HEERLEN, Netherlands—The continued global economic downturn continued to impact business at DSM, according to its report for 2Q09; however, the company’s Nutrition business is bolstering overall operating results. While 2Q09 operating profit was down substantially from a record level in 2Q08, cash flow was 44 percent higher than in the comparable 2008 period. Further, the company noted its Materials businesses are getting stronger, as the initial impact of inventory write-downs and customer de-stocking is largely concluded. DSM also is seeing positive effects of a strategic focus on China, with industry production up and sales rising 44 percent compared to 1Q09.
Feike Sijbesma, chairman of the DSM Managing Board, noted: “Early and aggressive action to reduce costs, a focus on cash, stringent management of working capital and the ongoing resilience of our Life Sciences businesses, have all ensured that DSM is in good shape at the end of the first half of 2009. … DSM is staying the course, even in these challenging times. This is illustrated by the announcement of the disposal of two non-core businesses in July, our ongoing strategic commitment to our customers, innovation and sustainability and our focus on China, where we are reaping the benefits of a favorable market. Our strong balance sheet and robust cash flow leave us well placed to take advantage of future opportunities that will arise.”
In the Nutrition sector specifically, sales were down 6 percent for 2Q09, compared to 2Q08, which the company attributed to inventory stockpiling last year in advance of expected price increases. Prices remained relatively strong and ahead of 2008 levels, particularly in the fat-soluble vitamins, resulting in DSM Nutritional Products’ operating profit up in 2Q09 compared to 2Q08. DSM Food Specialties’ operating profit was on par with 2008 levels, with the enzymes sector showing strong performance.
