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Press release

DSM reports H1 2018 results

Heerlen, NL, 01 Aug 2018 07:00 CEST

Highlights H11

  • DSM reports a very good H1 with strong performance across all businesses
  • Continued strong organic sales growth in underlying business estimated at 10%
  • Adjusted EBITDA growth of underlying business estimated at 7%, despite significant FX headwind
  • ROCE of underlying business estimated at 13.8%, up 160 bps
  • Additional temporary vitamin price benefit estimated at €275m on Adjusted EBITDA
  • Total Adjusted EBITDA up 45% and Net profit up 103% to €633m
  • Cash from Operating Activities €503m up 53%
  • Interim dividend of €0.77, reflecting the proposed dividend increase of about 25% for 2018
  • Full year outlook reconfirmed

Key figures and indicators1

in € million H1 2018 H1 2017 % change
  Underlying
business2		 Temporary
vitamin effect2		 Total
Group		 Total
Group		 Underlying
organic growth2		 FX &
‘other’2		 Underlying
total growth2		 Temporary
vitamin effect2		 Total
Group
Sales 4,429 365 4,794 4,320 10% -7% 3% 8% 11%
Nutrition 2,840 365 3,205 2,778 10% -8% 2% 13% 15%
Materials 1,492   1,492 1,426 9% -4% 5%   5%
Adjusted EBITDA 771 275 1,046 721     7% 38% 45%
Nutrition 564 275 839 528     7% 52% 59%
Materials 261   261 241     8%   8%
Innovation 0   0 1          
Corporate -54   -54 -49          
EBITDA 754 275 1,029 689          
Adjusted EBITDA
margin		 17.4%   21.8% 16.7%          

1) Adjusted EBITDA is an Alternative Performance Measure (APM) that reflects continuing operations.
2) Underlying business is defined in this press release as the performance measures sales and Adjusted EBITDA, corrected for DSM’s best estimate of the vitamin effect, which is expected to be temporary.

CEO statement

Feike Sijbesma, CEO/Chairman DSM Managing Board, commented: “Our ongoing focus on driving above market growth while pursuing efficiency initiatives and maintaining capital discipline, continues to drive our results. Following a strong start to the year, we are very pleased to report very good H1 results, with organic growth above market across all our businesses, and strong underlying Adjusted EBITDA growth despite significant foreign exchange headwinds. During the quarter, we also took another important step in monetizing our partnerships through announcing our exits from Fibrant and DSM Sinochem Pharmaceuticals. Our business conditions remain strong and we reiterate our full year 2018 outlook.

We are convinced our recent strategy update will create enhanced organic sales growth and continued EBITDA momentum, as DSM evolves further towards a purpose-led, science-based company in Nutrition, Health and Sustainable Living. The step-up in our dividend for 2018, already reflected in the interim dividend, demonstrates our confidence in our future earnings growth.”

Q2 Highlights1

  • DSM reports a very good Q2 with strong performance across all businesses
  • Continued strong organic sales growth in underlying business estimated at 8%
  • Adjusted EBITDA growth of underlying business estimated at 6%, despite significant FX headwind
  • Nutrition: an estimated 8% underlying organic sales growth and Adjusted EBITDA growth of underlying business estimated at 6%
  • Materials: 7% organic sales growth and Adjusted EBITDA growth of 5%
  • Additional temporary vitamin price benefit estimated at €110m on Adjusted EBITDA
  • Total Adjusted EBITDA up 35%

Key figures & indicators1

in € million Q2 2018 Q2 2017 % change
  Underlying
business2		 Temporary
vitamin effect2		 Total
Group		 Total
Group		 Underlying
organic growth2		 FX &
‘other’2		 Underlying
total growth2		 Temporary
vitamin effect2		 Total
Group
Sales 2,214 145 2,359 2,161 8% -6% 2% 7% 9%
Nutrition 1,410 145 1,555 1,380 8% -6% 2% 11% 13%
Materials 754   754 725 7% -3% 4%   4%
Adjusted EBITDA 398 110 508 376     6% 29% 35%
Nutrition 287 110 397 271     6% 40% 46%
Materials 135   135 128     5%   5%
Innovation 1   1 0          
Corporate -25   -25 -23          
EBITDA 393 110 503 355          
Adjusted EBITDA
margin		 18.0%   21.5% 17.4%          

1) Adjusted EBITDA is an Alternative Performance Measure (APM) that reflects continuing operations.
2) Underlying business is defined in this press release as the performance measures sales and Adjusted EBITDA, corrected for DSM’s best estimate of the vitamin effect, which is expected to be temporary.

