Giant confronting omega-3, vitamin E challenges

DSM nutrition profits dip 7% in 2014

By Shane STARLING contact

- Last updated on GMT

DSM CEO: Global economy continues to exhibit “microeconomic uncertainty and low consumer confidence”
DSM CEO: Global economy continues to exhibit “microeconomic uncertainty and low consumer confidence”

Related tags: Nutrition, Us

Pricing and sector market challenges, currency fluctuations and some stiff economic headwinds have contributed to 2014 full-year EBITDA profits sliding 7% for the world’s biggest nutrient player, DSM.

The overall Q4 scenario was little changed from November’s Q3 results with a vitamin E price war and a challenged US omega-3 supplements sector highlighted in a “tough”​ year for the Dutch-Swiss giant with overall EBITDA profits also down 7% to €1.168bn on group sales of €9.181bn (up 4%).

In animal and human nutrition – by far the firm’s largest division compared to ‘Performance Materials’ and ‘Polymer Intermediates’ – sales rose 3% to €4.335bn but EBITDA profits fell from €914m to €850m.

CEO Feike Seibesma said 2014 “was not an easy year”​ and noted 2015 would continue to be impacted by “microeconomic uncertainty and low consumer confidence”.

Low growth in Europe was expected but “resilience”​ in the US and slowing growth in “high-growth economies” ​like those in Asia and south America.

The company said it was remaining aggressive in the hyper-competitive vitamin E market where mostly Chinese supply had in four years forced prices down more than 100% from around €12.50/kg in early 2011 to €5.20/kg today. Cost reduction and product differentiation strategies remained in place to deal with the situation.

vitEprob
DSM's take on the vitamin E market

Similarly the group was engaged in a sector-wide consumer education programme to boost flagging omega-3 sales in the US food supplements market, that had reacted to some omega-3 questioning research. Sales outside the US remained strong and it reported “strong growth” ​in its i-Health food supplements business in the US.

Despite such challenges Seibesma told a conference call the firm expected a higher EBITDA return in the 2015-2016 financial period that ends on March 31 2016. 

DSMNutra
Breakdown of DSM's Nutrition division (animal & human)

The company had been particularly affected by the strong Swiss Franc and US dollar, along with adjustments required for its international acquisitions. 

“We will look to the way we source products,”​ Seibesma said.

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