dsm factbook 2017 · roche’s vitamins & fine chemicals division, subsequently renamed dsm...
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HEALTH NUTRITION MATERIALS
ROYAL DSM
DSM Factbook 2017
DSM Investor Relations | Contact
Page 1
Dave Huizing – Vice President Investor Relations
t. +31 45 578 2864
Petra Volk – IR Support Officer
t. +31 45 578 2511
Sandra Segers – IR Support Officer
t. +31 45 578 2864
Marc Silvertand – IR Manager
t. +31 45 578 2348
Thijs van der Heide – IR Manager
t. +31 45 578 2282
Stay connected
Page 2
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HEALTH NUTRITION MATERIALS
ROYAL DSM
DSM at a glance/Strategy 2018
Business overview
Financial data
Share-related information
1
2
3
4
DSM at a glance | People, planet, profit in 2016
Page 4
1. Continuing operations unless stated otherwise
2. See page 142 of the Integrated Annual Report 2016 for reconciliation
People Planet Profit1
Watch clip:
DSM at a glance | 2016 key financial data
Page 5
1. At 31 December
2. Income statement expense and capitalized costs (including associated IP expenditure)
1,262
931
435
MaterialsNutrition GroupCorp.
Act.
105
Innovation
Center
1
Sales Adj. EBITDA & Adj. EBITDA margin (%)
Capital Employed1 and ROCE (%) Capital Expenditure (accounting)
Adj. EBIT & Adj. EBIT margin (%)
R&D Expenditure2
18.0 17.3 15.9
7,920
5,169
2,513
GroupCorp.
Act.
71
Innovation
Center
167
MaterialsNutrition
141 791
645
311
GroupCorp.
Act.
Innovation
Center
24
MaterialsNutrition
12.5 12.4 10.0
7,889
5,5371,807
Nutrition GroupCorp.
Act.
31
Innovation
Center
576
Materials
12.0 17.6 10.4
485
331106
Corp.
Act.
16
Innovation
Center
32
MaterialsNutrition Group
426
205
75
124
MaterialsNutrition GroupCorp.
Act.
22
Innovation
Center
Watch clip:
DSM history | Successful transformation building on an impressive history
Page 6
▪ Formation of
coal mining
company
‘De
Nederlandse
Staatsmijnen’
(Dutch State
Mines)
1950 - 1980
▪ Continuous shift
to (petro)
chemical and
fertilizer
products incl.
industrial
chemicals and
raw materials
for synthetic/
polyethylene
fibers and yarns
1989
▪ DSM listed
on the AEX
stock
exchange
1998
▪ Acquisition
of Gist-
Brocades
which was
integrated
into the
DSM Life
Science
cluster
2002-2003
▪ Sale of
Petrochemicals
business
▪ Acquisition of
Roche’s
Vitamins & Fine
Chemicals
division,
subsequently
renamed DSM
Nutritional
Products
2005-2010
▪ Focus on
Life
Sciences
and
Materials
Sciences
and
divestment
of non-
core
businesses
Melamine,
Agro,
Elastomers
2011-2015
▪ Acquisition of
Martek (2011),
ONC, Kensey
Nash, Fortitech
(2012), Tortuga
(2013) and
Aland (2015)
▪ Establishment
of partnerships
DSP (2011),
Patheon (2014)
and
ChemicaInvest
(2015)
Extensive experience in chemical
synthesis and biotechnology
DSM
Chemistry, energy, polymer technology
Hoffman La Roche Vitamins
Chemical synthesis & biotechnology
Gist-Brocades
Biotechnology
Est.
1934
Est.
1902
Est.
1869
1902
DSM history | Business portfolio streamlined and simplified,
creating good platform for growth
Page 7
Significant portfolio transformation (in % of DSM sales)
▪ Built a broad, deep and global
Nutrition business
▪ Upgraded Materials businesses
▪ Became a more global, innovative
and sustainable company
▪ Extensive experience in chemical
synthesis and biotechnology binds
Nutrition and Materials
▪ Created 3 new growth platforms:
– Innovative materials for
medical devices
– Clean energy (from crop
– residues) and bio-chemicals for
biomass conversion
– Yield-boosting solutions for
solar energy
2010200520001995 2015
100%
Nutrition
Innovation Center
Materials
Pharma
Polymer Intermediates & Composite Resins
Other
▪ Petrochemicals
▪ Energy
▪ Engineering
▪ Plastic
products
▪ Curver
▪ Base Chemicals
& Materials
▪ Others
▪ Petrochemicals
▪ Energy
▪ Engineering
▪ Plastic
products
▪ Base Chemicals
& Materials
▪ Others
▪ Base Chemicals
& Materials
▪ Energy
Nutrition
Materials
Innovation
DSM today | DSM expects to extract significant value from further exiting
its legacy partnerships in the coming years
Page 8
1. On 15 May 2017, DSM informed markets that it had unanimously approved the acquisition of Patheon by Thermo Fisher Scientific. Thermo Fisher will
commence a tender offer to acquire all shares for $35 per share. The transaction is expected to be completed by the end of 2017
2. Book year 1 November until 31 October. Based on continuing operations
In € million at 100% 2016
Sales 431
Adjusted EBITDA% 14%
In € million at 100% 20162
Sales 1,786
Adjusted EBITDA% 20%
In € million at 100% 2016
Sales 1,802
Adjusted EBITDA% 6%
DSM Sinochem Pharmaceuticals (50%)
Pharma - Antibiotics
Patheon (34%)1
Pharma - Contract Manufacturing
ChemicaInvest (35%)
Bulk Chemicals
▪ JV with Sinochem created in 2011
when Sinochem took a 50% interest
in DSM Anti-Infectives
▪ Global leader in generic anti-
infective
▪ Created in 2014, when DSM
combined DSM Pharmaceutical
Products with JLL Partners’ Patheon
▪ Produces a unique breadth of
offerings from finished dosage (drug
products) to active substances (APIs)
▪ Created in 2015 when CVC Capital
Partners took a 65% stake in the (bulk
chemical) activities of DSM in
caprolactam, acrylonitrile and
composite resins
DSM today | A broad, deep and global Nutrition business and a focused,
high-quality, specialty Materials portfolio
Page 9
Sales
€7,920
Adj. EBITDA
€1,262
Adj. EBITDA%
15.9%
ROCE
10.4%
Nutrition
▪ Nutrition is active in nutritional ingredients for
animal feed and food, as well as in food specialty
ingredients and performance ingredients for
personal care, serving the global feed, food &
beverage, pharmaceutical, infant nutrition,
dietary supplements and personal care industries
Sales
€5,169
EBITDA
€931
EBITDA%
18.0%
Materials
▪ Advanced materials for high-performance
components for the electrical and electronics,
automotive, (flexible food) packaging, consumer
goods, life protection, transportation and telecom
industries
Sales
€2,513
EBITDA
€435
EBITDA%
17.3%
Animal
Nutrition
Human
Nutrition
DSM Food
Specialties
Pers. Care
& Aroma Ingr.
DSM Engineering
Plastics
DSM Dyneema DSM Resins &
Functional Materials
DSM today | Emerging Business Areas provide long-term growth platforms
based on the company’s core competences
Page 10
▪ DSM Biomedical supplies innovative
biomedical materials that enable
medical device manufacturers to
make less invasive devices. These
can speed up recovery, shorten
hospital stays and minimize
reoperations, lowering health costs
and helping people to lead longer,
healthier and more active lives
▪ DSM Bio-based Products & Services is
at the forefront of building a more
sustainable, bio-based economy with
solutions for clean fuel from
agricultural residue and for
renewable chemical building blocks
such as bio-based succinic acid
▪ DSM Advanced Solar develops and
provides solutions to increase the
yield of solar panels – Same sun.
More power™.
DSM Biomedical
Enabling innovative medical devices
DSM Bio-based Products & Services
Enzymes/yeast for biomass conversion
DSM Advanced Solar
Efficiency-increasing products for solar
DSM today | A well-balanced and diversified portfolio
Page 11
1. Personal Care & Aroma Ingredients
Net sales by end-use market (%)Net sales by origin (%)
1%
3%
1%
1%
11%
7%
18%
2%31%
25%
Rest of the World
Rest of Asia
Japan
India
China
Latin America
North America
Eastern Europe
Rest of Western Europe
The Netherlands
6%
25%
4%3%10%
3%2%
12%
12%
23%
Eastern Europe
Rest of Western Europe
The Netherlands
Rest of the World
Rest of Asia
Japan
India
China
Latin America
North America
8%
6%
5%1%
7%
6%
Other
Packaging
Electrical & electronics
Textiles
Automotive/transport
Metal/building & construction
Nutrition and Health
1%
2%
32%
65%
Corporate Activities
Innovation Center
Materials
Nutrition
Net sales by business segment (%)Net sales by destination (%)
67%
▪ Animal Nutrition (31%)
▪ Human Nutrition (24%)
▪ Food Specialties (7%)
▪ Other (1%)
▪ PC & AI (4%)1
DSM today | Global production while offering a local approach
Page 12
1. As per 31 December 2016
2%
23%
19%1%
4%
1%
2%
22%
10%
15%
North America
Eastern Europe
Rest of Western Europe
The Netherlands
Rest of World
Rest of Asia
Japan
India
China
Latin America
Africa:
73 employees
2,447
619
4,460
13,260Corporate Activities
Innovation Center
Materials
Nutrition
Total employees | 20,786
North America
3,187
Europe
9,180
Asia
6,090
RoW
260
Latin America
2,069
Employees per business segment1
Employees per region1Global presence1
Watch clip:
DSM today | Sustainability agenda is core to DSM’s business strategy1
Page 13
1. Please see DSM’s Integrated Annual Report 2016 for definitions and additional information
GHG and Energy
Efficiency
Renewable
energy
Brighter Living Solutions: ECO+ and People+
▪ Profitable solutions better for people and planet
▪ Aspiration: 65% of DSM products by 2020
Health & Safety
Engagement
Diversity
Securing sustainable operations
Operational Aspirations
▪ Leading in reporting benchmarks Gold class DJSI
▪ GHG efficiency improvements 40-45% (2008-2025)
▪ Energy efficiency improvements >10% (2016-2025)
▪ Purchased electricity from renewables 50% by 2025
▪ Employee engagement favorable score 75% by 2020
▪ Safety: Frequency recordable index 0.25 by 2020
Gold class
23%
2%
8%
71%
0.33
Eco+ People+
Sustainability as business growth driver
Key sustainability focus areas
▪ Nutrition
▪ Climate change and renewable energy
▪ Circular and bio-based economy
2016
63%
2016
Long-term goals
DSM today | DSM and the Sustainable Development Goals
Page 14
1. Please see DSM’s Integrated Annual Report 2016, pages 12 and 13 for additional details
▪ At DSM, we believe that companies have a
crucial role to play in creating the impact
needed at scale to achieve the 17 Global
Goals for Sustainable Development
▪ We believe that our expertise in health,
nutrition and materials position DSM well
to actively contribute to the SDGs
▪ While all the Goals are important, there
are five SDGs on which we believe our
company and its businesses can be most
influential
▪ DSM collaborates with multiple partners
and stakeholders, in line with SDG 17
(Partnering for the Goals), including UN
agencies, governments, academia, NGOs
and peers (see also next page)
Main intersections between the SDGs and DSM1
SDG 2 | End hunger, achieve food security and improved nutrition and promote sustainable
agriculture. DSM works to improve nutrition via initiatives such as the Nutrition Improvement
Program and Africa Improved Foods, providing fortified food solutions and micronutrient products,
as well as through partnerships such as with WFP. We continue to support the independent
nutrition think-tank, Sight and Life
SDG 3 | Ensure healthy lives and promote well-being for all at all ages. DSM’s health, nutrition,
biomedical and high-performance materials portfolios are geared to maintaining, protecting or
regenerating health in all age groups (for example, by reducing salt and sugar levels in processed
foods, or by reducing emissions associated with chemical manufacturing processes). Our First 1,000
Days Program supports mother and child health. We employ the DSM Life Saving Rules to protect our
employees from harm and the DSM Vitality Program to promote awareness of good health and
healthy living options among our employees
SDG 7 | Ensure access to affordable, reliable, sustainable and modern energy for all
SDG 13 | Take urgent action to combat climate change and its impacts. In partnership with RE100,
we are increasing the use of renewables in our energy mix, reducing our carbon footprint. DSM
enables solar and bio-based energy solutions and supports the move toward a low-carbon economy
through solutions such as POET-DSM advanced biofuels and high-performance materials for solar
panels. Our Bright Minds Challenge is identifying innovative solutions and new materials that will
fast-track the movement toward 100% renewable energy. We advocate responsible action on
climate change in combination with our stakeholders
SDG 12 | Ensure sustainable consumption and production patterns. DSM contributes to a bio-based,
circular and low-carbon economy with products such as Akulon® oil pans and Arnite® car lighting.