Outlook 2018

DSM confirms its full year outlook 2018, as provided at Q1 2018, and expects an Adjusted EBITDA growth towards 25% and a related higher ROCE growth. This is based on:

  • a low double-digit Adjusted EBITDA growth in the underlying business at constant currencies,
  • a negative foreign exchange effect on Adjusted EBITDA of about €70 million, and
  • an additional Adjusted EBITDA benefit estimated at €275 million from a temporary exceptional vitamin pricing environment

Key figures & indicators1

in € million H1 2018 H1 2017 % change Volume Price/mix FX Other
Sales 4,794 4,320 11% 5% 13% -7% 0%
Nutrition 3,205 2,778 15% 5% 18% -9% 1%
Materials 1,492 1,426 5% 6% 3% -4% 0%
Innovation Center 75 84          
Corporate Activities 22 32          
in € million Q2 2018 Q2 2017 % change Volume Price/mix FX Other
Sales 2,359 2,161 9% 3% 12% -6% 0%
Nutrition 1,555 1,380 13% 2% 17% -7% 1%
Materials 754 725 4% 5% 2% -3% 0%
Innovation Center 39 41          
Corporate Activities 11 15          
in € million H1 2018 H1 2017 % change Q2 2018 Q2 2017 % change
Sales 4,794 4,320 11% 2,359 2,161 9%
Adjusted EBITDA 1,046 721 45% 508 376 35%
Nutrition 839 528 59% 397 271 46%
Materials 261 241 8% 135 128 5%
Innovation Center 0 1   1 0  
Corporate Activities -54 -49   -25 -23  
Adjusted EBITDA margin 21.8% 16.7%   21.5% 17.4%  
EBITDA 1,029 689   503 355  
Adjusted EBIT 817 478 71% 394 256 54%
EBIT 800 441   389 235  
Capital Employed 8,115 7,692        
Average Capital Employed   7,874 7,831        
ROCE (%)2 20.8% 12.2%        
Effective tax rate3 18.0% 18.0%        
Adjusted net profit4 643 338 90% 306 175 75%
Net profit - Total DSM4 633 312 103% 302 163 85%
Adjusted net EPS 3.64 1.90 92% 1.73 0.98 77%
Net EPS - Total DSM 3.58 1.75   1.70 0.91  
Operating Cash Flow 503 329 53% 193 133 45%
Capital Expenditures5 295 250   125 120  
Net debt 831 2,205        
Average number of ordinary shares 175.0 175.0   175.2 174.9  
Workforce (headcount end of period)
 20,697 21,0546        

1) Including temporary vitamin effect
2) ROCE from underlying business H1 2018 is estimated at 13.8%
3) Over Adjusted taxable result
4) Including result attributed to non-controlling interest
5) Cash, net of customer funding, investment grants and excluding financial leases
6 )Year-end 2017

In this report:
‘Organic sales growth’ is the total impact of volume and price/mix;
‘Total Working Capital’ refers to the total of ‘Operating Working Capital’ and ‘non-Operating Working Capital’

The complete version of this press release with accompanying financial statements and the Presentation to Investors are below in PDF format.

For more information

Lieke de Jong-Tops

Senior Communications Manager
+31 45 578 2420
media.contacts@dsm.com

Dave Huizing

Vice President Investor Relations
+31 45 578 2864
investor.relations@dsm.com

Lieke de Jong-Tops

Senior Communications Manager
+31 45 578 2420

Email

Dave Huizing

Vice-President Investor Relations
+31 45 578 2864

Email