Dsm-firmenich Ag · EURONEXT:DSFIR
Dsm-firmenich — Royal DSM — Shareholder Meeting (May 2018)
46 slides from Dsm-firmenich's shareholder meeting presentation, May 9, 2018
Slide 1: Annual Results 2017
Annual Results 2017 Feike Sijbesma, CEO / Chairman Managing Board Royal DSM Annual General Meeting, May 9 2018 ROYAL DSM HEALTH NUTRITION MATERIALS
Slide 2: Agenda
Agenda 1▪ Introduction 2▪ 2017 Highlights - Delivering higher value for all Stakeholders 3▪ Future Proofing our Results 4▪ 2018 Q1 Results Page 1
Slide 3: Royal DSM @ a glance: a company with a purpose
Royal DSM @ a glance: a company with a purpose (2017 numbers) ▪ Sales: ~€8,632m (up 9%) Animal Nutrition ▪ EBITDA: ~€1,445m (up 15%) & Health ▪ ROCE: 12.3% (up 190bps) Specialty Materials ▪ Adj. Net Profit: up 36% (2017; even tripled incl. Patheon) ▪ Dividend: €1.85 (up €0.10/share) ▪ TSR: 43% in 20
Slide 4: DSM history | Successful transformation building on an impressive history
DSM history | Successful transformation building on an impressive history Coal Mining (Petro) Chemicals Life Sciences & Materials Sciences Page 3
Slide 5: 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 6: Strategy 2018 is well aligned with the UN Sustainable Development Goals
Strategy 2018 is well aligned with the UN Sustainable Development Goals Page 5
Slide 7: Stepping-up sustainability aspirations on our own operations
Stepping-up sustainability aspirations on our own operations 65% 65% ▪ Brighter ▪ GHG ▪ Energy ▪ 50% ▪ Employee ▪ Safety: ▪ Leading in living efficiency efficiency purchased engagement Frequency reporting solutions 65% improvement improvement from favorable Recordable benchmarks of DSM 45% by 2025 >
Slide 8: Agenda
Agenda 1▪ Introduction 2▪ 2017 Highlights - Delivering higher value for all Stakeholders 3▪ Future Proofing our Results 4▪ 2018 Q1 Results Page 7
Slide 9: Highlights Full Year 2017
Highlights Full Year 2017 Strategy 2018 Target 2017 2016 Profit Planet People Delivering higher value for all Stakeholders Page 8
Slide 10: DSM group sales: €8,632m with 9% organic growth – clearly above market
DSM group sales: €8,632m with 9% organic growth – clearly above market DSM group sales up 9%, mainly driven by 7% volume growth. All business contributed well to this growth. Prices slightly up, currencies somewhat weaker €8,632m 2% (1%) 1% 7% €7,920m FY 2016 Volume Price/mix FX Other FY 2017 Page 9
Slide 11: All businesses delivering on their programs, outpacing market growth
All businesses delivering on their programs, outpacing market growth Animal Strategy Nutrition 2018 Target Human Nutrition 2017 2016 Materials Organic growth Organic growth Volume growth 10% 10% 10% 11% 9% 8% 8% 8% 8% 7% 6% 6% 7% 6% 7% 5% 4% 4% 5% 2-3% 4% ~3% 2-3% 4% 3% 4% 2% 2% 2% 1% 2% 0% 0% 1% 0%
Slide 12: DSM has been outperforming its headline financial targets again
DSM has been outperforming its 2 headline financial targets again High single-digit % annual High double-digit basis point annual Adjusted EBITDA growth ROCE growth 15% 190bps 1,600 14% 1,400 17% 12% 280bps 1,200 1,445 10% 12.3% 1,000 1,262 10.4% 800 1,075 8% 600 6% 7.6% 4% Adj. 400 2% EBITDA 200 €m
Slide 13: Nutrition: continued strong momentum & outperforming aspirations
Nutrition: continued strong momentum & outperforming aspirations Sales €5,579m, up 8% Adj. EBITDA €1,053m, up 13% 8% Organic growth EBITDA-margin: 18.9% (2016: 18.0%) ▪ Successful implementation growth initiatives, both in Animal & Human Nutrition, clearly outpacing market growth ▪ Further expansion
Slide 14: Materials: Strong growth in specialties driving strong performance
Materials: Strong growth in specialties driving strong performance Sales €2,825, up 12% Adj. EBITDA €488m, up 12% 13% Organic growth (7% volumes) EBITDA-margin: 17.3% (2016: 17.3%) ▪ All 3 businesses groups delivered a double-digit % organic growth – Engineering Plastics continued shift toward highe
Slide 15: Well balanced global footprint & focused innovation as key drivers
Well balanced global footprint & focused innovation as key drivers 44% sales to 21% Sales from High Growth Economies Innovation 25% Europe 20% 22% 21% Americas Asia 20% Africa ~35% ~35% ~30% 15% 10% 5% 0% Aspiration 2016 2017 Page 14
Slide 16: Ambitious cost reduction & efficiency improvement programs
