February 21, 2007

DSM achieves record sales and operating profit

Operating profit for DSM in 2006 reached EUR 835 million (US$1,097 million), 6 percent higher than in 2005.

Net profit rose 4 percent to EUR 547 million. The company recorded a solid volume growth, especially in performance materials.

The proposed dividend is EUR 1 per ordinary share. Operating profit for 2007 is expected to be lower than in 2006, but on track with their 2006 strategy Vision 2010.

Commenting on DSM's results, Peter Elverding, chairman of the DSM Managing Board said in 2006, DSM made a flying start in implementing Vision 2010. To support their increased innovative efforts, they launched more than 25 new products and applications as also made several investment projects, especially in performance materials. These, he said, would contribute to sales growth in the near future. Economic growth developed satisfactorily, but raw material and energy prices reached unprecedented levels and were highly volatile, while the US dollar remained weak, he said.

Nevertheless, the company succeeded in posting a record operating profit for the second year in a row mainly due to solid volume growth (5 percent) and the ongoing efforts to optimise operations, he added.

Elverding expects continued good volume growth this year, but some attractive contracts related to the acquisition in 2003 of Roche's Vitamins division (now DSM Nutritional Products) would come to an end.

Since the second part of 2006 DSM has faced intensified competition in some of the more mature parts of DSM Nutritional Products' portfolio. DSM has deliberately chosen to defend and further strengthen its market position even at the expense of margins, he said adding, it is most likely that this would temporarily have a stronger effect than the positive impact of the introduction of new innovative products.

Finally, Elverding pointed out that the company has started the year 2007 with a lower US dollar exchange rate and with high natural gas prices. However, the company would still work to further increase its innovation efforts and the associated expenditure.