Chr. Hansen: 10 percent organic growth for 2016/2017

25 Oct 2017 --- Chr. Hansen has announced its 2016/2017 Q4 results, with revenue reaching €283 million (US$333 million), compared to €256 million in Q4 2015/2016, corresponding to organic growth of 12 percent. Organic growth for the year as a whole reached 10 percent, and the EBIT margin before special items ended at 28.9 percent, up from 28.2 percent the year before.

Food Cultures & Enzymes and Health & Nutrition both delivered strong growth, performing slightly above the long-term ambitions for these businesses, while Natural Colors grew in line with ambitions. This meant that the company reached the high end of its revenue expectations. Profitability improved in all areas, with the significant profitability improvement in Natural Colors highlighted as particularly encouraging.

“2016/17 was another good year for Chr. Hansen,” says Cees de Jong, CEO at Chr. Hansen. “We delivered successfully on our operational and strategic priorities, achieving strong financial results while continuing to build long-term growth opportunities. Organic growth reached 10 percent, and the EBIT margin before special items ended at 28.9 percent, up from 28.2 percent the year before. Finally, free cash flow before special items and acquisitions was €188 million, an improvement of 7 percent, despite considerable investments in both new capacity and future growth opportunities in line with our Nature’s no. 1 strategy.”

Strategic lighthouses perform encouragingly
Chr. Hansen’s lighthouses progressed well during the year. Revenue in bioprotection grew by around 30 percent and a range of second-generation products has just been launched to fuel future momentum in this category.

Chr. Hansen’s bioprotection is key, Soeren Westh Lonning, CFO at Chr. Hansen (pictured), tells NutritionInsight. “We have just launched our second generation of bioprotection cultures, which can help keep food fresh and safe,” Lonning says. “So you reduce food waste, the number of chemical preservatives and the risk of having food safety issues. We have launched the second generation, but that journey will also continue going forward.”

“When we talk about all the aspects we also mention plant health: using nature to keep plants healthy and grow fast to create a sustainable way of delivering the food demands of the world,” Lonning notes. “We have seen such positive effects of using bacteria for exactly that so far that we will continue to invest in building the portfolio, the pipeline of products. We will then invest and take them to markets to make sales happen for customers that are maybe not so used to these types of solutions as an alternative to chemicals.”

In plant health, the company received registration for two new products ahead of schedule, and it believes both products offer great prospects.

“Our key focus area within the human microbiome is really gastrointestinal health. Immune system strengthening and metabolism are key to us,” explains Lonning. 

“There might also be bacteria which don’t fit our own discovery focus, but we will aim to enter into a partnership with biotech or pharma companies that want to leverage our bacteria for other purposes outside communication areas that I mentioned here,” Lonning continues. “We have a focus, but our range of bacteria may be broader than that, and this would be something that we’d work with partners to develop.”

Shortly after the end of Chr. Hansen’s financial year, the company completed the large capacity expansion for dairy cultures in Copenhagen and it notes that this complex project has been executed fully according to plan.

The key focus for Chr. Hansen continues to be strong organic growth through innovation and the company notes that, with good progress in many of its strategic initiatives, the building blocks for achieving its ambitious financial targets are in place.

Chr. Hansen does look to acquisitions as well, however. “Over the last one and a half years, we have competed two acquisitions and they have created a great deal of value for Chr Hansen,” Lonning explains. “It shows that we are capable of doing that. It also shows to investors and shareholders that that is also a way that Chr. Hansen can extract value. We are also mindful that we need to stay disciplined and quite selective because it needs to be something that strengthens our technology platform or our customer channel.”