Q1 Profits Jump 21 Percent to $50m at Chr. Hansen

11 Jan 2017 --- Profits in Q1 were up 21 percent on the year to €47m ($50m) at Chr. Hansen driven by organic growth across its Food Cultures & Enzymes and Natural Colors divisions but the performance of its Health & Nutrition division is falling short of expectations. The Danish developer of natural ingredient solutions for the food and agricultural industries reported that its revenues were up 13 percent to €241.7m ($255m) between September 1 and November 30.

By division, across Health & Nutrition, revenues were up year-on-year from €36m ($38m) to €46m ($48m) while organic growth was up eight percent, below target.

Animal health delivered “solid growth”, as did human and plant health. Growth in human health was driven by the increasing use of dietary supplements in North America, while animal health was helped by strong growth in swine and poultry.

Plant health was helped by the take up of its biological product Nemix C which increases growth and yield through enhanced root development and protection.

Across Food Cultures & Enzymes, which supplies enzymes and probiotics for the dairy and food industry, revenues were up nine percent to €144.3m ($152m) while organic growth was up 10 percent.

The organic growth was mainly driven by strong growth in fermented milk along with solid growth in probiotics and enzymes. The growth in cheese was partly driven by US customers upgrading to Direct-Vat-Set products, which aim to reduce waste and increase yield.

Across Natural Colors, revenues were up 13 percent to €52m ($55m) with organic growth up 13 percent. The organic growth was driven mainly by strong growth in the anthocyanin, natural carotene and annatto categories while carmine volumes declined.

By region, revenues in North America were up 20 percent, nine percent in EMEA, six percent in Latin America and 18 percent in Asia Pacific.

“The results in Q1 gave us a good start to the year, and we maintain our guidance for the full year. Both Food Cultures & Enzymes and Natural Colors delivered strong organic growth and improved profitability,” said CEO Cees de Jong.

“The organic growth in Health & Nutrition was still below our long-term ambitions, however, better than expected for the quarter, mainly due to timing of orders. The EBIT margin for the business area was down, partly due to an unfavorable product mix.”

“We made good progress on our focus areas for 2016/17. Our bioprotective cultures continue to deliver strong growth. In Q1, growth was approximately 25 percent, and the segment now accounts for approximately five percent of the revenue in Food Cultures & Enzymes.”

“In November, we concluded the acquisition of LGG, and we have initiated integrating the business into Chr. Hansen. The integration of NPC is being concluded and we are starting to reap the synergies from the acquisition. Plant health supported the growth in Health & Nutrition with sales of both Nemix C and VGR, and we are making progress in our work to introduce new products in the coming years. Natural Colors showed good progress in Q1.”

Chr. Hansen has previously stated it hopes to benefit from the wave of big mergers across the agrochemical industry, as it believes it could give smaller players, such as itself, a competitive advantage.