(Bloomberg) -- DSM-Firmenich AG raised its profit outlook for the second time this year as a supply disruption leads to price increases in some vitamins.
The chemicals group expects full-year adjusted earnings before interest, taxes, depreciation and amortization toward €2.1 billion ($2.3 billion), compared to around €2 billion previously.
In August, “a supply disruption in the industry” led to price increases in vitamins A and E, the company said Thursday. The firm expects the higher prices to boost its profit by €80 million in the fourth quarter.
BASF SE said in August it’s interrupting shipments for some vitamins after a fire at its main factory complex damaged manufacturing equipment. The fire at Europe’s biggest chemical site in Ludwigshafen injured at least 15 people.
What Bloomberg Intelligence Says:
“DSM-Firmenich raised guidance for full-year adjusted Ebitda to €2.1 billion, in line with analyst expectations, but that’s unlikely to trigger consensus upgrades as it’s mostly driven by an €80 million windfall in 4Q from supply disruptions that pushed vitamin prices higher. Volume momentum is extending, along with ingredient peers, but the guidance implies that may slow in 4Q.”
— Ignacio Canals Polo, BI consumer-product analyst
Last year, DSM-Firmenich started a restructuring program due to the weakness in the global vitamins market. In February, the company said it’s considering the sale of its animal nutrition and health unit, which had €858 million sales in the third quarter, as it seeks to cut its exposure to the vitamin market.
“The carve-out of animal nutrition & health and divestments of de-prioritized activities, are progressing well,” the DSM-Firmenich said. It cited weak business conditions in China “with the pork industry still under pressure.”
DSM-Firmenich was born last year after chemicals company Royal DSM NV and Swiss ingredients maker Firmenich International SA completed a merger to create a major producer of nutrition, health, and beauty products.
(Updates with details on BASF’s supply disruption in fourth paragraph.)
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