Royal DSM sees 10% local sales growth in Q2

Feike Sijbesma, chairman of Royal DSM NV. [Photo/VCG]

Royal DSM NV, the world's biggest maker of vitamins, said it expects more than 10 percent revenue growth in China in the second quarter of this year compared to the same period last year.

The new prediction comes as it continues a major expansion phase amid the country's fast industrial and consumption upgrading boom, its chairman said on Thursday.

DSM Chairman Feike Sijbesma did not put a figure to the Q2 sales, but its full year earnings report showed that the company's China business accounted for 12 percent of total sales revenue in 2016, reaching over 7.6 billion yuan ($1.12 billion).

The company's sales revenue in China grew by 18 percent in the first quarter of this year.

Sijbesma told China Daily in an interview, while attending the Summer Davos forum in Dalian, that his group will continue to seek investment opportunities in China this year.

It launched a new Vitamin B factory in Shanghai last year, which produces for human nutrition and animal nutrition, and it also acquired a Suzhou-based high-performance solar photovoltaic backsheet manufacturer in February.

Sijbesma said China's national development strategy now emphasized quality economic growth as well as green, low-carbon and sustainable development and DSM was looking to further expand its presence in the country's solar power, next-generation vehicle materials and energy efficiency projects.

The company has 21 factories in China and employs over 4,700 workers. DSM's China regional headquarters and the China science and technology center are located in Shanghai.

Sijbesma said rising incomes and the accelerating pace of urbanization in China are also driving demand for more diverse and convenient diets. Additionally, higher incomes have stimulated the consumption of meat proteins.

He said DSM still sees upside in the daily caloric intake of consumers in China, especially proteins.

To feed a population of more than 1.3 billion, more agricultural products are now produced and sold in China than anywhere else, and this has boosted overall food consumption in China during the past decade.

"During the process of agricultural modernization, China's transformation can be summarized as a combination of growth and demand that is linked to income and urbanization," Sijbesma said.

"Those two elements came together to create the sheer size of the market."

Sijbesma said the Belt and Road Initiative is a creative conception, committed to creating a common development of many countries and regions related to the Silk Road Economic Belt and the 21st Century Maritime Silk Road.

DSM has already shipped its food, beverage and dietary supplement products from its plants in China to markets involved in the initiative, including economies in Europe, the Middle East and Southeast Asia, to further enrich its global sales network.

Eager to further diversify its business, the Heerlen-headquartered group in recent years has also expanded its operations into the field of personal care, to produce skin care, sun care and shampoo.

Ding Lixin, a researcher at the Chinese Academy of Agricultural Sciences in Beijing, said that for new growth drivers for China to explore home and global markets, an obvious path to take was modernization of the livestock and the food supply chain, a big area with a lot of room for investments.

"The demand for juices, soft drinks, yogurt and milk will provide a number of opportunities for the food and ingredients business," Ding said.

"The sector has been showing excellent potential in both domestic and overseas markets."