DSM N.V. : DSM reports good start to the year in challenging environment

   DSM N.V. : DSM reports good start to the year in challenging environment



  *DSM records higher Q1 EBITDA of €311 million (Q1 2012: €306 million)

  *Healthy profitability in Life Sciences with Nutrition proving resilience 

  *Materials Sciences delivered a solid performance 

  *Integration of acquisitions and realization of synergies on track 

  *Good progress with implementation of Profit Improvement Program

  *Outlook 2013 unchanged, moving towards EBITDA of €1.4 billion 

Royal DSM, the Life Sciences and Materials Sciences company, today reported a
first quarter EBITDA of €311 million compared to €306 million in Q1 2012 and
€243 million in Q4 2012. The improvement compared to Q1 2012 was realized
despite a negative caprolactam effect of €65 million. This was achieved in a
context of uncertain global macro-economic conditions as the European economy
remained weak, Asia continued to show good levels of growth whilst the US
maintained its modest rate of recovery. Life Sciences delivered growth once
again, driven by Nutrition, while Materials Sciences performed well, except
for caprolactam. During the quarter DSM benefited from the sale of certain DSM
Resins & Functional Materials related distribution activities.

Commenting on the results, Feike Sijbesma, CEO/Chairman of the DSM Managing
Board, said:
"In a challenging economic environment, I'm pleased to report a good start to
the year with a robust performance. Nutrition, which accounts for about 70% of
group EBITDA, has proved the resilience and quality of its broad offering
across the value chain, delivering another quarterly improvement in
profitability, together with healthy margins."

"Where the last two years were characterized by acquisitions, in 2013 we will
fully focus on the operational performance and the integration of
acquisitions, with special attention to capturing synergies whilst also
ensuring the successful execution of our group-wide profit improvement
initiatives. We expect strong EBITDA growth in 2013, moving towards €1.4
billion."



Key figures



                                 first
                                 quarter                          exch.
in € million                    2013   2012  +/- volume price/mix rates other
Net sales                      2.376  2.290   4%   3%      -3%     -1%    5%
Nutrition                        988    900  10%   3%      -3%     -1%    11%
Pharma                           178    175   2%   1%      2%      -1%
Performance Materials            673    701  -4%  -2%      -1%     -1%    0%
Polymer Intermediates            437    430   2%   9%      -7%      0%
Innovation center                 38     16
Corporate Activities              62     68
EBITDA                           311    306   2%
Nutrition                        215    192  12%
Pharma                             8      5  60%
Performance Materials             80     79   1%
Polymer Intermediates             29     69 -58%
Innovation Center                 -4    -15
Corporate Activities             -17    -24
Core net profit                  129    149 -13%
Net profit before exceptional
items                            121    145 -17%
Net profit after exceptional
items                            119    145 -18%
Core EPS (€/share)              0,76   0,91 -16%
Net EPS before exceptional
items (€/share)                 0,70   0,87 -20%
Net EPS after exceptional
items (€/share)                 0,69   0,87 -21%
Cash flow from operations        -78     97
Capital expenditures (cash)      164    126
Net debt                       1.932  1.668 *
* year-end 2012



In this report:

  *'net profit' is the net profit attributable to equity holders of
    Koninklijke DSM N.V.; 

  *'core net profit' is the net profit before exceptional items and before
    acquisition related (intangible) asset amortization.

Note: all tables are available in the attached press release-pdf

Review by cluster

Nutrition




Sales in Q1 rose 10% compared to Q1 2012, driven primarily by acquisitions.
Organic sales growth in Human Nutrition & Health and DSM Food Specialties was
offset by lower sales in Animal Nutrition & Health. Overall 3% volume growth
was offset by a 3% decline due to price/product mix effects.

Despite some softness in established Food & Beverage markets, Q1 delivered
good organic growth in Human Nutrition & Health, driven by increased volumes
with slightly lower prices, mainly due to mix effects. Ocean Nutrition Canada
(ONC) and Fortitech delivered healthy double digit growth in line with
expectations. ONC has been successfully integrated in DSM Nutritional Products
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 that rolled through the
production and downstream value chains for animal protein. Price increases for
some vitamins were announced in Q1 2013.

DSM Food Specialties showed higher sales through organic growth and the
contribution of the Cultures & Enzymes business acquired from Cargill.

The integration of Ocean Nutrition Canada, Fortitech and Cargill's Cultures &
Enzymes business is proceeding well and the acquired businesses are meeting
expectations. The integration of Tortuga started after the closing on 5 April
2013.

EBITDA for Q1 was €215 million, up 12% compared to Q1 2012, driven by strong
operational performance including acquisitions, with an overall EBITDA margin
of 21.8%, well within the target range.

