Press release

DSM reports H1 2019 results

Heerlen, NL, 01 Aug 2019 07:00 CEST

Highlights1,2,3

  • DSM reports a good H1
  • Results compared to Underlying business in H1 2018:
    • Group sales +3%, Adjusted EBITDA up 12% (including 3% from IFRS 16)
    • Nutrition: organic sales +4%, Adjusted EBITDA up 13% (including 2% from IFRS 16)
    • Materials: organic sales -6%, Adjusted EBITDA flat (including 1% from IFRS 16)
  • Adjusted Net Operating Free Cash Flow €257m, up 14% versus H1 2018
  • Total Net profit €401m, up versus H1 2018 of €633m when correcting for the temporary vitamin effect of €275m EBITDA following an exceptional supply disruption in the industry
  • Interim dividend of €0.77 per ordinary share
  • Full year outlook maintained

Key figures and indicators

in € millionH1 2019H1 2018% change
  Underlying
business1
Temporary
vitamin effect
Total
Group
Underlying
Organic growth1
FX &
‘other’1
Underlying
total growth1
Temporary
vitamin effect
Total
Group
Sales4,5684,4293654,7941%2%3%-8%-5%
Nutrition3,0292,8403653,2054%3%7%-12%-5%
Materials1,4271,492 1,492-6%2%-4% -4%
Adjusted EBITDA8627712751,046  12%-30%-18%
Nutrition639564275839  13%-37%-24%
Materials 262261 261  0% 0%
Innovation110 0     
Corporate-50-54 -54     
EBITDA8237542751029     
Adjusted EBITDA margin18.9%17.4% 21.8%     

1) In 2018 DSM benefitted from a temporary vitamin effect (see page 6 of PDF). Underlying (business) is defined as the performance measure sales and Adjusted EBITDA, corrected for DSM’s best estimate of this temporary vitamin effect.
2) Adjusted EBITDA is an Alternative Performance Measure (APM) that reflects continuing operations.
3) DSM adopted IFRS 16 as per its effective date of 1 January 2019 and has not restated 2018 (see page 23 of PDF).

CEO statement

Feike Sijbesma, CEO/Chairman DSM Managing Board, commented: “I am pleased to report a good performance for the first half year, achieved against a challenging macro-economic environment. The Nutrition business saw continued good business conditions and delivered a strong performance, demonstrating the quality of its innovative portfolio of value-added solutions. Materials experienced ongoing soft market conditions in some of its end-markets, especially in China. Through a continued strong performance in the Dyneema and Functional Materials businesses, combined with good margin management, our Materials business demonstrated resilience with stable earnings.

DSM continues to be well positioned to deliver on our ambitious Strategy 2021 targets, driven by our commitment to be a purpose led, performance driven science-based company in Nutrition, Health and Sustainable Living. We reiterate our outlook for the full year.”

Q2 Highlights1,2,3

  • DSM reports another good quarter
  • Results compared to Underlying business in Q2 2018:
    • Group sales +3%, Adjusted EBITDA up 10% (including 3% impact from IFRS 16)
    • Nutrition: organic sales +4%, Adjusted EBITDA up 13% (including 3% impact from IFRS 16)
    • Materials: organic sales -7%, Adjusted EBITDA flat (including 1% impact from IFRS 16)

Key figures and indicators

in € millionQ2 2019Q2 2018% change
  Underlying
business1
Temporary
vitamin effect
Total
Group
Underlying
Organic growth1
FX &
‘other’1
Underlying
total growth1
Temporary
vitamin effect
Total
Group
Sales2,2762,2141452,3591%2%3%-7%-4%
Nutrition1,5121,4101451,5554%3%7%-10%-3%
Materials710754 754-7%1%-6% -6%
Adjusted EBITDA438398110508  10%-24%-14%
Nutrition323287110397  13%-32%-19%
Materials135135 135  0% 0%
Innovation51 1     
Corporate-25-25 -25     
EBITDA407393110503     
Adjusted EBITDA margin19.2%18.0% 21.5%     

1) In 2018 DSM benefitted from a temporary vitamin effect (see page 6 of PDF). Underlying (business) is defined as the performance measure sales and Adjusted EBITDA, corrected for DSM’s best estimate of this temporary vitamin effect.
2) Adjusted EBITDA is an Alternative Performance Measure (APM) that reflects continuing operations.
3) DSM adopted IFRS 16 as per its effective date of 1 January 2019 and has not restated 2018 (see page 23 of PDF).

Outlook 2019

DSM maintains its full year outlook as provided at Q1 2019: DSM expects to deliver a full year 2019 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 IFRS 16 (see page 23 of PDF).

