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Dsm-firmenich — Royal DSM — Investor Day (2011)
34 slides from Dsm-firmenich's investor day presentation, 2011
Slide 1: DSM Capital Markets Days
Royal DSM N.V. Presentations, Vaalsbroek 2011 Life Sciences and Materials Sciences DSM Capital Markets Days Address: DSM Investor Relations P.O. Box 6500, 6401 JH Heerlen The Netherlands Phone: +31 45 5782864 Fax: +31 10 45 90275 Email: investor.relations@dsm.com www.dsm.com
Slide 2: DSM – Bright Science. Brighter Living.
DSM – Bright Science. Brighter Living.™ Royal DSM N.V. is a global science-based company active in health, nutrition and materials. By connecting its unique competences in Life Sciences and Materials Sciences DSM is driving economic prosperity, environmental progress and social advances to create su
Slide 3: Value creation
Value creation Rolf-Dieter Schwalb Chief Financial Officer Capital Markets Days 2011 DSM BRIGHT SCIENCE. BRIGHTER LIVING. HEALTH NUTRITION + MATERIALS 2.1
Slide 4: Value creation at DSM: Achieving the 2013 and 2015 targets
x °"¢ D> <b “ExQverview NEL; ~ Value creation at DSM Achieving the 2013 and 2015 targets @ BRIGHT SCIENCE. BRIGHTER LIVING.
Slide 5: DSM in motion: driving focused growth
2.3 • ”DSM in motion: driving focused growth” is about growing ”the new DSM”. And of course, this growth should also lead to further creation of shareholder value. • Sales growth, margin improvement, cash generation, capital and financing efficiency are all interlinked and ultimately lead to the cre
Slide 6: Organic sales growth above target range
2.4 • Very important in terms of generating value for shareholders is DSM’s ability to drive organic growth. • This graph shows that, aside from the recession year in 2009, organic sales growth since 2007 was at or above the target range of 5-7%. The average organic sales growth for this period (inc
Slide 7: Sales recovery after the 2008/2009 recession
2.5 • Sales across DSM have shown a reassuring level of strength coming out of the 2008/2009 recession. • Not only has the business been able to recover sales numbers, we actually surpassed 2007 and 2008 in 2010, and this year we are once again showing good growth. This is a reflection of the transf
Slide 8: Improved quality of earnings
2.6 • DSM has significantly improved the quality of its earnings. A large proportion of group revenues and earnings are now in high margin, high-quality businesses. • The profitability of the continuing operations is increasing year by year, except for the recession year. In H1 2010 we were already
Slide 9: Cash position and operating working capital
2.7 • From the end of 2008, DSM has focused on add an extra 0.5% to our OWC percentage improving its cash position, most importantly against net sales. by creating a sustained cash mindset within the company. A series of steps were put in place to • One of the remaining challenges is to have the ens
Slide 10: Capital expenditure outlook 2011-2015
2.8 • Over the last couple of years, DSM has reduced capital expenditures from the high level of 2008, improving its capital efficiency. For 2011 we expect capital expenditures to be between € 450 million and 500 million. • The capital expenditure levels to be expected for the period 2012 - 2015 are
Slide 11: Capital expenditure focus on high growth economies
2.9 • DSM’s european history and heritage means that a considerable proportion of capital expenditure will inevitably be spent on maintaining and improving operational capacity in Europe. But the clear focus of growth capital expenditures will be in the high growth economies, where DSM’s asset base
Slide 12: Asset intensity reduction
2.10 • When we presented our strategy ”DSM in motion: driving focused growth” we announced that we wanted to ensure that we continued to see the results of expansion but through the employment of lower investment and with a more flexible asset base: in other words to get comparable results with less
Slide 13: Modular premix facilities
2.11 • Expansion of the premix network and services plan. Our pump supplier in this case is taking is an integral part of DSM Nutritional Products’ on the business risk of evaluating all the pumps business strategy: as the only full value-chain across DSM’s facilities at his own cost, allowing playe
Slide 14: Cash allocation priorities
2.12 • DSM is leaving its cash allocation priorities unchanged: 1. CAPEX for organic growth 2. Dividend (stable and preferably rising) 3. Acquisitions 4. Cash return to shareholders • DSM will only consider returning cash to shareholders if over a longer period not enough cash can be allocated to th
Slide 15: Dividend policy
2.13 • DSM’s dividend policy is to provide a stable and preferably rising dividend. During the recession DSM kept its dividend unchanged and for the year 2010 it increased the dividend by € 0.15 (12.5%) to € 1.35 per ordinary share. • The interim dividend of € 0.45 (+12.5%) per ordinary share for th
Slide 16: Solid financial base and credit facility
2.14 • DSM enjoys a very solid financial base. The • Finally, we have changed our Dutch pension company’s gearing in H1 2011 was only 5%, and plan from a defined benefit plan into a defined cash in hand stood at € 1.9 billion. The contribution plan, thereby reducing the company has no commercial pap
Slide 17: Debt maturity and hedging of bonds
2.15 • DSM’s debt situation is very well under control. Most of the long-term debt will mature only as from 2014, and there are no covenants in outstanding bonds. • A forward starting swap is in place as a pre- hedge of the 10 year € 500 million bond which will mature on March 17, 2014 (agreed at 3.
