Ladies and gentlemen, thank you for standing by. Welcome to DSM's conference call on the first nine months results of 2019. Throughout today's presentation, all participants will be in a listen-only mode. After the presentation, there will be an opportunity to ask questions. To register for questions, you may dial star one at any time. Now I would like to turn the call over to Mr. Huizing. Please go ahead.
Thank you, operator. Ladies and gentlemen, good morning also from my end, and welcome to this conference call on DSM's third quarter 2019 results, which we published earlier this morning. I'm sitting here with Mrs. Geraldine Matchett, Chief Financial Officer and member of the DSM managing board. Geraldine will give a short introduction, after which she will answer any questions you may have. As always, I need to caution you that today's conference call may contain forward-looking statements. In that regard, I would like to direct you to the disclaimers about forward-looking statements as published in the press release. With that out of the way, please, Geraldine, go ahead.
Thank you, Dave. Good morning, ladies and gentlemen. It's a pleasure to welcome you to this call on DSM's first nine months results for 2019. I will provide you with a few comments on the key slides of our investor presentation that we published this morning together with our press release, and then we will open the line for the Q&A session. Before starting, I have to point out that our nine-month 2019 results are reported against a set of prior figures that included a significant additional benefit from an exceptional supply disruption in some of the key vitamins that we clearly communicated all along last year as the temporary vitamin effect. In order to provide as much transparency as possible, we continue to show this separately, calculating growth against 2018 total results, including this special event, as well as the comparison excluding this event.
Of course, from a perspective of monitoring the progress of our business, the comparison to last year's underlying business is the only meaningful one. For this reason, in the remainder of my presentation, I will compare the 2019 results versus the underlying business as estimated and reported in 2018. One more comment on comparisons. Please note that we adopted the new IFRS 16 standard on lease accounting as per its effective date as the 1st of January 2019, whilst the 2018 figures are not restated. You can find the full information on this on page 19 of the press release. This said, let's start with the year-to-date financial highlights on slide two. We are pleased to report a good performance for the first nine months of 2019.
Our group sales are up 3%, with nutrition delivering a 4% organic growth, fully offsetting the -7% organic growth in material sales, where volumes were down 5% on the back of continued weak market conditions in some end markets. Adjusted EBITDA is up 11%, which includes 3% positive effect from IFRS 16, well in line with our strategic target. In the period, nutrition continued to perform strongly, whilst materials showed its relative resilience, with a flat adjusted EBITDA, which includes a 1% IFRS 16 benefit. During these nine months, we continued to move forward with our large innovation projects such as Veramaris, Avansya, and Clean Cow, reaching important milestones. As for our cash generation, the net adjusted net operating free cash flow is up 4% from last year at EUR 550 million, we are on track to meet our strategic targets of a 10% increase for the full year.
Finally, we are pleased to reiterate our outlook 2019 for the full year. Now, for the rest of this presentation, I will focus on Q3. Let's move to page three with the Q3 highlights. We have called Q3 a solid quarter in the press release, when considering the economic backdrop in which we operate, I believe we could have also called it a good quarter. Nutrition delivered once again a strong performance, reporting a 4% organic growth with an adjusted EBITDA up 12%, which includes 3% from IFRS 16. As for our materials businesses, despite ongoing challenging condition in some of the end markets, resulting in volumes being down 3%, they delivered an adjusted EBITDA almost in line with prior. Overall, we are pleased with this performance as it proves the relative resilience of our materials portfolio.
Our innovation center also performed well, continuing its step-up in adjusted EBITDA, as seen already in the first half of this year. All put together, this results in an overall adjusted EBITDA growth for the quarter of 9%, including 3% for IFRS 16. Let's move now to page eight for a few more comments on nutrition. Overall, nutrition delivered, again, a good top-line growth with 7% in Q3, supported by 4% organic growth, with volumes up 3% and prices up 1%. This was achieved through solid animal nutrition sales, while human nutrition showed some softness in food and beverage, but with strong results in personal care and food specialties. As already mentioned, we realized a 12% EBITDA growth in the quarter, including 3% from IFRS 16. The adjusted EBITDA margin remains strong at 20.5%, including 50 basis points from IFRS 16 versus 19.7% in Q3 last year.
