Annual Result s 2014 Feike S ij besma, CEO / Chairman Managing Board Annual General Meet ing April 30 2015 Page
S afe harbor statement This present at ion may cont ain forward-looking st at ement s wit h respect t o DSM’ s fut ure (financial) performance and posit ion. S uch st at ement s are based on current expect ations, estimates and proj ections of DS M and informat ion current ly available to the company. DS M caut ions readers that such st atements involve cert ain risks and uncert aint ies t hat are difficult t o predict and t herefore it should be underst ood t hat many factors can cause act ual performance and position to differ materially from t hese st at ement s. DS M has no obligat ion t o updat e t he st at ement s cont ained in t his present at ion, unless required by law. A more comprehensive discussion of the risk factors affect ing DS M’ s business can be found in t he company’ s lat est Annual Report , which can be found on t he company's corporate websit e, www.dsm.com Page 1
WFP fundraising for Nepal • Eart hquake in Nepal: t housands of people have died; 8 million people in distress; almost 1.5 million people are in need of food aid • The World Food Program of the UN is a strat egic partner of DS M and is raising money t o deliver food and supplies t o Nepal • DS M calls employees to action to donat e t o t he WFP. DSM will mat ch these donations up t o $100.000 ‘ matchen’ , with a minimum of $50,000. Join us and donat e at wfp.org/ DS MNepal Page 2
DS M Year in review 2014 [movie] Page 3
Highlights year 2014 • 2014 sales of ~€9.2 billion with 3% organic growth � This includes ~€ 2.1 billion sales of the activit ies for which we announced a part nership (polymer int ermediat es, composit e resins) in March 2015, of which DS M remains a 35% shareholder � This excludes ~€ 1.1 billion pro-forma (annualized) sales of non-consolidat ed Associates & JV’s (mainly DPx, DSP) • Relatively solid EBITDA of €1,168 million wit h good cash flow from operating act ivit ies, despit e subst ant ial negat ive exchange rat e effect s (€50m) and t ough market condit ions in Nutrit ion and caprolactam � Rest at ed for t he announced part nership, 2014 EBITDA is €1,038 million � This excludes ~€ 140 million pro-forma (annualized) EBITDA of non-consolidat ed Associates & JV’s (mainly DPx, DSP) • Proposed dividend stable at €1.65 per ordinary share Page 4
Highlights year 2014 cont . Impressive progress on strategy • Cont inued delivery on t he st rat egic value drivers � High Growt h Economies, Innovat ion and Sust ainabilit y • DS M significant ly t ransformed, including value creat ing part nerships � Part nerships in Pharma (DPx, DSP) � Part nership in Polymer Int ermediat es and Composit e Resins announced • DS M is now well posit ioned wit h at t ract ive port folio � High qualit y, Nut rit ion and Performance Mat erials businesses wit h a good growt h and ret urn profile � At t ract ive emerging business areas est ablished (Innovat ion Cent er) providing significant fut ure value Page 5
Results full year 2014 - Key figures � % (€ million) FY 2014 FY 2013 Continuing operations before exceptional items: 9,181 8,858 4% Net S ales 1,168 1,261 -7% EBITDA EPS (€) 2.42 2.84 -15% Core EPS (€)* 2.85 3.19 -11% Total DS M before exceptional items: 9,283 9,429 -2% Net S ales EBITDA 1,166 1,261 -8% Total DS M after exceptional items: 145 271 -46% Net profit EPS (€) 0.78 1.52 -49% * Core EPS is the EPS from cont inuing operat ions before except ional it ems and before acquisition relat ed (intangible)asset amortization Page 6
EBITDA – development full year 2014 � % EBITDA (€ million) FY 2014 FY 2013 Nutrition 850 914 -7% Performance Materials 343 319 8% Polymer Int ermediat es 83 113 -27% Innovat ion Center -18 -9 Corporat e Act ivit ies -90 -76 Cont inuing Operations 1,168 1,261 -7% • Nutrition EBITDA declined 7% , despit e st rong volume growt h in Animal Nut rit ion. The decline was due negative currency effect s, lower volumes in Human Nut rit ion and lower vit amin E prices • Performance Materials EBITDA was up 8% . All t hree business groups cont ributed t o t his growt h, mainly due to higher volumes and cont inued cost control • Polymer Intermediates decreased given lower caprolact am margins and lower license income, despite higher volumes and lower costs • EBITDA of t he Innovat ion Cent er declined due to int ensified innovation programs. DSM Biomedical performed well. DSM Advanced S urfaces made good progress • EBITDA of Corporat e Act ivit ies was lower due t o the impact of a fire at DS M Nutrit ional Products on t he result of DSM’s capt ive insurance company Page 7
