DSM reports surge in Q2 profit boosted by “exceptional vitamin pricing environment”
01 Aug 2018 --- Specialty chemicals company DSM has reported a second-quarter core profit of €508 million (US$593.2 million), up 35 percent compared to Q2 2017, boosted by an “exceptional vitamin pricing environment” and cost cuts. The company has further confirmed its outlook for the full year, based on expectations of an Adjusted EBITDA growth towards 25 percent and a related higher ROCE growth.
The temporary vitamin pricing environment was mainly the result of a fire at a BASF plant this year, which forced the company to declare force majeure, leading to elevated vitamin prices. According to Reuters, without these effects, the company’s second-quarter core profit rose 6 percent, while sales climbed 8 percent to €2.2 billion.
For the first half of the year, DSM reported “strong performance across all businesses,” with organic sales growth in underlying business estimated at 10 percent.
“Our ongoing focus on driving above market growth while pursuing efficiency initiatives and maintaining capital discipline continues to drive our results. Following a strong start to the year, we are very pleased to report very good H1 results, with organic growth above market across all our businesses, and strong underlying Adjusted EBITDA growth despite significant foreign exchange headwinds,” says CEO statement Feike Sijbesma, CEO/Chairman DSM Managing Board.
Nutrition focus
On 20 June 2018, DSM presented its strategy update detailing how it will evolve further towards a purpose-led, science-based company in Nutrition, Health and Sustainable Living, with the company announcing it had set aside about €3 billion to spend on acquisitions to expand its nutrition business and maintain its profit growth.
The announcement was quickly followed by the news of a proposed sale of DSM Sinochem Pharmaceuticals (DSP) – a pharmaceutical joint venture with China’s Sinochem Group – to Bain Capital.
“During the quarter, we also took another important step in monetizing our partnerships through announcing our exits from Fibrant and DSM Sinochem Pharmaceuticals. Our business conditions remain strong and we reiterate our full year 2018 outlook. We are convinced our recent strategy update will create enhanced organic sales growth and continued EBITDA momentum, as DSM evolves further towards a purpose-led, science-based company in Nutrition, Health and Sustainable Living. The step-up in our dividend for 2018, already reflected in the interim dividend, demonstrates our confidence in our future earnings growth,” Sijbesma notes.
