Full year guidance maintained – new strategy to be presented in August
Chr. Hansen today reports organic revenue growth of 7% in Q3, corresponding to 4% EUR growth, with an improved momentum compared to 1H as expected: Food Cultures & Enzymes 8%, Health & Nutrition 12% and Natural Colors 1%, increasing the Group organic revenue growth in the first nine months of 2019/20 to 5%. COVID-19 impacts on revenues in Q3 were a net positive. In Q3, EBIT before special items increased by 5% to EUR 97 million, and EBIT margin before special items increased by 0.4 %-point to 30.8%. The full-year outlook on organic growth and EBIT margin b.s.i. is unchanged, while FCF b.a.s.i is increased to above EUR 200 million.
| EUR million | Q3 2019/20 | Q3 2018/19 | Growth | YTD 2019/20 | YTD 2018/19 | Growth |
| Revenue | 313.8 | 302.0 | 4% | 880.9 | 855.2 | 3% |
| EBIT before special items | 96.5 | 91.7 | 5% | 249.8 | 241.3 | 4% |
| Profit for the period | 70.0 | 66.5 | 5% | 178.8 | 175.6 | 2% |
| Free cash flow before acquisitions and special items | 106.3 | 48.9 | 117% | 147.4 | 56.5 | 161% |
| Organic growth, % | 7% | 8% | 5% | 9% | ||
| Gross margin, % | 54.9% | 56.6% | 55.0% | 55.4% | ||
| EBIT margin before special items, % | 30.8% | 30.4% | 28.4% | 28.2% | ||
| ROIC excl. goodwill, % | 35.0% | 37.1% | 31.8% | 34.3% |
Demonstrated resilience
CEO Mauricio Graber says: “We are pleased with our Q3 performance, as our business demonstrated resilience during the first volatile months since the outbreak of COVID-19 thanks to our essential natural ingredient solutions for the food, nutritional and agricultural industries. Customers increased safety stocks of essential ingredients in March and early April, to carry them through potential supply chain disruptions and then inventories began to normalize late April and in May. Our innovative solutions have proved their value, and we were able to continue the strong momentum from recent product launches such as the dairy enzymes CHY-MAX® Supreme and NOLA® Fit, and bioprotection posted another strong quarter. Animal Health continued to perform strongly driven by BOVAMINE® Dairy probiotics; and Human Health also delivered strong growth, supported by consumers’ interest in probiotics with indications for immune benefits. Natural Colors also delivered positive growth driven by FRUITMAX®, despite challenging conditions from COVID-19 and low raw material prices.
"Our Q3 EBIT margin before special items was up by 0.4%-point driven by scalability benefits in production and lower travel expenses due to COVID-19 travel restrictions – however, these positives were partly offset by higher freight costs that were also driven by COVID-19. Our strong business model and financial position allow us to sustain investments in growth opportunities and innovation. Free cash flow before acquisitions and special items grew by 117% in Q3 and is up 161% after nine months, primarily due to good management of working capital. The Q3 performance was in line with our expectations, and based on the business performance after nine months, we maintain our organic growth and EBIT margin guidance for the full year and increase the free cash flow before acquisitions and special items, although macroeconomic and end-market uncertainty persist due to COVID-19.
“We also completed an acquisition in Q3, and signed another early in Q4. HSO Health Care and UAS Laboratories represent important investments in our microbial platform, and we expect to continue to extend our platform through a disciplined acquisition strategy.
"As part of the strategic review, the Board of Directors and the Executive Board have considered the portfolio of Chr. Hansen, and given that Natural Colors does not share the microbial and fermentation technology platforms, strategic options for the future of Natural Colors will be explored, including a potential sale of the business. We also announce August 25 as the new date for our virtual Capital Markets Day, where we will present all the results of the on-going strategy review.”
OUTLOOK FOR 2019/20
| July 2, 2020 | April 16, 2020 | |
| Organic revenue growth | 4-6% | 4-6% |
| EBIT margin before special items | Around 29.5% | Around 29.5% |
| Free cash flow before acquisitions, divestments and special items | Above EUR 200 million | Around EUR 190 million |
Chr. Hansen is a global, differentiated bioscience company that develops natural ingredient solutions for the food, nutritional, pharmaceutical and agricultural industries. At Chr. Hansen we are uniquely positioned to drive positive change through microbial solutions. We have worked for almost 150 years to enable sustainable agriculture, better food and healthier living for more people around the world. Our microbial and fermentation technology platforms, including our broad and relevant collection of around 50,000 microbial strains, have game-changing potential. Matching customer needs and global trends we continue to unlock the power of good bacteria to respond to global challenges such as food waste, global health and the overuse of antibiotics and pesticides. As one of the world’s most sustainable companies, we touch the lives of more than 1 billion people every day. Driven by our legacy of innovation and curiosity to pioneer science, our purpose – To grow a better world. Naturally. – is at the heart of everything we do.
