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Latest Results & Outlook

Highlights

  • DSM reports a very strong first quarter
  • Sales up 13% to €2,159m, with 9% organic growth
  • Adjusted EBITDA up 17% to €345m
  • ROCE up 150 bps to 11.3%
  • Cash from operating activities up 43% to €196m
  • Net profit up 75% to €149m
  • Outlook maintained

Key figures and indicators

in € million Q1 2017 Q1 2016 % change
volume price/
mix
FX
other
Sales 2,159 1,913 13% 6% 3% 3% 1%
Nutrition 1,398 1,250 12% 5% 3% 4% 0%
Materials 701 600 17% 11% 3% 1% 2%
Adjusted EBITDA 345 296 17%        
Nutrition 257 225 14%        
Materials 113 95 19%        
EBITDA 334 271          
ROCE (%) 11.3% 9.8%          

CEO statement

Feike Sijbesma, CEO/Chairman of the DSM Managing Board, commented: "We are pleased to report a very good start to the year, with continued positive momentum in all businesses as we execute on our mid-term strategic and financial ambitions. Nutrition continued to deliver on its objectives with good growth from Animal and Human Nutrition. Materials demonstrated once again the benefit of its focus on specialties. Both businesses achieved strong volume growth, well above the market.

Notwithstanding the current global socio-economic volatility, we are confident that we will be able to deliver against our full-year objectives given our focus on improving our financial performance through our growth initiatives and our extensive and ambitious profit improvement programs. At the same time we continue to manage our business for the longer term by pursuing our innovation-driven growth strategy.”

Outlook 2017

DSM aims to deliver high-single digit percentage Adjusted EBITDA growth and high double-digit basis point ROCE growth in line with the targets set out in its Strategy 2018.

Key figures and indicators

in € million Q1 2017 Q1 2016 % change
YTD Q1 2017 YTD Q1 2016
% change
Sales - Continuing Operations 2,159 1,913 13% 2,159 1,913 13%
Adjusted EDITDA 345 296 17% 345 296 17%
Nutrition 257 225 14% 257 225 14%
Materials 113 95 19% 113 95 19%
Innovation Center 1 1   1 1  
Corporate Activities -26 -25   -26 -25  
Adjusted EBITDA margin 16.0% 15.5%   16.0% 15.5%  
EBITDA 334 271   334 271  
Adjusted EBIT 222 185   222 185 20%
EBIT 206 160   206 160  
Capital Employed       7,914 7,456  
Average Capital Employed       7,901 7,505  
ROCE (%)       11.3% 9.8%  
Effective tax rate       18.0% 18.5%  
Adjusted net profit 163 109 50% 163 109 50%
Net profit - Total DSM
149 85 75% 149 85 75%
Adjusted net EPS
0.92 0.60 53% 0.92 0.60 53%
Net EPS - Total DSM 0.84 0.46   0.84 0.46  
Cash Flow 196 137 43% 196 137 43%
Capital Expenditures1 130 99   130 99  
Net debt       2,081 2,0702  

1) Cash, net of customer funding
2 ) Year-end 2016

In this report:
a) ‘Organic sales growth’ is the total impact of volume and price/mix;
b) ‘Total Working Capital’ refers to the total of ‘Operating Working Capital’ and ‘non-Operating Working Capital'

Review by Cluster

Nutrition

in € million Q1 2017 Q1 2016 % change
YTD Q1 2017
YTD Q1 2016 % change
Sales 1,398 1,250 12% 1,398 1,250 12%
Adjusted EBITDA 257 225 14% 257 225 14%
Adjusted EBITDA margin (%) 18.4% 18.0%   18.4% 18.0%  
Adjusted EBIT 185 161 15% 185 161 15%
Capital Employed       5,555 5,252  
Average Capital Employed       5,546 5,281  
ROCE (%)       13.3% 12.1%  
Total Working Capital       1,500 1,399  
Average Total Working Capital as % of Sales       27.2% 27.5%  

Sales development

Q1 2017 sales increased by 12% compared to Q1 2016, driven predominantly by organic growth of 8%. Volume growth continued to be good across all business lines, with both animal and human nutrition benefiting in part from timing of sales between quarters. Higher prices were driven by animal nutrition. Exchange rates had a 4% positive effect, mainly coming from a stronger US dollar and Brazilian real.

Q1 2017 Adjusted EBITDA was €257 million, up 14% compared to Q1 2016, resulting from good organic growth and the profit improvement programs. Currencies had a positive effect with the stronger US dollar and Brazilian real, partly offset by the stronger Swiss franc.

Q1 2017 Adjusted EBITDA margin was 18.4%, up from 18.0% in Q1 2016.

Animal Nutrition & Health

Sales development

Q1 2017 sales were up 18% versus Q1 2016, driven mainly by organic growth of 12%. All regions delivered good volume growth. Our Latin America business, where markets remained weak, benefited from a low comparable reporting period, when volumes were impacted by pre-buying in Q4 2015. Normalized for this effect, Q1 2017 volume growth was 4-5%. Prices were up in several vitamins and premixes. Exchange rate effects were driven by a stronger US dollar and Brazilian real, partly offset by the weaker Chinese renminbi.

Human Nutrition & Health

Sales development

Q1 2017 sales were 10% higher compared to Q1 2016 driven predominantly by higher volumes, with good growth across all regions and market segments, well above the market. The reported volume growth in human nutrition in the quarter benefited from additional vitamin C volumes that could not be delivered in Q4. Normalized for this effect, Q1 2017 volume growth was about 5%. Prices were slightly down with lower contractual prices in Infant Nutrition and a product mix effect. Exchange rates had a positive effect led by the stronger US dollar.

