delivering value and growth - dsm | bright science. … · · 2018-03-14presentation, unless...
TRANSCRIPT
Delivering value and growth through a strategic commitment to sustainability
Rolf-Dieter Schwalb, CFO Royal DSM
CFO Leadership Seminar, London 12 Dec 2013
Page
Safe harbor statement
This presentation may contain forward-looking statements with respect to DSM’s future (financial) performance and position. Such statements are based on current expectations, estimates and projections of DSM and information currently available to the company. DSM cautions readers that such statements involve certain risks and uncertainties that are difficult to predict and therefore it should be understood that many factors can cause actual performance and position to differ materially from these statements. DSM has no obligation to update the statements contained in this presentation, unless required by law.
A more comprehensive discussion of the risk factors affecting DSM’s business can be found in the company’s latest Annual Report, which can be found on the company's corporate website, www.dsm.com
Page 1
Page
DSM at a glance (2012 numbers)
• Net sales € 9,131m• EBITDA € 1,109m• Net profit € 437m• ROCE 8.9%
• Capital employed € 8,084m• Capex incl acquisitions € 1,980m• R&D € 490m
• Workforce 23,498
• Top ranking in Dow Jones Sustainability Index
* Corporate Activities related sales & EBITDA over clusters weighted distribution
Page 2
42%
8%31%
18%1%
Nutrition
Pharma
PolymerIntermediates
PerformanceMaterials
Sales(*) per cluster
64%3%
23%
10%
NutritionPharma
PolymerIntermediates
PerformanceMaterials
EBITDA(*) per cluster
Innovation Center
Page
Global societal trends drive DSM’s markets
Population growth
Wealth
Resources constraints
Sustainability
UrbanizationHealthcare costs Energy security
Food security
Aging population
MaterialsNutritionHealth
Page 3
Page
DSM in motion: driving focused growth
Page 4
DSM’s strategic commitment to sustainability:People - Planet - Profit: creating value along three dimensions
PagePage 5
Ambitious financial targets set in 2010
Profitability targets 2013 2013 expectationEBITDA € 1.4 - 1.6bn Towards € 1.4bn
ROCE >15% 9-10%
Sales targets 2015 2013 H1 realizationOrganic sales growth 5% - 7% annually 1%
China sales from US$ 1.5bn to >US$ 3bn US$ 0.8bn
High Growth Economies sales from ~32% towards 50% of total sales ~40%*
Innovation sales from ~12% to 20% of total sales 18%
EBA aspiration 2020 2013 H1 realization
EBA sales >€ 1bn ~€ 75m
* 40% in 2013 H1 is incl. pro forma sales Tortuga in Q1 2013
Page
Supported by clear sustainability aspirations
Sustainability aspirations 2011 – 2015 H1 2013
Dow Jones Sustainability Index
Top ranking (“SAM Gold Class”) Gold class
Eco+ (innovation) at least 80% of pipeline is ECO+ 93%
Eco+ (running business) from ~34% towards 50% 41%
Energy efficiency20% improvement in 2020, compared to 2008
14% improvement
Greenhouse Gas Emissions
-25% (absolute) by 2020, compared to 2008
2012: 1% decrease
Employee Engagement Survey
towards High Performance Norm 2012: 72% favorable
Diversity and People+ to be updatedDiversity aspirations and People+ framework defined
Page 6
Page
Overview
Page 7
• Sustainability anchored in DSM’s strategy• ECO+ and People+ fueling Profit+• People-Planet-Profit driven remuneration
Page
Overview
Page 8
• Sustainability anchored in DSM’s strategy• ECO+ and People+ fueling Profit+• People-Planet-Profit driven remuneration
This im
• Eco+: Product solutions that create more value with less environmental impact than competing alternatives commercially available, fulfilling the same function
• People+: Product solutions that create a measurable better impact on the lives of people than competing alternatives commercially available, fulfilling the same function
• The sustainability benefit can be created at any stage in supply-chain/lifecycle: from raw material, manufacturing, use, to potential re-use and end-of-life disposal
Page 9
This im
ECO+ at DSM: more sustainable & more profitable
ECO+ solutions delivering higher growth and higher margins
Page 10
• Share of ECO+ solutions in running portfolio increased from ~34% (CSD 2010) to 43% in 2012
• ECO+ solutions offer clear ecological benefits• Data from 3 DSM Business Groups, DSM Food Specialties, DSM Engineering
Plastics and DSM Resins & Functional Materials show: (period 2010- YTD 2013):ECO+ sales have grown ~10%/year since 2010, while non-ECO+ salesslightly declinedECO+ sales have ~10% higher contribution margins versus non-ECO+ sales
This im
HEALTH I NUTRITION I MATERIALS
Examples of innovative ECO+ solutions
Page 11
Khepricoat™ anti-reflective coatings for solar glass offer higher yield of solar
panels.
