Chr. Hansen Holding A/S

Q4 organic revenue growth was 16% for the group, with year-to-date organic growth of 11%. EBIT before special items was EUR99 million in Q4, up 8% from EUR91 million last year, and EBIT margin before special items was 28.0% versus 27.9% last year. For the full year-to-date period, EBIT before special items was EUR358 million, up 10% from last year, and EBIT margin before special items was 26.9% versus 26.8% last year. Free cash flow before acquisitions and special items was EUR69 million in Q4 and EUR202 million year-to-date, up from EUR172 million last year. For calendar 2023, management expects organic growth of 10% to 12%, EBIT margin before special items of 26% to 27%, and free cash flow before acquisitions and special items of EUR190 million to EUR230 million; revenue will face an estimated about 6% negative FX impact.

Mauricio Graber emphasized that Chr. Hansen kept executing while merger work with Novozymes progressed, and he pointed to innovation and customer collaboration as the main growth engines. He highlighted product launches such as live probiotics in ambient yogurt in China, new gut-brain probiotics, and HMO regulatory progress in China. His tone was confident and explanatory, framing the quarter as evidence of the business model’s resilience in a challenging environment.

Lise Mortensen focused on the financial bridge: EBIT before special items was EUR99 million in Q4, up from EUR91 million, with the 28.0% margin helped by sales growth and pricing but offset by higher input costs and FX. Year-to-date free cash flow before acquisitions and special items reached EUR202 million versus EUR172 million last year, helped by higher operating profit and lower taxes paid, partially offset by working capital. She also said Q4 gross/margin pressure included roughly minus 0.5 percentage point from FX and that the company is not expecting input-cost headwinds to become tailwinds in calendar 2023.

Analysts pressed on why Food Cultures and Enzymes could grow strongly in Q4 while management guided the broader market to flat-to-slightly declining volume growth; management said Chr. Hansen is outgrowing a difficult market through focused technology platforms, innovation with customers, and productivity solutions. Questions also focused on China ambient yogurt, HMOs, and North American dietary supplements; management said ambient probiotic yogurt is early but strategically important, HMO China revenue is unlikely to be material until the second half of 2024 or 2025, and North American supplements remain challenged by inflation and discretionary spending even though Chr. Hansen is performing well within that market. On pricing, management said the quarter’s lower pricing contribution in Health and Nutrition reflected commercial mix and incentives, and that the year-to-date pricing level is the better run-rate indicator.