Thank you, operator. Ladies and gentlemen, good morning and welcome to this conference call on the second quarter results which we published earlier this morning.

Sitting here with me are Mr. Feike Sijbesma, CEO and Chairman of the DSM Managing Board, Mrs.

Geraldine Matchett, CFO and Member of the DSM Managing Board, and Mr. Jos Op Heij, Senior Vice President, Group Controller.

They will elaborate on the results and, after that, answer your questions. As a reminder, I'm obliged to caution you that today's presentation 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 on our Web site. With that being said, I will hand over to Mrs.

Matchett. Geraldine, please go ahead.

Thank you, Dave. Good morning, ladies and gentlemen, and welcome to this call on our DSM Q2 2016 results.

I'd like to start by apologizing a bit for my voice this morning, I'm afraid I've got a rather nasty cold, but hopefully, I'll make it through the call okay. Before we get started with the Q&A session, I would like to walk you through some of the key slides of our investor presentation that we published this morning, together with the press release, and they are both available on our Web site and on our Investor Relations app.

Let me start with the financial highlights on Slide 2. As you can see from this slide, our positive momentum from Q1 continued and we are pleased to see that our strategy of focusing on organic growth and improvement program has delivered another strong quarter, with both EBITDA growth of 18% and a ROCE of 10.5% compared to 7.4% in the same period last year.

Materials performed particularly well with good volume growth, notably in specialties and with an EBITDA up 10%. In nutrition, including initial benefits from the improvement programs, we delivered an organic sales growth of 9% and an EBITDA up 14%.

As for the outlook, we have revised it upwards. Developments in Q2, as you all know, have certainly not decreased uncertainties on the macroeconomic environment, and while this remains a concern, we expect, as stated, that our full year 2016, we will deliver an EBITDA growth into the low to mid teens, and an increase in ROCE in excess of 200 basis points.

And this is ahead of our previously stated target for 2016 of a high single digit growth in EBITDA and a high double digit basis points improvement in ROCE. Both nutrition and materials are expected to keep their positive momentum in H2 and contribute to this higher outlook.

And finally, our interim dividend will be €0.50 per share, which is simply one third of last year's dividend, in line with our policy, and should not be taken as an indication of the total dividend for the year. Now, following these highlights, I will run through a few more key points, and I will start on Slide 9 with the overall nutrition results.

I'll give you a second to get there. On Slide 9, as you can see nutrition delivered another strong quarter.

As stated earlier, the organic growth reached 9% and, as shown here, the EBITDA margin increased to 18.3% versus 16.7% in Q2 last year. And the first semester ROCE improved to 12.3%, coming from 10% in the same period last year, supported by both an increase in EBITDA of 23% and a slightly lower capital employed.

Although currencies had a negative impact of 5% on sales, coming mainly from the weaker Brazilian real and the US dollar, the impact on the EBITDA was limited thanks to the Swiss franc being slightly weaker against the euro. Now moving more specifically to animal nutrition, let's go to Slide 10.

Business conditions for animal nutrition remain overall strong in all regions except Latin America, leading to a 14% organic growth including 10% volume growth. However, this high volume growth was helped by a one-time negative effect in last year's figures when our business in Brazil was impacted by a third party fire in the port of Santos.

If we adjust for that effect, the like for like volume growth is about 6%, 7%. Prices showed a 4% increase versus the same period last year.

However, I would like to highlight here that part of this increase relates to step ups in local currency invoiced prices, while the list prices themselves are in U.S. dollars.

This is common practice, particularly in Latin America, and helps us protect our margins in euro, but this is reported under price mix. The currencies themselves had a 7% negative impact on sales, mainly due to the Brazilian real.

Coming back to pricing, the other part of the 4% increase comes from vitamin prices. These were slightly up versus Q2 2015 relating to the B vitamins, and resulted overall in a positive effect slightly in excess of 10 million for the quarter.

Regarding vitamin E, contract prices remained slightly below prior year, despite the clear increase in spot prices. Now moving to page twelve on human nutrition, organic sales growth in human nutrition remained solid at 4%, which is a more normalized rate of growth compared to Q1 2016 and Q4 2015, where the growth rate benefited from the easier year-on-year comparison.

This organic growth was predominantly driven by higher volumes, although prices were slightly up across the board. And currencies had a negative impact of 3%, mainly due to the somewhat weaker U.S.

dollar. This solid performance in human nutrition is the result of a good performance in food and beverage, with especially sales improving in the U.S.