Looking now more specifically at animal nutrition, let's go to page nine. Overall business conditions for animal nutrition in Q3 remain good across species and geographies, except for the swine business in Asia, where we saw a bigger negative impact than earlier estimated from the African swine fever. The disease has spread rapidly and to such a scale that the decline in pork production can no longer be offset by other species and regions in the short term. The reduced feed demand for swine in Asia has therefore impacted our growth in the short term. The estimated impact on our animal nutrition volume growth in Q3 is of the order of about 3%.
We believe, however, that the measures taken to bring back pork production to the necessary levels in Asia, as well as the new measures to prevent such significant outbreaks of the disease, will be eventually beneficial for DSM. Let's move now to human nutrition on page 10. Human nutrition reported a 1% organic growth in the quarter, with volumes up 2% and prices down 3%. Softer volumes were driven by ongoing soft demand in food and beverage, while all other segments in early life nutrition and dietary supplements performed well. Our health sales remain particularly strong. The minus 3% price effect was driven by mix and lower prices for our Chinese vitamin C.
As always, please remember that due to our large portfolio of ingredients, changes in top line due to price do not equate a change in our margin, as you have seen with our margins being up in the quarter. For our other nutrition activities, Q3 was also a good quarter for food specialties and personal care. Moving on to our materials business on page 12. For our materials businesses, Q3 was essentially a continuation of what we saw in the first half of the year. Challenging end market conditions for engineering plastics and resins continued, while Dyneema continues to enjoy strong business conditions, especially in personal protection. This resulted in volumes down 3% in the quarter. The adjusted EBITDA margins were slightly up at 18.8%, including 30 basis points from IFRS 16. This results in an adjusted EBITDA down only 2%, or when we include IFRS 16, 4%.
We believe this demonstrates the relative resilience of our materials portfolio in the current adverse market circumstances. Now let's turn to page 16 for a couple of quick comments on the cash flow and working capital. The adjusted net operating free cash flow increased 4% to EUR 550 million. As already mentioned, we are on track to meet our strategic target of a 10% increase for the full year. Total working capital as a percentage of sales was up about 200 basis points to 22.5%, resulting from a combined negative effect of IFRS 16, foreign exchange movements, and our 2019 acquisitions. Inventories, which are over time the key drivers for our desired reduction in working capital, were flat in the quarter when adjusting for the impact of the acquisitions and the FX.
This said, we are continuing our active programs aimed at improving overall our working capital performance over time. Now let's turn to slide 18 for final comments on the outlook. Finally, on our outlook, we can be short. Overall, we continue to see good business conditions in nutrition, and we continue to expect a relatively resilient performance in our materials businesses, even in the current macroeconomic environment. On that basis, as indicated in our press release, we maintain our full-year outlook. With this, I would like to open the floor for questions. Operator.
Thank you. Ladies and gentlemen, we will start a question and answer session now. If you would like to ask a question, please press star one on your phone. For questions, star one. Go ahead, please. First question is from Mr. Neil Tyler, Redburn. Go ahead.
Good morning, Geraldine, Dave. Start with two, please. Firstly, the Nenter acquisition. Were there any additional costs in the quarter, or are you assuming over the next nine to 12 months, before production starts, any additional costs at a net level will be impacting the results? The second question on the large innovation programs, can you provide us perhaps with your latest thoughts on when we should expect a visible revenue contribution from each of those? Thank you.
Good morning, Neil. Thanks for joining the call. When it comes to Nenter, the acquisition was effective end of August 27, 2028. As you know, we went straight into a shutdown in order to upgrade the site. What you're seeing from that is partly actually one of the effects is on our ratios to the balance sheets, because you consolidate the acquisition, and of course, from a P&L side, we get no top line at present. To your question, we are carrying a bit of cost as well. We don't have precise guidance on that. We will be carrying indeed during this shutdown period, a bit of cost related to Nenter. As for the innovation projects, what we are seeing, maybe if I start with Avansya, our stevia joint venture, the production is up and running.
