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 € million H1 2019 H1 2018 % change
    Underlying
business1
Temporary
vitamin effect
Total
Group
Underlying
Organic growth1
FX &
‘other’1
Underlying
total growth1
Temporary
vitamin effect
Total
Group
Sales 4,568 4,429 365 4,794 1% 2% 3% -8% -5%
Nutrition 3,029 2,840 365 3,205 4% 3% 7% -12% -5%
Materials 1,427 1,492   1,492 -6% 2% -4%   -4%
Adjusted EBITDA 862 771 275 1,046     12% -30% -18%
Nutrition 639 564 275 839     13% -37% -24%
Materials  262 261   261     0%   0%
Innovation 11 0   0          
Corporate -50 -54   -54          
EBITDA 823 754 275 1029          
Adjusted EBITDA margin 18.9% 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 € million Q2 2019 Q2 2018 % change
    Underlying
business1
Temporary
vitamin effect
Total
Group
Underlying
Organic growth1
FX &
‘other’1
Underlying
total growth1
Temporary
vitamin effect
Total
Group
Sales 2,276 2,214 145 2,359 1% 2% 3% -7% -4%
Nutrition 1,512 1,410 145 1,555 4% 3% 7% -10% -3%
Materials 710 754   754 -7% 1% -6%   -6%
Adjusted EBITDA 438 398 110 508     10% -24% -14%
Nutrition 323 287 110 397     13% -32% -19%
Materials 135 135   135     0%   0%
Innovation 5 1   1          
Corporate -25 -25   -25          
EBITDA 407 393 110 503          
Adjusted EBITDA margin 19.2% 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 € million YTD H1 2019 YTD H1 2018 % change Volume Price/mix FX Other
Sales 4,568 4,429 3% 1% 0% 2% 0%
Nutrition 3,029 2,840 7% 4% 0% 2% 1%
Materials 1,427 1,492 -4% -5% -1% 2% 0%
Innovation Center 90 75          
Corporate Activities 22 22          
in € million Q2 2019 Q2 2018 % change Volume Price/mix FX Other
Sales 2,276 2,214 3% 1% 0% 2% 0%
Nutrition 1,512 1,410 7% 3% 1% 2% 1%
Materials 710 754 -6% -5% -2% 1% 0%
Innovation Center 43 39          
Corporate Activities 11 11          

H1 2019 including IFRS 16 impact

in € million H1 2019 H1 2018 % change Q1 2019 Q1 2018 % change
Sales 4,568 4,429 3% 2,276 2,214 3%
Adjusted EBITDA 862 771 12% 438 398 10%
Nutrition 639 564 13% 323 287 13%
Materials 262 261 0% 135 135 0%
Innovation Center 11 0   5 1  
Corporate Activities -50 -54   -25 -25  
Adjusted EBITDA margin 18.9% 17.4%   19.2% 18.0%  
ROCE % 13.1% 13.8%        

H1 2019 excluding IFRS 16 impact

in € million H1 2019 H1 2018 % change Q1 2019 Q1 2018 % change
Adjusted EBITDA 837 771 9% 425 398 7%
Nutrition 625 564 11% 316 287 10%
Materials 259 261 -1% 133 135 -1%
Innovation Center 10 0   5 1  
Corporate Activities -57 -54   -29 -25  
Adjusted EBITDA margin 18.3% 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 € million YTD H1 2019 YTD H1 2018 % change Volume Price/mix FX Other
Sales 4,568 4,794 -5% 1% -8% 2%  
Nutrition 3,029 3,205 -5% 4% -12% 2%  
Materials 1,427 1,492 -4% -5% -1% 2%  
Innovation Center 90 75          
Corporate Activities 22 22          
in € million Q2 2019 Q2 2018 % change Volume Price/mix FX Other
Sales 2,276 2,359 -4% 2% -8% 2%  
Nutrition 1,512 1,555 -3% 5% -11% 2%  
Materials 710 754 -6% -5% -2% 1%  
Innovation Center 43 39          
Corporate Activities 11 11          
in € million, incl. IFRS impact where applicable YTD H1 2019 YTD H1 2018 % change Q2 2019 Q2 2018 % change
Sales 4,568 4,794 -5% 2,276 2,359 -4%
Adjusted EBITDA 862 1,046 -18% 438 508 -14%
Nutrition 639 839 -24% 323 397 -19%
Materials 262 261 0% 135 135 0%
Innovation Center 11 0   5 1  
Corporate Activities -50 -54   -25 -25  
Adjusted EBITDA margin 18.9% 21.8%   19.2% 21.5%  
EBITDA 823 1,029   407 503  
Adjusted EBIT 568 817 -30% 289 394 -27%
EBIT 518 800   247 389  
Capital Employed 8,735 8,115        
Average Capital Employed 8,680 7,874        
ROCE (%) 13.1% 20.8%        
Effective tax rate1 18.0% 18.0%        
Adjusted net profit2 415 643 -35% 215 306 -30%
Net profit - Total DSM2 401 633 -37% 205 302 -32%
Adjusted net EPS 2.32 3.64 -36% 1.20 1.73 -31%
Net EPS - Total DSM 2.24 3.58   1.14 1.70  
Operating Cash Flow 507 503 1% 306 193 59%
Adjusted Net Operating Free Cash Flow 257 226 14% 197 72 174%
Capital Expenditures3 264 295   116 125  
Net debt4 589 831        
Average number of ordinary shares 176.3 175.0   176.5 175.2  
Workforce (headcount end of period) 21,595 20,977        

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

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