Heerlen, NL, 15 Feb 2017 07:00 CET
in € million | FY 2016 | FY 2015 | % change | Volume | Price/mix | FX | Other |
---|---|---|---|---|---|---|---|
Sales | 7,920 | 7,722 | 3% | 4% | 0% | -1% | 0% |
Nutrition | 5,169 | 4,963 | 4% | 3% | 2% | -1% | 0% |
Materials | 2,513 | 2,528 | -1% | 4% | -5% | -1% | 1% |
Adjusted EBITDA1 | 1,262 | 1,075 | 17% | ||||
Nutrition | 931 | 822 | 13% | ||||
Materials | 435 | 384 | 13% | ||||
EBITDA | 1,174 | 956 | |||||
ROCE (%) | 10.4% | 7.6% |
1) Main non-IFRS terms are explained on page 23 'Notes to the condensed financial statements'. A reconciliation is provided on pages 15 and 17 of the PDF.
Feike Sijbesma, CEO/Chairman of the DSM Managing Board, commented: “With today’s results, we are clearly delivering on the goals we set out at the end of 2015. We are pleased to report a very good year, in which we achieved strong EBITDA and ROCE growth, well ahead of the mid-term targets set out in Strategy 2018: Driving Profitable Growth.
Nutrition achieved a year of strong organic growth, in both Animal and Human Nutrition & Health. The Materials transformation is apparent in strong volume and margin growth, driven by our focus on specialties. In addition, we made good progress on our extensive improvement programs. Besides stepping up our financial performance, we were also able to drive our innovation and sustainability agenda in 2016, as well as taking further steps in anchoring the organizational agility and culture that we aim at.
While macro-economic conditions are uncertain, we are confident that in 2017 we will again deliver on our strategic objectives, despite a higher comparative base year. We will continue to execute our growth initiatives, and we are firmly on track with our ambitious, group-wide cost and productivity improvement programs. In addition, we will maintain our disciplined approach to capital allocation and working capital.”
DSM aims to deliver high single-digit percentage Adjusted EBITDA growth and high double-digit basis point ROCE growth in line with the targets set out in its Strategy 2018.
in € million | Q4 2016 | Q4 2015 | % change | Volume | Price/mix | FX | Other |
---|---|---|---|---|---|---|---|
Sales | 2,015 | 1,926 | 5% | 2% | 0% | 2% | 1% |
Nutrition | 1,321 | 1,264 | 5% | 0% | 2% | 3% | 0% |
Materials | 639 | 601 | 6% | 7% | -3% | 1% | 1% |
Adjusted EBITDA1 | 315 | 261 | 21% | ||||
Nutrition | 238 | 206 | 16% | ||||
Materials | 105 | 90 | 17% | ||||
EBITDA | 270 | 230 | |||||
ROCE (%)2 | 10.4% | 7.6% |
1) Main non-IFRS terms are explained on page 23 'Notes to the condensed financial statements'. A reconciliation is provided on pages 15 and 17 of the PDF.
2) January until December.
in € million | Q4 2016 | Q4 2015 | % change | Volume | Price/mix | FX | Other |
---|---|---|---|---|---|---|---|
Sales - Continuing Operations | 2,015 | 1,926 | 5% | 2% | 0% | 2% | 1% |
Nutrition | 1,321 | 1,264 | 5% | 0% | 2% | 3% | 0% |
Materials | 639 | 601 | 6% | 7% | -3% | 1% | 1% |
Innovation Center | 41 | 40 | 0% | -2% | 0% | 1% | 1% |
Corporate Activities | 14 | 21 | |||||
Discontinued Operations | 0 | 0 |
in €million | FY 2016 | FY 2015 | % change | Volume | Price/mix | FX | Other |
---|---|---|---|---|---|---|---|
Sales - Continuing Operations | 7,920 | 7,722 | 3% | 4% | 0% | -1% | 0% |
Nutrition | 5,169 | 4,963 | 4% | 3% | 2% | -1% | 0% |
Materials | 2,513 | 2,528 | -1% | 4% | -5% | -1% | 1% |
Innovation Center | 167 | 155 | 7% | 6% | 0% | 0% | 1% |
Corporate Activities | 71 | 76 | |||||
Discontinued operations | 0 | 1,213 |
in € million | Q4 2016 | Q4 2015 | % change | FY 2016 | FY 2015 | % change |
---|---|---|---|---|---|---|
Sales - Continuing Operations | 2,015 | 1,926 | 5% | 7,920 | 7,722 | 3% |
Adjusted EDITDA - Continuing Operations1 | 315 | 261 | 21% | 1,262 | 1,075 | 17% |
Nutrition | 238 | 206 | 16% | 931 | 822 | 13% |
Materials | 105 | 90 | 17% | 435 | 384 | 13% |
Innovation Center | -1 | -1 | 1 | -9 | ||
