Dsm-firmenich Ag · EURONEXT:DSFIR
Dsm-firmenich — Koninklijke DSM — Q3 2012 Earnings Presentation
71 slides from Dsm-firmenich's earnings presentation, Nov 6, 2012
Slide 1: Presentation to Investors Q3 Results 2012
Q3 Results 2012 Presentation to Investors Life Sciences and Materials Sciences 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.™ Koninklijke 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 cre
Slide 3: Health + Nutrition * Materials
DSM BRIGHT SCIENCE. BRIGHTER LIVING. Dp | HEALTH + NUTRITION * MATERIALS
Slide 4: Operational performance, strategy, outlook
Operational performance Q3 2012 Progress on strategy Business conditions and outlook j / x DSM BRIGHT SCIENCE, BRIGHTER LIVING.
Slide 5: Highlights Q3 2012
Highlights Q3 2012 DSM reports solid Q3 results despite weak economic conditions * Q3 EBITDA from continuing operations €270 million (Q3 2011: €339 million) « Life Sciences, driven by Nutrition, showed good performance, representing 76% of Q3 EBITDA « Materials Sciences continued to perform well, ex
Slide 6: Quote from Feike Sijbesma
Quote from Feike Sijbesma “Despite a challenging global trading environment DSM continued to generate good results mainly driven by our Nutrition cluster. We continued to make good progress towards our strategic goals with the purchase of Tortuga and Cargill’s cultures and enzymes business. We have
Slide 7: Results Q3 2012 - Key figures
Results Q3 2012 - Key figures Q3-2012 Q3-2011 A% (€ million) YTD-2012 YTD-2011 A% Continuing operations before exceptional items: 2,304 2,322 1% Net Sales 6,862 6,821 +1% 270 339 -20% EBITDA 866 1,003 -14% 147 231 -36% EBIT 515 700 -26% 0.61 0.94 -35% EPS (€) 2.15 2.82 -24% Total DSM before exceptio
Slide 8: EBITDA - DSM continuing business
EBITDA - DSM continuing business EBITDA (€ million) Nutrition 589 542 521 481 396 Pharma 26 25 35 57 105 Performance Materials 228 250 227 122 275 Polymer Intermediates 115 301 156 18 105 Innovation Center’ -29 -40 +36 *" ““ Corporate Activities” -63 -75 -18 -104 -75 losm 866 1,003 885 574 806 * 200
Slide 9: Net sales growth Q3 2012 versus Q3 2011
Net sales growth Q3 2012 versus Q3 2011 (€ million) Nutrition Pharma Performance Materials Polymer Intermediates Innovation Center Corporate Activities Operations Page 7 032012, Q3 2011 Diff. Volume Price FX Other 945 868 9% 2% -1% 4% 4% 172 171 1% 0% 1% 3% -3% 703 711 -1% -3% -4% 5% 1% 384 473 -19%
Slide 10: Nutrition
Nutrition Q3-20 Q3-20 A% (€ million) D-20 D-20 A 945 868 +9% Net Sales 2,744 2,505 +10% 202 176 +15% EBITDA 589 542 +9% 154 134 +15% EBIT 456 428 +7% 21.4% 20.3% EBITDA margin 21.5% 21.6% « Organic sales growth was 1% compared to Q3 2011 with volume growth (2%) and slightly reduced prices (-1%). Sal
Slide 11: Nutrition - cont
Nutrition - cont « Animal Nutrition & Health achieved modest volume growth despite the drought in the US, which resulted in higher grain prices. This subsequently led to lower feed and meat production. Prices were slightly down. « Human Nutrition & Health prices were up slightly while volumes remain
Slide 12: Pharma
Pharma Q3-20 Q3-20 A% (€ million) 172 171 +1% Net Sales 4 13 -69% EBITDA 8 3 EBIT 2.3% 7.6% EBITDA margin -20 4.9% » 0 A 512 +3% 25 +4% -7 4.9% Net sales growth was 1% compared to Q3 2011, driven by a more favorable product mix (+1%), favorable exchange rates (+3%) and the deconsolidation of DSM Sin
Slide 13: Performance Materials
Performance Materials Q 0 Q O A% (€ million) D-20 D-20 A% 703 711 -1% Net Sales 2,117 2,125 0% 72 77 -6% EBITDA 228 250 -9% 39 47 -17% EBIT 129 162 -20% 10.2% 10.8% EBITDA margin 10.8% 11.8% * Organic sales development was -7% compared to Q3 2011 due to lower volumes in DSM Resins and lower volumes
Slide 14: Polymer Intermediates
Polymer Intermediates Q 0 Q 0 A% (€ million) D-20 D-20 A% 384 473 -19% Net Sales 1,203 1,353 -11% 16 109 -85% EBITDA 115 301 -62% 6 96 -94% EBIT 91 272 -67% 4.2% 23.0% EBITDA margin 9.6% 22.2% * Organic sales development was -24% compared to Q3 2011, due to 15% lower prices and 9% lower volumes. Cur
Slide 15: Innovation Center
Innovation Center Q 0 Q 0 A% (€ million) fe 0 DQ 0 A% 35 15 Net Sales 69 43 -4 -13 EBITDA -29 -40 -14 -16 EBIT -45 -48 - - EBITDA margin + — Sales improved strongly compared to Q3 2011 as a result of higher Biomedical sales as well the acquisition of Kensey Nash which has been consolidated as of Jun
