Dsm-firmenich Ag · EURONEXT:DSFIR
Dsm-firmenich — Royal DSM — Investor Day (November 2014)
43 slides from Dsm-firmenich's investor day presentation, Nov 5, 2014
Slide 1: Life Sciences and Materials Sciences
Life Sciences and Materials Sciences Feike Sijbesma, CEO Royal DSM Capital Markets Day, 5 November 2014 Page
Slide 2: Safe harbor statement
Safe harbor statement This presentation may contain forward-looking statements with respect to DSM’s future (financial) performance and position. Such statements are based on current expectations, estimates and projections of DSM and information currently available to the company. DSM cautions reade
Slide 3: DSM well positioned …
DSM well positioned … • DSM significantly transformed Increased global reach; stronger presence in High Growth Economies Capital allocation strongly focused on Nutrition through targeted acquisitions Value creation through sustainable innovation and new business platforms (EBAs) Pharma JVs establish
Slide 4: … focused on driving performance
… focused on driving performance • Focused strategy Improve operational performance of the Nutrition and Performance Materials businesses Ongoing portfolio management: strategic actions for caprolactam, acrylonitrile and composite resins No large M&A contemplated for now: current focus is on integra
Slide 5: Overview
Overview • Our strategy: where are we today • Our businesses Nutrition Performance Materials Innovation Center • Operational efficiencies • Wrap-up Page 4 4
Slide 6: Significant value creation by portfolio transformation
Significant value creation by portfolio transformation Mid-year share price** €10.10 €16.80 €28.30 €32.85 €53.19 Mid-year Enterprise €2.2bn €5.8bn €6.6bn €6.0bn €11.6bn Value*** * Core is pro-forma split after deconsolidation of polymer intermediates and composite resins ** Source: Bloomberg; Share
Slide 7: Megatrends more significant than ever; driving our growth
Megatrends more significant than ever; driving our growth Health & Wellness Global Shifts Climate & Energy Aging population Population growth Sustainability concerns Healthcare issues Urbanization drive Resources constraints Food composition Wealth increase Energy concerns Health Nutrition Materials
Slide 8: DSM in motion: driving focused growth
DSM in motion: driving focused growth Creating sustainable value along all growth drivers Page 7
Slide 9: Significantly expanding global presence
Significantly expanding global presence • Position in US strengthened Sales by destination* North High Growth • Sales to High Growth Economies (HGEs) America 19% Economies increased from 32% in 2010 to 43% YTD Q3’14 43% • Future economic growth mainly driven by HGEs • Current slowdown HGEs likely no
Slide 10: Innovation driving higher growth and margins
Innovation driving higher growth and margins • DSM strongly committed to innovation in existing businesses as well as in emerging business platforms • Good progress achieved: Sales from innovative products / solutions, introduced over last 5 years, account for 18% of sales YTD Q3’14 (target 20%) DSM
Slide 11: Sustainability is a strong business driver
Sustainability is a strong business driver • YTD Q3’14 ECO+ sales slightly above 45% • Well on track towards 2015 aspiration of 50% • More than 90% of DSM’s innovation pipeline is ECO+, strongly driving a greener portfolio • ECO+ sales have grown ~10%/year since 2010 • ECO+ sales have significantly
Slide 12: Active portfolio management delivering results
Active portfolio management delivering results • More than €2.8bn of acquisitions since 2010: Created a leading Nutrition business position ~85% of M&A spend in Nutrition Established a new business: DSM Biomedical Performance Materials • Value creation confirmed: Innovation Center 1% Martek Kensey N
Slide 13: Where we are versus 2015 targets
Where we are versus 2015 targets Profit targets 2015 YTD 2014 • EBITDA margin (%) 14% - 15% 13% • ROCE 11% - 12% 8-9% (FY14E) Sales target 2015 • Organic sales growth 5% - 7% annually 3% • China sales towards US$ 3bn >US$ 2.0bn (FY14E) • High Growth Economies sales about 45% of total sales 43% • Inn
Slide 14: Overview
Overview • Our strategy: where are we today • Our businesses Nutrition Performance Materials Innovation Center • Operational efficiencies • Wrap-up Page 13
Slide 15: Nutrition: global products & local solutions
Nutrition: global products & local solutions Strong growth in Nutrition, both organically and through €2.4bn acquisitions since 2010: Broadest portfolio of nutrition ingredients in diversified end-markets Unparalleled value chain presence and customer intimacy Significant global presence Margins wit
Slide 16: Good volume growth & margins
Good volume growth & margins • 4% volume growth since 2010 on average / year (HNH 2% / ANH 5%) Food/meat consumption-growth now less correlated to GDP-growth • Margins within 20-23% target range Supported by M&A but negatively impacted by FX and Vitamin E prices • Diversified portfolio of products,
