Danisco in Conclusive Phase of Sugar Division Sale
The company are now in the conclusive phases of negotiations with potential buyers of Sugar; however, they continue to work towards a separate listing of Sugar by the end of calendar year 2008 unless an outright sale proves to be more value enhancing.
24/06/08 Danisco has reported group revenue of DKK 18,778 million, EBIT of DKK 2,151 million and profit after tax of DKK 1,259 million for the year 2007/2008.
Ingredients recorded organic growth of 5% for the year driven by solid momentum in Cultures, Genencor and Emulsifiers. Sweeteners continues to face challenges within xylitol. At DKK 1,588 million, EBIT came in flat Y/Y despite a negative USD impact of DKK 70 million and soaring input costs.
Sugar showed strong operating performance throughout the year, posting EBIT of DKK 652 million. We booked a goodwill writedown of DKK 600 million as a result of the ongoing demerger or sales process.
Q4 saw continued strong Ingredients topline performance in most areas leading to an average organic growth rate of 8%. Genencor experienced margin challenges in the quarter whereas Sugar performed well partly due to one-off items.
The company noted that they are now in the conclusive phases of negotiations with potential buyers of Sugar; however, they continue to work towards a separate listing of Sugar by the end of calendar year 2008 unless an outright sale proves to be more value enhancing. Danisco aims for the Board of Directors to be able to put forward a proposal to Danisco’s shareholders at the upcoming AGM they will subsequently review their capital structure.
A unchanged Y/Y dividend for the year of DKK 7.50 per share has been proposed.
In 2008/09, Danisco’s result will depend on the outcome and timing of the ongoing process of merging Sugar. For clarity, the group outlook assumes that Danisco Sugar A/S continues as an integrated part of Danisco throughout the financial year.
For the Group, Danisco expects revenue of around DKK 19.4 billion, an EBIT of around DKK 1.85 billion and profit for the year before share-based payments of around DKK 900 million.
Danisco said that 2007/08 was an eventful year for the company. “We completed a strategic review of our business model and financial ambitions, the results of which have started to materialise through our decisions to exit Sugar and Flavours as well as through our recently announced second-generation bioethanol joint venture with DuPont,” the company stated.
Meanwhile, a number of external factors contributed to making 2007/08 a challenging year for Danisco with financial repercussions also expected in 2008/09.
CEO Tom Knutzen comments: ’We continue our quest to increase stakeholder value through our updated strategic priorities and reorganisation – Becoming first choice. We recognise short term headwind in the form of higher input costs and other margin pressure, adverse currency movements, and certain demand issues, however, we feel confident that the steps we are taking to transform Danisco into a bio-based, market driven ingredient provider will ultimately create superior value.’
