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Dsm-firmenich — Royal DSM — Investor Day (November 2015)

46 slides from Dsm-firmenich's investor day presentation, Nov 4, 2015

  1. Slide 1: DSM Strategy 2018: Driving Profitable Growth in Nutrition

    DSM STRATEGY 2018 Driving Profitable Growth In Nutrition Feike Stephan Sijbesma B. Tanda - CEO [Draft Member Version of the 29 (15.00 Managing hour) Board - 10 -2015 ] Version 0; 21 September 2015 Presentation Geraldine Matchett, CFO [classification: secret] 4 November 2015 ROYAL DSM CAPITAL MARKETS

  2. 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

  3. Slide 3: Agenda

    Agenda 1• Nutrition Strategy 2018 2• Growth Strategies:  Animal Nutrition & Health  Human Nutrition & Health  Food Specialties •3 Wrap-up Slide 2

  4. Slide 4: Global Products & Local Solutions

    Global Products & Local Solutions  Global leader in nutrition, with broadest portfolio of specialty nutritional ingredients, global presence and an unparalleled local network  DSM is uniquely positioned in all steps of the value chain: the production of pure active ingredients, their incorporation

  5. Slide 5: Nutrition portfolio is resilient with limited exposure to single product or customer

    Nutrition portfolio is resilient with limited exposure to single product or customer Top-10 represents <40% of Nutrition profit in 2015 Largest customers by sales in 2015  Product range includes ~100 product lines  Largest customer less than 3% of Other  Largest profit contributor less Nutrition

  6. Slide 6: Nutrition Strategy 2018

    Nutrition Strategy 2018  Profitable growth via: Aspirations 2018 •1 Expanding the core •2 New products and solutions 2  Above-market sales growth •3 Growing in underpenetrated (at stable prices) categories / regions  High single-digit annual •4 Accessing new segments/ EBITDA growth new business m

  7. Slide 7: Improved financial returns in Nutrition supported by cost savings and operational excellence

    Improved financial returns in Nutrition supported by cost savings and operational excellence Savings in Nutrition Improvement Sales Stimulation Program Support Functions Program  Simplification of the front-  Lower cost for support  Drive purchasing savings end operating model functions & functio

  8. Slide 8: Improved financial returns in Nutrition supported by cost savings and operational excellence

    Improved financial returns in Nutrition supported by cost savings and operational excellence Savings in Nutrition Improvement Sales Stimulation Program Support Functions Program  Simplification of the front-  Lower cost for support  Drive purchasing savings end operating model functions & functio

  9. Slide 9: Nutrition improvement program: €130-150m EBITDA contribution by 2018

    Nutrition improvement program: €130-150m EBITDA contribution by 2018 Cost improvements – €130-150m (vs. 2015)  Purchasing savings related to direct raw Purchasing Savings materials, energy, and indirect spend Efficiency Gains  Fixed cost reductions, including ~100 FTE Fixed Cost  Higher Rates and

  10. Slide 10: Rigorous effort undertaken to realize gains across all major manufacturing sites

    Rigorous effort undertaken to realize gains across all major manufacturing sites Fixed Cost Yields Energy Rate Total What Dalry  Increased yields, upgrading side streams  Higher throughput / rates Kingstree  Higher uptime / availability Lalden  Increasing energy efficiencies Sisseln How Belvider

  11. Slide 11: Driving working capital reduction

    Driving working capital reduction Reduced Operating Reduction Integrated Working Capital % of Inventories Business Planning A Optimizing distribution A Designing and 40% and transportation implementing end-to-end network worldwide planning, aligning financial and physical B Mapping and streamlining

  12. Slide 12: Third profit-growth pillar for Nutrition is sales stimulation & organic growth

    Third profit-growth pillar for Nutrition is sales stimulation & organic growth Savings in Nutrition Improvement Sales Stimulation Program Support Functions Program  Simplification of the front-  Lower cost for support  Drive purchasing savings end operating model functions & functional excellence

  13. Slide 13: Strategy 2018: Growth supported by disciplined investments in new capacities

    Strategy 2018: Growth is supported by disciplined investments in new capacities, downstream market access and limited, bolt-on M&A CAPEX Nutrition (€m) Investing for growth ~6.5% of sales 600 Various creep projects Expansion Aroma ingredients existing Meg-3 concentrates 400 Savory flavors i-Health 2

  14. Slide 14: Agenda

    Agenda 1• Nutrition Strategy 2018 2• Growth strategies:  Animal Nutrition & Health  Human Nutrition & Health  Food Specialties 3 Wrap-up Slide 13

  15. Slide 15: Animal Nutrition & Health

    Animal Nutrition & Health Slide 14

  16. Slide 16: Animal Nutrition has a complete portfolio of targeted feed ingredients

    Our 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, %) DSM market Caroteno

