Slide 1: Driving Profitable Growth
Driving Profitable Growth through science-based, sustainable solutions Presentation to Investors Q4 & Full Year 2015 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 Q4
Highlights Q4 Q4 Group: net sales up 6% to €1,926 million and EBITDA up 3% to €261 million Q4 Nutrition: 7% organic growth with strong volume growth in both Animal and Human Nutrition Q4 EBITDA: Nutrition up 3%, Materials up 13% Strong Q4 operating cash flow of €313 million supported by work
Slide 4: Quote from CEO Feike Sijbesma
Quote from CEO Feike Sijbesma “DSM’s fourth quarter performance, slightly ahead of expectations, was encouraging. We are particularly pleased with our progress in Nutrition, where both Animal and Human Nutrition delivered strong organic growth. Performance Materials continued to benefit from improve
Slide 5: Key financials | Q4 and Full Year 2015
Key financials | Q4 and Full Year 2015 in € million Q4 2015 Q4 2014 % Change FY 2015 FY 2014 % Change Sales - Continuing Operations 1,926 1,811 6% 7,722 7,051 10% EBITDA - Continuing Operations 261 254 3% 1,075 1,038 4% EBITDA margin - Continuing operations 13.6% 14.0% 13.9% 14.7% ROCE - Continuing
Slide 6: Net sales development | Q4 2015
Net sales development | Q4 2015 in € million Q4 2015 Q4 2014 % Change Volume Price/mix FX Other Sales - Continuing Operations 1,926 1,811 6% 3% -2% 4% 1% Nutrition 1,264 1,124 12% 7% 0% 3% 2% Performance Materials 601 618 -3% -1% -7% 5% Innovation Center 40 42 -5% -15% 1% 9% Corporate Activities 21
Slide 7: Net sales development | Full Year 2015
Net sales development | Full Year 2015 in € million FY 2015 FY 2014 % Change Volume Price/mix FX Other Sales - Continuing Operations 7,722 7,051 10% 3% -2% 8% 1% Nutrition 4,963 4,335 14% 6% 0% 7% 1% Performance Materials 2,528 2,460 3% 0% -4% 7% Innovation Center 155 154 1% -11% 0% 12% Corporate Ac
Slide 8: EBITDA development | Q4 and Full Year 2015
EBITDA development | Q4 and Full Year 2015 in € million Q4 2015 Q4 2014 % Change FY 2015 FY 2014 % Change EBITDA - Continuing Operations 261 254 3% 1,075 1,038 4% Nutrition 206 200 3% 822 850 -3% Performance Materials 90 80 13% 384 323 19% Innovation Center -1 -3 -9 -18 Corporate Activities -34 -23
Slide 9: Nutrition | Sales overview
Nutrition | Sales overview Sales bridge – Q4 2014 to Q4 2015 Sales bridge – Full Year 2014 to Full Year 2015 1,264 4,963 2% 1% 3% 0% 7% 0% 7% 6% 1,124 4,335 Q4 2014 Volume Price/mix FX Other Q4 2015 2014 Volume Price/mix FX Other 2015 Q4 2015 sales up 12% compared to Q4 2014; 7% organic sales grow
Slide 10: Nutrition | Key financials
Nutrition | Key financials in € million Q4 2015 Q4 2014 % Change FY 2015 FY 2014 % Change Sales 1,264 1,124 12% 4,963 4,335 14% EBITDA 206 200 3% 822 850 -3% EBITDA margin (%) 16.3% 17.8% 16.6% 19.6% EBIT 123 125 -2% 535 596 -10% Capital Employed 5,309 5,034 1 ROCE (%) 10.3% 12.5% Total Working Capi
Slide 11: Animal Nutrition & Health | Sales overview
Animal Nutrition & Health | Sales overview Sales bridge – Q4 2014 to Q4 2015 Sales bridge – Full Year 2014 to Full Year 2015 2,359 620 - 2% -1% - 4% 1% 7% 8% 572 2,084 Q4 2014 Volume Price/mix FX Other Q4 2015 2014 Volume Price/mix FX Other 2015 Q4 2015 sales strong with 9% organic growth despite
Slide 12: Animal Nutrition & Health | Vitamin E prices
Animal Nutrition & Health | Vitamin E prices Vitamin E prices - € per kg1 15 10 5 0 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Total EBITDA impact of lower Vitamin E prices was ~€25m in Q4 2015 and ~€100m in 2015 (compared to 2014) 1 Source: www.feedinfo.com Page 11
Slide 13: Human Nutrition & Health | Sales overview
