Chr Hansen, profits rise despite slowdown in US market

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Danish ingredients group Chr Hansen, shortly to be sold to private
equity firm PAI, posts a small rise in revenue and a decent boost
in pre-tax profit for the nine months to May, reports Lindsey

Culture sales for the firm across the globe continue to improve figures, helping to lift sales by 1.5 per cent to DKK2,543 billion (€341 million) from DKK2,504 billion the previous year.

In addition to cultures (number one slot), the Danish firm has strong market positions in natural colours (number one), enzymes and flavours.

Overall, the ingredients unit contributed the large majority of operating profit (EBITA), over 78 per cent at DKK298m, to the group's total profit of DKK380m.

The pharmaceutical unit, ALK-Abello, that focuses on allergy treatment and asthma prevention products, provided DKK70 million to the EBITA profit.

Chr Hansen​ continues to cite disappointing figures from the US. In North America, on organic growth of 2 per cent, revenue fell by over 16 per cent to DKK 880 million.

Severance payments, and currency conversions all played a role in reducing the bottom, said the Danish firm.

At three per cent, Europe - knocked by lower rennet prices - also fell short of the target organic growth of 5 to 6 per cent, set by the company for the financial year.

But the leading cultures supplier, Chr Hansen said its culture business continued to win market share in the nine month period, boosted by new products for yoghurt and cheese industries, and increased sales of probiotic cultures.

Earlier this month shareholders gave the green light for private equity firm PAI partners to take over the food ingredients arm of Chr Hansen.

At an Extraordinary General Meeting meeting, stakeholders in the ingredients maker cleared the way for PAI to pay €1.1 billion for the business.

The deal exceeded expectations, with the private equity company buying on a price to sales of 2.2 times.

For Chr Hansen, the new owner brings cash and with it strong opportunities for growth through acquisitions.

Speaking to recently, the new CEO Lars V. Frederiksen of Chr Hansen said PAI provides a strong financial partner to allow "us to be more aggressive".

Priate equity adds value by investing, to grow margins and cash flow, and to build further,"​ added Frederiksen, who last month took the reins from former CEO Erik Soerensen after the latter plumped for early retirement.

According to the new CEO, capital investments are expected in factories, R&D, and marketing efforts. Basically an acceleration of our existing strategies, he comments.

The deal is still subject to approval by the competition authorities. In the nine month statement today, Chr Hansen said it expects to hear in a couple of months from the regulatory bodies.

After the transaction, Chr Hansen group will consist only o the subsidiary ALK Abello.

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