DSM performance materials to post better 2013 despite capro issues

26 September 2013 11:32  [Source: ICIS news]

DSM headquarters (Source: DSM)LONDON (ICIS)--Dutch specialty chemicals producer DSM said on Thursday that its performance materials division is likely to post better year-on-year results for 2013 despite ongoing weakness for its caprolactam division.

The company added that it is expecting earnings before interest, taxes, depreciation and amortisation (EBITDA) to show “significant” growth from the €1.1bn ($1.5bn) posted in 2012, despite a challenging economic environment during the first half of this year.

DSM added that it hopes to reach its target of €1.4bn EBITDA for the year, but negative currency effects and Dutch "crisis tax" issues could lead to earnings coming in at slightly below €1.35bn.

The weak macroeconomic environment has prevailed into the second half of the year with no sign of let-up in the near future, DSM added.

“The challenging macro-economic environment experienced during H1 [first-half] 2013 continues, with little or no growth in Europe. Asia continues to show good levels of economic activity, though at more modest levels, while the US maintains a modest rate of recovery,” the company said ahead of its capital markets day on 26 September.

The company said in its second-quarter results that weak caprolactam performance had resulted in a €20m impact on profits for its Materials Sciences division during the period.

Polymer intermediates are likely to underperform in 2013 compared to the previous year, while nutrition division performance is expected to be stronger year on year. According to DSM, pharmaceuticals earnings are expected to be higher, despite challenging business conditions.

The company is now targeting an EBITDA margin of 14-15% as its new target for 2015, and a return on capital employed (ROCE) target of 11-12%.

($1 = €0.74)

By: Tom Brown
+44 208 652 3214

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