Chr. Hansen reports 10 percent organic growth in Q1, but downgrades year-long outlook for Health & Nutrition
12 Jan 2018 --- Chr. Hansen has reported organic revenue growth of 10 percent in the first three months of 2017/18, but has downgraded its outlook for Health & Nutrition due to challenging market conditions in North America. Food Cultures & Enzymes grew by 12 percent, Health & Nutrition by 10 percent and Natural Colors by 4 percent. EBIT before special items decreased by 1 percent to €65 million, corresponding to an EBIT margin before special items of 25.4 percent. According to the company’s results report, Q1 2017/18 Revenue reached €254.5 million, up from €241.7 million the same period last year, accounting for 5 percent growth. Profit for the period amounted to €46.5 million, up 1 percent from last year’s €47 million.
The overall outlook for 2017/18 remains unchanged, with Organic revenue forecast to grow by between 8 and 10 percent, EBIT margin before special items of around the 28.9 percent achieved in 2016/17 and Free cash flow before special items, acquisitions and divestments of around €88 million.
“We have had a solid start to the year, with Food Cultures & Enzymes’ organic growth better than expected. Sales of bioprotective solutions continue to show impressive momentum, and this is still without any significant impact from the second-generation FreshQ products that we launched at the beginning of this financial year. We have also introduced ProKids, an innovative product concept for a children’s drinking yogurt containing our LGG probiotic strain. As expected, organic sales growth in Natural Colors was below our long-term ambition,” says Cees de Jong, CEO at Chr. Hansen.
“Our EBIT margin before special items in Q1 was lower than last year, mainly due to the sale of a property in Argentina in Q1 2016/17, adverse currency impacts and costs related to starting up our new production capacity in Copenhagen. The new capacity is producing ahead of schedule, and we expect to see improving margins from this toward the end of the financial year,” de Jong continues.
“We are encouraged by the solid start to the year, and we maintain our overall guidance for the full year. We increase our expectations to organic growth for Food Cultures & Enzymes to be even stronger and above the long-term 7-8 percent growth target that we have for this business. At the same time, we lower our expectations to organic growth in Health & Nutrition for the full year to be below our long-term guidance for this business due to the challenging market conditions in North America,” he notes.
Speaking about the challenging market conditions in North America at the moment, a spokesperson for Chr. Hansen tells NutritionInsight that “the overall market growth is actually quite good, with overall volumes growing, but the faster growth is taking place in the low-cost, low-quality segment where we do not operate, and in online channels where other players are currently in a better position than some of our customers.”
New CEO appointment
Earlier this week, the company announced the appointment of Mauricio Graber as new Chief Executive Officer as of June 1, 2018. Mauricio Graber (54) has been President of the Flavors Division of Givaudan S.A. and a member of Givaudan’s Executive Committee since 2006. Chr. Hansen’s current CEO, Cees the Jong, will continue as acting CEO until Graber takes up his new position on June 1, 2018.
