DSM upbeat on animal protein market recovery and firmer vitamin E prices
Prices of several animal nutrition products were impacted negatively in 2013, most notably vitamin E, on challenging market conditions in the first half of last year, said DSM yesterday.
“This demand weakness in combination with market speculation about possible increases in supply has increased price pressure on this vitamin.”
The threat of a new vitamin E supplier in China added to competitive pressures, said DSM.
However, in its presentation to investors yesterday, DSM said it has learnt that this “potential new entrant” will most likely not be in the market for some time.
The Dutch group forecasts that trading of vitamin E is stabilising and prices are starting to recover with meat production having picked up in Q3 2013.
“Vitamin E prices are firming after the low levels of November 2013 but no impact on results is foreseen in Q1 2014,” said DSM to investors.
Financial results
The Dutch company said for the full year 2013, it delivered 18% higher EBITDA (earnings before interest, taxes, depreciation, and amortisation) - up to €1,314 million on €1,109m for 2012.
The animal nutrition and health business, said the group, achieved sales of €1,934m in 2013 compared to €1,717m in 2012 with net sales of €512m in Q4.
Organic sales growth in Q4 was 9% as volumes were up 12% compared to the weak Q4 2012 and 3% above Q3 2013.
These results, said DSM, confirm the preliminary, unaudited results the company published last month.
Commodity prices
Historically high grain prices in 2012 also played out in the continued demand weakness during the first half of the year, said DSM.
But, yesterday, the Dutch group said that in the animal protein markets, decreasing agricultural commodity prices are supporting a steady but slow recovery in production.
Animal diseases
Recovery last year was further delayed, said DSM, by the outbreak of animal diseases such as bird flu in China and Mexico and Early Mortality Syndrome (EMS) in shrimp in South East (SE) Asia.
The outbreak of swine disease in the US is not expected to have significant impact on the business, said the nutrition company.
However, it is “too early to tell the impact of the new poultry diseases in Asia”. Furthermore, it said, aquaculture in SE Asia has not yet seen full recovery.
Tortuga “exceeding expectations”
But the recently acquired Tortuga - the Brazilian market leader in minerals for animal nutrition and health - exceeded expectations in Q4, delivering sales of €68m and an EBITDA of €9m.
“The business has already delivered a strong contribution to DSM’s growth and earnings and its integration is on track to be fully completed in 2014. It fundamentally strengthens DSM’s footprint in Latin America and its ruminants’ position globally.
Product registrations are now underway for expansion in Latin America, while the company’s growing trace mineral programme for monogastric species is also underway,” said DSM.
