Press release

DSM reports results first nine months 2019

Heerlen, NL, 05 Nov 2019 07:00 CET

Highlights1,2,3

  • DSM reports good first nine months, with a solid performance in Q3
  • Results compared to Underlying business in first nine months 2018:
    • Group sales +3%, Adjusted EBITDA up 11% (including 3% from IFRS 16)
    • Nutrition: organic sales +4%, Adjusted EBITDA up 13% (including 3% from IFRS 16)
    • Materials: organic sales –7% (-5% volume), Adjusted EBITDA flat (including 2% from IFRS 16)
  • Total Net profit €640m, up versus first nine months 2018 of €821m when correcting for the temporary vitamin effect of €290m EBITDA
  • Adjusted Net Operating Free Cash Flow €550m, up 4% versus first nine months 2018 which included the temporary vitamin effect of €290m EBITDA
  • Full year outlook maintained

Key figures and indicators

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).

CEO statement

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.”

Q3 Highlights1,2,3

  • DSM reports a solid Q3
  • Results compared to Underlying business in Q3 2018:
    • Group sales +3%, Adjusted EBITDA up 9% (including 3% impact from IFRS 16)
    • Nutrition: organic sales +4%, Adjusted EBITDA up 12% (including 3% impact from IFRS 16)
    • Materials: organic sales –7% (-3% volume), Adjusted EBITDA down 2% (including 2% impact from IFRS 16)

Key figures and indicators

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).

Outlook 2019

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.

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. 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.

Key figures and indicators (comparison with January – September 2018 excluding temporary vitamin effect)

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.

Key figures and indicators (comparison with January - September 2018 including temporary vitamin effect)

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

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