DSM benefits from temporary vitamin price effect while raising 2018 outlook

By Mary Ellen Shoup

- Last updated on GMT

DSM CFO Geraldine Matchett said the company has built up an inventory of supplies to meet customer demand while its vitamin C facility in China is shut down for four months.
DSM CFO Geraldine Matchett said the company has built up an inventory of supplies to meet customer demand while its vitamin C facility in China is shut down for four months.

Related tags Vitamin c Dsm

DSM reported above market volume and sales gains for Q1 2018 with strong performance in its underlying nutrition business, which grew 5% in volume compared to the same period last year driven by strong sales in its i-Health and vitamin pre-mix businesses.

The solid performance occurred across all regions and market segments, according to DSM CFO Geraldine Matchett.

CEO and chairman of the DSM managing board, Feike Sijbesma, added: “We are currently benefitting from substantially higher prices in some vitamins due to exceptional supply disruptions in the industry.” 

DSM CFO Geraldine Matchett

Vitamin price effect

The company’s human health nutrition saw a 4%  vitamin price effect increase for pre-mixes and advanced formulations generating an estimated $260.4 million in additional sales for the quarter.  

“In line with previous quarters, this growth momentum continues to be supported by strong demand for innovative, environmentally-friendly specialty solutions while the 4% price increase offset stronger input costs,”​ Matchett said during the company’s call with investors.

Matchett added the higher pricing initiatives were necessary in the face of higher input costs and less-than-favorable exchange rates, but would only be “temporary and heavily-weighted towards the first half of the year.”

Looking ahead, DSM believes its nutrition business will continue to surpass its sales targets and has increased its full year financial outlook for 2018 to adjusted EBITDA growth of 25%.

“We still see plenty of opportunities in that (nutrition) space to expand in line with our strategy,”​ Matchett continued.

“All our businesses have been performing extremely well in the past few years and we’re very confident that they all have potential to continue to do very well. In fact, they’ve done so well we’ve run out of targets."

Status of vitamin C facility in China

DSM is planning four-month shut down starting in July of its vitamin C production plant in Jiangshan, China, to make facility improvements related to the reduction of greenhouse gas emissions and implement other sustainable operation practices.

"DSM Jiangshan has a summer shutdown each year to allow for maintenance and upgrades. This year's shutdown is extended for a more extensive package of upgrades to be implemented," D​SM APAC communications and external affairs director Christina Celestine told NutraIngredients-Asia​​.

"As this is a scheduled stop included in our guidance, we have prepared for this shutdown well in advance, and have ensured security of supply of vitamin C to cover our contracted commitments, even during the shutdown."​​

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