Heerlen, NL, 05 Nov 2019 07:00 CET
in € million | Jan - Sep 2019 | Jan - Sep 2018 | % change | ||||||
---|---|---|---|---|---|---|---|---|---|
Underlying business1 |
Temporary vitamin effect |
Total Group |
Underlying Organic growth1 |
FX & ‘other’1 |
Underlying total growth1 |
Temporary vitamin effect |
Total Group |
||
Sales | 6,858 | 6,644 | 415 | 7,059 | 0% | 3% | 3% | -6% | -3% |
Nutrition | 4,573 | 4,278 | 415 | 4,693 | 4% | 3% | 7% | -10% | -3% |
Materials | 2,114 | 2,215 | 2,215 | -7% | 2% | -5% | -5% | ||
Adjusted EBITDA | 1,288 | 1,162 | 290 | 1,452 | 11% | -22% | -11% | ||
Nutrition | 956 | 847 | 290 | 1,137 | 13% | -29% | -16% | ||
Materials | 391 | 393 | 393 | 0% | 0% | ||||
Innovation | 16 | 1 | 1 | ||||||
Corporate | -75 | -79 | -79 | ||||||
EBITDA | 1,239 | 1,124 | 290 | 1,414 | |||||
Adjusted EBITDA margin | 18.8% | 17.5% | 20.6% |
1) In 2018 DSM benefitted from a temporary vitamin effect (see page 5 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 19 of PDF).
Feike Sijbesma, CEO/Chairman DSM Managing Board, commented: “I am pleased to report again a good nine-month performance, together with a solid third quarter.
"In the quarter, Nutrition delivered a good performance with 4% organic growth and Adjusted EBITDA up 12%, despite some softness in Human Nutrition. Materials experienced ongoing challenging conditions in some of its end-markets, especially in China. Dyneema continued to perform strongly. The earnings performance highlights the relative resilience of our specialty Materials portfolio with a slight Adjusted EBITDA decline of 2%. We made good progress, with our large innovation projects, like Veramaris, Clean Cow and Avansya."
"We are on track to deliver 2019 in line with our targets, and therefore maintain our full year outlook. DSM continues to be well positioned to deliver its ambitious Strategy 2021, with its growth platforms together with increased customer centricity and its large innovation projects, while at the same time remaining focused on cost control and operational excellence.”
in € million | Q3 2019 | Q3 2018 | % change | ||||||
---|---|---|---|---|---|---|---|---|---|
Underlying business1 |
Temporary vitamin effect |
Total Group |
Underlying Organic growth1 |
FX & ‘other’1 |
Underlying total growth1 |
Temporary vitamin effect |
Total Group |
||
Sales | 2,290 | 2,215 | 50 | 2,265 | 0% | 3% | 3% | -2% | 1% |
Nutrition | 1,544 | 1,438 | 50 | 1,488 | 4% | 3% | 7% | -3% | 4% |
Materials | 687 | 723 | 723 | -7% | 2% | -5% | -5% | ||
Adjusted EBITDA | 426 | 391 | 15 | 406 | 9% | -4% | 5% | ||
Nutrition | 317 | 283 | 15 | 298 | 12% | -6% | 6% | ||
Materials | 129 | 132 | 132 | -2% | -2% | ||||
Innovation | 5 | 1 | 1 | ||||||
Corporate | -25 | -25 | -25 | ||||||
EBITDA | 416 | 370 | 15 | 385 | |||||
Adjusted EBITDA margin | 18.6% | 17.7% | 17.9% |
1) In 2018 DSM benefitted from a temporary vitamin effect (see page 5 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 19 of PDF).
DSM maintains its full year outlook: 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.
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. Up to and including 31 October 2019 DSM has repurchased 5.3 million shares for a total consideration of €563 million; 2.6 million shares relate to the regular repurchase programs and 2.7 million shares relate to the €1 billion share buy-back program.
