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Introduction

Our activities are grouped in three clusters: Nutrition, Materials and Innovation Center. We report separately on Corporate Activities. Results presented in this section (and elsewhere in this Report) relate to consolidated activities only (therefore non-consolidated partnerships are excluded).

 
Net sales
  
Adjusted EBITDA
x € million
2018
2017
% change
  
2018
2017
% change
               
DSM underlying business1
8,852
8,632
2%
  
1,532
1,445
6%
DSM
9,267
8,632
7%
  
1,822
1,445
26%
               
Nutrition underlying business1
5,722
5,579
3%
  
1,117
1,053
6%
Nutrition
6,137
5,579
10%
  
1,407
1,053
34%
Materials
2,913
2,825
3%
  
512
488
5%
Innovation Center
172
169
2%
  
8
9
  
Corporate Activities
45
59
    
(105)
(105)
  

1 Excluding temporary vitamin effect, see Key business figures at a glance.

Nutrition

Our Nutrition cluster comprises DSM Nutritional Products and DSM Food Specialties. This cluster provides solutions for animal feed, food and beverages, pharmaceuticals, early life nutrition, nutrition improvement, dietary supplements and personal care. Our company is 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. Our unique portfolio of products and services is global and highly diversified, serving customers and other stakeholders locally across various end-markets around the world.

Key figures

In Nutrition, we benefited from a temporary vitamin effect caused by an exceptional supply disruption in the industry. Adjusted for the total estimated temporary vitamin effect of €415 million (mainly in Animal Nutrition & Health), our underlying organic growth was up 7% compared to 2017, with €5,722 million sales. Volumes were up 4% from the previous year and above-market growth. The price growth of 3% was partly offset by a negative foreign currency impact. Conditions were good across most regions and market segments in 2018. The Adjusted EBITDA from underlying business was up 6% from 2017, to €1,117 million. The Adjusted EBITDA margin from underlying business was 19.5%, versus 18.9% over 2017.

Total Nutrition sales increased by 10%, to €6,137 million (compared to €5,579 million in 2017), including a total estimated €415 million temporary vitamin effect. The total Adjusted EBITDA was up 34% to €1,407 million, benefiting from a total estimated €290 million temporary vitamin effect.

Over the strategic period, Nutrition continued to deliver on its aspired above-market growth ambition and further leveraged our unique global products & local solutions business model, supported by marketing and sales excellence and customer-led innovation.

Read more about Nutrition in 2018

Organization

  • Animal Nutrition & Health

    Animal Nutrition & Health serves the global feed industry with innovative and sustainable nutritional solutions. A pioneer since the earliest days of feed additives, we draw on the latest science to provide a unique portfolio that runs from vitamins through carotenoids to cutting-edge eubiotics and feed enzymes. Population growth and rising incomes are driving demand for animal protein. Our products help producers of animal feed and meat, including farmers, to raise animals more efficiently and sustainably.

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  • Human Nutrition & Health

    Human Nutrition & Health provides solutions for the food & beverage, dietary supplements, early life nutrition, medical nutrition, nutrition improvement and active pharmaceutical ingredient (API) markets. We serve these industries with vitamins, nutritional lipids, carotenoids, nutraceuticals and custom nutrient premixes. i-Health — a global consumer health and wellness company and subsidiary of DSM — develops, markets and distributes branded products that support health and wellness. Core categories include probiotics, healthy aging, and urinary health.

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  • Personal Care & Aroma Ingredients

    Personal Care & Aroma Ingredients offers solutions for customers in the personal care, home care and fine fragrance markets. Our extensive portfolio includes aroma ingredients, vitamins and natural bio-actives, as well as UV filters, peptides and polymers. Our solutions support the health and beauty needs of an aging population with various skin and hair types around the world, and address increasing concerns around global public health issues such as air pollution and skin cancer.

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  • DSM Food Specialties

    DSM Food Specialties is a leading global supplier of specialty food enzymes, cultures, probiotics, bio-preservation solutions, hydrocolloids, savory ingredients, and solutions for sugar reduction. Our ingredients and solutions are widely used to create a broad range of food products, from grocery favorites like yogurt, cheese and soups to specialized products including gluten-free bread and beer, meat substitutes, lactose-free milk, and sugar-reduced beverages.

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Materials

DSM's Materials cluster comprises DSM Engineering Plastics, DSM Dyneema and DSM Resins & Functional Materials. DSM is a global player in specialty plastics for the electrical components and electronics, automotive, flexible food packaging and consumer goods industries. Our portfolio also includes Dyneema®, the world's strongest fiber™, for protective solutions and commercial marine applications, as well as resins for use in paints, industrial applications and optical fiber coatings, Niaga® technology for circular design, and advanced materials for additive manufacturing/3D printing applications.

