Progressing on the 2025 Strategy priorities, outlook for the new financial year is 5-8% organic growth
A year of transition
Statement by CEO Mauricio Graber: “Our performance of 7% organic growth and our EBIT margin b.s.i. of 27.7% both ended at the upper end of our initial outlook range for the full year. Free cash flow before acquisitions and special items ended at EUR 196 million and was higher than the full-year outlook, in part due to a positive impact from timing of payables.
It was a year of transition for Chr. Hansen as we executed on the changes we’ve made to our portfolio, i.e. the divestment of Natural Colors and the acquisitions of HSO Health Care, UAS Labs and Jennewein. The transactions have been successfully completed but not without challenges, especially relating to Jennewein, which fell short of expectations for the year in part due to the HMO market developing more slowly than anticipated.
The prolonged impact from the COVID-19 pandemic increased the complexity of transitioning Chr. Hansen to a fully-focused bioscience company. Limited customer access, delayed registration times, and general macroeconomic uncertainty restrained growth opportunities, and our Human Health business disappointed in the second half of the year due to the part of the business serving the traditional sales channels.
In light of the above it was positive to see the all-time-high product launch activity in Dairy, Animal Health, Bioprotection, and Fermented Plant Bases, as well as the new partnership with UPL in Plant Health, which will support growth in the coming years. In 2021/22, we will be focused on commercial execution and anchoring the new businesses, while making progress on our 2025 Strategy priorities. While 2021/22 will be a year with high macroeconomic uncertainty and continued COVID-19 related disruptions we expect organic growth of 5-8%, EBIT margin b.s.i. of 27-28%, and a free cash flow b.s.i. of EUR 140-170 million.”
2020/21 in brief (continuing operations)
Organic growth was 7%, while revenue increased by 11% to EUR 1,077 million. Revenue was impacted positively by 11% from acquisitions and negatively by 7% due to currency effects. Revenue from acquisitions amounted to EUR 105 million.
- Food Cultures & Enzymes: 8% organic growth
- Health & Nutrition: 5% organic growth
EBIT before special items decreased by 9% to EUR 298 million. The EBIT margin before special items was 27.7%, compared to 33.7% in 2019/20. The decline was partly due to positive one-off effects last year and the recognition of the acquired businesses. Free cash flow before acquisitions and special items was EUR 196 million, compared to EUR 225 million in 2019/20. EBITDA from acquisitions amounted to EUR 17 million.
Q4 2020/21 in brief (continuing operations)
Organic growth was 6%, while revenue increased by 15% to EUR 293 million. Revenue was impacted positively by 12% from acquisitions and negatively by 3% due to currency effects. Revenue from acquisitions amounted to EUR 32 million.
- Food Cultures & Enzymes: 10% organic growth
- Health & Nutrition: -4% organic growth
EBIT before special items decreased by 14% to EUR 84 million. The EBIT margin before special items was 28.8%, compared to 38.4% in Q4 2019/20. The decline was partly due to positive one-off effects last year and recognition of the acquired businesses. Free cash flow before acquisitions and special items was EUR 76 million, compared to EUR 81 million in Q4 2019/20. EBITDA from acquisitions amounted to EUR 5 million.
Outlook for 2021/22
- Organic revenue growth of 5-8%
- EBIT margin before special items of 27-28%
- Free cash flow before special items of EUR 140-170 million
Long-term financial ambitions until 2024/25
The ambitions have been updated to reflect the divestment of Natural Colors and the acquisition of Jennewein.
- Mid- to high single-digit organic growth, averaged over the period
- Increase in EBIT margin before special items over the period
- Average growth in free cash flow before special items exceeding the average growth in EBIT before special items
The successful divestment of Natural Colors reduced leverage from an elevated level of 3.1x to 2.3x net debt to EBITDA before special items during 2020/21. The Board of Directors proposes an ordinary dividend for 2020/21 of EUR 0.87 (DKK 6.54) per share, for a total of EUR 116 million. The proposed ordinary dividend is equivalent to the dividend paid out in 2021 and represents 58% of the profit for the year, and will keep Chr. Hansen at a financial leverage consistent with a solid investment-grade credit profile.
The outlook for 2021/22 assumes constant currencies from the time of this announcement and for the remainder of the financial year. For further details on the outlook for 2021/22 and the long-term financial ambitions until 2024/25, please refer to page 9 of the full annual report.
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 40,000 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.