Dutch chemicals maker DSM reports profit down 92 percent in 1Q as demand tanks

Chemicals maker DSM profit falls 92 percent in 1Q

AMSTERDAM — Chemicals maker DSM NV reported a 92 percent decline in net profit for the first quarter on Tuesday, as demand for its industrial products evaporated amid the global economic downturn, although its nutrition business proved more recession-resistant.

Net profit was euro13 million, down from euro162 million in the first quarter of 2008, which were boom times for commodities. Sales declined by 22 percent to euro1.84 billion.

“Although no improvement in demand in end markets seems to be imminent, we are not at this point in time seeing a further deterioration either,” said Chief Executive Feike Sijbesma in a statement. “Nevertheless there will be tough times ahead.”

DSM makes plastics, resins and fibers that are used in the car, electrical and electronics industries, all of which were hit hard by the downturn.

An exception was the company’s nutritional arm, its largest single group of operations. It is a major supplier to feed companies, makers of vitamins and supplements. It supplies flavoring to food makers and fragrances to personal care product makers.

Operating profit at that arm increased to euro141 million from euro79 million, as margins expanded.

DSM said it couldn’t offer any profit outlook for 2009. The company’s net debt fell by euro40 million from year end levels to euro1.74 billion.

Petercam Bank, which has a “buy” rating on shares, said the results were “strong.”

“We do not expect any major impact from the Mexican flu on pig meat consumption — indeed, DSM’s animal feed products are more geared toward poultry than to swine”,” analyst Jan Van den Bossche said in a note on the earnings.

While the company’s nutrition arm “is not immune to the economic crisis…we feel it offers a very strong resilience” in comparison with other industrial chemicals makers.

The company’s stock rose 3.3 percent to euro22.42 in Amsterdam.