Life S ciences and Materials S ciences Presentation to Investors Q1 2014 Result s, 6 May 2014 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 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. 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 • Q1-2014 Operat ional performance • Updat e on Nut rit ion • Business condit ions and out look • Our st rategy Page 2
Highlights DS M reports Q1 2014 result s • In Q1 2014 DS M delivered €272 million EBITDA from continuing operat ions, in line wit h expect at ions • Q1 2014 EBITDA from continuing operat ions was €29 million below Q1 2013, of which about €23 million was due t o adverse exchange rate developments • The impact of t he headwinds in Nut rit ion appear t o have peaked in Q1 • In Performance Mat erials all business groups delivered good volume growt h • DS M maint ains 2014 out look, ant icipat ing EBITDA improvement s over t he coming quarters Page 3
Quote from Feike S ij besma “ DS M delivered result s in line wit h expect at ions, despit e furt her currency det eriorat ion during t he quart er. We are pleased t o report t hat market condit ions in Nut rit ion began t o show some signs of improvement by t he end of t he quart er. Our performance in Q1 demonst rat es DSM’ s st rengt h in Nut rit ion, owing t o our highly int egrat ed and global business model, benefit ing from t he st ruct ural megat rends of healt h and wellness. We also see a more posit ive moment um in a number of Performance Mat erials end- market s.” “ Through maint aining our focus on t he operat ional performance of t he business, benefit ing from t he Profit Improvement Program, we cont inue t o execut e our near t erm init iat ives of prot ect ing profit abilit y and improving cash flow. Therefore, we confirm our out look given in January 2014, and ant icipat e t o deliver improving f inancial result s in t he coming quart ers.” Feike S ijbesma CEO / Chairman of t he Managing Board Page 4
Results Q1-2014 Key figures � % (€ million) Q1-2014 Q1-2013 Cont inuing operations before except ional it ems: Net S ales 2,196 2,188 0% EBITDA 272 301 -10% EPS (€) 0.57 0.71 -20% Core EPS (€)* 0.66 0.78 -15% Total DS M before exceptional items: 2,298 2,320 -1% Net S ales EBITDA 270 308 -12% Total DS M after exceptional items: 81 119 -32% Net profit EPS (€) 0.45 0.69 -34% • ‘ Core earnings per share’ is the earnings per share from continuing operations before exceptional items and before acquisition relat ed (intangible) asset amortization Page 5
Net sales growth Q1-2014 versus Q1-2013 Price/ (€ million) Q1-2014 Q1-2013 Diff. Volume FX Ot her Mix Nutrition 1,047 990 6% 4% -2% -3% 7% Performance 670 669 0% 4% -2% -2% 0% Materials Polymer 405 437 -7% 2% -8% -1% Intermediates Innovat ion Cent er 34 37 -8% -5% 0% -3% Corporat e Act ivit ies 40 55 Continuing 2,196 2,188 0% 3% -3% -3% 3% Operations Page 6
EBITDA –development � % EBITDA (€ million) Q1-2014 Q1-2013 Nutrition 203 215 -6% Performance Materials 77 79 -3% Polymer Int ermediat es 20 28 -29% Innovat ion Center -6 -2 Corporat e Act ivit ies -22 -19 Cont inuing Operations* 272 301 -10% • Continuing operations (excluding discontinued act ivities) Page 7
Nutrition � % (€ million) Q1-2014 Q1-2013 Net sales 1,047 990 6% Organic growt h 2% EBITDA 203 215 -6% EBITDA margin 19.4% 21.7% EBIT 143 163 -12% Capital employed 4,672 4,496* • S ales in the first quarter increased by 6% compared to Q1 2013. Organic sales growt h was 2% compared t o Q1 2013, as a result of 4% higher volumes and 2% lower prices. Currencies had a negative impact of 3% , while acquisit ions (mainly Tortuga) had a posit ive impact of 7% • EBITDA for Q1 was €203 million, down 6% from Q1 2013. The posit ive impact of the organic growth and t he cont ribut ion from acquisit ions was offset by negative foreign exchange development s, lower prices in some vitamins and a less favorable business mix, resulting in an EBITDA margin slight ly below DSM’s t arget range of 20-23% • DSM Food S pecialties delivered a solid performance in Q1 with good organic growth in enzymes and cult ures. The int egrat ion of Cargill and DSM’s cult ures businesses was concluded according t o plan. The combined businesses are generat ing value for DSM’s cust omers, result ing in significant growt h opport unities * year-end 2013 Page 8