Slide 17: Capitalizing on every step of the value chain
Capitalizing on every step of the value chain Active ingredients Forms & delivery systems Premixes Solutions GLOBAL PRODUCER LOCAL SOLUTION PROVIDER Estimated average EBITDA margins ~15% ~ 7.5% for the steps in the value chain Broad portfolio providing resilience Broadest portfolio of ingredients (2
Slide 18: Diversified into multiple end-markets
Diversified into multiple end-markets Other Dairy RTE meals Ruminants 4% Soups/Sauces/Spreads 11% Food & Wine-Beer-Fruit drinks 25% Beverages Aqua 4% 9% Swine 8% Infant nutrition 18% 17% Poultry 4% Dietary Supplements Personal care End-market diversification as strong natural hedge providing resilie
Slide 19: Headwinds impacting 2014 growth & margin
Headwinds impacting 2014 growth & margin Topic Sales Remarks/ actions exposed Vitamin E: Increasing price pressure in Vitamin E 9% of • See slide 19 due to intensified competition Nutrition Sluggish Western Food & Beverage markets; 10% of • Supporting customers by declining consumer spending in mid-
Slide 20: Significant impact from lower Vitamin E prices
Significant impact from lower Vitamin E prices • Good demand in animal feed, with limited Vitamin E 50% spot price (€/kg)* local disturbances (diseases, weather) € 15 • Increasing price pressure in Vitamin E due to intensified competition € 10 • Spot-prices declined significantly in Q3; should these
Slide 21: Business conditions in US Dietary Supplements
Business conditions in US Dietary Supplements • US Multivitamin DS markets weakened due to negative media attention in H2 2013 (IRI-data Sept 2014: 1% lower volumes over last 3 months versus previous year) • Recent scientific publications and media have been more positive • Vitamin D & E not impacte
Slide 22: Current business conditions in US Omega-3
Current business conditions in US Omega-3 • US fish-oil based Omega-3 DS market impacted by increased fish oil costs, leading to sharp retail price increase. This was combined with negative media events (IRI-data Sept 2014: 6% lower volumes over last 3 months vs previous year) DSM’s response • DSM i
Slide 23: Overview actions to improve performance (1)
Overview actions to improve performance (1) • Market development: Science and promotion based industry coalitions and retail alliances regarding Dietary Supplements / Omega-3 Science based promotion of vitamins in feed • Market position: Actively protect market shares (e.g. Vitamin C with pending Al
Slide 24: Overview actions to improve performance (2)
Overview actions to improve performance (2) • Improve cost position: Further improve cost position of fat soluble vitamins & carotenoids (e.g. VE) Enhance competitiveness of water soluble vitamins (e.g. B6 and VC) Upgrade and improve cost position Nutritional lipids (e.g. Mulgrave facilities) and yi
Slide 25: Structural growth drivers intact
Structural growth drivers intact • Growing population, urbanization, health- and environmental concerns and rising standards of living drive increased consumption of fish/meat and healthy (processed) foods ANH: Need for safe, efficient, healthy and sustainable animal protein production HNH: Desire f
Slide 26: Overview
Overview • Our strategy: where are we today • Our businesses Nutrition Performance Materials Innovation Center • Operational efficiencies • Wrap-up Page 25
Slide 27: Performance Materials well positioned for growth
Performance Materials well positioned for growth • Continuous upgrade of product portfolio; shift to greener, higher margin products and solutions 24% of sales* in Performance Materials are innovation sales 59% of sales* is Eco+ 38% of sales* to High Growth Economies YTD Q3’14 sales: €2.1bn Global p
Slide 28: Megatrends are driving our end-markets
Megatrends are driving our end-markets Megatrends will further accelerate growth of sustainable innovations Page 27Page 27
Slide 29: Good progress in volatile environment
Good progress in volatile environment • Gradual margin improvement despite: Sales (€bn) EBITDA margin (%) – Macro-weakness in Europe and weak FX (bars) (line) – No special tenders in vehicle protection anymore 4 15 – Caprolactam effect in DSM Engineering Plastics 3 13 • Successful implementation Pro
Slide 30: Performance Materials strategy
Performance Materials strategy Differentiated strategy: • Accelerate: Accelerate growth in highly innovative markets to fully benefit from megatrends • Strengthen: Combine sustainable innovation sales growth with margin optimization programs • Restructure: Composite Resins Further portfolio upgrade
Slide 31: Ongoing portfolio enhancement
Ongoing portfolio enhancement Further strategic actions are being pursued: • Polymer Intermediates: Caprolactam: €0.95bn sales YTD Q3’14 o 3 plants in China, the Netherlands and the US Acrylonitrile: €0.35bn sales YTD Q3’14 o 1 plant in the Netherlands • Composite Resins (Performance Materials): €0.
