DSM Has Baby-Food Enhanced Growth Spurt as Profit Beats Estimate
Royal DSM NA, which added a $1 billion baby-food ingredient maker a year ago, reported better- than-expected profit in the third quarter, driven by demand for nutritional supplements.
Earnings before interest, taxes, depreciation and amortization increased to 339 million euros ($467 million) from 268 million euros a year earlier, the Heerlen, Netherlands-based company said today in a statement. Analyst in a Bloomberg survey predicted 315 million euros.
Feike Sijbesma, now in his fifth year at the helm, has remodeled DSM into an enzyme-based manufacturer of chemicals, additives and materials, dropping the commodity-chemical products that were once the mainstay of the almost 100-year-old company. The purchase of Martek for almost $1 billion helped offset gains in the Swiss franc and higher charges for energy and raw materials, DSM said today.
“DSM assumes that there will be no major changes to the overall business conditions for the remainder of the year,” it said in the statement. “The nutrition cluster is expected to maintain its resilient performance through firm pricing and continued volume growth.”
DSM said it will close “a few” smaller sites making resins after a slowdown in construction markets, booking a charge of about 26 million euros. Annualized cost savings as a result of the move will be about 25 million euros to 30 million euros.
The world’s largest maker of vitamins reiterated its Sept. 29 prediction that 2011 will be a strong year, saying it was on course to meet a 2013 target for Ebitda of 1.4 billion euros to 1.6 billion euros.
DSM, rated a “buy” by 23 analysts, has fallen 12 percent this year, for a market value of 6.75 billion euros.
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