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Financial Results Q4 2010 and FY 2010

DSM reports strong 2010 results and proposes dividend increase to € 1.35


In the strong fourth quarter of 2010 DSM’s businesses developed as expected. In general the underlying trading conditions remained favorable. Compared to Q3 2010 there was organic sales growth of 4%, reflecting both continued volume growth and pricing strength. However, currency developments were unfavorable, due to a weaker US dollar and a very strong Swiss franc. In addition, project costs related to the implementation of DSM’s new strategy increased as indicated before. All in all, Q4 operating result was equal to Q3 despite the traditionally seasonally weaker quarter and the Swiss franc exchange rate increase. Compared to Q4 2009 the operating result was 17% higher, mostly due to strong performance of the Materials Sciences businesses.

The Nutrition cluster continued its very good business performance, but was negatively affected by the development of the Swiss franc, which was 13% stronger versus the Euro in Q4 2009. Nevertheless, the cluster’s operating result was similar to Q4 2009. Pharma showed some seasonal improvement in Q4, but the business dynamics in the pharmaceutical industry remained very challenging.

Most businesses in Performance Materials experienced the traditional year-end slowdown in demand. Unit margins in Q4 increased despite higher feedstock prices. Polymer Intermediates delivered its best quarter in history, reflecting excellent demand, pricing strength and a unique global presence.

Full year 2010 showed a very strong improvement compared to the downturn year 2009. All businesses, except Pharma, improved their performance. The improvement in the business environment, supported by DSM’s swift actions in response to the downturn, resulted in the best ever operating result for the new DSM portfolio. For most businesses the first half of the year was stronger than the second half, due to downstream restocking and much more favorable currency exchange rates.

DSM’s focus on cash remained a strong priority. Operating cash flow was € 1.1 billion. In combination with the proceeds from divestments and cautious capital expenditure this resulted in a net debt of minus € 108 million at the end of the year. This places DSM in an excellent position to pursue its strategic growth ambitions.

Net Sales

Organic sales growth in the fourth quarter was 14%, evenly spread over volumes and prices. Performance Materials was the main driver for volumes, Polymer Intermediates for prices. Currency exchange rates had a 6% positive effect. Deconsolidations resulted in a 2% decrease.

Full year sales were very strong compared to 2009. Nutrition showed strong volume growth with slightly lower prices. At constant exchange rates, sales in Pharma were virtually flat.

Materials Sciences showed a very strong volume increase resulting in an operating level which was back to pre-crisis level in most businesses. Pricing was very strong especially in Polymer Intermediates.

Operating Profit

Operating profit in the fourth quarter amounted to € 170 million, which was 17% higher than in Q4 2009. Nutrition’s profit was almost equal to Q4 2009. The positive trend in the business was offset by the very strong Swiss franc. Pharma results were lower than in Q4 2009 which included orders in flu related sterile vaccines. The combined Materials Sciences businesses continued to improve volumes and margins.

Full year operating profit was € 752 million, which was 74% above 2009. After 17% operating profit growth in 2009, Nutrition delivered 9% growth in 2010. This is a reflection of Nutrition’s ability to strengthen its market position based on its innovation and differentiation strategy in combination with a good operational performance. The Pharma results were lower, reflecting continuing challenges in the pharmaceutical industry and the one-off effect of flu related sterile vaccines business in 2009. The Performance Materials operating profit was substantially better than in 2009 and topped the 2008 level. Polymer Intermediates posted an excellent performance and its best year ever. In both caprolactam and acrylonitrile, margins were the driver.


Fourth quarter organic sales development was -1% as higher sales volumes were offset by lower prices. DSM’s Quali-CTM continues to command a solid premium despite increased price pressure in vitamin C. Operating profit was in line with Q4 2009 and Q3 2010 despite a negative impact of the strong Swiss franc. Performance of personal care and savory ingredients was particularly strong compared to 2009.

Full year performance was above 2009, in both sales and profitability. Organic sales growth was 2%, mainly driven by higher volumes. Operating profit of DSM Nutritional Products and DSM Food Specialties increased further, due to good market conditions, excellent manufacturing performance, good cost control and favorable currency exchange rates. The cluster remained focused on its value over volume strategy.


Fourth quarter sales were considerably higher than in the previous quarter, mainly due to seasonally high shipments in DSM Pharmaceutical Products. However, organic sales development compared to Q4 2009 was -8% mainly due to orders in the flu related sterile vaccines business in Q4 2009. As a consequence, operating profit was lower than in Q4 2009.

Full year organic sales development was -1%. The much lower operating result compared to 2009 was mainly due to DSM Pharmaceutical Products as it continued to face challenges as a result of low demand from pharmaceutical companies, delay in approvals and the loss of some large contracts. DSM Anti-Infectives’ improved performance in its continuing business could not completely offset the loss of margin as a result of the termination of clavulanic acid production in 2009.

Performance Materials

Fourth quarter organic sales growth was 25%, of which 10% prices and 15% volumes. All three business groups (DSM Engineering Plastics, DSM Dyneema and DSM Resins) contributed to this growth. The operating result clearly improved compared to Q4 2009. DSM Engineering Plastics and DSM Resins improved unit margins, but the further increased feedstock prices in Q4 are not yet fully reflected in pricing.

Full year organic sales growth was 31%, highlighting a very strong recovery from the depressed year 2009 in all three business groups. Prices were flat at DSM Dyneema, but clearly increased in the other two business groups. The sales increase was reflected in the operating result, which showed a significant improvement, especially in the first half of the year because of downstream restocking. The second half of the year was affected by increased feedstock prices.

Polymer Intermediates

Organic sales growth in the fourth quarter was 44%, mainly reflecting very strong prices. Volume growth was restricted because of capacity limitations. Although feedstock prices increased, this was clearly compensated for by better prices. This resulted in a record operating profit.

Full year organic sales growth was 59%, reflecting very strong trading conditions for caprolactam as well as acrylonitrile. These excellent trading conditions resulted in an unprecedented operating profit.

Other activities

The lower fourth quarter result in Other activities compared to Q4 2009 was, as expected, a result of additional project expenses related to the announced strategy (including investments in internationalization and branding as well as M&A related costs). An impairment loss was recognized for the Emerging Business Area (EBA) Specialty Packaging. Share based payments costs increased following the higher DSM share price.

Full year operating result stayed at the same level as in 2009. Additional project related costs were compensated for by higher results from some remaining non-core businesses.

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