Slide 1: Presentation to Investors Q2 2016 results
Presentation to Investors Q2 2016 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 Q2 2016
Highlights Q2 2016 DSM reports a second consecutive strong quarter in 2016 Group net sales up at €1,994 million, with 5% organic growth, and EBITDA up 18% Nutrition: organic sales growth of 9%, EBITDA up 14% Materials: volumes up 5%, EBITDA up 10% H1 Group ROCE: improved to 10.5% (H1 2015:
Slide 4: Quote from CEO Feike Sijbesma
Quote from CEO Feike Sijbesma “Our positive momentum from Q1 continued and we are pleased to deliver another strong quarter. This was driven by good growth across our businesses and steady progress in our operations. Furthermore, we remain on track with our ambitious group-wide improvement and cost
Slide 5: Key financials | Q2 2016 and H1 2016
Key financials | Q2 2016 and H1 2016 in € million Q2 2016 Q2 2015 % Change H1 2016 H1 2015 % Change Sales - Continuing Operations 1,994 1,965 1% 3,907 3,851 1% EBITDA - Continuing Operations 328 279 18% 6240 527 0 18% EBITDA margin - Continuing Operations 16.4% 14.2% 16.0% 13.7% EBIT - Continuing Op
Slide 6: Net sales development | Q2 2016
Net sales development | Q2 2016 in € million Q2 2016 Q2 2015 % Change Volume Price/mix FX Other Sales - Continuing Operations 1,994 1,965 1% 6% -1% -4% 0% Nutrition 1,295 1,247 4% 7% 2% -5% 0% Materials 640 664 -4% 5% -7% -2% Innovation Center 40 37 8% 9% 0% -2% 1% Corporate Activities 19 17 Discont
Slide 7: Net sales development | H1 2016
Net sales development | H1 2016 in € million H1 2016 H1 2015 % Change Volume Price/mix FX Other Sales - Continuing Operations 3,907 3,851 1% 6% -2% -3% 0% Nutrition 2,545 2,446 4% 6% 1% -4% 1% Materials 1,240 1,296 -4% 3% -6% -1% Innovation Center 83 73 14% 14% 0% -1% 1% Corporate Activities 39 36 D
Slide 8: EBITDA development | Q2 2016
EBITDA development | Q2 2016 in € million Q2 2016 Q2 2015 % Change H1 2016 H1 2015 % Change EBITDA - Continuing Operations 328 279 18% 624 527 18% Nutrition 237 208 14% 462 403 15% Materials 117 106 10% 212 192 10% Innovation Center 0 -3 1 -8 Corporate Activities -26 -32 -51 -60 Discontinued Operati
Slide 9: Nutrition | Sales overview
Nutrition | Sales overview Sales bridge – Q2 2015 to Q2 2016 Sales bridge – H1 2015 to H1 2016 1% 2% -5% -4% 2,545 1,295 1% 0% 6% 7% 1,247 2,446 Q2 2015 Volume Price/mix FX Other Q2 2016 H1 2015 Volume Price/mix FX Other H1 2016 Q2 2016 sales up 4% compared to Q2 2015; 9% organic sales growth – Vo
Slide 10: Nutrition | Key financials
Nutrition | Key financials in € million Q2 2016 Q2 2015 % Change H1 2016 H1 2015 % Change Sales 1,295 1,247 4% 2,545 2,446 4% EBITDA 237 208 14% 462 403 15% EBITDA margin (%) 18.3% 16.7% 18.2% 16.5% EBIT 165 137 20% 326 266 23% Capital Employed 5,391 5,474 Average Capital Employed 5,317 5,339 1 ROCE
Slide 11: Animal Nutrition & Health | Sales overview
Animal Nutrition & Health | Sales overview Sales bridge – Q2 2015 to Q2 2016 Sales bridge – H1 2015 to H1 2016 1% 4% -7% -7% 610 - 8% 10% 1,163 - 572 1,145 Q2 2015 Volume Price/mix FX Other Q2 2016 H1 2015 Volume Price/mix FX Other H1 2016 Page 10
Slide 12: Animal Nutrition & Health | Sales overview (cont’d)
Animal Nutrition & Health | Sales overview (cont’d) Q2 2016 sales showed 14% organic growth compared to Q2 2015 – Growth in the year-on-year comparison was helped by a one-off effect in the comparative quarter of 2015, when animal nutrition was impacted by a key raw material supply interruption at
Slide 13: Human Nutrition & Health | Sales overview
Human Nutrition & Health | Sales overview Sales bridge – Q2 2015 to Q2 2016 Sales bridge – H1 2015 to H1 2016 1,015 1% 1% -2% 2% -3% 5% 3% 507 0% 502 955 Q2 2015 Volume Price/mix FX Other Q2 2016 H1 2015 Volume Price/mix FX Other H1 2016 Page 12
