DSM benefits from high vitamin prices in Q1, raises outlook

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12 Apr 2018 --- DSM has pre-announced better-than-expected earnings for the first quarter and raised its 2018 outlook on upbeat sales, with an additional boost from high prices in vitamins. The first quarter benefited from an additional Adjusted EBITDA contribution estimated at €165 million from an exceptional vitamin pricing environment. DSM raised its 2018 adjusted EBITDA forecast to "toward" 25 percent from earlier guidance for a rise of at least high single-digit growth.

DSM expects to report a very strong first quarter, with an estimated organic sales growth from the underlying business of 11%. Including the negative foreign currency effects, the total sales growth in the underlying business is estimated to be 3% and the Adjusted EBITDA growth 7%. 

Sales rose by 11 percent to €2.22 billion euros from €2.16 billion euros, DSM said. Underlying sales growth was 12 percent at its largest division, which makes nutritional products.

Feike Sijbesma, CEO/Chairman DSM Managing Board, commented on the preliminary results: “We are very pleased that the strong underlying performance of our business continues, with growth well above 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 result in a significantly higher outlook for the full year 2018.”

DSM raised its full year outlook 2018 and now expects an Adjusted EBITDA growth towards 25% and a related higher ROCE growth. 

This is based on:
•    A low double-digit Adjusted EBITDA growth in the underlying business at constant currencies,
•    A negative foreign exchange effect on Adjusted EBITDA of about €80 million, and;
•    An additional Adjusted EBITDA benefit estimated at €250-300 million from an exceptional vitamin pricing environment, that is expected to be temporary and heavily weighted towards the first half of the year.

Organic sales growth in the underlying Nutrition business is estimated to be 12% in Q1, driven by continued strong volume growth of 7%, well above market. Higher prices in the quarter of 5% partly off-set the negative foreign currency effects and higher input costs.

Including the negative foreign exchange effects, the Adjusted EBITDA of the underlying business is estimated to be up 7%, with an Adjusted EBITDA margin of about 19%.

In addition, due to the exceptional supply disruptions in the industry, the first quarter also benefitted from an estimated €165 million additional Adjusted EBITDA contribution from an exceptional vitamin price environment expected to be temporary.

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