Slide 1: Presentation to Investors
Life Sciences and Materials Sciences Presentation to Investors Q3 Results 2013, 5 November 2013 Page
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 Q3 2013
Highlights Q3 2013 DSM maintains positive momentum in challenging markets • DSM records 27% higher Q3 EBITDA compared to Q3 2012 (€342 million versus €270 million) • Life Sciences EBITDA up 23% from Q3 2012 • Materials Sciences EBITDA up 27% from Q3 2012 • Q3 cash flow from operating activities €310
Slide 4: Quote from Feike Sijbesma
Quote from Feike Sijbesma “I am pleased to report increased profitability in all our business clusters despite the initial impact from adverse currency movements and a continued challenging macro-economic environment. Nutrition continued its good performance notwithstanding some headwinds that emerg
Slide 5: Results Q3 2013 - Key figures
Results Q3 2013 - Key figures Q3-2013 Q3-2012 % (€(€ million) YTD-2013 YTD-2012 % Before exceptional items: 2,397 2,304 +4% Net Sales 7,241 6,862 +6% 342 270 +27% EBITDA 998 866 +15% 206 147 +40% EBIT 598 515 +16% 148 111 +33% Core net profit 433 378 +15% 136 103 +32% Net profit 398 362 +10% 0.86 0.
Slide 6: EBITDA Q3 – DSM continuing business
EBITDA Q3 – DSM continuing business EBITDA (€ million) Q3-2013 Q3-2012 Q3-2011 Q3-2010 Nutrition 242 202 176 167 Pharma 12 4 13 7 Performance Materials 84 72 77 72 Polymer Intermediates 28 16 109 46 Innovation Center -4 -4 -14 -10 Corporate Activities -20 -20 -22 -14 DSM 342 270 339 268 Page 5
Slide 7: EBITDA YTD Q3 – DSM continuing business
EBITDA YTD Q3 – DSM continuing business EBITDA (€ million) YTD-2013 YTD-2012 YTD–2011 YTD-2010 Nutrition 706 589 542 521 Pharma 34 26 25 35 Performance Materials 246 228 250 227 Polymer Intermediates 83 115 301 156 Innovation Center -11 -29 -40 -36 Corporate Activities -60 -63 -75 -18 DSM 998 866 1,
Slide 8: Net sales growth Q3-2013 versus Q3-2012
Net sales growth Q3-2013 versus Q3-2012 Price/ (€ million) Q3-2013 Q3-2012 Diff. Volume FX Other Mix Nutrition 1,061 945 12% 5% -3% -4% 14% Pharma 183 172 6% 6% 4% -4% Performance Materials 700 703 0% 6% -2% -3% -1% Polymer Intermediates 374 384 -3% 3% -3% -3% Innovation Center 36 35 3% 0% 6% -3% Co
Slide 9: Nutrition
Nutrition Q3-2013 Q3-2012 % (€ million) YTD-2013 YTD-2012 % 1,061 945 12% Net sales 3,157 2,744 15% 2% Organic growth 1% 242 202 20% EBITDA 706 589 20% 22.8% 21.4% EBITDA margin 22.4% 21.5% 185 154 20% EBIT 539 456 18% Capital employed 4,682 4,122* * year-end 2012 • Sales in Q3 rose 12% compared to
Slide 10: Nutrition - continued
Nutrition - continued • Human Nutrition & Health delivered 5% organic growth compared to Q3 2012, mainly driven by volume. Compared to the previous quarter, organic sales development was -5% driven by the soft demand faced by Food & Beverage customers in developed markets. Moreover, demand for fish
Slide 11: Pharma
Pharma Q3-2013 Q3-2012 % (€ million) YTD-2013 YTD-2012 % 183 172 6% Net sales 548 529 4% 10% Organic growth 6% 12 4 200% EBITDA 34 26 31% 6.6% 2.3% EBITDA margin 6.2% 4.9% 0 -8 EBIT -5 -20 Capital employed 819 766* * year-end 2012 • Organic sales growth was 10% compared to Q3 2012, mainly driven by
Slide 12: Performance Materials
Performance Materials Q3-2013 Q3-2012 % (€ million) YTD-2013 YTD-2012 % 700 703 0% Net sales 2,087 2,117 -1% 4% Organic growth 2% 84 72 17% EBITDA 246 228 8% 12.0% 10.2% EBITDA margin 11.8% 10.8% 50 39 28% EBIT 145 129 12% Capital employed 2,007 2,026* * year-end 2012 • Organic sales growth was 4% c
Slide 13: Polymer Intermediates
