Danisco earnings 'progressing as planned'

In the first six months of 2006/07, Danisco recorded revenue of DKK 10,423 million and consolidated profit of DKK 643 million.

Earnings and cash flows in both Ingredients and Sugar were in line with expectations, while the implementation of the 'Unfolding the potential' programme is 'progressing as planned'.

In addition, the restructuring in Sugar is being executed ahead of plan.

Ingredients​

Danisco reported six per cent organic growth in ingredients, with EBIT margin in ingredients up 0.6 percentage points to 13.7 per cent. The company claimed that investment programmes in growth segments of enzymes, cultures and xylitol are all progressing well.

On 28 August 2006 Danisco announced the acquisition of a Chinese cellulose gum (CMC) manufacturer with revenue of close to DKK 100 million and some 250 employees. With this acquisition, Ingredients now owns five big factories in China, covering key product areas.

The acquisition provides an interesting addition to the hydrocolloids range, and is designed to give Danisco access to CMC production at an efficient cost base.

Sugar​

In Sugar however, revenue declined as expected by DKK 268 million or 7 per cent, mainly as a result of the EU sugar reform. The company claimed that gross profit nonetheless rose DKK 58 million or two per cent to DKK 3,565 million, corresponding to a gross margin of 34.2 per cent against 33.8 per cent in the same period last year.

"The margin increase is attributable to favourable developments in Ingredients and a setback in Sugar,"​ said the Danish firm.

Unfolding the potential​

Danisco also said that the rollout of 'Unfolding the potential' is progressing as planned. The new organisational structure and the financial management systems were put in place on 1 November 2006.

As stated in the reorganisation announcement, Danisco's divisions will in the near future be dedicated to identifying focus areas and immediate cost reduction measures to ensure that the product divisions will meet the objectives set.

The company is also focusing on key value sectors. Bio Ingredients for example is investing considerably in expanding capacity, with a new enzymes plant in Wuxi, China, currently under construction.

This is expected to be operational before the end of the current financial year.

In Beloit, USA, the capacity for enzymes used in bioethanol production is also being expanded, and the cultures plant in Niebull, Germany, recently concluded a capacity expansion. A significant expansion of the raw material capacity (xylose) in Lenzing, Austria, is underway in order to accommodate the surging demand for xylitol.