We're seeing product which is being, from a taste profile point of view, well-received by customers. We're seeing some of the products going to test markets. At this point, it remains relatively small, but you can say that it's on its way, and it's on track. Veramaris. Here, we are also up and running on production. If you recall, we opened a production facility this summer. We are bit by bit increasing the capacity. Here, thanks to particularly a relationship with a salmon farmer in Norway, we are now supplying three big retail chains, one in Germany, one in France, and one in the U.K. That is also scaling up nicely. In terms of Veramaris, it's going to be very much a factor of how quickly we can ramp up actually the production of these fermenters.
For Clean Cow, there we are in that registration phase that we mentioned last quarter as well. July, we were able to file everything, in terms of the papers for the EU registration. In New Zealand, we are trying to find the right way forward in terms of classification of Clean Cow. Here, Europe, we're still thinking that we are looking at end of 2020, beginning of 2021. That's broadly the status on our three big tickets, on which we put an update in the press release.
That's great. Thank you very much.
Next question is from Mr. Mutlu Gundogan, ABN AMRO. Go ahead, please.
Yes. Good morning, everyone. Two questions from my side. The first one is on animal, Geraldine. Why is the African swine fever having a negative impact on your results this quarter, while in the previous quarter you indicated that you had a net benefit due to your strong presence in poultry? The second question is on M&A. It's now been, I think, more than two years when you received the significant proceeds for the sale of Patheon. We haven't seen any noteworthy acquisitions since then. Perhaps, can you tell us why that is? What are your thoughts on valuation currently in the market? Is that perhaps an issue of proceeding?
Hi. Good morning, Mutlu. I think if I recall correctly, we never said we would have a net benefit of the African swine fever, but that we would be able to broadly offset the impact through different species and also different geographies. By the way, this is happening partly. What is a bit different this quarter, and as I mentioned in my opening comments, the 1% volume growth in animal nutrition is reflecting the fact that we probably lost about 3% linked to African swine fever, is simply the scale of what is happening here. This is pretty unprecedented. Just to put things in perspective, China represents about half of the world's pork production. If you look at the various estimates which are out there, the disease has impacted probably in excess of 30% of that production.
It's very difficult for the other species to ramp up fast enough. Sorry, my voice is a bit croaky today. For the other geographies to fully offset this. This has also actually been accentuated by the fact that this is a disease that really requires very little movements of animals around the world. Really to get it going again requires doing it in country and not shipping animals from country to country. It is a temporary effect. I think it's important to also highlight that when it starts coming the other way, i.e., the rebuilding takes place, we will be very well positioned to benefit from that.
Younger animals take a lot more feed ingredient supplementation, but there will also be a professionalization of the pork industry in China with fewer backyard animals and much more in the hands of professional meat producers. Who are classically our customers. That's what we're seeing. Let's not forget the proportions, but swine in China is about 78% of our Animal Nutrition business, and if you put it in the context of total DSM, we're looking at about 2%, but it is causing quite a disruption to the industry itself, and you can see that reflected in the price of pork currently, as we're consuming stocks of meat at present. That's really the bigger picture around the African swine fever. When it comes to M&A, if you recall earlier this year, we decided to announce a share buyback of EUR 1 billion.
That was in response to your comment earlier, the fact that we had a balance sheet that benefited from disposals, but also because of our confidence in the cash generation of the company. As you can see, year to date, our cash generation is up 4%. We're very happy with the fact that we are delivering on cash generation. Therefore, we had space to do both. Now, in terms of M&A, you know that our strategy is predominantly an organic growth strategy. We said we would enhance it with potential M&A in nutrition and health if and when we find opportunities that are value enhancing. We don't see it as a must, but if we can find these opportunities, we would have the financial flexibility to do that. As such, we're continuing to look into it.
All right. Thank you.
Next question is from Mr. Thomas Riggs with Citi. Go ahead, please.