Slide 14: Human Nutrition & Health | Sales overview (cont’d)
Human Nutrition & Health | Sales overview (cont’d) Q2 2016 organic sales grew by 4% compared to Q2 2015, predominantly driven by higher volumes (+3%) – Prices were slightly up across the board when compared to Q2 2015 – Currencies had a negative impact, mainly due to a somewhat weaker US dollar
Slide 15: Human Nutrition & Health | Further marketing efforts in the second half of 2016
Human Nutrition & Health | Further marketing efforts in the second half of 2016 to enter into new segments and expand i-Health’s global footprint DSM’s fast-growing i-Health consumer line consists of Initiative 1 probiotics, urinary health-, menopause relief-, and New product launches (incl. TV-
Slide 16: Materials | Sales overview
Materials | Sales overview Sales bridge – Q2 2015 to Q2 2016 Sales bridge – H1 2015 to H1 2016 3% 5% 1,296 -7% -6% 664 -2% 640 -1% 1,240 - - Q2 2015 Volume Price/mix FX Other Q2 2016 H1 2015 Volume Price/mix FX Other H1 2016 Page 15
Slide 17: Materials | Sales overview (cont’d)
Materials | Sales overview (cont’d) Q2 2016 sales were 4% below Q2 2015 mainly as a result of 7% lower prices, fully reflecting lower input costs – Overall, volumes were up by 5%, outperforming market growth – Strong growth in the specialty segments more than compensated for lower volumes in polya
Slide 18: Materials | Key financials
Materials | Key financials in € million Q2 2016 Q2 2015 % Change H1 2016 H1 2015 % Change Sales 640 664 -4% 1,240 1,296 -4% EBITDA 117 106 10% 212 192 10% EBITDA margin (%) 18.3% 16.0% 17.1% 14.8% EBIT 86 74 16% 148 127 17% Capital Employed 1,775 1,897 Average Capital Employed 1,751 1,857 1 ROCE (%)
Slide 19: Innovation Center | Key financials
Innovation Center | Key financials in € million Q2 2016 Q2 2015 % Change H1 2016 H1 2015 % Change Sales 40 37 8% 83 73 14% EBITDA 0 -3 1 -8 EBIT -5 -10 -10 -22 Capital Employed 559 564 Q2 2016 sales 8% above Q2 2015 sales – Increase fully driven by higher volumes. DSM Biomedical delivered a good p
Slide 20: Corporate Activities | Key financials
Corporate Activities | Key financials in € million Q2 2016 Q2 2015 H1 2016 H1 2015 Sales 19 17 39 36 EBITDA -26 -32 -51 -60 EBIT -35 -44 -68 -83 Q2 2016 EBITDA was €6 million better than in Q2 2015, when EBITDA was impacted by the insurance costs related to the Tortuga supply interruption Page 19
Slide 21: Key Joint Ventures and Associates | Key financials
Key Joint Ventures and Associates | Key financials in € million, based on 100% Q2 2016 Q2 2015 % Change H1 2016 H1 2015 % Change DSM Sinochem: Sales 114 112 2% 226 229 -1% EBITDA% 14% 16% 15% 14% Patheon1: Sales 415 397 5% 791 774 2% EBITDA% 19% 20% 17% 19% ChemicaInvest: Sales 437 n.a. n.a. 892 n.a
Slide 22: Cash Flow development
Cash Flow development Cash flow Working Capital% - Annualized 40% in € million Q2 2016 Q2 20151 H1 2016 H1 20151 H1 2015 H1 2016 EBITDA 328 332 624 618 30% Change in Working Capital -115 -127 -227 -229 Income Tax -18 -14 -40 -35 Other -13 -112 -38 -253 20% Cash from Operating Activities 182 79 319 1
Slide 23: Net debt and ROCE development
Net debt and ROCE development Net debt1 ROCE 3,000 20% FY 2015 H1 2016 15% 2,000 10% 1,000 5% 0 0% YE 2014 YE 2015 H1 2016 Total DSM Nutrition Materials Net debt increased by €145 million compared to the end of 2015 and stood at €2,466 million – The increase was mainly due to the payment of divide
Slide 24: Interim dividend proposal: €0.55 per ordinary share
Interim dividend proposal: DSM will pay an interim dividend of €0.55 per ordinary share for 2016 Dividend per ordinary DSM share - € Dividend policy “stable and preferably rising” DSM will pay an interim dividend of €0.55 per ordinary share for 2016 1.80 1.65 1.65 1.65 4.5% – As usual, this repr