Higher eco-efficiency and renewable content - Palapreg® ECO applied in
composite bridges.
Higher eco-efficiency and downstream cost benefits with Brewers Clarex™
applied in beer.
This im
ECO+ as business driver in Animal Nutrition
Page 12
“CleanCow”: reducing methane emissions from cattle
• Livestock are responsible for methane emission, a GHG that causes global warming• DSM is working on “CleanCow”, a feed additive(s) solution:
1. to reduce methane by 25-30% in vivo2. with the potential for better performance (increased milk yield, increased body
weight gain, etc.)
Feed20kg/day
This im
Bright ScienceMore design freedom (vs steel and alu)Similar noise levels (as silent as steel)Less weight & lower system costs (vs metal)
Brighter LivingLower weight (vs metal) = less fuelConsumption = lower (CO2) emissionsBetter ECO/carbon footprints
TrendsQuest for low fuel consumption and thus lower CO2 emissions System cost optimization
ECO+ as business driver in Materials
Page 13
Peugeot 508 with oil pan in Akulon ® PA6Reducing weight, cost and CO2 reduction
Akulon®: Oil Pan
This im
Dyneema® for sustainable and durable cargo nets• Airlines are committed to reduce carbon footprint while at the same
moment reducing costs• The demands to cargo nets regarding strength, elasticity, fire safety and
water absorption are extremely high
Brighter Living• One net with Dyneema® will save ~ 210 gallons of kerosene fuel / year
That means CO2 emissions will be > 2.5 tonnes less per net per year• Air France – KLM expects to save some 1,500 kt of CO2 a year
Bright Science: lightweight cargonets from Dyneema®• ECO+: Less fuel, lower emissions, longer life • People+: Half the weight and safer and easier to handle
Another DSM innovation that ticks all sustainability & financial boxes
Page 14
This im
Examples of innovative People+ solutions
HEALTH I NUTRITION I MATERIALS FloraGLO® Lutein: a natural ingredient for
eye health dietary supplements.
Surgeons profit from an effective barrier against bacteria and viruses with Arnitel®
VT used in disposable medical gowns.
BluCure™ cobalt-free Technology for composites applied in boats and
constructions eliminates any exposure of workers to cobalt.