Ambitious cost reduction & efficiency improvement programs Cost savings of Timing cumulative cost savings €270-280m (2018) ~€m Realized Forecast ~270-280 Nutrition 300 Program ~195 €130-150m 200 DSM-wide support ~110 functions 100 €125-150m ~25 0 2015 2016 2017 2018 rigorously executed & fully on tr
Slide 17: Patheon transaction: realized cash proceeds of ~€2bn
Patheon transaction: realized cash proceeds of ~€2bn (~€1.5bn in 2017) Extracting value from partnerships ahead of schedule Exit 50% 35% €m, 100% 2015 2016 H1 2017 €m, 100% 2015 2016 2017 €m, 100% 2015 2016 2017 Sales 1,621 1,786 Sales 418 431 440 Sales 756 1,802 1,933 Adj. EBITDA % 23% 20% Adj. EBI
Slide 18: Working Capital improved & Net Debt further reduced
Working Capital improved & Net Debt further reduced Total Working Capital Net debt significantly reduced Aim: <20% by 2018 (€ million) 25% 2,500 20% 2,000 2,321 20% 2,070 15% 17.4% 18.4% 17.2% 1,500 10% 1,000 5% 500 742 0% 0 Aim 2015 2016 2017 2015 2016 2017 Page 17
Slide 19: Making a significant step-up in adj. Net profit & adj. Earnings per share
Making a significant step-up in adj. Net profit & adj. Earnings per share Adj. Net profit up 36% Adj. Earnings per Share up 35% (Total Net profit up 183%) 2,000 1,781 12 10.07 10 1,500 8 1,000 6 629 520 706 3.52 2.90 3.92 4 500 381 2.14 92 2 0.45 0 0 2015 2016 2017 2015 2016 2017 Net profit (€m) Adj
Slide 20: Highlights Full Year 2017
Highlights Full Year 2017 Strategy 2018 Target 2017 2016 Profit ✓ Planet People Delivering higher value for all Stakeholders Page 19
Slide 21: Planet highlights Full Year 2017
Planet highlights Full Year 2017 Page 20
Slide 22: There's only ONE Planet Earth: Climate Change & Alternative Energies
There’s only ONE Planet Earth Climate Change & Alternative Energies? Whose responsibility? DSM reduces its our own environmental impact, enables our customers to do the same, and advocates for climate action Page 21
Slide 23: Whose responsibility? - Advocating 'Climate Action'
Whose responsibility? - Advocating ‘Climate Action’ DSM CEO Feike Sijbesma (on behalf WBG): One Planet Summit - Paris, organized by President Macron - December 2017: “The world is not yet on track to deliver on the Paris Agreement. But we should, since it is our moral, societal, and economic obligat
Slide 24: Thriving in a low (fossil) carbon economy
Thriving in a low (fossil) carbon economy ▪ Securing a cleaner future energy supply ▪ Enhancing efficiency ▪ Offering climate-relevant Brighter Living Solutions ▪ Shaping partnerships and policies that accelerate the shift ▪ Ensuring climate readiness (internal CO2 price €50/ton) Page 23
Slide 25: Highlights Full Year 2017
Highlights Full Year 2017 Strategy 2018 Target 2017 2016 Profit ✓ Planet ✓ People Delivering higher value for all Stakeholders Page 24
Slide 26: People highlights Full Year 2017
People highlights Full Year 2017 75% employee engagement index, up 4% from 2016 (71%) 27/73 Female/male ratio index, stable versus 2016 17% Female executives, up 2% from 2016 (15%)* 0.36 frequency index of recordable injuries (0.33 in 2016) *) clearly over 30% women in DSM Boards; over 20% in leader
Slide 27: People: Strengthened DSM organization drives performance
People: Strengthened DSM organization drives performance Global organizational and operational adjustments implemented – New strengthened top structure – New operating model: leveraged support functions – People: building strong leaderships teams – Culture focused on : accountability agility and col
Slide 28: People, Planet, profit go hand-in-hand together
People, Planet, profit go hand-in-hand together Opening Africa Improved Foods plant in Kigali (Rwanda) in 2017 Page 27
Slide 29: People: delivered on ALL targets & aspirations
Full Year : delivered on ALL targets & aspirations Strategy 2018 Target 2017 2016 Profit ✓ Planet ✓ People ✓ Delivered higher value for all Stakeholders Page 28
Slide 30: Strong performance reflected in higher dividend
… Strong performance reflected in higher dividend… 2018 Dividend proposal for 2017 per ordinary DSM share - €1.85 2.00 1.85 1.75 DSM Dividend €1.85 1.75 1.65 1.65 1.65 1.50 +85% 1.50 1.45 2007 1.25 1.00 DSM Dividend €1.00 Page 29
Slide 31: … and significantly higher share price
