DENMARK: Chr. Hansen profit slides despite sales growth
- EBIT down 3%
- Margins hit by Q2 charge
- Sales up 6% on organic growth
Costs hit margins at Chr. Hansen
Danish ingredients firm Chr. Hansen booked a drop in first-half profit, in spite of sales gains which were driven by strong organic growth.
The company revealed today (11 April) operating profit in the six months to 28 February slid 3% to EUR30m (US$39.3m).
The group's operating margin totalled 22.7% compared to 25% last year. Margins were hit by a EUR8m cost in the second quarter, excluding this the margin would have been unchanged from last year.
Net profit fell to EUR53m, down from EUR57m in the first half of last year.
Nevertheless, Chr Hansen reiterated its objective to drive year-on-year margin improvements in the fiscal year.
The company said that sales in the period were up 6%, climbing to EUR535m. Organic sales increased by 9% in the period, putting the group on-track to hit its targeted organic revenue growth of 8-10% in the full year.
Continued growth in first half year
With organic growth of 9% in the first half of the financial year 2012/13 Chr. Hansen delivers a strong interim result.
"The Chr. Hansen Group delivered organic revenue growth of 9% (excluding carmine price effect) in the first half of 2012/13.
Preliminary analysis of two clinical studies relating to gastrointestinal health has been finalized. Despite indications of positive results the studies' primary end points were not met and consequently the data is assessed to be insufficient for approval of an EU health claim. Therefore impairment of capitalized development costs of EUR 8 million has been made in Q2.
Operating profit (EBIT) margin before impairment was at 25.0% at the same level as last year. We remain committed to achieve improved profit margins through scalability and our outlook for 2012/13 is unchanged. We expect organic revenue growth between 8-10% (excluding carmine price effect) and an EBIT margin before special items and impairments above 2011/12," says CEO Cees de Jong.
Highlights, first half of 2012/13
? Revenue of EUR 353 million, up 6% compared to the first half of 2011/12
? Organic growth of 6% (9% excluding carmine price effect)
? EBIT of EUR 80 million, down 3% compared to the first half of 2011/12. EBIT margin of 22.7% compared to 25.0% last year. The EBIT margin before impairment reached 25.0% which is unchanged from last year
? Q2 2012/13 revenue was EUR 174 million, up 6% compared to Q2 last year. Organic growth was 8% (10% excluding carmine price effect). The EBIT margin of 18.7% compared to 25.4% in Q2 last year. The EBIT margin before impairment was 23.3%
Outlook, full year 2012/13
The outlook for 2012/13 is unchanged compared to the announcement of 16 January 2013. Organic revenue growth, excluding effect on sales prices from change in raw material prices for carmine, is expected to be in the range of 8-10% while organic revenue growth, including the effect from change in raw material prices for carmine, is expected to be in the range of 7-9%. The EBIT margin before special items and impairments is expected to be above last year. Free cash flow before acquisitions and divestments is expected to be at the same level as in 2011/12.
Original source: CHR Hansen
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