DSM-Niaga enables the manufacture of carpets that can be recycled, again and again. Food waste is
reduced through DSM food solutions such as Pack-Age®. Bio-based chemicals such as bio-succinic
acid replace fossil-fuel based alternatives in applications from packaging to footwear. Through our
Brighter Living Solutions program we consider the impact of our products throughout the value chain
DSM today | Rewarding partnerships to fight malnutrition around the
world
Page 15
1. For a more extensive list and description of DSM’s other nutrition platforms and partnerships, please see our website
▪ As a leading micronutrient provider DSM develops innovative
solutions for improved nutrition. In order for these solutions to
have the broadest reach, and in line with SDG 17, we work with
partner organizations that have direct access to beneficiaries
▪ DSM’s nutrition partnerships focus on the following objectives:
– Wider base of scientific evidence and endorsement;
– Increased market for nutrition products;
– Improved employee engagement
▪ DSM’s partners range from UN agencies, governments, academia
and NGOs to industry peers
▪ We commit support through financial and non-financial means
including time, technical expertise, products and volunteers
DSM’s main cross-sector nutrition partnerships1
DSM today | External recognition1
Page 16
1. For more information please see https://www.dsm.com/corporate/about/our-company/external-recognition.html
▪ In August 2016, Fortune Magazine revealed that DSM was included in its second annual Change the World List which highlights the 50 leading
companies that are innovating to solve the world’s biggest challenges through core profit-making strategy and operations
▪ On 8 September, DSM was named the worldwide leader in the Materials industry group in the Dow Jones Sustainability World Index. DSM has
consistently been recognized for integrating sustainability into its business, having been named among the global leaders in each of the last 13 years
and holding the number one position in the sector seven times
▪ On 30 September, DSM’s Science Can Change the World campaign won in the Best Communication category at the Ethical Corporation Responsible
Business Awards 2016. DSM was also ‘highly commended’ in the Best Sustainable Company category. The Awards recognize genuine, truly innovative
and meaningful approaches to making responsible business a reality
▪ DSM has been identified as a global leader for its actions and strategies in response to climate change and has been awarded a position on the Climate
A List by CDP, the international not-for-profit that drives sustainable economies. 193 “A Listers” appear on the list, which has been produced at the
request of 827 investors with assets of US$100 trillion
▪ On 25 October 2016, DSM was reconfirmed as a constituent of the Ethibel Sustainability Index (ESI) Excellence Europe. The ESI Excellence Europe
contains shares of 200 European companies that are included in the Russell Global Index that display the best performance in terms of corporate
social responsibility (CSR)
▪ On 4 November 2016, Reverdia, the joint venture between DSM and Roquette Frères that produces Biosuccinium™ (succinic acid), the first non-fossil
feedstock derived chemical building block, topped the Biofuels Digest 40 Hottest Emerging Companies in the Advanced Bioeconomy 2016-17
▪ Each year Corporate Knights publishes their Global 100 Index of the most sustainable corporations in the world. In the 2017 Index published on 16
January, DSM was the highest ranked materials company for a second successive year and rose from 23rd place overall in 2016 to 9th in 2017. Those
featured are considered leaders in transparency, in resource productivity and on a range of other social and governance indicators
DSM today | DSM management
Page 17
DSM Managing Board
▪ Member of the Managing Board since
September 2013
▪ With DSM since 1990
Dimitri de Vreeze
Member of the Managing Board
Nationality: Dutch
▪ CEO since 1 May 2007, member of the Managing
Board since 2000
▪ With DSM since 1998 when DSM acquired Gist-
Brocades. Joined Gist-Brocades in 1987
Feike Sijbesma
CEO/Chairman of the Managing Board
Nationality: Dutch
DSM Supervisory Board DSM Executive Committee
▪ Rob Routs (Chairman)
▪ Tom de Swaan
▪ Pauline van der Meer Mohr
▪ John Ramsay
▪ Victoria Haynes
▪ Eileen Kennedy
▪ Pradeep Pant
▪ Frits van Paasschen
▪ Feike Sijbesma (CEO/Chairman)
▪ Geraldine Matchett (CFO)
▪ Dimitri de Vreeze (Materials)
▪ Chris Goppelsroeder (Nutrition)
▪ Philip Eykerman (Strategy and M&A)
▪ Peter Vrijsen (People & Organization)
▪ Rob van Leen (R&D and Innovation)
▪ CFO since December 2014, member of the
Managing Board since August 2014
▪ Prior to joining DSM, Global CFO of SGS Group,
a publicly quoted company on the SIX Swiss
stock exchange
Geraldine Matchett
Chief Financial Officer
Nationality: British, French, Swiss
Strategy 2018 | Summary and 2016 achievements
Page 18
Two headline
financial targets
High single-digit percentage
annual Adjusted EBITDA growth
2016 achievements:
▪ 17%
High double-digit basis point
annual ROCE growth
2016 achievements:
▪ 280 bps
Clear actions identified to
achieve targets
Businesses aim to outpace
market growth
2016 achievements:
Nutrition
▪ 5% organic growth
Materials
▪ 4% volume growth
€250-300m cost reduction &
efficiency improvements
2016 achievements:
▪ On track: ~€110m
cumulative savings by
year-end 2016
Consistent improvements in
capital efficiency
2016 achievements:
▪ Cash from operating
activities up 27%
▪ Capex at €475m,
<€500-550m guidance
▪ Total Working Capital
at 18.4%, better than
aspiration level
✓ ✓
✓
✓
✓
Additional items underpinning
strategy
Stepping up sustainability
aspirations
2016 achievements:
▪ On track
Global organizational and
operational adjustments
2016 achievements:
▪ On track
Extract value from Pharma and
Bulk Chemicals JVs
2016 achievements:
▪ 1st step taken with sale
of 4.8m shares in Patheon
✓
✓
✓
✓ ✓ ✓
Strategy 2018 | Driving profitable growth through science-based,
sustainable solutions
Page 19
▪ Following a period of important transformation, DSM is now focusing on ensuring that the potential of the current
business portfolio translates into improved financial results during the 2016-2018 period
▪ Two headline financial targets
– High single-digit percentage annual Adjusted EBITDA growth & high double-digit basis point annual ROCE growth
HEALTH . NUTRITION . MATERIALS
IMPROVING
FINANCIAL RESULTS
Growth
Cost & Productivity
Capital
Efficiency
2018 TARGETS
annual Adj. EBITDA growth:
high single-digit percentage
- - -
annual ROCE growth:
high double-digit bps
Global shifts &
Digitization
Climate &
Energy
Health &
Wellness
Result-driven organization
& culture
BRIGHT SCIENCES
Strategy 2018 | Well-identified initiatives to drive Strategy 2018 targets
Page 20
1. Savings as of 2015
▪ DSM is confident it has the right business strategies in place to meet the needs of its customers and succeed in its
markets, providing innovative and sustainable solutions
▪ Aims to accelerate growth and outpace market growth in all its key segments
▪ In addition to its growth initiatives, self-help programs will further help delivery of the Strategy 2018 targets
2015
EBITDA
2018
EBITDA
~€100-125m1
~€130-150m
InflationSupport
functions& services program
Nutrition program Sales above
market growth
Strategy 2018 | Nutrition growth strategy
Page 21
▪ Annual EBITDA growth:
high single-digit percentage
▪ Annual ROCE growth:
high double-digit bps
▪ EBITDA margins: 18-20% over the period
▪ Above-market sales growth (at stable
prices)
Nutrition strategy 2018 Aspirations underlying Group targets
Excellence in execution
2
143
▪ Profitable growth via:
▪ Expanding the core
▪ New products and solutions
▪ Growing in underpenetrated
categories/regions
▪ Accessing new segments/new
business models
▪ Reducing costs and increasing
productivity
▪ Driving cash generation
▪ Increasing capital efficiency
1
2
3
4
Strategy 2018 | Growth projects in Nutrition are delivering
Page 22
Excellence in execution
2
143
▪ Expand the core
– New vitamin B6 plant and
expansion of the gellan-gum
and pectin facilities all in
China;
▪ Add new products and solutions
– Product offering broadened
e.g. eubiotics for antibiotic-
free poultry;
– Good progress in the ‘Green
Ocean’ and ‘Clean Cow’
projects;
1
2
2016
▪ Organic growth: 5%
▪ EBITDA growth: 13.3%
▪ ROCE up 170 bps
Nutrition Strategy 2018 and 2016 milestones
Watch clip:
Strategy 2018 | Growth projects in Nutrition are delivering (cont’d)
Page 23
Nutrition Strategy 2018 and 2016 milestones
Excellence in execution
2
143
▪ Expand in new segments/regions
– Launch of MEG-3® Ultra allowing for
varieties of (high-concentrate) DHA
and EPA;
– Successful expansion of fast-growing
i-health consumer line of products
outside of the US;
▪ New business models
– Business to farmer (B2F) network
expanded with new brand
(YiWeiZhuang) and new mobile order
platform
3
4
Strategy 2018 | Materials growth strategy
Page 24
1. Whilst not part of the cluster, the Emerging Business Areas of DSM Biomedical and DSM Advanced Solar are also related to Materials and represent promising
growth platforms for the longer term
▪ Annual EBITDA growth:
high single-digit
▪ Annual ROCE growth:
high double-digit bps
▪ EBITDA margins:
>15% over the period
▪ Above-market sales growth
(at stable prices)
Aspirations 2018 underpinning Group targets
High Low
High-Performance
Plastics
Biomedical1
Functional
Materials
Specialty Coating
Resins
DSM’s capability to extract value
Mark
et
gro
wth
Solar1
Dyneema® Life
Protection
Growth
Accelerated
growth
Powder
Coating Resins
PA6
Polymers
PA6
Compounds
- DSM Engineering Plastics
- DSM Dyneema
- DSM Resins & Functional Materials
- Emerging Business Areas
High
Maximize
returnsDyneema®
Fiber Solutions
Materials Strategy 2018
▪ Focus on the higher-growth specialty segments,
while maximizing returns in PA6 Polymers and
Powder Coating Resins
High Low
High-Performance
Plastics
Biomedical
Functional
Materials
Specialty Coating
Resins
DSM’s capability to extract value
Mark
et
gro
wth
Solar
Dyneema® Life
Protection
Growth
Accelerated
growth
Powder
Coating Resins
PA6
Polymers
PA6
Compounds
- DSM Engineering Plastics
- DSM Dyneema
- DSM Resins & Functional Materials
- Emerging Business Areas
High
Maximize
returnsDyneema®
Fiber Solutions
Strategy 2018 | Materials is delivering good growth in specialties
Page 25
▪ For DSM’s specialty materials, DSM is using new
technologies and (sustainable) customer solutions
to accelerate growth:
– DSM Engineering Plastics
• Used in new ultra-thin USB Type-C
connectors
• Launch of next-generation high-
temperature polyamides
• New high-performance thermoplastic
copolyester
2016
▪ Volume growth: 4%
▪ EBITDA growth: 13.3%
▪ ROCE up 320 bps
Materials Strategy 2018 and 2016 milestones
ForTii®
PA6, PA66
PA410
PA46
PPS
PA4T
High Low
High-Performance
Plastics
Biomedical
Functional
Materials
Specialty Coating
Resins
DSM’s capability to extract value
Mark
et
gro
wth
Solar
Dyneema® Life
Protection
Growth
Accelerated
growth
Powder
Coating Resins
PA6
Polymers
PA6
Compounds
- DSM Engineering Plastics
- DSM Dyneema
- DSM Resins & Functional Materials
- Emerging Business Areas
High
Maximize
returnsDyneema®
Fiber Solutions
Strategy 2018 | Materials is delivering good growth in specialties (cont’d)
Page 26
Materials Strategy 2018 and 2016 milestones
– DSM Dyneema
• Increased global demand for Dyneema®
Force Multiplier Technology for personal
protection
• Launch of a woven laminated anti-stab
solution
• Launch of Dyneema® Carbon hybrid
composite fabrics that improve impact
resistance and vibrational dampening of
traditional carbon fiber composites without
compromising on weight and performance
– DSM Resins & Functional Materials
• Good progress with sustainable waterborne
coatings for marine containers in China;
• High acceptance of powder and waterborne
coatings in Europe
Key business/innovation projects driving earnings growth beyond 2018
Page 27
▪ DSM has set itself strategic targets for the period to 2018. At the same time, we are also preparing for further longer-
term growth
▪ Range of key business and innovation projects across the clusters will drive earnings growth beyond 2018 and we will
continue to develop more initiatives in light of market dynamics
Nutrition Emerging Business AreasMaterials
▪ Force multiplier technology
(light personal protection)▪ New Bio-Medical products
▪ Fermentative
stevia
▪ Algae-based omega-3
for aquaculture
▪ Clean cow
▪ New bio colorants
(blue/red)
▪ i-Health
(B2C nutrients)
▪ Eubiotics
▪ Hydrocolloids
▪ ForTii® (HPPO
polymer)
▪ Niaga® (recycle
carpets)
▪ Decovery® (bio-based
resins)
▪ Apparel (Dyneema®
textile apps)
▪ 3D options (combine
Somos, Resins, Biomedical
& Engineering Plastics)
▪ Solar materials
▪ Bio-based products
and services
Strategy 2018 | Driving profitable growth supported by cost reduction
and efficiency improvement programs
Page 28
▪ DSM is rigorously executing its ambitious cost reduction and efficiency improvement programs across the company
▪ Cost reduction/efficiency improvement programs target overall savings of €250-300m by 2018
▪ The plans are firmly on track by end of 2016
Cost savings: total €250-300m by 2018 Timing of cumulative cost savings
~€m
~25
~110
0
100
200
300
400
2015 2016 2017 2018
Realized Forecast
DSM-wide
support
functions
€125-150m(by end 2017)
Nutrition
Program
€130-150m(by 2018)
Materials
Strategy 2018 | FTE reduction on track and one-time costs within budget1
Page 29
1. By end of 2016
2. Vs. 2014 baseline
▪ FTE reduction in service organization on track to reach target:
– FTE reduction up to and incl. FY2016 is ~675 FTE vs. an ambition of 900-1,100 FTE (end of 2017)
▪ One time restructuring costs in 2016 amounted to ~€80m
0
100
200
300
400
2015 2016 2017
Realized Forecast
~80 ~70
0
1,000
2,000
3,000
4,000
5,000
Total FTE in SupportFunctions
(2014 baseline)
2016(vs. 2014 base)
Reduction target
~4,400
900-1,100~675
~80
Realized Forecast
Cumulative FTE reduction2 One-time costs
Strategy 2018 | Strong progress made with globally leveraging support
functions, saving DSM-wide support functions & staff costs
Page 30
1. Vs. 2014 baseline
2. By end of 2016
Savings: €125-150m1
Support
Funct.