Slide 16: Cash flow
Cash flow Cash Flow (€ million) YID 12) YTD’11 Cash from operating activities 347 479 Cash from investing 1,060 229 activities Free cash flow from 513 250 operations Balance sheet Ult. Q3 (E million) 2012) YE 2011 Net debt 1,157 318 Gearing 16% 5% Page 14 3000 2000 1000 0 OWC development Q1’09 - Q3’
Slide 17: Progress on strategy
Page 15 ih = 2 Operational performance Q3 2012 Progress on strategy Business conditions and outlook DSM BRIGHT SCIENCE. BRIGHTER LIVING.
Slide 18: DSM in motion: driving focused growth
DSM in motion: driving focused growth Innovation ff Sustainability Life Materials Sciences Sciences DSM Page 16 BRIGHT SCIENCE. BRIGHTER LIVING.
Slide 19: Good progress with strategic ambitions in Q3
Good progress with strategic ambitions in Q3 High Growth Economies * Q3’12 sales to HGE was 37% (38% YTD Q3’12), with strongest growth in Latin America (15% YTD) « Double digit growth Nutrition and Performance Materials * China sales YTD is US$ 1.3bn (15% of DSM) Reverdia bio-succinic plant, Italy I
Slide 20: Tortuga, leader in supplements for ruminants
Tortuga, leader in supplements for ruminants Highly attractive acquisition with excellent strategic fit « Total enterprise value ~ € 465m) in cash « 2012 expectations: Sales ~ €385m, EBITDA ~ €60m e Market leader in nutritional supplements with focus on pasture raised beef and dairy cattle « — Integ
Slide 21: Cargill's cultures and enzymes business
Cargill’s cultures and enzymes business Creating a tier one supplier to the dairy industry, by combining the cultures and enzymes business of Cargill with the dairy business of DSM Food Specialties ¢ Total enterprise value ~ €85m in cash « Net sales ~ €45m « Leading global manufacturer of cultures a
Slide 22: Acquisitions further enhancing quality portfolio
Slide updated after announcement of acquisition Fortitech ~€2.8bn*Acquisitions further enhancing quality portfolio ACQUISITIONS PARTNERSHIPS ~ €2.4bn Nutrition Nutrition • Premix plant Russia • Martek (microbial DHA/ARA) • Vitatene (natural carotenoids), • Premix plants (Romania, Italy) Pharma • DSM
Slide 23: Business conditions and outlook
Operational performance Q3 2012 Progress on strategy Business conditions and outlook DSM BRIGHT SCIENCE. BRIGHTER LIVING.
Slide 24: Nutrition - Food
Nutrition - Food * Sustained good business conditions: * Nutritional lipids businesses showing strong growth High Growth Economies showing continued growth Europe and US show modest growth DSM Page 22 BRIGHT SCIENCE. BRIGHTER LIVING.
Slide 25: Business Conditions in Materials Sciences
Business Conditions in Materials Sciences Performance Materials + Volatile and uncertain market conditions: ¢ Business conditions similar to Q3, but: * Demand will experience the usual seasonality of Q4 * Continued weakness in polyamide-6 value chain + DSM Resins benefitting from successful executio
Slide 26: DSM well positioned in current economic climate
DSM well positioned in current economic climate « The outlook for the global economy remains uncertain. However, DSM is well positioned to secure its growth and profitability: EBITDA’ YTD (€ m) DSM’s clusters 1000 - our business portfolio is far more robust with = Polymer 76% of EBITDA in Q3 coming
Slide 27: 2012 Outlook
2012 Outlook « In Nutrition, EBITDA is now expected to be clearly above 2011. Ocean Nutrition Canada will add about €20 million in EBITDA in 2012 « Pharma is expected to deliver a slightly improved EBITDA, despite the 50% deconsolidation of the anti-infectives business. DSM continues to seek opportu
Slide 28: Wrap up
Wrap up « DSM continued to deliver solid results, despite weak economic conditions: - Q3 EBITDA of €270 million, - Life Sciences representing 76% of Q3 EBITDA - Nutrition delivered a 15% higher EBITDA than in Q3 2011 - Q3 2012 had a negative caprolactam-related impact of €105 m compared to Q3 2011 *
Slide 29: Investor Relations November 2012
DSM BRIGHT SCIENCE. BRIGHTER LIVING. Dp | Investor Relations 8 November 2012 HEALTH + NUTRITION * MATERIALS
Slide 30: Overview
’ Overview « Fortitech at a glance ¢ Acquisition rationale DSM Page 28 BRIGHT SCIENCE. BRIGHTER LIVING.
