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DSM achieves record sales and operating profit

0 74 Process Management

Operating profit for DSM in 2006 reached € 835 million, 6% higher than in 2005. Net profit rose 4% to € 547 million. The company recorded a solid volume growth (5%), especially in performance materials (9%). The proposed dividend is € 1.00 per ordinary share. Operating profit for 2007 is expected to be lower than in 2006, but on track with Vision 2010.

Commenting on DSM's results, Peter Elverding, Chairman of the DSM Managing Board, said: "In 2006 we made a flying start in implementing our strategy Vision 2010 - Building on Strengths.

"We have greatly increased our innovation efforts and have supported these efforts with selected acquisitions, which will put us in a good position for future growth. In 2006 we launched more than 25 new products and applications.

"Economic growth developed very satisfactorily, but raw-material and energy prices reached unprecedented levels and were highly volatile, while the US dollar remained weak.

"Nevertheless, we succeeded in posting a record operating profit for the second year in a row. This was mainly due to solid volume growth (5%) and the ongoing efforts to optimize our operations."

Nutritional products
In 2007 Elverding expects continued good volume growth, but some attractive contracts related to the acquisition in 2003 of Roche's Vitamins division (now DSM Nutritional Products) will come to an end.

Since the second part of 2006 DSM faced intensified competition in some of the more mature parts of DSM Nutritional Products' portfolio. DSM as the market leader has deliberately chosen to defend and further strengthen its market position even at the expense of margins.

Vision 2010
DSM's new strategy program Vision 2010 - Building on Strengths focuses on accelerating the profitable and innovative growth of the company's specialties portfolio. The overall objective is strong value creation.

In market-driven growth and innovation DSM devoted significant additional resources to innovation. The additional spend in 2006 amounted to more than € 25 million. A considerable number of new products and new applications of existing products were introduced in the market.

As part of its open innovation policy DSM acquired CRINA, a pioneering company in plant extracts used as feed additives, and acquired full ownership of LTP, a company with a technology platform based on formulated lipids.

Business review Nutrition
Full-year sales in this cluster were at the same level as last year. Higher organic sales volumes were offset by the negative effects of lower selling prices and exchange rates and the contractual phasing-out of the phytase tolling activities.

All businesses in this cluster faced higher costs for energy and raw materials. Compared to 2005, both Animal Nutrition & Health and Human Nutrition & Health in DSM Nutritional Products achieved solid volume growth at lower prices.

DSM Nutritional Products' operating profit decreased slightly because higher volumes did not fully compensate for higher innovation expenditure and negative price effects. DSM Food Specialties' sales and operating profit decreased due to the contractual phasing-out of the phytase tolling business.

by Editor AllAboutFeed last update:6 Aug 2012

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