DSM in motion: driving focused growth Q1 results 2013
Safe 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 t o t he company. DS M caut ions readers t hat such st at ements 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. 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 Page 1
Overview • Operational performance Q1 2013 • Progress on st rategy • Business and out look Page Page 2
Highlights Q1 2013 DSM reports good start to the year in challenging environment • DS M records higher Q1 EBITDA of € 311 million (Q1 2012: € 306 million) • Healt hy profit abilit y in Life Sciences wit h Nut rit ion proving resilience • Mat erials S ciences delivered a solid performance • Integrat ion of acquisit ions and realizat ion of synergies on t rack • Good progress with implementation of Profit Improvement Program • Out look 2013 unchanged, moving towards EBITDA of € 1.4 billion Page Page 3
Quote Feike Sijbesma “ In a challenging economic environment , I’ m pleased t o report a good st art t o t he year wit h a robust performance. Nut rit ion, which account s for about 70% of group EBITDA, has proved t he resilience and qualit y of it s broad offering across t he value chain, delivering anot her quart erly improvement in profit abilit y, t oget her wit h healt hy margins.” “ Where t he last t wo years were charact erized by acquisit ions, in 2013 we will fully focus on t he operat ional performance and t he int egrat ion of acquisit ions, wit h special at t ent ion t o capt uring synergies whilst also ensuring t he successful execut ion of our group-wide profit improvement init iat ives. We expect st rong Feike Sijbesma EBITDA growt h in 2013, moving t owards € 1.4 billion." CEO / Chairman of t he Managing Board Page Page 4
Results Q1 2013 - Key figures � % (€ million) Q1-2013 Q1-2012 Continuing operations before exceptional items: 2,376 2,290 +4% Net sales EBITDA 311 306 +2% EBIT 183 200 -8% EPS (€) 0.70 0.87 -20% Core EPS* 0.76 0.91 -16% Total DSM before exceptional items: 2,376 2,290 +4% Net sales EBITDA 311 306 +2% Total DSM including exceptional items: 119 145 -18% Net profit EPS (€) 0.69 0.87 -21% * Core earnings per share’ is earnings per share before except ional it ems and before acquisition relat ed (intangible) asset amortization Page 5 Page
EBITDA –DSM continuing business EBITDA (€ million) Q1-2013 Q1-2012 Q1– 2011 Q1-2010 Nutrition 215 192 173 166 Pharma 8 5 0 14 Performance Materials 80 79 91 71 Polymer Int ermediat es 29 69 99 50 Innovat ion Center -4 -15 -13 -13 Corporat e act ivit ies -17 -24 -25 -4 311 306 325 284 DSM core business Page Page 6
Net sales growth Q1-2013 versus Q1-2012 Price/ (€ million) Q1-2013 Q1-2012 Diff. Volume FX Other Mix Nutrition 988 900 10% 3% -3% -1% 11% Pharma 178 175 2% 1% 2% -1% Performance 673 701 -4% -2% -1% -1% 0% Materials Polymer 437 430 2% 9% -7% 0% Intermediates Innovat ion Cent er 38 16 Corporat e Act ivit ies 62 68 Continuing 2,376 2,290 4% 3% -3% -1% 5% Operations Page Page 7
Nutrition � % (€ million) Q1-2013 Q1-2012 Net sales 988 900 10% EBITDA 215 192 12% EBIT 164 149 10% EBITDA margin 21.8% 21.3% • Sales in Q1 rose 10% compared to Q1 2012, driven primarily by acquisitions. Organic sales growth in Human Nutrit ion & Health and DS M Food S pecialties was offset by lower sales in Animal Nutrit ion & Health. Overall 3% volume growth was offset by a 3% decline due to price/ product mix effects. • EBITDA for Q1 was € 215 million, up 12% compared to Q1 2012, driven by strong operational performance including acquisit ions, wit h an overall EBITDA margin of 21.8% , well wit hin t he t arget range. Page Page 8
