Nutrition cluster holds but DSM profits slide 27% as recession bites

By Shane Starling

- Last updated on GMT

Related tags Mergers and acquisitions Nutrition

Nutrition cluster holds but DSM profits slide 27% as recession bites
Royal DSM saw 2012 EBIT (operating) profits fall 27% to €635m from €866m in 2011 – but the human and animal nutrition business it has invested €2.4bn in since 2010 added 6% in profit.

Nutrition EBIT profits grew from €577m in 2011 to €613m in 2012 with sales up 9% to €3.667bn and boosted by the €900m Ocean Nutrition Canada and Fortitech acquisitions in the year along with other animal and human nutrition investments.

Omega-3s and blends were singled out as star performers in the division that includes cultures and enzymes, carotenoids, vitamins and minerals.

Board member Stephan Tanda told us the company's Martek (2011) and ONC buys meant it could handle all omega-3 demands, even high-end pharma requirements although the company was not particularly active there now, preferring to focus on food and supplements. It was however, "keeping an eye"​ on the omega-3 drug patent landscape where blockbuster drugs were coming off-patent.

Feike Sijbesma, CEO/chairman of the DSM managing board, praised the nutrition division performance which he noted contributed 70% to the Dutch firm’s EBITDA profits of €1.1bn.

The company forecast for EBITDA of €1.4bn in 2013 remained intact despite a 'problematic Europe' that remains deep in recession, according to Tanda.

Forecasts intact

“You have to remember we lost about €300m in the caprolactam nylon business in 2012. It suffered from weakness in demand so with that excluded our €1.4bn EBITDA profit forecast for GDP plus 2% remains intact,” ​Tanda said.

He added: “Europe continues as a problem and Brazil and latin America could be stronger, but the US market is picking up, and China and Asia remains in growth. It is true that it is not a pretty situation in Europe though.”

However China sales fell €300m to €1.7bn, mainly due to the caprolactam situation.

The company said its profit enhancement programme would shave a further €50-100m from costs in coming years but job losses would be restricted to synergistic effects of its merger and acquisition activity.


Tanda affirmed the company had no plans for further acquisitions until its recent buys had been properly consolidated into the world’s largest nutrient supplier.

The whole company including its pharma, performance materials and polymers divisions had revenue of €9.13bn in 2012 – 1% up on 2011.

When exceptionals such as restructuring costs were factored in, net profit for the year was 65% down on 2011 at €288m.

In a conference call this morning, Sijbesma, said caprolactam would always be volatile but there were no plans to sell the business.

Tanda said there were no plans to rid DSM of any of its clusters.

DSM's full annual report can be found here​.

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