in € million | Jan - Sep 2019 | Jan - Sep 2018 | % change | Volume | Price/mix | FX | Other |
---|---|---|---|---|---|---|---|
Sales | 6,858 | 6,644 | 3% | 0% | 0% | 2% | 1% |
Nutrition | 4,573 | 4,278 | 7% | 3% | 1% | 2% | 1% |
Materials | 2,114 | 2,215 | -5% | -5% | -2% | 2% | 0% |
Innovation Center | 140 | 118 | |||||
Corporate Activities | 31 | 33 |
in € million | Q3 2019 | Q3 | 2018% change | Volume | Price/mix | FX | Other |
---|---|---|---|---|---|---|---|
Sales | 2,290 | 2,215 | 3% | 1% | -1% | 2% | 1% |
Nutrition | 1,544 | 1,438 | 7% | 3% | 1% | 2% | 1% |
Materials | 687 | 723 | -5% | -3% | -4% | 2% | 0% |
Innovation Center | 50 | 43 | |||||
Corporate Activities | 9 | 11 |
in € million including IFRS 16 impact | Jan - Sep 2019 | Jan - Sep 2018 | % change | Q3 2019 | Q3 | 2018% change |
---|---|---|---|---|---|---|
Sales | 6,858 | 6,644 | 3% | 2,290 | 2,215 | 3% |
Adjusted EBITDA | 1,288 | 1,162 | 11% | 426 | 391 | 9% |
Nutrition | 956 | 847 | 13% | 317 | 283 | 12% |
Materials | 391 | 393 | 0% | 129 | 132 | -2% |
Innovation Center | 16 | 1 | 5 | 1 | ||
Corporate Activities | -75 | -79 | -25 | -25 | ||
Adjusted EBITDA margin | 18.8% | 17.5% | 18.6% | 17.7% | ||
ROCE % | 12.7% | 13.6% |
in € million excluding IFRS 16 impact | Jan - Sep 2019 | Jan - Sep 2018 | % change | Q3 2019 | Q3 | 2018% change |
---|---|---|---|---|---|---|
Adjusted EBITDA | 1,250 | 1,162 | 8% | 413 | 391 | 6% |
Nutrition | 934 | 847 | 10% | 309 | 283 | 9% |
Materials | 386 | 393 | -2% | 127 | 132 | -4% |
Innovation Center | 15 | 1 | 5 | 1 | ||
Corporate Activities | -85 | -79 | -28 | -25 | ||
Adjusted EBITDA margin | 18.2% | 17.5% | 18.0% | 17.7% | ||
ROCE % | 13.0% | 13.6% |
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.
in € million | Jan - Sep 2019 | Jan - Sep 2018 | % change | Volume | Price/mix | FX | Other |
---|---|---|---|---|---|---|---|
Sales | 6,858 | 7,059 | -3% | 1% | -7% | 2% | 1% |
Nutrition | 4,573 | 4,693 | -3% | 4% | -10% | 2% | 1% |
Materials | 2,114 | 2,215 | -5% | -5% | -2% | 2% | 0% |
Innovation Center | 140 | 118 | |||||
Corporate Activities | 31 | 33 |
in € million | Q3 2019 | Q3 2018 | % change | Volume | Price/mix | FX | Other |
---|---|---|---|---|---|---|---|
Sales | 2,290 | 2,265 | 1% | 2% | -4% | 2% | 1% |
Nutrition | 1,544 | 1,488 | 4% | 4% | -4% | 3% | 1% |
Materials | 687 | 723 | -5% | -3% | -4% | 2% | 0% |
Innovation Center | 50 | 43 | |||||
Corporate Activities | 9 | 11 |
in € million, incl. IFRS impact where applicable | Jan - Sep 2019 | Jan - Sep 2018 | % change | Q3 2019 | Q3 2018 | % change |
---|---|---|---|---|---|---|
Sales | 6,858 | 7,059 | -3% | 2,290 | 2,265 | 1% |
Adjusted EBITDA | 1,288 | 1,452 | -11% | 426 | 406 | 5% |
Nutrition | 956 | 1,137 | -16% | 317 | 298 | 6% |
Materials | 391 | 393 | 0% | 129 | 132 | -2% |
Innovation Center | 16 | 1 | 5 | 1 | ||
Corporate Activities | -75 | -79 | -25 | -25 | ||
Adjusted EBITDA margin | 18.8% | 20.6% | 18.6% | 17.9% | ||
EBITDA | 1,239 | 1,414 | 416 | 385 | ||
Adjusted EBIT | 844 | 1,100 | -23% | 276 | 283 | -2% |
EBIT | 784 | 1,049 | 266 | 249 | ||
Capital Employed | 9,330 | 8,221 | ||||
Average Capital Employed | 8,843 | 7,960 | ||||
ROCE (%) | 12.7% | 18.4% | ||||
Effective tax rate1 | 18.0% | 18.0% | ||||
Adjusted net profit2 | 659 | 852 | -23% | 244 | 209 | 17% |