Slide 18: Currency exposure: US dollar and Swiss franc
2.16 • The US dollar net sales exposure originates from the disparity between DSM’s current production asset base — approximately 67% of which is located in Europe — and DSM’s sales by destination, of which only 42% is directed towards European customers. To reduce this sensitivity, DSM prioritizes
Slide 19: Foreign currency hedging strategy
2.17 • DSM has in place long-term foreign currency unwind the concluded ARO in August for 2012 hedging accounting for 50% of the net and to conclude an ARF for the USD/CHF (lock- transaction exposure for US dollar, Japanese in to limit downward risk). yen and Pound sterling. There is no hedging of t
Slide 20: Acquisition and partnership criteria
2.18 • DSM applies stringent strategic and financial from the credit metrics commensurate with its criteria to any potential acquisition or rating target. However, DSM believes that partnership. In the screening process a first Single A ratings are the right place to be for selection is made on the
Slide 21: Recent acquisitions versus strategic criteria
2.19 • Above an overview is given how the recent acquisitions meet our strategic acquisition criteria.
Slide 22: Momentum in acquisitions and partnerships
2.20 • DSM has demonstrated considerable momentum in driving new acquisitions and partnerships since September 2010, putting into place its strategy to move from divestment (being transformation focused), to growth again. • Acquisition activity has taken place across the business, in all cases stren
Slide 23: Growth drivers used together
2.21 • As indicated in ”DSM in motion: driving focused growth”, DSM makes most progress when we use our growth drivers together. • The majority of our acquisition and partnership activity has been focused on the high growth economies. DSM has made it clear that these are the economies where it sees
Slide 24: Value creation at DSM: Achieving the 2013 and 2015 targets
2.22 Qo. *Wlerview© oe Tog Value creation at DSM Achieving the 2013 and 2015 targets
Slide 25: Nutritional Products value drivers
2.23 • DSM Nutritional Products continues to drive value by: - Market demand growth - Operating its core business as effectively as possible - Emphasizing differentiation and innovation through new products and services - Extend geographic reach to deliver tailored solutions to even more customers.
Slide 26: Partnerships in pharma
2.24 • DSM has been consistent in its view that partnerships offer the most advantageous route to drive value in our pharma business. • The Anti-Infectives joint venture DSM Sinochem Pharmaceuticals is established; further value will be delivered here through the completion of the JV’s new 6-APA pla
Slide 27: Performance Materials value creation
2.25 • Continuing to meet customer needs for higher performing, more sustainable products — which in turn enjoy higher margins and above average growth — will drive value creation in DSM’s Performance Materials businesses. The DSM Dyneema business and the innovations at DSM Resins and DSM Engineerin
Slide 28: Polymer Intermediates growth
2.26 • Growth in our Polymer Intermediates business will be driven by expansion in China in 2014 to support growing caprolactam demand. By marrying this with continual operational excellence, we are confident we can deliver an EBITDA performance of around 14% over the economic cycle.
Slide 29: 2013 EBITDA and ROCE targets
2.27 • For 2013 two profitability targets have been sustainable innovative products with higher set: an increase in EBITDA to a level of € 1.4 - average margins, and an above average growth 1.6 billion and an increase in Return on Capital in Dyneema®. Further sales and EBITDA growth Employed (ROCE)
Slide 30: ROCE target of at least 15%
2.28 • DSM is confident that it will be able to meet its target of delivering a Return on Capital Employed (defined by DSM as operating profit as a percentage of capital employed) of at least 15%. • Based on our aspired 2015 sales growth and margin improvement in our existing businesses, an EBIT imp
Slide 31: H1 2011 progress toward targets
2.29 • H1 2011 gives a clear indication that DSM is well on its way towards hitting the ambitious targets it has set itself for 2013 and for the strategy period up to 2015. EBITDA improved considerably compared H1 2010, and ROCE exceeded 15% even including the dilutive effect of the very recent Mart
Slide 32: First year of DSM in motion
2.30 • The first year after announcing ”DSM in motion: driving focused growth” has been successful both in terms of meeting our targets and seeing clear progress across all of our four growth drivers. • The strength of DSM’s business after the transformation, and its strategy for the future, has bee
Slide 33: Disclaimer
6.41 DISCLAIMER This document 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. Examples of forward-looking s
Slide 34: Abbreviations
6.42 Abbreviation Explanation Abbreviation Explanation 6-APA 6-amino-penicillanic acid EU European Union AGI AGI Corporation Taiwan F&B Food & Beverage AMEA Asscociation of Machinery and FD Finished dosage / final dose Equipment Appraisers FDA Food and Drugs Administration ANH Animal Nutrition & Hea