Polymer Intermediates Q3-2013 Q3-2012 % (€ million) YTD-2013 YTD-2012 % 374 384 -3% Net sales 1,186 1,203 -1% 0% Organic growth 0% 28 16 75% EBITDA 83 115 -28% 7.5% 4.2% EBITDA margin 7.0% 9.6% 18 6 200% EBIT 55 91 -40% Capital employed* 583 447* * year-end 2012 • Organic sales development was in li
Slide 14: Innovation Center
Innovation Center Q3-2013 Q3-2012 % (€ million) YTD-2013 YTD-2012 % 36 35 3% Net sales 111 69 61% 6% Organic growth 12% -4 -4 EBITDA -11 -29 -14 -14 EBIT -39 -45 Capital employed* 567 507* * year-end 2012 • The sales level of the Innovation Center was the same as in 2012. Following the completion of
Slide 15: Cash flow
Cash flow Cash Flow OWC development Q3’11 – Q3’13 YTD’13 YTD’12 (€ million) OWC (€m) % OWC/Sales (right axis) Cash from operating 463 547 3000 30% activities Cash from investing -907 -1,137 activities* 2000 20% Free cash flow from -444 -590 operations * Excluding changes in fixed-term deposits 1000
Slide 16: Overview
Overview • Operational performance Q3 2013 • Business Conditions & Outlook • Annex: Highlights Capital Markets Day Page 15
Slide 17: Business Conditions
Business Conditions Nutrition - Feed Nutrition - Food Pharma • Recovery in animal protein • Favorable conditions for • Ongoing challenging market remains fragile creating Infant Nutrition and Food market conditions price pressure esp. in Vitamin E Specialties • Usual uneven delivery • Poultry and Aq
Slide 18: 2013 Outlook: Unchanged
2013 Outlook: Unchanged • The challenging macro-economic environment experienced during the first three quarters of 2013 continues, with little or no growth in Europe. Asia continues to show good levels of economic activity, though at more modest levels, while the US maintains a modest rate of recov
Slide 19: Wrap-up
Thi s im Wrap-up • Good Q3 results in a continued challenging macro-economic environment: – 27% higher EBITDA vs Q3 ’12, with increased profitability in all clusters – Nutrition accounts for about 70% of Group EBITDA • Good results in Nutrition, despite temporary headwinds – EBITDA up 20% – EBITDA m
Slide 20: Overview
Overview • Operational performance Q3 2013 • Business Conditions & Outlook • Annex: Highlights Capital Markets Day Page 19
Slide 21: DSM in motion: driving focused growth
DSM in motion: driving focused growth Page 20
Slide 22: Strong strategic progress
Strong strategic progress • Divestments of base chemicals activities Significant transformation with total €1.5bn sales and €0.2bn (Sales Breakdown %) EBITDA (2007) at good multiples (total divestment proceeds ~€1.2bn) • Portfolio significantly transformed: €2.4bn in value enhancing acquisitions in
Slide 23: Shift to higher quality earnings
Shift to higher quality earnings Majority of sales are now to end-markets with lower macro-dependency * 2012 sales plus pro forma sales M&A Page 22
Slide 24: Our growth drivers are compelling
Our growth drivers are compelling High Growth Innovation Sustainability Acquisitions & Economies Partnerships From From From From ‘reaching out’ ‘building the responsibility portfolio machine’ transformation to to to to becoming doubling the business driver growth truly global output Page 23
Slide 25: The new DSM has become truly global
The new DSM has become truly global • DSM has broadened its international presence, capturing greater mega trend opportunities • ~40% of DSM’s total sales are now sold into High Growth Economies • ~60% of DSM’s growth since CSD 2010 announcement came from High Growth Economies • Organizational moves
Slide 26: HGE strong enabler of growth ambitions
HGE strong enabler of growth ambitions • Expand presence in High Growth Economies, including Africa • Cultivate synergies of the 2011-2012 acquisitions which provide an enlarged product/service pipeline for HGE • Continue to strengthen local R&D, innovation and application development capability • F
