DSM (company)

Royal DSM

Type	Naamloze vennootschap
Traded as	Euronext: DSM OTCQX: RDSMY
Industry	Chemicals
Founded	1902 (1902)
Headquarters	Heerlen, Netherlands
Key people	Feike Sijbesma (CEO), Geraldine Matchett (CFO), Rob J. Routs (Chairman of the Supervisory Board)
Products	Nutritional ingredients, specialty food ingredients, engineering plastics, Dyneema®, coatings, biomedical materials, biomass conversion technology, solar efficiency technology.
Revenue	€7.722 billion (2015)[1]
Operating income	€573 million (2015)[1]
Profit	€88 million (2015)[1]
Total assets	€11.473 billion (2015)[1]
Total equity	€5.541 billion (2015)[1]
Number of employees	20,750 (2015)[1]
Website	www.dsm.com

DSM Headquarters, Heerlen, the Netherlands 2011

Koninklijke DSM N.V. (Royal DSM, commonly known as DSM), is a Dutch multinational active in the fields of health, nutrition and materials. Headquartered in Heerlen, at the end of 2015 DSM employed 20,750 people in 50 countries and posted net sales of €7,722m.^[1]

Organization

DSM’s 5 business groups are clustered according to product and market combinations, with the business group directors reporting directly to the Managing Board. Since 2015 DSM's activities are grouped into three clusters: Nutrition, Materials and Innovation Center.

Nutrition

The Nutrition cluster is made up of DSM Nutritional Products and DSM Food Specialties. DSM Nutritional Products produces essential nutrients such as synthetic vitamins, carotenoids, nutritional lipids and other ingredients for the feed, food, pharmaceutical and personal care industries. DSM Food Specialties manufactures food enzymes, cultures, yeast extracts, savory flavors, hydrocolloids and other specialty ingredients for the dairy, baking, beverage and savory segments.

Materials

The Materials cluster is made up of DSM Engineering Plastics, DSM Dyneema and DSM Resins & Functional Materials. DSM Engineering Plastics’ specialty plastics are used in components for the electrical and electronics, automotive, flexible food packaging and consumer goods industries. DSM Dyneema is the inventor, manufacturer and marketer of Dyneema^®. DSM Resins & Functional Materials manufacture resins solutions for paints, inks, stereolithography, and industrial and optical fiber coatings.

Innovation Center

In addition to the role of supporting innovation in the businesses and DSM’s venturing activities, the Innovation Center is responsible for the company’s ‘Emerging Business Areas’; DSM Biomedical (biomaterials and regenerative medical devices), DSM Bio-based Products & Services (biomass-conversion technology) and DSM Advanced Surfaces (AR-coatings and Photovoltaic-films for solar modules).

Current strategy

Financial targets

In November 2015 DSM announced that up to 2018 it was targeting a high single-digit annual percentage increase in EBITDA and a high double-digit annual basis point increase in Return on Capital Employed (ROCE). It will focus on organic sales growth, reducing costs and strict capital allocation and does not expect to engage in large acquisitions in the near future.^[2]

Environmental targets

Within its corporate strategy the company also defines long-term sustainability aspirations, which include targets to improve the eco-efficiency of its operations. In November 2015 DSM set the following environmental reduction targets:

Since 2010,^[3] the Short^[1]- and Long-Term Incentive^[1] elements of the remuneration of DSM’s Managing Board^[4] and executive bonuses^[5] relate to the company’s financial and environmental performance in equal measure. Since 2004^[6] DSM has been either the Materials industry group leader, (6 years) or among the leaders, (also 6 years) in the annual Dow Jones Sustainability Index.

Shares

DSM is listed on Euronext Amsterdam and is a constituent of the AEX index. Options on DSM shares are traded on the European Option Exchange in Amsterdam. In the USA, a sponsored unlisted American Depositary Receipts (ADR) programme is provided by Deutsche Bank Trust Co. Americas. These ADR’s are listed on the OTCQX International Premier Marketplace.

