Danisco revenue drops as Sweeteners struggles
December 17, 2009
by Jeff Gelski
COPENHAGEN, DENMARK — A 16% drop in Sweeteners revenue was a primary factor in Danisco recording a second-quarter group revenue decrease of 2% in organic terms to DKK3,239 million, ($625 million), down from DKK3,348 million ($646 million) in the previous year’s second quarter. Danisco lowered its fiscal year outlook for revenue to DKK13.25 billion, down from DKK13.5 billion.
The Copenhagen-based company was able to post EBIT of DKK407 million for the second quarter ended Oct. 31, up 25% from the previous year’s second quarter. Danisco lifted its fiscal year outlook for EBIT to DKK1,450 million to DKK1,500 million, up from a previous forecast of about DKK1,400 million.
“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,” said Tom Knutzen, chief executive officer, when second-quarter results were announced Dec. 16. “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.”
Danisco will write down a remaining goodwill of DKK700 million in Sweeteners, which will lower the company’s invested capital to about DKK1,400 million for the Sweeteners segment.
Within Food Ingredients, second-quarter revenue came in at DKK2,173 million, down from DKK2,303 million. Sweeteners dropped in revenue to DKK334 million from DKK397 million. Second-quarter EBIT came in at DKK7 million, down from DKK12 million.
“The business momentum with Litesse, lactitol and rare sugars is positive whereas we are seeing price competition within fructose,” Danisco said. “For xylitol, our key problem area, we are starting to see some stabilization on volumes and reduced price pressure. Overall market demand remains healthy, but we still see substantial overcapacity for the industry on the back of Chinese commissions over the past several years.”
Within Food Ingredients, Enablers reported second-quarter revenue dropped to DKK1,350 million from DKK1,429 million while second-quarter EBIT rose to DKK196 million from DKK163 million. In Cultures, second-quarter revenue rose to DKK489 million from DKK477 million and EBIT increased to DKK114 million from DKK79 million.
Danisco’s Genencor posted second-quarter revenue of DKK1,074 million, up from DKK1,056 million, and second-quarter EBIT of DKK129 million, up from DKK96 million. Enzyme sales into the bioethanol industry continued to grow at organic rates above 20%.
For the first six months of the fiscal year, Danisco had group revenue of DKK6,688 million, up from DKK6,583 million in the first six months of the previous fiscal year.