DSM reports solid Q3 results despite weak economic conditions

DSM reports solid Q3 results despite weak economic conditions 
HEERLEN, NETHERLANDS -- (Marketwire) -- 11/06/12 --  
* Q3 EBITDA from continuing operations EUR270 million (Q3 2011:
EUR339 million) 
* Life Sciences, driven by Nutrition, showed good performance,
representing 76% of Q3 EBITDA 
* Materials Sciences continued to perform well, except for
* Further strategic progress with acquisitions 
* Strong Q3 cash flow from operating activities of EUR253 million 
* Outlook 2012 largely unchanged 
Commenting on the results, Feike Sijbesma, CEO/Chairman of the DSM
Managing Board, said: "Despite a challenging global trading
environment DSM continued to generate good
results mainly driven by
our Nutrition cluster. We continued to make good progress towards our
strategic goals with the purchase of Tortuga and Cargill's
and enzymes business. We have now invested EUR2.3 billion in
since the end of 2010, of which EUR1.9 billion in
Nutrition. With these acquisitions we are building new platforms and
are strengthening our downstream
network. This will create
significant future value for the company whilst further increasing
the resilience of DSM's earnings profile." 
"Our Profit Improvement Program, designed in part to offset the
impact of adverse external developments, is on track to deliver
significant cost savings.
We expect that trading conditions will
remain tough. Our strong focus on cost
control and cash flow together
with our strong balance sheet leaves DSM well
placed to navigate near
term external challenges." 
Find the tables on www.dsm.com or in the pdf version of the quarterly
During the third quarter of 2012, the weak conditions in the global
economy  seen
throughout the previous quarter continued. The Eurozone
challenges remained significant and the slow-down in China persisted.
 The US continued to grow at a modest rate. Despite these conditions,
DSM continued to deliver solid operational results generating Q3
EBITDA of EUR270 million which included a negative caprolactam
related impact of EUR105 million compared to Q3 2011. 
Nutrition delivered a 15% higher EBITDA than in Q3 2011 as a result
of organic
growth, positive exchange rate effects and the contribution
of Ocean Nutritio
Pharma results were adversely impacted by an uneven delivery pattern
at DSM Pharmaceutical Products and by lower margins. 
Performance Materials performed well, except for the continued
weakness of caprolactam which impacted the results of DSM Engineering
As expected, results at Polymer Intermediates declined significantly
versus last
year as already in Q2, mainly due to lower caprolactam
Results at the Innovation Center improved as a result of higher
Biomedical sales
and the acquisition of Kensey Nash. 
Cash provided by operating activities amounted to EUR547 million
during the first
three quarters of 2012 versus EUR479 million during
the same period last year. Net debt increased by EUR839 million
compared to year-end 2011 to a level of EUR1,157
million, mainly due
to acquisitions. 
Net sales 
Organic sales development was -7% compared to Q3 2011 mainly due to
Polymer Intermediates. 
Nutrition continued to deliver organic growth by increasing volumes. 
Pharma showed organic growth due to a more favorable product mix. 
In Performance Materials the organic sales development of -7% was due
to lower
prices and lower volumes. 
The organic sales development in Polymer Intermediates was due to
lower volumes
as well as lower caprolactam prices. 
Business review by cluster 
Organic sales growth was 1% compared to Q3 2011 with volume growth
(2%) and slightly reduced prices (-1%). Sales growth was positively
impacted by favorable exchange rates (4%) and the impact of the Ocean
Nutrition Canada acquisition (4%). 
Animal Nutrition & Health achieved modest volume growth despite the
drought in
the US which resulted in higher grain prices. This
subsequently led to lower
feed and meat production. Prices were
slightly down. 
Human Nutrition & Health prices were up slightly while volumes
remained relatively stable. Nutritional Lipids experienced strong
growth outside North
America with synergies realized in line with
targets. The integration of Ocean
Nutrition Canada is on track with
sales of EUR30 million and EBITDA of EUR8 million. 
Personal care continued to grow especially in sun care and skin care. 
DSM Food Specialties realized growth in all market segments.
Especially enzymes
showed strong organic growth. 
EBITDA for the third quarter was EUR202 million, up EUR26 million
from the same
quarter a year earlier driven by higher margins,
favorable exchange rates and
the contribution of Ocean Nutrition
Canada. At 21.4% the Q3 EBITDA margin was in line with the defined
target of 20% - 23%. 
Net sales growth was 1% compared to Q3 2011 driven by a more
favorable product
mix (+1%), favorable exchange rates (+3%) and the
deconsolidation of DSM Sinochem Pharmaceutical combined with the
re-integration of the Maleic Anhydride
and Derivatives business
(-3%). Higher volumes at DSM Sinochem Pharmaceutical
compensated for
reduced volumes at DSM Pharmaceutical Products. 
EBITDA for the quarter was EUR4 million, down from EUR13 million in
the same quarter a year earlier. Lower volumes caused by uneven
delivery patterns in the DSM Pharmaceutical Products business and
lower margins at DSM Sinochem Pharmaceutical, despite higher volumes,
had a negative impact. 
