DSM Margins Improve Despite Price Pressure

DSM Margins Improve Despite Price Pressure

HEERLEN, NetherlandsDSM Nutritional Products (Amsterdam StockExchange:DSMN) reported fiscal 2005 net sales growth of 5 percent, despitecontinued price pressure on vitamins and carotenoids. Nutritional products accounted for 27 percent of DSMs FY2005 research anddevelopment costs, reflecting its increased support of new products, includingbranded tea extract and genistein ingredients.

One of the last major vitamin C suppliers, DSM decided to combat pricingpressures from China by folding its production in New Jersey in favor of morefocused production in Scotland, as well as a proposed partnership with NorthChina Pharmaceutical Group, which is awaiting expected regulatory approval fromthe Chinese government. While the company (www.nutraaccess.com) faces similarchallenges with respect to vitamin E and carotenoids, its vitamin D market shareremains solid and it added a new German production plant.

Looking ahead, DSM management reported its nutritional products will becombined with its food specialties division as one nutrition business cluster.Further, the company sees personalized nutrition, which addresses health risksvia customized nutritional products, as an ongoing growth area. DSM currentlyparticipates in a U.S. start-up project that develops and commercializes genetictests for personalized health and wellness advice.