Royal DSM Boosts 2019 Outlook
Royal DSM NV bucked a downward trend in the chemical industry by raising 2019 guidance as the Dutch company beat profit forecasts following growth in nutrition and healthcare markets.
The maker of vitamins and dietary supplements sees earnings increasing by close to 10 percent this year, dropping the lower end of its previous guidance range. Adjusted earnings before interest, taxes, depreciation and amortization rose 14 percent to 424 million euros, beating a 400.6 million-euro estimate.
Rival plastics maker Solvay SA on Tuesday joined a raft of companies that have had to adjust their forecasts for the year due to a deterioration in automotive and electronics markets. By contrast, DSM Chief Executive Officer Feike Sijbesma is in full growth mode with a plan to invest new products including a fermented stevia-based sweetener.
“This is yet another robust quarter’s performance highlighting the stability of the nutrition business,” Thomas Wrigglesworth, an analyst at Citigroup, said in a note. “DSM’s innovation pipeline is on track and is expected to generate solid earnings momentum.”
The shares jumped 5.9 percent to 104.6 euros in Amsterdam as of 9:45 a.m., the biggest rise in nearly three months, valuing the company at almost 19 billion euros. Solvay fell 6.3 percent.
DSM is pushing ahead with its joint venture with Evonik Industries AG to supply omega-3 fatty acids derived from natural marine algae rather than fish stocks and is seeking regulatory approval for a project called ‘clean cow’ to lower methane emissions from cattle by more than 30 percent.
Like other companies suffering from a drop in car production, DSM saw sales at its materials division supplying fibers, thermoplastics and coatings decline by 3 percent. Nutrition revenue advanced by 6 percent.
©2019 Bloomberg L.P.