Morning, Geraldine. Couple of questions, if I may. Firstly, on food and beverage, you talked about a bit of softness in the second quarter. The text, if I'm interpreting correctly, reads a little bit more positive, but could you elaborate on what's going on in food and beverage, and specifically in the U.S. where we've heard some of your related peers talk about a slowdown there? Secondly, on materials, obviously into the fourth quarter, could you share any updates on what the order book looks like running through the year-end, maybe into next year, how that business is progressing given that autos production is supposed to be up year-over-year in the fourth quarter, according to most estimates? Thank you.
Good morning, Thomas. Maybe food and beverage first. Indeed, the softness we are observing as well, softness in the U.S. market, with a little bit of a question mark as to the why. Intuitively, one would expect, given the U.S. having a stronger economic environment, let's say, that food and beverage should also see a reasonable pattern. We have a bit of a question mark. We don't quite get to the bottom of it right now as to the why. It is a contrasted picture in the U.S. because, for instance, our eye health business is continuing to grow very nicely, double digits. It's a bit of a mixed bag there.
For the rest on food and beverage, it's very much in line with the trends that we have seen in the recent couple of quarters, where the larger customers are struggling to capture growth, and where we're seeing more growth in our regional local customers. Therefore, we are doubling down on making sure that we capture as much of the regional and local business as we possibly can. To watch a little bit how that develops. When it comes to materials, let me start with E&E. We're seeing a bit of a stabilizing there, in terms of number of devices. We're seeing the success of the new iPhone, et cetera. Things like that are certainly giving signs of a bit of an uptick on E&E. On automotive, not really.
In fact, if we look at the overall space, in Q4, we tend to have destocking anyway. We're thinking that maybe Q4, we will see at least the usual destocking, if not a bit more than usual due to uncertainty and hesitations, et cetera. We're also seeing a little bit of a slower pattern in functional materials, so that's the fiber optic cable business, where we're seeing clearly less investment in 4G networks, but a bit of a delay in the real ramp-up of 5G. When it comes, we will be very well positioned, but we're seeing a bit of a delay there. I would say overall, a mixed bag, but we expect a bit more of the same, to be honest in Q4, and not much upsides before next year. Let's see.
Very limited visibility and maybe when we talk with the full-year results, we will be able to have a bit more at hand to figure out what 2020 is going to be made of.
Okay, great. Thank you very much.
Next question is from Mr. Martin Roediger, Kepler Cheuvreux. Go ahead, please.
Yes. Thanks for taking my two questions. First, on animal nutrition, prices are up by 4%. You say it is positive sales mix and some price increases in some ingredients. Can you shed some light on this? Because I thought some vitamin prices were heading downwards, and also some premixes you use, methionine you buy in, and also these prices were down. Maybe you can give more details on this pricing in animal. Secondly, on the profit of associates, quite high figure of EUR 39 million in Q3. Can you also explain that and what you expect going forward? Thanks.
Yes, sure. Good morning, Martin. When it comes to animal nutrition, this is the quarter, which is a good example of why there is no one trend in vitamins. Some are up, some are down, as a result, we could go through ingredient by ingredient. What we're seeing is actually quite a balanced mix of ups and downs and overall a bit up. We do see a bit of a small benefit in the quarter on vitamin E, and a bit of a benefit as well on vitamin A. At the same time, some of the others are down. When you put it all together and you on top of that, add the mix, because what the African swine fever has done, is that it's shifted our mix from straight towards actually more premix versus straight.
That is also having an impact, which leads to this +4%. I think this is a very good example of a quarter where it just shows how you cannot take one or two data points and come to an overall impact. As for associates, indeed, we've had in Q3 some one-time incomes on associates. We had a dividend from our Encore associate that came in. Due to the accounting treatment of that actually delivers a gain of EUR 28 million in the quarter. We see a bigger impact there or a bigger benefit. We also actually had a gain on a venturing investment that came through this quarter, that happens from time to time. If I neutralize those, we're still up in terms of adjusted net profit.
I would say we will probably resume a level that's more in line with previous quarters going forward.
Thank you.
Next question is from Mr. Gunther Zechmann, Bernstein. Go ahead, please.