Human Nutrition & Health| Sales overview Sales bridge – Q4 2014 to Q4 2015 Sales bridge – Full Year 2014 to Full Year 2015 450 1,845 0%- -0% 9% 13% -2% 7% 394 1,626 2% -1% Q4 2014 Volume Price/mix FX Other Q4 2015 2014 Volume Price/mix FX Other 2015 Q4 2015 sales were strong in Human Nutrition & H
Slide 14: Performance Materials | Sales overview
Performance Materials | Sales overview Sales bridge – Q4 2014 to Q4 2015 Sales bridge – Full Year 2014 to Full Year 2015 618 2,528 - -1% 601 2,460 - 0% 7% -7% 5% -4% Q4 2014 Volume Price/mix FX Other Q4 2015 2014 Volume Price/mix FX Other 2015 Q4 2015 sales 3% below Q4 2014: – Prices down 7% refle
Slide 15: Performance Materials | Key financials
Performance Materials | Key financials in € million Q4 2015 Q4 2014 % Change FY 2015 FY 2014 % Change Sales 601 618 -3% 2,528 2,460 3% EBITDA 90 80 13% 384 323 19% EBITDA margin (%) 15.0% 12.9% 15.2% 13.1% EBIT 54 51 6% 250 204 23% Capital Employed 1,723 1,744 1 ROCE (%) 14.4% 11.9% Total Working Ca
Slide 16: Innovation Center | Key financials
Innovation Center | Key financials in € million Q4 2015 Q4 2014 % Change FY 2015 FY 2014 % Change Sales 40 42 -5% 155 154 1% EBITDA -1 -3 -9 -18 EBIT -14 -9 -43 -45 Capital Employed 560 523 Q4 2015 sales in line with full year: – Strong sales development at DSM Advanced Surfaces and positive curre
Slide 17: Corporate Activities | Key financials
Corporate Activities | Key financials in € million Q4 2015 Q4 2014 FY 2015 FY 2014 Sales 21 27 76 102 EBITDA -34 -23 -122 -117 EBIT -48 -39 -169 -168 Q4 2015 EBITDA: lower than the prior year, mainly as a result of costs related to a warehouse fire at the Chemelot site (the Netherlands) which were
Slide 18: Key Joint Ventures and Associates | Key financials
Key Joint Ventures and Associates | Key financials in € million, based on 100% Q4 2015 Q4 2014 % Change FY 2015 FY 2014 % Change DSM Sinochem: Sales 86 94 -9% 418 399 5% EBITDA% 16% 10% 14% 6% Patheon1: Sales 478 383 25% 1,813 984 n.a. EBITDA% 24% 22% 21% 18% ChemicaInvest2: Sales 514 n.a. n.a. 879
Slide 19: Cash flow and Working Capital development
Cash flow and Working Capital development Cash flow Working Capital% - At year-end in € million FY 2015 FY 2014 40% EBITDA 1,170 1,166 30% Change in Working Capital -12 -74 Income Tax -75 -82 20% Other -387 -202 Cash from Operating Activities 696 808 10% of which provided by Continuing Operations 80
Slide 20: Net Debt and ROCE development
Net Debt and ROCE development Net debt - At year-end ROCE - At year-end 3,000 20% 15% 2,000 10% 1,000 5% 0 0% 2013 2014 2015 Total DSM Nutrition Materials 2014 2015 In 2015, Net Debt decreased by €99 million compared to the end of 2014 reflecting higher free cash flow from operations, positively i
Slide 21: Dividend proposal to AGM: stable at € 1.65
Dividend proposal to AGM: stable at € 1.65 Dividend overview – 2010-15 Dividend policy “stable and preferably rising” € 1.75 Proposal to AGM on 29 April 2016: Maintain the dividend of €1.65 per ordinary share: – €0.55 interim dividend (paid in August 2015) € 1.50 – €1.10 final dividend (payable
Slide 22: Business Conditions
Business Conditions Animal Nutrition Continued good market conditions, with no significant pressure from animal diseases Human Nutrition Continued slow market conditions in the Americas, but own growth initiatives gradually kicking in Performance Materials Uncertain macro economic conditions a
Slide 23: Recap of Strategy 2018
Recap of Strategy 2018 Driving Profitable Growth
Slide 24: Strategy 2018
Strategy 2018 Two headline 1. High single-digit 2. High double- financial targets annual EBITDA digit basis point growth annual ROCE growth Clear actions Businesses aim to €250-300m cost Consistent identified to outpace market reduction and improvements in achieve targets growth in all efficiency ca
