Life S ciences and Materials S ciences Presentation to Investors Q1 2015 Result s, 29 April 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 Q1 2015 • S ales of €1,886 million, up 11% , including 2% organic sales growth • EBITDA up 4% t o €248 million • Nut rition delivered good organic growt h of 4% , driven by volumes in animal nut rit ion • Performance Mat erials cont inued t o improve EBITDA t hrough higher volumes and margins • Cash from continuing operat ing activit ies improved to €84 million (Q1 2014: €11 million) • Non-cash impairment of €130 million (aft er t ax) relat ed t o t he part nership for Polymer Int ermediat es and Composit e R esins announced in March, leading t o a net loss after except ional items • Out look 2015 updat ed for posit ive foreign exchange development s S ales, EBITDA, operating working capital and cash flow refer t o continuing operations Page 2
Quote from Feike S ij besma “ DS M delivered higher result s in Q1 2015 compared t o prior year, driven by higher volumes in bot h Nut rit ion and Performance Mat erials. Nut rit ion delivered mixed result s wit h good volume growth in animal nut rit ion, partly offset by low prices in vit amin E and weak performance in human nut rit ion. Performance Mat erials had anot her st rong quart er wit h higher volumes and margins. The mix of foreign currencies had an overall posit ive impact on bot h clust ers. In Q1 we announced a part nership with CVC Capit al Partners f or Polymer Int ermediat es and Composit e Resins, a significant st ep in furt her opt imizing our port folio and reducing our cyclicalit y. This st rat egic act ion will enable us t o focus fully on improving t he operat ional performance of our core businesses while capit alizing on t he longer term pot ent ial for value creat ion of our various part nerships. We are progressing well wit h set ting up a number of efficiency improvement and cost reduct ion programs especially in Nut rit ion and in all support f unctions across t he company. Feike S ij besma DSM aims t o deliver an EBITDA in 2015 ahead of 2014, t he increase CEO / Chairman of t he Managing Board mainly driven by posit ive foreign exchange effect s.” Page 3
Results Q1-2015 Key figures � % (€ million) Q1-2015 Q1-2014 Cont inuing operations before except ional it ems: Net S ales 1,886 1,692 11% EBITDA 248 239 4% EPS (€) 0.39 0.52 -26% Core EPS (€)* 0.51 0.61 -17% Tot al DSM before except ional it ems (incl. discontinued): 2,392 2,298 4% Net S ales EBITDA 286 270 6% Total DS M after exceptional items: -70 81 Net profit EPS (€) -0.42 0.45 • ‘ Core earnings per share’ is the earnings per share from continuing operations before exceptional items and before acquisition relat ed (int angible) asset amortization Page 4
Net sales growth Q1-2015 versus Q1-2014 Price/ (€ million) Q1-2015 Q1-2014 Diff. Volume FX Ot her Mix Nutrition 1,199 1,047 15% 3% 1% 11% 0% Performance Materials 632 589 7% 3% -4% 8% 0% Innovat ion Cent er 36 34 6% -12% 0% 18% 0% Corporat e Act ivit ies 19 22 Cont inuing operations* 1,886 1,692 11% 3% -1% 9% 0% * Cont inuing operat ions (excluding discont inued act ivities) Page 5
EBITDA –development � % EBITDA (€ million) Q1-2015 Q1-2014 Nutrition 195 203 -4% Performance Materials 86 71 21% Innovat ion Center -5 -6 Corporat e Act ivit ies -28 -29 Continuing Operat ions* 248 239 4% * Cont inuing operat ions (excluding discont inued act ivities) Page 6