Dietary supplements market outside North America also performed well, while in North America, multivitamin markets remained weak. Infant nutrition performed well, with stable growth in a healthy market.

And finally, our B2C business, iHealth, continued to grow double digit. Now, let's move to Slide 17 for materials.

In materials, sales for the quarter were down 4%, compared to Q2 2015, with 7% lower prices, fully reflecting the lower input cost environment. However, volume growth reached 5%, generally outperforming the market.

A positive mix, with higher growth in specialties more than offset the lower volumes and prices in polyamide 6 polymers, resulting in an EBITDA increase of 10%, compared to Q2 2015, and an increase in EBITDA margin from 16% to 18.3%. This step up in margin can be partially attributed as well to the lower input cost and the benefit of the cost savings and efficiency programs carried out over recent years, as well as good margin management.

Now, moving to Slide 20, I will comment briefly on our joint ventures and associates. As, for our main joint ventures, we are no longer in the driver's seat, and as a minority shareholder, we're not in a position to comment on specific details.

However, we are pleased to report that following the IPO of Patheon mid July, DSM successfully completed the sale of 4.8 million ordinary shares in Patheon NV, leaving us with a remaining 48.7 million shares, representing roughly a 34% holding. The total cash proceeds from this sale and other related IPO transactions are expected to amount to approximately $240 million.

And we expect to realize a booked profit of approximately €220 million, all to be reported in Q3. On the other key joint ventures, DSM Sinochem Pharmaceuticals continued to deliver solid results, driven by a favorable product and geographical mix, while ChemicaInvest posted for the quarter a break even EBITDA, due to the difficult market conditions for caprolactam.

For a quick overview of our cash generation, let's move to Slide 21. We are pleased to report that our efforts to increase our cash generation are delivering results.

Cash flow from operating activities amounted to 182 million, showing an improvement of 79 million compared to Q2 2015. Our total working capital amounted to 1,481 million at the end of the quarter, representing a ratio of 18.6% over the annualized Q2 sales compared to an equivalent ratio of 20% in Q2 last year.

Net debt closed, at June 30, at 2,466 million, up 445 million compared to the end of 2015, mainly due to the dividend payments and a share buyback program of 159, to cover existing option plans and stock dividend. And to conclude, please go to Slide 28 for some final comments on our cost savings and efficiency programs.

So Slide 28. As you will recall from our Capital Markets Day in the autumn last year, our strategy 2018, Driving Profitable Growth, is deliberately focused on ensuring that all our businesses generate improved financial results.

This was translated into two headline financial targets high single digit annual EBITDA growth, and a high double digit basis point annual ROCE growth. To achieve these targets, we have defined clear actions to support organic growth, and have initiated ambitious cost reduction and efficiency improvement programs.

At this moment, we're rigorously executing these detailed programs across the Company. And I'm pleased to report that they are all on track with the milestones set for 2016, as well as being on track to deliver the overall growth savings of €250 million to €300 million, versus the 2014 baseline, by 2018.

In order to succeed in embedding these changes in cost structures, we're also adjusting our global organizational and operating model, creating more agile, commercially focused and cost efficient businesses. The shift to the globally leveraged and steered support function is well underway as well, with the new operating models and leadership teams having been announced, including the impact on the various teams across the Group.

Continuous efforts are being made right now to support these organizational changes with specific programs that assist people in changing their mindset and behaviors, in line with our new way of working. And with this, I would like to open the floor for questions.

Operator?

Sorry to hear you're unwell, Geraldine, I hope you get better soon, but a couple of questions around guidance. Firstly, you've delivered 18% EBITDA growth in the first half.

If I read the cost-cutting slide right, then you have a similar tailwind in the second half, and, potentially, the vitamin E benefit. So, apart from the world looking a bit gloomier post-Brexit, there are other substantive reasons to think the growth rate will slow down in the second half.

Also, are you including any benefit for vitamin E contract prices picking up in Q4 in that guidance? And I guess the second or third question is CapEx.

CapEx was very, pretty low in the first half. What's the updated full year guidance?

And is there any reason why it was particularly low that I've missed? Thank you.

Yes. Good morning, James, and thank you for your good wishes.

