Delivers on guidance, launched new strategy and carried through three acquisitions in spite of COVID-19
CEO Mauricio Graber says: “2019/20 was a defining and extremely eventful year for Chr. Hansen. We launched our new 2025 Strategy to become a focused bioscience company and to grow a better world, naturally. We made three acquisitions over a short period of time – HSO Health Care, UAS Laboratories and, most recently, Jennewein – and made an agreement to divest Natural Colors. We are convinced that the long-term value creation from the changes in the portfolio is very attractive, and the changes will be clearly positive to EBITDA margin in the coming year, but will also give a slight short-term negative EBIT margin impact.
On top of all of that, everyone has had to manage through a pandemic which has posed unique challenges. We ended the year with 5% organic growth for the group, well within the guidance we provided at the beginning of the year. Organic growth accelerated in Q4, driven by Health & Nutrition which delivered impressive 18% growth. We also delivered on the earnings side and came in at almost 30% EBIT margin for the full year, and at 34.3% in Q4. Our free cash flow also developed strongly, but this was partly due to capex investments that were delayed during the second half of the year due to COVID-19.
Our three strategic lighthouses – bioprotection, plant health and Bacthera – have progressed well during the year, and we launched a fourth lighthouse, fermented plant bases, at the Capital Markets Day in August 2020, and a fifth lighthouse, human milk oligosaccharides, was announced in September 2020 in connection with the acquisition of Jennewein.
We have a cautious outlook for 2020/21, given the uncertainties that COVID-19 still create, and it will also be a year where we focus on integrating the acquired businesses and making solid progress on our strategic agenda. We expect an organic growth rate of 5-8%, in line with our long-term ambition, with the highest contribution from Health & Nutrition. We expect an EBIT margin before special items of 27-28%, given the headwinds from currencies, a normalization of the cost base, and the slight headwind from the portfolio changes. At the same time, we remain firmly committed to our long-term ambition of delivering underlying EBIT margin expansion by 2025.”
2019/20 in brief (incl. discontinued operations)
Organic growth was 5%, and adjusting for a negative currency impact of 3%, corresponded to a revenue increase of 2% to EUR 1,189 million.
- Food Cultures & Enzymes: 5% organic growth
- Health & Nutrition: 9% organic growth
- Natural Colors: 0% organic growth
EBIT before special items increased by 4% to EUR 356 million. The EBIT margin before special items was 29.9%, compared to 29.6% in 2018/19. Free cash flow before acquisitions and special items was EUR 245 million, compared to EUR 162 million in 2018/19 (excluding the inflow from the sale-and-lease-back of the Company’s main site in Hoersholm).
Q4 2019/20 in brief (incl. discontinued operations)
Organic growth was 7%, and adjusting for a negative currency impact of 6%, corresponded to a revenue increase of 1% to EUR 308 million.
- Food Cultures & Enzymes: 5% organic growth
- Health & Nutrition: 18% organic growth
- Natural Colors: 0% organic growth
EBIT before special items increased by 4% to EUR 106 million. The EBIT margin before special items was 34.3%, compared to 33.3% in Q4 2018/19, and the increase was partly driven by positive one-off effects and cost management initiatives. Free cash flow before acquisitions and special items was EUR 97 million, compared to EUR 105 million in Q4 2018/19 (excluding the inflow from the sale-and-lease-back of the Company’s main site in Hoersholm).
Dividend
The divestment of Natural Colors is expected to complete during the spring of 2021, and upon receiving the proceeds the Board of Directors expects to pay out an extraordinary dividend at least equal to a normalized ordinary dividend for 2019/20. Until then, the Board of Directors has decided to not propose an ordinary dividend for 2019/20, to prudently manage the leverage of the Company.
Outlook for 2020/21
| Organic revenue growth | 5-8% |
| EBIT margin before special items | 27-28% |
| Free cash flow before acquisitions and special items | EUR 120-160 million |
The guidance for EBIT margin before special items and for free cash flow before acquisitions, and special items assumes constant currencies from the time of this announcement and for the remainder of the financial year.
Chr. Hansen ist ein weltweit tätiges, breit aufgestelltes Biotechnologie-Unternehmen, das Lösungen mit natürlichen Inhaltsstoffen für die Lebensmittel-, Ernährungs-, Pharma- und Agrarindustrie entwickelt. Bei Chr. Hansen sind wir hervorragend positioniert, um positive Veränderungen durch mikrobielle Lösungen voranzutreiben. Seit fast 150 Jahren setzen wir uns für eine nachhaltige Landwirtschaft, bessere Lebensmittel und ein gesünderes Leben für mehr Menschen auf der ganzen Welt ein. Unsere mikrobielle Plattform und Fermentationstechnologie, einschließlich unseres vielfältigen und beeindruckenden Bestands von rund 50.000 mikrobiellen Stämmen, besitzen bahnbrechendes Potenzial. Abgestimmt auf Kundenbedürfnisse und internationale Trends erschließen wir weiterhin die Kraft guter Bakterien, um auf weltweite Herausforderungen wie Lebensmittelverschwendung, globale Gesundheit und den übermäßigen Einsatz von Antibiotika und Pestiziden zu reagieren. Als das weltweit nachhaltigste Biotechnologie-Unternehmen berühren wir jeden Tag das Leben von mehr als 1 Milliarde Menschen. Unser Ziel „Grow a better world. Naturally“ wird angetrieben durch unsere Innovationsgeschichte, Neugierde und Pionierarbeit in der Wissenschaft und ist das Herzstück von allem, was wir tun.