Regions
Funct.
Excell.
▪ Shared Services Improvement Plan completed, incl. shift of most activities to Global Service Centre in
India
▪ Finance Regions (EMEA, North America, Asia) staffed and operational in Financial, Commercial &
Operations Control
▪ Shared Services operational and payroll outsourced
▪ Updated processes and tools for talent development, career review, recruitment, learning & development
▪ IT Operating Model defined and related FTE reductions announced, implementation has started
▪ Standardization/outsourcing of personal workplaces and other saving initiatives realized
▪ Supplier base rationalization, FTE reduction and related savings in external spend progressing well
▪ Global external & internal Communications function fully operational across regions and business groups
▪ Supplier rationalization in (Marketing-)Communications progressing well
▪ One Shared Services Organization with Global Delivery Centre in India and satellite in China live
▪ One multi-functional Service Desk and Portal in development
▪ Operating Models implemented (FTE reduction of ~40%); good progress in implementing new mandates
▪ Regional organizations brought in line with new DSM Operating Model; Finance, HR implementing Functional Operating Models
65 35Finance
85 15HR
50 50IT
75 25Ind. Sourcing
85 15Comms
30 70Shared Services
RemarksProgress (%)2 Achieved by end of 2016 Remaining 2017/ Run Rate EoY
Strategy 2018 | Nutrition-specific improvement program running well
with purchasing savings ahead of plan and cost-reductions on track
Page 31
1. Vs. 2015
Savings: €130-150m1
Cost improvements Work streams closely monitored and on track
Purchasing
Fixed cost
reduction
(~100 FTE)
Throughput gain in sold-out units
Efficiency
gains
(Yield &
Energy)
Purchasing ▪ Purchasing savings so far
exceeding target, helped by low
commodity prices
Fixed cost
reduction
▪ Cost reduction programs are
being executed. Remaining part
will be captured in the upcoming
period
Throughput
gains
▪ Program on track, planned
benefits end of 2016 realized.
Target gains are expected to be
secured
Efficiency
gains
▪ Program on track, planned
benefits end of 2016 realized.
Target gains are expected to be
secured
Actions Financial benefitsCurrent status as per end of 2016:
Strategy 2018 | Disciplined approach to capital allocation
Page 32
1. 2014 figure added for comparison only: based on non-audited, restated estimates adjusting for divestitures, acquisitions and other non-recurring items
▪ Capital efficiency is a key driver of cash generation; in 2016 we undertook a number of improvement projects in this
area throughout DSM
– One of these has been to take a more integrated approach to business planning, in particular in our Nutrition cluster
– Holistically addressing processes instead of approaching them as a series of individual steps has resulted in clear
improvements in inventory management, production and distribution efficiencies.
Driving financial performance
1,018
800
663
201620152014
▪ Cash from operating activities up 27%
2016
18.6%
2015
20.7%
2014
▪ Average Total Working Capital better
than aspiration level <20%
▪ Cash capex at €475m below
€500-550m per annum guidance
475
20162015
536
2014
628
Reducing working capital1 Strict capital allocation
Discontinued operations
Strategy 2018 | Organization adjustments to deliver
Page 33
▪ A new -strengthened- top structure:
Executive Committee aligns finance, business, innovation, strategy
& people, enabling faster strategic alignment & operational
execution
▪ A new operating model:
Business Groups: focus on M&S, Operations, Sourcing, R&D
Support Functions: globally leveraged: Finance, HR, Legal,
Comms, IT, Business Services & Corporate
Departments
▪ A new way of working:
Focus on Accountability (delivering) and Collaboration
(trust/speed)
Examples: reduction internal meetings, reducing demand,
increased speed, feedback loops, clearer expectations and
engagement with more skills, supported by incentives
HEALTH NUTRITION MATERIALS
ROYAL DSM
DSM at a glance/Strategy 2018
Business overview
Financial data
Share-related information
1
2
3
4
HEALTH NUTRITION MATERIALS
ROYAL DSM
Nutrition
Nutrition | A unique, global and broad portfolio in food/feed nutritional
ingredients with increased solutions offering capabilities
Page 36
▪ Global leader in nutrition, with broadest portfolio of
specialty nutritional ingredients
▪ DSM serves the global industries for animal feed, food and
beverages, pharmaceuticals, infant nutrition, dietary
supplements and personal care
▪ DSM is uniquely positioned in all steps of the feed and food
value chains: the production of pure active ingredients, their
incorporation into sophisticated forms, and the provision of
tailored premixes and forward solutions
Sales by end-market (%)
Sales by region (%)
Nutrition - Overview
4%
25%
18%22%
31%
10%
35%
46%
7%1%
Human Nutrition & Health
Food Specialties
Animal Nutrition & Health
Personal Care & Aroma Ingredients
Other
Sales | €5,169m
Sales | €5,169m
Rest of the World
Asia
North America
Europe
Latin America
Nutrition | 2016 key financial data (continuing operations)1
Page 37
1. 2012-13 figures added for comparison only. Figures are based on non-audited, restated estimates adjusting for divestitures, acquisitions and other non-
recurring items
Sales and organic sales growth (%) Adj. EBITDA & Adj. EBITDA margin (%)
ROCE (%) Capital employed (at 31 Dec.)
Adj. EBIT & Adj. EBIT margin (%)
Capital expenditure (accounting)
5,1694,9634,335
201620132012 20152014
931822850
2015 20162012 20142013
19.6 16.6 18.0562
645
535596
2013 20162012 20152014
13.7 10.8 12.5
12.010.3
12.5
20142013 20162012 2015
5,5375,3095,034
2015 20162012 20142013
331322330
20142013 20162012 2015
22 2222 1617
Nutrition | Broad portfolio is providing resilience with limited exposure to
single product lines or customers
Page 38
Sales split over value chain steps (%)Portfolio of ingredients (%)
Sales per customer (top 10)Profit contribution per product line (%)
Active ingredients
Forms
Premixes
i-Health/B2C
Fat soluble vitamins (e.g. A,D,E)
Water soluble vitamins (e.g. B,C)
Carotenoids
Marine PUFAs
Microbial PUFAs
Enzymes & cultures
Minerals & dicalcium phosphates
Savory / yeast extracts
Nutraceutical ingredients
Aroma intermediates
Other blend ingredients
Other
▪ Top-10 represent <50% of Nutrition
profit in 2016
▪ Product range includes ~100 product
lines
▪ Largest profit contributor less than
10% of Nutrition profit
▪ Several products have a strong IP
position
▪ Largest customer
represents less than 3%
of Nutrition sales
Nutrition | Product portfolio overview
Page 39
Value chain positioning
Active IngredientsForms/delivery
systems
Premix and
nutritional solutions
Feed,
Food,
Cosmetics,
Pharma
Retail/end
consumer
Raw
Materials
▪ Vitamins – Essential ingredients required for growth and well-being ranging from fat-soluble vitamins (A, D, E, K) to water-
soluble vitamins (C, all B vitamins, folic acid and pantothenic acid)
▪ Carotenoids – Essential ingredients that are important in nutrition and reproduction. Providing sufficient carotenoids
increases animal performance across species. Carotenoids also ensure consistent pigmentation of eggs and fish such as
salmon
– Key carotenoids are beta carotene, lutein, canthaxanthin, astaxanthin and zeaxanthin
▪ Nutritional Lipids – Polyunsaturated fatty acids (‘PUFAs’) play a critical role in the development and maintenance of proper
brain function, cardiovascular and eye health, immune and inflammatory responses and the production of hormone-like
molecules. Omega-3 and omega-6 are used in food, dietary supplements and infant nutrition and are manufactured from
algae, fungi as well as fish oil
▪ Enzymes & Cultures for food and feed – Adding enzymes to animal feed improves feed conversion leading to a reduction of
the cost of feed while at the same time improving the ecological impact of animal protein production by reducing the
amount of raw materials needed and by reducing pollutants in the manure. In food & beverage, enzymes and cultures
enhance taste, texture or act as processing aids functioning as a catalyst for biochemical reactions
Nutrition | Product portfolio overview (cont’d)
Page 40
Value chain positioning
Active IngredientsForms/delivery
systems
Premix and
nutritional solutions
Feed,
Food,
Cosmetics,
Pharma
Retail/end
consumer
Raw
Materials
▪ (Trace) minerals & Dicalcium Phosphates (DCP) – Minerals that are needed in very small amounts. As minerals they
come from soil and water and cannot be made by living organisms. Most of the trace elements in our diets come
directly from plants or indirectly from animal sources
▪ Savory/yeast extracts – Extracts and process flavors to enhance taste while reducing salt in snacks, ready-meals,
sauces, soups and meat
▪ Natural anti-microbials - Fermentation based anti-microbial solutions, effective to protect foodstuffs and beverages
from microbial spoilage, extending shelf life and improving flavor
▪ Nutraceutical ingredients – Deliver the optimal balance of microflora in the gastrointestinal tract of livestock animals
optimizing nutrient absorption, while in human nutrition, nutraceutical ingredients enable consumers to perform at
their peak, as well as helping cope with future health concerns such as cardiovascular disease and weight
management
▪ Aroma intermediates - Products of the highest purity and quality, from authentic foods packed with taste to aromatic
scents and perfumes
▪ UV-filters – Range of high performing UV-A and UV-B filters for skin and hair applications
▪ Skin Bio-actives – Range of vitamins, synthetic peptides and natural extracts for skin care markets
Nutrition | Product portfolio overview (cont’d)
Page 41
Value chain positioning
Active IngredientsForms/delivery
systems
Premix and
nutritional solutions
Feed,
Food,
Cosmetics,
Pharma
Retail/end
consumer
Raw
Materials
▪ A broad range of technologies transform the
active ingredients into a different state of
presentation, e.g. a fat-soluble vitamin oil
into a powder form
▪ Allows for maximum differentiation in terms
of stability, shelf-life, heat resistance, bio-
availability, physical properties
▪ Through customized blending of active
ingredients and/or forms, DSM offers its
clients regional and segment-specific
finished products solutions
▪ A broad network of around 60 premix plants
allows DSM to offer tailor-made, customer-
driven solutions, i.e. global products & local
solutions
Spray
dried
Multi-layer
micro
encapsulate
Beadlet Flavor
flake
Examples of forms
Nutrition | Global presence and unparalleled local network
Page 42
1. Excl. DSM(-wide) Research & Development locations
Unique global network1
HEALTH NUTRITION MATERIALS
ROYAL DSM
Animal Nutrition & Health
Animal Nutrition | DSM has the broadest portfolio in the industry
Page 44
Core
Vitamins
Carotenoids
Enzymes
Eubiotics
Premixes
Tortugaminerals
Provide antioxidants
& pigmentation
HEALTH
Required for growth
and well-being
PRODUCTIVITY
Improve digestion
Strengthen gut
health
Animal Nutrition | Focused on sustainable animal nutrition
Page 45
• Advocate science-based knowledge
about balanced diets; the right
amount and quality of proteins are
essential
• Improved end-product quality and
food safety
• Support small-scale farmers with
training and services
• Reduce use of scarce resources
• Reduce greenhouse gas
emissions from livestock
• Reduce food waste
• Capture the opportunities of new,
emerging technologies
• Combat antibiotic resistance
• Improved gut health
• Find and develop new sources of
protein and marine omega–3 oils
• Care for safe and controlled
production, including animal
welfare
• continuous drive to increase
animal health
Animal Nutrition | Serving global feed ingredients markets with local
solutions
Page 46
▪ Animal Nutrition & Health serves the global feed ingredients
markets for poultry, swine, aquaculture, ruminants and pets
with a focus on the nutritional ingredients and additives
segments (€2,399m in sales in 2016)
– These markets are spurred by population growth and rising
standards of living
▪ The global animal nutrition market is driven by the need to
improve production efficiency in response to the growing global
demand for animal protein while at the same time reducing the
environmental impact of farming
– This results in feed with higher nutritional content (i.e.
