DSM eyes brands, private label; will cut 100 nutrition jobs
In August the company outlined organisational adjustments that would see 900-1100 jobs lost within support functions – half of which would be in the Netherlands.
It forecast the changes – to be fully implemented by the end of 2017 – would save between €125 and €150 million compared to 2014.
However in a strategy 2018 announcement yesterday the company said it would execute “cost reduction and efficiency improvement” programmes that would save €250-300 million by the end of 2018.
This new saving figure accounts for a further 100 job losses – this time falling within its nutrition unit – as well as through purchasing savings related to direct raw materials, energy and indirect spend.
DSM corporate communications director Herman Betten said the latter would make up the “vast majority” of savings.
He could not yet give further details about this latest round of job cuts.
DSM employs about 25,000 people in total.
In August DSM managing board CEO and chairman Feike Sijbesma said the cuts would enable it to be more “agile, focused and cost-efficient”.
He said the cuts came after a period of acquisitions from the company, which had led to a complex company structure made up of smaller business units and as a result duplication in certain services.
The nutrition programme
In the presentation of its nutrition programme the company outlined several core priorities for growth.
It said it was interested in retail-ready solutions for both brands and private label.
This would help capture a greater share of the value chain by providing a “one stop shop” as well as build mutually-beneficial relationships with customers who are also suppliers.
Premixes were also a priority as was malnutrition strategies.
DSM is part of a consortium called Africa Improved Foods, which announced a joint venture with the Rwandan government last month.
Along with the Dutch development bank (FMO), the UK government’s Development Finance Institution (CDC Group) and the investment arm of the World Bank (International Finance Corporation), it produces nutritional foods for vulnerable groups like micronutrient powders and complementary foods for pregnant and breastfeeding mothers and older infants.
The Africa Improved Foods joint venture is initially targeting Rwanda and Ethiopia.
It would also expand its brands i-Health, look to repair growth in North America and integrate its 2014-acquired Chinese vitamin C business Aland.
New products and forms of ingredients like vitamins, fermentation based coloration, lipids and other nutritional ingredients would also be developed.
Positive Q3 results
DSM announced positive third quarter 2015 results this week.
It reported earnings before interest, taxes, depreciation and amortization (EBITA) of €213m for its nutrition business - 5% lower compared to Q3 2014.
However Q3 nutrition sales increased 15%. It called volume developments in human nutrition and health “solid”.
Declan Morrissey, food, beverage and pharmaceutical analyst at Davy Research, told our sister publication FeedNavigator: “If you strip out the divestments from earlier this year – the non-core polymer intermediaries — these are good results.
“There had been a lot of uncertainty in the nutrition business at the start of the year especially on the dietary supplements and omega-3 fish oil side but we are beginning to see good organic growth in the whole division now and the stock is trading up today as a result of that performance and the full year guidance being maintained.”
The company has faced some difficulties with low vitamin E prices.
