Slide 1: Presentation to Investors: Full Year and Q4 2016 results
Presentation to Investors Full Year and Q4 2016 results ROYAL DSM HEALTH NUTRITION MATERIALS
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: Highlights | Full Year 2016
Highlights | Full Year 2016 Very strong 2016, well ahead of strategic goals Sales up 3% to €7,920m, with 4% organic growth Adjusted EBITDA1 up 17% to €1,262m ROCE up 280 bps to 10.4% driven by 38% increase in Adjusted EBIT1 Cash from operating activities up 27% to €1,018m Net profit of €
Slide 4: Highlights | Q4 2016
Highlights | Q4 2016 Sales up 5% to €2,015m, with 2% organic growth Adjusted EBITDA1 up 21% to €315m Nutrition: 2% organic sales growth; Adjusted EBITDA up 16% Materials: 7% volume growth; Adjusted EBITDA up 17% Cash from operating activities up 19% to €374m 1 Main non-IFRS terms are expla
Slide 5: Quote from CEO Feike Sijbesma
Quote from CEO Feike Sijbesma “With today’s results, we are clearly delivering on the goals we set out at the end of 2015. We are pleased to report a very good year, in which we achieved strong EBITDA and ROCE growth, well ahead of the mid-term targets set out in Strategy 2018: Driving Profitable Gr
Slide 6: Key financials | Q4 and Full Year 2016
Key financials | Q4 and Full Year 2016 in € million Q4 2016 Q4 2015 % Change FY 2016 FY 2015 % Change Sales - Continuing Operations 2,015 1,926 5% 7,920 7,722 3% Adjusted EBITDA - Continuing Operations 315 261 21% 1,262 1,075 17% Adjusted EBITDA margin - Continuing operations 15.6% 13.6% 15.9% 13.9%
Slide 7: Net sales development | Q4 and Full Year 2016
Net sales development | Q4 and Full Year 2016 in € million Q4 2016 Q4 2015 % Change Volume Price/mix FX Other Sales - Continuing Operations 2,015 1,926 5% 2% 0% 2% 1% Nutrition 1,321 1,264 5% 0% 2% 3% 0% Materials 639 601 6% 7% -3% 1% 1% Innovation Center 41 40 0% -2% 0% 1% 1% Corporate Activities 1
Slide 8: EBITDA development | Q4 and Full Year 2016
EBITDA development | Q4 and Full Year 2016 in € million Q4 2016 Q4 2015 % Change FY 2016 FY 2015 % Change Adjusted EBITDA - Continuing Operations 315 261 21% 1,262 1,075 17% Nutrition 238 206 16% 931 822 13% Materials 105 90 17% 435 384 13% Innovation Center -1 -1 1 -9 Corporate Activities -27 -34 -
Slide 9: Nutrition | Sales overview
Nutrition | Sales overview Sales bridge – Q4 2015 to Q4 2016 Sales bridge – Full Year 2015 to Full Year 2016 1,321 -0% -1% 5,169 2% 0% 3% 3% 2% 1,264 4,963 0% Q4 2015 Volume Price/mix FX Other Q4 2016 FY 2015 Volume Price/mix FX Other FY 2016 Q4 2016 sales increased by 5% compared to Q4 2015 – Hig
Slide 10: Nutrition | Key financials
Nutrition | Key financials in € million Q4 2016 Q4 2015 % Change FY 2016 FY 2015 % Change Sales 1,321 1,264 5% 5,169 4,963 4% Adjusted EBITDA 238 206 16% 931 822 13% Adjusted EBITDA margin (%) 18.0% 16.3% 18.0% 16.6% Adjusted EBIT 160 123 30% 645 535 21% Capital Employed 5,537 5,309 Average Capital
Slide 11: Nutrition | DSM updated the way Nutrition results are presented
Nutrition | DSM updated the way Nutrition results are presented As from Q4 2016, the sales of DSM Nutrition cluster overview – 2015 Sales reported vs. New presentation Nutritional Products are as follows: 2015 Sales reported 2015 New presentation – Animal Nutrition & Health – Human Nutrition & Hea
Slide 12: Nutrition | Additional information on new presentation of segments
