growth
Net sales
€ 4,335 m
x € million 2014 2013R
Net sales:
DSM Nutritional Products:
- Animal Nutrition & Health 2,084 1,935 - Human Nutrition & Health 1,626 1,690 - Personal Care 152 152 3,862 3,777 DSM Food Specialties 473 428
Total 4,335 4,205
Organic sales growth (in %) 2 2 Operating profit 596 680 Operating profit plus depreciation
and amortization (EBITDA) 850 914 Capital expenditure 330 255 Capital employed at 31 December 5,034 4,496
ROCE (in %) 12.5 15.5
EBITDA as % of net sales 19.6 21.7 R&D expenditure 206 209 Workforce at 31 December
(headcount) 10,857 10,548
Business
The Nutrition cluster comprises DSM Nutritional Products and DSM Food Specialties. These businesses serve the animal feed, food and beverage, pharmaceutical, infant nutrition, dietary supplement and personal care industries. With a global and highly diversified portfolio of products, services and end- markets, and a unique position across the feed and food value chains, DSM applies its capabilities to the benefit of customers and other stakeholders.
Total sales for 2014 of the Nutrition cluster came to
€ 4,335 million, compared to € 4,205 million in 2013. Organic sales growth remained stable at 2 percent and EBITDA was € 850 million.
EBITDA for the cluster declined 7 percent in 2014, despite strong volume growth in Animal Nutrition & Health. The decline was due to the impact of negative currency effects, lower volumes in Human Nutrition & Health and lower vitamin E prices. DSM responded to the decline in the US dietary supplement market by supporting science-based industry coalitions that promote essential vitamins and omega-3 supplements through dedicated communications initiatives in the US. It worked closely with retailers to grow the category, and continued to see good growth in dietary supplements markets outside the US. The company took a number of actions to drive further improvements in operational performance. It further improved its cost position, enhancing the competitiveness of its vitamins, and upgraded and improved its cost position in nutritional lipids. In addition to its share in the DSM Profit Improvement Program (PIP), Nutrition is running cost-saving projects totaling € 50 million, which will be partly reinvested into external open innovations and local, front-line support systems.
The business supported its customers with innovations and used scientific expertise to increase differentiation in forms, tailor-made products, solutions and premixes, while supporting the growth of its i-Health consumer health and wellness business. The company’s product and end-market diversification acted as a strong natural hedge, providing significant resilience in these difficult market conditions. DSM Nutritional Products
DSM Nutritional Products is organized around three market- facing entities: Animal Nutrition & Health, Human Nutrition & Health and Personal Care. In 2014, DSM Nutritional Products posted sales of € 3,862 million compared to € 3,777 million in 2013.
Trends
The fundamental growth drivers in nutrition and health remained intact, despite the challenging macro-economic conditions in 2014. A steadily growing urban population in high growth economies with rising standards of living are driving increased consumption of fish, meat, poultry and dairy products. As the
Review of business in 2014:
Nutrition
Review of business in 2014:
Nutrition
Review of business in 2014:
Nutrition
average age increases, concerns about health and the environment also drive demand for healthier processed foods. The need for convenience and safe, processed food has never been higher, which matches DSM’s ability to deliver tailor-made local applications and blends.
Global megatrends are also fuelling demand for health, wellness and convenience products such as dietary supplements, and healthier choices in food and beverages, as well as infant nutrition products. At the same time, growing awareness about malnutrition in both the developing and the developed world is prompting regulatory actions aimed to encourage the
consumption of healthy, balanced diets and, where needed, fortified foods and supplements.
Quality, safety and sustainability are also issues of rising public concern that are leading to greater attention from health authorities. They prefer producers to work with suppliers that, like DSM, are rigorous in their application of science and have state-of-the-art quality assurance systems. Another important differentiator for DSM is environmental sustainability, most notably in countries where there are low-cost producers. In the period ahead, DSM expects customers to demand deeper insights and customized solutions. DSM's nutrition business is well positioned for growth and will continue to increase its focus on high growth economies where the business will increase its development of products tailored to local consumer preferences and market and channel structures.
Sustainability
Sustainability is an important growth driver for DSM, as demand increases for market solutions that are more efficient and have distinctive environmental advantages.
DSM has undertaken environmental assessments of its products, including vitamins C, B2 and B6. By lowering the environmental impact of its production processes, DSM has reduced its ecological footprint and that of its end-products. One of the greatest challenges for society is the alleviation of malnutrition. As an industry pioneer, DSM helps to address malnutrition by advancing the world's understanding of the intricate relationships between nutrition and health and by assisting customers to improve the nutritional content of their products through product development and improved food production processes.
DSM has been a proud partner of the United Nations World Food Programme (WFP), the largest provider of food aid to the world’s hungry, since 2007, and has extended this partnership until
2015. The UN World Food Programme feeds and nourishes an average of 90 million people in over 80 countries every year. See Public-Private Partnerships on page 36.
In the field of ingredients, DSM is increasingly recognized as a thought leader in the areas of nutrition and health. Thought leadership enables it to engage in discussions on nutrition guidelines, policies and practices with high-level decision makers and authorities around the world. It also helps the business to build institutional knowledge and create confidence among its customers and other stakeholders.
Sustainable animal protein production is of major importance for the world and therefore for the feed and food value chains. The greater demand for safer, more efficient, healthier and more sustainable animal protein production, combined with a rising scarcity of resources, is requiring efficient feed conversion processes and a reduction of undesirable waste components. DSM offers solutions to meet this demand and helps to make industrial farming systems more sustainable with a lower impact on the environment.
Strategy
DSM Nutritional Products has a unique business model that aims to capture opportunities arising from global megatrends by combining global production capabilities in active ingredients and formulations with customized local formulations, premix
activities and distribution channels. As a global producer, it delivers a broad portfolio of high quality and competitive actives while offering maximum differentiation through industry and segment specific formulations. As a local solutions provider, it is focused on customer-driven solutions and segment-specific products.
DSM has the broadest portfolio of nutritional ingredients in diversified end-markets and benefits from an unparalleled presence across the value chain. It has also developed high levels of customer intimacy in its markets around the world. By managing the interdependencies between active ingredients, formulations, premixes and macro blends tailored for specific applications, DSM drives innovation and ensures value delivery to customers and consumers.
In recent years, DSM has grown to become one of the strongest industry players by expanding and strengthening its value chain presence wherever there are growth opportunities. Its footprint of operations now comprises more than 60 countries, including a large number of high growth economies, where it has unparalleled customer access, the deepest and broadest product portfolio, and new skills and capabilities.