September 20, 2007

 

Danisco upgrades 2007/08 outlook on improved Q1

 

press release

 

 

Danisco announced an improvement in key financial ratios in line with previously set targets.

 

For Q1 2007/08  (1 May - 31 July 2007), the company's Ingredients segment posted an EBIT margin of 14.7 percent, an expansion of 0.4 percent on-year, while RONOA increased by 1.2 percentage points to 18.4 percent and organic growth reached 3 percent.

 

Tom Knutzen, CEO of Danisco, said the company's ''Unfolding the potential'' strategy, announced a year ago, continues to deliver earnings improvements that are bringing the company closer to its financial targets.

 

These include higher RONOA, higher EBIT margin and organic growth in Ingredients.

 

Although Danisco is facing challenging market conditions in some key business areas, the company remains confident it would maintain its value enhancement momentum in 2007/08.

 

Group EBIT before share-based payments remains stable on-year, at DKK 578 million (US$ 108.8 million), despite the anticipated 13-percent drop in sugar sales.

 

The company is upgrading its 2007/08 outlook for profit for the year before share-based payments to over DKK 1,350 million (US$254.1 million)  (previously at over DKK 1,300 million). The upgrade is related to a property gain in Copenhagen and the divestment of its Flavours segment.

 

For full year 2007/08, Danisco maintains its guidance for revenue. EBIT is now expected at the level of DKK 1,800 million (US$338.8 million)  (previously slightly under DKK 1,800 million).

 

Profit from discontinued operations is now estimated to be DKK 430 million (US$80.9 million) (previously expected at over DKK 400 million).

 

Profit for the year before share-based payments is subsequently expected at over DKK 1,350 million (US$254.0 million)   (previously at over DKK 1,300 million).

 

Danisco's Ingredients margin expansion was driven by advances in both Bio Ingredients and Texturants & Sweeteners, thanks to strict cost discipline and its decision to improve average selling price at the expense of short-term volume.

 

The company expects this price and margin momentum to gradually accelerate over the remainder of the current financial year.

 

During Q1, Danisco's expanded xylose plant in Lenzing came on stream, and the company opened its new enzyme plant in Wuxi, China.

 

Following a good start to the year, Sugar is well on track to meet its earnings expectations for 2007/08.

 

At a recent AGM, the company announced its intention to work towards a demerger of Danisco Sugar.