higher degree of nutritional ingredients)
▪ Increased focus on alternatives to antibiotic growth promoters
▪ Few global players in feed/premix and animal protein, next to
many mid-size, local and/or regional feed/premix companies
and animal protein producers
▪ DSM is uniquely positioned, offering a complete portfolio of
targeted feed ingredients, while competitors cover only part(s)
of the value chain
Global ingredients market for animal feed (%)
Amino Acids(4-6%)
Carotenoids(2-3%)
Water soluble vitamins(2-3%)
Fat soluble vitamins(4-6%)
Enzymes(5-6%)
Eubiotics4-5%)
Minerals & chelates(4-6%)
(x) = Growth rate 2015-18 (CAGR, %)
Total
potential
market:
€10bn
DSM active in colored parts with
market share of ~30%
Overview
Compound feed
Premix
Additives
Other
€350bn
(~2%)
€9bn (~4%)
€10bn (~4%)
€2bn (0.1%)
DSM is active in the ~€10bn
additives and ~€9bn premix
segments
~370bn (~2%)
Animal Nutrition | Value chain
Page 47
Compound feed - €198bn
Premix
Processors/farmers -
>€1,200bn
Specialty feed
additives
>€10bn
Feed ingredients
(soy, corn, etc.)
~€140bn
Nutrition serv.
& consultants
Medical feed
additives
>€10bn
Additives for pasture
raised animals
Chinese
players
Various
consultants
A full chain player, providing active ingredients globally and (tailored) premix solutions at a local level
Animal Nutrition | Overview
Page 48
Sales by active ingredients (%)Sales by region (%)
Sales by differentiated segment (%)Sales by application landscape (%)
Forms
Straight actives
Premix
Feed enzymes
Carotenoids
Water-soluble vitamins
Fat-soluble vitamins
Other
Other blending ingredients
Minerals/DCP
Pet
Aqua
Ruminant
Poultry
Swine
North America
Europe
Rest of the World
Asia
Latin America
Animal Nutrition | Implementation of Strategy 2018
Page 49
1. CAGR %
▪ Double-digit growth from feed enzymes and eubiotics
solutions, tailored to local conditions/requirements
▪ Growth in underpenetrated species (aqua, pet, dairy)
– Grow beyond the historical core area of poultry
▪ Leverage Tortuga in Latin America beyond Brazil
▪ Further expansion of global premix network
Key actions driving profitable growthExpected market growth vs. DSM aspiration
2016-18
Market DSM
~3-4%1
Animal Nutrition Case Study | DSM and Evonik are developing a
sustainable omega-3 solution for aquaculture
Page 50
1. Source: FAO (2016)
▪ EPA and DHA omega-3 fatty acids are essential for
animal and human health
– Essential at all life stages for humans
– Essential nutrients to support normal growth and
health for salmon
▪ A supply-demand gap for fish oil will limit the growth of
the aquaculture industry
▪ Urgent need to find an alternative, sustainable solution
for EPA and DHA
– 17% of global wild catch is consumed for the
production of fish oil and fishmeal
Driving growth of aquaculture1
0
20
40
60
80
100
120
140
160
180
1970 19901950 19801960 2000 2014
Wild capture
Aquaculture
t million
Wild catch productionAquaculture production
Watch clip:
Animal Nutrition Case Study | Algal oil as a high-quality source of
omega 3 for the use in animal nutrition
Page 51
1. Sources: IFFO, FAO
▪ Joint development between DSM and Evonik started in
2015 to find a sustainable solution for aquaculture
– Produce omega-3 fatty acids for animal nutrition
without using fish oil from wild-caught fish
▪ In March 2017, parties announced their intention to
jointly (50/50) produce omega-3 fatty acids (EPA and
DHA) from natural marine algae:
– Build new facility in the US, scheduled to open in
2019
– Total capex in the facility will amount to ~$200m
▪ Initial annual production capacity will meet ~15% of
total current annual demand for EPA and DHA by the
salmon aquaculture industry
Market size of fish oil and alternatives
Volu
me
present future
Supply/demand gap
will emerge in the
near future
Approx. 1 million tons per
year limited supply of fish oil
as source of omega-3 fatty
acids
Animal Nutrition Case Study | Project Clean Cow - Tackling methane
emissions from cows
Page 52
1. Source: S. Kirschke et al., Nature Geosci. 2013, 6, 813-823
▪ Ruminants are a significant source of methane
– Studies have shown that a cow emits 500l of methane
per day, which is equivalent to 10% of the energy it
would otherwise use for performance and milk
production
▪ Within Project Clean Cow, a special feed solution has
been developed that:
– Reduces enteric methane emissions from cow/cattle by
at least 30% (indicated by published studies)
▪ Focused on markets with highly developed dairy and beef
production
▪ Potential: triple-digit sales (€ million)
▪ Launch after 2018
Anthropogenic methane sources (%)1
Rice fields 10%
Ruminants27%
Biomass burning &
biofuel11%
Waste decomposition
23%
Fossil fuels29%
Watch clip:
HEALTH NUTRITION MATERIALS
ROYAL DSM
Human Nutrition & Health
Human Nutrition | Providing local nutritional solutions on a global scale
Page 54
1. Total specialty food ingredients market, excluding ~€20bn of commodity ingredients, e.g., soy proteins
▪ Human Nutrition & Health provides (local) nutritional solutions
for the food and beverage, dietary supplements and early-life
and clinical nutrition markets, with a parallel focus on
solutions for the pharmaceutical industry for the use of
vitamins, nutritional lipids (ARA/EPA/DHA) and carotenoids as
Active Pharmaceutical Ingredients (APIs) (€1,823m in sales in
2016)
▪ Fundamental growth driver for DSM is the link between
nutrition & health, supported by a number of global
megatrends:
– Macro-economic: Nutritional ingredients/products with
health benefits for an aging population or local solutions for
processed foods for new customers in emerging economies;
– Behavioral trends: Nutritional solutions that lead to
healthier, safer and more sustainable foods that can be
customized to local taste and preference
– Structural trends: Reforming the retail landscape by creating
a shift to modern trade, by being the only integrated
premix, vitamin and nutraceutical manufacturer capable of
creating and delivering tailor-made formulations anywhere
Global specialty food ingredients market (%)Overview
(x) = Growth rate 2016-18 (CAGR, %)
Preservation (2%)
Processing aids(3%)
Nutritional ingredients
(3-4%)
Taste(4%)
Texture(4%)
Color(5%)
Total
potential
market:
€36bn1
Main segment is
Nutritional
Ingredients but
DSM is active in all
segments
DSM market
share in
Nutritional
Ingredients
~20%
Human Nutrition | Value chain
Page 55
1. Total specialty food ingredients market, excluding ~€20bn of commodity ingredients, e.g., soy proteins
Fresh food:
€1,375bn
Farmer:
€2,865bn
Non-food (tobacco,
feed, textile,
seeds, etc.):
€830bn
▪ Vitamins
▪ Enzymes
▪ Antioxidants
▪ Hydrocolloids
▪ Colors
▪ Yeasts
▪ Cultures
▪ Carotenoids
▪ Minerals
▪ Lipids
▪ Probiotics
▪ Dairy
▪ Fruits
▪ Cereals
▪ Proteins
▪ Meat/ fish
▪ Oils
▪ Spices
▪ Flour
▪ Salt
▪ Sugar
Food additive manufacturers
€33bn1
Commodities
€660bn
F&B manufacturers
€2,130bn
Dietary suppl. companies
€39bn
Retail brands
€2,740bn
Store brands
€315bn
Food service
€2,430bn
Consu
mers: >
€5,2
45bn (e
xcl. u
npro
cesse
dfo
ods)
Early life/ medical
€60bn
The only integrated premix, vitamin and nutraceutical producer for tailor-made formulations in the value chain
Human Nutrition | Overview
Page 56
Sales by active ingredient (%)Sales by region (%)
Sales by differentiated segment (%)Sales by application landscape (%)
Other blend ingredients
Nutraceutical ingredients
Microbial PUFAs
Marine PUFAs
Carotenoids
Water-soluble vitamins (e.g. B,C)
Other
Fat-soluble vitamins (e.g. A,D,E)
B2C
Premix
Forms
Straight actives
Rest of the World
Asia
Latin America
North America
Europe
Food and Beverage
Dietary supplements
Infant
Human Nutrition | Implementation of Strategy 2018
Page 57
1. CAGR %
▪ From product to segment marketing with segment-
specific local solutions and an aligned front-end operating
model
▪ Repair growth in North America, returning Dietary
Supplements (vitamins, omega-3) and F&B to growth
▪ Continue double-digit growth of i-Health business
– Continue strong growth from base brands and expand
in category (e.g. bladder control, cough & cold, etc.)
and channels (e.g. medical, natural, digital, etc.)
▪ Accelerating forward solutions and premix globally
– Have stepped up our efforts to truly create a global
premix business with best in class systems and
processes
▪ Capture new business in nutritional ingredients for
Pharma, Clinical, and Sports Nutrition applications
Key actions driving profitable growthExpected market growth vs. DSM aspiration
2016-18
Market DSM
~3%1
Human Nutrition Case Study | Culturelle®, a probiotic megabrand
in the broader health and wellness space
Page 58
▪ The global dietary supplements probiotics market is
predicted to grow at around 7% per year (2015-19)
– New product innovation is helping to fuel this growth
▪ The market is highly segmented and extremely
competitive: product differentiation supported by
authenticated health claims is vital for success
▪ Culturelle® is currently the #1 selling consumer dietary
supplement probiotic brand in the US
▪ Top-line growth has been achieved by creating consumer
demand for Culturelle®
– Important to understand and validate consumers’
health and wellness needs
– Delivered on those needs across three growth
platforms (Digestive Health, Everyday Wellness, and
Kids) based around Lactobacillus GG − the leading
clinically-studied probiotic strain
– Positioned Culturelle® as the proven probiotic brand in
the broader health and wellness space.
