Slide 1: Presentation to Investors
Life Sciences and Materials Sciences Presentation to Investors Q1 2014 Results, 6 May 2014 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: Overview
Overview • Q1-2014 Operational performance • Update on Nutrition • Business conditions and outlook • Our strategy Page 2
Slide 4: Highlights
Highlights DSM reports Q1 2014 results • In Q1 2014 DSM delivered €272 million EBITDA from continuing operations, in line with expectations • Q1 2014 EBITDA from continuing operations was €29 million below Q1 2013, of which about €23 million was due to adverse exchange rate developments • The impact
Slide 5: Quote from Feike Sijbesma
Quote from Feike Sijbesma “DSM delivered results in line with expectations, despite further currency deterioration during the quarter. We are pleased to report that market conditions in Nutrition began to show some signs of improvement by the end of the quarter. Our performance in Q1 demonstrates DS
Slide 6: Results Q1-2014 Key figures
Results Q1-2014 Key figures (€ million) Q1-2014 Q1-2013 % Continuing operations before exceptional items: Net Sales 2,196 2,188 0% EBITDA 272 301 -10% EPS (€) 0.57 0.71 -20% Core EPS (€)* 0.66 0.78 -15% Total DSM before exceptional items: Net Sales 2,298 2,320 -1% EBITDA 270 308 -12% Total DSM after
Slide 7: Net sales growth Q1-2014 versus Q1-2013
Net sales growth Q1-2014 versus Q1-2013 Price/ (€ million) Q1-2014 Q1-2013 Diff. Volume FX Other Mix Nutrition 1,047 990 6% 4% -2% -3% 7% Performance 670 669 0% 4% -2% -2% 0% Materials Polymer 405 437 -7% 2% -8% -1% Intermediates Innovation Center 34 37 -8% -5% 0% -3% Corporate Activities 40 55 Cont
Slide 8: EBITDA – development
EBITDA – development EBITDA (€ million) Q1-2014 Q1-2013 % Nutrition 203 215 -6% Performance Materials 77 79 -3% Polymer Intermediates 20 28 -29% Innovation Center -6 -2 Corporate Activities -22 -19 Continuing Operations* 272 301 -10% • Continuing operations (excluding discontinued activities) Page 7
Slide 9: Nutrition
Nutrition (€ million) Q1-2014 Q1-2013 % Net sales 1,047 990 6% Organic growth 2% EBITDA 203 215 -6% EBITDA margin 19.4% 21.7% EBIT 143 163 -12% Capital employed 4,672 4,496* • Sales in the first quarter increased by 6% compared to Q1 2013. Organic sales growth was 2% compared to Q1 2013, as a result
Slide 10: Human Nutrition & Health
Human Nutrition & Health* (€ million) Q1-2014 Q1-2013 % Net sales 423 442 -4% Organic growth -1% • Human Nutrition & Health net sales were €423 million in Q1. Organic sales declined by 1% compared to Q1 2013, with volumes flat and prices/mix down slightly. As expected, the US dietary supplements mar
Slide 11: Animal Nutrition & Health
Animal Nutrition & Health* (€ million) Q1-2014 Q1-2013 % Net sales 466 396 18% Organic growth 7% • Animal Nutrition and Health net sales were €466 million in Q1. Organic sales growth in Q1 was 7% with volumes up 10% compared to the weak Q1 2013 when the animal feed markets were still being impacted
Slide 12: Performance Materials
Performance Materials (€ million) Q1-2014 Q1-2013 % Net sales 670 669 0% Organic growth 2% EBITDA 77 79 -3% EBITDA margin 11.5% 11.8% EBIT 44 46 -4% Capital employed 1,967 1,902* • Organic sales growth in Q1 2014 was 2% compared to Q1 2013 with 4% volume growth and 2% lower prices. Adverse currency
Slide 13: Polymer Intermediates
Polymer Intermediates (€ million) Q1-2014 Q1-2013 % Net sales 405 437 -7% Organic growth -6% EBITDA 20 28 -29% EBITDA margin 4.9% 6.4% EBIT 7 20 -65% Capital employed 662 570* • Organic sales development was -6% compared to the same quarter of 2013, with 2% higher volumes and 8% lower prices. Sales
Slide 14: Innovation Center
Innovation Center (€ million) Q1-2014 Q1-2013 % Net sales 34 37 -8% EBITDA -6 -2 EBIT -14 -11 Capital employed 468 469* • Sales in Q1 2014 were lower than Q1 2013 due to DSM Biomedical. Underlying growth in DSM Biomedical is well on track. • EBITDA declined as a combination of lower sales, a negativ
Slide 15: Corporate Activities Discontinued Activities
Corporate Activities (€ million) Q1-2014 Q1-2013 Net sales 40 55 EBITDA -22 -19 EBIT -34 -30 • EBITDA in Q1 2014 was in line with DSM’s expectations as well as with Q1 2013 Discontinued Activities • Discontinued activities in Q1 2014 reflects the contribution of DSM Pharmaceutical Products until the
Slide 16: Pharma activities and other associates
Pharma activities and other associates • DSM stopped proportional consolidation of joint ventures in line with IFRS, with all 2013 numbers restated accordingly. The net result of these ventures is included in Share of profit of associates / joint ventures • The announced venture combining Patheon an
Slide 17: Cash flow
Cash flow Cash Flow OWC development Q1-2012 – Q1-2014 Q1-2014 Q1-2014 (€ million) OWC (€m) % OWC/Sales (right axis) Cash from operating 3,000 30% -37 -49 activities Cash from investing -75 -94 activities* 2,000 20% Free cash flow from -112 -143 operations 1,000 10% Balance sheet Q1-2014 YE 2013 (€ m