Corporate Activities | -27 | -34 | -105 | -122 | ||
Discontinued Operations | 0 | 1 | 0 | 95 | ||
Adjusted EBITDA margin - Continuing Operations1 | 15.6% | 13.6% | 15.9% | 13.9% | ||
EBITDA - Continuing Operations | 270 | 230 | 1,174 | 956 | ||
Adjusted EBIT - Continuing Operations1 | 190 | 115 | 65% | 791 | 573 | 38% |
EBIT - Continuing Operations | 139 | 36 | 685 | 362 | ||
Capital Employed - Continuing Operations2 | 7,889 | 7,553 | ||||
Average Capital Employed - Continuing Operations2 | 7,627 | 7,512 | ||||
ROCE - Continuing Operations (%) | 10.4% | 7.6% | ||||
Effective tax rate | 18.3% | 22.9% | ||||
Adjusted net profit - Continuing Operations1 | 130 | 96 | 35% | 520 | 381 | 36% |
Net profit - Total DSM |
87 | 29 | 629 | 92 | ||
Adjusted net EPS - Continuing Operations1 |
0.73 | 0.53 | 38% | 2.90 | 2.14 | 36% |
Net EPS - Total DSM | 0.48 | 0.12 | 3.52 | 0.45 | ||
Cash Flow - Continuing Operations | 374 | 313 | 19% | 1,018 | 800 | 27% |
Capital Expenditures - Continuing Operations3 | 170 | 147 | 475 | 468 | ||
Net debt2 | 2,070 | 2,321 |
1) Main non-IFRS terms are explained on page 23 'Notes to the condensed financial statements'. A reconciliation is provided on pages 15 and 17 of the PDF.
2) Before reclassification to held for sale
3) Cash, net of customer funding
In this report:
‘Organic sales growth’ is the total impact of volume and price/mix;
‘Discontinued operations’ comprises net sales and operating profit (before depreciation and amortization) of DSM Fibre Intermediates and DSM Composite Resins up to and including 31 July 2015;
‘Total Working Capital’ refers to the total of ‘Operating Working Capital’ and ‘non-Operating Working Capital’
DSM’s Strategy 2018: Driving Profitable Growth is focused on ensuring that the potential of the business portfolio that has been created over recent years is translated into improved financial results. Reflecting its disciplined focus on performance, DSM has implemented a three-year strategic period with two headline financial targets: high single-digit percentage annual Adjusted EBITDA growth and high double-digit basis point annual ROCE growth.
In 2016, DSM’s financial results were well ahead of these headline targets:
Two headline financial targets | 2016 achievements |
---|---|
High single-digit percentage annual Adjusted EBITDA growth | 17% |
High double-digit basis point annual ROCE growth | 280 bps |
DSM has defined clear actions to achieve its targets, including outpacing market growth, cost reduction and efficiency improvement programs and making a continuous push for consistent improvements in capital efficiency.
Clear actions identified to achieve targets |
2016 achievements |
---|---|
Businesses aim to outpace market growth in all segments | Nutrition: 5% organic growth Materials: 4% volume growth |
€250-300m cost reduction and efficiency improvements | On track: ~€110m cumulative savings by year-end 2016 |
Consistent improvements in capital efficiency | Cash from operating activities up 27% to €1,018m. Capex at €475m, below guidance of €500-550m. Total Working Capital at 18.4%, better than aspiration level. |
In 2016, both Nutrition and Materials showed above-market growth. The constant drive to improve capital efficiency ensured that Total Working Capital at year-end was better than the level we aspire to. There was also a significant increase in cash from operating activities.
DSM has instigated extensive cost-reduction and improvement programs which will deliver €250-300 million versus the 2014 baseline. In 2016, all of these well-identified programs progressed as planned and the programs are on track to deliver the targeted benefits.
Besides stepping up the financial performance of DSM’s businesses, Strategy 2018 comprises additional elements aimed at future-proofing the company, providing a strong and sustainable basis for long-term value creation for all its stakeholders.
