UPDATE 2-DSM trims profit forecast on FX, tax and fish oil

Thu Sep 26, 2013 5:26am EDT

Related Topics

* Says 2013 EBITDA may be slightly below 1.35 bln euros

* Targets 2015 EBITDA margin of 14-15 pct, ROCE of 11-12 pct

* To launch buyback program in Q4

* Shares down 6 pct in Amsterdam (Adds analyst, shares, buyback)

By Martinne Geller

LONDON, Sept 26 (Reuters) - Dutch food and chemicals group DSM has cut its 2013 earnings forecast, blaming currency moves, the renewal of a Dutch "crisis tax" and weaker demand for fish oil supplements.

Shares in the group, whose products are used to make a range of goods from food to artificial joints to nylon, fell about 6 percent in early Thursday trading.

DSM said its 2013 earnings before interest, tax, depreciation and amortisation (EBITDA) could come in slightly below 1.35 billion euros ($1.8 billion), compared with its target of 1.4 billion euros.

It also gave new goals for 2015, targeting an EBITDA margin of 14-15 percent and return on capital employed (ROCE) of 11-12 percent, below some analysts' forecasts.

KBC Securities said it expected a 2015 profit margin of 15.1 percent and ROCE of 12.4 percent. It trimmed its rating on DSM shares to "Accumulate" from "Buy", citing a recent run up in the stock that saw it gain 30 percent in the past six months.

Given the recent weakening of several currencies versus the euro, DSM said foreign exchange moves could cut 10 million to 15 million euros from its full-year EBITDA.

The company also blamed a Dutch "crisis tax" paid by employers on staff earning above a certain salary, a fragile recovery in animal protein markets that is pressuring Vitamin E prices, and lower consumer demand for Omega-3 fish oil products following price hikes taken to offset rising ingredient costs.

DSM said the challenging economic environment generally would continue, with little or no growth in Europe, less robust economic activity in Asia and a modest recovery in the United States.

The company's nutrition business makes vitamins and other ingredients used to make everything from food and drinks to animal feed to hair and skin care products. It is also in the pharmaceuticals business and makes resins and polymers used in medical technology.

DSM said its nutrition and performance materials businesses should improve this year, while the troubled polymer intermediates business should come in lower.

The company said a priority for the next two years was "completing strategic actions" for the latter business, where profit has eroded due to declining prices for caprolactam, used to make nylon.

KBC analyst Wim Hoste wondered whether DSM might be ready to fully divest the business instead of just trying to reduce its exposure to the caprolactam merchant market.

DSM executives told reporters its exploration of options was ongoing and that there was nothing to report at this time.

As for acquisitions, DSM said it had no appetite for any big deals at the moment, as it is still digesting recent purchases.

Instead, it plans to buy back 4 million to 5 million shares in a program expected to start in the fourth quarter.

DSM shares were down 3.35 euros, or 5.75 percent, to 54.93 euros at 0850 GMT in Amsterdam.

($1 = 0.7403 euros) (Editing by Keith Weir and Mark Potter)

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