In terms of the outlook, the best way of looking into this is that, if, as you know, in our three-year strategy and the guidance that we gave after Q1 was the high-single digit outlook for the year. Now, given the very strong H1 with that 18% EBITDA growth, we're now in the position to confidently say that we will go beyond that for the year.

Now, H1 and H2 are not necessarily the same. In fact, we had a very strong H1.

And here, we want to signal clearly that we're going beyond the high single digits into that low- to mid-teen growth in EBITDA. Now to come to your question on the vitamins, vitamin E, in Q2 there was no upside from the vitamin E itself.

There was a broad upside from all the vitamins put together, including vitamin B, of about 10 million and what we are assuming for the second half, and the visibility is not so easy to figure out in terms of the vitamin E price evolution, but we are factoring in between maybe 20 million to 30 million upside from vitamin E in the second half. However, one semester is not always the same as the other and what we have in the second half are also the shutdowns.

Now, you may recall that we had a shutdown last year in the second half as well, quite a big one that weighed about 15 million, 20 million. We will also have shutdowns in this second half, in Q3 and Q4, mainly Q3.

We also have some marketing campaigns coming through. So what we will see is that for the full year though, we're very happy to announce this upward adjustment to our outlook on the full year basis, as stated.

And maybe thirdly, in terms of the CapEx, the first half is indeed a little lower than last year. We would again, it's not a straight line, here, we would guide for the full year at broadly around the 500 million.

Now, in the Capital Markets Day, if you remember, we had guided 500 million to 550 million in any given year. I think this year we'll be more towards the 500 million.

Very clear, thank you very much.

Operator, can you also add the name of the company?

Actually, I had two. Firstly, am I right in thinking that overall human nutrition EBITDA was possibly down?

I know you don't report that, but I'm just trying to read between the lines here on the contrasting performance of the two. And then secondly, resins and functional materials, I think if I look at your commentary, volumes there could have even been double digit.

Can you just run me through why it's particularly so good in the second quarter?

We do not give the underlying specific EBITDAs for the different units, but human nutrition has not been down. I think we had good growth in human nutrition in the second quarter, and prices more or less flat, slightly positive.

So, human nutrition is well on track. Of course, the growth in animal nutrition was very high in this second quarter, even if we need to correct for the easy comparison of last year due to the fire Geraldine elucidated.

So, the growth in animal nutrition was higher than human nutrition, but both fairly good and both increased EBITDAs. Regarding resins, indeed very strong growth, especially waterborne paints and specialties , to be honest, also in Asia, including China, very good growth, if you know that some years ago already, this is two years ago, Chinese law has been changed and Chinese are pushing very much waterborne paints instead of sulfur borne paints and we are benefiting from that.

By the way, that counts a little bit in our whole Company what we did in 2015 when we revised again our portfolio. We're setting apart caprolactam and all the stuff and shaping the portfolio we have today.

We looked with all businesses where are the real pockets of growth geographically, market wise, etcetera. That's the analysis we did in 2015 and with the announcement of the new strategy, in the November 2015, we kicked off pretty much on that one.

So, in all businesses, we know exactly where we want to grow, which specialties, which market segments, which customers, etcetera. For some business, still that can be improved, but for many businesses, we are capturing that growth and therefore, you see also that the organic growth, the whole Company, in fact across all businesses, has been very good.

Thank you very much.

Two on my side. The first one is on the interim dividend.

Given the strong cash flow, can you go through your reasoning on the dividend there? And the second one on the human nutrition, you still say that U.S.

is so, so. Is it where you are going to put most of the marketing campaign?

And how have you seen the market evolving in Q2? And what do you expect for the rest of the year there?

Thank you.

Okay, maybe I'll start with the interim dividend. Just be careful here, our interim dividend is nothing more than one third of the prior year dividend, and you will see that in the press release and in line with our policy.

So don't read in that any particular logic there and should actually not be read as an indication of the full-year dividend.

On the marketing campaigns in the U.S., the U.S. market for multivitamins and Omega-3 is still so-so.

It's not really strongly recovering. The market outside the United States, which is much less separate market than, of course, in the United States where the consumption per capita is much higher, so the potential outside the United States is much more, it's much bigger and we focus also on growth of multivitamins and Omega-3 outside the U.S.

Now coming back to the U.S., where the market is so, we position ourselves more on the higher end of the portfolio. We did an investment last year in Mulgrave in our Omega-3 to be more active in the concentrated Omegas which is, again, a segment within the segment which is more niche, more specialty, higher growth rates, higher margins.

