DSM profited from vitamin supply crunch

By Jane Byrne contact

- Last updated on GMT

© GettyImages
© GettyImages

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Dutch group, DSM, reported Q4 2017 organic growth for its animal nutrition and health business was exceptionally high, at 18%.

The 12% volume growth in the quarter, against an undemanding comparison base, resulted from a combination of very strong sales in Brazil, strong premix sales in all regions reflecting continued strong global demand, and higher vitamin sales, it said.

Towards the end of its Q4, DSM said it benefitted from somewhat higher vitamin A and E prices for emergency spot business. However, the supply shortages in those two vitamins due to outages at competitors also resulted in some additional deliveries to its existing -contracted- premix customers.

Q4 highlights for DSM group business

▪ DSM reports another strong quarter

▪ Sales up 8% to €2,176m, with 12% organic growth, driven by volumes and prices

▪ Adjusted EBITDA up 14% to €359m

▪ Nutrition: 13% organic sales growth; Adjusted EBITDA up 12%

▪ Materials: 5% volume growth; Adjusted EBITDA up 13%

“The high demand for the export beef markets in Brazil continued in Q4 2017. This was accentuated by additional sales in anticipation of an ERP system change in January 2018 at Tortuga. The reported 6% price effect resulted largely from a mix effect driven by the exceptionally strong premix and Tortuga sales.”

Full year 2017 sales for its animal nutrition division were also exceptionally strong, with 11% organic growth, driven by 9% volume growth, though it was against an easy comparative base, added DSM.

The business continued to benefit from a strategy aimed at addressing a wide range of species, as well as from its diversified geographical presence, covering all the major growth areas in the world, and its strong forward-integrated premix position, it said.

DSM said markets in animal feed were generally favorable and supportive in 2017, except for Latin America, where weak economic conditions affected domestic demand. Prices for the full year were 2% above 2016, owing to higher premix and vitamin prices.

Group results

For its overall business, the specialty chemicals company reported 14% rise in Q4 core profit, to €359m ($444.3m), beating market expectations.

It predicted another year of double-digit growth in core profit for 2018, as cost saving programs continue.

Feike Sijbesma, CEO of DSM, said: “We remain relentlessly focused on improving our operational and financial performance through our growth initiatives and by completing the final stage of our improvement programs. These actions should allow us to continue our above-market growth and further improve our financial returns and capital efficiency. We expect to deliver above our Strategy 2018 targets in 2018.”

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