23 June 2008 - 2007/08 was an eventful year for Danisco. We completed a strategic review of our business model and financial ambitions, the results of which have started to materialise through our decisions to exit Sugar and Flavours as well as through our recently announced second-generation bioethanol joint venture with DuPont.
Meanwhile, a number of external factors contributed to making 2007/08 a challenging year for Danisco with financial repercussions also expected in 2008/09.
CEO Tom Knutzen comments: ’We continue our quest to increase stakeholder value through our updated strategic priorities and reorganisation – Becoming first choice. We recognise short term headwind in the form of higher input costs and other margin pressure, adverse currency movements, and certain demand issues, however, we feel confident that the steps we are taking to transform Danisco into a bio-based, market driven ingredient provider will ultimately create superior value.’
Highlights
Danisco reported group revenue of DKK 18,778 million, EBIT of DKK 2,151 million and profit after tax of DKK 1,259 million.
Ingredients recorded organic growth of 5% for the year driven by solid momentum in Cultures, Genencor and Emulsifiers.
Sweeteners continues to face challenges within xylitol. At DKK 1,588 million, EBIT came in flat Y/Y despite a negative USD impact of DKK 70 million and soaring input costs.
Sugar showed strong operating performance throughout the year, posting EBIT of DKK 652 million. We booked a goodwill writedown of DKK 600 million as a result of the ongoing demerger or sales process.
Q4 saw continued strong Ingredients topline performance in most areas leading to an average organic growth rate of 8%.
Genencor experienced margin challenges in the quarter whereas Sugar performed well partly due to one-off items.
We are now in the conclusive phases of negotiations with potential buyers of Sugar; however, we continue to work towards a separate listing of Sugar by the end of calendar year 2008 unless an outright sale proves to be more value enhancing. We aim for the Board of Directors to be able to put forward a proposal to Danisco’s shareholders at the upcoming AGM. We will subsequently review our capital structure.
We propose a dividend for the year of DKK 7.50 per share, unchanged Y/Y.
Outlook for 2008/09
In 2008/09, Danisco’s result will depend on the outcome and timing of the ongoing process of demerging Sugar. For clarity, our group outlook assumes that Danisco Sugar A/S continues as an integrated part of Danisco throughout the financial year.
For the Group, we expect revenue of around DKK 19.4 billion, an EBIT of around DKK 1.85 billion and profit for the year before share-based payments of around DKK 900 million. See page 19 for further details.