Slide 1: Presentation to investors 9M 2017 results
Presentation to investors 9M 2017 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 rea
Slide 3: Highlights YTD 2017
Highlights YTD 2017 ▪ Strong performance in Q3, contributing to very good first nine months ▪ Sales up 9% to €6,456m, with 8% organic growth ▪ Adjusted EBITDA up 15% to €1,086m, driven by both Nutrition and Materials ▪ ROCE up 170 bps to 12.3% ▪ Adjusted Net profit up 29% to €504m ▪ Total Net profit
Slide 4: Highlights Q3 2017
Highlights Q3 2017 ▪ DSM reports another strong quarter in Q3 ▪ Sales up 7% to €2,136m, with 10% organic growth ▪ Adjusted EBITDA up 13% to €365m ▪ Nutrition: 8% organic sales growth; Adjusted EBITDA up 12% ▪ Materials: 9% volume growth; Adjusted EBITDA up 8% Page 3
Slide 5: Quote from CEO Feike Sijbesma
Quote from CEO Feike Sijbesma ▪ “We are pleased to report another strong quarter, resulting in a very good performance during the first nine months. Nutrition and Materials once again delivered organic growth rates well above their respective markets, with particularly good volume growth. These resu
Slide 6: Group | Key financials
Group | Key financials January - September in € million 2017 2016 % Change Q3 2017 Q3 2016 % Change Sales 6,456 5,905 9% 2,136 1,998 7% Adjusted EBITDA (cont.operations) 1,086 947 15% 365 323 13% Adjusted EBITDA margin 16.8% 16.0% 17.1% 16.2% ROCE (%) 12.3% 10.6% Adjusted net profit, cont. oper. 504
Slide 7: Group | Net sales development
Group | Net sales development January - September in € million 2017 2016 % Change Volume Price/mix FX Other Sales 6,456 5,905 9% 7% 1% 1% 0% Nutrition 4,151 3,848 8% 6% 1% 1% 0% Materials 2,132 1,874 14% 8% 5% 0% 1% Innovation Center 126 126 Corporate Activities 47 57 in € million Q3 2017 Q3 2016 %
Slide 8: Group | EBITDA development
Group | EBITDA development January - September in € million 2017 2016 % Change Q3 2017 Q3 2016 % Change Adjusted EBITDA (cont.operations) 1,086 947 15% 365 323 13% Nutrition 786 693 13% 258 231 12% Materials 369 330 12% 128 118 8% Innovation Center 5 2 4 1 Corporate Activities -74 -78 -25 -27 Page 7
Slide 9: Nutrition | Sales overview
Nutrition | Sales overview Sales bridge | 9M 2016 to 9M 2017 Sales bridge | Q3 2016 to Q3 2017 4,151 1% 0% -1% 1% -3% 1,373 0% 9% 6% 3,848 1,303 ytd Q3 Volume Price/mix FX Other ytd Q3 Q3 2016 Volume Price/mix FX Other Q3 2017 2016 2017 ▪ Nine months 2017 sales: Nutrition performed strongly as its g
Slide 10: Nutrition | Key financials
Nutrition | Key financials January - September in € million 2017 2016 % Change Q3 2017 Q3 2016 % Change Sales 4,151 3,848 8% 1,373 1,303 5% Adjusted EBITDA 786 693 13% 258 231 12% Adjusted EBITDA margin (%) 18.9% 18.0% 18.8% 17.7% Adjusted EBIT 575 485 19% 192 159 21% Capital Employed 5,292 5,384 Av
Slide 11: Animal Nutrition & Health | Sales overview
Animal Nutrition & Health | Sales overview Sales bridge | 9M 2016 to 9M 2017 Sales bridge | Q3 2016 to Q3 2017 1,921 0% 2% 0% -4% -3% 658 14% 0% 8% 1,753 615 ytd Q3 Volume Price/mix FX Other ytd Q3 Q3 Volume Price/mix FX Other Q3 2016 2017 2016 2017 ▪ Nine months 2017 sales: 8% organic growth fully
Slide 12: Human Nutrition & Health | Sales overview
Human Nutrition & Health | Sales overview Sales bridge | 9M 2016 to 9M 2017 Sales bridge | Q3 2016 to Q3 2017 1,496 1% 0% 1% 4% -4% 477 0% 6% 5% 1,388 454 ytd Q3 Volume Price/mix FX Other ytd Q3 Q3 Volume Price/mix FX Other Q3 2016 2017 2016 2017 ▪ Nine months 2017 sales: 7% organic growth – Good sa
