Ladies and gentlemen, thank you for standing by. Welcome to DSM's Conference Call on 1st 9 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. Now I would like to turn the call over to Mr.
Huysing. Please go ahead.
Thank you, operator. Ladies and gentlemen, good morning also the from my end and welcome to this conference call on DSM's Q3 2019 results, which we published earlier this morning. I'm sitting here with Mrs. Geraldine Machet, Chief Financial Officer and member of the DSM Managing Board. Geraldine will give a short introduction, the [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] After which, we 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. And with that out of the way, please, Geraldine, go ahead.
Phone. Thank you, Dave. Good morning, ladies and gentlemen. It's a pleasure to welcome you to this call on DSM's 1st 9 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 and A session.
Before starting, I have to point out that our 9 months 2019 results are reported against a set of prior year 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 is 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. Now of course, from a perspective of monitoring the progress the [SPEAKER JEAN FRANCOIS VAN BOXMEER:] First 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 of the 1st January 2019, whilst the 2018 figures are not restated. The 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 2. We are pleased to report a good performance for the 1st 9 months of 2019.
Our group sales are up 3% With Nutrition delivering a 4% organic growth, fully offsetting the minus 7% organic growth in material sales, the where volumes were down 5% on the back of continued weak market conditions in some end markets. The [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] 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 the call with a flat adjusted EBITDA, which includes a 1% IFRS 16 benefit. The During these 9 months, we continued to move forward with our large innovation projects such as Viramaris, Advancia and Klinkal reaching important milestones.
As for our cash generation, the net adjusted the Sorry, the net adjusted net operating free cash flow is up 4% from last year at €550,000,000 And we are on track to meet our strategic targets of a 10% increase for the full year. And 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. So let's move to Page 3 with the Q3 highlights. We have called Q3 a solid quarter in the press release, But 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 the condition in some of the end markets, resulting in volumes being down 3%, they delivered an adjusted EBITDA almost in line with prior year. 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 the call as seen already in the first half of this year. All put together, this results in an overall adjusted EBITDA growth for the quarter the of 9%, including 3% for IFRS 16.
Let's move now to Page 8 the for a few more comments on Nutrition. Overall, Nutrition delivered again a good top line growth We have 7% in Q3, supported by 4% organic growth, with volumes up 3% and prices up 1%. The call. This was achieved through solid Animal Nutrition sales, while Human Nutrition showed some softness in Food and Beverage, the call, but with strong results in Personal Care and Food Specialties. As already mentioned, we realized a 12% EBITDA growth in on the quarter, including 3% from IFRS 16.
The adjusted EBITDA margin remained strong at the 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 9. Overall, business conditions for Animal Nutrition in Q3 remained good across species and geographies, the Except for the swine business in Asia, where we saw a bigger negative impact than earlier estimated from the African swine fever. The [SPEAKER UNIDENTIFIED
COMPANY REPRESENTATIVE:] Thank
you for standing by. Welcome to DSM's conference call on the [SPEAKER UNIDENTIFIED COMPANY
REPRESENTATIVE:] Thank you.
The reduced feed demand for swine in Asia has therefore impacted our growth in the short term. The 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 the call 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. The Our health sales remain particularly strong. The minus 3% price effect was driven by mix and lower prices the for our Chinese vitamin C. As always, please remember that due to our large portfolio of ingredients, the 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. As 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, the 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 the continued, while Dyneema continues to enjoy strong business conditions, especially in personal protection. The call. This resulted in volumes down 3% in the quarter.
However, the adjusted EBITDA margin were slightly up the 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 the [SPEAKER JEAN FRANCOIS VAN BOXMEER:] 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 550,000,000 the call. And 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%, the call, resulting from a combined negative effect of IFRS 16, foreign exchange movements and our 2019 acquisitions. The 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 the programs aimed at improving overall our working capital performance over time. And now let's turn to Slide 18 for final comments on the outlook. The Finally, on our outlook, we can be short.
Overall, we continue to see good business conditions in Nutrition, the And we continue to expect a relatively resilient performance in our Materials businesses even in the current macroeconomic environment. And on that basis, as indicated in our press release, we maintain our full year outlook. The And 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. Go ahead please. The first question is from Mr. Neil Tyler, Redburn.
Go ahead.
Yes. Good morning, Geraldine, Dave. Start with 2, please. Firstly, the Nenter acquisition, were there any additional costs in the quarter? Or are you assuming the Over the next 9 to 12 months before production starts, any additional costs at a net level the We'll be impacting the results.
