DSM hunts for €100m profit
Royal DSM NV has launched a comprehensive profit
improvement program for DSM Nutritional Products that, through a mix of cost
savings and increased profits from higher revenues, is expected to deliver an
annual minimum of €100 million of improved profitability.
The program will commence in the second half of 2007 and run through 2008 and
2009, enabling the Nutrition business to achieve the targeted gross profit
(EBITDA) margin level of at least 18% as set out in Vision 2010.
For 2008, the first full year of the
program, it is expected that benefits will offset the negative impact of the
expiration of the contracts made in conjunction with the acquisition of Roche Vitamins.
One time costs of the
program are estimated at some € 40 million after tax, the majority of which are
expected to be accounted for in 2008.
In addition, DSM Nutritional
Products will also invest in further optimizing its business processes,
including the replacement of numerous legacy systems with an integrated SAP ERP system.
Vision 2010, Aspire to
The profit improvement plan, 'Aspire to Win', is based on three main
- Cost reductions - The major elements of the cost savings program
are related to Sales, General and Administrative expenses, further streamlining
of business processes and administrative overhead reductions. Additional cost
improvements will be targeted in manufacturing, both at the main production
sites and premix plants, including the sourcing of raw materials and services.
Further options will be evaluated to optimize R&D expenditure and the
Enhancement of differentiation activities - The business will further
enhance its differentiation activities and develop customer solutions in close
cooperation with leading players in the food and feed industry.
Accelerated innovation -
A further boost to capturing the innovation potential in health enhancing
ingredients for Animal Nutrition, Human Nutrition and Personal Care will be
achieved through accelerated market penetration and new applications of young
products like Hy.D© (advance source of Vitamin D3 for poultry), and the
introduction of new products. Additional growth will be stimulated by an
intensified acquisition program to in-source early stage products and
technologies and acquire start-up companies and innovation
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