Key figures

In 2018, Materials reported 5% organic sales growth, driven by an increase of 2% in volumes and 3% in prices, mainly reflecting commercial pricing initiatives aimed at offsetting higher input costs.

The Adjusted EBITDA was up 5%, driven by good volume growth and our continuing shift toward a specialty portfolio, and despite a negative foreign exchange effect. This 'silent transformation' was also reflected in the 2018 Adjusted EBITDA margin of 17.6%, versus 17.3% in 2017.

Read more about Materials in 2018

Organization

  • DSM Engineering Plastics

    DSM Engineering Plastics addresses the key market trends in automotive and electronics. In addition to serving the automotive and electronics sectors, we provide solutions to specialized industries that address a range of evolving consumer and societal needs. Examples of application areas are water management, power distribution, outdoor power equipment, and multilayer flexible food packaging.

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  • DSM Dyneema

    Our Dyneema® business is driven by our customers' and end-users' need for lightweight, sustainable solutions that offer improved safety and ergonomics as well as durability. Dyneema® products typically replace traditional materials such as steel and aramid.

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  • DSM Resins & Functional Materials

    We are a global leader in the development and production of waterborne, UV and powder coating resins. These products offer clear sustainability advantages over solvent-borne resins traditionally used in paints and coatings. In functional materials, we are the global leader in fiber-optic coatings. In additive manufacturing (3D printing), we offer highly efficient and effective prototyping technologies which help the industry accelerate the pace at which new products are designed and brought to market.

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Innovation Center

The DSM Innovation Center has two functions. The first is to help develop new business, focusing on areas outside the current scope of the company's business groups. The Innovation Center identifies and invests in new and innovative growth options, initially through the Business Incubator and then by developing and extracting value through the Emerging Business Areas (EBAs).

The Innovation Center's second function is to accelerate the innovation power and speed of our core businesses. In this role, it supports all DSM's businesses through the Excellence in Innovation Program, DSM Venturing, and the IP & Licensing department. In addition, the Chief Technology Officer, acting through the Science & Technology Department, ensures the quality of the total R&D competence base, including monitoring and ensuring access to early-stage technologies with disruptive potential through the Corporate Research Program.

Key figures

In 2018, sales were up 2%, with 5% organic sales growth largely offset by a weaker US dollar. DSM Biomedical volumes were up, driven by strong sales in the drug delivery segment in the second half of the year. DSM Advanced Solar reported slightly lower volumes resulting from a slowdown in demand for solar panels following a policy change by the Chinese government to reduce the number of subsidized solar parks to be installed. DSM Advanced Solar introduced a new generation of solar backsheets which is being well received by the market. DSM Bio-based Products & Services made good progress in 2018, improving the robustness of the production technology for second-generation bio-ethanol and introducing a new generation of enzymes for first-generation bio-ethanol.

The Adjusted EBITDA was relatively stable compared with 2017. The Adjusted EBIT in 2017 included an impairment loss on the related assets.

Review of Business - Innovation Center

Emerging Business Areas

  • DSM Biomedical

    DSM Biomedical is a trusted partner to the global medical device industry, enhancing the quality and delivery of healthcare, and shaping the future of biomaterials and regenerative medical devices. Every second, a patient somewhere in the world receives a medical device containing a biomedical solution from DSM.

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  • DSM Bio-based Products & Services

    DSM Bio-based Products & Services 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. In particular, we have developed patented bioconversion technologies (yeast and enzymes) for various feedstocks and processes (including starch-based and cellulosic) in the biofuels industry.

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  • DSM Advanced Solar

    Solar photovoltaic (PV) capacity continues to grow more rapidly than any other fossil or renewable power source. DSM Advanced Solar aims 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. Increased efficiency reduces the cost of energy delivered.

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Partnerships

As part of our strategic transformation and move away from more commoditized and cyclical areas, we established the joint ventures of DSM Sinochem Pharmaceuticals in 2011, active in anti-infectives, and ChemicaInvest in 2015, active in polymer intermediates and composite resins.

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Corporate Activities

Any consolidated activities that are outside the three reporting clusters are reported as Corporate Activities. These comprise operating and service activities, as well as a number of costs that cannot be allocated to the clusters. While this segment reports net sales to third parties from its service units, it normally has a negative operating result.

More about Corporate Activities