Nutrition bright for DSM; pharma benefits from flu vaccines
The Dutch chemicals group reported a 17 per cent increase in operating profit for its nutrition division in full year 2009, to €521m, absorbing losses from other divisions like base chemicals and materials.
Pharma profits were €32m, down 64 on the previous year, but with a surge in Q4 thanks to a run on its sterile vaccine business caused by ‘flu epidemic concerns.
Overall, however, the group saw a 52 per cent drop in operating profit to €370m last year.
“Although our full year operating profit from continuing operations halved compared to our record performance of 2008, the decline in DSM’s core activities was limited to 28 per cent,” said board chairman Feike Sijbesma.
“A continued robust performance from the Nutrition business and the benefits of early our early actions to improve our competitive position contributed to this performance”, he added, saying that a drive to reduce costs resulted in savings of €150m in the year.
Indeed, in December 2008 DSM announced 1000 job cuts across all its businesses. It did not give details of which divisions saw posts culled, but at the time it said the move would bring savings of €100m a year by the end of 2010.
Nutrition and pharma
While sales volumes were down across all divisions last year, in Nutrition this was seen to be due to customer de-stocking in the first half of the year. The nutrition division includes DSM Food Specialities, DSM Nutritional Products, and animal feed.
In sales value, Nutrition saw growth of 3 per cent, to €2824m in the full year; pharma sales dipped 1 per cent to €721m.
Nutrition was also something of an exception in terms of prices. It was the only cluster not affected by lower prices.
In its relatively cautious outlook, which made reference to the uncertain economic climate, DSM said food and feed markets are expected to grow in line with GDP in 2010. Demand is expected to increase in the Nutrition cluster, and price levels to be quite stable.
In pharma, low prices at DSM Anti-Infectives are expected to take their toll; and as the world recovers from ‘flu concern, sterile vaccine demand is likely to shrink back to former levels.
Remuneration
DSM’s managing board will henceforth be remunerated under a restructured system, based in part around sustainability.
Board members will have a fixed salary base, but their bonus will be determined by greenhouse gas emissions, environmental product launches, and employee engagement. They will no longer be granted options.
The base salary for the managing board will not rise in 2010, for the second year running.
