Chr Hansen financial results released

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Related tags: Chr hansen, North america

Chr Hansen, the Danish biotechnology company producing food
ingredients, released its financial results for the period from
September 1, 2000 to May...

Chr Hansen, the Danish biotechnology company producing food ingredients, released its financial results for the period from September 1, 2000 to May 31, 2001. According to this report, sales increased 8 per cent to Euro466.5m, income before tax reached Euro15.6m, and the sales forecast for the full year has been raised to Euro618.1m from Euro605m. Three ingredients factories in North America will be shut down before the end of the financial year. The full year forecast of income before tax and costs in connection with these closings is Euro16.8-20.8m. Sales in the ingredients sector increased by 7 per cent from Euro342.2m to Euro366.7m, of which acquisitions contributed 1 per cent and exchange differences accounted for 6 per cent. Sales showed a positive trend in the third quarter. Looking at the overall picture in the Ingredients sector, growth showed an upward trend over the three quarters, respectively, so the 5 per cent target for growth next year is retained. In Europe and the rest of the world outside North America, growth was 6 per cent, 1 per cent and 10 per cent, respectively in Q1, Q2 and Q3. Sales of ingredients for the dairy, meat and wine markets continued to improve. The Colour business was characterised by price competition owing to plentiful supplies of raw materials for certain products; Savoury Ingredients (flavours and seasonings) sales in southern Europe showed a satisfactory trend. The trend in the sale of cultures to the Health and Nutrition segment continued. In North America, the focus on sales activities and profitability will result in improved earnings for many of the products. In the pursuit of the new strategy for growth and profitability, Chr Hansen​ would close down three ingredient factories in North America: Vineland (pharmaceutical ingredients), Sacramento (seasonings) and Boston (sweeteners). Their production would be transferred to other facilities, which should reduce the number of factories in North America from ten to seven: production capacity will be used more efficiently, and production costs will go down. Closing the three factories is expected to lead to annual cost savings of approximately Euro3.4m, some of which will be used to increase sales, marketing and R&D resources. The factories have a book value of approximately Euro12.1m, and a major write-down should be expected depending on the price to be obtained. In addition, redundancy payments are expected to amount to approximately Euro2m. The combined effect of the strategic measures mentioned in the six-month report and the closing of the above-mentioned factories will contribute positively to reduce growth in fixed costs. Income for the third quarter was affected by redundancy payments and inventory write-downs totalling approximately Euro2.7m. The downward trend in gross margin is a result of heavy increases in the prices of raw materials and energy, intensified price competition and the cost involved in closing down factories and running in new facilities. Following the positive trend in ingredients in Q3, income for the full year before interest, tax and costs in connection with the closing of the three ingredients factories in North America is expected to total Euro30.9-33.6m. In the allergy sector, sales increased 13 per cent to Euro99.8m. For Q4, a Euro2-3.4m loss before interest and tax is forecast as a result of a normal seasonal distribution and expected continued growth in R&D expenses, including an additional payment of Euro1.3m to Maxygen, which brings the forecast of in-come before interest and tax for the full year to Euro7.4-8.7m. The efforts to create shareholder value through a new ownership structure for the Allergy sector are progressing following expectations. Source: Chr Hansen

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