sustainable solutions
Net sales
€ 2,792 m
x € million 2014 2013R
Net sales:
DSM Engineering Plastics 1,324 1,261
DSM Dyneema 264 252
DSM Resins & Functional
Materials 1,204 1,216
Total 2,792 2,729
Organic sales growth (in %) 2 3 Operating profit 193 180 Operating profit plus depreciation
and amortization (EBITDA) 343 319 Capital expenditure 77 56 Capital employed at 31 December 1,928 1,902
ROCE (in %) 10.1 9.2
EBITDA as % of net sales 12.3 11.7 R&D expenditure 143 132 Workforce at 31 December
(headcount) 5,115 5,126
Business
This cluster comprises DSM Engineering Plastics, DSM Dyneema and DSM Resins & Functional Materials. DSM Engineering Plastics is a global player in specialty plastics. These materials are used in components for the electrical & electronics, automotive, flexible food packaging and consumer goods industries. DSM Dyneema is the global manufacturer of Dyneema®, the world’s strongest fiber™. DSM Resins &
Functional Materials is a global player in innovative high-quality resins solutions for paints and coatings, composite materials and optical fiber coatings. The cluster has a global presence, with significant sales originating in high growth economies. In 2014, sales in the Performance Materials cluster increased to € 2,792 million compared to € 2,729 million in 2013, with organic growth of 2 percent. Total EBITDA for the full year increased to € 343 million, compared to € 319 million in 2013. All
three business groups contributed to this growth, mainly due to higher volumes and a continued cost control.
Throughout 2014, the cluster expanded its presence and leadership positions in selected segments of the global market for advanced performance materials. The cluster is well positioned in terms of ECO+ innovation sales at 96 percent and ECO+ sales from running business at 59 percent. The cluster delivered increased volumes and gradual margin improvements across all business groups. It achieved this despite ongoing adverse macro-economic conditions in the European building and construction sectors, and the negative impact of the weakness in the caprolactam market, through backward integration, on DSM Engineering Plastics.
The cluster benefited from its investments and sales in high growth economies, which now account for 38 percent of total sales. China and India were significant contributors to its growth in 2014, while the business also reaped the benefits of the recovery in the US, where all areas of the market grew for the third year in succession.
With the continuous upgrade of its portfolio, the cluster is well positioned for growth and cash generation by further leveraging its higher added-value businesses. It has strengthened its global position as a leading provider of sustainable innovations, meeting end-market demands for greater energy efficiency and improved environmental performance.
Trends
Performance Materials’ markets are increasingly driven by concerns over resource scarcity and climate change. Customers in virtually every market are demanding products that help to reduce energy consumption and harmful emissions, both within their operations and across the value chain. DSM addresses these needs through innovative materials that are lighter than metals and other conventional materials. These include high performance plastics, solvent-free waterborne resins, bio-based and renewable plastics and resins, and other new applications. The use of hazardous substances is another area of growing concern for consumers and regulators, leading to demands for safer alternatives. DSM Engineering Plastics and DSM Resins &
Review of business in 2014:
Performance Materials
Review of business in 2014:
Performance Materials
Review of business in 2014:
Performance Materials
Functional Materials address these concerns by offering products and solutions that eliminate or reduce the use of substances such as halogens, styrene, volatile organic compounds (VOC) or cobalt.
The business groups manufacture technologically sophisticated high-quality products that address key megatrends driving DSM's end-markets. They meet the needs of customers across a range of sectors through innovative and sustainable value propositions.
Sustainability
DSM is creating innovative solutions that make a positive difference to people’s lives and reduce the environmental footprint. In Performance Materials, sustainability is a significant driver of new business and innovations.
This is leading to the development of new applications that address key sustainability challenges. The cluster has shifted its materials portfolio towards a higher added-value mix by introducing innovative and more sustainable solutions, some examples of which are described in the business group sections below.
