DSM posts profit surge despite materials costs

27th April 2011, Comments 0 comments

Dutch chemical and pharmaceuticals company DSM reported 28.0-percent rise in net profit for the first quarter on Wednesday, despite an increase in raw materials costs and unfavourable exchange rates.

The company's net profit climbed to 166 million euros ($244 million dollars) from 130 million euros 12 months earlier - with a sales increase of five percent to 2.34 billion euros.

"Overall the consensus outlook for 2011 is positive," the company said in a statement.

DSM expected trading conditions in the first quarter to continue for the rest of the year, with strong growth in China and other high growth economies, together with moderate growth in mature economies.

"Unrest in the Middle East did not have an impact on DSM's business, except for higher oil prices, causing energy and raw material prices to increase," it added, saying it had compensated by raising its prices.

An unfavourable exchange rate with a "very strong" Swiss franc had a negative impact of 15-20 million euros within the Dutch company's Nutritional Products cost base.

"Despite headwinds from higher input costs and unfavourable currencies on balance, 2011 is expected to be a strong year for DSM," the company stressed, but it expected exchange rates to remain volatile.

The Dutch group notably manufactures numerous products intended for the food, pharmaceutical, motor, aircraft and electrical industry. DSM employs more than 22,000 people globally.

The incorporation of US-based nutrition specialist group Martek by means of a friendly takeover bid, finished in February, boosted the firm with a further 839 million euros and Martek's integration was "underway", it said.

Earthquake disruption in Japan was expected to have only a limited impact on full-year earnings, the company added.

© 2011 AFP

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