DSM reports 2019 results

Key figures and indicators

in € million	Full Year 2019	Full Year 2018			% Change
		Underlying business¹	Temporary vitamin effect	Total Group	Underlying organic growth¹	FX & ‘other¹	Underlying total growth¹	Temporary vitamin effect	Total Group
Sales	9,010	8,852	415	9,267	-1%	3%	2%	-5%	-3%
Nutrition	6,028	5,722	415	6,137	2%	3%	5%	-7%	-2%
Materials	2,746	2,913		2,913	-8%	2%	-6%		-6%
Adjusted EBITDA	1,684	1,532	290	1,822			10%	-18%	-8%
Nutrition	1,250	1,117	290	1,407			12%	-23%	-11%
Materials	509	512		512			-1%		-1%
Innovation	22	8		8
Corporate	-97	-105		-105
EBITDA	1,586	1,464	290	1,754
Adjusted EBITDA margin	18.7%	17.3%		19.7%

1) In 2018 DSM benefitted from a temporary vitamin effect (see below). 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 25 of PDF below).

CEO statement

Feike Sijbesma, outgoing CEO, Geraldine Matchett and Dimitri de Vreeze, incoming Co-CEOs, commented: “We are pleased to have delivered a good financial performance, as well as achieving our key milestones in the first year of Strategy 2021. Given the softer trading conditions seen in some of our markets, we are focused on driving growth, costs and operational excellence initiatives across the company to offset these adverse macro-economic conditions. Our outlook for 2020 is based on our own strength and self-help actions, and underlines our commitment to DSM’s Strategy 2021 targets. Our businesses are well positioned to capitalize on many strong fundamental growth drivers related to the world’s most pressing challenges and we expect our large innovation programs to begin to contribute in 2020, and further expand during 2021 and beyond.”

Outlook 2020

DSM expects to deliver a mid-single digit increase in Adjusted EBITDA for 2020 compared to prior year, together with an improvement in Adjusted Net Operating Free Cash Flow in line with our Strategy 2021 targets. This outlook is driven by DSM’s own growth initiatives, innovation programs and self-help actions, and does not assume any significant improvement to the current macro-economic environment. With regard to any potential impact of the coronavirus, DSM will monitor the situation closely.

CEO succession

As announced on 2 December 2019, CEO Feike Sijbesma will hand over his responsibilities to his Managing Board colleagues Geraldine Matchett and Dimitri de Vreeze as Co-CEOs on 15 February 2020 and will support a smooth transition until 1 May 2020.

Feike Sijbesma, commented: “It has been my greatest privilege and joy to lead DSM for 13 years. I am proud of the company it is today, and I am pleased that we once again delivered a good financial performance for the year, despite an increasingly challenging market environment. 2019 marked another year of clear progress in our strategy of evolving towards a Nutrition, Health and Sustainable Living company, addressing the world’s most pressing challenges as key business drivers with our science-based innovations. I am delighted to leave a DSM that is on track to meet its Strategy 2021 objectives, and in the excellent hands of Geraldine and Dimitri, who I know share my commitment to the purpose of the company, and the excitement about the long-term growth drivers of our business and our strong market execution.”

Geraldine Matchett and Dimitri de Vreeze, added: “We are honored to lead the company in the next stage of its journey and thank Feike for his extraordinary leadership over the years.”

Feike Sijbesma has been appointed Honorary Chairman of DSM, being a tribute to Feike’s contribution to the company over the years, maintaining a connection between him and DSM, as Feike will -when requested- continue representing DSM externally, especially in areas such as (mal)nutrition and climate.

Fit for Growth program

DSM has launched a program in DSM Nutritional Products to increase its agility to drive above market profitable growth. By simplifying the operating model and further improving business steering, the program aims to better serve customers and respond to the differentiated needs of their respective end markets. At the same time, it creates a more efficient organization.

Share Buy-Back program

DSM announced on 14 February 2019 a repurchase of shares with an aggregate market value of €1 billion, with the intention to reduce its issued capital. In 2019 DSM has repurchased 5.4 million shares for a total consideration of €600 million under this program. DSM intends to repurchase the remaining €400 million during the first half year of 2020, next to the usual repurchase programs which DSM executes from time to time to cover commitments under the share-based compensation plans and the stock dividend.

Q4 Highlights^1,2,3

DSM reports a solid Q4
Group sales -3%, Adjusted EBITDA up 7% (including 4% impact from IFRS 16)
Nutrition: sales +1%, organic sales -1%, Adjusted EBITDA up 9% (including 3% impact from IFRS 16)
Materials: sales -9%, volume -6%, Adjusted EBITDA -1% (including 2% impact from IFRS 16)

Key figures and indicators

in € million	Q4 2019	Q4 2018			% Change
		Underlying business¹	Temporary vitamin effect	Total Group	Underlying organic growth¹	FX & ‘other¹	Underlying total growth¹	Temporary vitamin effect	Total Group
Sales	2,152	2,208	-	2,208	-5%	2%	-3%		-3%
Nutrition	1,455	1,444	-	1,444	-1%	2%	1%		1%
Materials	632	698		698	-12%	3%	-9%		-9%
Adjusted EBITDA	396	370	-	370			7%		7%
Nutrition	294	270	-	270			9%		9%
Materials	118	119		119			-1%		-1%
Innovation	6	7		7
Corporate	-22	-26		-26
EBITDA	347	340		340
Adjusted EBITDA margin	18.4%	16.8%		16.8%

