Positive first quarter results see Danisco’s sweeteners division recover

By Ben Bouckley

- Last updated on GMT

Related tags: Bric, Organic growth

Food ingredients company Danisco has reported “solid” growth during Q1 of 2010, with the continued recovery of its sweeteners division particularly notable.

Headline growth of 13 per cent for Q1 2010/11 was driven by organic sales, said the Danish firm, while “positive currency impacts”​ accounted for 5 per cent.

Although organic growth totalled 12 per cent in Q4 of 2009/10, total food ingredients revenue rose to DKK2,658m compared with DKK2,360m in Q1 2009/10.

Natural sweeteners

The sweeteners division (11 per cent of group revenues) recorded a 12 per cent year-on-year revenue rise to DKK420m, principally due to “positive currency impacts”​ but also site capacity and staff cuts during 2009.

The division saw significant margin declines during the recession that led Danisco to cut costs: “In Q1 2010/11we have experienced improved plant load for xylitol and felt the effects of last year’s restructuring initiatives.

“We are currently seeing an improvement in our underlying cost competitiveness, due to positive currency development and a more challenging Chinese input cost environment.”

Danisco said it was “encouraged”​ by the division’s tactic of expanding its product portfolio to include sustainable solutions such as xylitol: “Overall, the underlying trend towards greater use of natural sweeteners and fibre solutions remain strong.”

Food enzymes

Danisco’s Genecor division, which includes food enzymes, saw revenue increase to DKK1,268m from DKK1,104m during the same period.

Enablers – emulsifiers, gums and systems activities – accounted for 42 per cent of group revenue in Q1 2010/11, with revenues up 13 per cent over 12 months to DKK 1,633m.

Cultures (accounting for 15 per cent of revenue in Q1 2010/11) saw revenue of DKK605m, up 13 per cent year-on-year, due to “continued penetration of DVItechnology and strong demand for food protection products.”

Expansion of European and US anchor plants in this division to support “continued strong demand” ​was progressing well, said the company.

Lifting financial outlook

Group-wide growth was particularly strong in Europe and Latin America, driven by an “enhanced product offering and capacity”​, which allowed Danisco to offer more competitive prices and locally produced goods.

Although Q1 growth was flat in the four BRIC countries (Brazil, Russia, India and China) – which comprise 12 per cent of Danisco’s revenue – the firm said these “global emerging markets remain a key growth driver for Danisco.”

Ceo Tom Knutzen said that Danisco was lifting its financial outlook for the year, with revenues of around DKK15bn now expected for 2010/11, up from DKK14.5bn.

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