DSM Integrated Annual Report 2020

4 Segment information

DSM’s operating segments are Nutrition, Materials and the Innovation Center. DSM has segmented its operations by business activity from which revenues are earned and expenses incurred. These operating results are regularly reviewed by the entity’s chief operating decision maker (CODM) to make decisions about resources to be allocated to the segment and assess its performance. DSM uses Adjusted EBITDA as the main indicator to evaluate the consolidated performance as well as the performance per segment. Discrete financial information is available for each identified segment. The accounting policies of the operating segments are the same as those described in the Summary of significant accounting policies. Transactions between segments are generally executed at market-based prices. Interest income, interest expense, and income tax expense or income are not allocated to segments as these amounts are not included in the measure of segment profit or loss reviewed by the CODM, or otherwise regularly provided to the CODM.

Nutrition serves the global industries for animal feed, food & beverages, pharmaceuticals, infant nutrition, dietary supplements, and personal care. It does so by the production of pure active ingredients, their incorporation into sophisticated forms, and the provision of tailored premixes and forward solutions.

Materials is a global player in specialty plastics, which are used in components for the electrical and electronics, automotive, flexible food-packaging, and consumer goods industries. Furthermore, Materials is a global player in providing innovative and sustainable ultra-strong, ultra-light Dyneema® fiber and fabrics.

The Innovation Center focuses on innovation and the growth of DSM’s existing core business through adjacent technologies via its Corporate Research Program as well as through the company’s venturing and licensing activities. Additionally, it identifies and invests in new and innovative growth options. The Innovation Center is responsible for developing and extracting value from DSM’s Emerging Business Areas.

Any consolidated activities outside the three reported segments are reported as ‘Corporate Activities’. These mainly comprise operating and service activities as well as several costs that cannot be allocated to the operating segments.

DSM does not have a single external customer that represents 10% or more of total sales.

Geographical information

 

 

Nether­lands

 

Switzer­land

 

Rest of Europe

 

North America

 

Latin America

 

China

 

Rest of Asia

 

Rest of the world

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales by origin

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

In € million

 

1,593

 

2,098

 

766

 

1,370

 

722

 

875

 

470

 

104

 

7,998

In %

 

20

 

26

 

10

 

17

 

9

 

11

 

6

 

1

 

100

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales by destination

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

In € million

 

321

 

137

 

2,108

 

1,804

 

1,095

 

949

 

1,310

 

274

 

7,998

In %

 

4

 

2

 

26

 

23

 

14

 

12

 

16

 

3

 

100

Workforce at year-end (headcount)1

 

3,960

 

2,275

 

3,433

 

3,346

 

2,134

 

4,960

 

1,774

 

292

 

22,174

Average workforce (FTE)1

 

3,785

 

2,192

 

3,346

 

3,336

 

2,232

 

4,515

 

1,691

 

293

 

21,390

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Intangible assets and Property, plant and equipment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital expenditure

 

131

 

117

 

95

 

116

 

22

 

74

 

6

 

3

 

564

Carrying amount

 

2,052

 

1,437

 

678

 

1,946

 

380

 

822

 

208

 

32

 

7,555

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

 

4,111

 

2,157

 

1,108

 

2,874

 

944

 

1,406

 

732

 

111

 

13,443

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales by origin

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

In € million

 

1,515

 

2,260

 

1,042

 

1,380

 

608

 

885

 

336

 

80

 

8,106

In %

 

19

 

28

 

13

 

17

 

7

 

11

 

4

 

1

 

100

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales by destination

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

In € million

 

407

 

214

 

2,125

 

1,791

 

1,045

 

991

 

1,268

 

265

 

8,106

In %

 

5

 

3

 

26

 

22

 

13

 

12

 

16

 

3

 

100

Workforce at year-end (headcount)1

 

3,858

 

2,129

 

4,384

 

3,185

 

2,243

 

5,025

 

1,996

 

307

 

23,127

Average workforce (FTE)1

 

3,708

 

2,135

 

3,625

 

3,195

 

2,108

 

4,950

 

1,803

 

291

 

21,815

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Intangible assets and Property, plant and equipment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital expenditure

 

110

 

159

 

114

 

76

 

15

 

93

 

4

 

2

 

573

Carrying amount

 

1,665

 

1,452

 

2,060

 

1,742

 

282

 

810

 

188

 

30

 

8,229

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets (including assets held for sale)

 

4,135

 

2,125

 

2,643

 

2,552

 

776

 

1,382

 

639

 

112

 

14,364

1

Refers to total group, including discontinued operations

Business segments

2020

 

Nutrition

 

Materials

 

Innovation Center

 

Corporate Activities

 

Elimi­nations

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial performance

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

6,365

 

1,518

 

184

 

39

 

-

 

8,106

Supplies to other clusters

 

53

 

8

 

21

 

 

 

(82)

 

-

Supplies

 

6,418

 

1,526

 

205

 

39

 

(82)

 

8,106

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA1

 

1,338

 

272

 

21

 

(97)

 

-

 

1,534

EBITDA

 

