On Thursday, Deutsche Bank (ETR:DBKGn) adjusted its outlook on DSM-Firmenich AG (DSFIR:NA), increasing the price target to EUR137.00 from EUR135.00, while maintaining a Buy rating on the shares of the company. The revision follows significant market changes in the vitamin sector, influenced by a recent event at a competitor's facility.
The price adjustment comes in the wake of a fire at the BASF Ludwigshafen site on July 29, which led to a declaration of force majeure on August 7. This incident has caused a dramatic surge in the spot prices for vitamins A and E. Since the last forecast update for DSM-Firmenich on July 30, the price of vitamin A has tripled, and vitamin E prices have nearly doubled.
DSM-Firmenich's profit and loss statement is expected to see a limited impact in the third quarter due to the time lag in reporting and scheduled maintenance shutdowns.
However, the company is anticipated to experience a more substantial effect starting in the fourth quarter. Assuming the spot prices remain stable, DSM-Firmenich could see year-over-year prices for vitamin A and E increase by approximately threefold, with increases of around 50 euros for vitamin A and 13 euros for vitamin E, respectively.
The company has previously disclosed EBITDA sensitivities related to vitamin prices, indicating a potential impact of 50 million euros for a 1 euro change in the price of vitamin E and 5 million euros for a 1 euro change in vitamin A on an annualized basis.
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