DSM animal nutrition business benefitted from COVID-19 demand boost

07-May-2020 - Last updated on 07-May-2020 at 08:11 GMT

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DSM says its nutrition business saw a slight increase, about 1%, on its first quarter 2020 sales from COVID-19.

Its animal nutrition segment saw continued good business conditions across all regions and species throughout Q1; that segment saw a 12% increase in organic growth in the period, powered by volumes, said DSM. “It benefitted from some additional COVID-19 driven demand.”

In relation to the COVID-19 outbreak, the company outlined how feed producers increased their purchases of nutritional ingredients, to bolster their stocks, in anticipation of logistics disruptions.

In terms of disease challenges, the effects of African Swine Fever (ASF) continued to recede in Q1, reported the company, with only a few cases documented in China and Southeast Asia since the end of 2019.

The rebuilding of the swine population in those regions will be gradual, with such restoration occurring in the large size professional farming operations, noted DSM.

‘Good underlying business conditions’ in nutrition

Commenting on the Q1 financial results, Geraldine Matchett and Dimitri de Vreeze, Co-CEOs, said:

“We saw good underlying business conditions in nutrition, with momentum increasing through the quarter, and with an overall small increase in demand from COVID-19. At the same time, trading conditions in materials deteriorated rapidly at the end of Q1 as customers’ operations were impacted by COVID-19 restrictions, especially in Europe and North America.

“While these are uncertain times, we are taking all necessary actions to address recent challenges in end markets. We remain well-positioned to manage near-term developments with a growing nutrition business and a strong financial position. We stay focused on our long-term strategy to deliver above-market growth, pursuing our innovation programs, and growth initiatives, supported by the execution of our self-help actions.”

Outlook

Given the uncertainty generated by the coronavirus pandemic, DSM said it expects its nutrition business to deliver at least a mid-single digit increase in adjusted EBITDA for 2020 compared to the year prior.