And second question, on the large innovation programs, can the Provide us perhaps with your latest thoughts on when we should expect a visible revenue contribution from each of those? Thank queue.
Yes. Good morning, Neil. Thanks for joining the call. So when it comes to Nenter, the acquisition was effective end of August 27, 28. And as you know, we went straight into a shutdown in order to upgrade the site.
So what you're seeing from that is actually partly actually one of the effects is on our ratios to the balance sheet because you consolidate the acquisition. And of course, from a P and L side, we get no top line at present. And to your question, we are carrying a bit of cost the As well. So we don't have precise guidance on that, but we will be carrying indeed during this shutdown period a bit of cost the [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] Related to Nenter. As for the innovation projects, so what we are seeing call.
Maybe if I start with Avance here. So our Stevia joint venture, the production is up and running. The And 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. So at this point, it remains the Relatively small, but you can say that it's on its way, and it's on track.
Then Viramaris. The So here, we are also up and running on production. If you recall, we opened the production facility this summer, And we are bit by bit increasing the capacity. And here, thanks to particularly a relationship with a salmon farmer in Norway. We are now supplying 3 big retail chains, the 1 in Germany, 1 in France and 1 in the UK.
So that is also scaling up nicely. And in terms of Verimaris, it's It'll be very much a factor of how quickly we can ramp up actually the production of these fermenters. And for Clean Cal, there, we are in that registration phase that we mentioned last quarter as well. So July, we were able to file everything in terms of the papers for the EU registration. And in New Zealand, we are trying to find the right way forward in terms of classification of clean cows.
So here, Europe, we are still thinking that we are looking at the end of 2020, beginning of 2021. So that's broadly the status on our 3 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 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 and A. It's now been, I think, more than 2 years when you received the significant proceeds for the sale of Passione. And we haven't seen any noteworthy acquisitions since then. So perhaps can you tell us why that is? I mean, what are your thoughts on valuation Currently in the market, is that perhaps an issue of proceeding?
Hi, good morning, Madelu. I think if I recall correctly, we didn't we never say 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. And by the way, This is happening partly. Now what is a bit different this quarter, and as I mentioned in my opening comments, the 1% volume growth Animal Nutrition is reflecting the fact that we probably lost about 3% linked to African swine fever It's simply the scale of what is happening here. I mean, this is pretty unprecedented.
Just to put things in perspective, the China represents about half of the world's pork production. And if you look at the various estimates which are out there, the The disease has impacted probably in excess of 30% of that production. So it's very difficult For the other species to ramp up fast enough and the import exports Sorry, my voice is a bit croaky today. For the other geographies to fully offset this. Now 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.
So really to get it going again requires doing it in country and not shipping animals from country to country. The So it is a temporary effect. And I think it's important to also highlight that when it starts the Coming the other way, I. E, the rebuilding takes place. We will be very well positioned to benefit from that Because younger animals take a lot more feed ingredient supplementation, but there will also be a professionalization of the pork the in China with fewer backyard animals and much more in the hands of professional meat producers, Which who are classically our customers.
So that's what we're seeing. On the And let's not forget the proportions, but swine in China is about the 78% of our Animal Nutrition Business. And if you put it in the context of total DSM, we're looking at about 2%. The But it is causing quite a disruption to the industry itself, and you can see that reflected in the price of pork the currently as we are consuming stocks of meat at present. So that's really the bigger picture on the around the African swine fever.
And when it comes to M and A, I mean, if you recall earlier this Here, we decided to announce a share buyback of SEK 1,000,000,000. 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. And as you can see, year to date, our cash generation is up 4%. So we're very happy with the fact that we are delivering on cash generation. The And therefore, we have space to do both.
Now in terms of M and A, the You know that our strategy is predominantly an organic growth strategy, and we said we would enhance it with potential M and A the in Nutrition and Health, if and when we find opportunities that are value enhancing. And we don't see it as a must, But if we can find these opportunities, then we would have the financial flexibility to do that. And as such, we are continuing to look into it.
All right. Thank you.
Next question is from Mr. Thomas Wrigglesworth, Citi. Go ahead please. Good
morning Geraldine. A couple of questions, if I may. Firstly, on Food and Beverage, You talked about a bit of softness in the Q2. 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 the Talk about a slowdown there. Secondly, on Materials, obviously, into the Q4, what are your if you could share any updates on the What the order book looks like running through the year end, maybe into next year? How about business is progressing given that auto's production is supposed to be up year on year in Q4 on the According to most estimates. Thank you.
Yes. Good morning, Thomas. So maybe food and beverage first. The Indeed, the softness we are observing as well, softness in the U. S.