Nutrition | Additional information on new presentation of segments Personal Care had strong organic growth Nutrition cluster overview – 2015 vs. 2016 New presentation across all segments, with good growth in the 2015 New presentation 2016 New presentation business unit’s carefully managed global k
Slide 13: Nutrition | Additional information on new presentation of segments (cont’d)
Nutrition | Additional information on new presentation of segments (cont’d) 2015 2,359 316 63 1,845 90 144 144 2,269 23 1,741 172 ANH Custom ANH - New HNH Aland Aroma Custom HNH - PC Reported Aroma PC & Aroma Reported Manuf. 1 Reported Ingredients Manuf. 1 New Ingredients Ingr. 2016 2,464 1,982 337
Slide 14: Animal Nutrition & Health | Sales overview
Animal Nutrition & Health | Sales overview Sales bridge – Q4 2015 to Q4 2016 Sales bridge – Full Year 2015 to Full Year 2016 646 - -2% 2,399 5% - 5% 7% 581 3% 2,269 -1% Q4 2015 Volume Price/mix FX Other Q4 2016 FY 2015 Volume Price/mix FX Other FY 2016 Q4 2016 sales up 11% versus Q4 2015 – 6% orga
Slide 15: Human Nutrition & Health | Sales overview
Human Nutrition & Health | Sales overview Sales bridge – Q4 2015 to Q4 2016 Sales bridge – Full Year 2015 to Full Year 2016 1,822 -0% 1% -0% 2% 434 -3% - 4% 430 2% 1,742 Q4 2015 Volume Price/mix FX Other Q4 2016 FY 2015 Volume Price/mix FX Other FY 2016 Q4 2016 sales – Good volume growth in i-Heal
Slide 16: Materials | Sales overview
Materials | Sales overview Sales bridge – Q4 2015 to Q4 2016 Sales bridge – Full Year 2015 to Full Year 2016 639 -3% 1% 1% 4% -5% 7% 2,528 2,513 601 -1% 1% Q4 2015 Volume Price/mix FX Other Q4 2016 FY 2015 Volume Price/mix FX Other FY 2016 Page 15
Slide 17: Materials | Sales overview (cont’d)
Materials | Sales overview (cont’d) Q4 2016 sales were 6% higher than the same quarter last year – Strong 7% volume growth driven by specialties on the back of continued favorable trading conditions – Prices were 3% lower, fully reflecting the low input costs – Seasonality effects were less pronou
Slide 18: Materials | Key financials
Materials | Key financials in € million Q4 2016 Q4 2015 % Change FY 2016 FY 2015 % Change Sales 639 601 6% 2,513 2,528 -1% Adjusted EBITDA 105 90 17% 435 384 13% Adjusted EBITDA margin (%) 16.4% 15.0% 17.3% 15.2% Adjusted EBIT 77 54 43% 311 250 24% Capital Employed 1,807 1,723 Average Capital Employ
Slide 19: Innovation Center | Key financials
Innovation Center | Key financials in € million Q4 2016 Q4 2015 % Change FY 2016 FY 2015 % Change Sales 41 40 0% 167 155 7% Adjusted EBITDA -1 -1 1 -9 Adjusted EBIT -9 -14 -24 -43 Capital Employed 576 560 For the full year 2016, the Innovation Center made good progress with 6% organic growth – Ful
Slide 20: Corporate Activities | Key financials
Corporate Activities | Key financials in € million Q4 2016 Q4 2015 FY 2016 FY 2015 Sales 14 21 71 76 Adjusted EBITDA -27 -34 -105 -122 Adjusted EBIT -38 -48 -141 -169 Full year 2016 Adjusted EBITDA improved by €17 million compared to 2015 – Driven by higher result at DSM’s captive insurance compan
Slide 21: Net result contribution of joint ventures / associates | Overview
Net result contribution of joint ventures / associates | Overview in € million Q4 2016 Q4 2015 FY 2016 FY 2015 DSM Sinochem (50%) 1 1 6 8 Patheon (33.5%) 11 68 222 56 ChemicaInvest (35%) 0 -12 -9 -14 Other -13 -9 -25 -20 Total share of the profit of -1 48 194 30 associates/joint control entities D
Slide 22: Key joint ventures and associates | Financial overview
