Q2: Sales up, profits down at DSM Nutritional Products

By Shane STARLING

- Last updated on GMT

DSM: “Fish oil-based omega-3 sales showed good growth in Europe and Asia."
DSM: “Fish oil-based omega-3 sales showed good growth in Europe and Asia."

Related tags Nutrition

The food and nutrition ingredients division of Dutch giant DSM has seen sales rise 16% to €1.247bn (US$1.37bn) in Q2 but profits slipped 6% amid ongoing pricing challenges on some vitamins.

EBITDA (Earnings before interest, tax, depreciation and amortisation) dropped from €222m to €208m ($244m to $228m) compared to the quarter in 2014, and from €425m to €403m ($466m to $442m) for the first half of this financial year compared to last.

The firm noted an exchange rate-driven gain of 16% for the nutrition division, driven by the strength of the Swiss franc and the fact DSN Nutritional Products is based near the city of Basel in Switzerland.

Challenged vitamin E and other vitamin prices from regions like Asia and in particular China continued to be a factor. Vitamin E prices have dropped to around €5/kg ($5.50/kg), a 100% plunge from little more than a year ago and hitting the bottom line by about €30m ($33m) in the quarter alone.

The firm suggested the low prices were making the sector less attractive to Chinese suppliers but that Assuming current low spot prices in vitamin E persist, the negative price impact on DSM’s 2015 EBITDA will be around €80-90 million.”

vitEprices

Omega-3 remained challenged in the US if not other regions, while vitamin products were doing better.

“US dietary supplements showed a mixed picture: I-Health [its supplements consumer brand] continued to deliver strong growth and (multi) vitamin sales were growing on the back of increased promotional activities by multivitamin producers, whereas fish oil-based omega-3 dietary supplements were still down versus Q2 last year.”

“Fish oil-based omega-3 sales showed good growth in Europe and Asia. Sales in DSM’s food & beverage segments also showed a mixed picture with Europe and Asia performing well, but with ongoing tough business conditions in North and South America. Infant nutrition returned to normalised growth rates after the destocking in Q2 last year.”

Despite the challenges, Feike Sijbesma, CEO/chairman of the DSM Managing Board said the nutrition division – which includes feed – had shown “solid volume growth”.

Its enzymes and cultures business had performed very strongly, it said.

Across all its divisions the company turned over €1.965bn for the quarter, up 12% from Q2 2014 when sales came in it at €1.754bn.

Cost rationalising processes would continue including the loss of some jobs across the company’s operations and its overall forecasts remained unchanged.

Nutrition-DSM-Q22015

Editor's note: Conversions from Euro to US Dollars made using the August 4, 2015 exchange rate of €1 = $1.10.

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