DSM Nutritional Products reported strong results for the third quarter of 2018, with organic sales growth of 5 percent.
“We are delighted to report another very good quarter and are confident that we can achieve our full year outlook,” said Feike Sijbesma, CEO and chairman of the DSM Managing Board. “The continued organic sales and adjusted EBITDA growth rates in the underlying business position us well for a strong year which would once again exceed our Strategy 2018 targets.
“While there are currently uncertainties around macro-economic developments, we see continued good business conditions in Nutrition and most of our Materials businesses. The strategic plan that we have successfully delivered over the past few years has resulted in a robust portfolio of solution-led, higher value specialty products in Nutrition, Health & Sustainable Living.”
The company’s underlying adjusted EBITDA growth was 7 percent; the Nutrition business also saw 7 percent organic sales growth and 10 percent adjusted EBITDA growth. The Materials business saw 3 percent organic sales growth and adjusted EBITDA growth of 3% percent.
The company’s total adjusted EBITDA was up 11 percent.
Nutrition segment results
For the first nine months of 2018, Nutrition realized 9 percent organic sales growth in the underlying business, with strong volumes, up 5 percent, as well as 4 percent price growth, supported by good conditions across most regions and market segments.
For the third quarter of 2018, Nutrition delivered another very good quarter with 7 percent organic sales growth in the underlying business. Volumes were up 3 percent, achieved despite a challenging comparable prior year period in Animal Nutrition. Prices were 4 percent higher, in part reflecting price initiatives to offset higher input costs and negative foreign exchange effects, similar to the first half of 2018.
Due to the exceptional supply disruptions in the vitamin industry, the first nine months further benefitted from EUR290 million (US$330 million) additional adjusted EBITDA contribution from an exceptional temporary vitamin price environment. Although prices had started to normalize by the end of the first half, there was a small, residual positive effect in the third quarter of EUR15 million. This temporary vitamin price effect was mainly related to animal nutrition.
Animal Nutrition delivered a strong year-to-date performance, with 6 percent volume growth in the underlying business. This was achieved against a tough prior year comparable period (8 percent volume growth in the first nine months of 2017).
Prices in the underlying business increased by 6 percent, driven by pricing initiatives to mitigate higher input costs and the impact of negative exchange rate developments.
Third quarter sales
The third quarter of 2018 saw continued good business conditions across regions, with especially strong sales in Asia. In China, there was a minor impact from the outbreak of African swine fever, but these effects were largely compensated by increased demand for poultry, which highlights the benefit of DSM’s diversified presence over species and geographies.
For the third quarter, DSM reported 2 percent volume growth against a tough comparison (14 percent in Q3 2017). This 2 percent included the residual effect from the Brazilian truckers’ strike in the second quarter and the temporary shutdown of DSM-Tortuga’s Pecém operations after an accident that resulted in a fatality. Therefore, a normalized volume growth would have been about 4 percent in the quarter.