Slide 31: Transaction highlights Fortitech
Transaction highlights Fortitech Acquisition Strategic fit Synergies Page 29 (o Total enterprise value about US$634 million (~ €495 million), in an all cash > transaction * 2013 expectations: net sales ~US$270 million, EBITDA ~US$70 million, including synergies and excluding exceptional items * Valu
Slide 32: Fortitech, global leader in food ingredient blends
Fortitech, global leader in food ingredient blends Food ingredient Blends * Broad range of food ingredient blends based upon externally sourced nutrients and food ingredients, including : vitamins, minerals, amino acids, colors, nucleotides, sweeteners, nutraceuticals, herb extracts, flavors, season
Slide 33: Food ingredient blending
GD focus dsm Food ingredient blending ED twas Fortitech Commodities Macro- ingredients Micro- ingredients & premixes Page 31 Formulated product Agricultural products CC suser >) sweeteners whey proteins soy proteins C starches) C tivers >) F dried . Salt & minerals C calcium >) Catt & minerals veget
Slide 34: Fortitech at a glance
Fortitech at a glance Revenues expectation FY 2013: e Net sales ~US$270 million « EBITDA ~ US$70 million, including synergies and excluding exceptional items « ~9 EV/EBITDA multiple Founded in 1986 « Private company with ~520 employees « Headquartered in Schenectady (USA) ¢ 6 production sites: USA (
Slide 35: Global production network of Fortitech
Global production network of Fortitech DSM Page 33 BRIGHT SCIENCE. BRIGHTER LIVING.
Slide 36: Fortitech at a glance, Acquisition rationale
¢ Fortitech at a glance « Acquisition rationale DSM Page 34 BRIGHT SCIENCE. BRIGHTER LIVING.
Slide 37: Strong growth in food ingredient blends
Strong growth in food ingredient blends Increased demand for complete solutions « From vitamin & carotenoids premix to complete food ingredient solutions using multiple ingredient categories « Increased complexity and high quality requirements e High single digit growth rates at attractive EBITDA ma
Slide 38: Further strengthening our value chain presence
Further strengthening our value chain presence Nun onal : consultanc' R _ Active eivers LE) ie services ingredients systems Blends DSM Tortuga @ Human Nutrition & Health @ Animal Nutrition & Health DSM Page 36 BRIGHT SCIENCE. BRIGHTER LIVING.
