Press release
DSM reports a very strong 2018, including a robust Q4
Heerlen, NL, 14 Feb 2019 07:00 CET
Highlights Full Year 20181
- DSM reports a very strong year, including a robust Q4
- Underlying business:
- Strong organic sales growth of 6%
- Adjusted EBITDA growth of 6%; 10% adjusted for FX
- ROCE of 13.3%, up 100 bps
- Total business (including temporary vitamin effect):
- Adjusted EBITDA up 26%, including €290m temporary vitamin effect
- Adjusted Net profit of €1,034m, up 46%, with Net profit of €1,079m
- Cash from Operating Activities €1,391m, up 40%
- 25% dividend increase from €1.85 to €2.30 per ordinary share2
- Full year outlook 2019 in line with strategic targets
- Launch of €1bn share buy-back program, reflecting strong balance sheet and resilient business
Key figures and indicators3
| in € million | Full Year 2018 |
Full Year 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 | 8,852 | 415 | 9,267 | 8,632 | 6% | -4% | 2% | 5% | 7% |
| Nutrition | 5,722 | 415 | 6,137 | 5,579 | 7% | -4% | 3% | 7% | 10% |
| Materials | 2,913 | 2,913 | 2,825 | 5% | -2% | 3% | 3% | ||
| Adjusted EBITDA | 1,532 | 290 | 1,822 | 1,445 | 6% | 20% | 26% | ||
| Nutrition | 1,117 | 290 | 1,407 | 1,053 | 6% | 28% | 34% | ||
| Materials | 512 | 512 | 488 | 5% | 5% | ||||
| Innovation | 8 | 8 | 9 | ||||||
| Corporate | -105 | -105 | -105 | ||||||
| EBITDA | 1,464 | 290 | 1,754 | 1,348 | |||||
| Adjusted EBITDA margin |
17.3% | 19.7% | 16.7% | ||||||
1) Underlying (business) is defined in this press release as the performance measures sales and Adjusted EBITDA, corrected for DSM’s best estimate of the temporary vitamin effect. See page 8 of the PDF for further details.
2) Subject to AGM approval.
3) Adjusted EBITDA is an Alternative Performance Measure (APM) that reflects continuing operations.
CEO Statement
“This has been again a record year in which we successfully completed Strategy 2016-2018, outperforming our ambitious financial and sustainability targets. We have created a strong platform of solution-led, higher value specialty products in Nutrition, Health & Sustainable Living. This has positioned the company well to drive continued above market organic growth and deliver further improvement in profitability, shareholder return and sustainability as we execute Strategy 2021 Purpose led, Performance driven.
"During the fourth quarter, Nutrition performed well once again, with continued good business conditions, whilst Materials delivered solid results, despite softness in some of its end-markets.
"Reflecting excellent underlying results for the financial year and confidence in our future earnings growth profile, as also reflected in our 2019 outlook, we propose an increase in the 2018 full year dividend of about 25% to €2.30 per share, in line with guidance given at our 2018 Capital Markets Day.
"In addition, having built a resilient portfolio with future upside from our large innovation projects, we are confident about our earnings prospects and cash generation. Based on this and our strong balance sheet we are pleased to announce a €1 billion share buy-back program which also increases capital efficiency while still retaining financial flexibility to deliver on our growth plans.”
Outlook 2019
DSM expects to deliver a full-year 2019 mid-to-high single digit increase in Adjusted EBITDA compared to prior year Underlying Adjusted EBITDA (pre-temporary vitamin effect), together with an improvement in Underlying Adjusted Net Operating Free Cash Flow in line with its Strategy 2021 targets. This outlook excludes the impact of IFRS16 (see page 15 of PDF).
New Share Buy-Back program
DSM intends to repurchase ordinary shares with an aggregate market value of €1 billion starting in Q2 2019, with the intention to reduce its issued capital. This will be in addition to the usual repurchase programs which DSM executes from time to time to cover commitments under share-based compensation plans and the stock dividend.
Q4 Highlights
- DSM reports a robust Q4
- Nutrition reports 1% organic growth with Adjusted EBITDA up 3%. Corrected for an estimated temporary vitamin effect in Q4 2017:
- The organic growth would have been 4% against a strong prior year
- The Adjusted EBITDA would have been up 7%.
- Materials reports solid results with flat sales and Adjusted EBITDA despite soft business conditions in some end-markets, against a strong prior year
- Total reported sales growth of 1% and Adjusted EBITDA growth of 3%
- Cash from operating activities of €458m, up 21%
| in € million | Q4 2018 | Q4 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 | 2,208 | - | 2,208 | 2,176 | 1% | 0% | 1% | - | 1% |
| Nutrition | 1,444 | - | 1,444 | 1,428 | 1% | 0% | 1% | - | 1% |
| Materials | 698 | 698 | 693 | 0% | 1% | 1% | 1% | ||
| Adjusted EBITDA | 370 | - | 370 | 359 | 3% | - | 3% | ||
| Nutrition | 270 | - | 270 | 267 | 1% | - | 1% | ||
| Materials | 119 | 119 | 119 | 0% | 0% | ||||
| Innovation | 7 | 7 | 4 | ||||||
| Corporate | -26 | -26 | -31 | ||||||
| EBITDA | 340 | 340 | 316 | ||||||
| Adjusted EBITDA margin |
16.8% | 16.8% | 16.5% | ||||||
1) Underlying (business) is defined in this press release as the performance measures sales and Adjusted EBITDA, corrected for DSM’s best estimate of the temporary vitamin effect. See page 8 of the PDF for further details.
