Cultures lift Chr Hansen

Related tags United states dollar

Strong growth in cultures and human health products partly driven
by developments in the dairy industry, as well as rises for colours
and flavours, helped first quarter ingredients sales at Danish firm
Chr Hansen.

It was not however enough to reduce the impact of economic downturn in most of the company's markets, and the tough dollar exchange rate. Sales in the ingredients business fell 4 per cent on the comparable period to DKK 836 million while operating profit was down to DKK106 million, a decline of 16 per cent on the 2003 first quarter.

A satisfactory sales growth in North America - 7 per cent in local currency terms - fell by 12 per cent because of the dollar exchange rate and in other markets organic growth was small - 3 per cent in Europe and Asia while South America, an emerging market for the ingredients suppliers, fell well below expectations, dropping 7 per cent from DKK 58 million to DKK 54 million.

'The major economic problems in Brazil and Argentina continued to affect sales in the region. This reduced buying power and consequently had an adverse impact on the production of industrially produced food products,' said Chr. Hansen, who emphasised that keeping a steady ship, rather than looking for sales rises, was the main priority for the company in the region.

Disappointing results from Japan and Korea although overall sales for Asia/Pacific/Middle East rose by 5 per cent from DKK 74 million to DKK 78 million, based on a 3 per cent organic growth.

'Sales of rennet, cultures and natural colours continued to increase in almost all markets in the region. In particular, performance in Australia, New Zealand and China was satisfactory,' commented the Danish company.

A continuing rise in sales of cultures for the US dairy industry also helped increase the firm's share in that market and buffered some of the impact from tougher competition in colours.

Probiotics represent a 'substantial' part of the overall cultures business, probiotics marketing manager Christian Bejder, told He added that the firm is working on new products for food supplements, expected to launch this year.

With revenue down 3 per cent to DKK 1.15bn at the group overall - food ingredients and ALK-Abelló Allergy Vaccines combined - operating profit has taken a 14 per cent dive in the quarter, and this trend is expected to increase over the coming year. The group has reduced expectations by 17 per cent with group profit estimated at DKK 115-145 million, compared to DKK 140-170 million predicted in the end of year results in 2003, and against DKK 139 million for 2002/03.

A leading global supplier of the troubled Italian dairy and food group Parmalat, Erik Sørensen, the CEO of Chr. Hansen yesterday reassured shareholders : 'In connection with the international dairy group Parmalat's recent financial collapse, it should be noted that our receivables from Parmalat companies across the world total approximately DKK 3 million as of today. No write-down has been charged to the income statement for the period.'

In an interview this month Chr. Hansen told that it has relaxed its demands for cash following talks with Parmalat's management, and now argues it is vital that suppliers co-operate in supporting the company through its crisis.

"We have been given the necessary assurances so that we can co-operate with them and help to see them through the crisis,"​ said Hansen.

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