Slide 39: Acceleration to a full solutions provider
Acceleration to a full solutions provider Ingredients channel-to-market In-house blending by customer Active Forms & DSM ingredients Paltnieiny systems STRATEGIC MUTRITION® Pema fortitech Customer solution driven Custom Blends & packaging Large food companies Core competencies DSM * Backward integra
Slide 40: Cost synergies estimated at ~10% of net sales
Cost synergies estimated at ~10% of net sales Significant cost synergies Combined plants & blending footprint « About 10% of net sales which ay 7 will be fully realized by 2015 Pama =a Lg Bu ant Yo tas - . a ) 2, Village 2,2 ig? ) In addition, one-time synergies ee Na vy) \ ‘ 24 “oe California “Rn e
Slide 41: DSM continues to expand its unique position in Nutrition
DSM continues to expand its unique position in Nutrition * 9th acquisition in Nutrition since announcement of strategy in September 2010: + ~€ 2.4 billion spent on acquisitions in Nutrition + Including Fortitech, Ocean Nutrition Canada and Tortuga, the Nutrition businesses will have: + About €4.6 bi
Slide 42: Wrap up
Wrap up Fortitech acquisition: « Fully supports DSM’s growth strategy “DSM in motion: driving focused growth” « Accelerates DSM’s strategy to become a full solutions provider in food ingredient blends « Expands DSM’s value chain presence * Creating significant cost synergies of ~10% of net sales, fu
Slide 43: Press Release
DSM BRIGHT SCIENCE. BRIGHTER LIVING. Press Release Osh, operate Communications .relations@dsm.com Heerlen (NL), 6 November 2012 29E DSM reports solid Q3 results despite weak economic conditions Q3 EBITDA from continuing operations €270 million (Q3 2011: €339 million) Life Sciences, driven by Nutriti
Slide 44: Third quarter and January - September results
DSM BRIGHT SCIENCE. BRIGHTER LIVING. third quarter January - September 2012 2014 +/- in € million 2012 2011 +l Continuing operations 2,304 2,322 -1% Net sales 6,862 6,821 1% Operating profit before depreciation and 270 339 -20% amortization (EBITDA) 866 = 1,003 “14% 202 176 - Nutrition 589 542 4 13
Slide 45: Overview
DSM BRIGHT SCIENCE. BRIGHTER LIVING. Overview During the third quarter of 2012, the weak conditions in the global economy seen throughout the previous quarter continued. The Eurozone challenges remained significant and the slow-down in China persisted. The US continued to grow at a modest rate. Desp
Slide 46: Net sales
DSM BRIGHT SCIENCE. BRIGHTER LIVING. Net sales in € million third quarter 2012 2011 differ- organic exch. other ence — growth rates Nutrition 945 868 9% 1% 4% 4% Pharma 172 171 1% 1% 3% -3% Performance Materials 703 711 “1% -7h 5% 1% Polymer Intermediates 384 473 19% -24% 5% Innovation center 35 15
Slide 47: Business review by cluster
DSM BRIGHT SCIENCE. BRIGHTER LIVING. Business review by cluster Nutrition third quarter in € million January - September 2012 2011 2012 2011 945 868 Net sales 2,744 2,505 202 176 EBITDA 589 542 154 134 EBIT 456 428 21.4% 20.3% EBITDA margin 21.5% 21.6% Organic sales growth was 1% compared to Q3 2011
Slide 48: Performance Materials
DSM BRIGHT SCIENCE. BRIGHTER LIVING. Performance Materials third quarter in € million January - September 2012 2011 2012 2011 703 711 Net sales 2,117 2,125 72 77 EBITDA 228 250 39 47 EBIT 129 162 10.2% 10.8% EBITDA margin 10.8% 11.8% Organic sales development was -7% compared to Q3 2011 due to lower
Slide 49: Kensey Nash and Corporate activities
DSM BRIGHT SCIENCE. BRIGHTER LIVING. EBITDA improved due to higher sales and the acquisition of Kensey Nash which now has been integrated into the biomedical business. Kensey Nash contributed in line with expectations with sales of €17 million and EBITDA of €7 million. Corporate activities third qua
Slide 50: DSM in motion: driving focused growth
DSM BRIGHT SCIENCE. BRIGHTER LIVING. DSM in motion: driving focused growth DSM in motion: driving focused growth is the strategy that the company embarked on in September 2010. It marks the shift from an era of intensive portfolio transformation to a strategy of maximizing sustainable and profitable
Slide 51: Outlook
DSM BRIGHT SCIENCE. BRIGHTER LIVING. Outlook The outlook for the global economy remains uncertain. DSM’s Profit Improvement Program is fully on track and aims to deliver €150 million of benefits by 2014. This program together with an on-going focus on cash generation will help to offset adverse exte
Slide 52: Condensed consolidated statement of income for the third quarter
DSM BRIGHT SCIENCE. BRIGHTER LIVING. Condensed consolidated statement of income for the third quarter third quarter 2012 in € million third quarter 2011 before excep- _ total before excep-_ total excep- tional excep- tional tional items tional items items items 2,304 2,304 net sales 2,322 2,322 270
Slide 53: Condensed consolidated statement of income for January - September
