The year 2009 was perhaps one of the most challenging years in DSM’s history. We were heavily impacted by the economic downturn that swept across the world.
Although our Life Sciences businesses appeared to be relatively resilient, with Nutrition performing particularly well, the DSM businesses supplying the automotive, electronics and construction industries (in particular our Materials Sciences businesses and our non-core Base Chemicals and Materials cluster) suffered badly, especially in the first half of the year. Despite a recovery in the second half, our overall sales and operating profit were much lower than in the record year 2008.
To remain competitive and stay financially healthy amidst the downturn, we had to implement tough measures to manage cash and reduce costs. This involved the announcement of a planned reduction of our global workforce by 1250 positions – a very painful decision to make, but a necessary part of a € 150 – 200 million per annum cost saving program to be fully achieved in 2010. Although our sales and operating profit showed a clear decrease compared to 2008, our actions to focus on cost and cash resulted in very strong cash generation, even stronger than in our record year 2008. Our response to the changing economic circumstances was fast, strong and effective, securing the strength of our company and the interests of our shareholders.
During this challenging year 2009, we focused even more on our markets and customers, and we continued to push our innovation drive to further develop DSM, including our capabilities to provide solutions for a more sustainable world. We thank our customers for their continued trust in our company and we are pleased and ready to serve them. We also made good progress in making our operations even safer and further reducing our eco-footprint. We did not compromise our commitment to meeting the ‘triple bottom line’ of People, Planet and Profit. We stuck firmly to our values, beliefs and principles. In short, we stayed our strategic course on all fronts, despite the economic climate.
We were rewarded for this in September, when the Dow Jones Sustainability Index (DJSI) once again named DSM the number one in the area of sustainability in the global chemical industry. We are very proud of this result. It is external recognition of the fact that sustainability remains at the heart of our company, especially in current times, when values are put to the test. In this light, we are working on long-term goals in the area of sustainability.
We are proud that we were also number 1 in the Carbon Disclosure Leadership Index (CDLI) for the Netherlands published in December by the Carbon Disclosure Project. The index highlights the companies listed at Euronext Amsterdam that display the most professional approach to climate change disclosure.
Our Vision 2010 strategy is a response to key long-term global issues such as the need for alternative energy sources, the need to address climate change and the need to provide health and a balanced diet for all, against the background of demographic trends, globalization and emerging economies. We are convinced that these issues and trends offer DSM a healthy long-term market perspective, enabling our company to not only flourish but also contribute to the wellbeing of a great many people on our planet – and of the planet itself.
To our regret, the Copenhagen Climate Conference in December 2009 did not deliver against the high expectations that many people (including global leaders) had expressed beforehand. It is however promising that, in the current economic downturn, attention for environmental topics has increased rather than decreased.
Climate protection plans are competing with short-term economic needs (as evidenced by the outcome of the Copenhagen Conference), and the number of hungry people across the globe has risen sharply since the onset of the downturn. We must not allow this to continue. We can be sure that these global issues will be staring us in the face long after the economic downturn has gone. That is why we at DSM have continued to contribute to the solution of these issues. For example, in 2009 we developed new key nutritional innovations together with the United Nations World Food Programme, innovations that will help save millions of lives. We also continued to develop solutions to reduce greenhouse-gas emissions and solutions promoting a sustainable bio-based economy – not just to reduce our own eco-footprint but also to enable our customers to reduce their eco-footprint.
One of the great dilemmas of our time is how economic growth and the desire to create wealth and wellbeing for all people worldwide can be reconciled with the need for climate protection. We believe there is a way out of this dilemma, and that our industry is part of the solution. A report on the chemical industry’s potential for climate-change abatement that was published in 2009 by the International Council of Chemical Associations strengthens our conviction that we are steering the right course in developing solutions which, besides their other benefits, help protect the climate.
