Dsm-firmenich Ag · EURONEXT:DSFIR
Dsm-firmenich — Royal DSM — Investor Day (June 2018)
19 slides from Dsm-firmenich's investor day presentation, Jun 20, 2018
Slide 1: DSM Capital Markets Day 2018
DSM Capital Markets Day 2018 Targets 2021 focused on growth, cash and value Geraldine Matchett | CFO ROYAL DSM CAPITAL MARKETS DAY | LONDON (UK) - 20 JUNE 2018
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 rea
Slide 3: Strategy Update: Growth & Value - Purpose led, Performance driven
Strategy Update: Growth & Value - Purpose led, Performance driven. Health & Climate Nutrition & Energy ▪ Purpose sets scope for DSM’s further portfolio evolution: 2021 Targets1 – Focus on growth in Nutrition, Health and Sustainable Living Resources & Circularity High single-digit Focus percentage an
Slide 4: Ambitious targets set on a higher base
Ambitious targets set on a higher base 2016-18 2021 Targets Achievements Targets1 EBITDA ▪ High-single digit % ▪ 13% ▪ High-single digit % annual increase CAGR 2016-182 annual increase from ~€1.0bn from ~€1.5bn Adj. Net ▪ ~5% ▪ ~10% average Operating CAGR 2015-173 increase per year Free Cash Flow RO
Slide 5: 2021 Targets achieved by growth and capital efficiency
2021 Targets achieved by growth and capital efficiency 2021 Targets1 Ambitions underpinning Group targets1 High single-digit 1. Sales Above-market sales growth (~5%) for percentage annual Group, Nutrition and Materials Adj. EBITDA increase 2. Adj. EBITDA margin Nutrition: >20% Materials: 18-20% 3. W
Slide 6: DSM will continue its above-market growth
1 DSM will continue its above-market growth Nutrition Materials Human Nutrition organic growth Animal Nutrition organic growth Materials volume growth 14% 14% 14% 12% 12% 12% 10% 10% 10% ~8% 8% 8% 8% ~5% ~5% ~5% ~5% ~5% 6% 6% 6% 4% 2-3% 2-3% 4% 2-3% 2-3% 4% ~3% ~3% 2% 2% 2% 0% 0% 0% Market DSM Marke
Slide 7: Well-balanced geo-split provides natural hedge for growth & FX impact
1 Well-balanced geo-split provides natural hedge for growth & FX impact Geographical footprint Sales by origin and destination | FY2017 29% 25% 23% 22% 17% 15% 12% 12% 13% 9% 8% 4% 5% 2% 3% 1% NL CH Rest of North America LatAm China APAC RoW Europe Sales by origin Sales by destination Page 6
Slide 8: Improving margins by further shift to higher-margin, specialty solutions
2 Improving margins by further shift to higher-margin, specialty solutions Nutrition Materials Temporary vitamin 25% benefit >20% 25% 23% 23% 21% 21% 18-20% 19% 19% 17% 18.9% 17% 15% 18.0% 15% 17.3% 17.3% 16.6% 13% 13% 15.2% 11% 11% 9% 9% 7% 7% 5% 5% 3% 3% 1% 1% -1% -1% 2015 2016 2017 2018 2 Ambitio
Slide 9: Growing while retaining efficiency is safeguarding margins
2 Growing while retaining efficiency is safeguarding margins Total support function costs as % of sales2 6.1 ▪ Functional costs reduced 4.5 Anchoring of significantly support function ▪ Anchoring efficiencies Anchoring savings ensuring stable costs in functional top-quartile benchmark cost levels 20
Slide 10: DSM aims bringing down Average Total Working Capital to ~16%
3 DSM aims bringing down Average Total Working Capital to ~16% Ambitions underpinning Strategy 2018 accomplishments ▪ Working Capital improvement Targets 2021 from: Avg. total working capital as % of sales – Inventory reduction: 35% Customer-centric supply chain 29.4% and Digitization enable 30% 28.
Slide 11: Strict capex allocation: investments focused on growth and efficiency
4 Strict capex allocation: investments focused on growth and efficiency Ambitions underpinning Strategy 2018 accomplishments Targets 2021 ▪ Strategy 2018 capital allocation: – Strict and targeted allocation to growth areas 700 ~625 • focus on enhancing 586 Nutrition capabilities 600 478 485 (2/3 cap
Slide 12: EBITDA growth and capital efficiency drive ROCE improvement
5 EBITDA growth and capital efficiency drive ROCE improvement Strategy 2018 Ambitions underpinning ▪ Ambition of ~1%-point ROCE accomplishments Targets 2021 increase per annum 30% DSM Group Temporary vitamin ~16% ▪ ROCE could be negatively benefit 10% impacted by M&A-related 7.6% 10.4% 12.3% Underly
Slide 13: Stronger free cash flow and earnings per share
6 Stronger free cash flow and earnings per share1 High single-digit Improving EBITDA Average Total Balanced Tax annual Adj. margins Working Capital capex EBITDA growth reduction Supported by above- Nutrition: >20% Reduce to Disciplined capex; focus: 18-20% market sales growth Materials: 18-20% ~16%
Slide 14: Cash allocation policy unchanged
Cash allocation policy unchanged 1st 2nd 3rd 4th Disciplined capex for Share Dividend M&A organic buy-backs growth ▪ ~2/3 in Nutrition ▪ Stable, ▪ Prudent and ▪ To be considered preferably rising disciplined in the absence of ▪ ~50-60% focused approach value-creating on growth M&A ▪ Value creation i
Slide 15: Stable, preferably rising dividend policy; step-up linked to cash generation
Stable, preferably rising dividend policy; step-up linked to cash generation Dividend per ordinary share (€) ▪ Maintaining dividend policy: stable and preferably rising 3 1 ▪ Proposal to increase ordinary dividend 2.30 with 25% over 2018 to €2.30 per share 2 1.85 1.75 – Reflecting future earnings/ c
Slide 16: Balance sheet to enable organic and inorganic growth
Balance sheet to enable organic and inorganic growth Debt maturity profile ▪ Healthy debt maturity profile ▪ DSM linked GHG emission reduction to 540% 383% 226% 069% 912% 755% 598% 440% 283% 126% 969% 812% 655% 498% 341% 184% 027% 870% 713% 555% 398% 241% 084% 927% interest rate in new €1bn Revolvin
Slide 17: Key assumptions
Key assumptions ▪ No major macro-economic downturn assumed ▪ Assumed FX rates and – Global GDP growth rate of ~3.8%1 is assumed for 2019-21 sensitivities – Stable geopolitical environment – USD: 1.18 – CHF: 1.16 BRL: 3.90 – RMB: 7.90 – Hedging of ~50% of key USD ▪ No major shifts in key raw material
Slide 18: DSM Strategy: Growth & Value – Purpose led, Performance driven
DSM Strategy: Growth & Value – Purpose led, Performance driven DSM’s key competences … 2021 Targets1: … provide growth opportunities in the focus-domains … … creating high single-digit % a growth annual increase Future-proof company … Adj. EBITDA Nutrition Climate & Health & Energy ~10% average Sust
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