Good morning, Geraldine. Hi, Dave. Following up on the mega tickets. You I think missed out on Niaga or maybe I missed it, maybe you can tell us what we should expect for 2020 revenue and also earnings contribution because of the licensing income with a different business model there. Secondly, on the mega tickets, can you give some guidance overall for all of them, what we should expect in terms of contribution for next year? Lastly, you mentioned Geraldine in the intro that the inventories were only flat, even if you adjust for currencies and for acquisitions. Can you just shed some light on why that is? The raw material costs seem to be going down, certainly in the materials division. One would expect that inventories would also get a tailwind from that. What's working against that, please?
Yeah, absolutely. Firstly, Niaga. This is another nice innovation project that we have, and we are gaining traction with various carpet makers in the U.S., but also in Europe a bit more. We're working with some brands on mattresses. At this stage, it remains very much in initiation phase. There's a lot of piloting, a lot of product positioning. It really is too early to put a number there. The progress from a technology and uptake is going nicely. We will, over time, update you as and when we can have a number that is meaningful and solid to share.
As for the other big tickets, I think it's good to remember that during the strategic period, the contribution of our big tickets is very much in the order of the rubber hitting the road as opposed to an incremental additional top line and earnings to be factored in. It was always assumed to be part of our 2021 targets, but with clearly significant upside potential thereafter. It's a critical moment in time for all of them. We will, over time, continue to update. Maybe actually with the full year result, we'll see if we have a little bit more to share there. It's part of our overall DSM targets. Now for inventories. What we are seeing is, of course, you're right, that raw materials are a bit down, which is, by the way, nicely reflected in our margins.
You're seeing a margin increase in both nutrition and materials. What you're also seeing is that when you have a bit of a soft top line, in terms of inventory, that can also have a bit of an impact. Just to put things in perspective, if I look at inventory days, we are holding, so we're not going backwards, but we are indeed flat. Our intention is of course, to keep working on that and bring it down over time. I would say if I was to point to one thing in particular that's holding us back, is a little bit the softer top line.
Thank you.
Next question is from Ms. Laura Lopez-Pineda, Baader Bank. Go ahead, please.
Good morning. I have three questions as well. On dairy and baking enzymes, you also reported ongoing good progress. Do you think that DSM is gaining market share in this market? Because some of your other peers have actually highlighted some weakness in those two markets, also in different regions. This business is still rather small compared to the whole DSM nutrition business. I remember, I think one year ago, you had some issues with capacities, which were limited. What is the situation now? If you continue to grow and let's say, gain market share, then is it easy to continue to expand capabilities to supply that growth expectations? The second one is on Veramaris. In the presentation, it says that you expect it to achieve full capacity in 18 months, since the startup in July.
I think building a new plant or spending will also take a similar time. Could we expect maybe in 2020 that a new plant will start to be constructed there? Lastly, on yeast technologies, you also had there some product launches recently. How are those developed? Because there were some weakness in the U.S. due to the floodings. How are your technologies developing for POET? Thanks.
Okay, great. Let me cover the food specialties part. As we put in the press release, we've had a really good quarter in food specialties, so you're absolutely right. That was both in cultures and enzymes. With definitely a good performance in dairy, but also in baking, where we released some new products in the quarter. A good performance. In terms of read across with other players, I would say be careful there, because we don't have that much overlap, and we are quite specific in terms of the markets that we cover. As you said, we are smaller. I wouldn't translate the fact that we're doing well as us gaining share, but more us doing a good job and growing in our respective spaces. You're absolutely right that we had flagged some capacity issues a while back, but these are solved.
We've done the debottlenecking, we've stabilized the production, and so we have the capacity to grow. We are well positioned there. When it comes to Veramaris, indeed, the ramp up of the fermenters will take a number of quarters to get there. The order book is looking very, very good. Now, we haven't quite decided on a second plant yet. We will let you know when and if we get there. It's certainly going well. I'm afraid I missed the fourth question that you had, if you could help me with that one.
Yeah. The last one was on yeast technology for bioethanol production.
Okay.
On POET, how is that developing, your new product launches? We have also heard some weakness from other players due to the floodings in the U.S.
Maybe how is that developing recently?