Watch clip:
2013-2014 2015-2016
Culturelle Digestive
Health Ex. Strength
Providing growth
from more
committed loyal
consumer base
Culturelle Kids
Regularity
Expands Kids line
with new benefits
Culturelle Pro-Well
Expands probiotic
benefits to heart
health with Omega-
3s
Culturelle
Adult Chewables
New form
expands
consumer base
Human Nutrition Case Study | Focus now on global expansion and
footprint
Page 59
▪ Global expansion strategy focused on distribution and
consumer brand-building in Asia first and Europe later
– Different local market characteristics require new
routes to market
– Currently building expertise in these new segments
▪ Aggressive marketing support deployed to drive growth,
yet operation still in its infancy
– First signs of successful launch
▪ International marketing supporting ongoing bran-
building
HEALTH NUTRITION MATERIALS
ROYAL DSM
DSM Food Specialties
DSM Food Specialties | A leading global supplier of food enzymes,
cultures, yeast extracts, flavors and other specialties
Page 61
1. Total specialty food ingredients market, excluding ~€25bn of commodity ingredients, e.g., soy proteins
▪ DSM Food Specialties is a leading global supplier of food
enzymes, cultures, bio-preservation, hydrocolloids, taste and
health ingredients (€536m in sales in 2016)
▪ DSM helps make existing diets healthier and more sustainable,
giving increasing numbers of people access to affordable,
quality food – ‘enabling better food for everyone’ - driven by:
–
▪ Customer proximity and the ability to deliver highly tailored
products are the basis for our continually expanding portfolio
of innovative fermentation-based product solutions
Global food ingredients market (%)Overview
(x) = Growth rate 2016-18 (CAGR, %)
DSM’s main segments
in food specialty
ingredients include,
amongst others,
processing aides
(enzymes, cultures)
and taste (savoury)
DSM typically has
number 1-3
positions in the
segments where
active
Sugar, salt, fat reduction without compromise on taste &
mouthfeel Health
Convenience and taste are key purchase driversConvenience
and taste
Strong consumer demand for ‘kitchen cabinet’ ingredients,
removal of undesired chemicals, clean and clear labelsClean label
More and
faster
Rapidly growing world population, food production more
than 8 times more efficient since 1940
Diverse cultures, eating habits and taste/flavor preference,
localized solutions key despite globalisation
1bn new
consumers
Preservation (2%)
Processing aids(3%)
Nutritional ingredients
(Human Nutrition)
(3-4%)
Taste(4%)
Texture(4%)
Color(5%)
Total
potential
market:
€36bn1
DSM Food Specialties | Value chain
Page 62
1. Total specialty food ingredients market, excluding ~€25bn of commodity ingredients, e.g., soy proteins
▪ Enzymes
▪ Antioxidants
▪ Hydrocolloids
▪ Colors
▪ Cultures
▪ Flavors
▪ Dairy
▪ Fruits
▪ Cereals
▪ Proteins
▪ Meat/ fish
▪ Oils
▪ Spices
▪ Flour
▪ Salt
▪ Sugar
F&B manufacturers
€2,130bn
Retail brands
€2,740bn
Store brands
€315bn
Food service
€2,430bn
Consu
mers: >
€5,4
85bn (e
xcl. u
npro
cesse
dfo
ods)
Commodities
€790bn
Food additive
manufacturers
€36bn1
Playing a pivotal role in the value chain offering healthier solutions that enhance taste and texture
DSM Food Specialties | Enabling better food through advanced
fermentation and biotechnology
Page 63
Sugar Reduction
Digestive Health
Taste Experience
Food Chain Efficiency
Bio Preservation
BIOTECHNOLOGY & FERMENTATION
DairyBrewing
Baking
Beverages
Savory
Watch clip:
DSM Food Specialties | Technology plays a key role in finding solutions
Page 64
▪ Biotechnology in
food
development
▪ Efficiency in
traditional food
production
systems, e.g.
robotics
▪ Innovative
production
methods, e.g.
urban farming
▪ Disruptive
production
methods, e.g. 3D
printing
DSM Food Specialties | Overview
Page 65
Sales by ingredient (%)Sales by region (%)
Sales by application landscape (%)
Latin America
North America
EMEA
Asia-Pacific
Hydrocolloids
Cultures
Other
Food & crop protection
Enzymes
Savory
Savory
Other
Baking
Dairy
Beverages
DSM Food Specialties | Implementation of Strategy 2018
Page 66
1. CAGR %
Expected market growth vs. DSM aspiration
2016-18
Market DSM
~5%1
Savory
Market growth
2016-2018
DSM growth
2016-2018
3-4%
5-6%
3-4%
>10%
3-4%
6-7%
7-8%
Cultures &
enzymes
Hydrocolloids
Non-artificial
sweeteners
▪ Create value
through market-
driven innovation
based on insights
and in close
cooperation with
customers
▪ Focus on high
growth segments
of the market such
as sugar reduction,
bio-preservation,
taste modulation,
digestive health
and food chain
efficiency4% 5%Bio-preservation
DSM Food Specialties Case Study | Consumers and governments globally
moving away from sugar
Page 67
DSM Food Specialties Case Study | Sugar reduction offers big opportunity
for fermentative stevia
Page 68
▪ Sugar is ~80% of current sweetener market
▪ Stevia is the only viable and large scale new alternative in
the foreseeable future
▪ Fermentative stevia is the future for:
– Sustainable production
– Several relevant sweetener molecules, e.g.:
• Reb A -Available in plants
• Reb M - The most potent rebaudioside, but availability
in plants is limited
• Potentially Reb D
▪ DSM has developed a unique cost effective technology to
produce Reb A and Reb M
▪ Development program for stevia well on track
– Regulatory submissions as well as FTO/IP work streams
ongoing
– Launch plans in close cooperation with major customers
– Commercial availability projected by end of 2018
DSM Food Specialties Case Study | Maxilact® offers dairy
producers opportunities for sugar reduction and digestibility
Page 69
▪ ‘Lactose-free’ and ‘no added sugar’ are two of the
fastest growing segments in dairy, driven by increasing
awareness of lactose-intolerance and health & wellness
▪ DSM was the first company to commercialize lactase and
has been innovating ever since
▪ DSM’s Maxilact® lactase breaks down lactose in dairy
products, making them suitable for lactose-intolerant
consumers
▪ Maxilact® meets the needs of lactose-intolerant
customers worldwide. Its natural sweetness also enables
dairy producers to achieve a 20 to 50% sugar reduction in
dairy products
Watch clip:
HEALTH NUTRITION MATERIALS
ROYAL DSM
Personal Care & Aroma Ingredients
Personal Care & Aroma Ingredients | Providing active, performance and
technical ingredients for cosmetic products
Page 71
▪ Personal Care & Aroma Ingredients provides innovative
solutions for some of the world’s best-selling beauty products
for sun, skin and hair care as well as aroma ingredients to the
flavor and fragrance industries which are used in many of the
world’s best-known consumer brands (€337m in sales in 2016)
▪ DSM’s extensive portfolio of key ingredients includes peptides,
natural bio-actives, UV filters, hair polymers, vitamins and
(specialty) aroma ingredients (such as lavender fragrance)
– The product portfolio is complemented by a unique range of
services in the areas of formulation expertise, sensory
competence, technical support, quality assurance, and
regulatory approval
▪ The business is driven by global megatrends, local consumer
beauty regime insights, and growth opportunities presented by
emerging markets
Global personal care market (%)Overview
Total
potential
market
€11.5bn
Surfactants (0-1%)
▪ Fatty alcohols, FA sulphates/
ethoxylates/ ethersulphates,
betaines, amphoacetates, etc.
Technical ingredients (2-3%)
▪ (Co) emulsifiers, thickeners &
rheology control agents,
emollients, solubilizers, etc.
Performance ingredients (3-4%)
▪ Hair conditioning & styling
polymers, skin sensory modifiers &
enhancers, pigments & dyes
Active ingredients (3-6%)
▪ UV-filters, vitamins, skin care
actives (natural extracts,
synthetic peptides, biotech ingr.13%
21%
30%
35%
DSM
active in
colored
parts
(x) = Growth rate 2015-18 (CAGR, %)
Personal Care & Aroma Ingredients | Value chain
Page 72
Sele
cte
d S
pecia
lty
Ingre
die
nts
segm
ents
Technical
Ingredients
(€3.5bn)
Performance
Ingredients
(€2.5bn)
Active and UV
Ingredients
(€1.5bn)
Surfactants
(€4.0bn)
Base Chemicals
(€14.obn)
Chinese
players
Cosmetic brand companies
and Private Label
Consumer products value at
manufacturer level: €240bn
Fast Moving Consumer
Goods
Consumer products value at
manufacturer level: €380bn
Leading position in selected key ingredients for cosmetic companies
Personal Care & Aroma Ingredients | Overview
Page 73
Sales by region (%)
Sales by segment (%)
China
Asia Pacific excl. China
Latin America
North America
Europe
Aroma Ingredients
Skin
Vitamins
Sun
Other
Watch clip:
Personal Care & Aroma Ingredients | Aroma Ingredients provides
lavenders and ionones to the fragrance and flavor industry
Page 74
▪ The aroma ingredients portfolio consists of lavenders and
ionones that are sold to the world’s leading fragrance and
flavor companies
▪ Products find their use mainly in home and personal care
products fine fragrances as well as food in the food
industry
▪ DSM product range includes:
– Ionones
• Beta-Ionone
• Methyl-Ionone
• Irone
– Lavender
• Linelool
• Linalyl Acetate
• Tetrahydrolinalool
Overview of the fragrance and flavor industry (€m)
F&F ingredients
4.5bn
2.4
0.2
Musk
1.0
Benzoids
1.1
Terpenes
Synthetic Essential oil/natural
1,1bn
Terpenes
Pinene
Menthol
350
Citrus
Lavender &
Ionones
Personal Care & Aroma Ingredients Case Study | An innovative
inorganic UV filter suitable for a wide range of products
Page 75
▪ Titanium dioxide finds extensive applications in the personal
care sector, being used as a pigment, sunscreen and thickener
– Its high refractive index, strong UV light-absorbing
properties and resistance to discoloration under UV light
make this the fastest-growing technology segment in the UV
filters market
▪ DSM offers a unique grade of titanium dioxide: PARSOL® TX, an
inorganic UV filter with excellent formulation compatibility,
which makes it suitable for a wide range of product
applications
▪ PARSOL® TX became the first titanium dioxide UV filter to
comply with the amended EC Regulation on Cosmetic Products
– Speedy compliance with the amended EC regulation offered
us a significant competitive advantage, establishing
PARSOL® TX as the global number one product grade in
titanium dioxide technology
▪ As a direct result of our regulatory expertise and dedicated
customer support, sales of PARSOL® TX increased by 55% in
2016
Watch clip:
Personal Care & Aroma Ingredients Case Study | Revealing the power of
beautiful skin with responsible and natural ingredients
Page 76
▪ “Health and Wellness” societal trend encourages
customers and consumers to search for more sustainable
solutions in personal care
▪ ALPAFLOR® line is a pioneer in the organic market:
– Standardized high altitude organic cultivation
contributing to Alpine flora diversity
– Quality, efficacy, and traceability from seed to
bioactive
▪ Green production principles
– 100% renewable energy
– 40% water reduction
– No production of chemical waste
– Vegetable waste used in compost
– Extraction solvent recycled
▪ Focused on all major skin care applications
▪ Potential: triple-digit sales
HEALTH NUTRITION MATERIALS
ROYAL DSM
Materials
Materials | A high-quality portfolio focused on well-defined, higher-
growth specialty segments
Page 78
▪ The Materials cluster comprises DSM Engineering Plastics,
DSM Dyneema and DSM Resins & Functional Materials
▪ The cluster consists of a high-quality portfolio of specialty
materials serving global automotive, electrical & electronics,
building & construction, consumer goods, flexible food-
packaging, high-performance textiles and life protection
industries
▪ Key trend is substitution; customers are looking to replace
existing parts and materials with newer, more sustainable
alternatives
– Through its materials, DSM is a leading provider of these
sustainable innovations, meeting demands for greater
efficiency, safer materials and improved environmental
performance
Sales by region (%)
Sales by end-market (%)
Materials - Overview
Sales | €2,513m
Sales | €2,513m 1%
36%
21%
2%
40%Asia
Rest of the World
Latin America
Europe
North America
23%
17%
15%
18%
27% Automotive & Transport
Building & Construction
Other
(Food) Packaging
Electrics & Electronics
Materials | ‘Silent’ transformation of the Materials portfolio toward
higher-value, more sustainable specialty products continues
Page 79
1. Whilst not part of the cluster, the Emerging Business Areas of Biomedical and Advanced Surfaces are also related to Materials and represent promising
growth platforms for the longer term
High Low
High-Performance
Plastics
Biomedical1
Functional
Materials
Specialty Coating
Resins
DSM’s capability to extract value
Mark
et
gro
wth
Solar1
Dyneema® Life
Protection
Growth
Accelerated
growth
Powder
Coating Resins
PA6
Polymers
PA6
Compounds
- DSM Engineering Plastics
- DSM Dyneema
- DSM Resins & Functional Materials
- Emerging Business Areas
High
Maximize
returnsDyneema®
Fiber Solutions
Materials | Implementation of Strategy 2018
Page 80
1. CAGR %
DSM Engineering Plastics
▪ Highly specified application development for global
customers in high-performance plastics ‘winning’
segments
▪ Continue to grow by leveraging global footprint of
commercial and technical resources to lead the PA6 and
high-performance polyamides markets in innovative
growth
DSM Dyneema
▪ Development of new application segments and product
solutions in existing segments for Fiber Solutions
▪ Continue re-focus on growing Life Protection segment
DSM Resins & Functional Materials
▪ Grow customer base profiting from fiber-to-home trend
▪ Drive substitution from solvent to water and other
sustainable solutions in coatings
Key actions driving profitable growthExpected market growth vs. DSM aspiration
2016-18
Market DSM
~3-4%1
Materials | 2016 key financial data1
Page 81
1. 2012-13 figures added for comparison only. Figures are based on non-audited, restated estimates adjusting for divestitures, acquisitions and other non-
recurring items
Sales and sales volume growth (%) Adj. EBITDA & Adj. EBITDA margin (%)
ROCE (%) Capital employed (at 31 Dec.)
