Focused Chr. Hansen Reports Strong Growth

20/11/07 Chr. Hansen has reported that in the financial year 2006-07, the company surpassed, in every way, the positive result from last year. All business areas and regions contributed to strong growth in both sales and profitability. At the same time, DKK 450 million are invested in the company’s future. In spite of a weakened US dollar the company expects a continued positive development for 2007-08.

Sales amounted to DKK 3,709 million, an increase of 4 percent from last year. Measured in local currencies, the sales growth amounts to 10 percent. EBITDA was DKK 906 million corresponding to growth of 24 percent. The working capital was reduced to DKK 593 million corresponding to 16 percent of sales. Massive investments totaling DKK 450 million, primarily for a new plant for lactic acid bacteria at Avedoere, Copenhagen, Denmark.

“Since the change in our ownership two years ago we have been working determinedly to focus the business and create growth, and I am very proud of what we have achieved. For the second year in row we have demonstrated that our strategy has revitalized Chr. Hansen so that we not only deliver better results; we are also producing growth way above industry standard,” says Lars Frederiksen, CEO.

Sales increased by 10 percent in local currencies but due to the weakening of the US dollar in particular, the sales increase measured in DKK amounted to 4 percent. Solid growth in all regions and product groups was recorded, but sales of cultures and enzymes developed particularly strong, generating 18 percent organic growth.

In spite of increasing prices of raw materials, a better sales mix, increased efficiency in production and a more centralized sourcing strategy resulted in an improvement of the profit margin (EBITDA) from 20.6 to 24.4 percent.

In December 2006 part of the shareholder debt was restructured into bank debt with lower interest. This increased the interest-bearing debt, but on the other hand reduced the interest expense.

During the financial year Chr. Hansen has divested, as planned, its activities within paprika and auxiliaries for the pharmaceutical industry. This contributed to focusing on the continued development and investment within the key areas: Cultures, enzymes, colors and certain flavor solutions.

According to the plan, Chr. Hansen’s new culture plant at Avedoere will be ready for production in spring 2008. The plant will sustain a globally increasing demand for lactic acid bacteria. Priced at DKK 300 million, this is the single largest individual investment ever in Chr. Hansen’s history of more than 130 years.