Healthy boost: DSM’s “very good” Q3 benefits from “exceptional temporary vitamin price environment”
31 Oct 2018 --- Boosted by elevated vitamin prices and higher sales, DSM has reported a “very good” Q3, with strong organic sales growth in underlying business coming in at 8 percent for the first nine months of the year and a 11 percent rise in Q3 core profit to US$460.4 million.
“Due to the exceptional supply disruptions in the industry, the first nine months further benefited from €290 million additional Adjusted EBITDA contribution from an exceptional temporary vitamin price environment,” a DSM spokesperson tells NutritionInsight.
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.
Although prices had started to normalize by the end of H1, there was a small, residual positive effect in the third quarter of €15 million. This temporary vitamin price effect was mainly related to animal nutrition.
“For the remainder of the year DSM does not expect any further benefit from this exceptional vitamin price effect,” the spokesperson continues.
“We are delighted to report another very good quarter and are confident that we can achieve our full year outlook. The continued organic sales and Adjusted EBITDA growth rates in the underlying business position us well for a strong year which would once again exceed our Strategy 2018 targets,” says Feike Sijbesma, CEO and Chairman DSM Managing Board.
“While there are currently uncertainties around macro-economic developments, we see continued good business conditions in Nutrition and most of our Materials businesses. The strategic plan that we have successfully delivered over the past few years has resulted in a robust portfolio of solution-led, higher value specialty products in Nutrition, Health & Sustainable Living,” Sijbesma adds.
Outlook 2018
DSM has confirmed its full year outlook and expects an Adjusted EBITDA growth of approximately 25 percent and a related higher ROCE growth.
Looking to the future growth projects within nutrition, the DSM spokesperson notes to NutritionInsight that during this quarter, the company expanded its India operations with the opening of a second Animal Nutrition & Health premix plant in Jadcherla, India.
“Furthermore DSM and Novozymes launched Balancius, a major breakthrough in poultry nutrition that significantly increases feed efficiency and digestibility in broilers,” they add. “Also, we are planning a first dedicated early life nutrition premix plant. Construction of the state-of-the-art plant has just started. It is Located in Buk, Poland, the investment is expected to double production output at the site within the next two years.
