DSM first quarter profits up from 4Q
quarter of 2002 from the fourth quarter last year, an increase of
€27 million to €93 million, although net profit was still 36 per
cent below the same period last year.
Dutch group DSM reported a rise in operating profit for the first quarter of 2002 from the fourth quarter last year, an increase of €27 million to €93 million, and an increase of 21 per cent in net profit. However net profit dropped 36 per cent on the same period last year to €68 million.
Commenting on the results, DSM managing board chairman Peter Elverding said: "It seems that the worst is now behind us. The second half of 2001 was difficult, but in the first quarter of 2002 we were able to recover to some extent and saw our operating profit increase considerably compared with the previous quarter."
He added : "A particularly positive signal was the rapid and strong improvement in Performance Materials. In Life Science Products, we will resume profit growth in the second quarter. Therefore, I expect our second-quarter operating profit to be considerably better than that for the first quarter of 2002."
Net sales in the first quarter of 2002 amounted to over € 1.8 billion, down 14 per cent from the first quarter of 2001. DSM attributed the cause of the decrease to a strong decline in selling prices in the Polymers & Industrial Chemicals segment.
Selling prices were on average 14 per cent lower, but prices for penicillin, food specialties, bakery ingredients and Dyneema increased, said DSM.
The decrease in operating profit was due to lower margins (selling prices less variable costs). This was partly compensated for by a decrease in fixed costs due to the implementation of existing restructuring programmes, according to the company.
It claimed that economic conditions have shown a greater improvement than expected when it presented annual figures for 2001 in February. The economic recovery - noticeable since the beginning of March - is mainly evident in the USA and Asia, with conditions in Europe improving only slightly.
However with regard to the whole year, Elverding warned that it was still uncertain to what extent and at what pace economic conditions would continue to improve, claiming that while the underlying development seemed at this stage to be positive, it was too early to make predictions regarding the profit level for 2002 as a whole.
The company expects to see operating profit for the second quarter of 2002 climbing substantially from the first quarter of 2002, reaching approximately the same level as in the second quarter of 2001 on a comparable basis.