DSM

DSM

22 May 2019Reading time: 3 minutes

In the first quarter DSM achieved an organic grow of 3 percent to 2,29 billion euro on an annual basis, while the adjusted ebitda rose with 10 percent to 412 million euro. The Nutrition division showed a revenue increase of 3 percent due to positive developments of the food industry. However the Materials division noted a revenue decrease of 5 percent due to a lower demand.

Due to the first quarter results, DSM has increased its targets. Whereas DSM earlier counted on a ebtida growth between 5 – 10 percent for 2019, they now expect this growth to be closer to the 10 percent. For 2020 and 2021 DSM also aims for a ebtida growth of 10 percent.

It remains to be seen if DSM can hold on to this growth. In the last period, Nutrition benefited from an increasing demand but the division also struggled with the ‘African Pigs-plague’ amongst other things. According to DSM the pigs-plague pulled down the first quarter revenue with 12 million euro and the ebitda with 3 million euro. Recently new cases of the African pigs-plague showed up in Hong-Kong and Belgium, which could possibly affect the demand for animal feed ingredients.

DSM believes that the Materials results will remain relatively stable for the coming period, but they do point out that the division is operating in a cyclically sensitive industry.

In the first quarter, DMS has started a share repurchase program with a total value of 1 billion euro. According to the company this program will not affect any possible investments and acquisitions. The recent take-over of SFR seems to confirm this. In May DSM acquired the Indian manufacturer of plastics for the car industry and electronics industry for 38 million euro. The acquisition is expected to be completed in the third quarter of this year. This take-over could strengthen the position of DSM in India, where the company achieved a turnover of approximately 250 million euros in 2018.

Due to the first quarter results the stock price of DSM rose the same day with more than 4 percent to 103,3 euro (7 May 2019). In the following days the stock price has been relatively volatile and is now slightly lower at 102,55 euro (20 May 2019). The price to earnings ratio is 19,3 and the share offers a dividend yield of 2,2 percent.

The future price of the stock is subject 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.

Important legal information:

This information does not constitute a financial analysis, but product advertisement. Thus it does not meet the legal requirements to ensure the impartiality of financial analysis and is not subject to trade prohibition before the publication of a financial analysis.

Fordetailed information, particularly regarding the structure and the risks associated with an investment in the derivative financial instruments, prospective investors should read the Base Prospectus, which is available together with the Final Terms and any supplement to the Base Prospectus in electronic form on the issuer’s website: http://beursproducten.vontobel.com. Additionally, the Base Prospectus, anysupplements to the Base Prospectus and the Final Terms are available inprinted form, free of charge, at the registered office of the issuer: Vontobel Europe AG, Bockenheimer Landstrasse 24, 60323
Frankfurt am Main, Germany.


Investors should consider the applicable selling restrictions.
Companies of the Vontobel group may directly or indirectly pay commissions in varying amounts to third parties (e.g. brokers) in connection with the public offer and the distribution of the derivative financial instruments. Further information is available upon request from your distribution partner.

 

16/09/2019 00:32:55