Chr. Hansen reports “higher than expected” organic growth as its “lighthouses” shine
13 Apr 2023 --- Danish bioscience business Chr. Hansen has ended the first half of its financial year with 11% organic growth driven by both volume and price increases. Its “lighthouses,” strategic business areas with a minimum revenue potential of €100 million (US$97.2 million), delivered 38% growth in Q2 “positively impacted by the timing of orders,” according to the company.
Chr. Hansen has five lighthouses – Bioprotection, Fermented Plant Bases, Plant Health, HMO (Human Milk Oligosaccharides) and Bacthera, which outpaced the general business growth – delivering 38% organic growth in Q2, compared to 8% of the core businesses.
Nonetheless, even after achieving double-digit organic growth, Lise Mortensen, CFO at Chr. Hansen tells NutritionInsight that the company “remains cautious” in their “volume expectation for the full year, given the macroeconomic and geopolitical uncertainties.”
“On inflation, a better-than-anticipated winter combined with declining transportation costs has impacted our cost outlook positively. This is unfortunately offset by higher than expected price increases in other categories (direct materials including certain raw materials, packaging, etc.), reflecting a delayed impact from last year’s inflation and continued bottlenecks in supply,” she continues.
The company also announced it will continue the regulatory approval process toward merging with Novozymes and expects to clear all hurdles and close the deal either in the fourth quarter of the calendar year 2023 or during the first quarter of 2024.
“The regulatory approval processes are progressing as planned, and it is still too early to say anything other than closing is expected in the fourth quarter of 2023 or first quarter of 2024 (calendar year),” details Mortensen.
Solid core business
The company’s year-to-date revenue is up to €647 million (US$713.06 million), 13% more than last year for the same period, with the core businesses up 9% in the same period and 8% for Q2.
“The strong results for Q2 confirm the attractiveness of the markets we serve in Food Cultures and Enzymes and Health and Nutrition and the resilience of our customer-focused business model,” says Mauricio Graber, Chr. Hansen CEO.
“In particular, volumes in our Health & Nutrition business came in better than expected,” reveals Mortensen.
Lighthouses help navigate headwinds
Mortensen explains that its lighthouses sections “delivered strongly” but remarks that those businesses are “more volatile and represent ‘only’ around 10% of the Group revenue.”
In its corporate strategy until 2025, the company plans to reinvest in science around synbiotics combining Human Milk Oligosaccharides (HMOs) with probiotic solutions, as the company reveals that customer interest in HMOs remains high.
“Worth highlighting in Q2 is HMO, which delivered strong positive results supporting an outlook for the year of approximately 30% organic growth,” underscores Mortensen.
Chr. Hansen gained regulatory approvals last year for the use of HMOs in infant formula by European, US, Canadian and Israeli authorities, with product registration in China and other “key geographies” ongoing, according to the company.
The business also plans to extend its Bacthera segment fermentation capacity, leveraging a microbiome-producing agreement with Seres Therapeutics.
Chr. Hansen and Novozymes wrote history as Denmark’s largest merger when Novozymes agreed to purchase the company in a US$12.3 billion deal.
Both companies are in a growth trajectory, with Novozymes forecasted to achieve 4% to 7% organic growth this year. “The combined group will have increased scale and efficiency and more capabilities to unlock significant growth opportunities by translating needs into transformational solutions for our customers and consumers,” Anders Lund, executive VP for Consumer Biosolutions at Novozymes, told NutritionInsight.
In March, at the extraordinary general meetings of Chr. Hansen and Novozymes, capital investors of both companies, approved the merger.
“With the approval of the proposed merger from shareholders of both Novozymes and Chr. Hansen, we have reached an important milestone toward creating a leading biosolutions partner based on complementary technology platforms,” says Graber.
By Marc Cervera
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