DSM’s Health, Nutrition & Bioscience records US$4B sales growth amid challenging macroeconomic headwinds

02 Aug 2022 --- DSM Group marked a net profit of €458 million (US$ 469 million), highlighting a recovery for its Early Life Nutrition segment. The supplier’s Health, Nutrition & Bioscience (HNB) business segment delivered a “good first half year” with sales up 17%, organic sales up 10% and Adjusted EBITDA up 8%.

“Demand has proven to be resilient across our businesses despite the costs of inflation, which reinforces our view that what we do is critical to the food supply chain and the nutritional health of people,” Gareth Mead, spokesperson for DSM, tells NutritionInsight.

With consumers becoming increasingly proactive about their health, segments such as dietary supplements continue to perform well, he adds.

Higher prices aimed to offset the impact of inflation. “Pivotal moment”
The company’s first half-year results were marked by strategic decisions, such as the HNB segment’s restructuring of three market-focused business groups: Animal Nutrition & Health; Health, Nutrition & Care (HNC); and F&B. 

“The first half marked a pivotal moment in our history as we reached the final phase of our exciting strategic transformation,” says Geraldine Matchett, DSM co-CEO. 

“We announced our intention to merge with Firmenich, the world’s largest privately-owned fragrance and taste company, to create the leading creation and innovation partner in nutrition, beauty and well-being.”
Navigating complexities

HNC specifically saw pricing initiatives accelerate throughout the first half of the year. Q2 specifically had volumes impacted by supply chain constraints, leading to order backlogs. 

Over the last year, industry has struggled with supply chain bottlenecks, leaving companies scrambling to obtain the necessary ingredients for their products. In an attempt to mitigate some of the effects, nutrition businesses have been increasingly trying to source more locally to avoid shipment delays.

  “Conditions began to ease toward the end of the quarter leading to a strong exit rate momentum,” DSM specifies.

“While acknowledging the challenging global macroeconomic environment, we see continuing good market demand, positive pricing momentum and favorable foreign exchange effects supporting our full-year outlook,” underscores Dimitri de Vreeze, DSM Co-Ceo.

According to Mead, navigating these complexities – including raw material availability and logistics constraints – created a lot of additional work for DSM’s staff. “We have a considerable advantage in being a global business with operations worldwide which helps us to be able to continue to serve our customers, as we can source, switch, or reroute in many circumstances. We did see some backlog earlier in the year, but these conditions eased toward the end of Q2, and we entered Q3 with strong momentum.”Demand for supplements remained steady as a result of consumer interest in health after the COVID-19 pandemic. 

Recovery in Early Life Nutrition
Dietary supplements in DSM’s HNC segment performed well with strong i-Health, the company notes, while recording 9% organic sales growth in the first half and €1.5 billion (US$1.5 billion) in sales.

Early Life Nutrition continues to recover with improving market conditions, spurred by growing interest for HMOs, “especially given its regulatory readiness for China,” DSM highlights. 

“Early life nutrition as a market has returned to growth recently after a period where COVID-19 and over stocking from customers has had an impact. Now we see growth, in Europe and North America in particular, as those conditions ease. We are a leader in HMOs and in China, where we know there is demand, regulatory clearances speeding up and we have solutions ready for market.”

DSM announced in May it was expanding into maternal nutrition in the EMEA region, addressing pre-conception and pregnancy requirements. 

Pharma, Medical Nutrition, Personal Care & Aroma and Biomedical all performed strongly, the company highlights. 

By Andria Kades