
sustainable solutions for the carpet industry, announced a joint
venture, DSM-Niaga, to further develop and commercialize
sustainable technology for recyclable carpet. Based on proprietary
and complementary technologies, DSM-Niaga will enable the industry
to close the carpet materials loop.
Outlook
2014
DSM targets for 2014 to deliver an improved
underlying business performance in a challenging macro environment.
DSM is on track to meet current market expectations,
notwithstanding the adverse impact from foreign exchange rates of
about €70 million and weakness in the caprolactam
supply-chain.
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 half year result
2014 can be found in the Presentation to Investors, which can be
downloaded from the Investors section of the DSM website.
Important dates
Ex interim dividend quotation
Wednesday, 6
August 2014
Record date
Friday, 8 August
2014
Interim dividend payable
Wednesday, 27 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
Report for the first quarter of 2015
Wednesday, 29 April 2015
Report for the second quarter of 2015
Tuesday, 4 August 2015
Report for the third quarter of 2015
Tuesday, 3 November 2015
Heerlen, 5 August 2014
The Managing Board
Feike Sijbesma, CEO/Chairman
Rolf-Dieter Schwalb, CFO
Stefan Doboczky
Geraldine Matchett
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) 45
5782017
e-mail media.contacts@dsm.com |
DSM
Investor Relations Dave Huizing
tel. +31 (0) 45 5782864
e-mail investor.relations@dsm.com |
Forward-looking
statements
This press release may contain forward-looking statements with
respect to DSM's future (financial) performance and position. Such
statements are based on current expectations, estimates and
projections of DSM and information currently available to the
company. DSM cautions readers that such statements involve certain
risks and uncertainties that are difficult to predict and therefore
it should be understood that many factors can cause actual
performance and position to differ materially from these
statements. DSM has no obligation to update the statements
contained in this press release, unless required by law.
Presentation to Investors Q2
2014
Press release-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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