Life S ciences and Materials S ciences Presentation to Investors FY 2013 Result s, 26 February 2014 Page
Safe 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 Page 1
Overview • Q4 2013 Operational performance • Market headwinds in Nut rit ion • Business condit ions and out look • 2013 Progress on strat egy Page 2
Highlights DSM reports final 2013 results, increases dividend • 2013 FY EBITDA substantially up t o €1,314 million (2012 FY : €1,109 million) • Q4 2013 EBITDA €316 million (Q4 2012: €243 million) • S trong cash generation from operat ing activit ies of €889 million in 2013 (2012: €730 million) • Dividend increase of 10% proposed to €1.65 per ordinary share (2012: €1.50) • Share repurchase program t o hedge exist ing opt ion plans cont inues • Target for 2014 to improve business performance t o at least offset negat ive currency impact Page 3
Quote from Feike Sijbesma “ We achieved significant st rat egic progress in 2013, also demonst rat ed by an 18% increase in full year EBITDA and st rong cash generat ion. We were pleased wit h t he st rong performance in Mat erials S ciences in Q4. Despit e t he moderat e Q4 result s in Nut rit ion, due t o currencies and market weakness, DS M’ s market posit ions remained strong. This business wit h it s broad, global offering across t he value chain is well posit ioned t o benefit from t he st ruct ural megat rends, wit h t he need t o nourish a growing and aging global population, living increasingly in urban areas, paying more at tent ion t o healt h and well-being. This will cont inue t o drive increased demand for nut rit ional ingredient s. We remain firmly on track t o deliver on our st rat egy and t o creat e sust ainable value wit h all our clust ers. Therefore we propose a dividend increase of 10% . In t he short t erm our focus will cont inue on Feike S ij besma t he operat ional performance of our businesses, support ed by our Profit CEO / Chairman of t he Improvement Program and int ensified R&D and innovat ion programs.” Managing Board Page 4
Results Q4 2013 - Key figures � % � % Q4-2013 Q4-2012 (€ million) FY-2013 FY-2012 Continuing operations before exceptional items: 2,219 2,118 5% Net S ales 9,051 8,588 5% 297 230 29% EBITDA 1,263 1,073 18% 0.58 0.41 41% EPS (€) 2.84 2.59 10% 0.68 0.42 62% Core EPS (€)* 3.19 2.80 14% Total DS M before exceptional items: 2,377 2,269 5% 9,618 9,131 5% Net S ales EBITDA 316 243 30% 1,314 1,109 18% Total DSM including exceptional items: -77 18 271 278 -3% Net profit EPS (€) -0.46 0.10 1.52 1.62 -6% * Core earnings per share’ is understood to be earnings per share before exceptional items and before acquisit ion relat ed (intangible) asset amortization Page 5
EBITDA - FY EBITDA (€ million) 2013 2012 2011 2010 Nutrition 914 793 735 684 Pharma 3 3 12 28 Performance Materials 324 280 293 283 Polymer Int ermediat es 113 129 380 223 Innovat ion Center -17 -38 -57 -49 Corporat e Act ivit ies -74 -94 -91 -41 Continuing 1,263 1,073 1,272 1,128 Operations Page 6
Net sales growth Q4 2013 versus Q4 2012 (€ million) Q4 2013 Q4 2012 Diff. Volume Price FX Other Nutrition 1,038 923 12% 4% -1% -4% 13% Pharma 45 46 -2% -4% 11% -9% Performance Materials 659 655 1% 7% -2% -3% -1% Polymer Int ermediat es 393 393 0% 11% -9% -2% Innovat ion Cent er 38 33 15% 21% -3% -3% Corporat e Act ivit ies 46 68 Continuing 2,219 2,118 5% 7% -3% -3% 4% Operations Page 7
Net sales growth FY 2013 versus FY 2012 (€ million) FY 2013 FY 2012 Diff. Volume Price FX Other Nutrition 4,195 3,667 14% 5% -3% -3% 15% Pharma 184 183 1% 0% 7% -6% Performance Materials 2,746 2,772 -1% 4% -2% -2% -1% Polymer Int ermediat es 1,579 1,596 -1% 7% -7% 1% Innovat ion Cent er 149 102 46% 17% -2% -3% 34% Corporat e Act ivit ies 198 268 Continuing 9,051 8,588 5% 5% -3% -3% 6% Operations Page 8
