Chr. Hansen reports 5% organic growth in 2019/20
October 13, 2020 - CEO Mauricio Graber says: “2019/20 was a defining and extremely eventful year for Chr. Hansen. We launched our new 2025 Strategy to become a focused bioscience company and to grow a better world, naturally. We made three acquisitions over a short period of time – HSO Health Care, UAS Laboratories and, most recently, Jennewein – and made an agreement to divest Natural Colors. We are convinced that the long-term value creation from the changes in the portfolio is very attractive, and the changes will be clearly positive to EBITDA margin in the coming year, but will also give a slight short-term negative EBIT margin impact.
On top of all of that, everyone has had to manage through a pandemic which has posed unique challenges. We ended the year with 5% organic growth for the group, well within the guidance we provided at the beginning of the year. Organic growth accelerated in Q4, driven by Health & Nutrition which delivered impressive 18% growth. We also delivered on the earnings side and came in at almost 30% EBIT margin for the full year, and at 34.3% in Q4. Our free cash flow also developed strongly, but this was partly due to capex investments that were delayed during the second half of the year due to COVID-19.
Our three strategic lighthouses – bioprotection, plant health and Bacthera – have progressed well during the year, and we launched a fourth lighthouse, fermented plant bases, at the Capital Markets Day in August 2020, and a fifth lighthouse, human milk oligosaccharides, was announced in September 2020 in connection with the acquisition of Jennewein.
We have a cautious outlook for 2020/21, given the uncertainties that COVID-19 still create, and it will also be a year where we focus on integrating the acquired businesses and making solid progress on our strategic agenda. We expect an organic growth rate of 5-8%, in line with our long-term ambition, with the highest contribution from Health & Nutrition. We expect an EBIT margin before special items of 27-28%, given the headwinds from currencies, a normalization of the cost base, and the slight headwind from the portfolio changes. At the same time, we remain firmly committed to our long-term ambition of delivering underlying EBIT margin expansion by 2025.”
2019/20 organic growth was 5%, and adjusting for a negative currency impact of 3%, corresponded to a revenue increase of 2% to EUR 1,189 million.
• Food Cultures & Enzymes: 5% organic growth
• Health & Nutrition: 9% organic growth
• Natural Colors: 0% organic growth
EBIT before special items increased by 4% to EUR 356 million. The EBIT margin before special items was 29.9%, compared to 29.6% in 2018/19. Free cash flow before acquisitions and special items was EUR 245 million, compared to EUR 162 million in 2018/19.