Nutrition � % (€ million) Q1-2015 Q1-2014 Net sales 1,199 1,047 15% Volume 3% Price/ Mix 1% FX 11% Ot her 0% EBITDA 195 203 -4% EBITDA margin 16.3% 19.4% EBIT 129 143 -10% Capital employed 5,509 5,034* * Year-end 2014 • S ales in the first quart er increased by 15% compared to Q1 2014. Organic sales growt h was 4% compared to Q1 2014 as a result of 3% higher volumes and 1% higher prices. Good volume growth in animal nutrition was partly offset by lower vitamin E prices and by weakness in human nut rit ion. Currencies had an 11% positive impact on sales • EBITDA for Q1 was €195 million, down 4% from Q1 2014. Higher volumes in animal nut rition were offset by lower vitamin E prices, lower volumes in human nutrit ion, int ensified market ing and sales act ivities as well as act ions to reduce inventory levels. These factors and the relative higher share of animal nutrition impacted the EBITDA margin. Positive effect s of foreign exchange rat es, especially the US dollar, were partly offset by the negative impact of the S wiss franc • DS M Food S pecialties delivered a solid performance in Q1, with good organic growth in enzymes and cult ures. Issues around manufact uring performance in savory ingredient s and cult ures report ed in Q4 2014 have been resolved Page 7
Nutrition: quarterly sales evolution Reported sales in € million 600 500 400 300 200 Q1'13 Q3'13 Q1'14 Q3'14 Q1'15 Animal Nutrition Human Nutrition • The report ed organic growt h rat es in Q1 2015 reflect t he business evolut ion during 2014: � Q1’ 14 was weakest quarter for animal nutrition (ANH) since the start of 2013 � Q1’ 14 was st rongest quart er for human nut rit ion (HNH) in 2014 • Growth momentum in Human and Animal diverging since 2013, impacting mix Page 8
Animal Nutrition & Health* � % (€ million) Q1-2015 Q1-2014 Net sales 574 467 23% Organic growt h 14% Volume 14% Price/ Mix 0% FX 9% • Animal Nut rit ion and Health net sales were €574 million in Q1, a 23% increase versus the €467 million in Q1 2014. Organic sales growth in Q1 was 14% , ent irely driven by higher volumes. This development reflects the continued positive growth momentum throughout 2014 versus a slow start in Q1 2014. Premixes showed strong growt h and Tortuga continued to develop well and delivered a st rong quart er • Vitamin E prices were significantly lower compared to Q1 2014. This negative price effect of more than €20 million was compensated by higher prices for other ingredients. However, as a substantial part of t hese other ingredients are in-sourced for DS M’s premix activities and as such t hese increased prices only have a limit ed EBITDA effect * Animal Nut rit ion & Healt h act ivit ies of DSM Nut rit ional Product s Page 9
S ignificant impact from lower Vitamin E prices € 15 spot price per kg (source: feedinfo) Vitamin E 50% € 10 € 5 € 0 • S pot prices seem to have bottomed out in Q1 2015 • Thanks to t he full int egrat ion of our vit amin production, DS M continues t o be a low cost supplier vs our Chinese competitors • Att ract iveness of Vit amin E market for Chinese players has clearly eroded • Assuming current low spot prices in vit amin E persist , t he negat ive price impact on DSM’s 2015 EBITDA will be around €80 million compared to 2014 Page 10 Page
Human Nutrition & Health* � % (€ million) Q1-2015 Q1-2014 Net sales 452 422 7% Organic growt h -6% Volume -6% Price/ Mix 0% FX 13% • Human Nutrition & Health net sales increased by 7% to €452 million versus €422 million in Q1 2014. Volumes declined 6% and prices were flat while currencies had a positive effect of 13% . However, compared to Q4 2014, Q1 showed a posit ive organic sales growth of 7% , breaking the t rend of successive sales declines over t he last t hree quart ers of 2014 • The weakness in volumes was broadly across expect ed product cat egories, in part icular low sales in fish oil based Omega 3 diet ary supplement s in t he US. DSM is addressing organic growth in human nut rit ion wit h int ensified market ing and sales act ivit ies and organizat ional changes • Food & Beverage market s in developed economies as well as ret ail sales of vit amin-based diet ary supplement s in t he US showed early signs of improvement . Volume growth in infant nut rit ion has normalized since Q4 2014, albeit at lower than historic growth rates. I-Health enj oyed strong sales growth * Human Nut rit ion & Healt h act ivit ies of DS M Nut rit ional Product s Page 11
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