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DSM Posts Record Profit for 2008, Despite Q4 Downturn

DSM, one of the world’s largest suppliers to the nutrition industry, announced full-year 2008 profits were up 10%, despite fourth quarter operating profits declining 35%. DSM’s nutrition division performed well on the year, posting profit growth of 62%. The company’s Material Sciences division, which produces materials like plastics and resins, saw sharp declines in demand, which affected sales negatively and contributed to the fourth quarter decline.

The company posted total net sales of 9.3 billion Euro, an increase of 6% over 2007. The nutrition division accounted for 2.7 billion Euro in sales, on growth of 18% over 2007. Organic products in the nutrition division grew an impressive 21% for the year. However, organic sales were down 10% in the fourth quarter.

The company cites its nutrition division as the main reason it was still able to post record profits for 2008. The company points to innovation and differentiation in combination with “structural changes in the vitamin industry,” which have led to significantly higher profitability. The release isn’t clear as to what those changes are, but if I were venturing a guess, I would say the company is either talking about the acquisition of Leiner by NBTY, which altered the dietary supplement business landscape; or it is referring to the implementation of Good Manufacturing Practices (GMPs), which may have eliminated some of its fringe competitors. I'm a bit perplexed as to what structural changes in the vitamin industry would have directly led to higher profitability. If you have any ideas as to what those may be, please feel free to share those in the comments section below. In any case, it’s clear DSM’s Nutrition division is driving growth within the company.

DSM’s U.S. nutrition industry raw material and ingredient supply sales totaled $256 million in 2007, according to NBJ estimates. DSM refused to provide an outlook for 2009 citing economic conditions.

Related Links-

DSM Plans to Cut 5% of Workforce

Nutrition Division Helps Float DSM’s Boat During Third Quarter

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