Dsm-firmenich Ag · EURONEXT:DSFIR
Dsm-firmenich — Royal DSM — Investor Day (September 2017)
35 slides from Dsm-firmenich's investor day presentation, Sep 25, 2017
Slide 1: DSM Investor Event 2017
DSM Investor Event 2017 Feike Sijbesma | CEO Geraldine Matchett | CFO 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: 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 4: 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 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 | 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 7: 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 8: 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 9: 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 10: 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 11: 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 12: 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 13: 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 14: Sustainability aspirations are well 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 12
Slide 15: 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 16: 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 14
Slide 17: 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 18: 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 19: 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 20: 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 21: 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 19
Slide 22: 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 23: 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 24: 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 25: 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 26: 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 27: 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 28: What's next?
What’s next?
Slide 29: 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 27
Slide 30: 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 28
Slide 31: 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 32: 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 33: 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 34: Q&A
Q&A
Slide 35: Bright Science. Brighter Living.