Markets with a little bit of Should Mark, as to the why? I mean, intuitively, one would expect, given the U. S. Having a stronger economic environment, let's say, that food and beverage should also It's a reasonable pattern, but we are we have a bit of a question mark. We don't quite get to the bottom of it right now as to the why.
The But it is a contrasted picture in the U. S. Because, for instance, our eye health business is continuing to grow very nicely double digit. So it's a bit of a mixed bag there. And for the rest on food and beverage, it's very much in line with the trends that we have seen in the recent a couple of quarters where the larger customers are struggling to capture growth and where we're seeing more growth the in our regional, local customers.
And therefore, we are doubling down on making sure that we capture as much on the of the regional and local business as we possibly can, but to watch a little bit how that develops. Now when it comes to Materials, so what we're seeing is or maybe start let me start with E and 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, etcetera. Things like that are certainly giving signs of a bit of an uptick on E and E.
On Automotive, the Not really. And in fact, if we look at the overall space, in Q4, we tend to have destocking anyway. The And we're thinking that maybe Q4, we will see at least the usual destocking, if not a bit more the usual due to uncertainty and hesitations, etcetera. We're also seeing a little bit of a slower pattern in the Functional Materials. So that's the fiber optic cable business, where we're seeing clearly less investment in the 4 gs Networks, but a bit of a delay in the real ramp up of 5 gs.
So when it comes, we will be very well positioned, but the We're seeing a bit of a delay there. So I would say overall, a mixed bag, But more we expect a bit more of the same, to be honest, in Q4 and not much upside before next year. The But 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, the 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 premiums as you use methionine you buy in and also these prices were down. So maybe you can Give more details on this pricing in Animal. And secondly, on the profit of associates, quite high figure of €39,000,000 the Q3. Can you also explain that and what you expect go forward? Thanks.
Yes, sure. Good morning, Martin. So when it comes The Animal Nutrition, this is the quarter, which is a good example of why there is no one trend in vitamins. The Some are up, some are down. And as a result and we could go through ingredient by ingredient.
The But what we're saying 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 the [SPEAKER JACQUES VAN DEN BROEK:] benefit as well on vitamin A, but at the same time, some of the others are down. And when you put it all together and you, on top of that, add the mix the Because what the African swine fever has done is that it shifted our mix from straight towards actually more premix versus Straits. And that is also having an impact, which leads to this plus 4%. So I think this is a very good example of a quarter where it just shows how you cannot take 1 or 2 data points and the As for associates, indeed, we've had in Q3 the Some onetime incomes on associates.
We had a dividend from our Encore associate that came in. And due to the accounting treatment of that actually delivers a gain of EUR 28,000,000 the In the quarter, so we see a bigger impact there or bigger benefits. And we also actually had a gain on a venturing investment that the This quarter that happens from time to time. But if I neutralize those, we're still up in terms of adjusted net profit. And 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 Sachman, Bernstein. Go ahead please.
Hi. Good morning, Geraldine. Hi, Dave. Just following up on the mega ticket. You, I think you missed out on Niaga or maybe I missed it.
So 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. And the Sensing income with a different business model there. And secondly, on the megaticket, can you give some guidance overall for all of them what we should the in terms of contribution for next year. And then lastly, you mentioned, Gerald, in the intro the The inventories were only flat even if you adjust for currencies and for acquisitions. Can you just shed some light on why that is?
Because the the Room material costs seem to be going down certainly in the Materials division. So one would expect that inventories would also get a tailwind From that, so what's working against that, please?
Yes, absolutely. So firstly, Niaga. The So this is another nice innovation project that we have, and we are gaining traction with various the carpet makers in the U. S. But also in Europe a bit more.
And we're working with some brands on mattresses. But at this stage, it remains very much in initiation phase. So there's a lot of piloting, a lot of product positioning, But it really is too early to put a number there. But the progress from the technology on the And uptake is going nicely. So we will, over time, update you as and when we can have a number that is meaningful and a solid per share.
As for the other big tickets, I think it's good to remember that during this strategic period, the The contribution of our big tickets is very much in the order of the rubber hitting the roads as opposed To an incremental additional top line and earnings to be factored in, and it was the Always assumed to be part of our 2021 targets, but with clearly significant upside potential thereafter. So it's a critical a moment in time for all of them. And we will, over time, continue to update. And maybe actually with the full year result, we'll see if we have the A little bit more to share there, but it's part of our overall DSM targets. And now for inventories.