Net profit - Total DSM2 | 640 | 821 | -22% | 239 | 188 | 27% |
Adjusted net EPS | 3.68 | 4.82 | -24% | 1.36 | 1.18 | 15% |
Net EPS - Total DSM | 3.57 | 4.64 | 1.33 | 1.06 | ||
Operating Cash Flow | 941 | 933 | 1% | 434 | 430 | 1% |
Adjusted Net Operating Free Cash Flow | 550 | 529 | 4% | 293 | 303 | -3% |
Capital Expenditures3 | 410 | 445 | 146 | 150 | ||
Net debt4 | 852 | 680 | ||||
Average number of ordinary shares | 176.3 | 175.2 | 176.2 | 175.7 | ||
Workforce (headcount end of period) | 22,204 | 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 September 2019 includes €217 million following the adoption of IFRS 16 on ‘Leases’
5) Year-end 2018
‘Underlying’ business is defined as the sales and Adjusted EBITDA, corrected for the temporary vitamin effect due to exceptional supply disruptions in the industry which occurred in the first nine months of 2018. This event provided additional sales for €415 million and a corresponding Adjusted EBITDA of €290 million in the first nine months of 2018, as estimated and reported last year.
in € million (estimated) | Jan - Sep 2019 | Jan - Sep 2018 | % change | Q3 2019 | Q3 2018 | % change |
---|---|---|---|---|---|---|
Sales | 4,573 | 4,278 | 7% | 1,544 | 1,438 | 7% |
Adjusted EBITDA1 | 956 | 847 | 13% | 317 | 283 | 12% |
Adjusted EBITDA margin1 | 20.9% | 19.8% | 20.5% | 19.7% | ||
ROCE % | 14.6% | 15.1% |
in € million (estimated) | Temporary vitamin effect 2018 | Temporary vitamin effect Q3 | 2018
---|---|---|
Sales | 415 | 50 |
Adjusted EBITDA | 290 | 15 |
in € million | Jan - Sep 2019 | Jan - Sep 2018 | % change | Q3 | 2019Q3 2018 | % change |
---|---|---|---|---|---|---|
Sales | 4,573 | 4,693 | -3% | 1,544 | 1,488 | 4% |
Adjusted EBITDA1 | 956 | 1,137 | -16% | 317 | 298 | 6% |
Adjusted EBITDA margin (%)1 | 20.9% | 24.2% | 20.5% | 20.0% | ||
Adjusted EBIT | 687 | 918 | -25% | 225 | 220 | 2% |
Capital Employed | 6,626 | 5,671 | ||||
Average Capital Employed | 6,251 | 5,546 | ||||
ROCE (%) | 14.6% | 22.1% | ||||
Total Working Capital | 1,746 | 1,567 | ||||
Average Total Working Capital as % of Sales | 27.8% | 24.9% |
1) Including IFRS 16 impact of €8 million in Q3 2019 and €22 million in the first nine months of 2019
All comparisons are versus the Underlying business in the first nine months of 2018.
Nutrition realized 4% organic growth against a strong +9% in same period last year. Total sales were 7% higher compared to first nine months 2018 including 1% from the consolidation of Andre Pectin and 2% from exchange rates driven by the US dollar.
Nutrition reported 4% organic growth, with volumes up 3% and prices +1%. Animal Nutrition sales were solid, Human Nutrition showed some softness and the other nutrition activities were strong, especially Food Specialties.
The Adjusted EBITDA growth was 13%, including a 3% contribution from IFRS 16 and 2% from Andre Pectin (€19 million), driven by higher volumes, lower costs and a small positive foreign exchange effect. The adjusted EBITDA margin was 20.9% (including 0.5% impact from IFRS 16) versus 19.8% in same period last year.
Nutrition reported 12% growth in Adjusted EBITDA (including 3% from IFRS 16), in line with H1 2019, with same earnings drivers. The Q3 2019 Adjusted EBITDA margin was 20.5% (including 0.5% impact from IFRS 16) versus 19.7% in Q3 2018.
