DSM Reports Record for 2008     

DSM, the global life sciences and materials sciences company, announced the net sales of Euro 9.297 billion for 2008, up 6% from a year earlier, and the operating profit of Euro 903 million, up 10% year-on-year.
   Full year sales in China rose about 20%, to US$1 151 million. In Q4 2008 sales in China amounted to US$265 million, representing an increase of 2% relative to the comparable period of last year.
   In Q4 the crisis in the financial markets spread to the real economy, DSM reacted swiftly when the first signs of the economic downturn became visible. The first action was to prioritize cash over short-term profitability via inventory reduction through plant shutdowns, reduced purchasing spend, focused credit control and the postponement of some projects. This prioritization of cash has been very successful, as evidenced by the fact that cash flow from operating activities in Q4 alone amounted to Euro 392 million. In combination with difficult, but successful, actions to refinance short term debt, DSM's cash position at the end of 2008 amounted to Euro 601 million.
   DSM's acceleration of the strategic program Vision 2010 - Building on Strengths, announced in September 2007, focuses on delivering faster growth, higher margins and improved earnings quality from the company's portfolio. The strategy will see the transformation of DSM into a Life Sciences and Materials Sciences company capable of sustainable growth fueled by important societal trends.
   As a result of the accelerated shift, DSM announced to carve out and dispose of a number of businesses which do not fit in with the accelerated strategy. The disposal process for Agro and Melamine, Elastomers and Urea Licensing is underway in the form of a controlled auction process. DSM has slowed down the process in view of the current financial and economic environment but still aims to complete the disposals within the timeframe of Vision 2010.
   DSM announced a number of structural cost-saving actions to address the effects of the economic downturn in December 2008. DSM has now prepared plans for most of these actions and confirms that they are expected to result in total savings of up to Euro 100 million per year, to be fully achieved by 2010.
   The actions are expected to result in a reduction of DSM's workforce by about 5% or 1000 positions, mainly at DSM Engineering Plastics, DSM Resins, DSM Fibre Intermediates, DSM Pharmaceutical Products, some businesses within Base Chemicals and Materials and in corporate overheads. Around 25% of the planned job reductions will be in the Netherlands; about 75% is spread around the world including the United States and China.