  17. Slide 17: Strategy 2010-2015 built a unique position in Animal Nutrition & Health

    Strategy 2010-2015 built a unique position in Animal Nutrition & Health Geographic expansion (premix network) Acquired Tortuga Extended value chain New animal R&D center Expand Broadened Coreportfolio 1 Slide 16

  18. Slide 18: Strategy 2018: Profitable growth in Animal Nutrition & Health

    Strategy 2018: Profitable growth in Animal Nutrition & Health New products /solutions 2 Expand the core 1  Enzymes  Geographic expansion premix  Eubiotics network  Tailored solutions 2  Maximize growth & value in core products (poultry, swine) New products & solutions Underpenetrated species 3

  19. Slide 19: Expanding the core: Further geographic expansion of unique premix network

    Expanding the core: Further geographic expansion of unique premix network Premix regions targeted for expanding the core Slide 18

  20. Slide 20: New solutions: Feed enzymes and eubiotics tailored to local needs

    New solutions: Feed enzymes and eubiotics solutions tailored to meet the specific, local needs of animal protein producers  Strong alliance with Novozymes, global leader in feed enzymes  Leader in Eubiotics for animal gut health  Double sales in 5 years via – next generation enzymes and eubiotics

  21. Slide 21: Grow in underpenetrated species: Ruminants, Aqua and Pet

    Grow in underpenetrated species: Ruminants, Aqua and Pet 3-4% 6-7% 7-8% CAGR growth CAGR growth CAGR growth 2016-2018 2016-2018 2016-2018 Ruminants Aqua Pet  Expansion of Tortuga model  Health solutions, reducing  Demand for high value, high outside Brazil mortality rate: quality pet food for whi

  22. Slide 22: Drive growth via penetration of new customer segments with new channels

    Drive growth via penetration of new customer segments with new channels: developing dedicated new brand of premix for mid-sized farms in China1 100% integrators  traditional B2B, focused on integrators & feed mills & feed mills productivity through straights & (>10,000 pigs) concentrates 75% larger

  23. Slide 23: Sustainable innovations: algae-based Omega-3 for animal nutrition

    Sustainable innovations: Setting the new industry standard for algae-based Omega-3 fatty acids for animal nutrition  Fish oil supply / demand gap creates opportunity for algae-based Omega 3  Alliance to develop high value solution  Set an industry standard for aqua feed  Market development along

  24. Slide 24: Sustainable innovations driving tomorrow's growth: CleanCow

    Sustainable innovations driving tomorrow’s growth: CleanCow Slide 23

  25. Slide 25: CleanCow tackling climate change and increasing productivity

    CleanCow tackling climate change and increasing productivity Methane sources  Ruminants are significant source of methane Rice fields 10%  CleanCow, a proprietary special feed ingredient Fossil Fuels – reduces methane emissions by 25-30% 29% – increases performance (protein yield, weight gain, Rum

  26. Slide 26: Growth 2016-2018 in animal nutrition: Continued outperformance

    Growth 2016-2018 in animal nutrition: Continued outperformance Animal Nutrition1 Key actions driving profitable growth 92  Double-digit growth from feed enzymes and eubiotics 5 solutions, tailored to local conditions / requirements 3  Growth in underpenetrated species (aqua, pet, dairy)  Leverage

  27. Slide 27: Human Nutrition & Health

    Human Nutrition & Health Slide 26

  28. Slide 28: Our Human Nutrition is leading in nutritional ingredients

    Our 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 Color Preservation (x) = Growth rate 2016-18 (CAGR, %) Fortified (

  29. Slide 29: Strategy 2010-2015 built a strong core in Human Nutrition & Health

    Strategy 2010-2015 built a strong core in Human Nutrition & Health Successful M&A broadening product range: algea-based Omega- 3 & Omega-6 (Martek), marine-based Omega-3 (ONC) Introduced new products (natural carotenoids, Oatwell, Tolerase, ...) Extended value chain presence (Fortitech) Built re

  30. Slide 30: Strategy 2018: Profitable growth in Human Nutrition & Health

    Strategy 2018: Profitable growth in Human Nutrition & Health New products /forms 2 Expand the core 1  Vitamin Forms  Repair Growth in North America  Fermentation based coloration  i-Health  New Lipids / Meg3 2  Premix  New Nutritional ingredients  Leverage Vitamin C acquisition New products

  31. Slide 31: Expand the core: Repair Growth in North America

    Expand the core: “Repair Growth” in North America Example: Bayer PRO1 branded launch of Ultra Example: Leveraging Vitamin C acquisition Omega-3 is renewing the category  Vitamin C is largest vitamin for Human Nutrition  Integration of Alland well advanced  Acquisition allows us to access a broade