Yeah. No, absolutely. The progress relates to our on-site manufacturing. We are actually producing now the enzymes that we need for the plant, and it's going well. In that sense, they are very effective. The cost base goes down, so that is positive. In POET, we are still finding some issues when it comes to the pretreatment and the technology there. The testing is not on a continuous basis, but much more sort of, let's call them batches. In sprints. That is still causing us a bit of struggles from a technology point of view. Having said that, what is great is that this year, our platform of yeast and enzyme technologies, has increased our earnings through the licensing model, and that we see as a positive, so that we are able to expand the use of this technology beyond POET.
That's where we're heading at present.
Perfect. Thank you so much.
Our next question is from Mr. Watson, ING. Go ahead, please.
Morning, Geraldine. I'd just like to come back to the issue around African swine fever. I think you mentioned earlier on that there was a 3% impact on growth in the quarter. Am I right in thinking that's roughly a EUR 20 million hit to the top line?
Yep, absolutely.
Okay.
I thought you paused, so I thought that was the question.
No, it was a question, and I needed confirmation because if I was wrong, then I'd make a fool of myself. I just wanted to see how you expect this evolving, because if I recall correctly, you first started to see the impact of swine flu in Q3 last year, which was roughly EUR 5 million, rising to about EUR 10 million a quarter. Having expected us to sort of anniversary that, it now feels that actually the impact of this is starting to get worse again. Is it reasonable to assume that we continue to see this impact perhaps for another 12 months?
Yeah. It's so difficult to predict. Indeed, when it all started, the view was that the authorities would manage to contain it as much as possible. Now they've struggled doing that, and as a result, the numbers that we were sharing earlier are the sheer scale is unprecedented. Because of the challenges of this, it cannot be vaccinated. Therefore, you cannot move animals around. That does mean that the recovery is going to take longer, because you need adult female pigs to be able to have the piglets, and therefore you have a time delay. It is very difficult to call out how long it's going to take for that to happen. Let's be clear, when the market that has 50% of the production is down by 30%, then a lot of efforts are there to boost production. The offsetting is happening.
It's just not happening enough to fully compensate for this down in swine. You are absolutely right. In terms of the number, the 3% is about EUR 20 million. When we look at EBITDA, we probably have an impact a bit above the EUR five million that we had indicated before on the quarter. We will be doing everything we can to, of course, offset it in other geographies and through other species. I wish we had a better crystal ball on this one to see how long it's going to last. Having said that, please don't forget, when this starts recovering, we are very well-placed to take advantage of it.
That's great. Thank you.
Next question is from Mr. Sebastian Bray from Berenberg. Go ahead, please.
Good morning. Thank you for taking my questions. I would have two, please. The first is on the margin profile in nutrition relative to the mix of human and animal. Usually, one would think that human nutrition makes substantially higher EBITDA margins than animal. Yet it's been outgrown by animal nutrition for several quarters now, and the EBITDA margins in nutrition have remained quite robust. Why is this? Is it a mix shift with an animal that is driving this, or is it simply because the vitamin A and E prices have remained quite robust? If so, would I be right in saying that on the quarter, it's roughly 50 basis points of EBITDA across those two? My second question is on Veramaris.
Am I right in saying that DSM is likely to pursue any further expansion in cooperation with Evonik, or could it go its own way with the technology for this area? Thank you.
Good morning, Sebastian. In terms of margins in nutrition, of course, there's a big number of moving parts in there. It's very difficult to point exactly to where that is happening. Now, one element that I would throw in addition to what you were saying, is the fact that in animal nutrition, I mentioned earlier, we have been selling more through premix than we have been selling through straights because of the African swine fever, which of course has a beneficial impact in terms of earnings and margin as a proportion. You're seeing lower volumes, but a bigger price effect. Therefore, we're seeing there some support to our margins. When it comes to the human nutrition softness, we do have a lot of different price points in there.