Slide 25: Strategy 2018 – Driving Profitable Growth through science-based, sustainable solutions
Strategy 2018 – Driving Profitable Growth through science-based, sustainable solutions Climate & IMPROVING 2018 TARGETS Energy FINANCIAL RESULTS Global shifts & Health & Digitization Wellness Growth annual EBITDA growth: high single-digit Cost & Productivity --- annual ROCE growth: Capital high doub
Slide 26: Well-identified initiatives to drive Strategy 2018 targets
Well-identified initiatives to drive Strategy 2018 targets ~€130-150m ~€100-125m Nutrition program Inflation Sales above Support functions market growth & services program 2015 2018 EBITDA EBITDA DSM is confident it has the right business strategies in place to meet the needs of its customers and
Slide 27: Driving profitable growth supported by cost reduction and efficiency improvement programs
Driving profitable growth supported by cost reduction and efficiency improvement programs Cost savings: total €250-300m Timing of cumulative cost savings One-time costs by 2018 ~€m Nutrition 400 2017 Program ~€50m 300 €130-150m DSM-wide (by 2018) 2016 200 ~€100m support functions 100 €125-150m 2015
Slide 28: DSM wide savings in support functions & staff
DSM wide savings in support functions & staff | Structural savings of €125-150 million to be fully achieved by the end of 2017 Breakdown by function Breakdown by cluster Aim of the program External benchmark identified savings potential Other Corporate Finance Activities functions Nutrition New
Slide 29: Nutrition improvement program
Nutrition improvement program Cost savings & efficiency improvements in Nutrition €130-150m by 2018 Breakdown by category Aim of the program Purchasing savings related to direct raw Purchasing Efficiency gains materials sourcing, energy, intermediates “Lowering the Yield and indirect spend cost
Slide 30: Drive growth in Nutrition
Drive growth in Nutrition Global products and local solutions Capitalizing on every step in the value chain Aspirations 2018 underpinning Group targets Global leader in nutrition, with broadest portfolio of Annual EBITDA growth: specialty nutritional ingredients high single-digit Unparalleled
Slide 31: Nutrition has a unique, global and broad portfolio in food/feed nutritional ingredients
Nutrition has a unique, global and broad portfolio in food/feed nutritional ingredients with increased solutions offering capabilities Broad portfolio providing resilience Fat soluble vitamins (e.g. A,D,E) Water soluble vitamins (e.g. B,C) Carotenoids Active ingredients Marine PUFAs Microbial PUFAs
Slide 32: Growth 2016-2018 in Animal Nutrition | Continued outperformance
Growth 2016-2018 in Animal Nutrition | Continued outperformance Animal Nutrition Key actions driving profitable growth Double-digit growth from feed enzymes and eubiotics solutions, tailored to local conditions / requirements ~3-4%1 Growth in underpenetrated species (aqua, pet, dairy) Leverage
Slide 33: Animal Nutrition has a complete portfolio of targeted feed ingredients
Animal Nutrition has a complete portfolio of targeted feed ingredients and has further growth opportunities beyond the historical core area of poultry Animal Nutrition market by product (excl. premix) Animal Nutrition application landscape1 (x) = Growth rate 2016-18 (CAGR, %) Carotenoids (2-3%) DSM
Slide 34: Growth 2016-2018 in Human Nutrition | Step-up to above market growth
Growth 2016-2018 in Human Nutrition | Step-up to above market growth Human Nutrition Key actions driving profitable growth Repair growth in North-America, returning Dietary Supplements (Vitamins, Omega-3) and F&B to growth Continued double-digit growth of i-Health business ~3%1 Accelerating fo
