UpdateDSM upbeat about full-year 2010 after Q2 results

03 August 2010 13:48  [Source: ICIS news]

(Adds chairman comment in paragraphs 1-12)

LONDON (ICIS)--DSM is benefiting from its cost-cutting measures and expects 2010 to be a strong year if the current business environment persists, Feike Sijbesma, chairman of DSM's managing board, said on Tuesday following the announcement of the company's second-quarter results.

“Most of the markets that are relevant to DSM saw a continued recovery in the second quarter. DSM expects further end-market recovery for the remainder of the year, assuming no major change in the economic conditions,” Sijbesma said.

However, the chairman said that the risk of a slowdown in the economic recovery remained.

DSM's polymer intermediates business was forecast to have a good full-year 2010, while its Pharma segment’s full-year results were expected to be positive but below those achieved in 2009.

In its Performance Materials business, DSM expected overall sales volumes for the second half of 2010 to be lower than in the first half due to seasonality and the diminishing impact of re-stocking, as demand in building and construction markets remained at relatively low levels.

DSM singled out China as a major growth area and was targeting sales of €1.5bn ($1.9bn) from the region for the full year of 2010.

“Business conditions in most geographical areas and markets have further improved, partly due to restocking, especially in China, which is growing very fast,” said Sijbesma.

Sales in China in the first half of 2010 totalled €784m, which was 13% of DSM’s total sales. Last year sales from China ammounted to 9% of DSM's total sales.

Additionally, DSM said it was progressing with the divestment of parts of the company that were no longer its core focus, as part of its strategy to focus on life and material sciences.

“We will use those proceeds for acquisitions in our strategic focus and further strengthen our portfolio,” Sijbesma said.

The chairman did not disclose the size or type of acquisitions DSM was looking at, or how much it had to spend.

However, Sijbesma added that DSM had €1.8bn in cash at the end of the first half of 2010.

Earlier, DSM announced that its second-quarter net profit surged to €149m from just $10m in the previous corresponding period, on the back of a 28% jump in sales.

Sales for the three months to June stood at €2.27bn from €1.77bn in the same period last year, as revenues in almost all of its business segments recorded double-digit growth, it said.

Polymer intermediates had the biggest year-on-year gain in sales at 68% to €362m, followed by performance materials, which recorded a 41% jump in sales to €644m, DSM said.

"Operating profit increased by more than 25% compared to the first quarter and for the current business portfolio it was the best quarter in DSM's history,” Sijbesma said in a statement.

Operating profit in the June quarter nearly tripled year on year to €246m from €85m in the same period last year, DSM said.

($1 = €0.76)

Additional reporting by Pearl Bantillo

For more on DSM visit ICIS company intelligence
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By: Franco Capaldo
+44 (0)20 8652 3214



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