Top line being a bit soft has not translated into our margins going down for Nutrition, which to a great extent shows the resilience of the business. Across the board, we are, of course, always very diligent and disciplined in the way that we manage our operations, and we manage our cost base. It's a whole bundle of things that is leading to that. On Veramaris, which is indeed the joint venture with Evonik. What we have in terms of the aquaculture space is clearly that that is the scope of the joint venture. If the expansion was for the purpose of Animal Nutrition, and particularly aquaculture end markets, it would be in the context of the joint venture.
All right. Thank you.
Next question is from Mr. David Simmons, J.P. Morgan. Go ahead, please.
Hi, this is actually Chetan. Just one question, Geraldine, on any structural impact you guys are seeing from what's happening in the African swine fever, the extent of how it's spread outside of China as well. Are you seeing maybe different behavior in terms of competitive environment or structurally, any change in the whole environment around swine as a sort of species? That's one question. The second question was, it's not been asked so far, so maybe I should probably give a go. Any sort of comment around this whole news flow that we are seeing around DuPont and DSM's interest in that business? Thank you.
Okay. Well, maybe I'll start with the second. As you said it yourself, you'll have a go, but I hope you appreciate that we never comment on specific M&A speculations. Good on you to have a go, but you won't get much here. When it comes to the African swine fever structural impacts, what we are seeing, and I'm not sure that's where you're heading, but we are seeing, of course, it's not exclusively China, so there is some spreading to the Asia region. Far it seems to be relatively well managed, but we need to keep an eye on that. Now, do we believe that this will have a structural impact on the pork, I don't know, global footprint, et cetera? Actually, at this point, no.
I think what we're seeing is, of course, a time delay in the recovery of this, but we have no reason to believe that we are looking here at something which is structurally shifting. Having said that, if one would imagine that there would be, for some reason, a different pattern going forward, at DSM, we're of course, very well positioned. Not only do we have the full species coverage, as you know, 45% of our animal nutrition sales is already poultry, with absolute global footprint there, but we are also increasingly present in plant-based proteins. Protein overall is what we play in. We are well-positioned to manage whatever shift could potentially occur. At present, we have no reason to believe that's going to be the outcome.
Thank you.
Ladies and gentlemen, the next question is from Mr. Neil Tyler Redburn. Go ahead, please.
Oh, hello. I didn't expect to get back on that quickly, but it was really, Geraldine, just picking up on the very last comment that you made around your presence in plant-based proteins. Can you just, for those of us that aren't particularly familiar with sort of products or exposures, run us through where those are, and a little bit of an outlook for your technology development in that field? Thank you.
Yeah, that's a very interesting space for development. If you have a look, you may have heard us talk about CanolaPRO, which is a plant-based protein out of canola, rapeseed, depending on which geography you're sitting in. It's very much about extracting very high-quality protein from canola. It's one of the products that we're working on. Interestingly, when it comes to plant-based, I think what needs to be understood is that any alternatives to animal protein require a lot of technology. When you look at a plant-based burger, for example, there are a lot of ingredients that go into that, and that very much is looking into both flavors, the texture, stability, et cetera. These are all the kind of things that we are very good at.
What we're seeing, and very much keeping an eye on, is what are the contributions that we can make in that space as it develops, and doing the innovation that comes with that.
Thank you. Look forward to hearing more a bit later on next year.
Yeah. Okay. We'll make sure to bring that at our innovation day. Yeah.
Operator, I think.
I think we're coming to the end, right?
Yeah, I think we're coming to the end. Maybe Geraldine, you want to say a few closing remarks?
Thanks, Dave. Basically, in summary, we saw a good performance in nutrition and a relative resilience in our materials in the quarter. Business conditions in nutrition remain supportive for our plans for the full year, and we continue to make good progress on our innovation tickets. This leads us to maintain our outlook for the full year, and we are very well positioned to deliver on our ambitious Strategy 2021. These are my closing remarks, and with that, I thank you all, and I wish you a very good day.
Thank you, Geraldine. This concludes our conference call for today. Thank you very much for your attention and your questions. As always, if you have any further questions, you know where to reach us. We're on the phone and on the email. With that, I wish you a good day, and I hand back the call to the operator.
Ladies and gentlemen, this concludes the DSM Q3 Results 2019 event call. You may now disconnect your line. Thank you. Have a very nice day.