Company update: Strong third quarter for DSM
Dutch Chemical company DSM showed excellent results in its third quarter, compared to the second quarter.
Net sales dropped by 14% compared to Q3 2008 but improved by 5% compared to Q2 2009 (volumes +5%, prices +2%, exchange rates -2%). Sales volumes were on average still lower compared to last year’s level, but the decline was much less than in previous quarters. This is a reflection of improvements in end-markets as well as some re-stocking. Nutrition, DSM Anti-Infectives, DSM Agro and DSM Melamine are even showing better sales volumes than Q3 last year.
Although prices were clearly below last year’s level (partly due to lower raw material prices in the Materials Sciences and Base Chemicals and Materials businesses), pricing power was generally strong. Prices were, on average, increasing during the quarter and margins were mostly better than last year’s (DSM Agro being the important exception due to much lower prices). At €139 million, operating profit from continuing operations was substantially better than in the last three quarters, but clearly below last year’s Q3. The decline year-on-year was mainly attributable to the Base Chemicals and Materials and Pharma clusters.
"It seems that the first half of 2009 represented the low point for this recession," Chief Executive Feike Sijbesma said in a statement. But DSM warned the outlook for the rest of the year remains uncertain and fourth-quarter operating profit is expected to fall from the previous quarter although it should rise year-on-year.
Chief Financial Officer Rolf-Dieter Schwalb said: "What we see at the moment ... is a fragile recovery, an uneven road forward, a slow recovery." Shares in DSM were down 1.3 percent at €30.15 euros at 0859 GMT compared with a 0.9 percent fall in the DJ Stoxx European Chemicals index .SX4P.
[Sources: Reuters and AGD.nl]
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