DSM completed the transaction with Nenter as first announced on 29 January 2019. The new subsidiary will produce vitamin E exclusively for DSM. The production facilities and related assets are currently being upgraded to ensure compliance with DSM’s safety, health and environmental standards, to secure high-quality and sustainable supply of Vitamin E. The plant is not expected to resume production activities before Q3 2020.
All comparisons are versus the Underlying business in the first nine months of 2018.
Animal Nutrition reported 4% organic growth, against a strong 12% in the same period last year. Volumes were up 2% and prices +2%. Total sales were 6% higher compared to first nine months 2018 including 2% positive exchange rate effect.
Animal Nutrition delivered an organic growth of 5%, with sales volumes up 1% and prices up 4%.
Volumes were impacted by the continued spread of African swine fever in China and South East Asia, with the region representing more than 50% of global pork production. The rapid spread of this condition has disrupted the global equilibrium of animal protein in the short term, and as a result DSM is currently unable to fully offset the decline in pork production in the region from increases in production from other regions and species. Business conditions in all other species and regions remained strong.
Prices were up due to positive sales mix effects, as well as price increases initiated for some ingredients earlier in the year to compensate for higher costs.
All comparisons are versus the Underlying business in the first nine months of 2018.
Organic growth was 1% against a tough comparison of +7% organic growth in the first nine months of 2018. Volumes were up 3% and prices were down 2%. Total sales were up 5% as sales growth was supported by a 4% foreign exchange effect which was largely US dollar related.
Human Nutrition reported minus 1% organic growth, with volumes up 2% and prices down 3%. Sales were somewhat soft in food & beverage while early life nutrition, medical nutrition and dietary supplements (especially i-Health, DSM’s business-to-consumer business), all performed well. Geographically, sales in China, North America and Europe were soft, Asia was good and Latam was strong.
The minus 3% price effect resulted from lower prices for vitamin C and negative mix effects.
DSM’s other nutrition activities which include Food Specialties, Personal Care, Aroma Ingredients and Hydrocolloids, delivered a good performance with 7% organic sales growth in the first nine months 2019, with 5% organic growth in Q3. Food Specialties enjoyed good growth in enzymes and cultures in the dairy and baking segments in the quarter.
Good progress was made with Avansya, the large innovation program in Food Specialties. Avansya is ready to start commercial production of its fermentative stevia at its plant in Blair, Nebraska by mid-November. The response from customers on stevia samples supplied in recent quarters has been very positive. Avansya expects first customer products containing its stevia solutions to arrive in designated test markets soon.
in € million | Jan - Sep 2019 | Jan - Sep 2018 | % change | Q3 | 2019Q3 2018 | % change |
---|---|---|---|---|---|---|
Sales | 2,114 | 2,215 | -5% | 687 | 723 | -5% |
Adjusted EBITDA1 | 391 | 393 | 0% | 129 | 132 | -2% |
Adjusted EBITDA margin (%)1 | 18.5% | 17.7% | 18.8% | 18.3% | ||
Adjusted EBIT | 285 | 298 | -4% | 92 | 99 | -7% |
Capital Employed | 2,028 | 1,890 | ||||
Average Capital Employed | 1,956 | 1,850 | ||||
ROCE (%) | 19.5% | 21.5% | ||||
Total Working Capital | 450 | 415 | ||||
Average Total Working Capital as % of Sales | 15.4% | 13.2% |
1) Including IFRS 16 impact of €2 million in Q3 2019 and €5 million in the first nine months of 2019
Organic growth was down 7%, with volumes down 5% and prices minus 2%, while margins were slightly up. Total sales were down 5% as a result of a 2% positive exchange rate effect, which was largely US dollar related.
The reported organic growth was minus 7% with volumes down 3% and prices down 4%. This price decline reflected developments in input cost.
Materials experienced ongoing challenging conditions in some of the end-markets. Dyneema continued to perform strongly.
Nine months 2019 Adjusted EBITDA was flat compared to previous year (including 2% from IFRS 16). The slight Adjusted EBITDA decline and increase in margins demonstrated the strong resilience of DSM’s portfolio in the current market circumstances. The impact from lower volumes was partly compensated by the strong performance of Dyneema. Earnings were further supported by good margin management on lower input costs, cost control and a small benefit from currencies. The Adjusted EBITDA margin was 18.5% (including 0.2% from IFRS 16) compared to 17.7% achieved in the previous year.