Food Specialties

Q1 2017 sales showed solid organic growth in enzymes, cultures and savory ingredients, while hydrocolloids had a weaker quarter.

Materials

in € million Q1 2017 Q1 2016 % change
YTD Q1 2017
YTD Q1 2016 % change
Sales 701 600 17% 701 600 17%
Adjusted EBITDA 113 95 19% 113 95 19%
Adjusted EBITDA margin (%) 16.1% 15.8%   16.1% 15.8%  
Adjusted EBIT 81 62 31% 81 62 31%
Capital Employed       1,831 1,755  
Average Capital Employed       1,819 1,739  
ROCE (%)       17.9% 14.4%  
Total Working Capital       332 293  
Average Total Working Capital as % of Sales       12.3% 11.7%  

Sales development

Q1 2017 sales were 17% higher than Q1 2016, with high demand for specialties and some stocking effects in parts of the value chain resulting in an exceptionally high volume growth of 11%. DSM Resins & Functional Materials benefited from improved business conditions in the European building and construction markets, while DSM Dyneema continued to see strong demand for life protection in law enforcement. Higher prices resulted from higher input costs.

Q1 2017 Adjusted EBITDA increased by 19% compared with Q1 2016, as a result of higher volumes, focus on specialties and a slightly positive FX effect.

The Adjusted EBITDA margin in Q1 2017 was 16.1% versus 15.8% in Q1 2016; higher input costs were only partially reflected in customer pricing in the quarter.

Innovation Center

in € million Q1 2017 Q1 2016 % change
YTD Q1 2017
YTD Q1 2016 % change
Sales 43 43 0% 43 43  
Adjusted EBITDA 1 1   1 1  
Adjusted EBIT -5 -5   -5 -5  
Capital Employed       602 549  

Q1 2017 sales and Adjusted EBITDA were stable compared to Q1 2016. Higher volumes in Biomedical and Advanced Solar and positive FX effects were offset by overall lower price/mix.

Corporate Activities

in € million Q1 2017 Q1 2016 YTD Q1 2017
YTD Q1 2016
Sales 17 20 17 20
Adjusted EBITDA -26 17 -26 -25
Adjusted EBIT -39 -26 -39 -33

Q1 2017 sales and Adjusted EBITDA were in line with Q1 2016. EBIT was impacted by the impairment of an IT tool.

Joint Ventures and Associates

Financial overview of DSM’s key joint ventures and associates

in € million Q1 2017 Q1 2016 % change YTD Q1 2017 YTD Q1 2016 % change
DSM Sinochem            
Sales 110 112 -2% 110 112 -2%
Adjusted EBITDA% 17% 16%   17% 16%  
Patheon1            
Sales 430 376 14% 430 376 14%
Adjusted EBITDA% 17% 15%   17% 15%  
ChemicaInvest            
Sales
535 455 18% 535 455 n.a.
Adjusted EBITDA% 8% 4%   8% 4%  

1) Patheon respective period is from 1 November – 31 January

  • DSM Sinochem Pharmaceuticals (50% DSM) showed stable results.
  • Patheon (33.5% DSM) continued to make good progress, as reported in their first quarter earnings release published on 16 March 2017.
  • ChemicaInvest (35% DSM) reported improved results due to higher caprolactam prices.

Net result contribution of joint ventures / associates

in € million Q1 2017 Q1 2016 YTD Q1 2017 YTD Q1 2016
DSM Sinochem (50%) 3 3 3 3
Patheon (33.5%) 7 -12 7 -12
ChemicaInvest (35%) 0 -3 0 -3
Other -4 -5 -4 -5
Total share of the profit of associates / joint ventures   6 -17 6 -17

Cash Flow, Capital Expenditures and Financing

in € million Q1 2017 Q1 2016 YTD Q1 2017 YTD Q1 2016
Cash from Operating Activities 196 137 196 137
Total Working Capital     1,574 1,394
Total Working Capital as % of Sales
    18.2% 18.2%
Capital Expenditure (cash, net of customer funding) 130 99 130 99
Net Debt     2,081 2,0701

*Year-end 2016.

Cash flow from operating activities amounted to €196 million in Q1 2017 showing an improvement of €59 million (+43%) compared to Q1 2016.

Total Working Capital amounted to €1,574 million at the end of Q1 2017 compared to €1,394 million at the end of Q1 2016. The higher working capital reflected the higher level of sales representing 18.2% as a percentage of annualized Q1 sales, which was equal to Q1 2016.

Net debt increased slightly by €11 million compared to the end of 2016 and stood at €2,081 million.

Overview of Alternative Performance Measures (APM) adjustments to EBIT(DA)

The following overview gives a summary of Q1 2017 APM adjustments.

Nutrition: EBITDA adjustments amounted to -€5 million relating to the profit improvement programs. EBIT adjustments amounted to -€9 million including -€4 million asset impairment.

Materials: EBITDA adjustments amounted to +€1 million (EBIT+€1 million) relating to the release of a litigation provision.

Innovation: EBITDA adjustments amounted to +€1 million (EBIT+€1 million) relating to the release of a restructuring provision.

Corporate Activities: EBITDA adjustments amounted to -€8 million all related to restructuring programs. EBIT adjustments amounted to -€9 million including -€1 million asset impairment.