- Vitamin maker benefits from cost saving to boost margins: CEO
- Nutrition Ebitda advances 14%; materials increases by 10%
Royal DSM NV shares rose to a record after the world’s largest vitamin maker raised its outlook on higher demand for animal supplements and materials such as resins while reaping the benefits of cost savings.
Earnings before interest, taxes, depreciation and amortization from continuing operations will probably rise by at least 10 percent in 2016, the Heerlen, Netherlands-based company said in a statement on Tuesday. That compares with an earlier forecast for growth of below 10 percent.
“We remain on track with our ambitious group-wide improvement and cost-saving programs,” Chief Executive Officer Feike Sijbesma said. The materials division has performed “particularly well,” he added, while the human and animal nutrition vitamins businesses were both on track to outgrow the market.
The Dutch company is cutting jobs and making savings on raw materials and energy to generate 300 million euros ($336 million) in cost savings by 2018. The CEO is also exiting joint ventures in pharmaceuticals and bulk chemicals. Last month DSM raised $240 million from selling shares in the initial public offering of U.S. drug developer Patheon NV.
The stock advanced as much as 4.5 percent to 60.33 euros, the highest level since the company’s listing in Amsterdam in 1989, and traded 2.7 percent higher at 12:21 p.m. in the city.
Ebitda rose 18 percent to 328 million euros in the second quarter. Analysts had estimated profit of 303 million euros on average. Ebitda at DSM’s materials unit added 10 percent, mostly as demand for resins strongly increased. Profit at the company’s nutritional unit gained 14 percent, helped by 10 percent higher sales volumes in vitamins for animals and 3 percent more demand for human dietary supplements.
“The volumes are really good,” Fernand de Boer, an analyst for Bank Degroof Petercam, said by phone. “The price is also better than expected, so that drives margins.”