Headwindsimpacting 2014 Nutrition growth & margin Topic Remarks/ actions • Actively protect market share leveraging our low cost base Vitamin E : price decline in • Further reduce cost s Vit amin E due t o intensified • Expand market: leverage st rong science t o move cust omers compet ition t o increased inclusion levels • Product form different iat ion • Support ing cust omers by launching new innovations Sluggish Western Food & • Focus on growth opportunities in HGE Beverage market s; declining • Macro-blends and forward solut ions strategy consumer spending in mid-segment • US Weakness US vitamins and fish-oil multivitamins coalition promoting Dietary S upplements • GOED Omega-3 indust ry coalit ion’s campaign based Omega-3 Dietary • Upgrade of the Omega-3 production facility Supplements markets • Offtake normalized albeit at lower t han historic growth Asian Infant Nutrition markets rates have slowed down / destocking • Hedging policy Exchange Rates (FX) • Global asset spread Organic growth impacted by ~3% and EBITDA >€100m Page 8 Page
Dividend proposal to AGM: stable at € 1.65 • Dividend policy “ stable and preferably rising” Dividend per ordinary share (€) € 1.75 • Proposal t o AGM on 30 April 2015: Maint ain the dividend of €1.65 per ordinary share – € 0.55 interim dividend (paid in August ’ 14) € 1.50 – € 1.10 final dividend (payable in May’ 15) € 1.25 • Payable in cash or ordinary shares at the opt ion of t he shareholder € 1.00 • Dividend in cash will be paid after deduction € 0.75 of 15% Dut ch dividend wit hholding t ax • The ex-dividend date: 5 May 2015 € 0.50 '04 '05 '06 '07 '08 '09 '10 '11 12 13 14 Page 9
Overview • 2014 Operational performance • Good progress on strategy • Part nership wit h CVC • Highlights Q1 2015 Page 10
Megatrendsmore significant than ever; driving our growth Health & Wellness Global S hift s Climate & Energy Aging populat ion Populat ion growt h Sust ainabilit y concerns Healthcare issues Urbanization drive Resources constraints Food composition Wealth increase Energy concerns Health Nut rit ion Materials DS M well positioned to capitalize on key megatrends Page Page 11
DS M in motion: driving focused growt h Creating sustainable value along all growth drivers Page Page 12
S ignificantly expanding global presence S ales by dest inat ion (FY 2014) • Sales t o High Growt h Economies (HGEs) North increased from 32% in 2010 to 43% in 2014 High Growth 19% America Economies • Current slowdown HGEs likely not st ruct ural 43% • DS M will cont inue t o expand presence in HGEs (incl. Africa) driving growt h from t hese regions: 34% – Locally t ailored product s/ services 4% Western Rest of Europe World – Cont inue t o expand local presence (research, innovat ion, product ion, M&S) Global employee base (ult. 2014) – S ince 2010, >60 execut ive positions moved North High Growth 17% America Economies out side t he Net herlands 33% Western 2% Rest of 48% Europe World Well positioned t o capture global growth including High Growth Economies Page 13 Page 13 Page
Innovation driving higher growth and margins • DS M st rongly commit t ed t o innovat ion in exist ing businesses as well as in emerging business plat forms • Good progress achieved: � Sales from innovat ive product s / solut ions, int roduced over last 5 years, account for 18% of DSM’s FERMENTATI VE STEVIA 2014 sales (t arget 20% ) Nut rit ion at 17% , Performance Mat erials at o 24% � Three emerging business plat forms (EBAs) est ablished • Sust ainable innovat ions in exist ing businesses are delivering higher growt h and >5% higher gross margins Improving financial performance through a younger, greener portfolio Page 14 Page
S ustainability is a strong business driver • FY 2014 ECO+ sales at 49% ; well on t rack towards 2015 aspiration of 50% • More t han 90% of DS M’s innovat ion pipeline is ECO+, strongly driving a greener portfolio • ECO+ sales have grown ~10% / year since 2010 • ECO+ sales have significant ly higher cont ribut ion margins versus non-ECO+ sales • People+: DS M at the forefront of a new methodology to measure impact of product s on people’s life, creat ing credibility and t ransparency Bio-based Coating Resins S ustainable solutions delivering higher growth and higher margins Page Page 15
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