5% organic growth in Q2 elevates year-to-date organic growth to 3%
Organic revenue growth of 5% in Q2, corresponding to 4% EUR growth, with an improving momentum in all areas as expected: Food Cultures & Enzymes 5%, Health & Nutrition 8% and Natural Colors 1%, lifting the group organic revenue growth in the first six months of 2019/20 to 3%. In Q2 EBIT before special items increased by 6% to EUR 83 million, and EBIT margin before special items increased to 28.2%. The full-year outlook is unchanged.
CEO Mauricio Graber says: “We are pleased that all three business areas improved the growth momentum in Q2, as expected. Food Cultures & Enzymes delivered solid organic growth as we continue to deliver advanced technology that can help our customers innovate, improve food quality, reduce waste and drive down costs. Especially innovative dairy enzymes, like CHY-MAX® Supreme and NOLA® Fit are doing very well, and bioprotection grew approximately 15% in Q2. In Health & Nutrition, Animal Health continued to perform strongly driven by BOVAMINE® Dairy probiotics; and Human Health also delivered solid growth. Natural Colors showed positive growth, despite continued negative raw material price impacts and challenging market conditions, as growth and profitability of FRUITMAX® was strong.
"Our Q2 EBIT margin before special items was up by 0.4%-point, and as we continue to see scalability benefits in production, we have also managed costs carefully while sustaining investments in growth opportunities and innovation across our three business areas. Growth in free cash flow before acquisitions and special items in Q2 was 18%. Our cash position is very strong, and we have more than two year’s free cash flow worth of committed, undrawn credit facilities. Our policy of paying out 40-60% of net profits as ordinary dividends is unchanged.
"The second quarter was in line with our expectations. The COVID-19 outbreak in China did not have a material impact on our business in Q2, however, it is clear that we will see both favorable and unfavorable impacts in the second half of the year, as the virus has spread globally. Chr. Hansen is part of the global food supply chain and has strong offerings for the food, health and nutrition industries. Customers are securing safety inventories to ensure supply continuity to consumers that are buying more at grocery retail as they comply with stay at home government directives. The health and safety of our employees and continuity of service to our customers are our primary concerns, but so far we have managed to have all our production sites running at normal operations and have also continued to deliver on customer commitments. Based on the business performance in the first part of the year, we maintain our guidance for the full year, although subject to greater macroeconomic uncertainty due to COVID-19. We also postpone the CMD to focus on business continuity and operations.”
OUTLOOK FOR 2019/20
The full-year outlook is maintained, but assumes no significant supply disruption from COVID-19.
Chr. Hansen is a leading, global bioscience company that develops natural solutions for the food, nutritional, pharmaceutical and agricultural industries. We develop and produce cultures, enzymes, probiotics and natural colors for a rich variety of foods, confectionery, beverages, dietary supplements, animal feed, and plant protection. Our product innovation is based on around 40,000 microbial strains – we like to refer to them as “good bacteria”. Our solutions enable food manufacturers to produce more with less – while also reducing the use of chemicals and other synthetic additives – which makes our products highly relevant in today’s world. Sustainability is an integral part of Chr. Hansen’s vision to improve food and health. In 2019 Chr. Hansen was ranked as the world’s most sustainable company by Corporate Knights thanks to our strong sustainability efforts and our many collaborative partnerships with our customers. We have been delivering value to our partners – and, ultimately, end consumers worldwide – for over 145 years. We are proud that more than one billion people consume products containing our natural ingredients every day. Chr. Hansen was founded in 1874 and is listed on Nasdaq Copenhagen.