Annual Report 2014/15Detailed Picture

Letter to shareholders

During 2014/15, the food & beverage end markets were impacted by developments such as trade restrictions, major currency fluctuations and slower growth in emerging markets.

As market leader in niche industries, offering strategically important solutions that create value for customers in either their products or their processes, Chr. Hansen nevertheless delivered strong results for the year. 


The Nature’s No. 1 strategy continues to guide the long-term direction of the Company, and we have seen good progress in our strategic initiatives – both in our established businesses and in our new initiatives within biological plant protection and the human microbiome.

We successfully increased the utilization of new fermentation capacity during the year, with a positive impact on profitability in the second half of the year. The facility in Copenhagen holds further potential for attractive investments in cost-efficient capacity expansion which will be pursued in the coming years.

A new go-to-market model has been established in China, which gives us direct access to the most important customers for dairy products. This setup provides a stronger platform for us to capture the attractive growth opportunities in one of our key markets, building on our strong customer insight and local technical competencies. To achieve this, we have invested in building a stronger local organization in China - an investment, from which we have already seen good results.

In human and animal health, progress has been made in expanding our market-leading position. In human health, we have continued to strengthen our relationships with major customers across the world, providing them with solutions based on strong clinical documentation, superior stability and innovative formulations.

Animal health also remains an attractive market, despite the insourcing of silage  inoculant production by one of our major customers. We have progressed well in our efforts to expand the product portfolio to support future growth.

In addition, we have made good progress on our new initiatives. In biological plant protection we continued the implementation of Nemix C™ in the Brazilian sugarcane market and conducted a number of field trials to develop new plant protection solutions.

Within the human microbiome initiative, we established a consortium with leading universities in the field of anaerobic bacteria, and initiated the construction of a dedicated pilot-scale pharma-grade facility for the next-generation human health bacteria.

During the last couple of years, the performance of the Natural Colors Division has not met our long-term ambitions. To ensure future value creation, the division went through a major reorganization during 2014/15, including integration of the sales and application functions and strengthening of commercial management.

We are now almost halfway through our current strategic planning period, and we have initiated a review process to be conducted over the coming months in order to update and, if necessary, adjust the Nature’s No. 1 strategy. We expect to announce the outcome of this process in the spring of 2016.


At Chr. Hansen, we remain committed to conducting our business with the highest standards of integrity and to develop and protect the employees.

During 2014/15, we continued our behavior-based safety initiatives initially launched in 2012. For the fourth year in a row, we saw a measurable improvement in lost-time incidents, but we will continue to improve our systems, processes and culture  until we reach zero accidents.

Following a decrease in our Environmental Performance indicators (EPIs) in 2013/14, we saw an improvement in our energy, CO2 and water efficiency in 2014/15. With these improvements, our EPIs are back at the same level as in 2012/13, with further progress needed to reach our long-term targets for 2019/20.


The performance in 2014/15 was better than our initial expectations, and with organic growth of 10%, we delivered in the upper end of our Nature’s No. 1 growth ambitions.

The Cultures & Enzymes Division and the Health & Nutrition Division delivered solid organic growth of 9% and 13% respectively.

The performance of the Natural Colors Division improved during the year, and with organic growth of 9% for the full year, the division also delivered in line with our long-term ambition.

The gross margin increased by 0.3 percentage point, primarily due to improved operating efficiency in the second half of the year and the stronger USD.

The EBIT margin was 27.1%, in line with 2013/14, once adjusted for special items in 2013/14. A positive impact from higher sales volume and the stronger USD was offset by increased research & development expenses related to biological plant protection and the human microbiome initiative.

Free cash flow came to EUR 151 million, a significant improvement on the EUR 115 million achieved in 2013/14.


While we continue to invest in innovation and capacity to drive the future growth of the Company, our free cash flow generation remains strong and we remain committed to returning excess cash to shareholders.

In line with this, an interim dividend of EUR 0.88 (DKK 6.57) per share, or a total of EUR 115 million, was declared in July 2015. In addition to this, we propose an ordinary dividend of EUR 0.63 (DKK 4.70) per share, or a total of EUR 82 million.


2015/16 will undoubtedly also be a busy year as we continue to build the future of Chr. Hansen, not only in our established businesses, but also in our new initiatives. Our ambition is to deliver new and improved solutions that create value for our Company, our customers, consumers and our shareholders alike.


Ole Andersen
Chairman of the Board

Cees de Jong
President & CEO