Results & outlook Q3 2011
Commenting on the Q3 2011 results, Feike Sijbesma, CEO/Chairman of the DSM Managing Board, said: “We are pleased to have delivered continued profitable growth compared to last year across all business clusters. This performance has been achieved despite the significant impact of a very strong Swiss franc and a weak US dollar.
“Our outlook remains unchanged: 2011 is expected to be a strong year with further progress towards achieving our 2013 targets. However, DSM remains vigilant to possible negative developments in the global economy. Through Q3 we have experienced weakening in the electronics and electrical markets and in the depressed building and construction markets. DSM would not be immune to a deterioration in the economic environment, however, we have transformed DSM into a much more balanced and stronger company with a relatively resilient portfolio in health, nutrition and materials, a broad geographic spread with a strong presence in high growth economies and a solid balance sheet.”
The outlook for the remainder of the year is consistent with DSM’s earlier expectations. However, DSM is mindful of the impact that a deterioration in macro-economic conditions could have on its end markets. At the same time DSM remains confident that it will continue to benefit from its balanced, relatively resilient portfolio in health, nutrition and materials, its broad geographic spread with a strong presence in high growth economies, and its solid balance sheet.
DSM assumes that there will be no major changes to the overall business conditions for the remainder of the year.
The Nutrition cluster is expected to maintain its resilient performance through firm pricing and continued volume growth. At the current exchange rate the Swiss franc is estimated to have a negative impact of between €10 million and €15 million net of hedges in Q4 2011 compared to last year. Including Martek, full year EBITDA for the cluster is expected to be clearly above last year’s level.
Conditions in the Pharma cluster remain challenging and the overall results are anticipated to be lower than in 2010. DSM has proportionally consolidated DSM Sinochem Pharmaceuticals at 50% as of 1 September 2011.
In Performance Materials, unit margins have clearly increased during the year. However, the cluster will continue to be impacted by weakening demand in building and construction and electronics and electrical and lower sales at DSM Dyneema related to the tender driven vehicle protection business as previously communicated. The cluster is expected to report full year results above last year.
The Polymer Intermediates business continues to benefit from very strong, although softening trading conditions. Polymer Intermediates’ full year results are expected to be excellent.
DSM remains confident that 2011 will be a strong year with further progress being made towards achieving the EBITDA target of €1.4 billion to 1.6 billion in 2013, in conjunction with a ROCE of more than 15%.