HEERLEN, the Netherlands, June 20, 2018 /PRNewswire/ --
Royal DSM, a global science-based company, today presents its strategy update entitled "Growth & Value - Purpose led, Performance driven." at its Capital Markets Day in London (UK).
"Our Strategy 2015-18 has been highly successful. After transforming DSM over the period 2010-15, we delivered strong growth with greatly improved operational and financial performance and significant value creation in all our businesses. In addition, we took important steps to monetize our non-core Pharma and Bulk Chemicals joint ventures. DSM has become a growth company with ambitious sustainability efforts creating value for all stakeholders across the three dimensions of People, Planet and Profit.
DSM will evolve further towards a purpose-led, science-based company in Nutrition, Health and Sustainable Living. We have created a strong platform for growth, centered on developing innovative solutions addressing Nutrition & Health, Climate & Energy and Resources & Circularity. Increased customer centricity and large innovation projects will enable above-market growth, while we will remain focused on cost control and operational excellence, allowing us to accelerate profit and cash generation. Organic growth will be complemented by acquisitions predominantly in Nutrition.
I am convinced that our strategy will create further significant value for all our stakeholders and the step-up in the dividend demonstrates our confidence in the future."
DSM's strategy update
Purpose sets scope for further growth and evolution
With its unique science-based competences, DSM is ideally positioned to capture the growth opportunities offered by the global megatrends and Sustainable Development Goals (SDGs), with a particular focus on Nutrition & Health, Climate & Energy and Resources & Circularity
DSM will therefore evolve into a Nutrition, Health and Sustainable Living company:
DSM's Nutrition business will focus on human nutrition (ingredients and solutions for Food & Beverages, as well as Specialty Nutrition, nutritional ingredients, consumer branded products and Personalized Nutrition), animal nutrition (covering all species with premix and specialty solutions) and personal care and aroma ingredients
DSM's Materials business will further develop into a high-growth, higher-margin specialty business and focus on health, bio/ green applications and new mobility & connectivity applications
By improving the impact of its own operations, enabling sustainable solutions for its customers and advocating sustainable business, DSM can grow faster and reduce its cost and risk profile
DSM will step-up its ambitions regarding the reduction of GHG emissions, energy efficiency and use of renewable energy
Performance driven to deliver growth and value
Ambitious targets for profit growth and cash generation to drive value creation
Two financial targets have been set for the period 2019-2021:
High single-digit annual percentage increase in adjusted EBITDA
About 10% average annual increase in adjusted net operating cash flow
Financial targets to be supported by holistic value-creation approach
Committed to top-line growth ahead of market, resulting in about 5% organic growth
Organic growth across all our businesses will be supported by an expanded solutions offering, putting the customer even more in the center, and the delivery of large innovation projects
Approximately 20% of our sales will come from innovation and 45% of sales from high growth economies
DSM continues to invest in differentiating science and technology with circa 5% of sales
DSM will also continue to harness digital capabilities to increase customer intimacy, improve productivity/efficiency and support new business models
New adjusted EBITDA margin ambitions by 2021:
Nutrition over 20%
Materials 18-20%
To be achieved by greater efficiencies and increased focus on higher-margin specialty solutions
Organic top-line growth combined with margin enhancements to drive high single-digit adjusted EBITDA growth
Focus on investment and cash generation to improve returns and accelerate growth in operating cash flow of about 10% annually
Working capital levels to be reduced with an ambition of around 50 bps annually to about 16% of turnover (from 18.4% in 2017)
Disciplined approach to capex and overall level limited to approximately 6.5% of turnover
Ambition to drive improvements in organic ROCE of around 1% annually
Capital to be deployed in M&A
Predominantly in Nutrition given its growth potential, resilience, strong leadership position and value creation potential
Deployment of capital expected to drive EPS growth ahead of EBITDA growth
Step-up in dividend linked to underlying earnings growth
Unchanged policy of a stable, preferably rising dividend
DSM will propose a dividend increase of about 25% to ?2.30 per ordinary share over 2018,
already to be reflected in the upcoming interim dividend over 2018
DSM's performance expected to result in further dividend growth, which could lead to an expected average payout of 40-50% of adjusted (underlying) earnings
Cash allocation policy remains unchanged
Clear order of priority for deployment of cash
Disciplined capex for organic growth: about 6.5% of annual sales
A stable, preferably rising dividend
Disciplined M&A, predominantly in Nutrition
In the absence of value-creating M&A, capital to be returned to shareholders
DSM remains committed to maintaining a strong, investment grade credit rating
Video-webcast and presentations
A conference call for the media will be held at 08.30 hrs. (CET). Details on how to access this call can be requested at [email protected]. The DSM Capital Markets Day can be followed live via Video webcast from 10.00 -14.00 hrs. (CET). The presentations can be found on http://www.dsm.com as from 09.45 hrs. (CET).
DSM - Bright Science. Brighter Living.tm
Royal DSM is a purpose-led global science-based company in Nutrition, Health and Sustainable Living. DSM is driving economic prosperity, environmental progress and social advances to create sustainable value for all stakeholders. DSM delivers innovative business solutions for human nutrition, animal nutrition, personal care and aroma, medical devices, green products and applications, and new mobility and connectivity. DSM and its associated companies deliver annual net sales of about ?10 billion with approximately 23,000 employees. The company is listed on Euronext Amsterdam. More information can be found at http://www.dsm.com .
This press release may contain forward-looking statements with respect to DSM's future (financial) performance and position. Such statements are based on current expectations, estimates and projections of DSM and information currently available to the company. DSM cautions readers that such statements involve certain risks and uncertainties that are difficult to predict and therefore it should be understood that many factors can cause actual performance and position to differ materially from these statements. DSM has no obligation to update the statements contained in this press release, unless required by law. The English language version of the press release is leading.
For more information:
DSM Corporate Communications Herman Betten
tel. +31-(0)-45-5782421
e-mail [email protected]
DSM Investor Relations Dave Huizing
tel. +31-(0)-45-5782864
e-mail [email protected]
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