Chr. Hansen grows in "challenging" conditions

Despite what the company describes as more challenging growth conditions, Chr. Hansen delivered a strong EBIT margin and a healthy cash flow, while also making significant progress on key strategic priorities.

2018/9 organic growth was 7%, with revenue increasing to €1,161 million. Q4 organic growth was 2%, with revenue of €306 million, impacted by -2% growth in natural colours. The company said it was forecasting organic revenue growth for next year in the range 4-8%, with an EBIT margin of 29.5%.

CEO Mauricio Graber said: “2018/19 was a solid year for Chr. Hansen, although it was not without its challenges as tougher market conditions especially in emerging markets made it more difficult to grow to the level of our ambition. We ended the year with 7% organic growth for the group, at the low end of the guidance provided in June. However, we are satisfied that we delivered well on the financial targets for EBIT margin and free cash flow that we set at the beginning of the year, with EBIT margin before special items reaching 29.6% and 17% growth in free cash flow before acquisitions and special items. For the full year, Food Cultures & Enzymes delivered solid organic growth of 8%, while Health & Nutrition delivered 9% and Natural Colors delivered 3%. In Q4, organic growth came down as expected for all three business areas, as we continued to see macroeconomic challenges in emerging markets, primarily impacting Food Cultures & Enzymes and Natural Colors.”

“We made very good progress on our strategic priorities: Plant Health had a very strong year in Latin America, and is set to have another strong year, selling in both Latin America and North America. We’ve reached an important milestone for our Human Microbiome lighthouse with the Bacthera joint venture, and while bioprotection did not have a very strong year, it still delivered double-digit growth, and we are confident in the commercial pipeline and have accelerated the development of the 3rd generation technology.”

“We have a cautious outlook for 2019/20, given the market challenges we are facing. After a first quarter with flat to low-single digit growth, we expect to improve the momentum in Food Cultures & Enzymes and Health & Nutrition for the rest of the year to end at 4-8% organic growth for the group, with an EBIT margin on par with 2018/19 and an improved operating cash flow.”

“Over the next six months, we will conduct our biennial review of the Nature’s no. 1 strategy and will present the results at a Capital Markets Day in April 2020. Given our strong belief in the opportunities inherent in the strategy, fundamental changes from our focus on microbial and natural solutions produced via fermentation should not be expected. Until then, our business focus in 2019/20 will be to improve on our execution of the strategy.”