So what we are seeing is, of course, you're right, that raw materials are a bit down, the Which is, by the way, nicely reflected in our margins. So you're seeing margin increase in both Nutrition and Materials. The But what you're also seeing is that when you have a bit of a soft top line in terms of inventory, that can So have a bit of an impact. But just to put things in perspective, If I look at inventory days, we are holding, so we're not going backwards because we are indeed flat. The And our intention is, of course, to keep working on that and bring it down over time.
But I would the 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. So I have three questions as well. So on dairy and baking enzymes, You also reported ongoing good progress. So do you think that DSM is gaining market share in this market because some of your other peers I have actually highlighted some weakness in those two markets, also in different regions. And this business is still the rather small compared to the whole BSM Nutrition business.
And I remember, I think, 1 year ago, you had some issues with capacities, which were limited. So what is the situation now? And 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? And the second one is on Veramaris. So in the presentation, it says that you expect it to achieve full capacity in 18 months the since the start up in July.
So and I think building a new plant or spending will also take a similar time. So could we expect maybe in 2020 that a new And lastly, on GIST 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 and how are your technologies developing for Poet?
Thanks.
Okay, great. So let me cover the Food Specialties part. So as we put in the press release, we've had a really Quarter in Food Specialties. So you're absolutely right. That was both in cultures and enzymes.
We've definitely a good performance in dairy, But also in baking, where we released some new products in the quarter, so a good performance. Now 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 the So I wouldn't translate the fact that we're doing well as gaining share, but more us doing a good job on the and growing in our respective spaces. Now you're absolutely right that we had flagged some capacity issues a while back, But these are solved. So we've done the debottlenecking.
We've stabilized the production. And so we have the capacity to grow. The [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] So we are well positioned there. And when it comes to Veramaris, indeed, the ramp up of the fermenters will take the A number of quarters to get there, and the order book is looking very, very good. Now we haven't quite decided on a second plant yet, but we will let you know When and if we get there, but it's certainly going well.
And I'm afraid I missed the 4th question that you had, if you could help me with that one.
Yes. The last one was on GIST technology for bioethanol production. So on Poet, how is that developing your new product launches? Because we have also heard some weakness from other players due to the floodings in the U. S.
The And so maybe how is that developing recently?
Yes. No, absolutely. So there, the progress the Relates to our on-site manufacturing. So we are actually producing now the enzymes the that we need for the plants, and it's going well. So in that sense, they are very effective.
The cost base goes down, so that is positive. The In Poets, we are still finding some issues when it comes to the pretreatment and the technology there. The So the testing is on is not on a continuous basis but much more sort of, Let's call them batches, but in sprints, and that is still causing us a bit of struggles from a technology point of view. But having said that, what is great is that this year, our platform of yeast and enzyme technologies the has increased our earnings through the licensing model and that we see as a positive the So that we are able to expand the use of this technology beyond PoET, and that's where we're heading at present.
The Perfect. Thank you so much.
Our next question is from Mr. Watson, ING. Go ahead please.
Good morning, Geraldine. I'd just like to come back to the issue around African swine fever. I think you mentioned Earlier on, there was a 3% impact on growth in the quarter. Am I right in thinking that's roughly a €20,000,000 hit to the top line? The
Yes, absolutely.
And then I think
I thought you paused, that was a question. Let me
No, no. It was a question And I needed confirmation because if I was wrong, then I'd make a fool of myself. But I just wanted to see how you the I expect this evolving because if I recall correctly, you first started to see the impact of swine flu in Q3 last year, the Which is roughly €5,000,000 rising to about €10,000,000 a quarter. So having expected us to sort of anniversary that, it now feels that actually the impact of the So is it reasonable to assume that we continue to see this impact perhaps for another 12 months?
The Yes. And it's so difficult to predict. Indeed, when it all started, the view was that this would the The authorities would manage to contain it as much as possible. Now they've struggled doing that. The And as a result, the numbers that we were sharing earlier, the sheer scale is unprecedented.
And because of the challenges of this, the It cannot be vaccinated. Therefore, you cannot move animals around. And 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. The to be able to have the piglets and therefore, you have a time delay. So it is very difficult to call out the How long it's going to take for that to happen?
But 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 the If you're looking at the production is down by 30%, then a lot of efforts are there to boost production. And the offsetting is happening. It's just not happening enough to fully the compensate for this down in swine. So you were absolutely right. In terms of the number, the 3% is the It's about EUR 20,000,000.
And when it we look at EBITDA, we probably have an impact a bit above the EUR 5,000,000 that we had indicated before on the quarter. And we will be doing everything we can to, of course, offset it in other geographies and through other species. The But 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 the Perenberg. Go ahead please.
