Results & outlook
Commenting on the results, Feike Sijbesma, CEO/Chairman of the DSM Managing Board, said: “In a challenging business environment, DSM continued to make good progress in Q1 and the robust results represent a positive start to 2012. In Life Sciences, Nutrition continued to deliver excellent performance despite the currency headwinds, benefiting from the acquisition of Martek and continued organic growth. Materials Sciences delivered an improved performance compared to the previous quarter in Performance Materials and another good result in Polymer Intermediates.
“We continue to make important steps in the execution of our strategy. During the quarter we established the joint venture with US based POET, one of the world’s largest bio-ethanol producers, to unlock the exciting potential of advanced cellulosic biofuels. Last week we announced the execution of a Merger Agreement with Kensey Nash and planned tender offer, which will put DSM Biomedical clearly on the map as the second new growth platform for DSM in addition to our Bio-based Products & Services business.
“DSM has successfully transformed itself into a Life Sciences and Materials Sciences company. Our attractive portfolio in health, nutrition and materials together with our broad geographic spread with a significant presence in high growth economies and our very strong balance sheet has positioned us well to deliver shareholder value with stronger, more stable growth and profitability. We remain cautiously optimistic for 2012 despite the uncertain macro-economic situation.”
Outlook
DSM made a good start to the year, supported by positive momentum in the US, continued progress of high growth economies and a return to more normal trading conditions in Performance Materials compared to Q4 2011. However, the global economic outlook is still uncertain and conditions remain weak in Europe.
DSM’s expectations for the year are broadly in line with its previous guidance.
In addition to the already announced restructuring initiatives at DSM Resins, DSM is preparing further cost reduction programs.
In Nutrition, the impact of the substantial strengthening of the Swiss franc in 2011 was mitigated by a €50 million currency hedge gain, a benefit which will not be repeated in 2012. Despite this, DSM anticipates that it will make further progress, with EBITDA expected to be above 2011.
Business conditions in Pharma are likely to remain challenging, although DSM anticipates that it will make further strategic progress. DSM expects to deliver a slightly improved EBITDA despite the 50% deconsolidation of the anti-infectives business.
Trading conditions in Materials Sciences have normalized compared to Q4 2011 but continue to be volatile and the end market outlook is uncertain owing to weak consumer sentiment in some of DSM’s key geographies. In addition, increasing input costs remain a risk. Nevertheless, based on current insights, EBITDA is expected to be somewhat higher than in 2011.
In Polymer Intermediates prices and margins continue to be volatile. Results will be impacted in Q2 as a consequence of the end Q1 turnaround and in the second half year by two more planned turnarounds in caprolactam. For Polymer Intermediates another strong year is expected, at a level above the historical average, but EBITDA will be clearly lower than the exceptional result in 2011.
Overall DSM remains cautiously optimistic for the year 2012, on its way to achieve the 2013 targets.
