DSM in motion: driving focused growth Nico Gerardu Member of the - - PowerPoint PPT Presentation

DSM in motion: driving focused growth

Nico Gerardu Member of the Managing Board Nomura Chemicals Conference Rome, 22 March 2012

Safe harbor statement

This present at ion may cont ain forward-looking st at ement s wit h respect t o DS M’ 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 t he company. DS M caut ions readers t hat such st at ement s 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 actual 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. The English language version of t his document is leading. 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 2

DSM at a glance 2011, continuing operations

• Net sales

€ 9,048m

• EBITDA

€ 1,296m

• Net Profit

€ 594m

• ROCE

14.0%

• Capital Employed

€ 6,581m

• Capex incl acquisitions € 1,508m
• R&D

€ 476m

• Workforce

22,224

• Leader in sustainability

No 1 in 6 out of 8 years DJS I

39% 8% 32% 21% Nutrition Pharma Polymer Intermediates Performance Materials

Sales

(*) per cluster

52% 2% 20% 26% Nutrition Pharma Polymer Int ermediates Performance Materials

EBITDA(*) per cluster

* Innovat ion Cent er and Corporat e Act ivit ies relat ed Sales & EBITDA weight ed dist ribut ed over clust ers S lide 3

Overview

• Operational performance 2011
• S

trat egic Progress 2011

• Out look 2012

Highlights Q4 / FY 2011

DSM reports another strong year and increases dividend

• Q4 EBITDA from cont inuing operations up 6%

to €293 million

• Full year EBITDA from continuing operat ions increased 12%

t o €1,296 million

• Life Sciences delivered furt her EBITDA growt h t hrough Nut rit ion
• Mat erials S

ciences posted a strong year with record Polymer Int ermediates results

• Good st rat egic progress wit h Mart ek acquisit ion and j oint vent ure wit h S

inochem

• EPS (before except ional it ems, cont inuing operat ions) up 22%

t o €3.53

• Dividend increase by €0.10 to €1.45 per ordinary share proposed for 2011
• Caut iously opt imist ic out look; on t he way t o achieve 2013 t arget s

Page 5

Results Q4 2011 & FY 2011 - Key figures

Q4-2011 Q4-2010

%

(€ million) FY-2011 FY-2010

%

Cont inuing operations before except ional it ems: 2,227 2,082 +7% Net S ales EBITDA EBIT EPS (€) 9,048 8,176 +11% 293 276 +6%

**

1,296 1,161 +12%

**

166 170

• 2%

866 752* +15% 0.71 0.63 +13% 3.53 2.89 + 22% Total DS M before exceptional items: 2,227 2,202 +1% Net S ales EBITDA 9,193 9,050 +2% 293 290 +1% 1,325 1,278 +4% Total DSM including exceptional items: 85 149

• 43%

Net profit EPS (€) 814 507 +61% 0.53 0.89

• 40%

4.86 3.03 +60%

* of which €9 million (full year €33 million) IFRS pension adj ustment **10% (full year 15% ) if IFRS pension adj ustment is excluded

Page 6

EBITDA –DSM continuing business

EBITDA (€ million) 2011 2010 2009 (*) 2008 (*) Nutrition 735 684 655 585 Pharma 36 61 91 150 Performance Materials 293 283 174 266 Polymer Int ermediat es 380 223 36 43 Innovat ion Center (*)

• 57
• 49

(**) (**) Corporat e Act ivit ies (*)

• 91
• 41
• 122
• 80

DSM core business 1,296 1,161 834 964 * 2008 & 2009 not rest at ed for changes in pension account ing and corporat e research cost s ** 2008 & 2009 Innovation Center was reported in Corporate act ivities

Page 7

On track towards achieving ambitious targets

Profitability targets 2013 2011 EBITDA € 1.4 - 1.6bn € 1,296m ROCE >15% 14% Sales targets 2015 2011 Organic sales growt h 5%

• 7%

annually 11% China sales from US $ 1.5bn to >US $ 3bn US $ 2bn High Growt h Economies from ~32% t owards 50%

