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Annual Report 2014/15Detailed Picture

Health & Nutrition Division 

(19% of total revenue)

EUR million   2014/15 2013/14
Revenue 164.8 133.5
Organic growth  13% 15%
EBITDA 64.2 52.6
EBIT 54.9 44.1
EBIT margin 33.3% 33.0%
ROIC excluding goodwill 42.2% 42.7%

 

Chr. Hansen is the leading producer of probiotics  for human and animal health. The Health & Nutrition Division supplies products and solutions for the dietary supplement, over-the-counter pharmaceutical, infant formula, animal feed and plant protection industries.

The key offering is probiotic cultures with a documented health and/or efficiency effect. In addition to its existing businesses, Chr. Hansen is developing microbial solutions to address attractive new growth opportunities within plant protection (medium term) and exploring solutions for the human microbiome (longer term).

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Human health

The role of beneficial bacteria in human health is increasingly being acknowledged across the world, and Chr. Hansen is a global leader in the development and production of probiotics for dietary supplements and infant formula.

Chr. Hansen’s market leadership is particularly strong in the segment representing the world’s largest consumer health and pharmaceutical companies.

General market conditions for human probiotic dietary supplements remained favorable in 2014/15. Penetration of probiotic solutions in the overall dietary supplements market increased, primarily in North America where large retail chains have included probiotics in their product ranges.

Chr. Hansen continuously invests in providing clinical evidence of the health benefits of probiotic strains, strengthening its GMP manufacturing competencies, and developing innovative formats and product combinations that ensure superior stability of the live bacteria in a range of settings.

Human microbiome

The global focus on the human microbiome continues to accelerate with increasing investments by academia, pharmaceutical and consumer health companies and smaller bioscience -based startup companies in exploring the positive effects on human health.

Based on its core competences within microbial research and production, Chr. Hansen is exploring opportunities related to the human microbiome. Chr. Hansen seeks to build relationships and collaboration with the companies and research institutions that are most advanced in this area, some of which are already partners with Chr. Hansen within human health.

In 2014/15, Chr. Hansen established a research & development consortium, partnering with the universities of Aberdeen in Scotland and Groningen and Wageningen in the Netherlands to secure access to and commercialization of new anaerobic bacterial strains . Construction of a pilot-scale pharma-grade facility for next-generation human health bacteria was also initiated.

Animal health

With a growing world population, there is an ever greater need to increase productivity in the agricultural industry. Farmers need to get more out of less, for example more piglets per sow, reduced mortality, more milk per dairy cow and more energy per ton of forage harvested, and at the same time reduce the use of antibiotic growth promoters. Chr. Hansen’s probiotic concepts for animal feed support farmers in addressing these challenges.

In 2014/15, the market for animal probiotics in the livestock industry expanded again, primarily through increased penetration of probiotic solutions in the swine, poultry and dairy cattle segments. However, growth slowed significantly in the second half of 2014/15 as milk prices in several countries hit their lowest in a decade, affecting many dairy farmers’ financial position negatively.

The growth outlook for probiotic solutions for poultry was boosted by the decision of several major US poultry companies to initiate a process to reduce their use of antibiotics in the coming years.

A number of existing and new competitors stepped up their activity levels in animal probiotics during 2014/15.

Chr. Hansen increased its focus on the development of new solutions and concepts to meet the demand for natural alternatives to antibiotic growth promoters.

Plant protection

Plant and crop producers also need to improve productivity and find more sustainable solutions to replace the use of chemical products.

In 2014/15, the overall market for chemical and biological plant protection was challenging, due partly to weather conditions. The market for biological solutions did, however, still increase, but remains a small part of the total market.

Chr. Hansen and FMC Corporation continued the implementation of Nemix C™ in the Brazilian sugarcane market with positive feedback from customer field trials. In addition to this, a significant number of field trials were conducted to develop new biological plant protection solutions, especially within biostimulants.

REVENUE

Revenue increased by 23% to EUR 165 million, corresponding to organic growth of 13%. Human health and plant protection realized strong growth, while animal health delivered modest growth. Revenue was positively impacted by the stronger USD.

Organic growth in human health products was primarily driven by dietary supplements in the Americas and EMEA regions and by cultures for infant formulas in the APAC region.

Organic growth in animal health products was negatively impacted by a major customer’s decision to insource the production of silage  inoculants, whereas continued penetration of the poultry segment impacted growth positively.

EBIT

EBIT amounted to EUR 55 million, compared to EUR 44 million in 2013/14. The EBIT margin was 33.3%, up 0.3 percentage point on 2013/14.

The positive impact from higher sales volume and the stronger USD was partly offset by increased research & development expenses related to biological plant protection and the human microbiome initiative, and by an unfavorable product mix within human health products. 

ROIC EXCLUDING GOODWILL

The return on invested capital excluding goodwill was 42.2%, compared to 42.7% in 2013/14. Invested capital excluding goodwill increased by EUR 37 million, or 37%, to EUR 138 million. The increase was driven by a reallocation of assets from the Cultures & Enzymes Division to the Health & Nutrition Division.