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

in € million	FY 2019	FY 2018	% change	Volume	Price/mix	FX	Other
Sales	9,010	8,852	2%	0%	-1%	2%	1%
Nutrition	6,028	5,722	5%	2%	0%	2%	1%
Materials	2,746	2,913	-6%	-5%	-3%	2%	0%
Innovation Center	194	172
Corporate Activities	42	45

in € million	Q4 2019	Q4 2018	% change	Volume	Price/mix	FX	Other
Sales	2,152	2,208	-3%	-2%	-3%	1%	1%
Nutrition	1,455	1,444	1%	1%	-2%	1%	1%
Materials	632	698	-9%	-6%	-6%	2%	1%
Innovation Center	54	54
Corporate Activities	11	12

in € million, including IFRS 16 impact	FY 2019	FY 2018	% change	Q4 2019	Q4 2018	% change
Adjusted EBITDA	1,684	1,532	10%	396	370	7%
Nutrition	1,250	1,117	12%	294	270	9%
Materials	509	512	-1%	118	119	-1%
Innovation Center	22	8		6	7
Corporate Activities	-97	-105		-22	-26
Adjusted EBITDA margin	18.7%	17.3%		18.4%	16.8%
ROCE (%)	12.0%	13.3%
Adjusted net operating free cash flow	801	545	47%
Adjusted net profit - Total DSM^1,2	830	769	8%
Adjusted net EPS - Total DSM	4.64	4.33	7%

in € million, excluding IFRS 16 impact	FY 2019	FY 2018	% change	Q4 2019	Q4 2018	% change
Adjusted EBITDA	1,632	1,532	7%	382	370	3%
Nutrition	1,220	1,117	9%	286	270	6%
Materials	502	512	-2%	116	119	-3%
Innovation Center	20	8		5	7
Corporate Activities	-110	-105		-25	-26
Adjusted EBITDA margin	18.1%	17.3%		17.8%	16.8%
ROCE (%)	12.3%	13.3%
Adjusted net operating free cash flow	749	545	37%
Adjusted net profit - Total DSM^1,2	833	769	8%
Adjusted net EPS - Total DSM	4.66	4.33	8%

1) Including result attributed to non-controlling interest
2) Including €25m tax on temporary vitamin effect of €290m in 2018

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 full year 2018 including temporary vitamin effect)

in € million	FY 2019	FY 2018	% change	Volume	Price/mix	FX	Other
Sales	9,010	9,267	-3%	1%	-6%	2%	0%
Nutrition	6,028	6,137	-2%	3%	-8%	2%	1%
Materials	2,746	2,913	-6%	-5%	-3%	2%	0%
Innovation Center	194	172
Corporate Activities	42	45

in € million	Q4 2019	Q4 2018	% change	Volume	Price/mix	FX	Other
Sales	2,152	2,208	-3%	-2%	-3%	1%	1%
Nutrition	1,455	1,444	1%	1%	-2%	1%	1%
Materials	632	698	-9%	-6%	-6%	2%	1%
Innovation Center	54	54
Corporate Activities	11	12

in € million, including IFRS 16 impact where applicable	FY 2019	FY 2018	% change	Q4 2019	Q4 2018	% change
Sales	9,010	9,267	-3%	2,152	2,208	-3%
Adjusted EBITDA	1,684	1,822	-8%	396	370	7%
Nutrition	1,250	1,407	-11%	294	270	9%
Materials	509	512	-1%	118	119	-1%
Innovation Center	22	8		6	7
Corporate Activities	-97	-105		-22	-26
Adjusted EBITDA margin	18.7%	19.7%		18.4%	16.8%
EBITDA	1,586	1,754		347	340
Adjusted EBIT	1,075	1,345	-20%	231	245	-6%
EBIT	954	1,245		170	196
Capital Employed	9,311	8,181
Average Capital Employed	8,936	8,005
ROCE (%)	12.0%	16.8%
Effective tax rate¹	18.2%	17.4%
Adjusted net profit²	830	1,034	-20%	171	182	-6%
Net profit - Total DSM²	764	1,079	-29%	124	258	-52%
Adjusted net EPS	4.64	5.84	-20%	0.96	1.02	-5%
Net EPS - Total DSM	4.27	6.10		0.70	1.46
Operating cash flow	1,385	1,391	0%	444	458	-3%
Adjusted Net Operating Free Cash Flow	801	810	-1%	251	281	-11%
Capital expenditures³	609	646		199	201
Net debt⁴	1,144	113
Average number of ordinary shares	175.7	175.3		174.1	175.6
Workforce (headcount end of period)	22,174	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 December 2019 includes €217 million following the adoption of IFRS 16 on ‘Leases’

The complete version of this press release with accompanying financial statements and the Presentation to Investors are below in PDF format.

Press release