Dutch life science group DSM reported an operating profit of €104 million in the third quarter, up 8 per cent from the same period in 2001. Sales in the life sciences cluster decreased overall, with a lower operating profit and sales in Fine Chemicals, and merely stable income in the Food Specialties division.
Commenting on the results, DSM managing board chairman Peter Elverding said: "In the third quarter, market conditions in the markets that are important to DSM showed little or no improvement. Against this background, I am not dissatisfied with the operating profit of our current business, which, on a comparable basis, was clearly better than that of Q3 2001 and was at the Q2 2002 level.
"To me, this confirms the increased stability of our profit levels that is a result of our strategy," he added.
"I do not foresee a significant improvement in neither the economic climate nor relevant market conditions in the fourth quarter. However, we are maintaining the forecast we made in July that DSM's operating profit on ongoing activities for 2002 as a whole will be substantially better than last year, on a comparable basis," he continued.
Net sales in the third quarter of 2002 amounted to €1.4 billion, similar to the 2001 third quarter, while autonomous volume growth only reached 2 per cent. Sales decreased by 1 per cent due to divestments and by another 4 per cent due to exchange rate developments (in particular for the US dollar), reported DSM.
Sales in the Life Sciences cluster, which makes food ingredients and pharmaceuticals, decreased 3 per cent compared with the 2001 third quarter - again this was attributed to divestments and a lower exchange rate for the US dollar. However, the operatingprofit increased by 5 per cent.
DSM Fine Chemicals posted slightly lower sales and a lower operating profit, which was attributable to the quinine divestment and substantiallylower prices for aspartame. DSM Pharmaceutical Products saw its operating profit improve compared with the third quarter of 2001, mainly as a result of higher sales and lower fixed costs at DSM Pharmaceuticals, Inc in the USA. Theoperating profit of DSM Food Specialties and DSM Bakery Ingredients remained stable.
Performance Materials and Industrial Chemicals sales were also down on the 2001 third quarter.
The profit on ordinary activities after taxation was €87 million, down 14 per cent from the profit for the third quarter of 2001, which still included the results of DSM Petrochemicals and Energie Beheer Nederland, said the company.
The company said that a recovery in DSM's key markets would remain hesitant during the fourth quarter of 2002. "A near-term recovery of the world economy is notyet visible. Nevertheless, DSM expects its fourth-quarter operating profit to be significantly higherthan in the relatively weak fourth quarter of 2001, on a comparable basis."
The company reiterated its July forecast that its operating profit on ongoing activities for 2002 as a whole would be substantially better than last year.