Slide 27: Innovation underpins further growth & profit
Innovation underpins further growth & profit DSM well on track to deliver on its 20% Innovation sales target by 2015 Innovation strongly contributes to DSM’s sales growth and EBITDA growth with on average >5% higher gross margins Initially 4 new Emerging Business Areas were launched, of which 2 have
Slide 28: Sustainability as a strong business driver
Sustainability as a strong business driver • Share of ECO+ solutions in running portfolio increased from ~34% (CSD 2010) to 43% in 2012 • ECO+ solutions offer clear ecological benefits • Data from DSM Engineering Plastics and DSM Resins & Functional Materials show for their businesses (period 2010-
Slide 29: Acquisitions: attractive shareholder value
Acquisitions: attractive shareholder value Acquisition EV NPV • DSM acquired for €2.8bn in total, at an average EV/EBITDA multiple < 9 Martek € 730m € 1.4bn • Exciting synergies achieved at ‘Martek’: – Martek sales grew by ~15%/year since acquisition – Combination of Martek and ONC (algae-based and
Slide 30: Updated 2015 targets
Updated 2015 targets Profit targets 2015 • EBITDA margin (%) 14% - 15% • ROCE 11% - 12% Sales target 2015 • Organic sales growth 5%-7% annually • China sales towards US$ 3bn • High Growth Economies sales about 45% of total sales • Innovation sales 20% of total sales • ECO+ sales towards 50% of total
Slide 31: Nutrition: continued value growth
Nutrition: continued value growth Targets: • EBITDA margin 20% - 23% • Sales growth GDP+ 2% Key focus until 2015: • Drive continued organic growth: • Macro trends • Unique business model (with a broad, deep and global portfolio) • Additional focus on HGEs • Expand in B2C / i-Health • Selected invest
Slide 32: Unique business model: global & local capabilities
Unique business model: global & local capabilities FROM Actives Forms Premix TO Active Access & Forms Solutions Ingredients insights GLOBAL PRODUCER + LOCAL SOLUTION PROVIDER Broad, global Maximum Premixes: from channel- Proprietary access to Portfolio of Actives: Differentiation through to- market
Slide 33: Performance Materials: Upgrade portfolio
Performance Materials: Upgrade portfolio Via differentiated strategy: • Accelerate: Accelerate growth in highly innovative markets to fully benefit from megatrends • Strengthen: Combine sustainable innovation sales growth with margin optimization programs • Restructure: Composite Resins Page 32
Slide 34: Drivers to improve performance
Drivers to improve performance Improve performance by upgrading the portfolio, leveraging 3 drivers: 1. Megatrends 2. Differentiated strategies to capture PIP profitable growth 3. Profit Improvement Program Strategy Targets Performance Materials Cluster: Megatrends • EBITDA margin 13% - 15% • Sales
Slide 35: Pharma & Polymer Intermediates
Pharma & Polymer Intermediates Pharma Polymer Intermediates Key focus until 2015: Key focus until 2015: • For anti-infectives business • Explore opportunities to reduce the • Continue to strengthen the core exposure to the merchant business caprolactam markets • Continue to upgrade the portfolio • R
Slide 36: Preparing for the next phase of growth
Preparing for the next phase of growth For the period 2013 – 2015, we will strongly focus on: 1) Completing the strategic actions set in 2010 2) Improving operational performance to align returns and margins profile with transformed business portfolio This will mean: 1) Continued value growth in Nut
Slide 37: Bright Science. Brighter Living.