So that is what we do. The marking campaigns which we will do in the second half year are partly building on the marketing campaigns we did before, to push both categories more in the United States, so we do that in collaboration with other players.

That is one part of the marketing campaigns we do. Other marketing campaigns we will do have specifically to do with our products, especially also on our B2C business, our eye health business, with products like Culturelle and AZO, etcetera, which are doing very well.

Like Geraldine mentioned before today, we will have roughly 10 million excess spend in the second half year of marketing campaigns across the globe, both industry wide, where we contribute our part and specifically, deals and products. That we did not do so strongly before.

And that is also one of the things, together with the closures, which Geraldine mentioned, which eats up a part of the benefit which we have in the second half year from increased vitamin E prices, like Geraldine indicated.

Okay, thank you.

Three questions from my side. On vitamins, did you see any temporary production closures in China at your local competitors which leads to the G20 summit and the respective preparation meetings?

So I want to understand to which extent the price increases on the spot market is sustainable. The second question is on vitamins in Europe.

To which extent did the production outage of BASF in their citral plant in Ludwigshafen help you in your vitamins business in Europe? And finally on materials, can you quantify the windfall profits from raw materials in the second quarter?

And to which extent do you think that the earlier mentioned exaggerated margin of 150 basis points will flatten out? Or is that the wrong understanding because we saw right now, you improving your product mix, shifting more volumes towards high end products and thus reducing the low-end products and thus, the general margin in materials will structurally move upwards?

Yes, good questions. Geraldine will address the materials, what you call windfall and indeed, we have pretty strong margins in the second quarter.

Coming back to vitamins, indeed, we see clearly a positive momentum in vitamins. Like Geraldine already mentioned, in the first half-year, second quarter, we saw vitamin Bs increasing.

Vitamin E invoiced by us, spot market went up in the first half year, vitamin E invoiced by us in the first half year even slightly down last year, so no benefit from us, in total, all vitamins, roughly 10 million windfall in the first half year, mainly due to the B vitamins. Now, the momentum is clearly up with vitamin A, especially vitamin E in the spot market.

You know we do not operate in the spot market. We operate more on the longer term contracts.

Secondly, we sell limited amount of spreads and most of it via pre mixes. So there is also, let's say, the way we sell our vitamin E is partly in a packaged form via pre mixes.

Nevertheless, we see clearly momentum up. And we see also that we will partly benefit already from that in the second half year.

And Geraldine mentioned the 20 million to 30 million benefit we will get. She mentioned also the shutdowns and the marketing campaigns and, therefore, the first or second half year comparison.

Nevertheless, the momentum is positive. For us, you will see that more in the fourth quarter than in the third quarter, due to delays into the contracts.

On the other hand, we said also let's not be totally carried away by all of this and see how much it sticks. I agree because there is something about some outages, about the G20 and all that stuff.

And we are making that analysis our self. And I think you will see better in October where you really are on all the vitamin prices and whether it sticks.

Is the momentum positive? Yes.

Will we, in the second half year, start increasing prices, also invoice increase? Yes.

Are there certain questions about how that will continue further? Always, but the momentum, I cannot say differently is, of course positive in the numbers we gave you, Geraldine, on the windfall on the materials?

Yes, on materials, absolutely. As you can see in Q2, 18.3% margin is clearly on the high side.

And if you take the full H1, that's 17.1%. Now, in line with what we've seen in the past, what we're seeing is that the benefit of the low input cost is broadly in the range of 100 basis points to 150 basis points.

And that is the absolute benefit, as well as the math of having the numerator and denominator mix a bit different. So there, we would still, over time expect that some of that will fade and go away.

Now, the other upside that you see here is, obviously, the mix impact and the FX of, broadly together, about 100 basis points. So, if I come back to the Capital Markets Day, where we said that over the period, we would aim to take our materials to being higher than 15% margin, I would say that now we are a bit more comfortable that we are there, whereas last time, if I'd adjusted, we were back in the 14.5% type range.

In the vitamins in Europe question?

Yes, let me not go into outages of other companies, etcetera. I don't see a major shift here in production.

And we need to be careful to react on all kinds of temporary movements. Therefore, I'd say also, let's be careful with the G20 effects and all that stuff.