Slide 13: Materials | Sales overview
Materials | Sales overview Sales bridge | 9M 2016 to 9M 2017 Sales bridge | Q3 2016 to Q3 2017 2,132 0% 1% -3% 706 5% 5% 0% 8% 9% 1,874 634 ytd Q3 Volume Price/mix FX Other ytd Q3 Q3 Volume Price/mix FX Other Q3 2016 2017 2016 2017 ▪ Nine months 2017 sales – Volumes up 8% with strong growth in speci
Slide 14: Materials | Key financials
Materials | Key financials January - September in € million 2017 2016 % Change Q3 2017 Q3 2016 % Change Sales 2,132 1,874 14% 706 634 11% Adjusted EBITDA 369 330 12% 128 118 8% Adjusted EBITDA margin (%) 17.3% 17.6% 18.1% 18.6% Adjusted EBIT 275 234 18% 98 86 14% Capital Employed 1,811 1,798 Average
Slide 15: Innovation | Key financials
Innovation | Key financials January - September in € million 2017 2016 % Change Q3 2017 Q3 2016 % Change Sales 126 126 0% 42 43 -2% Adjusted EBITDA 5 2 4 1 Adjusted EBIT -29 -15 -17 -5 Capital Employed 552 553 ▪ Nine months 2017 sales showed strong growth in DSM Advanced Solar. DSM Biomedical is als
Slide 16: Corporate Activities | Key financials
Corporate Activities | Key financials January - September in € million 2017 2016 Q3 2017 Q3 2016 Sales 47 57 15 18 Adjusted EBITDA -74 -78 -25 -27 Adjusted EBIT -104 -103 -34 -35 ▪ Nine months 2017 Adjusted EBITDA slightly improved compared to the same period last year as a result of the contributio
Slide 17: Key joint ventures/associates | Financial overview
Key joint ventures/associates | Financial overview January - September in € million, based on 100% 2017 2016 % Change Q3 2017 Q3 2016 % Change DSM Sinochem Sales 321 329 -2% 104 103 1% Adjusted EBITDA% 14% 14% 12% 13% ChemicaInvest Sales 1,475 1,300 13% 479 408 17% Adjusted EBITDA% 9% 3% 13% 5% ▪ DS
Slide 18: Joint ventures/associates | Net result contribution
Joint ventures/associates | Net result contribution January - September in € million 2017 2016 Q3 2017 Q3 2016 DSM Sinochem (50%) 4 5 0 1 1 Patheon 7 -5 0 5 2 ChemicaInvest (35%) 0 -9 0 1 Other associates / joint ventures -18 -13 -4 -4 Total before APMs -7 -22 -4 3 APM adjustments 1,152 217 1,150 22
Slide 19: Cash flow and Working Capital | Overview
Cash flow and Working Capital | Overview Cash Flow, Capital Expenditures and Financing Average Working Capital % 40% January - September 9M 2016 9M 2017 in € million 2017 2016 Q3 2017 Q3 2016 30% 28.2% 27.3% Cash from Operating Activities 619 644 290 325 Total Working Capital 1,635 1,528 18.6% 18.6%
Slide 20: Net debt and ROCE | Overview
Net debt and ROCE | Overview Net debt ROCE 3,000 25% 9M 2016 9M 2017 20.2% 20% 17.7% 2,054 2,000 14.1% 15% 12.3% 12.1% 10.6% 10% 1,000 703 5% 0 0% 9M 2016 9M 2017 Total DSM Nutrition Materials ▪ Net debt €703 million compared to €2,054 million end of September 2016 – The decrease of €1,351 million w
Slide 21: CEO/CFO Keynote presentation
CEO/CFO Keynote presentation DSM Investor Event 2017 | 25 September 2017
Slide 22: DSM created a launch pad for growth in the period up to Strategy 2018
DSM created a launch pad for growth in the period up to Strategy 2018 ▪ Implemented important transformation steps – from Bulk Chemicals to specialty Nutrition and (bio-based) Materials ▪ Business portfolio streamlined and simplified ▪ Created good platform for growth – Nutrition: unique, global and