Slide 25: Business conditions
Business conditions Nutrition Animal Nutrition – Robust market conditions with the exception of Latin America – Maintenance stop in the fat-soluble vitamins – Further positive vitamin price effects Human Nutrition – Robust market conditions in Asia and Europe. Continued softness in the Americas
Slide 26: Update on the improvement programs
Update on the improvement programs Strategy 2018 | Driving Profitable Growth
Slide 27: Strategy 2018 (recap)
Strategy 2018 (recap) 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 effic
Slide 28: Well-identified initiatives to drive Strategy 2018 targets (recap)
Well-identified initiatives to drive Strategy 2018 targets (recap) ~€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 custom
Slide 29: Ambitious improvement programs on track
Ambitious improvement programs on track – DSM focused on maintaining positive momentum Cost savings: total €250-300m Timing of cumulative cost savings by 20181 ~€m Realized Forecast Nutrition 400 Program €130-150m 300 DSM-wide (by 2018) support 200 functions €125-150m 100 Materials (by end 2017) 0 2
Slide 30: In control of one-time costs
In control of one-time costs FTE reduction and one-time costs Cumulative FTE reduction1 One-time costs1 5,000 Realized Forecast Realized Forecast ~4,400 400 4,000 300 3,000 200 2,000 900-1,100 ~100 100 ~80 1,000 ~470 ~640 ~35 ~50 0 0 Total FTE in Reduction target 2016 YTD 2016E 2015 H1 2016 2016E 20
Slide 31: DSM-wide savings in support functions & staff
DSM-wide savings in support functions & staff | Strong progress made with globally leveraging support functions at lower costs Savings: €125-150m1 Breakdown by function (recap) Work streams closely monitored and on track HR Implementation of new functional design Current status progressing well, e
Slide 32: DSM-wide savings | Implementing structural changes and behaviors
DSM-wide savings in support functions & staff | Implementing structural changes and behaviors for a new agile operation model Implementing structural changes in DSM: Change & Culture Program – STRATEGY - Globally leveraged support functions at Drive and embed change (leadership) in DSM lower cost
Slide 33: Nutrition-specific improvement program
Nutrition-specific improvement program | Successful initiation of programs combined with a continuous search for further improvements Savings: €130-150m1 Cost improvements (recap) Work streams closely monitored and on track Current status Purchasing Purchasing savings implemented Fixed cost Cost
Slide 34: Update on the sustainability aspirations
Update on the sustainability aspirations Strategy 2018 | Driving Profitable Growth
Slide 35: DSM has stepped up its sustainability aspirations
DSM has stepped up its sustainability aspirations Sustainability aspirations1 Key focus areas Nutrition Climate change and renewable energy Circular and bio-based economy Sustainability as Business Growth Driver Brighter Living Solutions: ECO+ and People+ Profitable solutions better for peop
Slide 36: DSM’s global sustainability agenda aligned with UN Sustainable Development Goals
DSM’s global sustainability agenda aligned with the ‘Sustainable Development Goals’ set by the UN DSM contributes to many of the Sustainable Development Goals but especially: 2 No hunger 3 Good health 7 Renewable energy 12 Responsible consumption 13 Climate Action 17 Partnerships for the
Slide 37: DSM US Investor Event 2016
DSM US Investor Event 2016 22-23 September, Charleston, South Carolina (US) Meet the Management and DSM’s Top Executives Deep dives in our businesses Visit of the Omega Nutrition production facility More information via sandra.segers@dsm.com DSM US Investor Event 2016 Page 36
Slide 38: Bright Science. Brighter Living.