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DSM may sell or spin off weaker performing businesses

November 5, 2014
Consumer Packaged Goods
(Reuters) – Dutch food and chemicals group DSM said it might sell or spin off lower-performing units, after hitting profit forecasts in the third quarter despite currency headwinds and low demand in its core nutrition business.
 
The company said on Tuesday it was prepared to sell or spin off into joint ventures its composite resins and polymer intermediates businesses, which includes acrilonitrile and caprolactam units, which it said were too cyclical.
 
Shares in the company were up 3 percent at 1020 GMT against an almost flat Amsterdam AEX index.
 
“All three businesses do not fit with the resilient portfolio that DSM is building. We want to reduce our cyclicality and those three businesses are all less performing or have a cyclical character,” said chief executive Feike Sijbesma in a telephone briefing for journalists.
 
Shares in the company have been volatile recently, partly as a result of speculation that peers such as Germany’s Evonik might make a bid for the company. Evonik said it was in no hurry to make acquisitions.
 
Sijbesma declined to comment on the rumours and said DSM was not contemplating any major acquisitions itself, and was focusing on improving operational performance.
 
DSM did not give any details as to when any sales or spin-offs might take place, but said the value of the business units under consideration was in the range of 1.5-2 billion euros.
 
DSM said it expected to meet analysts’ results expectations for the full year, but warned of volatile currencies, increasing macro-economic uncertainty and low consumer confidence. It said the stronger Swiss franc had had a particular impact on profitability at its key nutrition business.
 
The company posted third-quarter earnings before interest, tax, depreciation and amortisation (EBITDA) of 315 million euros ($394 million), down 8 percent on year, on revenues that were down 1 percent at 2.3 billion euros.
 
(1 US dollar = 0.7989 euro) (Reporting by Thomas Escritt; Editing by Anupama Dwivedi and Mark Potter)

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