Pharma




Organic sales growth was 3% compared to Q1 2012, mainly driven by higher
prices at DSM Sinochem Pharmaceuticals (DSP). Volumes at DSP were stable.
Sales of DSM Pharmaceutical Products were at the same level as in Q1 2012.

EBITDA for the quarter was €8 million versus €5 million in Q1 2012. The
increase was mainly caused by lower fixed costs at DSM Pharmaceutical
Products.

Performance Materials




Organic sales development was -3%. Volumes declined at DSM Resins & Functional
Materials especially in Europe in building and construction, but were up at
DSM Engineering Plastics and DSM Dyneema. Price increases at DSM Resins &
Functional Materials could not fully offset the negative impact of caprolactam
in DSM Engineering Plastics.

Q1 EBITDA was stable compared to the same period last year as continuous cost
savings offset the -anticipated-lower margins in the polyamide-6 value chain
caused by caprolactam. Q1 results included a one-time book profit of a high
single digit amount on the sale of certain DSM Resins & Functional Materials
related distribution activities. Compared to Q4 2012 EBITDA improved
significantly, benefiting from a 3% increase in sales, stable margins in the
polyamide-6 value chain and lower costs.

Polymer Intermediates




Organic sales  growth was  2%, driven  by higher  volumes, which  were  partly 
offset by lower prices. Volumes in Q1 2012 were impacted by the turnaround  of 
the caprolactam plant in Europe. In Q1 2013 there was no turnaround.

EBITDA declined significantly versus Q1 2012 mainly due to lower caprolactam
prices and substantially higher benzene prices. Q1 included a high single
digit income as the initial effect from a long-term 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 turnaround
in the US.

Innovation Center




DSM Biomedical showed a strong increase in sales versus Q1 2012, mainly due to
the contribution of Kensey Nash (€19 million). All other activities at the
Innovation Center were at the same level as in Q1 2012. The POET-DSM Advanced
Biofuels JV is making good progress with the construction of the cellulosic
bio-ethanol refinery, which is on track for timely completion.

EBITDA increased by €11 million compared to Q1 2012 of which €7 million was
due to the contribution of Kensey Nash.

Corporate Activities




EBITDA in Q1 2013 improved compared to Q1 2012, which was mainly due to lower
share-based payments costs as a result of a lower share price increase in Q1
2013 compared to Q1 2012.

Financial overview

Exceptional items
Total exceptional items in the first quarter amounted to €11 million before
tax (€2 million after tax), including €22 million expenses related to the
Profit Improvement Program and €13 million due to acquisition and other costs,
which is partly compensated for by the book profit of €24 million on the sale
of DEXPlastomers V.o.F.

Net profit
Financial income and expense in Q1 2013 amounted to -€35 million, which is €24
million more negative than Q1 2012. This was mainly caused by hedge results
being positive in Q1 2012 (+€8 million) and negative in Q1 2013
(-€3 million), higher interest and expense due to increased debt (-€5
million), lower interest income due to less cash (-€1 million), lower
contributions from venturing participations (-€4 million) and a change in
presentation of pension related interest income and expense (-€3 million). 

The effective tax rate was 18%, in line with the full year 2012.



Net profit before exceptional items in Q1 2013 decreased by €24 million
compared to Q1 2012 and stood at €121million. Main reasons were higher
depreciation and amortization mainly due to the acquisitions of last year as
well as higher net finance costs.

Net earnings per ordinary share (continuing operations, before exceptional
items) amounted to €0.70 in Q1 2013 compared to €0.87 in Q1 2012.

Cash flow, capital expenditure and financing
Cash provided by operating activities in Q1 2013 was -€78 million (Q1 2012:
€97 million).

Operating working capital increased from €1,936 million per end of 2012 to
€2,226 million per end Q1 2013 (in percentage of annualized sales an increase
from 20.7% to 23.6%). This increase is mainly caused by the higher trade
receivables, which is partly related to the seasonal pattern with especially
higher sales in March.

Cash used for capital expenditure amounted to €164 million in Q1 2013 compared
to €126 million in Q1 2012. The increase is among other things due to
investments in the joint venture with POET for advanced bio-fuels and the new
ammonium sulphate plant for Polymer Intermediates.



Net debt increased by €264 million compared to year-end 2012 and stood at
€1,932 million (gearing 24%).



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 overview of DSM's strategic achievements in Q1 2013.

High Growth Economies: from reaching out to being truly global
DSM entered into a license agreement with Fujian Shenyuan New Materials Co.,
Ltd. in China to supply DSM's proprietary HPO+^TM technology for the
production of caprolactam in a new plant consisting of two 200kt lines. This
license agreement underlines DSM's position as the global technology leader in
caprolactam. A long-term supply agreement, with an initial term of 3 years,
has been concluded under which DSM secures a substantial part of the output of
the new caprolactam plant currently under construction in China.

