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DSM Claims Increased Sales of Food Components Despite Macroeconomic Challenges

Food and Beverages | Thursday, November 03, 2022

With energy costs weighing down European productivity, DSM has lowered its full-year 2022 outlook.

FREMONT, CA: Food & Beverage, a division of the Dutch nutrition powerhouse DSM (DSM: AMS), saw growth with volumes up three per cent and high pricing up 11 per cent; dairy, baking, beverages, and hydrocolloids all performed very well. In the first nine months of 2022, the company's companies had a respectable performance, with sales up 19 per cent and organic sales growth up ten per cent.

DSM specifically notes that the division experienced 12 per cent organic sales growth, compared to ten per cent for Health, Nutrition & Care and eight per cent for Animal Nutrition & Health in terms of value. The third quarter saw strong organic growth across all businesses. Although with a lag, companies continue to combat rising energy and raw material prices, which escalated particularly in Europe. Geraldine Matchett, co-CEO, notes that despite a difficult macroeconomic situation, market demand held steady throughout all three sectors. The co-CEO of DSM, Dimitri de Vreeze, expresses optimism about the company's mid-term financial goals.

Good progress has been made toward concluding the divestiture of DSM Engineering Materials to Advent International and LANXESS and the upcoming combination with Firmenich. The foundation of DSM-Firmenich, a purpose-led creation and innovation partner in nutrition, beauty, and well-being, will result from these important initiatives. The Dutch nutrition giant anticipates a rise in low-single digits in adjusted EBITDA for its corporate, health, nutrition, and bioscience sectors.

In a setting of rising inflation, Q3 saw good organic sales growth and consistent, strong end-use demand. Health, Nutrition & Care, on the other hand, produced significant increases with price up eight per cent and robust sales volumes up three per cent to outstanding results within its Early Life Nutrition business.

Volumes for Animal Nutrition & Health were consistent with a strong preceding year that saw 14 per cent volume growth. Pricing rose by six per cent in Q3 compared to 11 per cent in H1, which resulted from lower pass-through expenses and vitamin pricing. Science & Nutrition & Health With an eight per cent contribution from acquisitions and foreign exchange effects, adjusted EBITDA increased by three per cent. These businesses' Adjusted EBITDA margin decreased by 150 basis points due to price increases and foreign exchange effects, from 20.5 per cent in the past year to 17.5 per cent in the current year.

Innovation Pipeline

DSM is involved in the first portfolio of all matured fermented milk products, which would assist the change of leading cultures for fermented milk products. DSM recently unveiled its first portfolio of all-in-one cultures for fermented milk products, continuing its distinguished performance in the innovation rollouts. These are created on a brand-new platform with AI. The company claims only the beginning of applying AI to solve the toughest difficulties in the F&B market.

The cheese product line at Royal DSM has been widened to include the expanding plant-based market. FoodIngredientsFirst conducted exclusive interviews with corporate executives about industry changes. DSM purchased the Brazilian animal nutrition technology business Prodap. Recently, the demand for efficiency, traceability, and enhanced animal welfare has led to optimistic expansion in the global precision farming industry.

To reduce food waste in yoghurts while preserving texture and flavour, the supplier expanded its DelvoGuard bioprotective culture line. Four new DelvoGuard bioprotective cultures were introduced with this release, enabling yoghurt producers to organically increase shelf life.

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