Adj. EBIT & Adj. EBIT margin (%)
Capital expenditure (accounting)
2,5132,5282,460
20162014 20152012 2013
435384
323
20142012 2013 2015 2016
15.2 17.3-1-4
311
250
204
2014 20152012 2013 2016
9.9 12.4
17.6
14.4
11.9
20132012 2014 2015 2016
1,8071,7231,744
20152012 2013 2014 2016
10698
71
20162012 2013 20152014
34-4 13.11311 8.386
Materials | End-market segments offer growth options enhanced by
substitution based on application development capabilities
Page 82
Automotive ElectronicsLife
Protection
Fiber
Solutions
Sustainable Coatings
Functional Materials
Replace metals &
hazardous materialsReplace steel/aluminum & aramids Environmentally friendly solutions
DSM Engineering Plastics1 DSM Dyneema DSM Resins & Functional Mat.DSM
Biomedical
Replace traditional
solutions
Regenerative
Biomaterials
DSM Advanced
Surfaces
Fossil fuel
replacement
Solar
Growth via end markets and substitution based on application development
Materials | Locations
Page 83
Global presence in R&D and production supporting preferred partnerships in winning segments
HEALTH NUTRITION MATERIALS
ROYAL DSM
DSM Engineering Plastics
DSM Engineering Plastics | A global engineering plastics player with a
broad range of value-adding polyamides and polyesters
Page 85
▪ DSM Engineering Plastics is a global engineering plastics
player with a broad range of value-adding, high
performance polyamides and polyesters (€1,312m in sales
in 2016)
▪ DSM targets three key industries: automotive, electrical
and electronics and flexible food packaging:
– In automotive, focus is on lower fuel consumption and
emissions reduction via weight and friction reduction
and via electrification and on connectivity, safety and
comfort
– The electrical and electronics industry continually
demands improvements in terms of functionality,
miniaturization and process efficiency, as well as
looking for ways to address the issue of e-waste
– Reduction of food waste and longer shelf-life is the
main driver in flexible food packaging
Engineering Plastics market by product (%)
20%
9%
27%
20%
3%
21%
PA6
PA66
PBT/PET
POM
HPEP
TPC
Total
potential
market:
€19bn
Key segments
Packaging
▪ Powertrain
▪ Air/turbo
management
▪ Safety components
▪ Automotive
electronics
and lighting
▪ Interior/exterior
▪ Connectors
▪ Frames & casings
▪ Wire & cable
▪ Power distribution
▪ Electrical components
▪ (LED) lighting
▪ Flexible food
packaging for meat,
fish and cheese
Electronics &
ElectricalsAutomotive
DSM Engineering Plastics | Product overview
Page 86
▪ Today, DSM Engineering Plastics has one of the broadest
portfolios of high-performance plastics with global
leadership positions in many of its products in the areas
of high-performance plastics such as Stanyl®, ForTii®,
Xytron®, Arnitel®, Arnite®, EcoPaXX®, Akulon® and
Novamid®
▪ Using its broad, high-quality materials portfolio and in-
depth technology know-how, DSM works in close
collaboration with customers to develop breakthrough
innovative solutions
– Low emission concepts
– Halogen- and lead-free concepts
– Eco-efficiency
– Cradle-to-Cradle certified solutions
– Recycle-based concepts
– Bio-based concepts
Watch clip:
Extensive high-performance plastics portfolio
Amorphous Semi-crystalline
PE PPPS PVC
ABS PMMA
PEI
PEEK
LCP
PSU
PES
PET
POM
PC
mPPO Blends
PA46
PA4T
TPC
PBT
PA410
PPA
PA6 PA66 P6/66
ForTii®
PPS
PPA ForTii® Ace
DSM Engineering Plastics | DSM invented the high temp. polyamides
space and continues to introduce more advanced grades to its offering
Page 87
▪ Stanyl® PA46 was the first high performance polyamide in
the market and opened up High Temperature Polyamides
(HTPA) as a new class of materials
▪ Launched in 2008, DSM’s semi-aromatic polyamide, ForTii®
(PA4T), combined the benefits of existing PPA with
improved high temperature mechanics of Stanyl PA46
▪ Unique proprietary position with PA46, PA4T
– In Q4 2016 DSM launched the next generation high
performance polyamide family, again opening a new
market space:
• ForTii® Ace has a glass transition temperature of
160ºC and has a higher resistance to various
automotive oils and chemicals
▪ DSM materials are in 87% of all cars and nearly every
mobile device
Historic development overview
Watch clip:
1986 1992 2007 20152013 20162010 2011 201420082003
DDR, I/O, Data
connectors
(PA46)
ForTii® Ace▪ Full halogen-free
portfolio ▪ Stanyl® Diablo BM
Reflow
soldering increases
required T
Halogen-free
wave starts
Launch Diablo
DSM Engineering Plastics | Value chain
Page 88
High
Performance
Polyamides
PA66
Compounds
PA6
(Polymer and
Compounds)
Polyesters
PPS
System suppliers OEMsParts producers/
molders
Electronics & electrical
Consumer Goods
Automotive
DSM + Strategic Partners
Russia JV
Strat. partnership
JV (PPS)
Food packaging
Developing applications further down the value chain
DSM Engineering Plastics | Value chain driven by application
development at leading OEMs and system integrators
Page 89
Monomer Polymer Compound
Convertor Injection,
Moulding,
Extrusion
Parts
producer
System
supplierOEM End user
Material and performance specifications
DSM’s solutions provide high value-add materials combined with design
and processing support
▪ 75% of our business is highly specified by leading global brands
▪ Value is captured at the converters
▪ Commercial and technical resources equally distributed throughout the globe
DSM Engineering Plastics | Overview
Page 90
Sales by end-market (%)Sales by region (%)
Engineering plastics in a carCO2 requirements drive substitution growth
Asia-Pacific
Latin America
North America
Europe
Electrics & Electronics
Automotive
Consumer Goods
Flexible Food Packaging
2802602402202001801601401201008060
2003 2006 2009 2012 2015 2018 2021 2024 2027 2030
Gra
ms
CO
2/Km
(equiv
ale
nt)
China
Australia
USAJapanEurope
2003 2006 2009 2012 2015 2018 2021 2024 2027 2030
DSM Engineering Plastics Case Study | Arnitel® offers real design
freedom while ensuring extreme ease of wear demanded by consumers
Page 91
▪ The wearable electronics market is poised to triple in
size between 2015 and 2020
– Applications range from fitness & wellness through
medical & healthcare to infotainment & industrial
▪ The quest for improved connectivity, greater
functionality and enhanced design is driving growth
– Physical comfort and the possibilities of color play
a crucial role in the design of today’s wearables:
• Arnitel® TPE from DSM is easy to process via
injection molding, and can be used in
combination with other thermoplastics such as
polycarbonate, ABS, PET and PBT, providing
excellent adhesion
• Being intrinsically bright, with high UV
resistance, Arnitel® permits the production of
compounds in a broad range of colors
• Arnitel® gives the strap the required soft touch
and feel, and is very comfortable to wear in
direct contact with the skin, causing no allergic
reactions
Watch clip:
DSM Engineering Plastics Case Study | Stanyl® Diablo delivers
performance in the world’s first high-heat plastic air intake manifold
Page 92
1. Air Intake Manifold with integrated liquid-cooled Charged Air Cooler
▪ For the i8, BMW was looking for a high-heat
thermoplastic solution for its AIM/CAC1 that offered
superior performance and thermal stability and stiffness
above 200°C
▪ With Stanyl® Diablo, DSM offered the solution leading to
the world’s first high-heat plastic AIM/CAC combination:
– Revolutionary design of air intake manifolds
– Eliminates need to return to metals due to increasing
temperature requirements
– Higher-performing engine while still meeting new
emission limits
– Weight reduction of up to 40% over aluminum
HEALTH NUTRITION MATERIALS
ROYAL DSM
DSM Dyneema
DSM Dyneema | DSM is the inventor of the world’s strongest fiber™
Page 94
1. On a weight-for-weight basis
▪ DSM produces the world’s strongest fiber™: 15 times stronger
than steel1, 40% stronger than aramid, and floats on water
(€297m in sales in 2016)
▪ The business is driven by the need for lightweight, sustainable
solutions that offer extreme durability coupled with improved
safety and ergonomics
– DSM’s global product leadership is based on unique, IP-
protected technology platforms
▪ Applications with Dyneema® push the boundaries of light-
weight strength, offer comfort and safety and are inherently
more sustainable than the materials substituted
– Dyneema® products typically replace traditional materials
such as steel and aramid
▪ DSM’s well-established Fiber Solutions business serves the high-
protective textiles and commercial marine & sports segments,
while Life Protection provides personal and vehicle ballistic
protection solutions
– New applications include performance fabrics, hybrid carbon
composites and synthetic chains
Watch clip:
1%
53%
19%
27%
Dyneema® UHMwPE
LCP and other
p-aramid
Other UHMwPE
Total
potential
market:
>€1.2bn
High-performance fiber market (%)
DSM Dyneema | Value chain
Page 95
Life
Protection
High
Protection
Textiles
Commercial
Marine &
Sports
UHMwPE resin
producer
System
integrator
End customer
Fiber
manufacturer
Rope &
netting
manufacturer
Assembler
Distributor/
direct
End customerGlove knitter Brand owner/
Private Label
Vest
manufacturer
Distributor
(optional)
End customerUD
manufacturer
UD presser/
weaver
/
As the world’s strongest fiber™, DSM Dyneema is uniquely positioned when continuous high performance is of
utmost importance
Mesa, Arizona Greenville, NC
Manufacturing Site
Tech Center
Stanley, NC
Geleen-Heerlen, NL
Laiwu, China
Manufacturing JV with Toyobo
Tsuruga, Japan
Singapore
Global HQ
Regional HQ
DSM Dyneema | Overview
Page 96
Sales by end market (%)Sales by region (%)
Only UHMWPE player with assets in 3 main continents
APAC
Latin America
North America
EMEA
Other
Fiber Solutions
Life Protection
DSM Dyneema | Product overview
Page 97
OverviewTechnologies and form factors Key markets
Polymer
Fiber
Sheets
Fabrics & Laminates
Industry Applications Value proposition
▪ Military & Law
Enforcement
▪ Ballistic Vests,
Inserts,
Helmets,
Vehicle
protection
▪ Lightest weight
protection and
increased comfort
▪ Maritime,
Fishing,
Offshore,
Industrial,
Aviation
▪ Ropes, cables,
slings, nets,
fishing and
yachting lines
▪ Lower operation cost
and footprint and
increased worker’s
safety
▪ Automotive,
Manufacturing,
Food
▪ Cut resistant
gloves,
Protective
workwear
▪ Better cut protection
at higher comfort
level
▪ Sports &
Lifestyle
▪ Jeans, Athletic
Footwear,
Sports Apparel
▪ Ultra lightweight,
improved durability,
increased protection
DSM Dyneema Case Study | Meeting the deep water challenge
Page 98
1. Floating production, storage and offloading vessel
▪ Developed for use offshore, mooring ropes with
Dyneema® Max Technology outperform the alternatives,
surpass industry standards for deep water permanent
mooring, and will outlast the operational life of the
installation
▪ Seven times stronger than steel wire rope, the fiber
opened the door to applications where the strengths of
Dyneema® are now no longer compromised by an
excessive creep
▪ The DM20 fiber extended the range of Dyneema®
applications in offshore to long-term permanently loaded
systems and set the standard for permanently mooring
FPSO vessels1:
– 30% smaller diameter than equivalent polyester rope
– 30% stiffer and 70% lighter than equivalent polyester
rope
– More freedom in riser design, planning, and
installation
Watch clip:
DSM Dyneema Case Study | High stiffness and low weight for safe station
keeping
Page 99
▪ Petrojarl Knarr was the first FPSO vessel to employ
Lanko®force riser tethers made with Dyneema® DM20
fiber
– Production was started successfully in April 2015, 120
kilometers off the coast of Norway
▪ Its riser tethers, made with Dyneema® DM20, provide
permanent subsea anchoring of the risers between
seabed and vessel
▪ Each of the riser tethers comprises two tethers made
with Dyneema® DM20 connected to a hold-down clamp
with an anchor
– Allows for rotation around two axes
▪ Using Dyneema® DM20 from DSM not only led to reduced
system and installation costs but also to increased
worker safety during handling
HEALTH NUTRITION MATERIALS
ROYAL DSM
DSM Resins & Functional Materials
DSM Resins & Functional Materials | A global coatings producer with a
well-balanced portfolio in sustainable coatings
Page 101
1. On a weight-for-weight basis
▪ DSM Resins & Functional Materials is a global leader of
sustainable, waterborne coating and powder coating resins that
are used in a wide range of applications, while its UV-curable
fiber-optic coatings are recognized worldwide as the standard
for fiber protection and identification (€904m in sales in 2016)
– Coating resins determine to a large extent the properties of
the final product
▪ Key trend is the shift from traditional solvent-based coatings
that contain hazardous materials to the use of more
sustainable coating technologies
▪ Expanding the field of properties to enlarge the range of
applications in which waterborne, powder and UV coatings can
be used remains key
▪ Besides end-user preference, legislation on the reduction of
substances such as Volatile Organic Compounds continues to be
