DSM adjusts organisational model

28-Aug-2015

DSM will also strengthen its management structure by establishing an executive committee, enabling faster strategic alignment and operational execution

Royal DSM, the global life sciences and materials sciences company, has announced adjustments to its organisational and operating model.

Following recent portfolio changes, these adjustments aim to create a more agile, focused and cost efficient organisation, with a stronger business and market focus, and globally leveraged support functions. These changes will result in structural savings of €125-150 million to be fully achieved by the end of 2017.

DSM will also strengthen its management structure by establishing an executive committee, enabling faster strategic alignment and operational execution. In addition to the changes above, DSM is developing a business (growth) improvement and efficiency programme for the nutrition business that will be communicated at the Capital Markets Day on 4 November 2015.

Feike Sijbesma, CEO/Chairman of the Managing Board, Royal DSM, commented: 'In an increasingly global and fast-paced business environment, we need to adapt our organisational and operating model to service our customers even better. With the adjustments we've announced, we become more agile, focused and cost-efficient. Businesses fully focus on growth, while at the same time we become more competitive by leveraging our global support functions.'

Global support functions

The support functions will be globally leveraged across DSM to capture scale-benefits and deliver high quality professional support at lower costs, among others via further standardisation of processes, delayering and the elimination of duplications, resulting in a more efficient pooling of resources with clearer accountability for performance.

This will lead to a reduction in size of the support functions, also in view of the transfer into partnerships of the pharma, polymer intermediates and composite resins businesses. This new organisational model will apply to finance, HR, legal, IT, business services, indirect sourcing, communications and corporate departments, as well as the regional centres. In addition, DSM will implement efficiency measures in its major R&D centres globally.

The DSM business groups remain the cornerstones of the company and their focus will be on the primary functions of the company: innovation and R&D, direct sourcing, manufacturing and operations, marketing and sales. The optimisation of the support functions will enable the business groups to increase their business and market focus and operate in today’s business environment with greater agility.

The above initiatives will result in a reduction in headcount of 900-1100 FTEs, of which approximately half will be in the Netherlands and to be fully implemented by the end of 2017.

The structural savings from the reduced headcount and lower spend are estimated to be €125-150 million compared with 2014, to be fully achieved by the end of 2017. One-off restructuring charges, including severance costs, are estimated at €150-175 million before tax.

Other efficiency programmes

More information on the business (growth) improvement and efficiency program for nutrition will follow at the Capital Markets Day on 4 November 2015, at which moment we will also communicate our strategy and goals for the years to come.

Executive committee

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DSM will strengthen its management structure by establishing an executive committee, enabling faster strategic alignment and operational execution by increasing focus on the development of the business, innovation and people. The members of the executive committee will be the managing board members Feike Sijbesma (CEO/Chairman), Geraldine Matchett (CFO), Stephan Tanda (Life Sciences) and Dimitri de Vreeze (Materials Sciences), as well as Chris Goppelsroeder (Nutritional Products), Philip Eykerman (Strategy and M&A), Rob van Leen (R&D and Innovation) and Peter Vrijsen (Human Resources). The statutory responsibilities of the Managing Board remain unchanged.

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