Slide 23: Focus areas identified to improve financial performance
Focus areas identified to improve financial performance ▪ Return to above market growth rates Market DSM Market DSM Market DSM Market DSM Market DSM Market DSM Market DSM Market DSM ▪ Recovery of Nutrition’s financial performance after Vitamin E and CHF EBITDA 2010 Price FX Acquisitions Growth/syner
Slide 24: 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 Adj. EBITDA growth: high single-digit percentage Cost & --- Productivity annual ROCE growth: C
Slide 25: Strategy 2018 | Initiatives to deliver improved financial results
Strategy 2018 | Initiatives to deliver improved financial results 1▪ Global organizational and operational adjustments 2▪ Outpace market growth through growth initiatives and innovation 3▪ Step up in sustainability aspirations 4▪ €250-300m cost reduction & efficiency improvements 5▪ Consistent impro
Slide 26: Strategy 2018 | Initiatives to deliver improved financial results
Strategy 2018 | Initiatives to deliver improved financial results 1▪ Global organizational and operational adjustments 2▪ Outpace market growth through growth initiatives and innovation 3▪ Step up in sustainability aspirations 4▪ €250-300m cost reduction & efficiency improvements 5▪ Consistent impro
Slide 27: Strengthened organization drives profitable growth
1 Strengthened organization drives profitable growth Global organizational and operational adjustments implemented ✓ ▪ Organization, people, culture addressed: – New strengthened top structure – New operating model - Leveraged support functions – People: building strong leaderships teams – Culture f
Slide 28: DSM is outpacing market growth
2 DSM is outpacing market growth All businesses are delivering on the growth initiatives ✓ Animal Nutrition organic growth Human Nutrition organic growth Materials volume growth 10% 10% 10% 9% 8% 8% 8% 7% 8% 6% 6% 6% 6% 6% 5% 4% 2-3% 5% 4% 2-3% 5% 4% ~3% 3% 4% 2% 5% 2% 2% 1% 2% 0% 0% 1% 0% 2011-15 M
Slide 29: Maintained well balanced growth drivers
2 Maintained well balanced growth drivers % sales to High Growth Economies % sales from Innovation 50% 30% 45% 40% 25% 35% 20% 30% 25% 15% 20% 44% ~45% 44% 24% 10% 20% 22% 15% 10% 5% 5% 0% 0% 2015 2018 2016 2017E 2015 2018 2016 2017E aspiration aspiration 1. Sales from products and applications intr
Slide 30: Innovation Center | Focused platform with deep value
2 Innovation Center | Focused platform with deep value Financial performance €m 2015 2016 2017 10 Innovation 5 1 Center 0 - -5 -9 EBITDA -10 30 -15 Emerging-2020 ▪ Adjusted EBITDA contribution Business -25 of the Emerging Business Areas Areas -3010 ~15 – €30m in 2018 - 0 ~5 EBITDA 0 ▪ Cost of global
Slide 31: Emerging Business Areas provide long-term growth platforms
2 Emerging Business Areas provide long-term growth platforms Biomedical Bio-based Products & Services Advanced Solar ▪ Kensey Nash acquisition ▪ Good progress made by POET- ▪ Good growth in anti-reflective successful; steady progress DSM Advanced Biofuels after a coatings despite market setbacks per
Slide 32: DSM has stepped up its sustainability aspirations
3 DSM has stepped up its sustainability aspirations1 Creating value for all stakeholders 65% 65% ▪ Brighter living ▪ GHG ▪ Energy ▪ 50% purchased ▪ Employee ▪ Safety: ▪ Leading in solutions 65% efficiency efficiency from engagement Frequency reporting of DSM improvements improvements renewable favor