Nutrition � % � % Q4-2013 Q4-2012 (€ million) FY-2013 FY-2012 1,038 923 12% Net sales 4,195 3,667 14% 3% Organic growt h 2% 208 204 2% EBITDA 914 793 15% 20.0% 22.1% EBITDA margin 21.8% 21.6% 140 157 -11% EBIT 679 613 11% Capital employed 4,494 4,122 • Sales in t he fourt h quarter increased 12% compared t o Q4 2012, mainly driven by acquisit ions. Organic sales growt h was 3% compared to Q4 2012, including 4% higher volumes and 1% lower prices. Currencies had a negative impact of about 4% on sales compared to Q4 2012. DSM’s overall market positions remained strong. • EBITDA for Q4 was €208 million, up 2% from Q4 2012. The posit ive impact of the organic growth, the cont ribut ion from acquisitions and the Profit Improvement Program was offset by negat ive foreign exchange developments, lower prices and a less favorable product mix resulting in an EBITDA margin of 20% for t he quarter. Page 9
Nutrition - continued • DS M Food S pecialties had a good Q4 with continued growth in food enzymes and cult ures. • Overall the acquisitions have performed well in Q4 as well as the full year. Martek, Fortitech and Tort uga exceeded expect at ions. Ocean Nut rit ion Canada was confront ed wit h market headwinds towards the end of t he year. The int egration of the acquisitions is well advanced. S ynergies have been delivering according t o plan. DSM continues t o implement further efficiency improvement s in support of it s unique business model in Nut rition. Page Page 10
Human Nutrition & Health* � % � % Q4-2013 Q4-2012 (€ million) FY-2013 FY-2012 386 359 7% Net sales 1,687 1,407 20% 1% Organic growt h 4% • In Human Nut rit ion & Healt h net sales were €386 million in Q4. Organic sales growt h in Q4 was 1% due to 1% higher price/ mix. Volumes were essentially flat compared to Q4 2012 but down 5% from Q3 2013. • Lower consumer demand in t he US for diet ary supplements, even more pronounced for fish oil based Omega-3 diet ary supplement s negatively impact ed sales volumes in Q4. Also t he food & beverage markets in West ern count ries were soft . Premixes and Infant Nut rit ion showed good performance. • In Q4 Fortitech realized sales of €43 million with a strong EBITDA of €14 million. * Human Nut rit ion & Healt h act ivit ies of DS M Nut rit ional Product s Page 11
Animal Nutrition & Health* � % � % Q4-2013 Q4-2012 (€ million) FY-2013 FY-2012 512 428 20% Net sales 1,937 1,717 13% 9% Organic growt h 0% • In Animal Nut rit ion and Healt h net sales were €512 million in Q4. Organic sales growt h in Q4 was 9% as volumes were up 12% compared to the weak Q4 2012 and 3% above Q3 2013. Price/ mix had a negative effect of 3% compared to Q4 2012. • A prolonged period of demand weakness earlier in t he year has affect ed prices of several animal nut rit ion products negat ively in 2013, most not ably vitamin E. This demand weakness in combinat ion wit h market speculation about possible increases in supply has increased price pressure on t his vitamin. • In Q4 Tortuga delivered sales of €68 million and an EBITDA of €9 million. * Animal Nut rit ion & Healt h act ivit ies of DSM Nut rit ional Product s Page 12
Pharma –continuing operations � % � % Q4-2013 Q4-2012 (€ million) FY-2013 FY-2012 45 46 -2% Net sales 184 183 1% 7% Organic growt h 7% 1 0 EBITDA 3 3 0% 2.2% EBITDA margin 1.6% 1.6% -1 -2 EBIT -8 -3 Capital employed 146 162 • Organic sales growth at DSM S inochem Pharmaceuticals, which is consolidated on a proportional basis for 50% , in the fourth quarter was 7% due t o higher prices. This was more t han offset by unfavorable exchange rates. • Q4 2013 EBITDA was in line wit h 2012. Page 13
Pharma –discontinued operations � % � % Q4-2013 Q4-2012 (€ million) FY-2013 FY-2012 158 151 5% Net sales 567 543 4% 7% Organic growt h 5% 19 13 46% EBITDA 51 36 42% 12.0% 8.6% EBITDA margin 9.0% 6.6% 8 3 167% EBIT 10 -16 Capital employed 439 604 • Upon closing of t he announced transact ion with JLL, DSM will have creat ed part nerships for its Pharma act ivities that will enhance t he value of t hese businesses in the mid-term, offering excellent value creation opport unit ies. • DSM Pharmaceutical Product s, which is now report ed as discont inued activit ies, delivered an improved performance in Q4 2013, with good volume growth and higher prices being reflected also in good EBITDA growth. Page 14
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