  32. Slide 32: Expand the core: Continue rapid growth of i-Health unit

    Expand the core: Continue rapid growth of i-Health unit (18% CAGR over 2011-2015) US$ m sales  #1 positions in North America in probiotics, urinary health, menopause symptom relief, and vegetarian $250 Omega 3  Continue to drive strong growth from base brands, and $200 category expansion (bladder

  33. Slide 33: New products / forms: Fermentation-based coloration

    New products / forms: Fermentation-based coloration  Global trend towards non-artificial coloration  DSM’s fermentation competences can replace artificial dyes technology  Create winning portfolio by adding natural red and blue to beta-carotene yellow Slide 32

  34. Slide 34: New products / forms: New Lipids/Meg3

    New products /forms: New Lipids/Meg3  Increased market share in F&B, dietary supplements and registered pharma intermediates  Enabled by new technology (Mulgrave facility) with significantly lower cost for Omega-3 concentrates, up to 85%  Ability to precisely tailor EPA and DHA levels  Also for

  35. Slide 35: New product examples: Oatwell, Fruitflow, Tolerase G

    New product examples: Oatwell® Fruitflow™ Tolerase® G (GlutnGo™)  Oatwell® helps lower cholesterol levels and control blood glucose  Fruitflow™ the first natural, scientifically substantiated solution contributing to healthy blood flow  Tolerase®G (GlutnGo™) helps digest gluten Slide 34

  36. Slide 36: Grow forward solutions space: Retail-ready solutions

    Grow forward solutions space: Retail-ready solutions  Retail-ready solutions for both brands and private label  Capture greater share of value chain through providing one stop shop at highest quality  Building mutually beneficial relationships with customers who are also suppliers Slide 35

  37. Slide 37: Grow forward solutions space: Forward solutions in Premix

    Grow forward solutions space: Forward solutions in Premix  Simplifying operations for customers with 14 facilities on 6 continents  Complete product solutions with micro- and macro- nutrients, flavors, texture, sweeteners and colors  Packaged in different sizes in sachets, cans, jugs and pouches

  38. Slide 38: Grow forward solutions space: Sustainable solutions targeting Malnutrition

    Grow forward solutions space: Sustainable solutions targeting Malnutrition  Micronutrient powders, easy to add to foods, reducing micronutrient deficiencies  Complementary foods for pregnant and breastfeeding mothers and for older infants  Africa Improved Foods JV, initially targeting Rwanda and

  39. Slide 39: Examples of new customer segments: High-potency Pharma intermediates

    Examples of new customer segments: High-potency Pharma intermediates  Actively pursue Drug Master Files for wide range of actives with limited investment  Multiple examples – Biotin – multiple sclerosis – Omega 3 – triglycerides – High potency versions of Vitamin D3, folate, … Slide 38

  40. Slide 40: Delivering on growth with disciplined sales & marketing execution

    Delivering on growth with disciplined sales & marketing execution Simplification of Front End Focused Segment Teams Driving Delivery at Customers Operating Model Tailored Local Solutions  Final step of integrating the four  From product to segment  Distribution partners for small businesses marke

  41. Slide 41: 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 Nutrition1 Key 2016-2018 actions driving profitable growth  Repair growth in North-America, returning Dietary Supplements (Vitamins, Omega-3) and F&B to growth 2-3  Continued double-digit growth of i-Health business 1  Acce

  42. Slide 42: Strategy 2018: Specialty Food Ingredients to continue its growth path

    Strategy 2018: Specialty Food Ingredients to continue its growth path New products /solutions 2 Expand the core 1  Hydrocolloids (gellan & pectin)  Enzymes growth and capacity  Sugar reduction solutions (Enzymes, expansion fermented Stevia) 2  Cultures growth  Dairy platform (texture, taste) 

  43. Slide 43: All segments strongly contributing to growth aspirations of Nutrition

    All segments strongly contributing to growth aspirations of Nutrition Market Growth DSM Growth Food Specialities1 2016-2018 2016-2018 Savory 3-4% 3-4% 5-6 4 Cultures & 5-6% 6-7% Enzymes Hydrocolloids 3-4% 7-8% Market DSM Market DSM Sweetener2 2011-15 2016-18 >10% platform 1 At steady prices, CAGR %

  44. Slide 44: Agenda

    Agenda 1• Nutrition Strategy 2018 2• Growth strategies:  Animal Nutrition & Health  Human Nutrition & Health  Food Specialties •3 Wrap-up Slide 43

  45. Slide 45: Driving Profitable Growth in Nutrition with Global Products & Local Solutions

    Driving Profitable Growth in Nutrition with Global Products & Local Solutions Higher growth rates Improved financial returns  Above-market sales growth (at stable prices)  High single-digit annual EBITDA growth  EBITDA margins: 18-20% over the period  Annual ROCE growth: high double-digit bps in

  46. Slide 46: Bright Science. Brighter Living.

Royal DSM — Investor Day (November 2015) on 6ix