an important driver for this substitution world-wide
▪ In fiber-optic coatings, signal reliability and field performance
are main drivers for growth as global bandwidth demand for
networks continue to surge
Global paints and coatings market (%)
20%9%
9%
2%
9%
14%
25%
3%
1%8%
Automotive OEM
Protective
General industrial
Industrial wood
Architectural trim
Architectural wall
Plastic coatings
Marine
Powder
Automotive refinish
Total
potential
market:
~€30bn
DSM Resins & Functional Materials | Value chain
Page 102
Solvent-based
resins
Powder
resins
Water-based
resins
UV curing
resins
Resins - ~€30bn Customer baseImpression of end
market
Ideally positioned as the industry continues to move to more sustainable coatings
DSM Resins & Functional Materials | 5 business lines overview
Page 103
Functional MaterialsSustainable coating resins
DSM-AGI
Powder
Coating
Resins
Specialty
Resins
Fiber
Optic
Materials
SOMOS
3D
Printing
UV
Applications
for Industrial
and Packaging
applications
Fiber Optics
Protecting
Optical Fibers
3D printing
Prototyping
and small runs
Waterborne
High
performance
low/ no VOC
coatings and
packaging
Powder
Very
sustainable
technology for
Industrial
Coating
DSM Resins & Functional Materials | Resin is a key component in coatings
Page 104
~30%: Water or Volatile Organic Compounds
~5%: Additives & Preservatives
~45%: Resin (binder)
~20%: Pigments
DSM Resins & Functional Materials | Coatings contribute 21% to global
NMVOC’s. Continuous move to sustainable technologies
Page 105
Global emission of NMVOC (%) Increasing shift away from solvent Coatings sales by end market (value)
North America
15%
Centra l and South America
4% Brazi l4%
Europe
16%
CIS4%
Middle East3%
Africa2%
China29%
India
8%
Rest Of As ia14%
Oceania
1%
50mTs
€100b
North America
15%
LatAm
8%
EMEA
25%
Asia
52%
Commercial, institutional and
households
15%
Energy production and
distribution
10%
Industrial processes
15%Road transport
15%
Solvent and product use
15%
Solvents from Coatings &
Paint
21%
SB49%
WB44%
UV2%
Powder
5%
DSM Resins & Functional Materials | Ideally positioned in the more
sustainable coatings segments
Page 106
Sales by end markets (%)Sales by region (%)
Extensive portfolio in sustainable specialty resins
Asia-Pacific
Latin America
North America
EMEA
Others
Packaging & graphic arts
Architectural
Industrial
Solvent-based
Powder
Specialty Resins
Func.
Mat.
DSM Resins & Functional Materials | After designing the first ever fiber-
optic coatings 40 years ago, DSM is the global leader in this segment
Page 107
▪ Without fiber-optic cable there is no fast internet
connecting the world. And without UV-curable coatings,
there is no fiber-optic cable
▪ DSM is the world’s leading supplier of fiber-optic
coatings, which help assure signal reliability and protect
fibers from harsh environmental conditions
– DeSolite® Supercoatings made by DSM is the industry
leading coating solution for fiber protection worldwide
▪ In additive manufacturing – 3D printing – DSM offers
highly efficient and effective prototyping technologies
and supports the industry in accelerating the pace at
which new products are designed and brought to market
DSM Resins & Functional Materials Case Study | Transforming the
Chinese, solvent-based, sea freight container industry
Page 108
▪ Since the beginning of 2014, the Chinese government has
been paying increasing attention to environmental
protection
– This includes introducing more stringent regulations
on VOC emissions from solvent-based coatings
▪ 95% of the world’s sea freight containers are made in
China, and almost all are painted with solvent-borne
coatings
▪ To mobilize industry support for the switch to
waterborne coatings in China, DSM founded the
Waterborne China Platform in 2010
– Represents leading coatings, resins and additive
manufacturers who are in a position to influence key
bodies – such as the Guangdong Coating Association,
the Container Owner Association and the China
Container Industry Association, as well as the Chinese
central and regional Environment Protection Bureau –
in the drafting of VOC and coating standards for the
container industry
In 2015, 2.5 million 20 foot
equivalent containers were
built, generating some
130,000 tons of VOC
emissions and constituting
one of the major VOC
emission sources in China
A new container requires 60-
70kg of paint: if all new
containers were painted with
waterborne coatings, this
would require 165,000 tons of
waterborne coatings a year
Today, only a small number
of these – some 20,000 in
2015 – are coated with
waterborne coatings
DSM Resins & Functional Materials Case Study | Further driving the
switch to waterborne coatings in China
Page 109
▪ As a result of these efforts, in 2016, the Chinese
container industry decided to sign a convention to
introduce waterborne coatings in two steps
– Guangdong Province made the switch in July 2016 and
the rest of the country will follow by April 2017
▪ Working with paint and coatings customers such as
Valspar (now Sherwin Williams), DSM is already seeing
considerable growth in its business as a result
▪ Other industries and governing bodies are now following
suit:
– The Chinese furniture industry is switching to
waterborne coatings ahead of the introduction of the
relevant legislation
– The Shenzhen Municipality has forbidden the use of
solvent-borne coatings for external wall applications
DSM Resins & Functional Materials Case Study | First and important
steps in creating coatings using plant-based materials
Page 110
▪ Decovery® plant-based resins are based on a novel
process of converting renewable materials
– Free of Volatile Organic Compounds, has an extremely
low odor and offers many additional benefits to the
end-products
▪ Praxis, one of the largest Dutch hardware chains, was
looking for a sustainable solution for its premium range
of private label decorative paints
– In close cooperation with DSM, Praxis was able to
further improve quality and sustainability using
Decovery®
▪ In 2016, DSM and ICA Group together announced a new
water-based coatings line for interiors called IRIDEA BIO
BEST PRODUCT OF THE YEAR 2015 - 2016
Watch clip:
HEALTH NUTRITION MATERIALS
ROYAL DSM
Innovation Center
Innovation Center | Accelerating and supporting innovation at DSM
Page 112
▪ The DSM Innovation Center has two main functions:
– Enable and accelerate innovation power and speed in
DSM’s core businesses as a center of excellence. It
protects DSM’s intellectual property, and also focuses
on adjacent technologies and business opportunities for
growth through DSM’s Corporate Research Program and
Venturing & Licensing activities;
– Focus on areas outside the current scope of the
business groups, investing in new and innovative growth
options through the DSM Business Incubator and by
developing and extracting value from the company’s
Emerging Business Areas (‘EBAs’) in promising end-
markets that provide strong long-term growth platforms
which are based on the company’s core competences in
health, nutrition and materials
Organization
Innovation Center
Supporting Business Groups
and EBAs in accelerating
innovation and meeting
innovation targets
Accelerators
Creating new businesses for
DSM, outside the current
scope of the existing
Business Groups
New business development
▪ Chief Technology Officer
▪ Excellence in innovation
▪ Intellectual Property
▪ Venturing & Licensing
▪ Emerging Business Areas
– Biomedical
– Bio-based Products &
Services
– Advanced Solar
▪ Business Incubator
Watch clip:
Innovation Center | The Emerging Business Areas provide long-term
growth platforms – Focus lies on development and extracting value
Page 113
▪ Partners with the medical industry
worldwide to develop innovative
biomaterials and regenerative medical
devices that improve patients’ lives
▪ With facilities in the US and the
Netherlands, DSM develops innovative
materials, components and full medical
devices based on biomedical polyurethanes
and polyethylenes, resorbable polymers,
ceramics, collagens, extracellular matrices,
silicone hydrogels, device coatings, and
drug delivery platforms
▪ Aim is to outpace market growth in high-
growth segments of the medical device
market including cardiology, neurology,
ophthalmics, diabetic care, and orthopedics
▪ Pioneers advances in biomass conversion
and seeks to demonstrate the commercial
viability of sustainable, renewable
technologies in collaboration with strategic
partners in the value chain (e.g. POET in
cellulosic bio-ethanol and Reverdia in bio-
succinic acid)
▪ Leveraging the expertise and products DSM
has built up in 2nd generation bio-fuels to
create new business in making the
production of all generations of bio-fuels
more efficient and sustainable
▪ Strategy is to license technology and
expertise, enabling future partners to
convert biomass in a commercially viable
and sustainable way
▪ Aim is to accelerate the uptake and
effectiveness of solar energy by focusing on
the development and commercialization of
technologies and materials that increase the
efficiency of solar modules, reducing the
cost of energy delivered
▪ DSM has built a strong position as a solution
provider for high-performance solar PV
materials, primarily driven by our market-
leading anti-reflective coating and an
innovative new type of backsheet
DSM Biomedical
Enabling innovative medical devices
DSM Bio-based Products & Services
Enzymes/yeast for biomass conversion
DSM Advanced Solar
Efficiency-increasing products for solar
Innovation Center | Implementation of Strategy 2018
Page 114
1. CAGR %
▪ Support innovation in core businesses to facilitate
earnings and profit growth towards and beyond 2018
▪ Develop and extract value from Emerging Business Areas
▪ Cost of Innovation Support:
- €15-20m EBITDA/year
▪ EBITDA contribution of the Emerging Business Areas:
from +€5m (2015) to +€30-40m (2018)
▪ Overall Innovation Center
EBITDA break-even as of 2016
Aspirations underpinning Group targets
YoY ~40%(2010-2015)
Innovation Center Case Study | DSM is meeting the needs of an attractive
growth market
Page 115
▪ Solar PV has emerged as a mainstream source for power
generation
– Driven by incentive schemes and increasing
competitiveness
▪ In 2015, solar photovoltaic (‘PV’) accounted for 25% of
new power capacity added globally
▪ Continued strong market growth expected
– Enabled by further reduction of the price of solar power
($/kWh)
▪ DSM has established a leading position in anti-reflective
coatings and is recognized as high performance material
supplier to the PV industry:
– DSM’s highly durable, proprietary technology for anti-
reflective coatings delivers unparalleled transmission
gain and easy handling and durability even in extreme
weather conditions
– DSM offers a portfolio of innovative PV backsheet
products based on a patented technology
Growth of global PV capacity | 2000-2015
Lower PV prices driven by higher efficiency and durability
Innovation Center Case Study | DSM solutions are lowering the
cost of solar power
Page 116
Backsheet
Encapsulant
Encapsulant
Glass
Frame
Junction box
Anti-reflective coating
Lowering cost through enhanced PV glass light transmission, resulting in
higher module power output
Cells
Watch clip:
▪ A closed pore structure is
established through a
differentiating core-shell
technology, provides
unique optical,
mechanical and durable
properties
Backsheet
Lowering cost through enhanced light management and improved barrier
properties resulting in higher power output and reduced degradation
during lifetime of the module
+1.5W
HEALTH NUTRITION MATERIALS
ROYAL DSM
DSM at a glance/Strategy 2018
Business overview
Financial data
Share-related information
1
2
3
4
Financial data | Income statement
Page 118
1. See page 142 of the Integrated Annual Report 2016 for reconciliation
Income statement – DSM Continuing (2015-16) and Total DSM (5 year summary)
in € million 2016 2015 2016 2015 2014 2013 2012
Net sales 7,920 7,722 7,920 8,935 9,283 9,429 9,131
Adjusted EBITDA 1,262 1,075 1,262 1,170 1,166 1,312 1,109
EBITDA 1,174 956 1,146 1,046 1,134 1,187 941
Adjusted operating profit (EBIT) 791 573 791 650 617 773 635
Operating profit (EBIT) 685 362 657 304 290 476 441
Financial income and expense (133) (164) (133) (174) (125) (144) (109)
Income tax expense (89) (46) (89) (68) (7) (76) (46)
Share of profit of associates and joint ventures 194 30 194 30 (59) 13 2
Profit for the year 657 182 629 92 99 269 288
Profit attributable to non-controlling interest 8 (2) 8 4 (46) (2) 10
Net profit attributable to equity holders of DSM 649 184 621 88 145 271 278
Dividend on cummulative preference shares (4) (10) (4) (10) (10) (10) (10)
Net profit attributable to equity holders of DSM 645 174 617 78 135 261 268
Total DSMDSM Continuing
1
Financial data | Other key figures
Page 119
1. As reported
2. Restated due to retrospective application of IFRS 11 'Joint Arrangements' that came into effect from 1 January 2014
Other key figures – Total DSM (5 year summary)
in € million 2016 2015 2014 2013 2012
Cash provided by operating activities 1,018 696 808 998 n.a.
