DSM records 'temporary' vitamin price benefit

By Jane Byrne contact

- Last updated on GMT

Credit: GettyImages
Credit: GettyImages
DSM’s Q1 2018 results showed it benefited from the increase in vitamin A and E prices as a result of the global shortage, which set in after October 2017.

It saw a benefit of around €165m on adjusted earnings before interest tax depreciation and amortization (EBITDA) arising out of the vitamin effect, which it said was mainly felt its animal nutrition business.

The Dutch human and animal health and nutrition company reported total adjusted EBITDA up 56% for the quarter, and net profit up 122% to €331m.

It also said EBITDA growth of its underlying business was around 8%, despite significant currency headwinds.

Animal nutrition business

Q1 2018 organic animal nutrition volumes were up 13% mainly due to very strong premix sales, it said.

“All regions delivered strong underlying volume growth, particularly North America and Asia Pacific.”

DSM noted an increased focus from customers on security of supply. It claimed this was partly driven by policies in China relating to significantly stricter enforcement of environmental regulations. DSM also cited EU regulation led reformulation obligations as behind some of the Q1 animal nutrition volume growth, with sales, it added, in the order of €15-20m.

The 5% higher prices in the animal nutrition segment in the quarter were driven by price initiatives to mitigate higher input costs and the impact of negative exchange rate developments, led by the weaker US dollar and the Brazilian real, continued DSM.

Feike Sijbesma, CEO, said the strong underlying performance of DSM’s business continues, with growth “well above [the] market”.

“In addition, we are currently benefitting from substantially higher prices in some vitamins due to exceptional supply disruptions in the industry, which are expected to be temporary and heavily weighted towards the first half of the year. These two combined resulted in a significantly higher outlook for the full year 2018.”

The company confirmed its increased full year outlook 2018, as previously announced.

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