For DSM, sustainability is a core value as well as an important business driver. DSM is focused on delivering science-based, sustainable and scalable solutions that help address the challenges the world faces and positively impact the value chain. Not only do these products and solutions (‘Brighter Living Solutions’) offer higher growth rates and better margins, the sustainability aspirations also provide DSM with a focus area to reduce operating costs by increasing its environmental efficiency.
DSM made good progress toward its sustainable operations aspirations in 2016. DSM was again named the global leader in the Materials industry group in the Dow Jones Sustainability World Index in 2016, the seventh time the company has held the number one position. DSM’s drive to improve its environmental efficiency is fully on track, with reductions in both greenhouse-gas emissions and energy efficiency in 2016. A significant step was also taken in the amount of electricity purchased from renewable sources. 2016 also saw an improvement on a number of important social parameters; the employee engagement favorable score was up versus a year ago, while safety also improved compared with prior year.
DSM is adjusting its global organization and operating model to support the company’s growth and to create a more agile, commercially-focused and cost-efficient business. The implementation of new target operating models in ICT, Finance, HR, Indirect Sourcing, Communication and Legal are now well underway. Programs to embed the new way of working in order to change mindset and behaviors are progressing well. An example is the DSM Continuous Improvement program, which is now running across ~40% of the manufacturing footprint. Talent management and development is a further strategic cornerstone. DSM continued to invest in its talent pipeline to ensure it can sustainably address future challenges and demands, and rolled out a new company-wide talent management approach in 2016. Inclusion & Diversity is an important enabler for a high-performing organization and DSM continues to strive to achieve a balanced and representative workforce.
DSM ultimately intends to monetize the partnerships that have been established for its former pharma activities (DSM Sinochem Pharmaceuticals and Patheon) and for the remaining bulk chemical businesses (ChemicaInvest). A first step was taken in July 2016 with the sale of 4.8m shares in Patheon N.V. in connection with its successful IPO. This resulted in a first gain for DSM of €232m in Q3 2016. DSM still holds 49m shares in Patheon, a ~34% stake in the company.
DSM is building for further growth beyond 2018. DSM’s Innovation Center develops Emerging Business Areas outside the direct scope of the current Nutrition and Materials portfolio. The Innovation Center reached EBITDA break-even in 2016 as planned. Good progress was also made with a number of promising programs in the company’s innovation pipeline, which for Nutrition includes a.o. Clean Cow, the Green Ocean partnership and the fermentative stevia sweetener platform and for Materials, Niaga®, ForTii® and Dyneema® Carbon Composites. DSM expects these and other initiatives to contribute to the company’s EBITDA growth in the years beyond 2018.
FY 2016: Nutrition had a strong year with 5% organic growth and Adjusted EBITDA up 13% versus 2015. All businesses contributed well to this growth. Adjusted EBITDA also benefited from the efficiency and cost-saving programs.
in € million | Q4 2016 | Q4 2015 | % change | FY 2016 | FY 2015 | % change |
---|---|---|---|---|---|---|
Sales | 1,321 | 1,264 | 5% | 5,169 | 4,963 | 4% |
Adjusted EBITDA | 238 | 206 | 16% | 931 | 822 | 13% |
Adjusted EBITDA margin (%) | 18.0% | 16.3% | 18.0% | 16.6% | ||
Adjusted EBIT | 160 | 123 | 30% | 645 | 535 | 21% |
Capital Employed | 5,537 | 5,309 | ||||
Average Capital Employed | 5,375 | 5,192 | ||||
ROCE (%) | 12.0% | 10.3% | ||||
Total Working Capital | 1,414 | 1,368 | ||||
Average Total Working Capital as % of Sales | 28.1% | 29.4% |
Q4 2016 sales increased by 5% compared to Q4 2015. Higher volumes in human nutrition and food specialties were offset by slightly lower volumes in animal nutrition, for which the reported growth percentage was impacted by a tough comparison with prior year. Prices in animal nutrition were up in a number of vitamins and premixes, while human nutrition showed a lower price/mix. Exchange rates had a 3% positive effect, mainly driven by a stronger US dollar and Brazilian real.
Q4 2016 Adjusted EBITDA was €238 million, up 16% compared to Q4 2015, resulting from organic growth and the contribution from the efficiency improvement and cost saving programs. There were some end of year incidental costs and marketing campaigns in human nutrition.