DSM inaugurated a Solar Technologies Demonstration Center at the DSM Engineering Plastics facility in Pune, India. The center will showcase DSM innovations in solar technology, and use the solar energy generated to meet 25 percent of the site's electricity needs.
Strategy
Performance Materials is applying a differentiated strategy based on its positions in various market segments. This strategy aims to accelerate, strengthen or restructure its businesses and will enable it to further upgrade its portfolio in the years ahead. The cluster is leveraging its existing infrastructure to accelerate growth in highly innovative markets in order to fully benefit from megatrends. It is also strengthening the business by combining sustainable innovation sales growth with margin optimization and cost control programs. At the same time, DSM is pursuing strategic actions for its Composite Resins business.
Although not part of the cluster, DSM's Emerging Business Areas (EBAs) represent promising long-term growth platforms also related to Performance Materials, such as DSM Biomedical and DSM Advanced Surfaces.
Low High <2x GDP% >2x GDP% 2x GDP% Market gr owth
DSM’s capabilities to extract value
DSM Resins & Functional Materials
6 Composite resins 7 Powder coating resins 8 Specialty coating resins 9 Functional materials
DSM Engineering Plastics
1 PA6 film & extrusion 2 PA6 compounds 3 High performance plastics
4 Dyneema® Life Protection 5 Dyneema® Fiber Solutions
10 Biomedical 11 Advanced Surfaces
Performance Materials strategy
* Reported in Innovation Center
DSM Dyneema Emerging Business Areas*
6 9 7 8 4 11 10 5 1 Restructure Strengthen Accelerate 3 2
DSM Engineering Plastics
Highlights 2014
- Good sales development, particularly in the specialty segment
- Improved margins and successful Profit Improvement Program
- New materials center opened in the Netherlands
Sales for DSM Engineering Plastics in 2014 came to € 1,324 million compared to € 1,261 million in 2013. The business group delivered a strong underlying performance in its specialty business, along with effective cost controls. These achievements were partly offset by negative currency effects and lower upstream results in the polyamide 6 value chain. DSM Engineering Plastics targets four key industries: automotive, electrical and electronics, flexible food packaging and consumer goods. In each of these, it aims to create shared value by providing high performance materials and solutions to help lower footprints over the life cycle, eliminate the use of substances of concern, use recycled content or offer improved recyclability, and use content that is entirely or partly bio-based. The markets for engineering plastics increasingly demand sustainable and innovative solutions that make people’s lives safer, easier and healthier, while addressing climate change, ingredient safety and food waste. DSM Engineering Plastics has a focused portfolio with global leadership positions in many of its products.
DSM Engineering Plastics has a strong position in semi- crystalline engineering plastics, high-performance polyamides, polyamide 6 and thermoplastic copolyester. All innovations in DSM Engineering Plastics launched in 2014 were classified as ECO+, providing quantifiable environmental advantages to its customers.
With its global headquarters and management based in Singapore, DSM Engineering Plastics is well positioned to respond to the requirements of its customers in the fast-growing Asian market, which are expected to account for the majority of its growth in the period ahead.
The business has production and R&D facilities in the
Netherlands, the US, Japan, China, Taiwan, India, Belgium and Russia. These centers house a wide range of highly specialized equipment for material and application testing and support the
collaboration of local experts with local, regional and global customers.
In the automotive sector, manufacturers are looking to reduce vehicle fuel consumption and emissions by reducing weight and friction, and through alternative propulsion technologies such as electric and hybrid. They are also seeking to meet regulations on end-of-time vehicles, while reducing vehicle footprints by using bio-based or recycled materials and improving safety and comfort. DSM offers solutions so that customers can meet these requirements. It provides a broad portfolio of more sustainable and advanced products that can reduce weight and friction, allow reductions in footprint and enable innovations further downstream.
