11 April 2018Reading time: 2 minutes

Last year DSM had some strong results and therefore increased their targets for the coming years. The Dutch chemical company seems to have sufficient cash, which is not only being invested but also returned to the shareholders.

Early this year we wrote that the acquisition of BioCare at the end of 2017 could strengthen the position of DSM as a worldwide player on the nutritional supplements market. For now the takeover has yet to be reflected within the results, but the chemical company seems to be in a positive flow.

On February 14, DSM presented their fourth quarter and annual results. The fourth quarter revenue grew with 8% on an annual basis, whereas the Nutrition and Materials division performed strong. During the same period the ebitda rose with 14%. Therefore the total revenue of DSM grew with 9% to EUR 8.6 billion throughout 2017, while the ebitda increased with 15% to 1.26 billion. Also the profit margin of DSM grew on an annual basis from 15.9% to 16.7%.

Furthermore, DSM noted a net debt of EUR 743 million and claimed that the chemical company has EUR 3.5 billion available for possible takeovers. This positive financial position is partly due to the cost reduction program which has been implemented during recent years. Part of this capital will also be returned to the shareholders. On March 19 DSM announced to have started with a buy-back program of their own shares. From that date on, 500,000 shares will be bought back and after May 14, another 1,100,000 will be bought-back. This makes it possible for the company to pay-out more dividend in shares. DSM claims that the total worth of the buy-back program will be approximately EUR 130 million.

Analysts in general claim that DSM is properly valued compared to other chemical companies. However analysts do expect that the growth of the company will decline within the coming years. The stock price of DSM has been very volatile during recent months with a provisional all time-high of EUR 81.35. The future stock price is subjected to several political, industrial and sector specific, as well as economic factors. Investors should consider these risks when making their investment decisions. Developments can be different at any time than investors anticipated on, which could result in capital losses.

Vontobel products on DSM are tradable at DEGIRO.

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25/09/2023 12:43:19