That is all a little bit short-term movements. The whole momentum is up and, to be honest, we have flagged that already quite a while that the bottom of vitamin E prices needs to be somewhere around €5, whether it was €4.90 or €5.20, etcetera, we said we cannot predict totally, but somewhere there needs to be the bottom and then it will bounce back again.

And yes, it's always difficult to predict that exactly but I think what we mentioned before in 2015 is exactly materializing right now, the bottom has been reached and it bounces back. Now there are also temporarily things you need to delete that from the picture.

There is a delay element with this. You need to delete that from the picture.

But the overall momentum is positive.

Thank you.

My first question in on the shutdowns, Geraldine, you said the impact was 15 million to 20 million last year in Q4. Can you give us a guidance on Q3/Q4 this year on the impact of the EBITDA?

The second question is on the guidance. If I take low to mid-teens on last year's EBITDA and if I take out the H1, I get to an implied growth of 7% for H2 2016.

Now, you would get there only on the back of the 20 million to 30 million of vitamin E impact that you just said. So all the growth that you've reported in H1 is not included in there.

So can you tell us why you would expect such a decline, such a significant decline? And then thirdly, you mentioned vitamin B.

You spoke about vitamin E. We also noted vitamin A has doubled.

Can you tell us whether you already had a positive impact of that in the first half and what kind of impact you would expect from that in the second half? Thank you.

Okay, let me address those in that order, so in terms of the shutdowns, correct. So last year, we indicated 15 million to 20 million in mainly Q4.

That was a big shutdown. This time, it's a somewhat smaller shutdown, but we would still it being in the double digit millions, and the timing is looking to be mainly Q3, but possibly partly impacting Q4, so we'll have to see on the exact timing.

So a bit smaller, but still a material shutdown, and that's on our fat soluble vitamins in Switzerland. Now, in terms of the vitamins, as you know, we have a whole portfolio and we don't split down the impact of each and every vitamin in there.

I highlighted that it was mainly the Bs, A is indeed up and there's partly an impact there. But very much what we've always said is that all put together, we look at the impact of vitamins and we don't carve out this one versus that one.

I was just highlighting the main impact in Q2 which was, as I said, about 10 million upside broadly coming from the Bs. And then in terms of the outlook, I thought I'd tried to phrase it properly based on the first question.

And what we're seeing is that one semester doesn't mean that the next one is necessarily at the same pace. So what we're seeing is we had a very strong H1, as you mentioned yourself.

Now in the second half, we have some positives. As we indicated, we expect, with all the caveats around it, that vitamin E will bring us between 20 million and 30 million upside.

In the first half, we already had some benefits of the program, we'll continue to gradually see those helping us in there. And we have in the second half events such as the shutdowns, such as the marketing campaign.

So, we're not seeing this as a slowdown, we're seeing a decent momentum actually in both of our businesses. But what we are focusing on is the full year, year on year EBITDA growth, which we are guiding here to that low to mid teens.

Okay, thank you. Can I just quickly follow up on the shutdowns?

In the last couple of years, you've done a lot of shutdowns. Is it mainly done for debottlenecking or is it, I would expect that the plant, the maintenance would be already quite high so to say.

Yes, but if you look to our operations in Switzerland, Sisseln and some of you have visited that, it's a huge factory, it's very, very complicated and it's multi, multi stops. It's also why we think we are competitive against competition because you cannot play around and jiggle a little bit too much with that.

It needs, almost every year, once in two or three years, a bigger stop and every year a stop for all kind of structural maintenance things. It's not a simple factory and last year, the big maintenance stops were more in the Q4.

Now it's planned, like Geraldine said, to more in Q3, maybe an overflow to Q4. But it is necessary to do and I would assume for competition as well.

You cannot play too much with this.

Okay. Thank you, Feike.

On the associates, can you give, insofar as you're able to do, and I understand you need flexibility, some sense of time line for the monetization of those holdings? And also, perhaps just to give us a bit of a handy hint on how we should think about the second half.

On the vitamin side, I know you gave a pretty good explanation, but I was wondering if you could go into a little bit more detail because obviously, you don't want to provoke a huge CapEx binge by Chinese investors, but equally, you don't want to under price your products. S, what's the strategic thinking about how you go about that market?

And lastly, and again, you've mentioned on it, Feike, on your human health side. If you could just go into a little bit more detail on how you're branding your products and the hopes you've got from that development over the medium term.