Performance Materials 
Organic sales development was -7% compared to Q3 2011 due to lower
volumes in
DSM Resins and lower volumes and lower prices at DSM
Engineering Plastics, mainly as a result of lower polyamide-6 prices
stemming from lower caprolactam
prices. Currency developments and
acquisitions had a positive impact on sales. 
EBITDA was below Q3 last year as lower margins in the polyamide-6
value chain of DSM Engineering Plastics offset the good performance of
the rest of the cluster.
Despite ongoing subdued market conditions
DSM Resins delivered improved results
due to better margins and the
implementation of cost saving actions. 
Polymer Intermediates 
Organic sales development was -24% compared to Q3 2011, due to 15%
lower prices
and 9% lower volumes. Currencies had a 5% positive impact
on sales. Volumes were
lower mainly due to scheduled caprolactam
plant turnarounds in China and the US. 
As expected, EBITDA was clearly below the record levels of Q3 2011.
margins remained at the low levels reached at the end of
Q2 2012. In addition,
the scheduled plant turnarounds in China and
the USA contributed to the lower
Innovation Center 
Sales improved strongly compared to Q3 2011 as a result of higher
sales as well the acquisition of Kensey Nash which has
been consolidated as of
June 22. 
EBITDA improved due to higher sales and the acquisition of Kensey
Nash which now has been integrated into the biomedical business.
Kensey Nash contributed in
line with expectations with sales of EUR17
million and EBITDA of EUR7 million. 
Corporate activities 
The lower sales compared to Q3 2011 were due to the re-integration of
the Maleic
Anhydride and Derivatives business into the Pharma cluster. 
EBITDA improved slightly compared to Q3 2011 as a result of the sale
of certain
assets at the Chemelot site which was partly offset by
higher share based payment costs and higher project related costs. 
Exceptional items 
xceptional items amounted to a loss of EUR26 million before tax
(EUR22 million
after tax). In connection with the Profit Improvement
Program, restructuring
costs and provisions were recognized for an
amount of EUR13 million. Acquisition
related costs amounted to EUR13
Net profit 
Net finance costs increased by EUR8 million compared to Q3 2011 to a
level of EUR23 million mainly as a consequence of currency effects and
less average cash at
lower interest rates. 
The effective tax rate was 18% compared to 19% for the full year
Net profit before exceptional items decreased by EUR56 million
compared to Q3
2011 to EUR103 million mainly due to the lower Polymer
Intermediates' operating
Compared to Q3 2011 total net profit decreased by EUR90 million to
EUR81 million. 
Net earnings per ordinary share (continuing operations, before
exceptional items) amounted to EUR0.61 in Q3 2012 compared to EUR0.94
in Q3 2011. 
Cash flow, capital expenditure and financing 
Cash provided by operating activities was EUR253 million in Q3 2012
compared to EUR323 million in Q3 2011. Year-to-date Q3 2012 cash
provided by operating activities amounted to EUR547
million versus
EUR479 million in the same period last year. 
Excluding the acquisition effect of Ocean Nutrition Canada and Kensey
Nash, Operating working capital decreased by EUR50 million compared to
the level at the end of Q2 2012. 
Cash flow related to capital expenditure amounted to EUR186 million
in Q3 2012
compared to EUR144 million in Q3 2011. In the first three
quarters of 2012 cash
flow related to capital expenditure amounted to
EUR474 million compared to EUR304
million in the same period last
Net debt increased by EUR839 million compared to year-end 2011 and
stood at EUR1,157
million (gearing 16%). 
DSM in motion: driving focused growth 
DSM in motion: driving focused growth is the strategy that the
company embarked
on in September 2010. It marks the shift from an era
of intensive portfolio transformation to a strategy of maximizing
sustainable and profitable growth.
DSM's strategic focus on Life
Sciences (Nutrition and Pharma) and Materials Sciences (Performance
Materials and Polymer Intermediates) is fueled by three
main societal
trends: Global Shifts, Climate & Energy and Health & Wellness. DSM
aims to meet the unmet needs resulting from these societal trends
with innovative and sustainable solutions. 
Below is an update on DSM's strategic achievements in the third
Acquisitions & Partnerships: from portfolio transformation to driving
focused growth 
In July, DSM successfully completed the acquisition of Ocean
Nutrition Canada,
the leading global provider of fish-oil derived
nutritional products to the dietary supplement and food and beverage
markets. With this acquisition DSM strengthens and complements its
Nutritional Lipids growth platform, established
after the acquisition
of Martek in 2011. DSM can now uniquely offer a full product range in
the rapidly growing nutritional lipids category, offering both
oil derived omega-3 fatty acids and microbially derived nutritional
In July, DSM successfully completed the acquisition of the Italian
animal health
and nutrition premix specialist, Cilpaz Srl.  Although
relatively minor in size,
this acquisition underlines DSM's strategy
of focused growth. 
In August DSM entered into a definitive agreement to acquire Tortuga,
a privately held Brazilian company, in a cash transaction for a total
value of about EUR465 million (BRL 1,160 million). Tortuga
is a leading company in nutritional supplements with a focus on
pasture raised beef and dairy cattle.
