In Q1 2009/10, Danisco posted revenue of DKK 3.5 billion, up 7% Y/Y (2% organic growth). Cultures and Genencor were the drivers of organic growth. Group EBIT* increased by 27% Y/Y, resulting in a significant margin enhancement compared to Q1 last year. Enablers and Genencor both contributed well to higher margins. We lift our full-year estimates for EBIT and profit for the Group.
CEO Tom Knutzen comments: ‘We are encouraged by the positive start to the year, not least in view of the still challenging and volatile market environment. Internal cost containment and positive momentum for several of our products are starting to bear fruit, and we are satisfied that we are able to lift our outlook for the full year. Meanwhile, we maintain our focus on optimising the business to meet our financial targets.’
Group organic growth of 2% was made up of stability in Enablers, 11% growth in Cultures, 6% growth in Genencor and weakness in Sweeteners.
Enablers saw good demand for both Emulsifiers and Gums & Systems. Price momentum was mixed.
The strong organic growth in Cultures was broad-based. Genencor succeeded in stabilising its Fabric & Household Care revenue and grew organically in all other business segments aside from Textiles.
Sweeteners is meeting internal cash flow targets – its key priority for the current financial year – and temporary plant closures are progressing according to plan. Xylitol volumes remain weak.
Group EBIT came in at DKK 524 million against DKK 412 million last year. Excluding Bio Chemicals Projects, EBIT came in at DKK 537 million (DKK 418 million), reflecting a margin of 15.6% (up 2.7 percentage points Y/Y).
Bio Chemicals Projects continued to progress well.
Profit for the Group came in at DKK 306 million against DKK 271 million last year.
The Board of Directors has decided to propose a removal of the 7.5% voting restriction, as well as a change of the election period for the Board members from two years to one year. This will be proposed at Danisco's next Annual General Meeting on 19 August 2010.
Outlook for 2009/10
Our revenue outlook is unchanged at around DKK 13.5 billion since our latest trading statement (09/2009, 24 June 2009). As a result of the strong first quarter, we raise our EBIT estimate to slightly under DKK 1,400 million (previously around DKK 1,300 million). We now expect profit for the Group of slightly above DKK 700 million (previously around DKK 650 million). For further details, including comments on goodwill in Sweeteners, please refer to page 13 of this report.
*Henceforth in this report, EBIT will refer to EBIT before share-based payments and special items unless otherwise stated.