February 23, 2011

  

DSM reports strong 2010 results

 

Full year 2010 operating profit for DSM was recorded at EUR752 million (US$1.03 billion), 74% above 2009.

 

In the strong fourth quarter of 2010 DSM's businesses developed as expected. In general, the underlying trading conditions remained favourable. Compared to Q3 2010 there was organic sales growth of 4%, reflecting both continued volume growth and pricing strength. However, currency developments were unfavourable, due to a weaker US dollar and a very strong Swiss franc. In addition, project costs related to the implementation of DSM's new strategy increased. All in all, Q4 operating result was equal to Q3 despite the traditionally seasonally weaker quarter and the Swiss franc exchange rate increase. Compared to Q4 2009, the operating result was 17% higher, mostly due to strong performance of the Materials Sciences businesses.

 

The Nutrition cluster continued its very good business performance, but was negatively affected by the development of the Swiss franc, which was 13% stronger versus the Euro in Q4 2009. Nevertheless, the cluster's operating result was similar to Q4 2009. Pharma showed some seasonal improvement in Q4, but the business dynamics in the pharmaceutical industry remained very challenging.

 

Most businesses in Performance Materials experienced the traditional year-end slowdown in demand. Unit margins in Q4 increased despite higher feedstock prices. Polymer Intermediates delivered its best quarter in history, reflecting excellent demand, pricing strength and a unique global presence.

 

Full year 2010 showed a very strong improvement compared to the downturn year 2009. All businesses, except Pharma, improved their performance. The improvement in the business environment, supported by DSM's swift actions in response to the downturn, resulted in the best ever operating result for the new DSM portfolio. For most businesses the first half of the year was stronger than the second half, due to downstream restocking and much more favourable currency exchange rates.

 

DSM's focus on cash remained a strong priority. Operating cash flow was EUR1.1 billion (US$1.5 billion). In combination with the proceeds from divestments and cautious capital expenditure this resulted in a net debt of minus EUR108 million (US$148 million) at the end of the year. This places DSM in an excellent position to pursue its strategic growth ambitions.

 

Organic sales growth in the fourth quarter was 14%, evenly spread over volumes and prices. Performance Materials was the main driver for volumes, Polymer Intermediates for prices. Currency exchange rates had a 6% positive effect. Deconsolidations resulted in a 2% decrease.

 

Full year sales were very strong compared to 2009. Nutrition showed strong volume growth with slightly lower prices. At constant exchange rates, sales in Pharma were virtually flat.

 

Materials Sciences showed a very strong volume increase resulting in an operating level which was back to pre-crisis level in most businesses. Pricing was very strong especially in Polymer Intermediates.

 

Operating profit in the fourth quarter amounted to EUR170 million (US$233 million), which was 17% higher than in Q4 2009. Nutrition's profit was almost equal to Q4 2009. The positive trend in the business was offset by the very strong Swiss franc. Pharma results were lower than in Q4 2009 which included orders in flu related sterile vaccines. The combined Materials Sciences businesses continued to improve volumes and margins.

 

Full year operating profit was EUR752 million (US$1.03 billion), which was 74% above 2009. After 17% operating profit growth in 2009, Nutrition delivered 9% growth in 2010. This is a reflection of Nutrition's ability to strengthen its market position based on its innovation and differentiation strategy in combination with a good operational performance. The Pharma results were lower, reflecting continuing challenges in the pharmaceutical industry and the one-off effect of flu related sterile vaccines business in 2009. The Performance Materials operating profit was substantially better than in 2009 and topped the 2008 level. Polymer Intermediates posted an excellent performance and its best year ever. In both caprolactam and acrylonitrile, margins were the driver.