Slide 33: Sustainability aspirations aligned with the Sustainable Development Goals
3 Sustainability aspirations are well aligned with the Sustainable Development Goals1 1. Please see DSM’s Integrated Annual Report 2016 for definitions and additional information Page 32
Slide 34: Sustainability focus drives innovative growth and positively impacts society
3 Sustainability focus drives innovative growth and positively impacts society Sustainable farming Low-carbon solutions DSM’s sustainable solutions are ideally Healthier, more Circular, low-carbon nutritious foods positioned to economy continue to profit from these trends Nutrition security/ Lower f
Slide 35: DSM is recognized for 'doing well by doing good'
3 DSM is recognized for ‘doing well by doing good’ ▪ Named #2 on Fortune Magazine’s Change the World list ▪ Leader Dow Jones Sustainability Index and Sustainalytics Page 34
Slide 36: Strategy 2018 | Identified initiatives to deliver improved financial results
Strategy 2018 | Identified initiatives to deliver improved financial results 1▪ Global organizational and operational adjustments 2▪ Outpace market growth through growth initiatives and innovation 3▪ Step up in sustainability aspirations 4▪ €250-300m cost reduction & efficiency improvements 5▪ Consi
Slide 37: Cost reduction and efficiency improvement programs rigorously executed
4 Cost reduction and efficiency improvement programs rigorously executed €250-300m cost reduction & efficiency improvements fully on track ✓ Actions Cost savings Total €250-300m by 2018 ▪ Support functions & services program near finalization Nutrition Program ▪ Nutrition-specific Improvement Progra
Slide 38: DSM-wide support functions efficiency program on track
4 DSM-wide support functions efficiency program on track Progress (%) Remarks Achieved by end of H1 2017 Remaining 2017/ Run Rate EoY ▪ Shared Services Improvement Plan completed, incl. shift of most activities to Global Service Centre in Support India Funct. Finance 70 30 ▪ Finance Regions staffed
Slide 39: Nutrition-specific improvement program running well
4 Nutrition-specific improvement program running well Cost improvements Work streams closely monitored and on track Current status as per end H1 2017: Actions Financial benefits Purchasing ▪ Purchasing savings so far Efficiency Purchasing exceeding target gains (Yield & Energy) Fixed cost ▪ Cost red
Slide 40: One-time costs within budget
4 One-time costs within budget Timing of cumulative cost savings One-time costs €m €m 350 Realized Forecast 250 Realized Forecast 300 200 250 ~190 150 200 150 100 ~110 100 ~50 50 ~80 ~80 50 ~25 0 0 2015 2016 2017E 2018E 2015 2016 2017 2018 Page 39
Slide 41: Disciplined approach to capital allocation maintained
5 Disciplined approach to capital allocation maintained Consistent improvements in capital allocation ✓ Cash capex (€m) Cash from operating activities (€m)1 x% Capex as % of sales 1,200 1,200 27% 1,000 1,000 1,018 ~6% ~6.5% ~6% ~6% 800 800 500-550 600 600 400 400 800 475 200 444 H1 200 250 2017 0 0
Slide 42: Ongoing actions to improve working capital level further
