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    DSM   NL0000009827

ROYAL DSM N.V.

(DSM)
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Royal DSM N : Dutch DSM to exit materials to focus on food, health and climate

09/14/2021 | 01:36am EDT

* DSM to look for strategic buyer for materials unit

* To focus on sustainable food and health products

* Analysts predict 4.8 bln euro selling price

* DSM shares up 3%

AMSTERDAM, Sept 14 (Reuters) - Dutch specialty chemicals maker DSM plans to sell its materials division, which some analysts suggested could sell for around $5.7 billion, as its focuses purely on producing sustainable food and health products.

Based in the southern Dutch town of Heerlen, DSM's products range from vitamins, baby formula and animal food to specialized materials such as plastics which are used in construction, clothes and automobiles.

Although a spin-off of its materials division had been anticipated by analysts for years, Tuesday's confirmation of the move lifted DSM shares 3% in Amsterdam, making them the strongest gainer in the blue chip AEX-index.

"DSM is on its way to (finally) become a focused health, nutrition and bioscience group", KBC Securities analysts wrote.

KBC predicted a 4.8 billion euros ($5.7 billion) selling price for the materials unit, after the 1.6 billion euro sale last year of DSM's resins and functional materials businesses to Germany's Covestro.

That sale cut revenues of the remaining materials unit, which makes engineering and protective materials, to just under 1 billion euros in the first half of 2021, with an adjusted EBITDA of 232 million euros.

DSM reported total sales of 4.5 billion euros over the first six months of the year, as core earnings hit 925 million euros.

CLIMATE CHANGE

DSM said it would now focus on products which help the fight against climate change and improve nutritional health.

"Climate change is already creating huge challenges for food systems worldwide, while at the same time food production remains one of the largest contributors of greenhouse gases", co-CEOs Geraldine Matchett and Dimitri de Vreeze said.

"We have the opportunity, capability, and therefore responsibility to apply our resources and expertise where they can have the greatest impact."

De Vreeze said DSM would look for a strategic buyer for the materials unit, which will be managed as a stand alone company in anticipation of a sale.

DSM has its roots in coal mining. After the last Dutch mines closed in the early 1970s it turned to trading in bulk chemicals for high-tech plastics and food products. ($1 = 0.8457 euros) (Reporting by Bart Meijer; Editing by Clarence Fernandez, Sherry Jacob-Phillips and Alexander Smith)


© Reuters 2021
Stocks mentioned in the article
ChangeLast1st jan.
COVESTRO AG -1.28% 55.42 Delayed Quote.11.21%
ROYAL DSM N.V. -0.08% 182.1 Real-time Quote.29.44%
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Analyst Recommendations on ROYAL DSM N.V.
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Financials
Sales 2021 8 967 M 10 436 M 10 436 M
Net income 2021 1 353 M 1 575 M 1 575 M
Net Debt 2021 1 108 M 1 290 M 1 290 M
P/E ratio 2021 20,8x
Yield 2021 1,40%
Capitalization 31 080 M 36 165 M 36 171 M
EV / Sales 2021 3,59x
EV / Sales 2022 3,38x
Nbr of Employees 21 173
Free-Float 91,1%
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Mean consensus OUTPERFORM
Number of Analysts 25
Last Close Price 182,25 €
Average target price 182,51 €
Spread / Average Target 0,14%
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Managers and Directors
Dimitri de Vreeze Co-Chief Executive Officer & COO
Géraldine Matchett Co-Chief Executive Officer & CFO
Thomas Leysen Chairman-Supervisory Board
Eileen A. Kennedy Member-Supervisory Board
Pradeep Pant Member-Supervisory Board
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