Share Buy-Back program

On 1 April 2019, DSM commenced its ordinary share repurchase program of an aggregate market value of €1 billion, with the intention to reduce its issued capital, as first announced on 14 February 2019. This program is in addition to the regular repurchase programs to cover commitments under share-based compensation plans and the stock dividend. As per 30 June DSM has repurchased 2.6 million shares for a total consideration of €265 million; 2 million shares relate to the regular repurchase programs and 0.6 million shares relate to the €1 billion share buy-back program.

Key figures and indicators (comparison with H1 2018 excluding temporary vitamin effect)

in € millionYTD H1 2019YTD H1 2018% changeVolumePrice/mixFXOther
Sales4,5684,4293%1%0%2%0%
Nutrition3,0292,8407%4%0%2%1%
Materials1,4271,492-4%-5%-1%2%0%
Innovation Center9075     
Corporate Activities2222     
in € millionQ2 2019Q2 2018% changeVolumePrice/mixFXOther
Sales2,2762,2143%1%0%2%0%
Nutrition1,5121,4107%3%1%2%1%
Materials710754-6%-5%-2%1%0%
Innovation Center4339     
Corporate Activities1111     

H1 2019 including IFRS 16 impact

in € millionH1 2019H1 2018% changeQ1 2019Q1 2018% change
Sales4,5684,4293%2,2762,2143%
Adjusted EBITDA86277112%43839810%
Nutrition63956413%32328713%
Materials2622610%1351350%
Innovation Center110 51 
Corporate Activities-50-54 -25-25 
Adjusted EBITDA margin18.9%17.4% 19.2%18.0% 
ROCE %13.1%13.8%    

H1 2019 excluding IFRS 16 impact

in € millionH1 2019H1 2018% changeQ1 2019Q1 2018% change
Adjusted EBITDA8377719%4253987%
Nutrition62556411%31628710%
Materials259261-1%133135-1%
Innovation Center100 51 
Corporate Activities-57-54 -29-25 
Adjusted EBITDA margin18.3%17.4% 18.7%18.0% 
ROCE %13.4%13.8%    

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’;
‘Adjusted Net Operating Free Cash Flow’ is the cash flow from operating activities, corrected for the cash flow of the APM adjustments, minus the cash flow of capital expenditures and drawing rights.

Key figures and indicators (comparison with H1 2018 including temporary vitamin effect)

in € millionYTD H1 2019YTD H1 2018% changeVolumePrice/mixFXOther
Sales4,5684,794-5%1%-8%2% 
Nutrition3,0293,205-5%4%-12%2% 
Materials1,4271,492-4%-5%-1%2% 
Innovation Center9075     
Corporate Activities2222     
in € millionQ2 2019Q2 2018% changeVolumePrice/mixFXOther
Sales2,2762,359-4%2%-8%2% 
Nutrition1,5121,555-3%5%-11%2% 
Materials710754-6%-5%-2%1% 
Innovation Center4339     
Corporate Activities1111     
in € million, incl. IFRS impact where applicableYTD H1 2019YTD H1 2018% changeQ2 2019Q2 2018% change
Sales4,5684,794-5%2,2762,359-4%
Adjusted EBITDA8621,046-18%438508-14%
Nutrition639839-24%323397-19%
Materials2622610%1351350%
Innovation Center110 51 
Corporate Activities-50-54 -25-25 
Adjusted EBITDA margin18.9%21.8% 19.2%21.5% 
EBITDA8231,029 407503 
Adjusted EBIT568817-30%289394-27%
EBIT518800 247389 
Capital Employed8,7358,115    
Average Capital Employed8,6807,874    
ROCE (%)13.1%20.8%    
Effective tax rate118.0%18.0%    
Adjusted net profit2415643-35%215306-30%
Net profit - Total DSM2401633-37%205302-32%
Adjusted net EPS2.323.64-36%1.201.73-31%
Net EPS - Total DSM2.243.58 1.141.70 
Operating Cash Flow5075031%30619359%
Adjusted Net Operating Free Cash Flow25722614%19772174%
Capital Expenditures3264295 116125 
Net debt4589831    
Average number of ordinary shares176.3175.0 176.5175.2 
Workforce (headcount end of period)21,59520,977    

1) Over Adjusted taxable result
2) Including result attributed to non-controlling interest
3) Cash, net of customer funding, investment grants and excluding leases
4) Net debt end of H1 2019 includes €202 million following the adoption of IFRS 16 on ‘Leases’
5) Year-end 2018

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