2) Adjusted EBITDA is an Alternative Performance Measure (APM) that reflects continuing operations.
Temporary vitamin effect
Underlying (business) is defined in this press release as the performance measures sales and Adjusted EBITDA, corrected for DSM’s best estimate of the temporary vitamin effect due to exceptional supply disruptions in the industry in the first nine months, providing estimated additional sales of €415 million and a corresponding Adjusted EBITDA of €290 million.
These supply disruptions started already in November 2017. While we did not quantify an additional benefit in Q4 2017, since then we have estimated a contribution of €40 million to total sales and a corresponding Adjusted EBITDA impact of €15 million. In the explanation of the sales and Adjusted EBITDA growth of total Nutrition and Animal Nutrition, comparisons are made versus the reported Q4 2017 figures, as well as the figures excluding these temporary vitamin effects.
Key figures & indicators1
| in € million | FY 2018 | FY 2017 | % change | Volume | Price/mix | FX | Other |
|---|---|---|---|---|---|---|---|
| Sales | 9,267 | 8,632 | 7% | 3% | 8% | -4% | 0% |
| Nutrition | 6,137 | 5,579 | 10% | 3% | 11% | -4% | 0% |
| Materials | 2,913 | 2,825 | 3% | 2% | 3% | -2% | 0% |
| Innovation Center | 172 | 169 | |||||
| Corporate Activities | 45 | 59 |
| in € million | Q4 2018 | Q4 2017 | % change | Volume | Price/mix | FX | Other |
|---|---|---|---|---|---|---|---|
| Sales | 2,208 | 2,176 | 1% | 0% | 1% | 0% | 0% |
| Nutrition | 1,444 | 1,428 | 1% | 1% | 0% | 0% | 0% |
| Materials | 698 | 693 | 1% | -3% | 3% | 1% | 0% |
| Innovation Center | 54 | 43 | |||||
| Corporate Activities | 12 | 12 |
| in € million | FY 2018 | FY 2017 | % change | Q4 2018 | Q4 2017 | % change |
|---|---|---|---|---|---|---|
| Sales | 9,267 | 8,632 | 7% | 2,208 | 2,176 | 1% |
| Adjusted EBITDA | 1,822 | 1,445 | 26% | 370 | 359 | 3% |
| Nutrition | 1,407 | 1,053 | 34% | 270 | 267 | 1% |
| Materials | 512 | 488 | 5% | 119 | 119 | 0% |
| Innovation Center | 8 | 9 | 7 | 4 | ||
| Corporate Activities | -105 | -105 | -26 | -31 | ||
| Discontinued Operations | ||||||
| Adjusted EBITDA margin | 19.7% | 16.7% | 16.8% | 16.5% | ||
| EBITDA | 1,754 | 1,348 | 340 | 316 | ||
| Adjusted EBIT | 1,345 | 957 | 41% | 245 | 240 | 2% |
| EBIT | 1,245 | 846 | 196 | 199 | ||
| Capital Employed | 8,181 | 7,766 | ||||
| Average Capital Employed | 8,005 | 7,776 | ||||
| ROCE (%)2 | 16.8% | 12.3% | ||||
| Effective tax rate3 | 17.4% | 16.8% | ||||
| Adjusted net profit4 | 1,034 | 706 | 46% | 182 | 202 | -10% |
| Net profit - Total DSM4 | 1,079 | 1,781 | -39% | 258 | 178 | 45% |
| Adjusted net EPS | 5.84 | 3.92 | 49% | 1.02 | 1.11 | -8% |
| Net EPS - Total DSM | 6.10 | 10.07 | 1.46 | 0.98 | ||
| Operating cash flow5 | 1,391 | 996 | 40% | 458 | 377 | 21% |
| Capital expenditures6 | 646 | 546 | 201 | 162 | ||
| Net debt | 113 | 742 | ||||
| Average number of ordinary shares | 175.3 | 174.8 | 175.6 | 174.5 | ||
| Workforce (headcount end of period) | 20,977 | 21,054 |
1) Including temporary vitamin effect
2) ROCE from underlying business for the year 2018 is estimated at 13.3%
3) Over Adjusted taxable result
4) Including result attributed to non-controlling interest
5) Operating Cash flow from Underlying business is estimated at €1,126m
6) Cash, net of customer funding, investment grants and excluding financial leases
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
Dave Huizing
Vice-President Investor Relations
+31 45 578 2864