DSM earnings beat expectations as strong demand offsets inflation

AMSTERDAM (Reuters) – Dutch specialty chemicals maker DSM on Tuesday beat analysts’ expectations with a 10% jump in quarterly core profit to 487 million euros ($511 million), as demand for its food ingredients and materials stayed strong despite elevated prices.

Revenues also came in higher than expected at 2.59 billion euros for the first quarter, rising 18% from a year earlier.

“DSM had a good start to the year with robust demand across our businesses and effective pricing measures to counteract inflation throughout the value chain,” co-CEOs Geraldine Matchett and Dimitri de Vreeze said in a statement.

Analysts in a company-compiled poll on average had predicted adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) would rise to 466 million euros in the first quarter, on sales of 2.47 billion euros.

DSM in September last year said it was looking to sell its materials division to focus purely on producing sustainable food and health products, ranging from food supplements and baby formula to animal feed.

In a first move, last month it said it had agreed to sell its protective materials business to Avient Corp for $1.48 billion.

Comparable sales at its nutrition and health division increased 9% in the first quarter, as high inflation spurred demand for its feed enzymes that improve the efficiency of feed conversion to proteins in animals.

Sales at the materials division, which now consists only of engineering goods such as plastics used in electrical components, cars and food packaging, were up 25%.

The company maintained its outlook for a “mid-single digit” growth of adjusted EBITDA in 2022, led by the nutritional and health division, as earnings from materials are seen stabilising following a strong performance last year.

($1 = 0.9524 euros)

(Reporting by Bart Meijer; Editing by Jacqueline Wong and Subhranshu Sahu)