Life S ciences and Materials S ciences Presentation to Investors Full year 2014 Result s, 11 February 2015 Page
S afe harbor statement This present at ion may cont ain forward-looking st at ement s wit h respect t o DSM’ s fut ure (financial) performance and posit ion. S uch st at ement s are based on current expect ations, estimates and proj ections of DS M and informat ion current ly available t o t he company. DS M caut ions readers t hat such st at ements involve cert ain risks and uncert aint ies t hat are difficult t o predict and t herefore it should be underst ood t hat many factors can cause act ual performance and position to differ materially from t hese st at ement s. DS M has no obligat ion t o updat e t he st at ement s cont ained in t his present at ion, unless required by law. A more comprehensive discussion of the risk factors affect ing DS M’ s business can be found in t he company’ s lat est Annual Report , which can be found on t he company's corporate websit e, www.dsm.com Page 1
Highlights Q4 & full year 2014 • 2014 sales of €9,181 million • Organic sales growt h 5% in Q4 2014 and 3% for 2014 • Q4 2014 EBITDA €288 million and 2014 EBITDA €1,168 million • S trong cash from operating act ivities of €418 million in Q4 2014 (€808 million in 2014) • Non-cash impairment of €186 million of the caprolactam business (after tax and non-cont rolling int erest s) included in except ional it ems, leading t o a net loss in Q4 2014 • Proposed dividend stable at €1.65 per ordinary share • DS M will take further actions to improve efficiencies and to reduce costs • DS M aims t o deliver 2015 EBITDA slightly ahead of 2014 Sales and EBITDA refer to cont inuing operations Page 2
Quote from Feike S ij besma “ DS M generat ed 3% organic growt h and delivered a relat ively solid EBITDA wit h good cash flow from operat ing act ivit ies, amongst ot hers due t o improved operat ing working capit al management . This was achieved despit e t he fact t hat 2014 was not an easy year for DS M wit h subst ant ial negat ive exchange rat e effect s and t ough market condit ions in Nut rit ion and caprolactam. DSM is already t aking st eps t o address t he challenging ext ernal environment . We will cont inue to focus on operat ional performance and this will be complement ed by accelerat ed act ions t o improve efficiencies and reduce cost s, specifically in Nutrition and across all functions in t he company. For 2015, DSM aims t o deliver an EBITDA slight ly ahead of t he result of 2014.” Feike S ij besma CEO / Chairman of the Managing Board Page 3
Results Q4 & full year 2014 - Key figures � % � % Q4 2014 Q4 2013 (€ million) FY 2014 FY 2013 Continuing operations before exceptional items: 2,374 2,175 9% 9,181 8,858 4% Net S ales 288 297 -3% 1,168 1,261 -7% EBITDA 0.52 0.57 -9% EPS (€) 2.42 2.84 -15% Core EPS (€)* 0.65 0.68 -4% 2.85 3.19 -11% Total DS M before exceptional items: 2,374 2,334 2% 9,283 9,429 -2% Net S ales EBITDA 288 316 -9% 1,166 1,261 -8% Total DS M after exceptional items: -107 -77 145 271 -46% Net profit EPS (€) -0.63 -0.46 0.78 1.52 -49% * Core EPS is the EPS from cont inuing operat ions before except ional it ems and before acquisition related (intangible)asset amortization Page 4
Net sales growth Q4 2014 versus Q4 2013 Price/ (€ million) Q4 2014 Q4 2013 Diff. Volume FX Ot her Mix Nutrition 1,124 1,039 8% 3% 1% 3% 1% Performance Materials 699 655 7% 4% -1% 3% 1% Polymer Int ermediat es 465 393 18% 25% -11% 4% 0% Innovat ion Cent er 42 39 8% 3% -3% 8% 0% Corporat e Act ivit ies 44 49 Cont inuing Operations 2,374 2,175 9% 7% -2% 4% 0% Page 5
Net sales growth full year 2014 versus 2013 Price/ (€ million) FY 2014 FY 2013 Diff. Volume FX Ot her Mix Nutrition 4,335 4,205 3% 3% -1% -1% 2% Performance Materials 2,792 2,729 2% 4% -2% -1% 1% Polymer Int ermediat es 1,727 1,579 9% 16% -7% 0% 0% Innovat ion Cent er 154 150 3% 4% -1% 0% 0% Corporat e Act ivit ies 173 195 Cont inuing Operations 9,181 8,858 4% 5% -2% 0% 1% Page 6
EBITDA –development Q4 � % EBITDA (€ million) Q4 2014 Q4 2013 Nutrition 200 208 -4% Performance Materials 87 77 13% Polymer Int ermediat es 23 30 -23% Innovat ion Center -3 -3 Corporat e Act ivit ies -19 -15 Cont inuing Operations 288 297 -3% Page 7
