Chr Hansen raises outlook again after bumper Q2
The Danish company’s overall Q2 results showed 24 per cent growth, of which 17 per cent organic, to €315m. Operating profit before special items was up by 23 per cent to €71m. The fine performance was seen across all three business units and across all geographies.
While the growth rate in emerging markets was highest, with 24 per cent organic growth in Asia Pacific, Africa and Middle East (APAME) and 20 per cent in South America, the mature markets of Europe and the United States also saw growth of 18 and 8 per cent respectively.
The Q2 results has led the company to raise its outlook for the full year for the second time. Revenue for full year 2010/11 is now expected to be up 12-14 per cent on last year (€576m), compared to previous predictions of 11-13 per cent made on 12 January and the significantly more modest 8-10 per cent made on 2 November 2010.
“All in all, we continue to prove we are a resilient business with broad-based growth platform and able to expand our earnings,” CEO Lars Frederiksen told FoodNavigator.com this morning.
Carmine supply
Frederiksen said it is clear that natural colour demand is growing in all regions. The colours and blends division reported revenue of €48m in the three months up to the end of last year, representing 58 per cent growth, of which 6 per cent was down to currency factors.
When the effect of higher pricing for its red carmine colours is taken into effect, the growth rate was 22 per cent.
In January Frederiksen discussed the supply impact of lower South American cultivation of cacti, on which the cochineal beetles live, on carmine prices.
He told FoodNativator today that prices have started to come down as new cacti, and cochineal beetles that live on them, planted by farmers keen to profit from the sky-high demand, replaced less lucrative crops.
Prices were up to US$110-120 a kg on the spot market, but dropped back to $85-90 a kg in March.
“How fast and how far they will fall we cannot say,” he said, echoing an element of caution in the outlook section of the Q2 report:
“The 2010/11 outlook is sensitive to major changes in the global economy including the USD exchange rate, and raw material process for carmine which could impact the operational and financial performance of the company.”
Do the cultures locomotive
By contrast with the rapid advancement in colours Frederiksen called the cultures and enzymes division “more of a locomotive”, as it has performed well – but with lower growth rates – over a long time. Organic growth was 6 per cent, bringing in revenues of €90m.
A separate article on our sister site NutraIngredients discusses the underlying currents in Chr Hansen’s cultures and enzymes division, particularly in relation to probiotics.