Nutrition - cont • Despit e some soft ness in est ablished Food & Beverage market s, Q1 delivered good organic growt h in Human Nut rit ion & Healt h, driven by increased volumes wit h slight ly lower prices, mainly due t o mix effects. Ocean Nut rit ion Canada (ONC) and Fort it ech delivered healt hy double digit growth in line wit h expect at ions. ONC has been successfully int egrat ed in DSM Nut rit ional Product s and is therefore no longer reported separately. In Q1 Fortitech realized sales of € 52 million and EBITDA of € 9 million. • Animal Nutrition & Health experienced a decline in volume and an unfavorable price/ mix impact, driven by the after-effects of the historically high grain prices in 2012 and the resulting lower demand t hat rolled through t he production and downstream value chains for animal prot ein. Price increases for some vit amins were announced in Q1 2013. • DS M Food S pecialties showed higher sales through organic growth and the contribution of the Cultures & Enzymes business acquired from Cargill. • The int egrat ion of Ocean Nut rit ion Canada, Fort it ech and Cargill’s Cult ures & Enzymes business is proceeding well and t he acquired businesses are meet ing expect at ions. The int egrat ion of Tortuga st art ed after the closing on 5 April 2013. Page Page 9
Pharma � % (€ million) Q1-2013 Q1-2012 Net sales 178 175 2% EBITDA 8 5 60% EBIT -6 - 8 EBITDA margin 4.5% 2.9% • Organic sales growth was 3% compared t o Q1 2012, mainly driven by higher prices at DS M S inochem Pharmaceuticals (DS P). Volumes at DS P were stable. Sales of DS M Pharmaceutical Product s were at the same level as in Q1 2012. • EBITDA for t he quart er was € 8 million versus € 5 million in Q1 2012. The increase was mainly caused by lower fixed costs at DSM Pharmaceut ical Products. Page Page 10
Performance Materials � % (€ million) Q1-2013 Q1-2012 Net sales 673 701 -4% EBITDA 80 79 1% EBIT 47 48 -2% EBITDA margin 11.9% 11.3% • Organic sales development was -3% . Volumes declined at DS M Resins & Funct ional Mat erials especially in Europe in building and const ruct ion, but were up at DSM Engineering Plast ics and DS M Dyneema. Price increases at DS M Resins & Funct ional Mat erials could not fully offset the negative impact of caprolactam in DS M Engineering Plast ics. • Q1 EBITDA was stable compared to t he same period last year as continuous cost savings offset the – ant icipated-lower margins in the polyamide-6 value chain caused by caprolactam. Q1 result s included a one-time book profit of a high single digit amount on t he sale of cert ain DS M Resins & Funct ional Materials related distribution act ivities. Compared to Q4 2012 EBITDA improved significantly, benefiting from a 3% increase in sales, stable margins in the polyamide-6 value chain and lower cost s. Page Page 11
Polymer Intermediates � % (€ million) Q1-2013 Q1-2012 Net sales 437 430 2% EBITDA 29 69 -58% EBIT 20 62 -68% EBITDA margin 6.6% 16.0% • Organic sales growth was 2% , driven by higher volumes, which were partly offset by lower prices. Volumes in Q1 2012 were impacted by t he t urnaround of t he caprolact am plant in Europe. In Q1 2013 t here was no t urnaround. • EBITDA declined significant ly versus Q1 2012 mainly due t o lower caprolact am prices and substantially higher benzene prices. Q1 included a high single digit income as t he init ial effect from a long-t erm license agreement with Shenyuan in China for a caprolactam plant. Compared to Q4 2012 EBITDA improved due to higher production volumes, as Q4 results were impacted by a t urnaround in t he US. Page Page 12
Innovation Center � % (€ million) Q1-2013 Q1-2012 Net sales 38 16 138% EBITDA -4 -15 EBIT -13 -17 • DS M Biomedical showed a strong increase in sales versus Q1 2012, mainly due to the cont ribut ion of Kensey Nash (€ 19 million). All ot her act ivit ies at t he Innovat ion Cent er were at the same level as in Q1 2012. The POET-DS M Advanced Biofuels JV is making good progress wit h t he construct ion of the cellulosic bio-et hanol refinery, which is on t rack for t imely complet ion. • EBITDA increased by € 11 million compared to Q1 2012 of which € 7 million was due to the cont ribut ion of Kensey Nash. Page Page 13
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