UpdateDSM seeks 50% of sales from high-growth markets by 2015

26 September 2013 14:23  [Source: ICIS news]

(updates with new lead in paragraph one, additional information on emerging market plans in paragraph nine, sales development targets in paragraph 10)

DSM headquarters (Source: DSM)LONDON (ICIS)--Dutch specialty chemicals producer DSM said on Thursday that it is seeking to expand the proportion of its sales derived from emerging markets from 32% to towards 50% by 2015, while seeking to double China sales from $1.5bn (€1.1bn) to over $3bn.

The company added 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 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 has identified emerging markets as a key driver of its growth, with around 40% of sales coming from high-growth markets in the first half of 2013, and sales from China in particular reaching $0.8bn during the period.

DSM 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%. It said that it is also seeking to derive annual sales growth of 5-7% from organic development. Organic sales growth in the first half of the year was 1%, DSM added.

($1 = €0.74)


By: Tom Brown
+44 208 652 3214



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