Company update: DSM Q1 2012
DSM made a good start to the year, supported by positive momentum in the US, continued progress of high growth economies and a return to more normal trading conditions in Performance Materials compared to Q4 2011. However, the global economic outlook is still uncertain and conditions remain weak in Europe.
- Q1 EBITDA from continuing operations €306 million (Q1 2011: €325 million)
- Strong results in Life Sciences due to continued growth in Nutrition
- Materials Sciences showed strong improvement compared to Q4 2011
- Joint venture with POET established to unlock the advanced biofuels opportunity
- Recently announced planned tender offer to acquire Kensey Nash to establish DSM Biomedical as new profitable growth platform
- Cautiously optimistic outlook, on the way to achieve 2013 targets
DSM’s expectations for the year are broadly in line with its previous guidance.
In addition to the already announced restructuring initiatives at DSM Resins, DSM is preparing further cost reduction programs.
In Nutrition, the impact of the substantial strengthening of the Swiss franc in 2011 was mitigated by a €50 million currency hedge gain, a benefit which will not be repeated in 2012. Despite this, DSM anticipates that it will make further progress, with EBITDA expected to be above 2011.
Business conditions in Pharma are likely to remain challenging, although DSM anticipates that it will make further strategic progress. DSM expects to deliver a slightly improved EBITDA despite the 50% deconsolidation of the anti-infectives business.
Trading conditions in Materials Sciences have normalized compared to Q4 2011 but continue to be volatile and the end market outlook is uncertain owing to weak consumer sentiment in some of DSM’s key geographies. In addition, increasing input costs remain a risk. Nevertheless, based on current insights, EBITDA is expected to be somewhat higher than in 2011.
In Polymer Intermediates prices and margins continue to be volatile. Results will be impacted in Q2 as a consequence of the end Q1 turnaround and in the second half year by two more planned turnarounds in caprolactam. For Polymer Intermediates another strong year is expected, at a level above the historical average, but EBITDA will be clearly lower than the exceptional result in 2011.
Overall DSM remains cautiously optimistic for the year 2012, on its way to achieve the 2013 targets.
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