02 May 2013 11:33 [Source: ICIS news]
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SINGAPORE (ICIS)--DSM’s first-quarter net profit fell 18% year on year to €119m ($157m) despite higher sales, as earnings from its polymer intermediates segment slumped 58%, the Dutch chemicals firm said on Thursday.
The weak demand and high benzene cost environment in the caprolactam business is expected to continue to hit the company’s polymer intermediates segment results this year.
Group sales for the three months to March 2013 were up 4% year on year to €2.38bn, with earnings before interest, tax, depreciation and amortisation (EBITDA) rising 2% to €311m, the company said in a statement. The negative caprolactam effect on group EBITDA was €65m it added.
Polymer intermediates generated €29m EBITDA for the period, down by 58% year on year “mainly due to lower caprolactam prices and substantially higher benzene prices”, DSM said.
Polymer intermediates segment sales were up 2% at €437m. Sales volumes for the segment were up 9% in the quarter but there was a negative 7% impact in prices and the business mix.
The first quarter of 2013 included “high single digit income” from the start of a long-term license agreement for a caprolactam plant in China with Shenyuan, DSM said.
“Polymer intermediates is expected to show lower results [in 2013] than in 2012,” DSM said in its outlook.
The company’s large nutrition segment contributed to higher group EBITDA in the quarter with nutrition sales up 10% and profits up 12%. The overall EBITDA margin for the segment in the quarter of 21.8% was well within the target range, the Netherlands-based company said.
DSM’s Performance Materials sales were down 4% at €673m with EBITDA up 1% at €80m.
“Continuous cost-savings offset the anticipated lower margins in the polyamide-6 value chain caused by caprolactam,” the company said.
DSM said its 2103 outlook was unchanged in a challenging macro-economic environment. It expects an EBITDA increase for the year to a target of €1.4bn based on stronger organic growth supported by a profit improvement programme.
($1 = €0.76)
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