Key joint ventures and associates | Financial overview in € million, based on 100% Q4 2016 Q4 2015 % Change FY 2016 FY 2015 % Change DSM Sinochem Sales 102 86 19% 431 418 3% Adjusted EBITDA% 15% 16% 14% 14% Patheon 1 Sales 570 421 35% 1,786 1,621 10% Adjusted EBITDA% 22% 23% 20% 23% ChemicaInvest 2
Slide 23: Cash Flow development
Cash Flow development Cash flow Average Working Capital% in € million Q4 20161 Q4 20151 FY 20161 FY 20151 40% 2015 2016 EBITDA 270 236 1,146 1,046 29.4% 28.1% Change in Working Capital 82 137 -89 -12 30% Income Tax -23 -12 -77 -75 20.7% Other 45 -47 38 -263 18.6% 20% 14.8% Cash from Operating Activi
Slide 24: Net debt and ROCE development
Net debt and ROCE development Net debt ROCE 3,000 20% 2015 2016 17.6% 2,420 2,321 14.4% 2,070 15% 2,000 12.0% 10.4% 10.3% 10% 7.6% 1,000 5% 0 0% 2014 1 2015 1 2016 Total DSM Nutrition Materials Net debt decreased by €251 million compared to the end of 2015 and stood at €2,070 million – The decreas
Slide 25: Dividend proposal to AGM: Increase dividend to €1.75 per ordinary share
Dividend proposal to AGM: Increase dividend to €1.75 per ordinary share Dividend per ordinary DSM share - € Dividend policy “stable and preferably rising” 2.00 6.0% Reflecting its confidence in the financial performance of the 1.75 1.80 1.65 1.65 1.65 company, DSM proposes to increase the divide
Slide 26: Reconciliation to Alternative Performance Measures | Overview
Reconciliation to Alternative Performance Measures | Overview In presenting and discussing DSM’s financial position, operating Reconciliation to Alternative Performance Measures results and cash flows, DSM uses certain alternative performance in € million Q4 2016 Q4 2015 measures (‘APMs’) not defi
Slide 27: Update on Strategy 2018 | Driving Profitable Growth
Update on Strategy 2018 | Driving Profitable Growth
Slide 28: Strategy 2018: Driving Profitable Growth
Strategy 2018: Driving Profitable Growth Two headline High single-digit percentage High double-digit basis point financial targets annual Adjusted EBITDA growth annual ROCE growth 2016 achievements: 2016 achievements: 17% 280 bps Clear actions identified to Businesses aim to outpace €250-300
Slide 29: Growth projects in Nutrition are delivering
Businesses aim to outpace market growth | Growth projects in Nutrition are delivering Nutrition Strategy 2018 and 2016 milestones 1 Expand the core 2 – New vitamin B6 plant and expansion of the gellan-gum and pectin facilities all in China; 1 3 4 2 Add new products and solutions Excellence in exec
Slide 30: Growth projects in Nutrition are delivering (cont’d)
Businesses aim to outpace market growth | Growth projects in Nutrition are delivering (cont’d) Nutrition Strategy 2018 and 2016 milestones 3 Expand in new segments/regions 2 – Launch of MEG-3® Ultra allowing for varieties of (high-concentrate) DHA and EPA; 1 3 4 – Successful expansion of fast-growi
Slide 31: Materials stepped up its transformation towards a more specialty portfolio
Businesses aim to outpace market growth | Materials stepped up its transformation towards a more specialty portfolio Materials Strategy 2018 and 2016 milestones For DSM’s specialty materials, DSM is using new High Accelerated growth Functional technologies and (sustainable) customer solutions to a
Slide 32: Materials transformation towards specialty portfolio (cont’d)
