Royal DSM NV, the world’s largest vitamin maker, plans to cut costs by as much as 300 million euros ($328 million) and exit some joint ventures as Chief Executive Officer Feike Sijbesma seeks to boost margins by 2018.
The Dutch company aims to increase earnings before interest, taxes, depreciation and amortization by a high-single-digit percentage each year, with a high double-digit basis point rise in return on capital employed, Heerlen-based DSM said in a statement on Wednesday.
“Organic growth, supported by cost reductions and strict capital allocation will enable us to improve our financial results,” Sijbesma said in the statement.
Sijbesma is seeking investor support for his strategy at a day of presentations in Amsterdam today, including from activist shareholder Third Point LLC, which has advocated a split of the nutrition division from operations making chemicals and plastics. DSM faces increased competition in vitamin E from Chinese manufacturers, as well as sluggish demand for dietary supplements in the U.S.
Rather than pursue large acquisitions, DSM will seek to “extract significant value” from pharma and bulk chemicals assets that have been placed in joint ventures to strengthen its balance sheet.
The total restructuring will cost 200 million euros to 250 million euros, including the measures already announced in August, the company said in the statement.
Shares have lost 1.3 percent since the start of the year, valuing the company at 9.1 billion euros.