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DSM Reports Profitable First Quarter

by 5m Editor
28 April 2009, at 11:29am

NETHERLANDS - DSM has reported a profitable first quarter (Q1) despite the difficult economic conditions. Good performance in terms of sales value and operating profit was achieved by the company's Nutrition Group.

According to DSM's latest report, first quarter (Q1) operating profit was down to €57 million. Whilst most Materials Sciences businesses have been severely impacted by the downturn, continuing strong performance was achieved by the Life Sciences businesses. With €166 million from operating activities, the Company says its cash performance continues to be strong. No quantitative outlook was provided for 2009 in view of uncertain economic conditions.

Commenting on the results, Feike Sijbesma, chairman of the DSM Managing Board, said: "Ongoing strong performances from our Life Sciences businesses and stringent control of costs and working capital allowed DSM as a whole to remain profitable and cash generating throughout the quarter despite the very challenging economic conditions which primarily affected most of Materials Sciences.

"Although no improvement in demand in end-markets seems to be imminent, we are not at this point in time seeing a further deterioration either. Nevertheless, there will be tough times ahead. We remain focused on the generation of cash. Actions to reduce costs will continue unabated, and we now expect to over-deliver on our targeted savings of €100 million by 2010.

"In the meantime, DSM continues its customer focus as well as its strategic commitment to innovation and sustainability. Despite the challenges we face today, DSM will continue its strategic direction, based on long-term societal trends. Our healthy financial position ensures that we will be able to take advantage of opportunities inevitably arising from this recession."

Nutrition Group

The first quarter saw continued strong performance from the Nutrition cluster, especially considering the economic downturn. Organic sales growth was one per cent compared to Q1 2008 and sales were stable compared to Q4 2008. In value terms, net sales for Q1 2009 stood at €707 million, up from €652 for the same period in 2008.

Volume developments in Q1 were negatively affected by continued inventory reduction in the value chain and reduced animal nutrition demand due to a moderate decline and shift in meat consumption. DSM has decided to reduce its production output for some feed ingredients to manage its operating working capital.

The increase in operating profit at DSM Nutritional Products compared to last year – €141 million and €79 million, respectively – was to a large extent based on favourable margins for most products, a relatively strong dollar and ongoing improvements resulting from the Aspire to Win program. The latter has already achieved the targets initially set for 2010.

Further Reading

- You can view the full report by clicking here.