DSM Nutrition Unit Becoming More Profitable

The performance of the vitamins business has improved on the back of heightened customer quality awareness, changing dynamics in China and the current balanced market due to strong market growth, in combination with reduced or stable production capacities.

25/09/08 Dutch chemicals group DSM has raised its operating profit forecast for 2008, saying its nutrition unit has become more profitable, while other operations are showing continued strength.

In Nutrition, the performance of the vitamins business has improved on the back of heightened customer quality awareness, changing dynamics in China and the current balanced market due to strong market growth, in combination with reduced or stable production capacities, the company said in a statement. These changing dynamics are in large part expected to be sustainable over the medium term and have resulted in substantially higher profitability for the Nutrition cluster. In the four quarters up to and including Q2 2008, the Nutrition cluster met its EBITDA margin target of at least 18%.

As a whole DSM has updated its 2008 EBIT guidance, from EUR 970 million, with potential upside, to EUR 1,025-1,075 million on the back of continued strength in some of DSM’s businesses, particularly DSM Agro.

“DSM continues to benefit from favorable market conditions, particularly in Nutrition and Fertilizers, and our Materials Sciences activities are showing sufficient resilience to the more difficult macro-economic environment from which of course nobody is completely immune ,” said Feike Sijbesma, Chairman of the DSM Managing Board. “Since the publication of our Q2 2008 results, we have seen a continuation of these trends, which allows us to further specify our full year guidance.”

“Our decision to focus our accelerated Vision 2010 strategy on Life Sciences and Materials Sciences is based on global trends that are here to stay. It puts us in an excellent position to reap financial benefits from opportunities in our markets and create value for all our stakeholders in the future,” Sijbesma said. DSM said that is confident that the Vision 2010 targets it has set to make the make the company less sensitive to economic cycles will be achieved.