Danish bioscience company Chr. Hansen has closed its financial year with 9% organic growth driven mainly by volume growth. Revenue increased by 13%, amounting to €1.218 billion (US$1.183 billion). 

“We have delivered a solid financial performance despite a volatile macroeconomic and geopolitical environment. Organic growth reached 9%, EBIT margin 26.8%, and the free cash flow ended at €172 million (US$167 million) in line with our latest guidance,” says Mauricio Graber, CEO at Chr. Hansen.

“The unprecedented input cost inflation and challenges in the supply chain, and the scaling down of our business in Russia, has affected the company the most,” Lise Mortensen, CFO at Chr. Hansen, tells NutritionInsight.

“Looking into 2022/2023, we will continue to adapt to a changing business environment for both our customers and us and aim to deliver solid organic revenue and EBIT growth in 2022/2023 as we progress on our strategic ambition to differentiate,” Graber adds.

Revenues in Q4 amounted to €328 million (US$318.6 million), which compared to the previous year is a 12% increase. 

Organic growth sources
The core businesses delivered 9% organic growth and “strategic lighthouses” provided 14% organic growth combined. 

trategic lighthouses are new business areas with a minimum revenue potential of €100 million (US$97.2 million) holding a strategic importance. 

Chr. Hansen has five lighthouses – Bioprotection, Fermented Plant bases, Plant Health, HMO (Human Milk Oligosaccharides) and Bacthera. The first four drove 14% organic growth. The company does not mention Bacthera in the financial statement. 

In the previous year’s fourth quarter, the lighthouses showed a negative organic growth of 9% caused by order timing, while the remaining core business contributed to 7% organic growth. 

The new report shows that the segment of Health and Nutrition represented 15% organic growth driven by volume. Lastly, 7% originated from Food Cultures and Enzymes – also driven by volume but with a “positive impact from pricing.”

Health and Nutrition delivered 6% organic growth in Q4 of 2020/2021 driven by volume, and Food Cultures and Enzymes organic growth was 6% driven by volume. 

Mortensen adds that out of the 9% organic growth, 7% came from volume and 2% came from pricing.

Fighting higher costs
Amounting to €1.218 billion (US$1.183 billion), annual revenue saw a 13% increase compared to 2020/2021 of €1.077 billion (US$1.047 billion). 

The annual EBIT also increased by 9%, amounting to €326 million (US$316.7 million) compared to the previous year’s €298 million (US$289 million). However, the EBIT margin decreased to 26.8% from last year’s 27.7%.

“The decrease was mainly driven by a negative impact from higher input costs and increased cost levels to mitigate challenges in the supply chain, which was partly offset by the strong sales performance, pricing initiatives and efficiency improvements,” the company says.

Free cash flow decreased from €196 million (US$190.4 million) to €172 million (US$167 million). This dro was due to higher taxes impacting the cash flow from operating activities.

Mortensen explains that the financial year lived up to expectations, and there were not a lot of surprises in Q4. 

“The focus throughout the year was to protect our margins to the largest possible extent against the unprecedented input cost inflation and cost related to challenges in the supply chain by implementing price increases in close collaboration with our customers. We saw a positive impact from these price up efforts in Q4.”

Looking forward
Chr. Hansen expects organic revenue growth to remain in the range of 7-10% and a positive impact from exchange rates by approximately 5%. 

“The outlook for 2022/2023 is based on actual rates until October 11, 2022, and for the remainder of the year assuming constant exchange rates at the current level of EUR/USD rate of 0.97,” the company underscores.

It further forecasts free cash flow before special items to range between €190-230 million (US$184-223 million), and EBIT is expected to grow more rapidly than revenue. The EBIT margin is expected to range between 27-28%.

At the recent Drinktec trade show in Germany, we spoke to Nathalia Edwards, commercial development manager for fermented beverages at Chr. Hansen, about some of the key trends emerging in the beverage industry.