Businesses aim to outpace market growth | Materials stepped up its transformation towards a more specialty portfolio (cont’d) Materials Strategy 2018 and 2016 milestones – Dyneema High Accelerated Functional growth Materials High-Performance • Launch of Dyneema® Carbon hybrid Growth PA6 Compounds Pl
Slide 33: Ambitious improvement programs firmly on track
Ambitious improvement programs firmly on track Cost savings: total €250-300m by 2018 Timing of cumulative cost savings ~€m Realized Forecast Nutrition 400 Program €130-150m 300 DSM-wide (by 2018) support 200 functions ~110 €125-150m 100 Materials ~25 (by end 2017) 0 2015 2016 2017 2018 DSM is rigo
Slide 34: FTE reduction on track and one-time costs within budget
FTE reduction on track and one-time costs within budget Cumulative FTE reduction1 One-time costs 5,000 Realized Forecast Realized Forecast ~4,400 400 4,000 300 3,000 200 2,000 900-1,100 ~80 ~80 1,000 ~675 100 ~70 0 0 Total FTE in Support 2016 Reduction target 2015 2016 2017 Functions (vs. 2014 base)
Slide 35: DSM-wide savings in support functions & staff
DSM-wide savings in support functions & staff | Strong progress made with globally leveraging support functions at lower costs Savings: €125-150m1 Progress (%) Remarks Actual 2015/2016 Forecast 2017/ Run Rate EoY Shared Services Improvement Plan completed, incl. shift of most activities to Global
Slide 36: Nutrition-specific improvement program
Nutrition-specific improvement program | Overall program running well with purchasing savings being ahead of plan and cost-reductions on track Savings: €130-150m1 Cost improvements (recap) Work streams closely monitored and on track Current status: Actions Financial benefits Purchasing Purchasing
Slide 37: DSM maintains its disciplined approach to capital allocation
DSM maintains its disciplined approach to capital allocation Capital efficiency is a key driver of cash generation; in 2016 we undertook a number of improvement projects in this area throughout DSM – One of these has been to take a more integrated approach to business planning, in particular in ou
Slide 38: DSM has stepped up its sustainability aspirations
DSM has stepped up its sustainability aspirations1 Key sustainability focus areas Nutrition Climate change and renewable energy Circular and bio-based economy Sustainability as Business Growth Driver Brighter Living Solutions: ECO+ and People+ 2016 Eco+ People+ Profitable solutions better fo
Slide 39: DSM launched the ‘Brighter Living Solutions’ program
In 2016, DSM launched the ‘Brighter Living Solutions’ program in order to steer products and innovations that are better for people and the planet Examples of ‘Brighter Living Solutions’ Uralac® Ultra Dyneema® heavy marine ropes Pack-Age® Coating solutions for Ropes for mooring and Moisture-pe
Slide 40: Key joint ventures and associates | Overview
Key joint ventures and associates | Overview DSM Sinochem Pharmaceuticals (50%) Patheon (34%) ChemicaInvest (35%) Pharma - Antibiotics Pharma - Contract Manufacturing Bulk Chemicals JV with Sinochem created in 2011 Created in 2014, when DSM ChemicaInvest includes the former when Sinochem took
Slide 41: Key business/innovation projects driving earnings growth beyond 2018
Key business/innovation projects driving earnings growth beyond 2018 DSM has set itself strategic targets for the period to 2018. At the same time, we are also preparing for further longer- term growth Range of key business and innovation projects across the clusters will drive earnings growth b
Slide 42: Slide 42