Full-Year Profits up at Chr. Hansen

26 Oct 2016 --- Chr. Hansen, the Danish developer of natural ingredient solutions for the food and agricultural industries, has reported that full-year profits were up year-on-year from €162.5m ($177m) to €183.8m ($201m), driven by its Food Cultures & Enzymes and Natural Colors units performing well.

Full-year revenues were up from €859m ($938m) to €949m ($1,036m) and were up in Q4 from €234m ($256m) to €256m ($280m).

However, the performance of its Health & Nutrition unit dragged behind Food Cultures & Enzymes and Natural Colors.

Revenues across Health & Nutrition were up from €165m ($180m) to €184m ($201m) but organic growth was down from 13 percent to two percent.

Health & Nutrition, which develops probiotics for dietary supplements and infant formula as well as microbial concepts for animal feed, was hamstrung
by commodity prices for milk and pork being at "extraordinary low levels" and well as more fierce competition.

The low commodity prices was causing farmers to cut down on certain feed additives such as microbial solutions and silage inoculants.

Across its Food Cultures & Enzymes unit, which supplies enzymes and probiotics for the dairy and food industry, revenues were up from €519m ($567m) to €565m ($617m) while organic growth was up from nine percent to 12 percent.

Chr. Hansen said the dairy market continues to hold "attractive growth opportunities", helped by opportunities in emerging market as well as customers demanding improvements.

New opportunities have also arisen with the introduction of bioprotective solutions to preserve and protect fresh salmon and fresh cut salads.

Across Natural Colors, which supplies natural color solutions for the food and drinks industry, revenues were up from €174.9m ($191m) to €200m ($218m) while organic growth up from nine percent to 19 percent.

Chr. Hansen is banking on the continued shift of consumers demanding more natural products and clean-label products to help raise sales in the unit.

It said the conversion to natural colors continued in Latin America and Asia-Pacific, while the European market experienced increasing penetration of more advanced natural color solutions during the year.

Allied to that, it said conversion in the US accelerated throughout the year as major US food & beverage manufacturers slowly started to convert to natural ingredients, including colors.

Earlier this year, Chr. Hansen acquired US microbial technology developer Nutritional Physiology Company for $185m.

In recent weeks, it has also bolstered its probiotics offering by acquiring Valio’s Lactobacillus rhamnosus GG (LGG) business for €73m ($79m).

“2015/16 was overall a good year for Chr. Hansen. We reaffirmed the short- and long-term growth opportunities through our strategic review, and our financial performance was strong. Organic growth reached 12 percent and the EBIT margin before special items ended at 28.2 percent, up from 27.1 percent the year before.”

“Finally, free cashflow before special items and acquisitions was €175 million ($191m), an improvement of 16 percent despite our continued investments in future growth. So I can only be pleased with how we performed in 2015/16” says CEO Cees de Jong.

“Food Cultures & Enzymes and Natural Colors both delivered strong growth and significant improvements in profitability, which show the attractiveness of both businesses. In Health & Nutrition, organic growth and profitability were below our expectations, but only due to challenging market conditions in the agricultural sector.”

“The long-term growth outlook for all market segments in Health & Nutrition remains very positive and we continue to build on our technology platform to capture these opportunities.”

To contact our editorial team please email us at editorial@cnsmedia.com