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Financial Results Q3 2010


The general economic conditions continued to be good in Q3. Most western economies sustained their growth, although at a low pace. In most high growth economies the growth is very strong.

Most end-markets that are relevant for DSM continued to grow. Those end-markets (especially Materials Sciences related markets) which experienced a downswing in demand have largely closed the gap with the 2008 level, with some exceptions like building and construction, which is still clearly lagging behind. Re-stocking downstream in the value chain, which was one of the drivers for the excellent result in Q2 2010, did not have much of an impact in Q3, with order patterns appearing to normalize.

The euro was clearly weaker against most other currencies compared to Q3 2009. Compared to Q2 2010, currency exchange rates were on average fairly stable, with the exception of the relatively strong Swiss franc, which negatively affects DSM Nutritional Products because of its Swiss activity base.

Nutrition continued its strong financial performance, driven by good business conditions and a very strong market position. The overall business environment normalized compared to the very good situation in Q2.

For Pharma, Q3 2010 saw no change in the challenging business dynamics that the entire pharmaceutical industry is facing. Results were negative, as expected.

Performance Materials is delivering continued strong organic sales growth. The recovery in operating profit was slowed down by margin pressure at DSM Engineering Plastics and to a lesser extent at DSM Resins, due to a time lag in passing on increased raw material prices.

Polymer Intermediates continued to perform very well, in spite of a maintenance shutdown in China and, as expected, somewhat lower margins compared to the very high level in Q2.

Base Chemicals and Materials, which is mainly DSM Elastomers now, continued to perform well.

Cash flow from operating activities in Q3 amounted to € 330 million. This includes a € 66 million contribution from a reduction in working capital. Operating working capital as a percentage of sales decreased from 21.0% to 19.7% during the quarter. Year-to-date cash flow from operating activities amounted to € 690 million. This is amply sufficient to cover capital expenditure and dividends. The operating cash flow in combination with the proceeds from divestments has led to a considerable reduction in net debt during the year.

Net Sales

Organic sales growth from continuing operations was a healthy 13% compared to Q3 2009, a period when economic recovery already was underway. The organic growth consisted of 8% autonomous volume growth and 5% higher prices. All business groups benefited from the weaker euro, which was on average 10% lower against the US dollar compared to Q3 2009.

In Nutrition somewhat lower prices were compensated for by higher volumes. Pharma growth was moderate, mainly driven by DSM Anti-Infectives. Organic growth was very strong in the Materials Sciences clusters, driven by prices as well as volumes.

Operating Profit

Operating profit was almost 30% higher than in Q3 2009, which is a reflection of the continuing improvement in business conditions. Nutrition and Polymer Intermediates continued to deliver very strong results. Pharma posted a small loss, as expected. Performance Materials posted an improved result compared to Q3 2009, although the current level is not satisfactory yet.

The result was lower than the very high level of Q2 2010 mainly because there were more planned maintenance activities in manufacturing operations, the Swiss franc was very strong, and there was margin pressure in Performance Materials.


Compared to Q3 2009 sales growthwas 7%, driven by currency exchange rates. Nutrition experienced some volume growth in most of its businesses but prices were somewhat lower than last year.

Compared to the previous quarter, volumes in Animal Nutrition & Health increased, whereas volumes in Human Nutrition & Health, Personal Care and DSM Food Specialties were somewhat lower due to seasonal effects.


Organic sales growth was +4%, driven by higher sales volumes and prices at DSM Anti-Infectives. Favorable exchange rates contributed to top line growth for DSM Anti-Infectives as well as DSM Pharmaceutical Products.

Operating profit was below the Q3 2009 result. DSM Pharmaceutical Products’ business environment remained very challenging during the third quarter of 2010. At DSM Anti-Infectives higher PEN prices and improved costs were partially offset by the loss of margin as a result of the termination of clavulanic acid productionlast year.

Performance Materials

The Performance Materials cluster showed strong organic sales growth of +25% compared to Q3 2009. The drivers of this growth were both volumes and prices.

Operating profit for Q3 2010 improved slightly compared to Q3 2009. Although strict margin management is in place there is a time lag in passing on higher raw material costs at DSM Engineering Plastics and to a lesser extent at DSM Resins. DSM Dyneema’s results were somewhat lower than in Q2 2010 due to a lower impact of a large life protection order.

Polymer Intermediates

Organic sales growth was +29% compared to Q3 2009 due to higher selling prices and continued strong demand.
Consequently operating profit showed a strong increase compared to Q3 2009 in spite of the scheduled maintenance turnaround in China.

Base Chemicals and Materials

Organic sales growth in Q3 was +18%, due mainly to increased prices and also partly to volume increases.
Higher margins together with higher volumes resulted in a higher operating profit for all units in this cluster.

Other activities

The operating result of Other activities stayed in line with Q3 2009. Higher costs related to Share Based Payments (because of the increase in the share price) and higher project related costs were compensated for by better results of DSM Biomedical, which is part of the Innovation Center.

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