FY 2016: Animal nutrition had a strong year with 8% organic growth, driven by strong volume growth in all regions with the exception of Latin America, due to the weak economic conditions in that region. Prices were up in a number of vitamins and premixes.
Q4 2016 sales were up 11% versus Q4 2015, with 6% organic growth mainly driven by positive price/mix, and positive FX effects. Europe, Asia and North America delivered good volume growth, reflecting continued good market conditions, whereas Latin America saw lower volumes. The reported Q4 volume growth percentage was impacted by a tough comparison with Q4 2015. Prices were up in a number of vitamins and premixes.
FY 2016: Human nutrition delivered a significant step-up in organic growth in 2016 versus recent years at 4%. This highlights the successful implementation of the strategy to drive above-market growth through new market initiatives and innovation.
Q4 2016 sales: There was good volume growth in i-Health, food & beverages and infant nutrition. This growth was partly offset by lower volumes in vitamin C as a result of the extended maintenance stop of our plant in China in Q3 2016. The lower price/mix was mainly due to some special price promotion actions in dietary supplements, and a less favorable product mix.
FY 2016: Food Specialties delivered solid organic growth driven by strong volume developments in hydrocolloids and enzymes.
Q4 2016: Organic growth was strong versus the same period last year, with higher volumes in hydrocolloids, enzymes and savory.
FY 2016: Strong financial performance reflected the success of the differentiated approach of focusing on higher-growth specialty businesses in the Materials portfolio.
Volumes grew 4% in the year, and Adjusted EBITDA was up 13%, driven by strong volume growth in higher margin specialties, the benefits of the efficiency and cost-saving programs, and the support from low input costs.
in € million | Q4 2016 | Q4 2015 | % change | FY 2016 | FY 2015 | % change |
---|---|---|---|---|---|---|
Sales | 639 | 601 | 6% | 2,513 | 2,528 | -1% |
Adjusted EBITDA | 105 | 90 | 17% | 435 | 384 | 13% |
Adjusted EBITDA margin (%) | 16.4% | 15.0% | 17.3% | 15.2% | ||
Adjusted EBIT | 77 | 54 | 43% | 311 | 250 | 24% |
Capital Employed | 1,807 | 1,723 | ||||
Average Capital Employed | 1,772 | 1,734 | ||||
ROCE (%) | 17.6% | 14.4% | ||||
Total Working Capital | 280 | 225 | ||||
Average Total Working Capital as % of Sales | 12.5% | 14.8% |
Q4 2016 sales were 6% higher than the same quarter last year, with a strong 7% volume growth driven by specialties on the back of continued favorable trading conditions. Prices were 3% lower, fully reflecting the low input costs. Seasonality effects were less pronounced than usual in Q4 2016, which is understood as demonstrating good end-use demand in many end-markets, in combination with some stocking effects as raw material costs started to increase.
Q4 2016 Adjusted EBITDA increased by 17% compared with Q4 2015 as a result of disciplined margin management, strong growth in the specialty segments, and the benefits of the efficiency and cost saving programs carried out over recent years. Input costs were still at a low level versus prior year.
The Adjusted EBITDA margin of 16.4% in Q4 2016 was below the level of approximately 18% seen in the previous two quarters. This was in part due to slightly higher input costs, and incidental costs, among others relating to DSM’s activities at the site in Augusta (USA).
in € million | Q4 2016 | Q4 2015 | % change | FY 2016 | FY 2015 | % change |
---|---|---|---|---|---|---|
Sales | 41 | 40 | 0% | 167 | 155 | 7% |
Adjusted EBITDA | -1 | -1 | 1 | -9 | ||
Adjusted EBIT | -9 | -14 | -24 | -43 | ||
Capital Employed | 576 | 560 |
For the full year 2016, the Innovation Center made good progress with 6% organic growth, fully driven by higher volumes in both DSM Biomedical and DSM Advanced Surfaces. Profitability clearly improved due to a combination of organic growth, more focused innovation and reduction of costs. Adjusted EBITDA in 2016 achieved break-even, in line with the ambition of Strategy 2018.
Q4 2016 sales and Adjusted EBITDA were stable compared to Q4 2015.
in € million | Q4 2016 | Q4 2015 | FY 2016 |
FY 2015 |
---|---|---|---|---|
Sales | 14 | 21 | 71 | 76 |
Adjusted EBITDA | -27 | -34 | -105 | -122 |
Adjusted EBIT | -38 | -48 | -141 | -169 |
Full year 2016 Adjusted EBITDA improved by €17 million compared to 2015, driven by higher result at DSM’s captive insurance company, as well as the execution of cost savings and efficiency improvement programs in DSM’s support functions.