Good morning and thank you for taking my questions. I would have 2 please. The first is on the margin profile the Nutrition relative to the mix of human and animal. Usually, one would think that human nutrition makes substantially high EBITDA margins the [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] Yes, it's been outgrown by Animal Nutrition for several quarters now, and the EBITDA margins in Nutrition have remained quite robust. The Why is this?
Is there a mix shift within animal that is driving this? Or is it simply because the vitamin A and E prices have remained quite robust? And if so, would I be right in saying that on the quarter, it's roughly 50 basis points of EBITDA across those two? And my second question is on Veramaris. Am I right in saying that DSM is likely to pursue any further expansion in cooperation with Evonik?
The Or could it go its own way with the technology for this area? Thank you.
Hi, good morning, Sebastian. So in terms of the Margins in Nutrition, of course, there's a big number of moving parts in there. So it's very difficult to point exactly To where that is happening. Now one element that I would throw in, in addition to what you were saying is the The fact that in Animal Nutrition, I mentioned earlier, we have been selling more through premix the Then we have been selling through Straits because of the African swine fever, which of course has a beneficial impact in terms of earnings on margin as a proportion. So you're seeing lower volumes, but a bigger price effect.
And therefore, we're seeing there the And when it comes to the Human Nutrition softness, we do have a lot of different price points in there. The And therefore, 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. And across the board, we are, of course, always very diligent and the in the way that we manage our operations, and we manage our cost base. So it's a whole bundle of things that is the [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] Leading to that. And then 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. So the If the expansion was for the purpose of Animal Nutrition and particularly aquaculture end markets, the It would be in the context of the joint venture.
All right. Thank you.
Next question is from Mr. David Simmons, JPMorgan. Go ahead please.
Yes. Hi. This is actually Chetan. Just one question Geraldine on any structural impact you guys are seeing from what's happening in the swine flu, the extent of how it's Sorry, the spread outside of China as well. Are you seeing maybe different behavior in terms of how In terms of competitive environment or structurally, any change in the whole environment around swine as a sort of species.
That's one question. And the second question was, it's not been asked so far, so maybe I should the 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 seconds. As you said it yourself, you'll have a go, but I hope you appreciate the We never comment on specific M and A speculations. So good on you to have a go, but you won't get much here. And when it comes to the African swine fever structural impact, 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. The So far, it seems to be relatively well managed, but we need to keep an eye on that. The Now do we believe that this will have a structural impact on the pork, I don't know, global footprint, etcetera? Actually, at this point, no. I think we're what we're seeing is, of course, a time delay in the recovery of this, But we have no reason to believe in that we are looking here at something which is structurally shifting.
Now having said that, if one would imagine that there would be some for some reason a different pattern going forward, At DSM, we're, of course, very well positioned because not only do we have the full species coverage, as you know, 45% of our Animal Nutrition sales is already poultry With an absolute global footprint there, but we are also increasingly present in plant based proteins. The So protein overall is what we play in. And so we are well positioned to manage whatever shift Could potentially occur, but at present, we have no reason to believe that's going to be the outcome.
Thank you.
The
Ladies and gentlemen, the next question is from Mr. Neil Tyler Radbourne. Go ahead please.
Hello, guys. 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 on the Where those are and a little bit of an outlook for your technology development in that field? Thank you.
Yes. I mean, that's a very the I mean, if you have a look, we have you may have heard us talk about canola pro, the Which is a plant based protein out of canola, rapeseed for depending on which geography you're sitting in. And it's very much about extracting a very high quality protein from canola. It's one of the products that we're working on. But interestingly, when it comes to plant based, I think what needs to be understood is that the Any alternatives to animal protein require a lot of technology.
So when you look at a plant based the Burger, for example. There are a lot of ingredients that go into that, and that very much is looking into the Both flavors, the texture, stability, etcetera. And these are all the kind of things that we are very good at. The So 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.
Okay. We'll make sure to bring that at our end of the day.
The Operator, I think
I think we're coming
to the end. Maybe Geraldine, you want to say a few closing remarks?
Yes. Thanks, Dave. So basically, in summary, we saw a good performance in Nutrition and a relative resilience in our Materials the In the quarter, business conditions in Nutrition remained 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. So these are my closing remarks.
And with that, I thank you all, and I wish you a very good day.
Thank you, Julien. This concludes our conference call for today. Thank you very much for your attention and your questions. And as always, if you have any further questions, you know where to reach us, the Yes. We are on the phone and on the e mail.
And 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 lines. Thank you and have a very nice day.