Rhodia acquisition brings gains to Danisco in Q3

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Related tags: Fatty acid, Danisco

Acquisition of Rhodia Food Ingredients brings growth to Danisco in
a third quarter squeezed by low growth in flavours, writes
Lindsey Partos.

The Danish firm whose ingredients reportedly are used in half the world's ice cream pulled in an operating profit of DKK410 million (€55 million) for the period, a 26 per cent rise on the same quarter in 2003/4.

Texturants, speciality products and sweeteners that make up the firm's ingredients business all cleared a profit, this despite a tougher industry climate faced with ongoing rises in raw material costs and tighter margins.

For the third quarter the firm saw costs rise by 17 per cent to DKK2.98 billion, up from DKK2.53 billion for the same period in the previous year.

The flavours business, housed in the speciality products division, faced more difficult times.

"Organic growth of 1 per cent [for speciality products] was affected by the cold summer in Europe in 2004, which hit flavour sales, of which relatively high portion is for European beverage industry,"​ said Danisco in a statement this week.

Further, the firm reported that flavour sales continued to be weak due to a "fall in raw material prices, notably vanilla and citrus"​ that has driven customers to defer their orders for later in order to achieve cost benefits.

At the texturants side of the business (emulsifiers, textural ingredients and functional systems) the food maker's desire to slice trans fatty acids out of formulations boosted sales in emulsifiers for north America.

Sales volumes for sweeteners "developed flat" but were helped by continued growth of the company's xylitol product in Asia.

As the biggest supplier of this polyol sweetener to Asian markets, Danisco announced earlier this week the completion of a joint venture in China deal to ramp up production of xylitol.

Pushing for a bigger stake in enzymes, last month the Danish firm said it would buy Eastman Chemical's 42 per cent stake in the US biotech company Genencor.

The €419 million deal leverage Danisco to become the world's number two enzyme player, behind the category leader Novozymes.

The €320 million purchase last year of Rhodia Food Ingredients lifted Danisco into the number two cultures position behind up-for-sale Chr Hansen, as well as considerably strengthening its position in enzymes and hydrocolloids.

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