Company update: Feed markets help DSM Nutrition to grow
DSM’s Nutritional Products segment, which also includes the animal nutrition business, posted a 7% year-on-year sales growth in Q2 comparison to the same quarter in 2011. As a whole, however, the multinational chemical company saw a strong profit decrease.
The company, headquartered in Heerlen, the Netherlands, explained: “DSM Nutrition once again delivered a strong performance. With acquisitions in the Nutrition cluster such as Martek in 2011 and Ocean Nutrition Canada in 2012 DSM is moving towards achieving €4 billion in nutrition sales.” The press release continued to say: “Feed markets continued to experience strong demand for animal protein in all geographic areas.”
The company added that the 7% sales growth can be divided into a ‘healthy organic growth’ of 2% and favourable exchange rates adding another 5%.
For the remainder of the year, the company expects the Nutrition division to continue to demonstrate its resilience with EBITDA now expected to be clearly above 2011.
In pig production, DSM manufactures and markets the several products, like the enzyme products Ronozyme and Roxazyme as well as the nutritional supplement Hy-D, for use in sows and gilts.
Total net profit
Despite good figures for the Nutrition cluster, DSM’s total net profit showed a decrease of €351 million compared to Q2 2011, to a level of €41 million. This is a 90% decrease. EBITDA went down by 14% to €290 million.
DSM CEO/ chairman Feike Sijbesma commented: “Despite the challenging macro-economic environment, I am pleased that DSM was able to deliver another robust set of results demonstrating the strength of our strategy, as evidenced by the ongoing strong performance of Nutrition. Our Life Sciences clusters accounted for around 70% of Q2 EBITDA. This strength has helped to offset the weakness caused by caprolactam in Materials Sciences. The other Materials Sciences businesses improved despite a challenging macro-economic environment.
“The global outlook for the second half of the year is more uncertain due in part to Europe’s inability to find an effective and sustainable solution to the financial challenges facing the Eurozone. Because of the increased economic uncertainty, we are announcing today a Profit Improvement Program that includes structural cost reduction and other initiatives that will generate €150 million EBITDA benefits by 2014.”
Cost reductions
The restructuring programme, in which about 1,000 jobs will be cut, will be implemented over the next 18 months. It is expected to deliver structural annual benefits of €150 million by 2014.
The total company Q2 presentation can be found here.
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