Q4 2016 Adjusted EBITDA improved by €7 million compared to Q4 2015; the prior year result of DSM’s captive insurance company was negatively impacted by a claim related to a warehouse fire at the Chemelot site in Sittard-Geleen (Netherlands).
in € million | Q4 2016 | Q4 2015 | FY 2016 | FY 2015 |
---|---|---|---|---|
DSM Sinochem (50%) | 1 | 1 | 6 | 8 |
Patheon (33.5%) | 11 | 68 | 222 | 56 |
ChemicaInvest (35%) | 0 | -12 | -9 | -14 |
Other | -13 | -9 | -25 | -20 |
Total share of the profit of associates/joint ventures | -1 | 48 | 194 | 30 |
DSM held a 49% stake in Patheon until the end of Q2 2016. Following the IPO of Patheon NV in Q3 2016, this became 33.5%. In 2016, the share of Patheon’s contribution to DSM’s net result includes the €232 million gain from IPO related transactions.
in € million | Q4 2016 | Q4 2015 | % change | FY 2016 | FY 2015 | % change |
---|---|---|---|---|---|---|
DSM Sinochem | ||||||
Sales | 102 | 86 | 19% | 431 | 418 | 3% |
Adjusted EBITDA% | 15% | 16% | 14% | 14% | ||
Patheon1 | ||||||
Sales | 570 | 421 | 35% | 1,786 | 1,621 | 10% |
Adjusted EBITDA% | 22% | 23% | 20% | 23% | ||
ChemicaInvest2 | ||||||
Sales |
502 | 391 | 28% | 1,802 | 756 | n.a. |
Adjusted EBITDA% | 13% | -4% | 6% | 0% |
1) Patheon (formerly reported as DPx Holding) respective periods are for the 4th quarter from 1 August – 31 October and for YTD from 1 November – 31 October. 2015 restated for comparative purposes
2) ChemicaInvest in 2015 refers to the period from 1 August – 31 December
in € million | Q4 2016 | Q4 2015 | FY 2016 | FY 2015 |
---|---|---|---|---|
Cash from Operating Activities - Continuing Operations | 374 | 313 | 1,018 | 800 |
Total Working Capital - Continuing Operations | 1,481 | 1,343 | ||
Total Working Capital as % of Sales - Continuing Ops. | 18.4% | 17.4% | ||
Capital Expenditure (cash, net of customer funding) - Continuing Operations | 170 | 147 | 475 | 468 |
Net Debt (before reclassification to held for sale) | 2,070 | 2,321 |
Cash flow from operating activities amounted to €374 million in Q4 2016 showing an improvement of €61 million compared to Q4 2015. Full year cash flow from operating activities increased by 27% from €800 million to €1,018 million.
Total Working Capital amounted to €1,481 million year-end 2016 compared to €1,343 million at the end of 2015, which represents 18.4% as a percentage of annualized Q4 sales (year-end 2015 17.4%). The increase of 1% was for 0.4% related to operating working capital and 0.6% related to non-operating working capital following lower cash-related liabilities to joint ventures.
On average, the working capital as a percentage of net sales amounted to 18.6% in 2016 (20.7% in 2015).
Net debt decreased by €251 million compared to the end of 2015 and stood at €2,070 million. The decrease was mainly due to the receipt of dividend and proceeds from the secondary offering of Patheon amounting to a total of €235 million.
The following overview gives a summary of APM adjustments (for reconciliation see page 15 and 17).
DSM’s dividend policy is to provide a stable and preferably rising dividend. Reflecting its confidence in the financial performance of the company, DSM proposes to increase the dividend from €1.65 to €1.75 per ordinary share for 2016. This will be proposed to the Annual General Meeting of Shareholders to be held on 3 May 2017. An interim dividend of €0.55 per ordinary share having been paid in August 2016, the final dividend payment would then amount to €1.20 per ordinary share.
Senior Communications Manager
+31 45 578 2420
media.contacts@dsm.com
Vice President Investor Relations
+31 45 578 2864
investor.relations@dsm.com
Senior Communications Manager
+31 45 578 2420
Vice-President Investor Relations
+31 45 578 2864