Chr Hansen Reports Strong Start to the Year, Enters Human Microbiome Collaboration

14 Jan 2016 –- Based on a strong start to the year, Chr Hansen expect organic revenue growth of 9-11% while the EBIT margin before special items is still expected to be above the 27.1% achieved in 2014/15. “We continue to implement our Nature's No 1 strategy, and I'm very pleased with the progress. We have signed an agreement to acquire Nutrition Physiology Company, which expand our current activities in animal health, and we have entered into our first commercial partnership in the human microbiome initiative,” states CEO, Cees de Jong.

In the first quarter of the current financial year, profitability increased, not least due to the positive impact from the scalability of the production platform in cultures and enzymes.

De Jong adds: “Our strong start to 2015/2016 and 14% organic revenue growth in Q1 underlines our unique position in markets within microbial and natural colour solutions with attractive growth opportunities."

FoodIngredientsFirst spoke with Anders Mohr Christensen, Head of Investor Relations at Chr Hansen: "We see the market opportunity for microbial solutions to support the human microbiome as being very big, however currently also with a high risk profile, given that we as an industry are very early in the process to identify specific opportunities."

Christensen goes on to explain the enzyme industry: "We provide enzymes to the dairy industry (primarily for cheese production). The estimated market growth in the last year has been above the historical growth rate in cheese of around 2% due to higher cheese production from the increase in milk availability. Our enzymes business has grown above that rate, partly driven by introduction of new products."

Clean label is having a positive impact across the business: "Our solutions helps dairies to reduce the list of ingredients, such as stabilizers, in yogurt. In animal health we help farmers to reduce the use of antibiotics, and food and beverage companies can remove E-numbers when using our coloring foodstuff products," Chistensen adds.

Q1 2015/16 results
•Revenue of EUR 214 million, compared to EUR 188 million in 2014/15, corresponding to organic growth of 14%
•EBIT before special items of EUR 54 million,compared to EUR 44 million in 2014/15, an increase of 24%. The EBIT margin before special items was 25.2%, compared to 23.1% in 2014/15
•Income taxes of EUR 13 million, equivalent to an effective tax rate of 25%, compared to 26% in 2014/15
•Profit for the period of EUR 39 million, compared to EUR 30 million in 2014/15, an increase of 31%
•Negative free cash flow of EUR 17 million, compared to a negative EUR 30 million in 2014/15
•Net interest-bearing debt of EUR 513 million, or 1.7x EBITDA, compared to EUR 432 million, or 1.7x EBITDA, at 30 November 2014.

The results were published as Chr. Hansen entered its first collaboration on the production of a next generation probiotic from the human microbiome. The objective of the collaboration between Chr. Hansen and Caelus Health is to develop a CP-001 product formulation that will allow for progression to a phase II clinical trial and a subsequent market introduction. As part of this collaboration, Chr. Hansen will develop a production process and pilot material for clinical trials which Caelus Health will run to explore the use of Eubacterium hallii for prevention and treatment of metabolic disease

Johan van Hylckama Vlieg PhD, Senior Director, Microbiome, Chr. Hansen, says: “Chr. Hansen has unparalleled expertise in fermentation and food and pharma grade production of bacteria. The collaboration with Caelus is in full alignment with our strategy to become the partner of choice for companies wanting to develop new generations of probiotic products and therapeutic microbes. The agreement with Caelus is an important milestone as the first of several projects within the Human Microbiome space for Chr. Hansen”

Luc Sterkman MD, CEO, Caelus states: “We are very pleased to announce this cooperation and are confident that Chr. Hansen has all the expertise and capabilities to develop an advanced formulation of CP-001, which we will further study in upcoming phase 2 clinical studies. This E. hallii based product is the first of a series of Microbiome-based products, which Caelus plans to bring to the market.”