Driving Profitable Growth through science-based, sustainable - PowerPoint PPT Presentation

Driving Profitable Growth through science-based, sustainable solutions Annual Results 2015 Feike S ij besma, CEO/ Chairman Managing Board Royal DS M Annual General Meeting, April 29 2016 ROYAL DSM HEALTH NUTRITION MATERIALS

S afe harbor statement This presentation may contain forward-looking statements with respect to DS M’ s future (financial) performance and position. S uch statements are based on current expectations, estimates and proj ections of DS M and information currently available to the company. DS M cautions readers that such statements involve certain risks and uncertainties that are difficult to predict and therefore it should be understood that many factors can cause actual performance and position to differ materially from these statements. DS M has no obligation to update the statements contained in this presentation, unless required by law. A more comprehensive discussion of the risk factors affecting DS M’ s business can be found in the company’ s latest Annual Report, which can be found on the company's corporate website, www.dsm.com Page 1

S ECRET Contents DS M – Introduction 1 Our businesses 2  Unique, broad, global business in Nutrition  High quality, specialty Materials portfolio  S trong innovation platforms 3 2015 Financial Results 4 S trategy 2018 – Driving profitable growth 5 Q1 Results 2016 Page 2

DSM History -Continued transformation resulted in good platform for growth Significant portfolio transformation (in % of DSM sales)  Built a broad, deep and global Innovat ion 100%  Petrochems  Petrochems  Base Nutrition business Chemicals&  Energy  Energy Pharma Materials  Engineering  Engineering Materials  Energy  Upgraded Materials businesses Plastic products Plastic products Bulk chems  Curver  Base Chemicals & Materials  Became a more global,  Base Chemicals  Others & Materials innovative and sustainable Materials  Others company  Nutrition  Extensive experience in  Nutrition chemical synthesis and biotechnology binds Nutrition and Materials 1995 2000 2005 2010 2015  Created 3 new growth Other Polymer Intermediates & Composite Resins Innovation Center Materials platforms Pharma Nutrition Page 3

DSM Today – A broad, deep and global Nutrition business and a focused, high-quality, specialty Materials portfolio Sales EBITDA EBITDA% ROCE + JV Sales/EBITDA €7.7bn €1,075m 13.9% 7.6% €1.9 bn/ €0.25bn(Pro-rata) Nutrition Materials Animal Human Food Personal Engineering Dyneema Resins & Nutrition Nutrition S pecialties Care Plastics Functional Materials   Nutrition is active in nutritional ingredients for animal Advanced materials for high-performance components for feed and food, as well as in food specialty ingredients the electrical and electronics, automotive, (flexible and ingredients for personal care, serving the global food) packaging, consumer goods, life protection, feed, food & beverage, pharmaceutical, infant nutrition, transportation and telecom industries dietary supplements and personal care industries Sales EBITDA EBITDA% Sales EBITDA EBITDA% €5.0bn €822m 16.6% €2.5bn €384m 15.2% Common (bio)technology platforms Page 4

DSM Today - A well balanced and diversified portfolio with global leadership positions in food, feed and specialty materials ) 1 Net sales by destination (% ) Net sales by end-use market (% 3% 4% 8% Nutrition – 66% 9% 7% 3% 2% 32% 24% 5% 1% 12% 7% 6% 6% 2% 14% 7% 25% 23% The Netherlands China Nutrition & Health Electrical/ Electronics - Animal Nutrition (32% ) Rest of Western Europe India - Human Nutrition (25% ) Eastern Europe Japan - Food S pecialties (7% ) - Personal Care (2% ) North America Rest of Asia Metal/ Building & Construction Packaging Latin America Rest of the World Automotive/ Transport Other Textiles 1 S egmental details to be provided further in this presentation Page 5

