DENMARK – The Danish ingredients supplier, Chr. Hansen has reported a ‘solid’ financial performance, delivering a total revenue of €1.21bn (US$1.19bn), marking 13% growth for the year ending 31 August 2022, despite a ‘volatile’ macroeconomic and geopolitical environment.
The company’s Organic growth was 9% in 2021/22, 7% of which was driven by volume growth, while the implementation of price increases – to reflect inflationary pressures – can be attributed to 2% of total organic growth, which the company reports had a favorable impact in the second half of the year.
However, organic growth was negatively impacted by Russia, where Chr. Hansen scaled down operations, explained CFO Lise Mortensen.
Following Russia’s invasion of Ukraine, the challenges ‘intensified’ and Chr. Hansen decided to reduce its activities in Russia to basic food ingredients only.
Lisa explained that the company supports the very basic products within food and health, adding that its work in Russia is not implicated in sanctions.
She noted that the Danish ingredient supplier has decided not to disrupt very basic food chains to feed the civil population of Russia.
From a logistical perspective, continuing to work even scaled-down operations in Russia has proved challenging. It has also impacted the company’s Russian business.
Lisa stated: “Before Russia invaded Ukraine, we saw challenges in the supply chain and inflation starting.Now, we started to focus on that and implement price increases.”
“We will be donating all profits from the Russia business to organizations supporting Ukraine because we don’t want to profit from it.”
Across the company, Food Cultures & Enzyme’s organic growth was 7%, mainly driven by volume but with a positive impact from the pricing. Health & Nutrition organic growth was 14%, driven by volume.
The Lighthouses – made up of Bioprotection, Fermented Plant Bases, Plant Health, and human milk oligosaccharides (HMOs) – delivered 14% organic growth combined.
These focus areas, Mortensen explained, are expected to grow faster than Chr. Hansen’s ‘core’ business areas.
The company noted that the Lighthouses are core to its strategy, in terms of innovation and where it wants to go.
The company chooses to measure its performance as a portfolio, rather than as individual businesses but could reveal that some Lighthouses experienced more ‘modest’ growth than others.
In an environment like this with macroeconomic uncertainty and unprecedented inflation, Lisa said, products like Bioprotection [ingredients that inhibit spoilage and protect against contamination] are growing at a more moderate level than they would have in more stable and growing economies.
However, over the last year, HMOs and Plant Health have grown ‘significantly’, ‘pulling up growth’ so that overall, the Lighthouses portfolio grew 14% – compared to 9% for the core business.
In Chr. Hansen’s Food Cultures & Enzymes businesses, revenue for the year 2021/22 amounted to €762m (US$749.01m), representing a 9% increase compared to €700m(US$688.07m) last year. Organic growth was 7%, driven by volume, while the impact from pricing was approximately 2%.
Looking into 2022/23, Chr. Hansen expects organic revenue to be in the range of 7-10%, with revenue predicted to be positively impacted by approximately 5% from exchange rates.
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