5 Ongoing actions to improve working capital level further Total working capital as % of sales Total working capital as % of sales (average) (average) per cluster 50% 50% 50% 45% 45% Nutrition 45% Materials 40% 40% 40% 35% 35% 35% 30% 30% 30% <20% 25% by 2018 25% 29.4% 28.1% 27.6% 25% 20% 20% 20% 15
Slide 43: Patheon transaction: realized cash proceeds of ~€1.5bn in 2017
6 Patheon transaction: realized cash proceeds of ~€1.5bn in 2017 Extracting value from partnerships ahead of schedule ✓ Exit 50% 35% €m, 100% 2015 2016 H1 2017 €m, 100% 2015 2016 H1 2017 €m, 100% 20151 2016 H1 2017 Sales 1,621 1,786 Sales 418 431 217 Sales 756 1,802 996 Adj. EBITDA % 23% 20% Adj. EB
Slide 44: DSM has been outperforming its headline financial targets
DSM has been outperforming its 2 headline financial targets… High single-digit percentage High double-digit basis point annual Adjusted EBITDA growth ✓ annual ROCE growth ✓ 17% 1,400 14% 170bps 1,200 12% 280bps 1,262 12.2% 1,000 16% 10% 1,075 10.4% 10.5% 800 8% 600 721 6% 7.6% 624 400 4% Adj. 200 2%
Slide 45: … with both businesses outperforming
… with both businesses outperforming Adjusted EBITDA (€m) ROCE (%) 13% 160bps 1,000 15% 170bps 931 13.9% 822 14% 10% 12.3% Nutrition 12.0% 500 10.3% 462 528 5% 0 0% 2015 1 2016 H1 2016 H1 2017 2015 1 2016 H1 2016 H1 2017 Adj. EBITDA % 16.6% 18.0% 18.2% 19.0% 25% 320bps 260bps 600 13% 20% 15% 19.5% 4
Slide 46: Full year 2017 outlook confirmed; aiming to continue growth in 2018
Full year 2017 outlook confirmed; aiming to continue growth in 2018 ▪ DSM confirms its EBITDA and ROCE outlook for 2017 as communicated with the Q2 financial results despite today’s slightly less favorable exchange rates – “DSM expects to deliver full-year 2017 results above the targets set out in i
Slide 47: What's next?
What’s next? ROYAL DSM HEALTH NUTRITION MATERIALS
Slide 48: DSM remains ideally positioned to profit from societal megatrends
DSM remains ideally positioned to profit from societal megatrends Climate & Energy Global shifts Health & & Digitization Wellness HEALTH . NUTRITION . MATERIALS BRIG HT SCIENCES Page 47
Slide 49: DSM is confident on further sales growth and EBITDA margin improvements
DSM is confident on further sales growth and EBITDA margin improvements Market growth Growth Adj. EBITDA margin Towards Nutrition 2-3% ~5% 20% Above Materials ~3% ~5% 15% Page 48
Slide 50: Upside will come from innovation-driven growth
Upside will come from innovation-driven growth Nutrition Materials Emerging Business Areas ▪ Fermentative ▪ ForTii® (HPPO ▪ 3D options (combine stevia polymer) Somos, Resins, ▪ Algae-based omega-3 Biomedical & ▪ Niaga® (recycle Engineering Plastics) for aquaculture carpets) ▪ Clean cow ▪ Decovery® (
Slide 51: Bring forward the strategy review process
Bring forward the strategy review process ▪ Key actions of Strategy 2018 are progressing well ▪ Financial results are well-ahead of the strategic targets ▪ Cash proceeds from Patheon came in earlier than expected ▪ DSM will bring forward its regular strategic review process for the period beyond 201
Slide 52: DSM will continue to drive profitable growth!
DSM will continue to drive profitable growth! ▪ Outlook 2017 confirmed ▪ Continued delivery in 2018 ▪ Confident DSM will continue to outgrow its markets through organic and innovation driven growth ▪ Optionality of enhanced growth through M&A ▪ Bring forward the regular strategic review process Page
Slide 53: Bright science. Brighter living.