The Danish natural ingredient supplier reported a 10% organic growth, with revenue hitting €859 million for the full year, compared to €756 million in 2013/14.
CEO Cees de Jong said he is ‘generally quite pleased’ with the firm’s results, noting that the good organic growth was also coupled with a strong EBIT margin of 27.1%. Its three business units – Cultures & Enzymes, Natural Colours, Health & Nutrition – all reported between 9% and 13% organic growth, with revenues hitting €519m, €175m and €165m, respectively.
Indeed, de Jong said the 9% growth witnessed by the Chr Hansens’s biggest business unit (its Cultures & Enzymes division) “is clearly at the top end of the range of what we can achieve for that division.”
Meanwhile, the group’s smallest business division, Health & Nutrition, reported 13% growth – putting at an average of 14% growth each year for the past there years, he noted.
“Both divisions have [also] delivered EBIT margins of over 30%, and then also obviously very good capital returns.”
“Generally, when I look at the total business, and of course with cultures and enzymes being still about two thirds of what we do, I can only be really pleased with the results,” he said.
Natural colour woes?
Despite a 9% growth in its natural colours business in the past year, de Jong said Chr Hansen ‘could have done better’ – citing an EBIT margin of just 8% as substandard.
Indeed, while the natural colours business ended the year ‘quite well’ in Q4, the CEO commented that over the whole year “I would have wanted them to deliver just a little bit more [than 9% organic growth], and I am disappointed with the margins that we made in the natural colours business.”
“The real challenge [for next year] is bringing natural colours back to double digit growth and significantly improving the profitability,” said de Jong.
“I’m confident though, that we will benefit from the announcements that we have seen in the United States, where many food and beverage companies are saying ‘we are going to be taking out these artificial colours and replacing them with natural solutions’ – and there Chr Hansen is very well positioned to benefit from that conversion.”
The Chr Hansen chief noted that its Health & Nutrition unit has seen growth in both human health, plant health and animal health – adding that the creation of a new microbiome consortium with leading universities has helped the company get its hands on 500 new strains.
He also noted that the company’s new microbiome lab, set to open next year, will bring Chr Hansen ‘to the forefront’ of what is possible in microbiome science.
“We might even capture some small revenue streams with that, but of course the big prize is further out.”
de Jong also noted that one of the ‘highlights’ of the current financial year for him personally is the success that Chr Hansen has achieved in China – where it has a new sales force and technical team to deal directly with customers.
“Establishing that and growing the Chinese market has been tremendously successful for us,” he said, adding that two of the top ten clients for its cultures and enzymes business are now from China and are a direct result of the move to establish a better foothold in the country.
“I don’t think we would have got that without this change,” he said.