EBITDA – development full year 2014 � % EBITDA (€ million) FY 2014 FY 2013 Nutrition 850 914 -7% Performance Materials 343 319 8% Polymer Int ermediat es 83 113 -27% Innovat ion Center -18 -9 Corporat e Act ivit ies -90 -76 Cont inuing Operations 1,168 1,261 -7% Page 8
Nutrition � % � % Q4 2014 Q4 2013 (€ million) FY 2014 FY 2013 1,124 1,039 8% Net sales 4,335 4,205 3% 3% Volume 3% 1% Price/ Mix -1% 3% FX -1% 1% Other 2% 200 208 -4% EBITDA 850 914 -7% 17.8% 20.0% EBITDA margin 19.6% 21.7% 125 142 -12% EBIT 596 680 -12% Capital employed 5,034 4,496 • Organic sales growth in Q4 was 4% compared to Q4 2013 driven by 3% volume growth and 1% price/ mix effect. Organic sales growt h in Animal Nut rit ion & Healt h (ANH) was 10% and Human Nutrition & Health (HNH) was down by 3% • EBITDA for Q4 was €200 million, down 4% compared to Q4 2013. Act ions to reduce inventories positively impacted cash flow but negatively impacted EBITDA. Mix effects of higher sales in ANH and lower sales in HNH negatively impacted the EBITDA-margin, as t he lat ter has, on average, somewhat higher EBITDA margins. The manufacturing performance of DS M Food S pecialties also had a negat ive impact on EBITDA. The strengt hening of t he US dollar started t o cont ribut e positively during t he quart er part ly offset by movements in ot her currencies Page 9
Nutrition -continued • In Q4 DS M has made solid progress with the initiatives t hat address the challenging external environment . In Animal Nut rit ion and Healt h DS M decisively held it s vitamin E market share in a growing market and it is reducing its costs, differentiating its offerings and supporting market expansion. In Human Nut rit ion and Healt h DS M is working on market expansion by promoting mult ivit amin and omega-3-based diet ary supplement s and implement ing strategies t o further penet rat e t he value chain in t hese market s. In addit ion, Nut rit ion is accelerating measures t o improve operat ional efficiencies • DS M Food S pecialties cont inued it s strong performance in enzymes. Manufact uring performance in Savoury Ingredient s and cult ures negat ively impacted t he EBITDA Page 10
Animal Nutrition & Health � % � % Q4 2014 Q4 2013 (€ million) FY 2014 FY 2013 572 512 12% Net sales 2,084 1,937 8% 10% Organic growt h 7% • Animal Nutrition & Health net sales were €572 million in Q4 2014, up €60 million compared to Q4 2013. S ales volumes showed 7% growth with strong performance in almost all active ingredient s and premix businesses. Tort uga cont inued t o develop well and had a st rong quart er • Prices were up 3% due t o higher prices for several vit amins and ot her act ive ingredient s, part ly offset by lower vitamin E prices Page 11
Human Nutrition & Health � % � % Q4 2014 Q4 2013 (€ million) FY 2014 FY 2013 394 386 2% Net sales 1,626 1,688 -4% -3% Organic growt h -3% • Human Nutrition & Health net sales were €394 million in Q4 2014, slightly above Q4 2013 (€386 million) driven by a 5% posit ive currency development, mainly due to the stronger US dollar. Organic sales development was -3% compared to Q4 2013 owing to 1% lower volumes and 2% lower price/ mix • Sales continued t o be impacted by ongoing weakness in bot h mult ivit amin and fish oil-based Omega-3 market s for diet ary supplements in the US. The momentum for t hese dietary supplement s outside t he US continued t o be positive. DSM’s consumer business i-Healt h again showed strong growth • Sales in infant nut rit ion normalized during Q4 2014 aft er t he dest ocking in previous quart ers, albeit at lower growth rat es compared to hist oric averages. DSM is uniquely positioned in this attractive end-market with its strong IP portfolio and the long term supply agreements with maj or infant nut rit ion customers • Western food & beverage market s remained sluggish; low consumer spending cont inued t o weigh on t he growth in various end-markets. Food and beverage sales in Asia continued to develop well • Growt h in premixes stayed healt hy in all segment s as cust omers value t he innovation, qualit y, global footprint, and service responsiveness offered by DSM Page 12
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