Chr Hansen attributes growth to clear focus

By Jess Halliday

- Last updated on GMT

Related tags: Chr hansen, Bacteria

Chr Hansen has reported strong growth in 2006/07, which it takes as
a strong sign that its strategy of focusing on key business areas
is right on the money.

The private equity-owned ingredients firm reported sales of DKK 3,709m (€497.7m) for the year, an increase of 4 per cent in DKK but 10 per cent in local currencies (the difference being due to the weak dollar). EBITDA was DKK 906m (€121.6m) - up 24 per cent. All business areas and regions were said to have contributed to the growth, but the story is particularly positive when it comes to cultures and enzymes, which generated 18 per cent organic growth. Since it was acquired by PAI in 2005 for €1.1bn, Chr Hansen has focused on its core areas of cultures, enzymes, colours, and flavour solutions. Accordingly, this year it divested of its remaining pharmaceutical auxiliary interests (coatings and excipients) to Colocon for an undisclosed sum. It also sold its paprika business and facilities in Spain and India. The Spanish part was divested through a management buy out that created a new business called Ingredientes Naturales Seleccionados, and the Indian part to its former partner A&P. Like most companies in the food sector, Chr Hansen has been affected by raw material price increases this year. Nonetheless, it looks to have managed these admirably by increasing production efficiency and centralising sourcing so as to yield an improvement in profit margin from 20.6 to 24.4 per cent. One area in which the company has splashed out this year, however, has been investment of DKK 300m in its new culture plant in Avedoere, near Copenhagen, Denmark. Scheduled to start production in spring 2008, the plant aims to meet rising global demand for lactic acid bacteria. CEO Lars Frederiksen said: "I am very pleased to be heading up this substantial investment, which clearly indicates that we not only prioritise growth hear and now, but also very much look to the future."​ Indeed, the new facility represents the largest single investment the company has made in its 130 year history. Another important decision that came to bear this year was the establishment of a new business division focused on health and nutrition, primed to take probiotic bacterial cultures into food supplements and other non-food areas. Frederiksen said that Chr Hansen holds the number one spot in probiotic cultures, and puts this down to clinical documentation to back up its bacteria. "With the establishment of the new division, we wish to accelerate the development of probiotic products that sustain and promote our general health and wellbeing in a natural way,"​ he said. The company also has a new development organisation for food cultures and enzymes. This is aimed at boosting customer-driven innovation.

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