• f tot al sales

39% Innovat ion from ~12% t o 20%

• f tot al sales

18% EBA aspiration 2020 2011 EBA sales >€ 1bn Good progress

S lide 8

Strong organic sales growth

Page 9

Target 5-7% Target 5-7%

• 20%
• 10%

0% 10% 20%

2007 2008 2009 2010 2011

Relatively resilient, increasing profitability

500 1000 1500 2007 2008 2009 2010 2011 EBITDA (€ m) and EBITDA margin % , continuing operations

14,2% 14,6% 12,4% 14,2%

Page 10

14,3%

Solid financial position

500 1000 1500 2000 2500 3000 2008 Q3 2011 Q4 Net Debt Cash

Net debt (€ m), Cash & Gearing Working Capital (€ m)

Gearing 26% Gearing 5%

500 1000 1500 2000 2500 3000 2008 Q3 2011 Q4 Working Capit al OWC/ Sales

20.2% % 25.1%

Page 11

OWC target: 19%

Dividend increased for the 2nd consecutive year

€ 0.50 € 0.75 € 1.00 € 1.25 € 1.50 '04 '05 '06 '07 '08 '09 '10 '11

Dividend per ordinary share (€)

• Dividend policy “ stable and preferably

rising”

• Proposal to AGM (May 2012):

€0.10 increase to €1.45 (7 % increase) – € 0.45 int erim dividend – € 1.00 final dividend

• Payable in cash or ordinary shares

Page 12

Overview

Page 13

• Operational performance 2011
• Strategic Progress 2011
• Out look 2012

DSM in motion: driving focused growth

Page 14

Acquisition of Martek Biosciences

• Leading posit ions in poly-unsat urat ed

fat ty acids and Infant Formula market

• Excellent performance
• Int egrat ion complet ed

DSM Sinochem Pharmaceuticals JV

• St rengt hening posit ion of t he -lact am

ant i- infect ives business, especially in China

• Furt her growt h announced; const ruct ion of

6-AP A and announcement of SS Cs plant Other

• Complet ion of non-core divest ment s
• 10 ot her part nerships and acquisit ions
• 5 vent uring invest ment s

Major steps in acquisitions and partnerships

Expectations by 2015

• JV to increase its sales to > € 600m
• EBITDA margin >15%

Expectations 2015

• Double digit sales growt h
• S

table t o rising EBITDA margins

Page 15

Page 16

POET & DSM JV make advanced biofuels a reality

Scope

• Commercially demonstrat e and license

cellulosic bio-et hanol

• JV int ends t o license t echnology:

–t hroughout POET’s exist ing net work

• f 27 corn et hanol plant s

–Worldwide to third parties Value creation

• First revenues expect ed in 2013
• JV is expect ed to be profit able in first full

year of production (2014)

• Proj ected sales (cellulosic bio-ethanol,

biogas and lat er on licensing) from JV to grow to > US $ 200m with above average EBITDA in medium/ longer t erm

5 10 15 20 2011 2015 2020 2022 US China Brazil EU

*: Derived from Hart ’ s Global Energy S t udy Market value for enzymes & yeasts of ~ US $ 3-5 bn by 2022

Market expectations(**) cellulosic ethanol (global demand in billion gallons)

0, 0 1, 5 3, 0 2005 CMD 2010 FY 2011 Target 2015

High Growth Economies: from 32% to 50%

Step up in High Growth Economies

• S

ales to High Growth economies increased to 40%

• f DS

M’s sales

• S

ales to China increased to US $ 2bn in 2011 Organizational change

• Business Group HQ’s moved to Asia

(DS M Engineering Plastics to S ingapore, DS M Fiber Intermediates to S hanghai)

• DS

M S inochem Pharmaceuticals JV est ablished in Hong Kong

• Innovat ion cent ers init iat ed in China &

India

• St rengt hened regional capabilit ies

(China, India, Russia and LAM)

2011 step up in High Growth Economies

Sales to China: from $1.5bn to > $3bn

S lide 17

Innovation

• Innovation sales increased to 18%
• f sales
• Acquisit ion of C5 Yeast Company from Royal

Cosun increased DS M’ s leadership in the field

• f cellulosic bio-et hanol
• DS

M & Roquet t e JV st art ed const ruct ion of commercial bio-succinic acid plant Sustainability

