Danisco Revenues Down 2% in Q2

Danisco's revenue outlook is now around DKK 13.25 billion (previously DKK 13.5 billion) due to adverse currencies and continued modest revenue growth. The company is lifting its EBIT outlook to DKK 1,450-1,500 million after BCP costs.

16 Dec 2009 --- In Q2 2009/10, Danisco reported group revenue of DKK 3.2 billion, down 2% in organic growth terms (Enablers -4%, Cultures +7%, Genencor +2% and Sweeteners -16%). Group EBIT (before BCP) came in at DKK 407 million, up 25% Y/Y. That reflects a margin of 12.6%, a 2.9 percentage point expansion Y/Y, driven by all divisions aside from Sweeteners. Profit for the Group came in at DKK 233 million.

CEO Tom Knutzen comments: ‘We continued to see a positive earnings momentum during the quarter and are encouraged by the results that we have achieved so far in this financial year, including our ability to lift our EBIT outlook once more. Meanwhile, overall market growth remains modest, and on that basis we remain cautious regarding the earnings momentum for the second half of the year. In Sweeteners, the situation warrants a writedown of goodwill to be booked in Q3 2009/10. Our longer-term ambitions and priorities for the Group remain unchanged.’

Danisco's revenue outlook is now around DKK 13.25 billion (previously DKK 13.5 billion) due to adverse currencies and continued modest revenue growth. The company is lifting its EBIT outlook to DKK 1,450-1,500 million after BCP costs (previously slightly under DKK 1,400 million). Goodwill writedown in Sweeteners and adjustment of deferred taxes will lower our expected profit for the year to above DKK 200 million (previously DKK 700 million).

Enablers encompasses Danisco´s emulsifiers, gums and systems activities and accounted for around 42% of group revenue in Q2 2009/10. The segment recorded revenue of DKK 1.35 billion for the quarter against DKK1.43 billion in the same period of last year. Organic growth was down 4% Y/Y, with 1% growth from acquisitions (Abitec) and a negative 3% from currency movements. Volumes were generally satisfactory but the overall price momentum was on average negative due to lower input costs. Momentum was particularly strong in the largest business areas of emulsifiers, pectin and systems which make up the lion’s share of the Enablers division. Due to relatively lower demand from the non-food industries, we saw a somewhat weaker trend for single gums.

Cultures – accounting for around 15% of group revenue in Q2 2009/10 – experienced another satisfactory quarter. Revenue came in at DKK 489 million for the quarter, up 3% Y/Y – reflecting 7% organic growth and a 4% negative currency impact. Growth was fairly broad-based, although starter cultures performed especially well this quarter with strong double-digit growth due to the continued conversion from bulk starter to DVI technology.

Danisco’s Sweeteners segment accounted for around 10% of group revenue in Q2 2009/10. Sweeteners recorded revenue of DKK 334 million, down 16% Y/Y, all of which was organic. The segment posted EBIT of DKK 7 million, reflecting a margin of 2.1% against 3.0% in the same period last year. This was in line with the company´s latest expectations.

Genencor posted revenue of DKK 1.1 billion in Q2 2009/10, up 2% Y/Y. The division recorded 2% organic growth, with acquisitive growth compensating for negative currency movements. In Q2 2009/10, Genencor accounted for around 33% of group revenue.