DS M also expects to extract significant value from exiting its partnerships in coming years - DS M share Sizeable Joint Ventures total ~€4bn in FY 2015 sales (~€1.9bn pro-rata), ~€245m FY 2015 EBITDA (pro-rata) while employing ~6,000 people 50% 49% 35% DSM Sinochem Pharmaceuticals Patheon Pharma ChemicaInvest Anti-infectives Contract Manufacturing Bulk Chemicals 2015 1 2015 2 €m at 100% 2015 €m at 100% €m at 100% S ales 418 S ales 1,621 S ales 756 EBITDA 57 EBITDA 366 EBITDA -3 1 Book year 1 November until 31 October 2 S tarted 31 July 2015, up to and incl. 31 July 2015, part of DS M and reporting €1,213m in sales and €95m in EBITDA under Discontinued Operations Page 6

S ECRET Unique, broad and global business in Nutrition Page 7

Nutrition’s broad portfolio is providing resilience with limited exposure to single product lines or customer Portfolio of ingredients Sales split over value chain steps Fat soluble vitamins (e.g. A,D,E) Water soluble vit amins (e.g. B,C) Carot enoids Active ingredients Marine PUFAs Microbial PUFAs Forms Enzymes & Cultures Minerals & DCP Premixes S avory / yeast ext ract s Nutraceut ical ingredient s i-Health/ B2C Aroma intermediates Ot her blend ingredient s Ot her Profit contribution per product line Sales per customer (top 10)   Top-10 represent < 40% of Largest cust omer Nutrition profit in 2015 represent s less t han 3% of Nut rit ion sales  Product range includes ~100 product lines  Largest profit cont ribut or less t han 10% of Nut rit ion profit  S everal product s have a st rong IP posit ion Page 8

Animal Nutrition has a complete portfolio of targeted feed ingredients and has further growth opportunities beyond the historical core area of poultry Page 9

Human Nutrition is leading in nutritional ingredients and has ample opportunities to further expand in a diversified application landscape 1 Total specialty food ingredients market, excluding ~€20bn of commodity ingredients, e.g., soy proteins 2 Breakdown of targeted markets, excluding Food S pecialties Food & Beverages sales (mainly bio ingredients) 3 Nutritional Improvement Programs includes sales through governmental / NGO supply programs. Excludes BOP (bottom of the pyramid) sales through traditional retail channels Page 10

S ECRET High quality, specialty Materials portfolio Page 11

Materials end market segments offer growth options enhanced by substitution based on application development capabilities Personal Com. Marine High Perf. Sustainable Automotive Electronics Coatings (B&C) 2 Protection & Sport Textiles Replace metals & hazardous materials Replace steel/ aluminum & aramids Replace solvent-based Growth via end markets and substitution based on application development Coating Engineering Plastics 1 Dyneema Resins 1 Food packaging is the 3 rd application area for Engineering Plastics 2 The Building and Construction (B&C) Industry is the main area of application for Resins Page 12

Differentiated approach has led to a more attractive Materials portfolio, with a higher growth and returns profile Low Page 13

S ECRET S trong innovation platforms Page 14

Innovation Center supports innovation in core businesses and develops new Emerging Business Areas Innovation Center Aspirations underpinning Group targets  S upport innovation in core businesses to Core Business S upport and Growth facilitate earnings growth beyond 2018 Center of Venturing Incubator  Develop and extract value from Excellence Emerging Business Areas  Cost of Innovation S upport: - €15-20m EBITDA/ year Emerging Business Areas  EBITDA contribution of the Emerging Business Areas: from +€5m (2015) to +€30-40m 2018)  Overall Innovation Center Biomedical Bio-based Advanced Products & Surfaces EBITDA break-even in 2016 Services Page 15

Financial Results 2015 ROYAL DSM HEALTH NUTRITION MATERIALS

Financial Highlights 2015  S olid performance with  Group net sales of €7,722 million up 10% vs 2014 and EBITDA up 4% to €1,075 million  S trong 6% organic growth in Nutrition despite lower Vitamin E prices and strengthened CHF  Performance Materials continued showed a 19% higher EBITDA, driven by cost savings, good margin management and lower input costs  Results benefitted from overall positive FX effect  New strategy set in November 2015 for 2016-2018 to drive improved profitability and return on capital  Proposed dividend stable at €1.65 per ordinary share  Outlook 2016: “ DS M aims to deliver increased full-year EBITDA and ROCE in line with the targets set out in its S trategy 2018: Driving Profit able Growt h ” Page 17