DSM Nutrition sales on a par with last Q1

By Jess Halliday

- Last updated on GMT

Related tags: New products, Profit

DSM has reported flat sales for its Nutrition division in the first
quarter of 2007, but a new, forward looking programme is already
underway to improve profitability and place emphasis on product
differentiation.

Net sales remained at €613m, the same level as last year's quarter. But operating profit slipped from €82m to €61m. The results are the first since DSM implemented its new Dual Track strategy on January 2. Today it has reiterative the need to focus on cost reduction and margin improvement. The second 'track' is boosting full growth of new business by developing a vital portfolio of innovative new products and launching them successfully into the markets.​ The strategy picks up from the concluded VITAL project, which centred around integration of the division acquired from Roche in 2003. Sales volumes for the Nutritional Products part of the division actually increased, but the benefits of this growth on operating profit were offset by lower margins and negative impact of the US dollar. Another factor was reducing output for vitamin C at the company's Dalry site in Scotland caused by a fire in a transformer. The impact of this incident is likely to continue into the second quarter, the company said. DSM listed eight innovation initiatives that took place in Q1 that have resulted in the introduction of new products, new applications of existing products, or expansion of recent new products - four of which relate to nutrition. New consumer products containing DSM Food Specialities' Fabuless weight management ingredient have been introduced in Germany and Scandinavia; and new sports recovery and endurance products using PeptoPro have been introduced in the United States. New launches include CakeZyme, which is aimed at enhancing quality in cake and pastry products and reducing manufacturing costs; and an innovative form of beta carotene called CaroCare, a high-potency, animal- and allergen-free natural beadlet form of the carotenoid.​ The Nutrition division sits in a good overall context within the group as a whole. Sales were up 4 per cent on the same period of 2006, to €2.15bn, and but operating profit (EBIT) was down seven per cent to €192m. Outgoing chairman of the managing board Peter Elverding said that the results are slightly above expectations, thanks to favourable underlying trading conditions. Feike Sijbesma will take up the helm from Elverding on May 1. The operating profit expectation for full year 2007 is around €750m (plus/minus five per cent).

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