DSM BRIGHT SCIENCE. BRIGHTER LIVING. Condensed consolidated statement of income for January - September January - September 2012 in € million January - September 2011 before excep- _ total before excep-_ total excep- _ tional excep: _ tional tional items tional items items items 6,862 6,862 net sale
Slide 54: Consolidated balance sheet: assets
DSM BRIGHT SCIENCE. BRIGHTER LIVING. Consolidated balance sheet: assets in € million 30 September 2012 year-end 2011 intangible assets 2,399 1,786 property, plant and equipment 3,622 3,405 deferred tax assets 344 292 associates 37 35 other financial assets 139 135 non-current assets 6,541 5,653 inve
Slide 55: Consolidated balance sheet: equity and liabilities
Consolidated balance sheet: equity and liabilities DSM BRIGHT SCIENCE. BRIGHTER LIVING. in € million 30 September 2012 year-end 2011 shareholders’ equity 5,947 5,784 non-controlling interest 213 190 equity 6,160 5,974 deferred tax liability 320 192 employee benefits liabilities 288 322 provisions 81
Slide 56: Condensed consolidated cash flow statement
DSM BRIGHT SCIENCE. BRIGHTER LIVING. Condensed consolidated cash flow statement January - September in € million 2012 2011 cash, cash equivalents and current investments at beginning of period 2,147 2,290 current investments at beginning of period 89 837 cash and cash equivalents at beginning of per
Slide 57: Condensed consolidated statement of comprehensive income
Condensed consolidated statement of comprehensive income DSM BRIGHT SCIENCE. BRIGHTER LIVING. in € million January - September 2012 2011 exchange differences on translation of foreign operations 25 -40 actuarial gains and losses and asset ceiling 0 0 change in fair value reserve “4 -84 change in hed
Slide 58: Condensed report business segments
Condensed report business segments January - September 2012 (in € million) DSM BRIGHT SCIENCE. BRIGHTER LIVING. continuing operations Discon Total Nutrition Pharma Polymer Innovation Corporate El Total tinued nation Intermediates Center activities nation continuing operations operations net sales Tr
Slide 59: Geographical information (continuing operations)
Geographical information (continuing operations) DSM BRIGHT SCIENCE. BRIGHTER LIVING. The Rest of Eastern. North Latin. China_—India._~—Japan—Rest of -Restof Total Nether: Western Europe America America Asia the January - September 2012 lands _ Europe world net sales by origin in € million 2,300 2,0
Slide 60: Notes to the financial statements
DSM BRIGHT SCIENCE. BRIGHTER LIVING. Notes to the financial statements Accounting policies and presentation The consolidated financial statements of DSM for the year ended 31 December 2011 were prepared according to International Financial Reporting Standards (IFRS) as adopted by the European Union
Slide 61: Acquisition of Kensey Nash and Ocean Nutrition Canada
DSM BRIGHT SCIENCE. BRIGHTER LIVING. The acquisition of Kensey Nash contributed approximately €17 million to net sales and €7 million to EBITDA in the third quarter of 2012. On 18 July 2012 DSM obtained control of Ocean Nutrition Canada (ONC). From that date onwards the financial statements of ONC a
Slide 62: Seasonality, dividends and equity
DSM BRIGHT SCIENCE. BRIGHTER LIVING. Seasonality In cases where businesses are significantly affected by seasonal or cyclical fluctuations in sales this is discussed in the ’Business review by cluster’ earlier in this report. Dividends and equity On 6 June the final dividend of €1.00 per share for t
Slide 63: Important dates
Important dates Annual Report 2012 Report for the first quarter 2013 Annual General Meeting of Shareholders Report for the second quarter 2013 Report for the third quarter 2013 DSM - Bright Science. Brighter Living.™ DSM BRIGHT SCIENCE. BRIGHTER LIVING. Wednesday, 20 February 2013 Thursday, 2 May 20
Slide 64: Financial Overview Q3 2012
Financial Overview Q3 2012 in million of Phenna Innovation Corporate Euros Materials Intermediates Center Continuing operations 3°12 Q3'11 | Chg.% | Q3'12| Q3'11 | Chg.% | Q3'12 |Q3'11 | Chg.% | Q3'12 | Q3'11 | Chg.% | Q3'12 | Q3'11 | Chg.% | Q3'12 | Q3'11 | Chg.% | Q3'12 Q3'11 | Chg.% before except
Slide 65: Financial Overview YTD Q3 2012
Financial Overview YTD Q3 2012 Pharma Performance Polymer Innovation Corporate Materials Intermediates Center Continuing operations ytd'12 |ytd'11| Chg.% |ytd'12| ytd'11/ Chg.% | ytd'12/ytd'11 | Chg.% | ytd'12|ytd'11 | Chg.% |ytd'12 |ytd'11 | Chg.% |ytd'12|ytd'1 | Chg.% | ytd'12 |ytd'14 | Chg.% befo
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Slide 67: Disclaimer
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
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Slide 69: Contact
Contact: DSM BRIGHT SCIENCE. BRIGHTER LIVING. = www.dsm.com visiting address: leerlen, The Netherlands HEALTH + NUTRITION » MATERIALS
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Slide 71: Presentation to Investors Q3 Results 2012
Q3 Results 2012 Presentation to Investors Life Sciences and Materials Sciences 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