Capital Employed 7,889 7,553 8,105 8,060 8,084
Capital Expenditure:
Intangible assets and PP&E 485 570 616 694 715
Acquisitions 16 106 0 424 1,265
Disposals 87 307 93 78 46
Depreciation, amorization and impairments 489 742 798 730 500
Net debt (2,070) (2,321) (2,420) (1,841) (1,668)
Dividend 310 297 296 297 263
Workforce at 31 December, headcount (#) 20,786 20,750 21,351 23,485 23,498
Employee benefit costs 1,752 1,778 1,713 1,822 1,761
Total DSM
1 2
Financial data | Ratios
Page 120
Ratios – Total DSM (5 year summary)
2016 2015 2014 2013 2012
ROCE (%) 10.4 8.2 7.8 9.6 8.9
Sales/ average Capital Employed 1.04 1.13 1.17 1.18 1.29
Current assets/ current liabilities 1.58 1.62 1.21 1.49 1.53
Equity/ total assets 0.48 0.48 0.49 0.51 0.50
Gearing (net debt/ equity plus net debt) 0.25 0.29 0.29 0.23 0.22
Adjusted EBIT/ Sales (%) 10.0 7.3 6.6 8.2 7.0
Net profit/ Avg. shareholders' equity available to
holders of ordinary shares (%) 11.1 1.4 2.4 4.5 4.8
Adjusted EBITDA/ net finance costs 9.5 7.4 9.9 9.6 10.2
Total DSM
Financial data | Balance sheet - Assets
Page 121
1. Application of IFRS 11 'Joint Arrangements' that came into effect from 1 January 2014. 2013 has been restated. The years 2012 has not been restated
Balance sheet – Assets - Total DSM (5 year summary)
in € million 2016 2015 2014 2013 2012
Intangible assets 3,188 3,228 2,867 2,690 2,793
Property, plant and equipment 3,325 3,171 3,673 3,611 3,811
Deferred tax assets 355 366 427 364 340
Share in associates and joint ventures 586 872 762 295 40
Other financial assets 463 191 130 152 141
Non-current assets 7,917 7,828 7,859 7,112 7,125
Inventories 1,800 1,627 1,739 1,638 1,803
Receivables 1,653 1,556 1,769 1,597 1,799
Financial derivatives 40 47 47 126 62
Current investments 944 9 6 19 12
Cash and cash equivalents 604 665 669 770 1,121
Assets held for sale 11 37 637 44
Current assets 5,041 3,915 4,267 4,787 4,841
Total assets 12,958 11,743 12,126 11,899 11,966
Total DSM
1 1 1
Financial data | Balance sheet – Equity and liabilities
Page 122
1. Application of IFRS 11 'Joint Arrangements' that came into effect from 1 January 2014. 2013 has been restated. The years 2012 has not been restated
Balance sheet – Assets - Total DSM (5 year summary)
in € million 2015 2015 2014 2013 2012
Shareholders' Equity 6,072 5,541 5,723 5,908 5,874
Non-controlling Interests 108 90 213 188 168
Equity 6,180 5,631 5,936 6,096 6,042
Deferred tax liabilities 278 319 365 375 236
Employee benefits liabilities 490 496 479 326 388
Provisions 128 98 105 97 125
Borrowings 2,552 2,557 1,637 1,725 1,922
Other non-current liabilities 158 228 81 75 94
Non-current Liabilities 3,606 3,698 2,667 2,598 2,765
Employee benefits liabilities 40 44 45 34 42
Provisions 54 41 42 65 81
Borrowings 853 253 1,143 841 642
Financial derivatives 253 232 362 190 299
Current liabilities 1,972 1,842 1,915 1,845 2,081
Other liabilities held for sale - 2 16 230 14
Current liabilities 3,172 2,414 3,523 3,205 3,159
Total liabilities 12,958 11,743 12,126 11,899 11,966
Total DSM
1 1 1
DSM is committed to maintain a strong balance sheet, while rewarding
shareholders with stable, preferably rising dividends
Page 123
1. More detailed information regarding DSM’s financial policies can be found in DSM’s Integrated Annual Report
2. In 2016 favorable market conditions allowed to already lock-in low interest rates and refinance the upcoming maturing of a €750m ten-year bond in 2017
Borrowings by maturityFinancial policies1
Dividend per ordinary DSM share - €Cash allocation priorities
▪ DSM’s refinancing has been geared towards evenly
spread maturity profile, to reduce refinance risk
▪ Average cost of long-term funding has been reduced
from 4.2% (2013), 3.9% (2014) to 3.4% (2016)
▪ No significant pension fund liabilities
▪ Committed to maintain a strong investment grade credit
rating
2,245
1300
6
853
2020-212019 After 202120182017
▪ DSM has set the following priorities for cash allocation
1) Disciplined capex to support profitable growth
2) Dividend
3) Acquisitions
4) Cash back to shareholders
▪ Dividend policy of ‘stable and preferably rising’
dividends
1.45 1.501.65 1.65 1.65 1.75
0.0%
2.0%
4.0%
6.0%
0.00
0.50
1.00
1.50
2.00
2011 2012 2013 2014 2015 2016
Dividend yield (based on average share price)
2
HEALTH NUTRITION MATERIALS
ROYAL DSM
DSM at a glance/Strategy 2018
Business overview
Financial data
Share-related information
1
2
3
4
Information about the DSM share
Page 125
1. More detailed information can be found on page 124 of DSM’s Integrated Annual Report 2016
▪ DSM has two types of shares: 1 class of
ordinary shares and 2 classes of Cumulative
Preference Shares, series A (issued, not
listed) and B (not issued, not listed)1
▪ Ordinary shares in Koninklijke DSM N.V. are
listed on the NYSE Euronext stock exchange
in Amsterdam, the Netherlands (Stock code
00982, ISIN code NL0000009827)
▪ Options on ordinary DSM shares are traded
on the European Option Exchange in
Amsterdam, the Netherlands
(Euronext.liffe)
▪ In the US a sponsored unlisted American
Depositary Receipts (ADR) program is
offered by Deutsche Bank Trust Co.
Americas (Cusip 780249108), with four
ADRs representing the value of one
ordinary DSM share
per ordinary share in € 2016 2015 2014 2013 2012
Adjusted net profit 2.90 2.14 2.34 2.84 2.52
Net profit 3.52 0.45 0.78 1.52 1.62
Operating Cash Flow 5.79 3.93 4.62 5.74 4.35
Dividend 1.75 1.65 1.65 1.65 1.50
Interim Dividend 0.55 0.55 0.55 0.50 0.48
Final Dividend 1.20 1.10 1.10 1.15 1.02
Pay-out incl. dividend on cumulative preference shares
as % of adjusted net profit 60 71 71 59 60
Dividend yield (dividend as % of average price of an
ordinary DSM share) 3.3 3.4 3.3 3.2 3.7
Share prices on Euronext Amsterdam (closing price)
Highest price 64.18 55.11 57.97 59.75 46.29
Lowest price 41.40 39.62 44.44 43.93 36.33
At 31 December 56.96 46.28 50.64 57.16 45.79
Number of ordinary shares outstanding (x 1,000)
At 31 December 175,002 174,923 173,537 173,963 168,684
Average 175,100 174,357 172,605 172,183 165,543
Daily trading volumes on Euronext Amsterdam
Average 787 912 801 728 823
Lowest 152 130 104 95 225
Highest 2,554 4,506 7,981 3,049 2,720
Information about the DSM share (cont’d)
Page 126
2015
Issued Repurchased Outstanding Outstanding
Balance at 1 January 181,425,000 6,501,973 174,923,027 173,536,815
Changes
Reissue of share in connection with exercise of options rights - (3,243,102) 3,243,102 1,056,880
Repurchase of shares - 5,200,000 (5,200,000) (2,300,000)
Dividend in the form of ordinary shares - (2,035,537) 2,035,537 2,629,332
Balance at 31 December 181,425,000 6,423,334 175,001,666 174,923,027
Market capitalization at 31 December (€ million) 10,334 8,396
2016
Development of number of ordinary DSM shares
Geographical spread of DSM shares (total)
3%31%
33%
4%
6%
14%
6%
3% Germany
Asia-Pacific
Other countries
North America
The Netherlands
France
United Kingdom
Switzerland
DSM Investor Relations | Overview and events
Page 127
1. For the latest, most up to date information, please see www.dsm.com/corporate/investors/generic/calendar-overview.html
▪ DSM attaches great value to a good relationship with its
shareholders
▪ The Investor Relations team’s primary tasks are to
maintain contacts with current and potential shareholders
as well as with sell-side analysts and to provide quality
information about developments at DSM that is equally
and simultaneously provided and accessible to all
interested parties
▪ Silent periods – In the period preceding the publication of
the financial results, DSM will be in a ‘silent period’ where
it will not engage in a business dialogue with analysts or
investors
▪ Consensus – At regular intervals, DSM asks VARA research
to compile a consensus number for key financial
parameters by approaching a number of sell-side analysts
that actively cover DSM. This consensus is published on
the DSM website
Calendar1
2 May 2017 7.00h CEST Publication Q1 2017 results
3 May 2017 14.00h CEST Annual General Meeting of
Shareholders 2017
5 May 2017 Ex-dividend date 2016
26 May 2017 Payment date of net cash
dividend/ stock dividend
8 July 2017 7.00h CEST Silent Period Q2 2017
1 Aug 2017 7.00h CEST Publication Q2 2017
25-26 Sept. 2017 Investor Seminar 2017
7 Oct. 2017 7.00h CEST Silent period Q3 2017
2 Nov. 2017 7.00 CEST Publication Q3 2017
Additional information and disclaimer
Page 128
▪ All financial data in this Factbook 2017 are based on 2016 continuing operations and in Euro million unless stated
otherwise (e.g. indicated as Total DSM)
▪ Information in this presentation has not been audited
▪ 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.
▪ More details on DSM’s performance can be found in the latest Integrated Annual Report together with a more
comprehensive discussion of the risk factors affecting DSM’s business, which can be found on the company's corporate
website, www.dsm.com
