DSM rejects chemicals past for biotech future

By Shane Starling

- Last updated on GMT

Tanda: "We are expanding our nutrition portfolio"
Tanda: "We are expanding our nutrition portfolio"
Dutch ingredients giant Royal DSM met growth targets in four of the past five years and its transition from chemicals to life sciences multinational is on track, board member Stephan Tanda told NutraIngredients this morning.

DSM and Tanda outlined its next five-year plan with increased globalization a priority as the company beefs up its Asian presence and, in nutrition, seeks to broaden its portfolio in natural and innovative ingredients for food supplements, functional foods – and animal feed.

“We are expanding our nutrition portfolio with more biotech options, more natural ingredients, more enzymes for food and feed,” ​Tanda said of the activities of DSM Nutritional Products. “We feel pretty good about the past five years even though some of our divisions suffered due to the recession.”

In a statement the company said it would focus on,structural cost improvements, building on the successful differentiation and innovation strategy, expansion of its premix network and pursuing acquisitions and partnerships.”

Its goals for the nutrition cluster were sales increases of two per cent above GDP and EBITDA (earnings before interest, tax, depreciation and amortisation) of between 20 and 23 per cent.

Life sciences

Its desire to expand further into life sciences was illustrated by the announcement yesterday that DSM had purchased Massachusetts-based Microbia, a start-up in possession of a proprietary platform to produce natural carotenoids like beta-carotene and canthaxanthin.

“We are more interested in the technology than the ingredients because Microbia sales levels are relatively small,” ​Tanda said.

DSM also announced yesterday that it will sell Citrique Belge – a citric acid manufacturer. The company said the decision to sell was, “a result of DSM's ambitions to focus on Life Sciences and Materials Sciences.”

Tanda emphasised the company’s increasing geographic spread with new operations in Russia, South Korea, China and India to feed markets “in the East”​ and more traditional markets.

He noted that a sales target of $1.5bn in China had been achieved in 2010, with the next target set at $3bn by 2015. The company said it would invest $1bn in infrastructure in China between now and 2015.

Global footprint

“The nutrition cluster has the most global footprint and it continues to expand and innovate,” ​he said noting sales of products classified as ‘innovative’ (new products and applications introduced in the last five years), was forecast to increase from 12 to 20 per cent by 2015.

It said it expects income earned from ‘high growth’ economies across all divisions to increase from 2010 levels of 32 per cent, to 50 per cent in 2015.

Products that meet sustainability targets (Eco+) would account for 50 per cent of total sales compared to 35 per cent now.

The company forecast profits of between €1.4bn and €1.6bn through to 2013 and has annual sales of about €8bn.

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