… and significantly higher share price Now Share price up ~40% in 2017 DSM outperforming peers/AEX again Share-price 180 ~€86 150 120 +150% 2007 90 DSM 60 Share price ~€35 DSM Consumer Chems Specialties AEX DJS Chems DSM’s value ~75% (~€7bn) higher, since start Strategy 2018; outperforming markets P
Slide 32: Reflected in external recognition for our responsible leadership
…. reflected in external recognition for our responsible leadership Page 31
Slide 33: Fortune's recognition: change the world – greatest leaders
Fortune’s recognition: change the world – greatest leaders 2nd in Fortune’s Change the World list Page 32
Slide 34: Agenda
Agenda 1▪ Introduction 2▪ 2017 Highlights - Delivering higher value for all Stakeholders 3▪ Future Proofing our Results 4▪ 2018 Q1 Results Page 33
Slide 35: Innovation-driven growth will continue to support DSM growth
Innovation-driven growth will continue to support DSM growth Nutrition Materials Emerging Business Areas ▪ Fermentative Stevia ▪ 3D options (combine ▪ ForTii® (HPPO polymer) Somos, Resins, ▪ Algae-based omega-3 Biomedical & (aquaculture) ▪ Niaga® (recycle carpets) Engineering Plastics) ▪ Clean cow ▪
Slide 36: Innovation-driven growth will continue to support DSM growth
Innovation-driven growth will continue to support DSM growth Nutrition Materials Emerging Business Areas ▪ Fermentative Stevia ▪ 3D options (combine ▪ ForTii® (HPPO polymer) Somos, Resins, Algae-based ▪ Green omega-3 Biomedical & Ocean/Veramaris ▪ Niaga® (recycle carpets) Engineering Plastics) (aqua
Slide 37: Innovation-driven growth will continue to support DSM growth
Innovation-driven growth will continue to support DSM growth Nutrition Materials Emerging Business Areas ▪ Fermentative Stevia ▪ 3D options (combine ▪ ForTii® (HPPO polymer) Somos, Resins, ▪ Algae-based omega-3 Biomedical & (aquaculture) ▪ Niaga® (recycle carpets) Engineering Plastics) ▪ Clean cow C
Slide 38: Innovation-driven growth will continue to support DSM growth
Innovation-driven growth will continue to support DSM growth Nutrition Materials Emerging Business Areas ▪ Fermentative Stevia ▪ 3D options (combine ▪ ForTii® (HPPO polymer) Somos, Resins, ▪ Algae-based omega-3 Biomedical & (aquaculture) ▪ Niaga Niaga® (recycle carpets) Engineering Plastics) ▪ Clean
Slide 39: DSM will continue to drive profitable growth!
DSM will continue to drive profitable growth! ▪ Continued delivery in 2018, outlook 2018 increased ▪ Confident DSM will continue to outgrow its markets through organic and innovation driven growth ▪ Optionality of enhanced growth through M&A ▪ Regular strategic review process brought forward: CMD Ju
Slide 40: Agenda
Agenda 1▪ Introduction 2▪ 2017 Highlights - Delivering higher value for all Stakeholders 3▪ Future Proofing our Results 4▪ 2018 Q1 Results Page 39
Slide 41: Highlights Q1 2018
Highlights Q1 2018 Continued strong organic sales growth in underlying business estimated at 11% Adj. EBITDA growth underlying business estimated at 8%, despite significant FX headwind ROCE of underlying business estimated at 13.3%, up 200 bps compared to Q1 2017 Additional temporary vitamin price b
Slide 42: Bright Science. Brighter Living.
Slide 43: Appendix – Big Innovation Projects
Appendix – Big Innovation Projects Page 42
Slide 44: Clean cow reducing methane emission
Example of an Innovation driving growth: Clean cow reducing methane emission ▪ Cows produce significant amount Methane sources (%) of methane, a potent greenhouse gas that causes climate change ▪ Trials with Clean Cow show >30% reduction in emissions ▪ Focused on markets with highly developed dairy
Slide 45: Sustainable Omega-3 solution for aquaculture
Example of an innovation driving growth: Sustainable Omega-3 solution for aquaculture ▪ Veramaris, a JV with Evonik ▪ Omega-3 fatty acids (EPA and DHA) from natural algae for animal nutrition without using fish oil from wild-caught fish ▪ Investing US$200m for a new facility in the US; scheduled to
Slide 46: Circularity by design: Specialty Resins Niaga - 100% recyclable carpet
Example of an Innovation driving growth: Circularity by design: Specialty Resins Niaga - 100% recyclable carpet ▪ In the US, ~2 billion kg of carpet ends in landfill every year (~85% of all discarded carpet), making it one of the highest contributors to landfill ▪ Niaga® Technology is based on using