Strong Danisco Quarter Triggers Earnings Upgrade

Revenue and EBIT came in well ahead of last year, reflecting a stronger performance in all four divisions driven by a broad-based, improved product offering and production efficiencies.

3/17/2011 --- In Q3 2010/11, Danisco has recorded revenue of DKK 3.9 billion (EUR0.522 billion), an 18% increase Y/Y made up of 9% organic growth, 1% acquisitive growth and 8% positive currency impact. Danisco group EBIT (before Bio Chemicals Projects – BCP) came in at DKK 575 million, reflecting a margin expansion of 3.5 percentage points Y/Y driven by all four divisions. Profit for the Group came in at DKK 310 million against a negative DKK 354 million in Q3 2009/10. The strong results are fueling speculation that DuPont may be pressured to increase its offer price of $5.9 billion for the ingredients giant.

CEO Tom Knutzen comments: “Q3 was a strong quarter for Danisco, with Sweeteners back on track, new earnings levels reached in Genencor and Cultures and an exceptional peak cycle performance in Enablers, where we are now entering a new and more challenging phase due to substantial raw material price inflation. Based on our preliminary planning for 2011/12 and using the prevailing exchange rates, we see revenue growth for the Group of around 6-7% in 2011/12 and a stable EBIT margin (after share-based payments) of around 15% (corresponding to around DKK 2.5 billion), reflecting a margin decline in Enablers and margin improvements for the remaining divisions.”

Revenue and EBIT came in well ahead of last year, reflecting a stronger performance in all four divisions driven by a broad-based, improved product offering and production efficiencies. Danisco reported that it is now running at very high capacity utilisation rates which will require new capacity to be built.

On 10 January 2011, DuPont announced a binding offer for all outstanding shares in Danisco at DKK 665 per share. Danisco’s Board of Directors has recommended Danisco’s shareholders to accept the offer. Since the DuPont Offer was announced, there has been no approach to Danisco by any other potential bidder, the company stated in its earnings report.

The Offer remains subject, inter alia, to the Offeror receiving the necessary approvals and clearances for the competition authorities in the EU and China. The Offeror has made filings with the competent authorities in both jurisdictions. In the EU, the Phase I review period is set to expire on 5 April 2011. In China, the Phase I review period was initiated on 8 March 2011.

Organic growth for Q3 came in at 9% for the Group driven by all four divisions (Enablers 10%, Cultures 8%, Sweeteners 13% and Genencor 7%). Year-to-date, group organic growth stands at 8%.

EBIT (before BCP) of DKK 575 million reflected a margin of 14.8% for the quarter (Enablers 15.8%, Cultures 19.6%, Sweeteners 9.2% and Genencor 16.6%). Our YTD EBIT margin before BCP is 16.2%.

Group RONOA reached 24.7%, up from 16.8% in Q3 last year, driven by improvements in all four divisions.

The company has upgraded its EBIT outlook for the full year as a result of a faster than expected recovery in Sweeteners and the exceptional peak cycle performance in Enablers.

For FY 2010/11, Danisco now expects to realise revenue of over DKK 15.5 billion (previously around DKK 15.3 billion) and EBIT (before BCP) of over DKK 2.4 billion (previously DKK 2.2-2.3 billion), resulting in an EBIT margin (before BCP) of around 15.5% (previously around 14.5%), corresponding to around 15.0% after share-based payments, which is consistent with the long-term plan communicated on 8 October 2010 in connection with our Capital Markets Day. We expect profit for the year of over DKK 1.35 billion (previously around DKK 1.3 billion).

Corresponding with DuPont’s binding offer, Danisco reported that in the period from 10 January 2011 to 28 February 2011, 18.1 million Danisco shares were traded on NASDAQ OMX Copenhagen, corresponding to 37.8% of the outstanding shares. In comparison, 60.7 million Danisco shares were traded during the entire financial year 2009/10.

As at 28 February 2011, the share of private investors had decreased to 19% from 25% on 31 December 2010 and from 25% on 30 April 2010. As at 28 February 2011, the total number of investors had decreased to 50,900 from 62,600 on 31 December 2010 and from 64,200 at 30 April 2010. As at 28 February 2011, Danisco’s share price closed at DKK 662 against an all-time high of DKK 530 on 7 January 2011, DKK 407 at 30 April 2010, and DKK 186 at 30 April 2009.