DSM signed a Memorandum of Understanding (MOU) for a strategic partnership
with Rostekhnologii (Rostec), a Russian State Corporation, in the fields of
biotechnology and functional materials. DSM also signed an MOU with the
Ministry of Health Care in the Republic of Tatarstan with the aim of
modernizing the Republic's public health sector through fortified nutrition.

DSM acquired Bayer's China feed mill and farm premix business in Chengdu,
Sichuan province, China.

Innovation: from building the machine to doubling innovation output
DSM and its joint venture partners won two awards at the Sustainable Biofuels
Awards 2013 ceremony: Global Deal of the Year (for POET-DSM Advanced Biofuels)
and Partnership of the Year (for Reverdia, the DSM/Roquette joint venture for
bio-based succinic acid).

DSM acquired a proprietary light trapping technology that can significantly
increase the efficiency of solar panels. With this acquisition DSM expands its
growing portfolio of solar energy enabling technologies in its Emerging
Business Area Advanced Surfaces.

Sustainability: from responsibility to business driver
At the 2013 World Economic Forum in Davos, DSM and the United Nations' World
Food Programma (WFP) signed an agreement to extend their existing partnership
for three years (to 2015) to combat hidden hunger and malnutrition in the
developing world. DSM and WFP will seek to double the number of people who
benefit from their work together, from the current annual reach of 15 million
to 25-30 million per year by 2015.

Acquisitions & Partnerships: from portfolio transformation to driving focused
growth
DSM completed the sale of its participation in DEXPlastomers V.o.F., a 50/50
joint venture of DSM with an affiliate of ExxonMobil Chemical, to Borealis.

On 5 April 2013 DSM completed the acquisition of Tortuga, a privately held
Brazilian company. Tortuga is a leading company in nutritional supplements
with a focus on pasture raised beef and dairy cattle. The company is
headquartered in São Paulo, Brazil with approximately 1,200 employees. The
acquisition has more than doubled DSM's workforce in Latin America to around
2,000 people.

Outlook

The challenging macro-economic environment experienced during Q4 2012 has
continued into 2013, with low or no growth in Europe. Asia continues to show
good levels of economic activity while the US has maintained a modest rate of
recovery.

DSM's outlook stays unchanged:

The Profit Improvement Program is fully on track and is expected to deliver
structural annual EBITDA benefits of €150 million by 2014 and €200-250 million
to be fully achieved by 2015.

Nutrition is expected to show clearly higher results than in 2012 due to
organic growth moving towards the target of 2% above GDP and due to the
acquisitions made.

Business conditions in Pharma are likely to remain challenging, but DSM is
confident that it will be able to deliver substantially better results,
notwithstanding the usual uneven delivery patterns between quarters.

Performance Materials is expected to show improved results in 2013, despite
the expected negative effects of caprolactam, especially compared to the first
half of 2012.

Polymer Intermediates is expected to show lower results than in 2012.

For the Innovation Center the activity level will be in line with 2012, with
EBITDA clearly improving following the full year contribution of Kensey Nash.

Overall, based on current economic assumptions, DSM expects a step up in
EBITDA during 2013 due to stronger organic growth, supported by DSM's Profit
Improvement Program and as the benefits of acquisitions and a more resilient
portfolio start to have impact. In 2013 the focus will be on the operational
performance and integration of the acquisitions DSM completed in 2012 with
special attention to capturing synergies. Overall, based on current economic
assumptions, the above will enable DSM to move towards its 2013 EBITDA target
of €1.4 billion. 

Additional information
Today DSM will hold a conference call for the media from 07.30 AM to 08.00 AM
CET 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 on the DSM website,
www.dsm.com. Also, information regarding DSM's Q1 result 2013 can be found in
the Presentation to Investors, which can be downloaded from the Investors
section of the DSM website.

Important dates
Annual General Meeting of ShareholdersFriday, 3 May 2013
Report for the second quarter            Tuesday, 6 August
2013
Report for the third quarter                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 23,500 employees deliver annual net sales of around €9billion. The
company is listed on NYSE Euronext. More information can be found at
www.dsm.com.

Or find us on: [IMG] [IMG] [IMG] [IMG]

For more information

Media
DSM, Corporate Communications 
tel.: +31 (45) 5782421 
e-mail: media.relations@dsm.com 

Investors
DSM, Investor Relations
tel.: +31 (45) 5782864
e-mail: investor.relations@dsm.com

www.dsm.com

Press release-pdf
Financial summary Q1-pdf
Presentation to investors Q1-pdf

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