EBIT upgrade following another strong quarter
In Q2 2009/10, Danisco reported group revenue of DKK 3.2 billion, down 2% in organic growth terms (Enablers -4%, Cultures +7%, Genencor +2% and Sweeteners -16%). Our group EBIT* (before BCP) came in at DKK 407 million, up 25% Y/Y. That reflects a margin of 12.6%, a 2.9 percentage point expansion Y/Y, driven by all divisions aside from Sweeteners. Profit for the Group came in at DKK 233 million.
CEO Tom Knutzen comments: ‘We continued to see a positive earnings momentum during the quarter and are encouraged by the results that we have achieved so far in this financial year, including our ability to lift our EBIT outlook once more. Meanwhile, overall market growth remains modest, and on that basis we remain cautious regarding the earnings momentum for the second half of the year. In Sweeteners, the situation warrants a writedown of goodwill to be booked in Q3 2009/10. Our longer-term ambitions and priorities for the Group remain unchanged.’
Continued EBIT improvements in Enablers, with volumes holding up well. Revenue was impacted by overall lower sales prices reflecting lower input costs.
Within BioActives, Cultures continues to perform well, and our health & nutrition pipeline is developing in line with our expectations. Sweeteners is meeting its cash flow targets. We are addressing our cost structure, capacity and market approach for this area and expect to book a writedown on the remaining goodwill of DKK 700 million (i.e. non-cash).
Genencor secured continued margin improvement Y/Y and saw a recovery in its detergents business. We maintained our solid double-digit growth momentum for enzymes for bioethanol.
Bio Chemicals Projects (BCP): Strong momentum in deploying second-generation bioethanol – on track to open Tennessee demo plant within the coming weeks. Continued solid technological momentum for BioIsoprene™.
Strong free cash flow of DKK 679 million for the quarter. Net interest-bearing debt down to DKK 3.5 billion at the end of the period.
Outlook for 2009/10
Our revenue outlook is now around DKK 13.25 billion (previously DKK 13.5 billion) due to adverse currencies and continued modest revenue growth. We lift our EBIT outlook to DKK 1,450-1,500 million after BCP costs (previously slightly under DKK 1,400 million). Goodwill writedown in Sweeteners and adjustment of deferred taxes will lower our expected profit for the year to above DKK 200 million (previously DKK 700 million). For further details, please refer to page 12.
*Henceforth in this report, EBIT will refer to EBIT before share-based payments and special items unless otherwise stated.