Danisco restructures food ingredient divisions

by Jeff Gelski
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COPENHAGEN, DENMARK — A Food Ingredients operating segment will bring together the four food ingredient divisions of Danisco, the company said March 26 while giving third-quarter financial results. The Danisco reorganization, which takes effect May 1, means Texturants and Sweeteners will cease to exist as a division.

"Texturants and Sweeteners has been facing two issues," Copenhagen-based Danisco said. "Firstly, its relative size creates an unbalanced organization in light of the sale of Flavours and separation of Sugar and, secondly, the benefits that we have harvested from creating T&S have not fully lived up to our expectations."

Sweeteners and Cultures will operate as divisions reporting to Food Ingredients, but Sweeteners and Cultures also will be part of Bio Actives, a move designed to bring all of Danisco’s health claim ingredients, including prebiotics and probiotics, under one umbrella.

Both the Emulsifiers division and the Gums and Systems division will report to Food Ingredients and also be part of Enablers. Mikael Sternberg Christiansen will join Danisco April 1 as executive vice-president and head of the Gums and Systems division. He spent 13 years as an executive with the Arla Group and most recently was in charge of the company’s global cheese and butter production, international sales and subsidiaries outside the domestic markets. At Danisco, he replaces Anders Wilhjelm, who plans to join the GEA Group as president of the process engineering division.

Genencor and Danisco Sugar A/S will continue to operate as separate Danisco divisions.

For the third quarter ended Jan. 31, Danisco companywide reported operating profit before special items (EBIT) of DKK479 million ($101 million), up from DKK367 million ($77 million) in the previous year’s third quarter. Diluted earnings per share were DKK5.43 per share, up from DKK3.13 per share. Revenue was DKK4,642 million, up from DKK4,443 million.

The Ingredients division had third-quarter EBIT of DKK335 million, up from DKK334 million in the previous year’s third quarter. Ingredients third-quarter revenue came in at DKK2,986 million, up from DKK2,921 million.

Within the Ingredients division, Bio Ingredients reported third-quarter EBIT of DKK187 million, up from DKK144 million, and revenue of DKK1,364 million, up from DKK1,282 million. Texturants and Sweeteners had EBIT of DKK187 million, up from DKK144 million, and revenue of DKK1,630 million, down from DKK1,648 million.

"Our Ingredients margin remains under pressure," Danisco said. "Ever increasing input costs combined with a high level of competitive pressure in certain areas keep our operating environment tough, and in our view this challenge is unlikely to abate in the short to medium term."

For the first three quarters of fiscal year 2007-08, Danisco reported companywide revenue of DKK13,955 million, down from DKK14,059 million in the first three quarters of the previous fiscal year. EBITDA before special items was DKK2,421 million, up from DKK2,243 million. Diluted earnings per share were DKK28.17 per share, up from DKK15.95 per share.

For the entire 2007-08 fiscal year, Danisco now expects companywide EBIT to come in above DKK2 billion, up from a previously estimated DKK1.9 billion. Ingredients EBIT is expected at DKK1,575 million, down from a previously estimated DKK1.6 million. Danisco continues to forecast companywide revenue of DKK18.8 billion, including DKK12.1 billion in Ingredients, for the fiscal year.

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