Slide 35: Human Nutrition is leading in nutritional ingredients
Human Nutrition is leading in nutritional ingredients and has ample opportunities to further expand in a diversified application landscape Specialty Food Ingredients market and growth by product Diversified application landscape2 (x) = Growth rate 2016-18 (CAGR, %) Color Preservation DSM market Fort
Slide 36: Growth 2016-2018 in Food Specialties
Growth 2016-2018 in Food Specialties | All segments strongly contributing to growth aspirations of Nutrition Food Specialties Market Growth DSM Growth 2016-2018 2016-2018 Savory 3-4% 3-4% ~5%1 Cultures & 5-6% 6-7% Enzymes Hydrocolloids 3-4% 7-8% Market DSM 2016-18 Sweetener2 >10% platform 1 CAGR % 2
Slide 37: Materials end market segments offer growth options
Materials end market segments offer growth options enhanced by substitution based on application development capabilities Personal Com. Marine High Perf. Sustainable Automotive Electronics Protection & Sport Textiles Coatings (B&C)2 Replace metals & hazardous materials Replace steel/aluminum & arami
Slide 38: Differentiated approach has led to a more attractive Materials portfolio
Differentiated approach has led to a more attractive Materials portfolio, with a higher growth and returns profile High Accelerated Functional growth Materials Aspirations 2018 underpinning High-Performance Group targets Growth PA6 Plastics Solar Compounds Biomedical Annual EBITDA growth: high sin
Slide 39: Materials expects to grow sales above market growth
Materials expects to grow sales above market growth1 Materials1 Key actions driving profitable growth Engineering Plastics Highly specified application development for global customers in High Performance Plastics’ ‘winning’ segments Continue to grow by leveraging global presence and footprint i
Slide 40: Innovation Center supports innovation in core businesses and develops new Emerging Business Areas
Innovation Center supports innovation in core businesses and develops new Emerging Business Areas Innovation Center Aspirations underpinning Group targets Core Business Support and Growth Support innovation in core businesses to facilitate earnings growth beyond 2018 Center of Venturing Incubator
Slide 41: DSM expects to extract significant value from its partnerships
DSM expects to extract significant value from its partnerships in the coming years - DSM share 50% 49% 35% DSM Sinochem Pharmaceuticals Patheon Pharma ChemicaInvest Antibiotics Contract Manufacturing Bulk Chemicals €m at 100% FY 2015 €m at 100% FY 2015 €m at 100% FY 2015 Sales 429 Sales 1,814 Sales
Slide 42: DSM is stepping up its sustainability aspirations
DSM is stepping up its sustainability aspirations Global sustainability agenda linked to DSM businesses / competences Sustainability aspirations 2010 20151 2020 Malnutrition Climate Change & Energy Dow Jones Sustainability Gold Gold Gold Index Class Class Class Addressing Deficiencies Circular E
Slide 43: Wrap up Strategy 2018
Wrap up Strategy 2018 Committed to Committed to Drive Shareholder Value Maintain a strong balance sheet Above market growth Extract value from Joint Ventures Cost reductions and efficiencies Improve operating cash flows High single-digit EBITDA growth Capital efficiency Page 42
Slide 44: DSM's IR App @your service
DSM’s IR App @your service Download the mobile app at Apple’s App store and Google Play DSM Investor Relations released its Investor Relations App for iPhone, iPad and Android mobile devices. The App is available for free at Apple’s App Store for the iPhone and iPad and at Google Play for Android mo
Slide 45: Slide 45