• Sect or leader Dow Jones Sust ainabilit y Index
• ECO+ sales 41%
• f running business
• ECO+ innovation pipeline was 94%

, clearly above aspiration level > 80%

• Energy efficiency 13%

improvement vs 2008

• Employee engagement 71%

(close to high performance norm)

• People+ framework and diversity ambitions

defined

ECO+ %

• f running business on track

Innovation from 12% to 20%

• f sales

Good progress on innovation & sustainability

Page 18

Nutrition

Life Sciences strategic progress 2011

Pharma

Aspiration by 2015

• Growth GDP + 2%
• EBITDA margin >20 - 23%

FY 2011 4% 22%

• Acquisition of Mart ek biosciences

(poly-unsat urat ed fat t y acids)

• Acquisit ion of Vit at ene

(nat ural carot enoids)

• Expanded to 51 premix facilities

(in e.g. IN, RU, CN, CO, EQ)

• S

uccessful process developments; improving cost position

• Asset s opt imizat ion/ rest ruct uring
• JV DS

M Ant i-infect ives and Sinochem est ablished.

• Const ruct ion of 6-APA plant
• First result s of portfolio expansion
• CMO pipeline improving

Aspiration by 2015

• EBITDA margin >15%

towards 20% FY 2011 5%

Page 19

Performance Materials

Materials Sciences strategic progress 2011

Polymer Intermediates

Aspiration by 2015

• Growth at 2 x GDP
• EBITDA margin >17%

FY 2011 9% 11%

• JVs wit h KuibyshevAzot in

engineering plast ics (RU)

• Acquisit ion of high performance

fiber producer ICD (CN)

• Acquisition of UV resins AGI (Asia)
• Part nership wit h Kemrock in

composit e resins (IN)

• New composit e resins plant (CN)
• Good progress in sust ainable

innovat ions

• 2nd Line in China under const ruct ion

wit h part ner S inopec

• Implement ing new sust ainable

t echnology

• Compet it iveness furt her

st rengt hened

• Licensing t o KuibyshevAzot (RU)

Aspiration by 2015

• EBITDA margin ~14%
• n

average over the cycle FY 2011 21%

Page 20

Overview

Page 21

• Operational performance 2011
• S

trat egic Progress 2011

• Outlook 2012

Current business trading in DSM end-markets

End-market demand

• Food

good

• Feed

st rong

• CMO Pharma

moderate

• Aut omotive / Transport

good

• E&E

moderate

• Building & Const ruct ion

weak

• Packaging

good

• Text ile

good Geographic demand

• EU

weak

• US

improving

• Asia, Latam

st rong

Page 22

Outlook

• Cautiously optimistic out look.
• In Nutrition EBITDA is expected to be above 2011.
• EBITDA in Pharma is expected to improve slightly compared to 2011, despit e

t he impact of t he 50% deconsolidat ion of t he ant i-infect ives business.

• Based on current insight s EBITDA of t he Performance Materials clust er is

expect ed t o be somewhat higher t han in 2011.

• For Polymer Intermediates anot her strong year is expect ed, at a level above

t he hist orical average, but t he EBITDA will be clearly lower t han t he exceptional result in 2011.

• DSM expect s t he second half of 2012 t o be st ronger t han t he first half of 2012.
• DSM on its way t o achieve 2013 t argets.

Page 23

Wrap up

• 2011 another strong year for DS

M

• Good strat egic progress
• Mart ek acquisit ion (poly-unsat urat ed fat t y acids)
• JV with DS

M S inochem Pharmaceuticals (ant i-infectives)

• JV with POET to make advanced biofuels a realit y
• DS

M is well placed in current macro-economic environment

• Relatively resilient portfolio,
• St rong presence in High Growt h Economies
• St rong balance sheet
• Caut iously optimistic outlook, DS

M on its way to achieve 2013 t argets

Page 24

Contact:

DS M Investor Relations

P.O. Box 6500, 6401 JH Heerlen, The Net herlands

(+31) 45 578 2864

e-mail: invest or.relat ions@ dsm.com int ernet : www.dsm.com visit ing address: Het Overloon 1, Heerlen, The Net herlands