Slide 32: Overview
Overview • Our strategy: where are we today • Our businesses Nutrition Performance Materials Innovation Center • Operational efficiencies • Wrap-up Page 31
Slide 33: Attractive emerging business areas established
Attractive emerging business areas established DSM Biomedical DSM Bio-based Products & DSM Advanced Surfaces Services Innovative materials for Advanced enzymes and Smart coatings and surface Medical Devices delivering yeasts for Bio-Energy & technologies boosting solar clinical improvements Bio-base
Slide 34: DSM Biomedical: scalable business
DSM Biomedical: scalable business • Accessible medical device material solution market: ~US$1-2bn (high single digit growth) • DSM Sales ~€140m (2014 expectation); EBITDA margins >25% (~20% R&D) • Growth: organically (global reach) and 2 ventures; Drug Delivery &JV DuPont (Actamax) • DSM key product
Slide 35: POET-DSM movie
POET-DSM movie a i fossil resources Sensvatine to come DSM Page 34 BRIGHT SCIENCE. BRIGHTER LIVING.
Slide 36: DSM Bio-based Products & Services: big potential
DSM Bio-based Products & Services: big potential • Bio-Energy Emerging market Advanced Biofuels (2nd generation cellulosic bio-ethanol) estimated at >US$10bn in 2020 of which enzymes/yeast are about US$3bn (ref: 1st Generation Biofuels is now ~US$25-30bn with ~US$1bn enzyme/yeast market) o POET-DSM’
Slide 37: DSM Advanced Surfaces: boosting solar yields
DSM Advanced Surfaces: boosting solar yields • Anti-reflective KhepriCoat® applied for solar panel cover glass (industry-benchmark): Attainable market of €250-300m (2020); solar panel market growth of 10-15%/yr DSM outcompetes on patents, quality, durability, strong product know-how • “Light trappin
Slide 38: DSM Innovation Center: significant value
DSM Innovation Center: significant value EBA FY14E Sales FY14E EBITDA Comments / Potential DSM Biomedical ~€140m ~€35m EBITDA margins: > 25% R&D spend: ~20% of sales Organic growth: high single digit DSM Bio-based Products ~€5m ~(€25m) Potentially very significant upside & Services DSM Advanced Surf
Slide 39: Overview
Overview • Our strategy: where are we today • Our businesses Nutrition Performance Materials Innovation Center • Operational efficiencies • Wrap-up Page 38
Slide 40: Operational performance initiatives
Operational performance initiatives • DSM will achieve further operational efficiencies, via: Improving ICT-infrastructure and optimizing across the company Finance, HR and Purchasing Leveraging our strong scientific base and manufacturing experience to provide solutions in growing markets Stronger
Slide 41: Overview
Overview • Our strategy: where are we today • Our businesses Nutrition Performance Materials Innovation Center • Operational efficiencies • Wrap-up Page 40
Slide 42: Wrap-up
Wrap-up • Attractive portfolio with high quality, Nutrition and Performance Materials businesses with a good growth and return profile • Focused strategy to improve financial performance and consolidate portfolio further: Drive improved performance of the Nutrition and Performance Materials business
Slide 43: BRIGHT SCIENCE. BRIGHTER LIVING
BRIGHT SCIENCE. BRIGHTER LIVING”