Driving Profitable Growth
With the long-term megatrends that drive our company’s business continuing to increase in significance, DSM is uniquely positioned to create value through science-based sustainable solutions in health, nutrition and materials to help address the challenges our societies are facing.
Strategy 2018: Driving Profitable Growth
In November 2015 DSM presented Strategy 2018: Driving Profitable Growth. With this new strategy we aim to capture the full potential of the portfolio we have created and translate this into improved financial results, focusing on organic sales growth, reducing costs and strict capital allocation.
The Nutrition and Materials businesses offer great potential for growth through sustainable innovative solutions, benefiting from opportunities the global megatrends offer. They have clear business strategies in place to drive sales and out-grow their markets. We are executing cost-reduction and efficiency programs with targeted overall savings of €250-300 million in EBITDA by the end of 2018 and we have adjusted our top structure, organizational model and way of working to support the achievement of our newly-set targets.
Discipline and focus
We have elected to set financial targets for a shorter strategic period up to 2018, reflecting our discipline and focus. We target a high single-digit annual percentage increase in EBITDA and a high double-digit annual basis point increase in Return on Capital Employed (ROCE).
Ambitious environmental performance targets
We have furthermore sharpened our sustainability approach and set more ambitious targets for our environmental performance. These include further improved greenhouse-gas efficiency (at least 45% improvement by 2025 versus 20% achieved so far), increased energy efficiency (over 10% improvement in the next 10 years) and a big step-up in the use of renewable electricity (50% by 2025), as well as continuing to drive up the proportion of Brighter Living Solutions that we provide to our customers.
We expect to extract significant value from the Pharma and Bulk Chemicals partnerships in the coming years, providing further financial headroom. We do not expect to engage in large acquisitions in the near future as we continue to integrate recent acquisitions, which have made a strong contribution to earnings.
Building for earnings growth beyond 2018
We are also preparing for longer-term growth. We have a range of key business and innovation projects across the clusters that will drive earnings growth beyond 2018 and will continue to develop more initiatives in light of market dynamics.