Page 15
This im
Page 16
People+ : Improving lives & reducing costs with nutritional solutions
People+ as business driver: Optimized Vitamin-D
• ~200 million women world-wide suffer from osteoporosis
• Worldwide, an osteoporotic fracture occurs every 3 seconds, a vertebral fracture every 22 seconds
• Hip and vertebral fractures have “cost-intense” medical implications
• Optimized vitamin-D reduces number of fractures by 20%
• The US as example: through vitamin D supplementation among all women over 55 years with osteoporosis, up to US$ 1.5 billion in savings per year could be realized, of which:
• US$ 1.9 billion in avoided healthcare costs (medical & therapeutical costs)*• US$ 350 million required in supplementation costs (including vitamin D)
* Source: US Health Care Costs
This im
Page 17
People+ as business driver: OatWell®
Contributing to DSM’s profitable growth while improving people’s lives
• Worldwide health care costs related to cardiovascular diseases will increase 22% by 2030 when one in ten adults is expected to have diabetes*. Therefore there is a worldwide need for blood glucose control solutions
• DSM’s nutritional ingredient “OatWell” reduces the risks of cardiovascular diseases by helping to lower cholesterol levels and reduce peak blood glucose levels after a meal**
* World Economic Forum and Harvard University report 2011 ** EFSA and EU Health claim approval. EU directive Nr 432/2012 May 16th.
This im
People+ in Personal Care: ALPAFLOR® EDELWEISS
Page 18
Unique new variety of Edelweiss Preserves skin’s natural balance
Strong anti-oxidative & protective properties
Unique new variety of Edelweiss Preserves skin’s natural balance
Strong anti-oxidative & protective properties
• Addressing societal needs: Consumer and A-Brand customer interest in transparent and socially compliant value chains of personal care & luxury products
• Measurable positive impact on people’s lives: • End-user benefits: Improved skin resistance for an ultimate skin sensation• Value chain benefits: training on local cultivation and harvesting principles, support to
Alpine flora diversity and contribution to local prosperity (Switzerland)
Underscoring social impact differentiators & engaging customers
This im
Sustainable partnerships to combat malnutrition
Offering tailored nutritional solutions to fight hunger and malnutrition around the world
• DSM and United Nations World Food Programme have strengthened their partnership to combat global malnutrition: 3-year extension to 2015; plan to double number of beneficiaries up to 30 million per year
• DSM is engaged in various other nutrition partnerships, including
– the Scaling Up Nutrition movement (SUN)
– the United States Agency for International Development (USAID)
– Mercy Corps’ food cart social enterprise KeBAL, World Vision International
People, Planet, Profit: We can’t be successful in a world that fails
Page 19
This im
DSM well on track to deliver on its 20% Innovation sales target by 2015Innovation strongly contributes to DSM’s sales growth and EBITDA growth with on average >5% higher gross marginsInitially 4 new Emerging Business Areas were launched, of which 2 have been divested. 1 new EBA has been added, resulting in 3 exciting growth platformsDSM now in McKinsey’s Top Quartile benchmark on best innovation practices
Profit+: Sustainable innovations fuel growth & profit
Page 20
This im
Overview
Page 21
• Sustainability anchored in DSM’s strategy• ECO+ and People+ fueling Profit+• People-Planet-Profit driven remuneration
This im
Sustainability anchored in Short Term Incentives
50% Sustainability & Individual
Goals
50% Financial
Goals
Financial Threshold
20% EBITDA
15% Gross Free Cash Flow
15% Net Sales Growth
10% Eco+ products
10% Employee Engagement Index
10% Safety
Minimum performance threshold for STI payout (set annually by Supervisory Board)
20% Individual: Quantitative & Qualitative Measures
Page 22
This im
As well as in Long Term Incentives Management
50% Sustainability
Goals
50% Financial Goals
25% Total Shareholder Return
25% Return on Capital Employed (ROCE)
25% Green House-Gas Emissions (GHGE) reductions
25% Energy Efficiency Improvement (EEI)
Page 23
This im
Wrap-up
• DSM’s growth strategy driven by megatrends
• Sustainability is anchored in DSM’s strategy
• Sustainability & sustainable innovations are strongly contributing to DSM’s sales and profit growth: sustainability as a profit driver
• Contribution to sustainability (ECO+, People+) are measured over the total supply/value chain and life cycle
• Sustainability targets are included in managements short term and long term incentives
• Contributing to a brighter world, passionate & engaged employees, higher & sustainable returns and happy shareholders: what more can a CFO wish?
Page 24