* Q3 EBIT 231 million euros, vs forecast 206 mln euros
* Sales 2.32 billion euros, vs forecast 2.19 bln
* Seeing slowdown in electronics, construction markets
* Reiterates full-year outlook
* Shares down 0.2 percent
(Adds CFO comment, detail, updates shares)
By Aaron Gray-Block
AMSTERDAM, Nov 1 Food and chemicals group Royal
DSM said lower consumer and business confidence was
hitting demand in the electronics and electrical sectors, after
the Dutch company reported quarterly profit that beat estimates.
The chemical industry is particularly exposed during
economic slowdowns because of overhead costs for production
plants as well as the dependence on highly cyclical machinery
makers, car manufacturers and the building sector.
Although DSM has sold off its lower-margin bulk chemicals
businesses to concentrate on less cyclical food ingredients and
high-end plastics, Chief executive Feike Sijbesma said DSM would
not be immune to a deterioration in the economy.
Still, the company , which makes vitamins and food
supplements for humans, fish, poultry and cattle, reiterated
2011 would be a strong year.
Chief financial officer Rolf-Dieter Schwalb said the
slowdown in the electronics and electrics sector had continued
into the fourth quarter and construction markets were expected
to remain weak for the next few years.
"We clearly see a softening in demand, but that is all we can
say at the moment," Schwalb told reporters, declining to comment
on the 2012 outlook. "The economy is not growing as fast as it
was before and we have to be mindful of that."
DSM, the maker of a fibre called Dyneema used in bullet
proof vests and fishing nets, said third-quarter earnings before
interest and tax (EBIT) rose 37 percent to 231 million euros
($322 million), compared with a forecast 206 million.
The group's polymer intermediates unit, which supplies the
textiles and electronics markets, had EBIT of 96 million euros,
beating estimates of 77.8 million, boosted by price hikes and
DSM bought Martek, which makes ingredients for baby food,
for $1.1 billion earlier in 2011, and CFO Schwalb said the
company was still looking to use its war chest of at least 2
billion euros for more acquisitions.
ING analyst Fabian Smeets said although DSM reported good
results, this was mainly because there was no plant maintenance
shutdown in polymer intermediates as there had been in the year
"We would not be surprised to see the stock decline during
the day as the quality of the beat is relatively low, with the
margin in nutrition below expectations," Smeets said.
DSM shares were down 0.2 percent at 37.1450 euros in early
trade, outperforming a 2.7 percent fall in the European
chemicals sector .
DSM'S peers BASF SE (BASFn.DE) and Solvay SA said
last week they were bracing for slowing demand as customers run
To cope with the slowdown in Europe and the United States,
DSM will cut about 200 jobs at its resins unit, which provides
ingredients for paints used in the construction industry, aiming
to achieve 25 to 30 million euros in annual savings in 2013.
On top of a dip in demand, the world's largest vitamins
maker and a supplier of micronutrients to the World Food
Programme, is also getting hit by the strong Swiss franc, which
has led to higher costs at its Basel-based nutrition business.
The nutrition unit's result suffered a 25 million euro
negative impact from currencies, mainly due to the franc, which
will have a 10 to 15 million impact again in the fourth quarter.
($1 = 0.717 Euros)
(Editing by Dan Lalor, David Holmes and Jane Merriman)