History

DSM was formed by the Dutch State in 1902 to mine coal reserves in southern Limburg and although the company had diversified into commodity chemicals and petrochemicals by 1973 when the last mine closed, DSM retains a link to its origins by continuing to use the initials of the original ‘Nederlandse Staatsmijnen’ (Dutch State Mines)^[7] to this day.

In 1989 the government floated 70% of its shares in the company on the Amsterdam Stock Exchange (now Euronext Amsterdam) with the remaining 30% floated in 1996, thereby completing DSM’s privatization. The 21st Century has seen DSM follow successive five-year strategic periods of portfolio transformation and internationalization involving acquisitions, divestments and partnerships.^[8][9] In 2001 DSM reported 48% of its workforce was based in the Netherlands, in 2015 this was 23%.^[1]

Acquisitions

• 1998: Gist-brocades (food ingredients, pharmaceuticals, yeast- and enzyme-based production process technology).^[10]
• 2000: Catalytica Pharmaceuticals (pharmaceutical intermediates).^[9]
• 2003: Roche’s vitamin division.^[9]
• 2005: NeoResins (water-based coating resins).^[9]
• 2011: Martek (nutritional products derived from microalgae and fermentation technology).^[9]
• 2011: Vitatene (natural carotenoids derived from fermentation of Blakeslea trispora fungus).^[11]
• 2012: Verenium’s food enzymes and oilseed processing business.^[12]
• 2012: Kensey Nash (biomedical regenerative medicine).^[13]
• 2012: Ocean Nutrition Canada (fish-oil derived nutritional products).^[14]
• 2012: Cargill ’s cultures and enzymes business.^[15]
• 2012: Fortitech (customized nutrient premixes).^[16]
• 2013: Unitech (micronutrient premixes and macronutrient blends).^[17]
• 2013: Andre Pectin (food hydrocolloids).^[18]
• 2013: Tortuga (nutritional supplements for pasture raised cattle).^[19]
• 2015: Aland (vitamin C).^[20]
• 2015: Cubic Tech (high performance ultra-lightweight flexible laminates and fabrics).^[21]

Divestments

• 2002: Petrochemicals (hydrocarbons, polyethylenes, polypropylenes, polyolefins).^[22]
• 2010: Ammonia, fertilizer and melamine.^[23]
• 2010: Thermoplastic elastomers.^[24]
• 2010: EP(D)M rubber.^[25]
• 2010: Toluene oxidation.^[26]

Partnerships

DSM has stated that these partnerships have been created with a view to it ultimately exiting the businesses concerned.

• 2009: DSM and NCPC sign contracts to establish nutrition and anti-infectives joint ventures in China^[27]
• 2011: DSM Sinochem Pharmaceuticals, joint venture (DSM 50%) with the Sinochem Group. DSM Sinochem Pharmaceuticals is a manufacturer of generic anti-infective molecules.
• 2014: Patheon, joint venture (DSM 49%) with JLL Partners. Patheon is a full service pharmaceutical manufacturing and development company.
• 2015: ChemicaInvest, joint venture (DSM 35%) with CVC Capital Partners. ChemicaInvest consists of three business units; Aliancys (composite resins), AnQore (acrylonitrile) and Fibrant (caprolactam).

DSM has applied IFRS 11 to its associates and joint ventures since 2013.

World Food Programme (WFP)

DSM became a WFP Private Sector Partner in 2007, forming the "Improving Nutrition, Improving Lives" partnership to lend expertise in improving the nutritional value of the food WFP distributes to those in need.

WFP receives DSM’s technical and scientific knowledge in the field of high nutrient products as well as financial assistance. The partnership focuses on developing new and improved nutritious products, such as micronutrient powders and fortified rice, that help WFP deliver not just more food, but also provide the nutrients necessary to fight hunger and prevent micronutrient deficiencies in vulnerable communities.^[28]

References

AEX companies of the Netherlands
Aalberts ABN AMRO Aegon Ahold Delhaize Akzo Nobel Altice ArcelorMittal ASML Boskalis DSM Galapagos Gemalto Heineken ING KPN NN Group Philips Randstad RELX SBM Offshore Royal Dutch Shell Unibail-Rodamco Unilever Vopak Wolters Kluwer