Slide 18: Dividend to increase for the 4th consecutive year
Dividend to increase for the 4th consecutive year • Dividend policy “stable and preferably rising” Dividend per ordinary share (€) • Proposal to AGM (May 2014) to increase the € 1.75 dividend by 10% from €1.50 to €1.65 per ordinary share – € 0.50 interim dividend (paid in August 2013) € 1.50 – € 1.1
Slide 19: Overview
Overview • Q1-2014 Operational performance • Update on Nutrition • Business conditions and outlook • Our strategy Page 18
Slide 20: Vitamin E
Vitamin E • Animal feed volumes have been weak in the period H2 2012 - H1 2013, putting pressure on the supply chain for nutritional ingredients, such as vitamins (notably vitamin E where the threat of a new entrant in China added to competitive pressures in H2 2013) • Currently, trading of vitamin
Slide 21: US Dietary Supplements
US Dietary Supplements • US dietary supplements markets weakened towards US retail volumes* end of 2013, with inventory adjustments in the retail Ingredient Q1’14 vs Q1’13 March’14 vs supply chain at end of 4th quarter, as reaction to March’13 negative publications doubting certain positive Vitamin
Slide 22: Fish-oil based Omega-3
Fish-oil based Omega-3 • Increased fish-oil costs in 2013 were passed through, Average Omega-3 Crude Fish-oil Price (FOB US$/MT)* leading to sharp increases in retail prices. This, $3,500 combined with the prevalence of multiple negative media events, led to a volume decline of 10% in 2013 $2,500 •
Slide 23: Western Food & Beverages markets
Western Food & Beverages markets • Western Food & Beverages markets showed – in general- sluggish growth: – General Mills: “This year's severe winter weather dampened sales performance across the food industry, and results for our U.S. Retail and Convenience Stores and Foodservice segments reflect t
Slide 24: Post integration streamlining in Nutrition
Post integration streamlining in Nutrition • Recent years were marked by intense integration of acquisitions of Martek, ONC, Fortitech, Unitech and Tortuga • DSM continues to implement further post-integration improvements in support of its unique business model, – Adapting HQ’s in Kaiseraugst towar
Slide 25: Overview
Overview • Q1-2014 Operational performance • Update on Nutrition • Business conditions and outlook • Our strategy Page 24
Slide 26: Negative currency effects in 2014
Negative currency effects in 2014 At constant January ’14 exchange rates, DSM’s Actual FX impact and initial forecasts EBITDA in 2014 was estimated to be negatively 30 based on January’14 currencies (€m) impacted by about €70 million, due to: Actual 1. Less favorable hedge results from the 2013/2014
Slide 27: Business Conditions
Business Conditions Animal Nutrition Human Nutrition • Continued positive momentum in global animal • Ongoing good growth in premix for Infant Nutrition protein markets and Food & Beverages Limited impact from Avian flu in China & Mexico • Western Food & Beverages markets in general Aquaculture in S
Slide 28: 2014 Outlook unchanged
2014 Outlook unchanged • For 2014 DSM takes a prudent approach, assuming the unfavorable January 2014 foreign exchange rates are maintained for the year. Furthermore, DSM assumes a continued challenging macro-economic environment, with low growth in Europe, modest growth in the US, and a slowdown in
Slide 29: Overview
Overview • Q1-2014 Operational performance • Update on Nutrition • Business conditions and outlook • Our strategy Page 28
Slide 30: Driving growth by embracing global megatrends
Driving growth by embracing global megatrends Aging population Population growth Resources constraints Healthcare costs Urbanization Energy security Food security Wealth Sustainability Health Nutrition Materials Page 29
Slide 31: DSM in motion: driving focused growth
DSM in motion: driving focused growth Page 30
Slide 32: Nutrition: continued value growth
Nutrition: continued value growth 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 to customer- loca
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: Pharma activities
Pharma activities Partnership established in Pharmaceutical Products: DPx Holdings • Combining DPP and Patheon is another successful step in DSM’s strategy execution as well as an excellent value creation opportunity independent stand alone company, of which DSM owns 49% anticipated 2014 sales of ab
Slide 35: 2015 targets
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 sales
Slide 36: Annex: new Factbook available
Annex: new Factbook available http://www.dsm.com/content/dam/dsm/cworld/en_US/documents/factbook-2014.pdf Page 35
Slide 37: Annex: DSM’s IR App @your service
Annex: DSM’s IR App @your service Download the mobile app at Apple’s App store and Google Play DSM Investor Relations released its Investor Relations App for iPhone, iPad and Android mobile devices. The App is available for free at Apple’s App Store for the iPhone and iPad and at Google Play for And
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