DSM today reported what it calls the best quarter in its history, with operating profit almost tripling compared to last year.
Key drivers behind the strong Q2 results were effective cost savings, favourable currency exchange rates, a continued focus on pricing and some downstream re-stocking, said the Dutch ingredients firm.
“Operating profit increased by more than 25 per cent compared to the first quarter and for the current business portfolio it was the best quarter in DSM's history,” said Feike Sijbesma, chairman of the DSM managing board
He added, however, that the company remains “vigilant about the broader macro economic developments”, and in this environment the company says its focus on cost generation and cost savings continues to be important.
Boosted by nutrition
DSM’s overall performance was boosted by strong results from its nutrition business, which helped balance out the slightly more disappointing performance of its pharma division.
Net sales in the Nutrition cluster came in at €764m in the quarter, a 9 per cent growth on last year. Organic sales growth was 4 per cent up on last year. This was mainly driven by growth in volumes in Human Nutrition & Health as a result of refilling the pipeline and market recovery in savory ingredients, said DSM.
Overall operating profit also reached a “record” level, being higher than the pre-downturn level, said the firm.
In DSM Nutritional Products and DSM Food Specialties operating profit was “exceptionally strong” and “materially higher” than Q2 2009 and Q1 2010.
“The businesses benefited from good market conditions, favorable product mix, excellent manufacturing performance, good cost control, favorable currency exchange rates and some downstream restocking. The continued strategic focus on value over volume is successful and sustainable,” said DSM in a statement this morning.