This site uses cookies to store information on your computer. Learn more x

Financial Results Q3 2009


Most of DSM’s businesses experienced a further improvement in demand during Q3, including a strong September. The underlying trend can be described as a mixture of a clear recovery in some end markets (especially China, where sales were 16% higher than Q3 last year) and some downstream re-stocking in other areas which, however, are still lower, such as automotive. The year-on-year percentage drop in sales volumes in the businesses affected by the economic downturn has returned to single digit.

DSM’s Nutrition cluster continued to show resilience and steady growth, capitalizing on its strong market position in areas which were hardly affected by the downturn. The Pharma results remained low as expected, due to weak sales.

In the Materials Sciences clusters, the results of DSM Engineering Plastics, DSM Resins and DSM Fibre Intermediates were close to last year’s level. The combined effects of lower sales volumes and the reduction of inventories were compensated for by lower raw material prices and the sustained focus on efficiency. Also DSM Dyneema experienced a weaker demand than in the same period last year.

The operating profit of DSM’s core business, Life Sciences and Materials Sciences, in Q3 2009 (EUR 137 million) was only 10% lower than last year’s level, during which period DSM was not yet affected by the downturn.

All businesses in Base Chemicals and Materials showed a clear recovery compared to the previous quarter, which resulted in a small operating profit for the cluster as a whole, but a much weaker result than in the very good period last year. The main contributors to this improvement versus Q2 were DSM Elastomers and DSM Agro.

The broad improvement in trading conditions was no reason to compromise the focus on cash. DSM’s net debt of EUR 1,069 million is now EUR 818 million (43%) lower than a year ago at the start of the economic downturn.

The disposals of DSM Energy and the urea-licensing activities, as part of DSM’s accelerated Vision 2010 strategy, were completed on 30 September and 6 October respectively. The disposal of DSM Energy resulted in a net book profit of EUR 268 million in Q3 and the disposal of the urea-licensing activities will result in a net book profit of around EUR 30 million which will be recognized in Q4.

Net Sales

Net sales dropped by 14% compared to Q3 2008 but improved by 5% compared to Q2 2009 (volumes +5%, prices +2%, exchange rates -2%). Sales volumes were on average still lower compared to last year’s level, but the decline was much less than in previous quarters. This is a reflection of improvements in end-markets as well as some re-stocking. Nutrition, DSM Anti-Infectives, DSM Agro and DSM Melamine are even showing better sales volumes than Q3 last year.

Although prices were clearly below last year’s level (partly due to lower raw material prices in the Materials Sciences and Base Chemicals and Materials businesses), pricing power was generally strong. Prices were, on average, increasing during the quarter and margins were mostly better than last year’s (DSM Agro being the important exception due to much lower prices).

Operating Profit

At EUR 139 million, operating profit from continuing operations was substantially better than in the last three quarters, but clearly below last year’s Q3. The decline year-on-year was mainly attributable to the Base Chemicals and Materials and Pharma clusters.

Nutrition sustained its solid performance and remained hardly affected by the recession. Volumes were growing again and were above last year while prices remained strong. Operating profit was negatively affected by underutilization of assets due to inventory reduction.

Pharma was affected by the weak demand at DSM Pharmaceutical Products and the continued weak pricing at DSM Anti-Infectives.

In Performance Materials both DSM Engineering Plastics and DSM Resins profited from a recovery in volumes, strong margins and improved efficiency. DSM Dyneema experienced pressure because of a weaker demand than last year.

Polymer Intermediates recovered sharply from the dramatic drop in demand and margins seen at the end of last year and the beginning of this year.

In Base Chemicals and Materials, the operating profit of DSM Elastomers showed a substantial improvement in this quarter and was positive again. The improvement in DSM Agro and DSM Melamine was less pronounced. Both business groups still posted a loss.

A number of structural cost-saving actions to address the effects of the economic downturn and to strengthen DSM’s competitive position helped to improve the operating profit in Q3 compared to Q2. DSM is on track to achieve cost savings as a result of these actions of EUR 150-200 million on a yearly basis, to be fully achieved by 2010.


Organic sales growth in the cluster was 2% compared to Q3 2008 driven by DSM Nutritional Products. The improvement came from an increase in volume, especially in the animal feed segment where demand slackened in Q3 2008. Demand for food ingredients in Q3 2009 was still impacted by de-stocking effects in the pipeline. However, in the second part of the quarter demand improved. Following the value-over-volume strategy, prices in both food and feed ingredients remained robust although at slightly lower levels which was compensated for by the stronger dollar. Compared to the second quarter of this year, volume improvements continued, but were offset by a weaker dollar. DSM Food Specialties’ sales were similar to Q3 last year.

Operating profit of DSM Nutritional Products continued to be strong in Q3 2009 and increased compared to last year. This was due to favorable sales developments, production efficiency and good cost management and despite underutilization of assets due to inventory reduction. DSM Food Specialties’ operating profit continued to be above last year due to strong performance in enzymes and ARA and favorable exchange rates.


Organicsales development of the Pharma cluster continued to be under pressure.
DSM Pharmaceutical Products’ activity level remained low as a result of low demand from pharmaceutical companies, delay in approvals and the loss of some large contracts. DSM Anti-Infectives was facing low prices. Last year’s sales still included the activities of DSM Deretil, which was disposed of at the end of Q3 2008.

The operating profit continued to decrease. The lower prices for penicillin derivatives and low demand at DSM Pharmaceutical Products led to a lower result compared to last year.

Performance Materials

Organicsales development was -17% compared to last year as market sentiment was lower for all business groups and most regions. The Asia Pacific region was an exception for most businesses as year-on-year growth continued. Compared to Q2 of this year, the organic sales growth was a healthy 10%. Higher volumes, partly due to re-stocking, as well as favorable price developments were observed in all businesses.

The operating profit gap narrowed significantly against Q3 of last year especially for DSM Engineering Plastics and DSM Resins, with a result that was more than double Q2 2009. Also DSM Engineering Plastics moved into positive territory for the quarter. These encouraging developments were driven by volume increase, well structured cost control programs, price leadership and higher margins. The quarterly result of DSM Dyneema dropped compared to the same period last year as weaker demand had an impact on this business as well.

Polymer Intermediates

Organic sales development was -30% compared to the same period of last year driven by lower market prices. With respect to volume, the continuing weak market demand in North America has been, to a large extent, compensated for by sales volume in Europe and Asia (especially China). Compared to the previous quarter, organic sales growth was 18% due to much better pricing.

The cluster delivered a slightly higher operating profit compared to the same quarter of last year. Due to the low benzene price in the first two months of the quarter, the margins in caprolactam have improved. Compared to the previous quarter, the operating profit has improved by EUR 17 million.

Base Chemicals and Materials

Organic sales development was -27% compared to last year, which was mainly caused by lower fertilizer prices, as volumes were comparable to last year. Q3 showed a healthy growth of 16% compared to the second quarter. In all businesses, sales are recovering, from the first half year’s trough.

The operating profitof the cluster was much lower than Q3 2008 due to lower prices at DSM Agro. Compared to the previous quarter operating profit recovered and was slightly positive again. Especially DSM Elastomers showed a good recovery to a level which was comparable to last year. The main cause for the overall recovery of the cluster is the fact that the volumes are picking up again. Furthermore the fixed costs saving programs were contributing considerably to the result.

Other activities

The main difference in the result of Other activities compared to Q3 2008 was the higher result at the captive insurance company which posted a substantial loss last year as a consequence of the ammonia outage. This broadly offset the (non cash) increase in IFRS pension costs for defined benefit plans.

Related links