Nutritional Products spears growth for DSM cluster
operating profits in Q1 2005 - a result that sits well with an
excellent picture for the group overall and could point towards
another positive year.
At the close of last fiscal DSM grouped DSM Nutritional Products together with Food Specialties (formerly known as Life Sciences) under a new 'Nutrition' cluster. In this, the first quarter to be reported under the new structure, sales were €626m compared to €594 last year, and operating profit was €82m, up from €78m.
However sales at Food Specialities remained almost the same as the prior year period, and the growth was driven by increased sales volumes in both human and animal nutrition and health.
The increased operating profit for DSM Nutritional Products is attributed by the company to "lower fixed costs and an improvement in its product mix".
Indeed the company has been looking to shift its emphasis away from traditional vitamins, a mature marker that is under considerable pressure from Chinese suppliers, towards new products aimed at helping reduce the risk of chronic disease and improving wellness, such as TeaVigo green tea extract and Bonistein high-purity genistein.
In 2005 Nutritional Products accounted for €80 million of the group's overall €290 million R&D spend - that is, 27 per cent.
Developments since the close of Q1 include the announcement of price increases for DSM's vitamins and carotenoids on a worldwide bases, as a result of increasing energy, raw material and transportation costs.
Across all its clusters, Royal DSM reported an 11 per cent increase in net sales to €2.061bn, and operating profit up 13 per cent to €206m.
The company has said that it has taken steps to compensate for these rising costs, but these have been only partially successful, leading to "unsustainable situations". The worst-hit areas are the fat soluble vitamins and carotenoid product range.
The rise increases were announced in mid-March but did not impact Q1 as they only came into effect from April 1.
At the start of April DSM also re-affirmed its commitment to its promising emerging business area, personalized nutrition, pledging $6.5m (€5.4) in follow-on funding to US nutrigenomics company Sciona. This funding, from DSM Venturing, means the Dutch company is now a major shareholder in Sciona.