Q3 2019 Adjusted EBITDA was minus 2% compared to previous year (including 2% from IFRS 16). Q3 2019 Adjusted EBITDA margin was 18.8% (including 0.3% from IFRS 16) compared to 18.3% in Q3 2018.
in € million | Jan - Sep 2019 | Jan - Sep 2018 | % change | Q3 2019 | Q3 2018 | % change |
---|---|---|---|---|---|---|
Sales | 140 | 118 | 19% | 50 | 43 | 16% |
Adjusted EBITDA1 | 16 | 1 | 5 | 1 | ||
Adjusted EBIT | -11 | -16 | -5 | -4 | ||
Capital Employed | 621 | 587 |
1) Including IFRS 16 impact of €0 million in Q3 2019 and €1 million in the first nine months of 2019
Q3 2019 was again a strong quarter in line with H1. Biomedical delivered good top and bottom-line growth. Bio-based Products & Services continued to benefit from the license income for yeast technologies used for bio-based fuels. Solar showed continued softness due to the subdued Chinese market. The Adjusted EBITDA increased to €16 million in the first nine months of 2019.
in € million | Jan - Sep 2019 | Jan - Sep 2018 | Q3 2019 | Q3 2018 |
---|---|---|---|---|
Sales | 31 | 33 | 9 | 11 |
Adjusted EBITDA1 | -75 | -79 | -25 | -25 |
Adjusted EBIT | -117 | -100 | -36 | -32 |
1) Including IFRS 16 impact of €3 million in Q3 2019 and €10 million in the first nine months of 2019
Nine months 2019 Adjusted EBITDA slightly increased compared to previous year, predominantly driven by the adoption of IFRS 16 partly offset by somewhat higher cost. EBIT was negatively impacted by some asset impairments.
in € million | Jan - Sep 2019 | Jan - Sep 2018 | Q3 2019 | Q3 2018 |
---|---|---|---|---|
Cash provided by Operating Activities | 941 | 933 | 434 | 430 |
Cash from APM adjustments | 37 | 66 | 14 | 25 |
Cash from capital expenditures* | -420 | -452 | -151 | -151 |
Cash from drawing rights | -8 | -18 | -4 | -1 |
Adjusted Net Operating Free Cash Flow | 550 | 529 | 293 | 303 |
Operating Working Capital | 2,472 | 2,341 | ||
Average Operating Working Capital as % of Sales | 26.3% | 23.8% | ||
Operating Working Capital as % of Sales - end of period | 27.0% | 25.8% | ||
Total Working Capital | 2,060 | 1,853 | ||
Average Total Working Capital as % of Sales | 21.1% | 18.5% | ||
Total Working Capital as % of Sales - end of period | 22.5% | 20.4% |
* January – September 2018: excluding €18 million payment of lease liability
Adjusted Net Operating Free Cash Flow amounted to €550 million for the three quarters in 2019 up 4% versus €529m in 2018, which included the impact from the temporary vitamin effect of €290 million EBITDA.
Operating Working Capital and Total Working Capital end of September 2019 increased versus 2018 following the consolidation of acquisitions in the period and exchange rate effects. The cash outflow from working capital movements was €207 million versus €448 million in the comparable period last year. As a result, combined with some timing effects in tax payments, Working Capital as a percentage of sales increased versus last year.
The following overview gives a summary of the APM adjustments for the first nine months of 2019 (for reconciliation see page 14 of PDF).
Nutrition: EBITDA adjustments amounted to -€10 million of which -€5 million related to restructuring costs and -€5 million to acquisition related costs. EBIT adjustments amounted to €-21 million including -€11 million asset impairment.
Materials: EBITDA adjustments amounted to -€5 million (EBIT -€5 million) of which -€4 million related to restructuring costs and -€1 million to acquisition related costs.
Innovation Center: EBITDA adjustments amounted to -€2 million (EBIT -€2 million) related to restructuring cost.
Corporate Activities: EBITDA adjustments amounted to -€32 million (EBIT -€32 million) of which -€30 million related to restructuring costs and -€2 million to divestment related costs.
Share of the profit of associates: Net result includes a positive book result of €23 million on its existing share of 29% following the acquisition of an additional 46% of the shares of Andre Pectin in Q1 2019.
DSM enabled its customers to deliver more sustainable solutions to their (end) consumers:
DSM advocated for topics such as the role of business in society, putting a responsible price on carbon, and climate adaptation:
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