Okay. And, Geraldine, start with the associates?

Yes, I'll start with the associates. Of course, we're happy to see already a first amount of liquidity coming in, in Q3, so that's the $240 million that we pointed to from the Patheon secondary, plus the related transaction linked to the IPO, so that's good.

Now that will go towards improving our balance sheet at this stage. Now be aware that we have anyway a six month lock in on our remaining 34% in Patheon and then we will see when the next steps will be in terms of monetizing, depending, obviously, now it will be very easy to track with the share price movements.

But the direction remains what we had indicated always, which is that we will aim to monetize overtime in a sensible way, with the aim of maximizing, obviously, the cash in, as opposed to particularly pushing on timing. So that's on Patheon.

So, in terms of DSP, so Sinochem Pharmaceuticals, it was another good quarter. And there, we continue to look at our alternatives.

And we will see how we progress with that one, so no big news there. Clearly, for ChemicaInvest, the market is difficult right now.

It's still early days, given we carved it out only in August last year, so less than one year ago. And there, it will be further down the road.

So, really, pretty much in line with what we've been saying recently.

Okay. And just, sorry, Geraldine, any handy hints on the second half, because there's an awful lot of exceptionals in there, which makes understanding the outcome in any period quite hard.

Okay, sorry, are you talking about the cash movements or the earnings?

No, I'm just talking about the associates line in the profit statement.

Yes, okay. So associates, indeed, fully agree, you see quite a difference between the EBITDA and the net profit after tax.

So what we're seeing is once you start taking into account the full cost of the financing and some of the exceptional items that were booked by the associates, that you see there a negative net profit for the period. So what we're seeing there is that, from a Patheon point of view, we would be expecting a lot fewer exceptionals.

And the business itself has a very good dynamic, so that should be positive. In the case of ChemicaInvest, what we're seeing is that they break-even at EBITDA level and then all the costs, from EBITDA down to net income, obviously brings us into negative territory.

Now, that is, if you want an implication, from a valuation point of view. Now that Patheon is listed, obviously, that part of our holdings will be a lot easier for everybody to value.

And in terms of cash, the cash inflows in Q3 will be the ones relating to the secondary IPO and the various related transactions, so the 240 million. I would not flag any others per se.

And back on the vitamins, yes, it's complicated. And, by the way, you already phrased it more or less yourself I think.

There is a different pricing per vitamin and per product. By the way, I repeat again, our Company does more than vitamins.

Vitamins is only 30%, 35% of the total sales of nutrition, so let's not overdo it, but it has a big impact. Vitamin C is still relatively low and did not really come higher yet.

Vitamin E reached a bottom and is bouncing back right now in 2016. And we will increase our prices of vitamin E and the effects we indicated.

Do we want to get it really at the extreme highs or the ultimate prices where it was before? Not necessarily, we said we will be competitive also at these prices.

And, of course, the current market prices, we think, are more realistic than maybe the bottom. But we don't need, per se, to push it to an extreme high level.

And we can compete at all levels because we believe we have the best technology and processes, even when we are located in Switzerland. The Bs went up a little bit in the beginning of this year, like we indicated.

And I think, Mutlu was it, who said vitamin A at this moment is not really at a low level, and we benefit from that. If I look back a little bit and I combine this with the human health picture, we made a great ride with this whole vitamin business in the decade 2003, 2013.

And it went up and we were benefiting, especially maybe also from vitamin E. We, as a Company, did not miss or did not notice the effect in 2013, 2014, which was quite heavy, especially in vitamin E going together with the Swiss franc.

And when we did, in 2013, 2014, when we got this hit, thinking carefully how we should react on that. And we changed further the portfolio of the Company, choosing on the right segments.

And especially at the end of 2014, 2015, we worked out can we be competitive in all those products? Yes.

Can we further reduce our costs Companywide? Yes, especially since we have a new portfolio or harmonized portfolio, we can reduce all our costs in all our support and service functions worldwide and that, we are implementing right now.

But also, we said in which segments are we now operating and we were not pleased with our performance in human health. And we looked very carefully where are the growth pockets geographically, market segments, etcetera.

We changed leadership and together in human health and together with Chris Goppelsroeder and Stephan Tanda, we looked carefully in all the growth segments. And I'm happy to see that in human health, we are back on our growth trajectory.

