DSM on track for 2010 targets, sets new goals for 2013 and 2015

23 September 2010 08:41  [Source: ICIS news]

SINGAPORE (ICIS)--Dutch producer DSM said on Thursday it is on track to achieve business targets for 2010 and has set an earnings target of €1.4-1.6bn ($1.87-2.1bn) by 2013 after “largely completing” its transformation into a life sciences and material sciences company.

Earnings before interest, taxes, depreciation and amortization (EBITDA) were set to rise to as much as €1.6bn by 2013, the Netherlands-based company said in a statement.

DSM was also planning to “more than double” its China sales to over $3bn by 2015, up from $1.5bn from its previous target, with sales from high-growth economies to increase towards 50% of total sales.

High-growth economies currently contribute around 32% towards the company’s total sales and was expected to contribute over 70% of DSM's total growth in the period to 2015, the company said.

The firm’s organic sales growth of 5-7% would also be enhanced with new acquisitions and partnerships, the firm added.

"With our transformation into a life sciences and materials sciences company largely completed, our focus now is on growth," said CEO Feike Sijbesma.

The firm’s new business targets reflect a new strategy towards four growth drivers – high growth economies, innovation, sustainability and acquisitions & partnerships – which would result in growth across all businesses and regions, DSM said.

As part of the new plan, the company said that it was looking to open new innovation centres in China and India, with the aim of growing sales from new products and applications introduced in the last five years from about 12% currently to 20% of total sales by 2015.

DSM was also planning to relocate the headquarters of business groups DSM Anti-Infectives, DSM Engineering Plastics and DSM Fibre Intermediates to Asia to be closer to its key markets and customers, the company said.

The company was also planning to move DSM Biomedical’s headquarters to the US, it added.

In its plan for the firm’s performance material division, DSM said that it would focus on growth via sustainable and innovative solutions, “driven by customer and end-user demands for stronger and lighter materials and environmentally friendly coatings”.

Meanwhile, DSM’s second production line for polymer intermediates in China could boost its capacity in the country by 2014, the company added.

For its Pharma cluster, the company said it remained convinced that growth and profit in its Anti-Infectives business could be accelerated via an alliance or partnership in Asia and was “actively pursuing this option”.

The firm said that it would also pursue a partnership strategy for its Pharmaceutical Products business – with a focus on Asia – as it was seen as the fastest way to improve results.

“DSM aspires to restore the cluster's profitability back towards an EBITDA-margin of 15-20% range by 2015,” it added.

In its outlook, DSM said that business developments in July and August were in line with earlier expectations, without elaborating on details.

DSM earlier in August 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.

“Based on the current positive business environment, 2010 is expected to be a strong year for DSM," the company said.

($1 = €0.75)

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By: Nurluqman Suratman

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