Food Cultures & Enzymes boosts Chr. Hansen first quarter performance

DENMARK – Chr. Hansen reported an organic revenue growth of 1% in the first three months of 2019/20 to €272.4 million (US$303.64m) boosted by a 4% growth in Food Cultures & Enzymes and a 1% growth in Health & Nutrition.

During the period, Chr. Hansen reported a 1% decline in EBIT before special items to €70 million (US$78.03m) while profit dropped 2% to €49.9 million (US$55.62m).

Despite the biosciences firm noting that the performance was in line with expectations, the company lowered its organic growth outlook for 2019/20 to 4-6% whereas the guidance for EBIT margin and free cash flow remained unchanged.

The Danish ingredients supplier also lowered its long-term organic sales outlook of 8-10% until 2021/2022 and further set a new preliminary target of mid-to-high single-digit organic sales growth per year until 2024/25.

CEO Mauricio Graber says: “We have had a mixed start to the year, as expected. Food Cultures & Enzymes delivered good organic growth driven by all segments apart from probiotics, in line with our expectations.

“The recently launched enzyme for cheese making, CHY-MAX Supreme, has been very well received by customers and is off to a very good start.

“In Health & Nutrition, Animal Health showed very strong growth driven by the timing of sales in silage and good momentum in Cattle, whereas Human Health and Plant Health declined, as expected, due to the timing of orders.

“Natural colors declined due to continued negative raw material price impacts and challenging market conditions but showed a strong EBIT growth of 10% – and growth in the FRUITMAX range remained strong.

Chr. Hansen’s Q1 EBIT margin before special items declined by 0.6%-point, which the company attributed to the lower margin in Health & Nutrition caused by the lower revenue.

The EBIT margin in Food Cultures & Enzymes improved, impacted by a continued positive development in gross margin, and the EBIT margin in Natural Colors also increased, driven by lower raw material prices.

“We continue to invest in growth opportunities and innovation across our three business areas,” Graber says.

“We started the year with a cautious outlook due to the market challenges that we were facing, and those challenges have proven to be persistent.

“The end-market growth in Food Cultures & Enzymes is not improving, and we also see lower growth in dietary supplements.

“As a consequence of the lower end-market growth, and reflecting the preliminary conclusions in our on-going strategy review, which will be finalized in April 2020, we are issuing a preliminary long-term growth ambition of mid to high-single digit organic sales growth per year until 2024/25.”

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