The company is headquartered in
Sao Paulo, Brazil with approximately 1,200 employees. Subject to
regulatory approvals, the transaction is expected to close
in Q1
In October, DSM entered into a definitive agreement to acquire
Cargill's cultures and enzymes business in a cash transaction for a
total enterprise value
of about EUR85 million. This business is a
globally leading manufacturer of cultures and enzymes for the dairy
and meat industries with manufacturing operations in Wisconsin (USA)
and France. The business generates net sales of
about EUR45 million
per year with approximately 200 employees. 
Since it set out its current strategic course in September 2010, DSM
has invested EUR2.3 billion worth of growth-enhancing acquisitions.
Nearly EUR1.9
billion is being spent in the Nutrition cluster as the
company continues to further improve its attractive portfolio in
health, nutrition and materials to
deliver value with stronger, more
stable growth and profitability. 
Innovation: from building the machine to doubling innovation output 
Bio-based Products & Services is making further strategic progress.
The bio-succinic acid facility in Italy is currently in the start-up
process. DSM and BP have extended their cooperation on the joint
development of advanced bio-diesel. DSM successfully produced its
first commercial batch of advanced C5 yeast for cellulosic ethanol
High Growth Economies: from reaching out to being truly global 
Sales to High growth Economies accounted for 37% of total sales
versus 41% of
total sales in Q3 2011 which was mainly due to lower
caprolactam sales in China. 
Net sales to China amounted to USD 398 million versus USD 554 million
in Q3 2011 which was mainly due to lower sales prices at DSM Polymer
The outlook for the global economy remains uncertain. DSM's Profit
Program is fully on track and aims to deliver EUR150
million of benefits by 2014.
This program together with an on-going
focus on cash generation will help to
offset adverse external
factors. The acquisitions announced since the end of
2010 will create
considerable economic value for DSM whilst increasing the resilience
of its earnings. 
Nutrition continues to demonstrate its resilience with EBITDA
expected to be
clearly above 2011. Ocean Nutrition Canada will add
about EUR20 million in EBITDA
in 2012. 
Business conditions in Pharma are likely to remain challenging for
the remainder
of the year, although DSM continues to expect to deliver
a slightly improved
EBITDA despite the 50% deconsolidation of the
anti-infectives business. DSM continues to seek opportunities to make
further strategic progress in this cluster. 
Full year EBITDA for Performance Materials is expected to be slightly
below 2011, due to continuing weak market conditions for caprolactam. 
The adverse market conditions for Polymer Intermediates are not
expected to improve during Q4 and therefore DSM anticipates EBITDA to
be clearly below the
exceptional 2011 result. 
For the Innovation Center, EBITDA is expected to improve compared to
last year
due to the acquisition of Kensey Nash which will add about
EUR10 million in EBITDA
in 2012. 
Overall, DSM remains cautious about the economic outlook for the
remainder of
2012. DSM's expectations for the year are largely in line
with its previous guidance, with the exception of ongoing weakness in
caprolactam which also affects the Performance Materials cluster. 
Assuming no further deterioration of the economic conditions, and
based on its
strategy, financial strength and the Profit Improvement
Program, DSM will move
towards the 2013 EBITDA target. 
Additional information 
Today DSM will hold a conference call for the media from 07.30 AM to
08.00 AM
CET which can be followed via a webcast and a conference call
for investors and
analysts from 09.00 AM to 10.00 AM CET. Details on
how to access these calls can be found here. Also, information
regarding DSM's third quarter results 2012 can
be found in the
Presentation to Investors, which can be downloaded from the Investors
section of the DSM website. 

Important dates
Annual Report 2012                            Wednesday, 20 February 2013
Report for the first quarter 2013             Thursday, 2 May 2013
Annual General Meeting of Shareholders        Friday, 3 May 2013
Report for the second quarter 2013            Tuesday, 6 August 2013
Report for the third quarter 2013             Tuesday, 5 November 2013

DSM - Bright Science. Brighter Living.(TM) 
Royal DSM is a global science-based company active in health,
nutrition and materials. By connecting its unique competences in Life
Sciences and Materials
Sciences DSM is driving economic prosperity,
environmental progress and social
advances to create sustainable
value for all stakeholders. DSM delivers innovative solutions that
nourish, protect and improve performance in global
markets such as
food and dietary supplements, personal care, feed, pharmaceuticals,
medical devices, automotive, paints, electrical and electronics, life
protection, alternative energy and bio-based materials. DSM's
employees deliver annual net sales of about EUR9 billion. The company
is listed on NYSE Euronext. More information can be found at
Financial summary-pdf: http://hugin.info/130663/R/1655251/534840.pdf 
Integrated report-pdf: http://hugin.info/130663/R/1655251/534841.pdf 
Press release-pdf: http://hugin.info/130663/R/1655251/534839.pdf 
This announcement is distributed by Thomson Reuters on behalf of
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(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein. 
Source: DSM N.V.  via Thomson Reuters ONE 
For more information 
DSM, Corporate Communications
tel.: +31 (45) 5782421
e-mail: media.relations@dsm.com 
DSM, Investor Relations
tel.: +31 (45) 5782864
e-mail: investor.relations@dsm.com 
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