Adjusted Net Operating Free Cash Flow of €955m, up 19%
Proposed dividend stable at €2.40 per ordinary share
Full year outlook 2021: Adjusted EBITDA growth into double digits
Key figures and indicators – continuing operations2
in € million
Full year 2020
Full year 2019
Adjusted EBITDA margin
1 Adjusted EBITDA is an Alternative Performance Measure (APM) that reflects results from usual operations. Organic sales growth is the total impact of volume and price/mix. Adjusted Net Operating Free Cash Flow is the cash flow from operating activities, corrected for the cash flow of the APM adjustments, minus the cash flow of capital expenditures and drawing rights. 2 Results excluding business held for sale
Co-CEOs statement Geraldine Matchett and Dimitri de Vreeze, Co-CEOs, commented: "When faced with the unprecedented challenges from the pandemic, we remained determined to keep delivering for our customers, something that would not have been possible without the passion, resourcefulness and commitment of our exceptional colleagues. This enabled us to record a good financial performance in our Nutrition business, while Materials was significantly impacted by COVID-19. In Q4, business conditions in Human Nutrition remained strong, primarily in dietary supplements, reinforcing the importance of 'health through nutrition', while Animal Nutrition growth resumed after the mid-year destocking. Materials saw a very strong demand recovery driven by the automotive sector.
We continued to make good progress on the execution of our long-term strategic plan, including three specialty nutrition acquisitions that enhance our offering to customers, the divestment of Resins & Functional Materials, and delivering against our purpose-led sustainability ambitions in people and planet. With our innovation-focused growth platforms, we are firmly on track to deliver strong sales and earnings growth in coming years.
Whilst global uncertainty remains, looking ahead, we have a positive outlook for DSM in 2021."
Outlook 2021 DSM expects to deliver an Adjusted EBITDA increase in Nutrition at the upper end of its mid-term strategic ambition of high single digit growth. Together with continued recovery in Materials, DSM expects an Adjusted EBITDA growth rate for the Group moving into double digits, with a continued good Adjusted Net Operating Free Cash Flow.
COVID-19 impact COVID-19 led to unprecedented global challenges. DSM took very early actions to ensure the health and safety of its employees and partners while keeping operations running to serve customers with its essential products. Overall COVID-19 had a slightly negative effect on Group sales as Materials saw a negative impact of around 10% on volumes in the year due to reduced global demand in Q2 and Q3. Nutrition saw an overall slightly positive sales impact from COVID-19 mainly due to very strong demand in Human Nutrition for immunity-boosting products. DSM will continue to respond swiftly to COVID-19 health and safety developments and support the societies in which it operates.
Strategy At its Virtual Investor Event in November 2020, DSM reiterated its purpose-led, performance-driven growth strategy. Sustainability and innovation are key growth drivers of DSM's long-term focused strategic plan, which are underpinned by ambitious targets across People, Planet and Profit. In markets related to Nutrition, Health and Sustainable Living, DSM is well-positioned to use its capabilities to create a positive impact and deliver value for all stakeholders.
In Nutrition, DSM sees significant headroom for business growth and innovation. The success of Nutrition's unique business model combining 'global products' and 'local solutions' is evident in its track record of 6% organic sales growth and a 10% Adjusted EBITDA growth CAGR 2015-2020. Recent acquisitions such as CSK, Glycom and the Erber Group further strengthened DSM's value proposition to customers. Going forwards, Nutrition will maintain strong growth by building on its 'global products' and 'local solutions' model. In addition DSM will add a third leg through driving precision and personalization, by building on big data, digital and bioscience capabilities.
In Materials, DSM has strong growth and earnings potential, and is well positioned in the strategic area of Sustainable Living. Following the announcement of the sale of the Resins & Functional Materials businesses to Covestro AG, Materials' activities now consist of DSM Engineering Materials and DSM Protective Materials. The company will continue to develop these into a more resilient, higher-growth, and high-margin specialty business. Its offering addresses the increasing demand for materials that protect the health of both people and planet by adding further bio-based and circular solutions.
Overall, DSM aims to deliver mid-single digit % organic sales growth, an above 20% Adjusted EBITDA margin, and high-single digit % Adjusted EBITDA growth on a mid-term basis in both Nutrition and Materials, supported by its strong innovation pipeline.
Q1 & Q3 reporting change Starting in 2021, DSM will change its reporting cycle, in line with the established practice of many of its consumer ingredients peers. From Q1 2021, DSM will provide a trading update for Q1 and Q3 reporting sales, organic growth, Adjusted EBITDA and Adjusted EBITDA margins. DSM will organize media and analyst calls during half year and full year.
Q4 Highlights Continuing operations results:
DSM reports a good Q4 despite significant negative foreign exchange effects
Adjusted net operating free cash flow of €316m, +26% compared to Q4 2019.
Key figures and indicators – continuing operations
in € million
Adjusted EBITDA margin
Nutrition delivered a strong sales performance in Q4, despite a significant negative foreign exchange effect of -7% which almost entirely offset the contribution of recent acquisitions. Business conditions overall were good, in line with expectations as communicated with the Q3 results.
Materials saw a strong sales recovery in Q4 driven by strong demand for Engineering Materials in the automotive markets. Protective Materials saw a partial recovery in its personal protection activities.
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Additional Information Today DSM will hold a conference call for media at 08:00 CET and a conference call for investors and analysts at 09:00 CET. Details on how to access these calls can be found on the DSM website, www.dsm.com.
DSM – Bright Science. Brighter Living.™ Royal DSM is a global, purpose-led, science-based company active in Nutrition, Health and Sustainable Living. DSM's purpose is to create brighter lives for all. DSM addresses with its products and solutions some of the world's biggest challenges while simultaneously creating economic, environmental and societal value for all its stakeholders – customers, employees, shareholders, and society at large. DSM delivers innovative 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 was founded in 1902 and is listed on Euronext Amsterdam. More information can be found at www.dsm.com.
Forward Looking Statements 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.
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