Strong performance in Chr. Hansen

With strong organic sales growth and improved profitability Chr. Hansen continues the positive development. Investments in the world’s largest culture plant, in a focused Innovation organization and the Health & Nutrition Division represent significant growth opportunities for the future.

• Sales reached DKK 3,555 million; organic growth of 9.8%
• EBITDA growth by 17.8% to DKK 1,053 million equal to 29.6%
• Net working capital represents 18.1% of sales
• Cash flow from operating activities of DKK 383 million
• Anticipated continued growth in sales and improved EBITDA in 2008/09

“The main driver for the positive results is the strong growth and increased market share of our business. This has lead to improved margins despite a challenging environment with adverse exchange rates and increasing raw material costs. The continued focus of the business within our core competence areas has also contributed. I am particularly pleased to see that the Health & Nutrition Division experienced growth of 26% hereby proving the large opportunities for Chr. Hansen within life sciences,” says Lars Frederiksen, CEO, Chr. Hansen.


A continued strong performance

(in million DKK)	2006/07	2007/08	Growth
Net sales	3,314	3,555	7,3%
Production costs	1,798	1,848	2,8%
Gross profit	1,516	1,707	12,6%
EBITDA before special items	894	1,053	17,8%
EBITA	665	821	23,5%
EBIT	559	714	27,7%
Profit before tax	-54	183
Tax	9	-129
Profit after tax continuing activities	-45	54
Profit after tax discontinued activities	-50	271
Net profit of the year	-95	325

Sales increased by 7.3% corresponding to organic growth of 9.8%. Sales of Cultures for both food, feed and health applications showed strong double digit growth while sales of enzymes and colors grew a little less. Notably the markets in Asia (+19%) and South America (+16%) progressed well, but also sales in Europe (+7%) and North America (+10%) increased nicely. On all markets Chr. Hansen has increased its market share.

Despite increased input prices and adverse exchange rates, gross profit improved due to a combination of price increases and improved efficiencies.

As a result of improved operational performance EBITDA before special items reached DKK 1,053 million corresponding to a margin of 29.6% vs. 27.0% last year and 20.6% in 2005/06.

Net profit after tax reached DKK 325 million compared to DKK -95 million last year.

(in million DKK)	2006/07	2007/08
Total assets	9,214	9,878
Invested capital	3,706	3,783
Net working capital	593	674
Equity	609	934

Growth through acquisitions

In addition to organic growth within the existing business areas Chr. Hansen is focusing strongly on growth through acquisitions.
“We are constantly monitoring both market and technology acquisitions within our core competence areas and also looking for opportunities to add new knowledge to our company,” says Lars Frederiksen.

In January 2008 Chr. Hansen acquired the company Medipharm which has a strong platform within cultures for the agricultural industry, for dietary supplements and food products. This not only increased the business in these areas significantly, it has also strengthened Chr. Hansen’s bioscience profile and created new opportunities in this field. Medipharm is today fully integrated with Chr. Hansen.

Focus on life sciences

Chr. Hansen has extensive knowledge within the area of lactic acid bacteria, a knowledge the company looks to leverage further both within the food and the life science area.

“We wish to expand beyond our current business areas of supplying value-adding ingredients for the food industry. There is a growing need for better balanced foods with specific health properties and with our technology platform we are uniquely positioned to benefit from this trend and expand into new exciting applications,” says Lars Frederiksen.


Outlook for the future

The expectation for the future is continued positive sales growth driven by innovation, acquisitions and people.

“To Chr. Hansen customer driven innovation is key and a significant contributor to business growth. Close to 10% of all our employees work with research and development and we invest heavily in the area. Furthermore, as a knowledge-based company, we are highly dependent on having committed and motivated employees to generate and support growth. The past two years we have seen a consistently high employee satisfaction, so the outlook for the future is positive,“ concludes Lars Frederiksen.