Financial results Q2 2011
DSM's Executive Board presented the second quarter results for 2011 on 2 August 2011. Feike Sijbesma, Chairman of the DSM Managing Board, said: “This has been another strong quarter for DSM with continued progress compared to the first quarter and the same period last year reflecting the strength of our businesses. These results include a positive contribution from Martek but also the negative impact of currency effects and higher raw material and energy costs."
“Whilst general economic forecasts for the year continue to be positive, there are increased uncertainties related to the global economy. However, we believe we are well positioned with our balanced, relatively resilient portfolio in health, nutrition and materials, and with our broad geographic footprint, strong technology and leading market positions. This, in combination with our focus on customers and innovation and our ongoing efficiency improvements, gives us confidence that 2011 will be a strong year for DSM with good progress towards achieving the 2013 targets.”
Whilst general economic forecasts for the year continue to be positive, there are increased uncertainties related to the global economy caused by sovereign debt challenges, increased inflation and volatile currencies. However, DSM believes that it is well-positioned with its balanced, relatively resilient portfolio in health, nutrition and materials, its broad geographic footprint and strong technology and leading market positions to make further progress.
DSM, in line with the industry, experienced higher raw material and energy costs during the first half of the year, although this increase is expected to ease during the second half of the year. DSM expects to remain successful in passing on these cost increases due to its strong market positions.
Currencies have also been a negative factor in the second quarter. The strong Swiss franc and the weakening US dollar will continue to impact results going forward.
However, at this stage, no major changes are anticipated to the overall business assumptions for the full year.
The Nutrition cluster is expected to maintain its positive momentum, with good volumes, price increases and further cost efficiencies helping to partially offset the adverse impact of the strong Swiss franc and weak US dollar. The cluster is relatively unaffected by changes in the global economy. EBITDA including Martek is likely to be clearly above last year.
The Pharma cluster continues to be impacted by challenging business conditions and results are expected to be lower than in 2010.
Performance Materials is expecting continued growth in end-user demand. Overall sales volumes for H2 2011 are expected to be lower than in H1 2011 due to normal seasonal trading patterns. In the second half of the year pricing initiatives will continue to take effect and input cost pressures are expected to ease. Full year results are expected to be clearly above last year.
Polymer Intermediates’ full year results are expected to be excellent, although DSM sees some potential margin decline.
Taking into consideration all of the above, together with DSM’s continued focus on customers, innovation and ongoing efficiency improvements, 2011 is expected to be a strong year for DSM. Therefore DSM believes that good progress is being made towards achieving the EBITDA target of €1.4 to 1.6 billion in 2013, in conjunction with a ROCE of more than 15%.