Chr. Hansen plans to strengthen biological solutions amid 7% organic growth in 2020/2021
14 Oct 2021 --- Executing acquisitions that Chr. Hansen has made to its portfolio in the past year “has not been without challenges.” Regardless, the performance of 7% organic growth has ended at the upper end of the company’s initial outlook range for the full year.” Meanwhile, Chr. Hansen is also joining forces with global agricultural solutions provider UPL in a bid to advance sustainable agriculture.
The full year results for 2020/21 also reveal that revenue increased by 11% to €1,077 million (US$1,251 million) and was impacted positively from acquisitions and negatively by 7% due to currency effects. Revenue from acquisitions amounted to €105 million (US$122 million).
COVID’s ripple effect
The prolonged impact from the COVID-19 pandemic increased the complexity of transitioning Chr. Hansen to a fully-focused bioscience company, outlines Graber.
In July, Chr. Hansen published its Q3 2020/21 financial results, reporting an overall 8% organic growth, but 0% organic growth in its Health and Nutrition segment. This was “as expected” due to higher comparables as customers built safety inventories during lockdowns throughout the pandemic.
“Limited customer access, delayed registration times, and general macroeconomic uncertainty restrained growth opportunities, and our Human Health business disappointed in the second half of the year due to the part of the business serving the traditional sales channels,” Graber explains.
CEO Mauricio Graber says the performance of 7% organic growth has ended at the upper end of our initial outlook range for the full year.In light of this, he further highlights an “all-time-high product launch activity in Dairy, Animal Health, Bioprotection and Fermented Plant Bases, as well as the new partnership with UPL in Plant Health, which will support growth in the coming years.”
Organic growth
Food Cultures & Enzymes saw 8% organic growth, while the Health & Nutrition segment increased 5% through organic growth.
Revenue was impacted positively by 12% from acquisitions and negatively by 3% due to currency effects.
Revenue from acquisitions amounted to €32 million (US$37 million), the company reveals. In the past 18 months, Chr. Hansen divested its Natural Colors business and acquired HSO Health Care, UAS Labs and Jennewein.
According to CEO Mauricio Graber, the transactions have been successfully completed but not without challenges, especially Jennewein, which fell short of expectations for the year in part due to the human milk oligosaccharides (HMO) market developing more slowly than anticipated.
The company’s outlook for 2021/22 eyes organic revenue growth of 5-8% and free cash flow before special items of €140 million (US$162 million) to €170 million (US$197 million).
Sustainable agriculture
Chr. Hansen is joining forces with global agricultural solutions provider UPL in a unique partnership to strengthen the existing portfolio of microbial products and provide farmers with sustainable choices beyond conventional agricultural products.
Biological solutions are increasingly in demand as the agriculture industry faces challenges such as the growing resistance to chemicals and an increasingly challenging regulatory environment.
Under the terms of the partnership, Chr. Hansen will develop biological products based on their microbial capabilities and UPL will register and commercialize these products via its extensive global distribution network.
“Biosolutions are a core pillar of our global purpose and work to reimagine sustainability – for food systems, for farmers and for our environment,” says Vicente Gongora, chief marketing officer at UPL Ltd.
“Building on the launch of NPP [Natural Plant Protection – a new global business unit] earlier in the year, we are proud to partner with Chr. Hansen to further expand our portfolio of products and technologies – and to offer new and sustainable solutions for more farming communities.”
“UPL is a significant distributor of biosolutions worldwide,” adds Kim Müller Christensen, vice president of Plant Health at Chr. Hansen. “Combining that with Chr. Hansen’s significant innovations in research and development, as well as our unique microbial capabilities and ability to breed our own bacteria, will mean better, targeted products that can go to market faster. The partnership is an important step in our 2025 strategy of growing a better world naturally.”
Outlook for forthcoming year
In 2021/22, the company will be focused on commercial execution and anchoring the new businesses while making progress on its 2025 Strategy priorities.
“While the forthcoming year will be a year with high macroeconomic uncertainty and continued COVID-19 related disruptions, we expect organic growth of 5-8%.”
Earlier this month, Linda Neckmar was appointed Chr. Hansen’s senior vice president of human health. At Vitafoods Europe 2021, she discussed how the business has been shaped by a chain of acquisitions and a broadened portfolio. Women’s health is a key area of focus, while the company is also expanding more into non-traditional channels like e-commerce.
Edited by Elizabeth Green