1,211

 

249

 

6

 

(98)

 

-

 

1,368

Adjusted operating profit1

 

919

 

168

 

(17)

 

(141)

 

-

 

929

Operating profit

 

792

 

145

 

(133)

 

(142)

 

-

 

662

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

407

 

99

 

38

 

43

 

-

 

587

Impairments

 

13

 

4

 

101

 

1

 

-

 

119

- of which included in APM adjustments

 

-

 

-

 

101

 

-

 

-

 

101

Additions to provisions

 

70

 

19

 

8

 

7

 

-

 

104

Result related to associates and joint ventures

 

(1)

 

-

 

(84)

 

53

 

-

 

(32)

R&D costs2

 

169

 

60

 

145

 

24

 

-

 

398

Employee benefit costs

 

1,102

 

226

 

83

 

273

 

-

 

1,684

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial position

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

 

9,495

 

1,035

 

599

 

2,139

 

1,0963

 

14,364

Total liabilities

 

2,469

 

379

 

37

 

3,738

 

2543

 

6,877

Capital employed at year-end

 

8,308

 

953

 

436

 

-

 

-

 

9,697

Capital expenditure

 

441

 

63

 

35

 

34

 

-

 

573

Share in equity of associates and joint ventures

 

30

 

3

 

2

 

58

 

-

 

93

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA margin (in %)

 

21.0

 

17.9

 

 

 

 

 

 

 

18.9

 

 

 

 

 

 

 

 

 

 

 

 

 

Workforce

 

 

 

 

 

 

 

 

 

 

 

 

Average in fte

 

14,535

 

2,852

 

613

 

2,012

 

1,8033

 

21,815

Year-end (headcount)

 

15,838

 

2,857

 

579

 

2,039

 

1,8143

 

23,127

1

See Note 2 Alternative performance measures for the reconciliation to Adjusted EBITDA of €1,534 million (2019: €1,551 million) and other IFRS performance measures.

2

R&D costs relate to the functional area Research & Development and exclude R&D costs included in the functional areas Cost of sales and Marketing & Sales as well as R&D expenditure capitalized.

3

The figures presented under ‘eliminations’ relate to the assets and liabilities reclassified as held for sale and the workforce for the discontinued operations.

Business segments

2019

 

Nutrition

 

Materials

 

Innovation Center

 

Corporate Activities

 

Elimi­nations

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial performance

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

6,028

 

1,744

 

184

 

42

 

-

 

7,998

Supplies to other clusters

 

50

 

4

 

19

 

 

 

(73)

 

-

Supplies

 

6,078

 

1,748

 

203

 

42

 

(73)

 

7,998

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

1,250

 

372

 

26

 

(97)

 

-

 

1,551

EBITDA

 

1,224

 

360

 

22

 

(149)

 

-

 

1,457

Adjusted operating profit

 

881

 

270

 

(12)

 

(150)

 

-

 

989

Operating profit

 

832

 

258

 

(16)

 

(202)

 

-

 

872

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

350

 

100

 

35

 

41

 

-

 

526

Impairments

 

42

 

2

 

3

 

12

 

-

 

59

- of which included in APM adjustments

 

23

 

-

 

-

 

-

 

-

 

23

Additions to provisions

 

8

 

11

 

2

 

50

 

-

 

71

Results related to associates and joint ventures

 

7

 

-

 

(2)

 

49

 

-

 

54

R&D costs1

 

148

 

61

 

54

 

32

 

-

 

295

Employee benefit costs

 

1,062

 

221

 

88

 

286

 

-

 

1,657

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial position

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

 

8,324

 

2,238

 

776

 

2,105

 

-

 

13,443

Total liabilities

 

2,119

 

628

 

57

 

2,804

 

-

 

5,608

Capital employed at year-end

 

6,731

 

1,060

 

599

 

38

 

-

 

8,428

Capital expenditure

 

420

 

84

 

30

 

30

 

-

 

564

Share in equity of associates and joint ventures

 

29

 

3

 

74

 

49

 

-

 

155

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA margin (in %)

 

20.7

 

21.3

 

 

 

 

 

 

 

19.4

 

 

 

 

 

 

 

 

 

 

 

 

 

Workforce

 

 

 

 

 

 

 

 

 

 

 

 

Average in fte

 

13,874

 

2,988

 

663

 

2,042

 

1,8232

 

21,390

Year-end (headcount)

 

14,599

 

2,951

 

683

 

2,087

 

1,8542

 

22,174

1

R&D costs relate to the functional area Research & Development and exclude R&D costs included in the functional areas Cost of sales and Marketing & Sales as well as R&D expenditure capitalized.

2

The figures presented under ‘eliminations’ relate to the workforce for the discontinued operations.

Earnings before interest, tax, depreciation and amortization (EBITDA)
EBITDA is the sum of operating profit plus depreciation and amortization. Adjusted EBITDA is the EBITDA adjusted for material items of profit or loss coming from acquisitions/divestments, restructuring and other circumstances that management deem it necessary to adjust in order to provide clear reporting on the development of the business.