In 2014, DSM launched the next generation of Diablo high- temperature resistant polyamides. The new grades are part of both DSM’s Stanyl® polyamide 46 and Akulon® PA6 and PA66
portfolios, and are aimed at applications in automotive engine compartments where temperatures can reach as high as 260°C. DSM's EcoPaXX®, the 70 percent bio-based engineering
plastic, was selected by Dytech for Ferrari and Maserati fuel vapor separators. The company gained share in the European automotive market despite sluggish conditions, due to its early stage collaboration with customers.
In the electrical and electronics industry, manufacturers increasingly seek solutions that address the growing problem of e-waste and offer improvements related to functionality, miniaturization and productivity. DSM addresses this need through its unique portfolio of high-performance, halogen-free flame-retardant materials with high flow, allowing lead-free soldering, thinner connectors and sockets and by offering a halogen-free alternative for consumer electronics cables. Demand for DSM's high performance polyamides from top electronics companies for use in their latest generation of memory connectors has grown in 2014. The introduction of new products such as Stanyl® ForTii™ supported market growth in
electrical and electronics, especially in Asia.
In the flexible food packaging industry, with growing demands for solutions that help reduce food waste, DSM’s leadership in polyamide 6 for film and specialty packaging is enabling customers to improve productivity, while better protecting food and extending its shelf life.
In consumer goods, where there is a growing requirement for more sustainable performance and improved functionality, DSM Engineering Plastics is moving towards a full range of innovative products with reduced content of substances of concern, increased bio-based content, increased recyclability and/or reduced environmental impact.
The construction of a new materials center in Sittard-Geleen (Netherlands) was completed in 2014. This facility brings the marketing and business teams together with scientists in the development center, to enable co-creativity and improve response and service to customers in the materials field.
DSM Dyneema
Highlights 2014
- Steady sales growth in existing segments and through new applications
- Improved operational efficiencies and cost controls - More than 90 percent ECO+ products in running
business
DSM Dyneema reported sales of € 264 million in 2014 compared to € 252 million in 2013. The business grew steadily in its existing segments during the year and increased its attention on new applications to create a broader and more resilient business base. DSM Dyneema successfully added new applications by leveraging its technical innovations and brand into new fields. It also realized operational efficiency gains and achieved cost controls.
DSM Dyneema maintained its focus on existing licensee and key customer relationships, with careful targeting of new products to increase loyalty. The DSM Dyneema business also undertook a number of measures to enhance its product line through a combination of new grade introductions, elimination of under- performing grades and targeted price increases.
In the year, DSM Dyneema finalized two large environmental footprint studies, which indicate that over 90 percent of its products are ECO+.
The Dyneema® brand is licensed to selected customers for use
across a wide and ever-increasing range of applications such as medical sutures, commercial fishing and aquaculture nets, ropes, slings, vehicle and personal ballistic protection, radomes and high-performance fabrics in apparel and cut-resistant gloves.
In all cases, the benefits of high strength, comfort and safety, combined with low weight, make Dyneema® a key contributor
to customer and licensee products. Customer products made with Dyneema® are inherently more sustainable than the
materials they replace. They weigh less, use less material, need less energy to process and deploy in their final application, and have longer lifetimes.
DSM Resins & Functional Materials
Highlights 2014
- Good sales growth through ECO+ sales and new introductions
- Continued attention to operational efficiency
- Joint venture DSM-Niaga focused on sustainable carpet technology, to create and re-create carpets from waste
DSM Resins & Functional Materials reported 2014 sales of € 1,204 million compared to € 1,216 million in the previous year.
In 2014, DSM Resins & Functional Materials focused on replacing non-sustainable products with sustainable solutions, in close cooperation with its partners in the value chain. This resulted in a higher growth rate of ECO+ sales versus
non-ECO+ sales. The business also further embedded a culture of continuous improvement, including attention for operational efficiency.
This business group is active across a broad range of resins and functional materials through its various business units.
In the coatings industry, DSM is a global leader in the
development and production of water-based coating resins and powder coating resins that offer distinct sustainability
advantages. DSM is also an emerging player in the market for UV-curable coating resins through its joint venture with AGI Corporation of Taiwan.
