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Nutrition shines as profits and sales slide at recession-hit DSM

By Shane Starling , 07-Aug-2012
Last updated the 08-Aug-2012 at 01:37 GMT

Royal DSM paid tribute to its nutrition division which held steady as its sales and profits dipped for the second quarter and first half of the financial year, as recessed global economies took their toll on bottom lines.

Despite the, “challenging macro-economic environment” spoken of by Feike Sijbesma, CEO/Chairman of the DSM Managing Board, the company’s nutrition portfolio (which includes animal feed) managed a €21m growth in operating profits year-on-year – from €366m in H1 2011, to €387m this year.

For the quarter, operating profits inched up from €193m in Q2 2011, to €195m, but net sales jumped almost 10% from €1637m to €1799m

But across the company the figures were less rosy, with net sales down 2% from €4644m to €4558 for the half and EBITDA profits down 14% (from €693m to €596m).

Polymer intermediates performed particularly poorly with operating profits almost halving from €192m to €99m for the half compared to the previous year. Performance materials dropped from €173m to €156m EBITDA while pharma improved from €12m to €22m.

The company noted the economic slowdown was not restricted to the developed world, with China not immune to the broader economic situation, and increased price competition there.

Profit improvement programme

Responding to the figures, DSM said it was implementing measures that would see €125m in cost savings by 2014, including facility rationalisation, shaving a 1000 staff from its 22,000+ global workforce and better synergies from recent acquisitions including omega-3 players, Ocean Nutrition Canada and Martek BioSciences.

“The cross-selling of Martek products through the DSM global sales network resulted in double digit growth of Nutritional Lipids in infant nutrition outside USA,” the company said.

It also hoped to pull back a further €25-€30m in profit and margin improvements.

The nutrition division would soon be a €4bn annual business, although it was not immune to the company’s austerity measures. In that division savings were being seen in, “key vitamins vitamins B and C with restructuring projects in Grenzach, Germany and Dalry, United Kingdom.”

More broadly, Sijbesma added:  “The global outlook for the second half of the year is more uncertain due in part to Europe’s inability to find an effective and sustainable solution to the financial challenges facing the Eurozone.

“We are confident that the Profit Improvement Program, together with our broad geographic spread with a significant presence in high growth economies and our very strong balance sheet, leaves us well placed to face the near term challenges."

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