Human Nutrition & Health* � % (€ million) Q1-2014 Q1-2013 Net sales 423 442 -4% Organic growt h -1% • Human Nut rit ion & Healt h net sales were €423 million in Q1. Organic sales declined by 1% compared to Q1 2013, with volumes flat and prices/ mix down slight ly. As expected, the US dietary supplement s markets (vit amins and fish oil based Omega 3) were down significantly, while dietary supplements in Europe and Asia performed well. Good growth was also realized in i-Health and in premixes. West ern food & beverage markets in general remained soft • Compared to Q4 2013, prices were down 3% mainly due to a less favorable product mix, while volumes were up almost 14% , due to seasonal effects and some restocking * Human Nut rit ion & Healt h act ivit ies of DS M Nut rit ional Product s Page 9
Animal Nutrition & Health* � % (€ million) Q1-2014 Q1-2013 Net sales 466 396 18% Organic growt h 7% • Animal Nutrit ion and Healt h net sales were €466 million in Q1. Organic sales growt h in Q1 was 7% wit h volumes up 10% compared to the weak Q1 2013 when t he animal feed markets were st ill being impacted by the high commodity prices resulting from the 2012 drought. Improving market condit ions in animal feed drove volume growth, albeit tempered by ongoing animal diseases in cert ain regions, with strong performance in premix. Volumes for our key vitamins, especially vit amin E, remained flat. Prices were down 3% from Q1 2013 due to lower vitamin prices, especially vit amin E • Compared to Q4 2013, volumes were down 6% mainly attributable to seasonalit y. Overall, prices were slight ly lower (-1% ), with vit amin E prices st abilizing in Q1. Higher vit amin spot prices in March had no significant impact on Q1 pricing, as DS M primarily supplies on a cont ract basis • In Q1 2014, Tort uga delivered sales of €64 million and an EBITDA of €10 million * Animal Nut rit ion & Healt h act ivit ies of DSM Nut rit ional Product s Page 10
Performance Materials � % (€ million) Q1-2014 Q1-2013 Net sales 670 669 0% Organic growt h 2% EBITDA 77 79 -3% EBITDA margin 11.5% 11.8% EBIT 44 46 -4% Capital employed 1,967 1,902* • Organic sales growth in Q1 2014 was 2% compared to Q1 2013 wit h 4% volume growth and 2% lower prices. Adverse currency effect s amounted to 2% . DS M Engineering Plastics showed good volume growt h, despite t he negat ive impact of t he severe wint er in t he US on P A 6 product ion. Prices were slight ly higher. DS M Resins & Functional Materials saw good volume growth, while prices were down due to price/ mix effect s. In DSM Dyneema, sales were support ed predominant ly by higher volumes • EBITDA in Performance Materials for the quarter was 10% above the underlying result of Q1 2013, as t hat quarter benefited from a €9 million book profit related to t he sale of distribution act ivities in DSM Resins & Functional Mat erials. In DS M Engineering Plast ics, EBITDA was up substantially from the previous year as a result of good volume growt h, slightly higher prices and the impact of cost reductions, which were partly offset by negative exchange rates. Underlying EBITDA at DSM Resins & Functional Materials was up, driven by good volume growth and continued cost control. DS M Dyneema delivered a substantially higher EBITDA t han Q1 2013, owing t o higher volumes and an improved cost base * year-end 2013 Page 11
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