I was not happy on what happened in 2013, 2014. But we are back on our growth trajectory because we know exactly where we need to be, more natural, more in the health segments, etcetera.

The Omega 3, multivitamins, more outside United States than inside the United States, but we still believe in the United States, so we do some additional marketing campaigns, not only with the industry, but also specifically for our products. That's a change of previous strategy.

Also, pushing our eye health business in the United States, which is doing well, also looking for opportunities to increase our eye health business outside United States, which can also help our human health business and not last, also hydrocolloids business, mainly based in China, is doing very well, enzymes in food specialties. So, those are the real growth pockets in human health and we have much more focus on the right segments.

And with all those actions on finding the right pockets of growth and reducing helpfully our costs, we're working, trying even successfully, of addressing the issues which we had in 2013, 2014, when the nutrition margin even dropped to 16%. I'm happy that we are back in this 18% territory, 18.3% this quarter.

So, it's moving all in the right direction and exactly like you say, let's not carry our self away with only increasing prices, etcetera, because we can be competitive at all kinds of levels. And that's what we're doing basically in this segment.

Thank you very much.

I have three questions. The first one relates to animal nutrition and in particular, the good volume growth.

Could you give us a bit more detail on regions, especially China and LatAm from what we hear on the feed side, the movements there and your growth there, but also on species? And in particular, I'm interested in pigs and aquaculture because there's plenty of news on movements and on trades.

See, if you can give us more light on where you saw growth and on which species in particular would be the first questions. The second question, again, a clarification on vitamin E issues.

There was some news last week on Feedinfo that a European producer had problems. I just wanted to make sure it was not you, if you can answer that.

And third question, again, can you put some, I'm surprised of the growth of food and beverages supplements. Could you also give us a bit of geographic and category details where will you see the growth in H1?

Thanks.

Okay. You go into great detail, so I'm not sure I can satisfy all your needs, but I'm sure otherwise, you can discuss that offline with our Investor Relations people and also maybe with Stephan Tanda.

But in animal health, we had good growth in Asia and in China. In Latin America and Brazil, we had some setbacks, but a little bit more in human nutrition than animal nutrition, as far as it was referring to exports.

Exports in Brazil are still there and there are a lot of meat exports, the local market was more difficult. United States continued to grow, Europe continued to grow.

That is on the regional segments. On the species, aqua is very important and especially for our [indiscernible] business.

Into the meat area, it is pig and chicken which is still by far our biggest segments and our biggest growth segments, although we have specific actions to move further into the meat, so that means cows, etcetera area, where we are relatively underrepresented and picking up step by step, but it is still smaller for us. With that, to give you a little bit picture about our animal health business, growth was already for quite some quarters pretty good.

This quarter was a little bit maybe helped by the low growth of the same quarter last year due to the Tortuga issue with the fire in the harbor. But nevertheless, even corrected for that, growth is good and we are very well positioned in our animal health business.

And you see here that the whole strategy of global products, which we manufacture in certain places and then local solutions, which all our premix is closer to customer and there, we distinct ourself from any competition that that strategy actually works and I'm happy with that, and we see that already for many quarters. The European production outlets, I don't also know what Feedinfo, first, you need to ask to Feedinfo.

But we had some smaller shifts in supply in the quarter. Just, I don't know, could refer to us, could not refer to us, but we have no, any major issues in our whole supply chain.

So, for the rest, I'd need to feed info for Feedinfo. Food beverages, the segments, well, it's partly into our enzymes business, our coloring business, which is doing fine.

Also, of course, some of the vitamins into drinks, yogurt, those are the main important growth areas we see there. I hope this gives a little bit new elucidation, otherwise, we can do that offline.

Okay, thanks.

Two from me please. Firstly, on the iHealth business, I wonder if you could talk a little bit about how your branded supplement customers are reacting to the growth of iHealth.

And is there a risk that you're cannibalizing growth elsewhere, perhaps deliberately I don't know? At what point would this business, iHealth that is, required further investment to facilitate further growth?

You talked about marketing campaigns, but I'm thinking more fixed capital investment? And the second question is more broadly.

If we compare the first half revenue performance, particularly in the two sides of the nutrition business, against your 2018 strategy targets, I know it's early days, but could you perhaps provide some context around the delta, the better growth that you've enjoyed and split that between better market growth and superior share gains above and beyond what you had been expecting? Thank you.