In the functional materials area, DSM is a leading developer of formulated coatings designed to address the growing demand for more sustainable, environmentally friendly materials. It has a global leadership position in optical fiber coatings. In the additive manufacturing industry, DSM offers the most efficient and effective prototyping technologies available, supporting the industry to design and bring new products to market with an increased speed.
For the composite resins market, DSM provides resins solutions for lightweight composites used in trucks and trains, bridges, building façades, trenchless pipe renovation and wind-turbine blades.
Innovations in all areas aim to create superior performance in existing application areas, and enlarge the market for sustainable technologies.
DSM Coating Resins
DSM Coating Resins seeks to grow the market for sustainable coating solutions with resins that are raw materials for three types of coatings: water-based coatings, powder coatings and UV-curable coatings. These resins are used in a wide range of coating applications, such as architectural, industrial wood, flooring, graphic arts, can, coil and powder coating applications. In China, new standards and legislation were introduced in 2014 with a focus on improved air quality. DSM anticipated this development and actively participated in the establishment of the Waterborne China Platform, which has resulted in significant progress being made in the conversion from solvent-borne to waterborne coatings.
The market launch of a powder coating technology, enabling fast curing at low temperatures, took this segment beyond the typical metal substrates market and allowed for application of this technology on heat-sensitive substrates. This will enable it to expand its portfolio of Uralac® applications to a wider range of
DSM Coating Resins measures the carbon footprint of its innovations to validate its qualities and has conducted multiple LCAs. The data acquired by these studies help to foster cooperation across the value chain. An example of this is the LCA study on the carbon footprint of coated cans; the new Bisphenol A-free resins have a significantly lower environmental footprint.
The business is also setting a new standard in sustainable paint resins with the introduction of Decovery®. These resins are
based on novel plant-based building blocks, combining reduced reliance on fossil fuels with a safer indoor air quality environment, opening a new era of high performance sustainable paint production with a reduced environmental impact.
DSM announced a joint venture with Niaga, a Netherlands- based provider of sustainable solutions for the carpet industry. DSM-Niaga will further develop and commercialize sustainable technology for recyclable carpets. Based on proprietary and complementary technologies, the venture will enable the industry to create and re-create carpets from waste in order to close the carpet materials loop.
DSM Functional Materials
In the telecommunications market, DSM’s UV-curable optical fiber materials set the standard for fiber protection and identification worldwide, helping ensure greater signal reliability and field performance within fiber-optic networks as bandwidth demand surges worldwide.
DeSolite® Supercoatings, a broad portfolio of optical fiber
coatings, help network owners attain higher levels of reliability and performance. DSM announced the next generation of DeSolite® Supercoatings, taking performance to a new level with
excellent fiber strengths and enhanced processing robustness. DSM is actively protecting and, where needed, will defend its IP position.
In additive manufacturing (3D printing), DSM has introduced several innovative products to key markets in this field such as medical, dental, aerospace and automotive. The business introduced Somos®Precise, a new material for 3D printing
designed to create parts and patterns for high temperature applications requiring exceptional detail resolution. Another introduction was Somos®PerFORM, the latest composite
material for 3D printing, helping users to achieve maximum accuracy and detail with a reduced processing time.
DSM Composite Resins
Market conditions remained challenging in 2014, with some positive signs in the second half. While transportation, marine, and construction markets were operating at lower levels, infrastructure (bridges, relining) and industrial are showing improvements. At the same time, markets in China continued to grow, but at lower levels than before.
DSM Composite Resins worked to increase competitiveness by reducing operating costs and de-bottlenecking its processes. It collaborated closely with partners to speed up innovations. DSM is pursuing strategic actions for the Composite Resins business. In December, DSM announced that it had reached an agreement for the sale of Euroresins to Cathay Investments. The company also announced an agreement to sell its solvent-borne coating business Synres to Standard Investment.