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Chr. Hansen raises revenue forecast after strong first quarter

By Mike Stones , 12-Jan-2011

Danish bioscience firm Chr. Hansen is raising its revenue predictions by 11-13 per cent for 2010/11 after what it describes as “strong growth” in its first quarter from the September 1, 2010 to the end of November.

First quarter revenue totaled €156m; up 22 per cent, on the same period of last year.

Operating profit or earnings before interest and tax (EBIT) also increased by 22 per cent to reach €35m.

Driving growth were strong performances in all three divisions, Cultures and Enzymes, Health and Nutrition but particularly Colors and Blends, said company CEO Lars Frederiksen.

Organic growth

The financial year 2010/11 has started positively with strong organic growth in all three divisions. Strong demand for DVS cultures is driving results in Cultures & Enzymes. Health & Nutrition benefited from the continued interest for probiotics while the pronounced consumer preference for natural colors resulted in organic growth of 46% in Colors & Blends,” said Frederiksen.

Revenue in the Colors and Blends Division increased by 56 per cent in the first quarter; driven mainly by the conversion to natural colours. Overall, the Colors and Blends Division accounted for 28 per cent of group revenue.

The Cultures and Enzymes Division produced 60 per cent of group revenue in the first quarter and generated revenue growth of 12 per cent, corresponding to organic growth of 6 per cent, compared with the same period of last year.

Main drivers of this growth were yoghurt, cheese and wine cultures particularly in the Asia-Pacific region and North America.

Its Health and Nutrition Division, accounting for 12 per cent of group revenue, achieved revenue growth of 16 per cent and 13 per cent organic growth. Strong growth in the human health area that includes its probiotic strains underlined this result,

For the full financial year 2010/2011, EBIT margin before special items is expected to top 25 per cent with improvements in all three divisions compared with 2009/2010.

Net debt to earnings before interest, taxes, depreciation, and amortization (EBITDA) ratio is expected to fall to about 2 times from 2.5 times at year end.

The company’s latest revenue prediction compares with 8-10 per cent organic growth forecast on 2 November 2010

The first quarter results are the third set of financial results to be released after the company’s initial public offering(IPO)last June. The IPO was designed to raise about €450m in primary proceeds to facilitate future growth.

Bolt-on acquistions

The IPO raised DKr5.52bn ($907m) valuing the company at about €2.2bn.

Frederiksen said in a statement in June 2010 that the listing would provide Chr. Hansen with "the right platform to grow both organically and through targeted bolt-on acquisitions."

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