Okay, iHealth, it is still relatively small in the context of total DSM. DSM is still a B2B company and not a B2C company.

However, we see the benefits of being in the B2C market also. However, however we do not want to compete with our own customers.

So, we target and select our segments in which we operate in, in our iHealth B2C business very carefully. There, we do not compete with our customers.

Some of the customers even like very much what we do with our iHealth activities because we boost, therefore, also the category because we are backward integrated and know exactly what we talk about and try to boost the category, which also other people are benefiting from. But we have a very careful strategy not to compete with our customers.

iHealth business is mainly in the United States, but we are now also looking for expansion outside the United States. Capital intensity is very low in the business, so it doesn't require a lot of capital.

What it requires from time to time is indeed these marketing campaigns, but that is operational cost like we will have in this second half year where we will more push our own products than other products. Then growth in this first half year, market growth, market share gain.

Yes, we are outperforming the market in terms of growth. We grow faster than the market.

So call it, here and there, market share gain or call it that we focus on exactly the right segments, because that is what we developed in 2015, where exactly we want to grow. So, you can also say that in older segments of the markets which has an average growth of around 3%, 4%, there are always pockets in that 3%, 4% which grow 1% and pockets which grow 6%, 7%.

If you focus more on the 6%, 7% pockets and less on the 1% pocket, yes, you grow faster. Overall, you can say, yes, you gain market share, you grow faster than the market, but even in those segments it does not, per se, have to be.

But you shift your growth, if you understand what I mean. And that is also what we are doing and this was the effort we did in 2015.

After the hit we got in 2013, 2014, we said, hey guys, we need to do something about our cost base, about our organization, about our leadership, about our approach on where to focus on. And we made all those changes and I think we are benefiting from that.

To see to what that results towards 2018, like Geraldine said before, that goes too far right now. We revise our outlook for this year and with that, I would like to keep it and then we see later on what we do later on.

Okay, we're running out of time. One short last question and then we have to close off.

So who has the last question?

Congratulations on the results. Most questions have been answered, so a last one, maybe strategic.

Regarding the structural change you guys are trying to effectuate with the cost cuts as well. But, I also heard Geraldine talk about internal culture and front- and back-end integration.

Is it conceivable that within the Capital Markets Day 2015, 2018 frame, there will be maybe some more rigorous rationalizations of actual assets as opposed to just maybe variable costs, maybe more fixed-cost based? Is this being investigated or is this something that we shouldn't look at, at current?

Thank you very much.

Okay, let me see if I understood your question correctly. So thank you, by the way, for closing on this because, let's be clear, the result that we're posting here is also very much linked to all the efforts that we're putting in to rationalizing our cost base and we are on track, but there's still quite a journey to be done.

Now, indeed, the way we described it at the Capital Markets Day is that we're tackling primarily the support functions, as well as various aspects of the variable costs within the nutrition business, although there, there was also some debottlenecking and asset efficiency elements in the nutrition programs. Now, if you're asking whether we are looking in those programs to look at our geographical footprint of our assets, which I guess is what you're referring to, at this stage, there are no major rationalizations planned there.

This is more, I would say, incremental as we go along as part of our evolution of our footprints that we had planned. So not something which is specifically ring fenced and accelerated at this stage on the fixed asset side.

Maybe one quick follow-up in that regard, I'm sorry. There's no link between this and maybe the lower CapEx spend in the first-half either, I shouldn't read into that?

Maybe more cautious…

No, no, absolutely not. The lower capital spend in the first half is just due to timing.

Of course, we are careful with our spend and we spend where we have to. But there is no particular link there in any way.

Okay, then we have to stop. Maybe, Geraldine, you want to make some closing remarks?

Yes. Thank you, Dave.

So thank you all for your time again today to follow our results. So, in short, we had another strong quarter and we remain confident about the remainder of the year that both nutrition and materials will be supporting our upwardly revised outlook for the year.

Now, I would just like to close by saying that we very much hope to see most of you at our investor event in Charleston in the US. You see the details on page 36, from September 22 to 23, where you will have a chance, if you join us, to meet with several of our top executives and learn a bit more in depth about some of our businesses.

And with this, I thank you all.

Thank you, Geraldine. Thank you, Feike.

This concludes our conference call for today. Thank you very much for your attention and your questions.

And if you have any further questions, you know where you can find Investor Relations. And with that, I hand back the call to the operator.