DSM experienced strong demand and pricing strength in most of its markets
during the first quarter. DSM sees the following trends in its clusters:
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In Nutrition higher sales volumes are expected to be sustained, but growth
rates will gradually come down approaching market growth, since market share
increased already in the course of 2007. Continued good pricing strength is
expected as a result of our successful differentiation activities, higher
costs at our competitors and tight supply in several key products.
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In Pharma, the result of DSM Pharmaceutical Products is expected to recover
from the weak first quarter. Anti-Infectives’ pricing is currently in an
upward trend, but is expected to remain on average below last year’s level.
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The Performance Materials cluster is developing at a steady positive pace and
will benefit from the start-up of several new plants later this year.
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In Polymer Intermediates (also supplying to Performance Materials) there is a
tight market, facilitated by a very strong demand, especially in China. DSM
does not foresee a short-term shift in these conditions.
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The dominant driver in Base Chemicals and Materials is fertilizers. The
prolonged restructuring of the fertilizer industry and currently strong
agricultural markets have resulted in a shift in the demand-supply balance,
resulting in clearly higher prices.
The current macro-economic outlook is very uncertain. The positive business
conditions could be affected by a global negative macro-economic trend.
However, in its transformation process to a Life Sciences and Materials
Sciences company, DSM has developed a much higher resilience to the business
cycle, which is now becoming visible in Nutrition, Performance Materials and
Pharma.
As a result DSM remains positive about the remainder of the year, in spite of
a weakening US dollar and high feedstock and energy prices.
Based on the currently available information and barring unforeseen
circumstances, DSM expects that the operating profit from continuing
operations and before exceptional items in 2008 will be EUR 870 million, plus
or minus 5%.
