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UPDATE 1-Danish ingredients group Chr. Hansen beats forecast, boosts payout
October 23, 2013 / 8:54 AM / 4 years ago

UPDATE 1-Danish ingredients group Chr. Hansen beats forecast, boosts payout

* Q4 operating profit 59.5 mln euros vs 58.7 mln forecast

* Sees organic growth of 7-9 pct in new financial year

* Shares are up 2.5 percent in a negative Danish market (Adds comments from CEO, details, share price)

COPENHAGEN, Oct 23 (Reuters) - Danish food ingredients maker Chr. Hansen beat expectations for its fourth quarter profit rise, forecast an increase in revenues for next year and said it would pay out an extraordinary dividend to shareholders.

Shares in the company, which makes cultures, colours and enzymes and has food producers like Danone and Nestle as major customers, rose 3.9 percent after the news on Wednesday against a 0.3 percent fall in the Danish benchmark index OMXC20CAP.

“We had good traction in all the divisions in the fourth quarter. We were firing on all cylinders,” Chief Executive Cees de Jong told Reuters after the report.

Earnings before interest and tax (EBIT) rose to 59.5 million euros ($82 mln) in the three months to end-August from 50.3 million euros a year earlier, to come in just above a forecast for 58.7 million euros in a Reuters poll.

For the 2013/14 financial year, Chr. Hansen, expects revenue to grow by 7-9 percent organically and the EBIT margin before special items to be above 26 percent.

In 2012/2013, its revenues rose 7 percent.

Chr. Hansen cut its sales forecast for the full year in July as volatile prices of carmine, a food colouring made from cactus-dwelling lice in Peru, led a major South American customer to switch to synthetic alternatives made by rivals.

De Jong said that the loss of the South American customer would hit revenue by around 1 percent in the new financial year.

Chr. Hansen proposed to return 110 million euros to shareholders through ordinary and extraordinary dividends out of free cash flow of 120 million euros in 2012/13.

“We have promised not to pile up cash in the company and this shows that we keep that promise,” de Jong said.

The company said research and development expenditures would move towards 7 percent of revenue in 2013/14 from 6.1 percent in the previous year.

Combined with a reassessment of the capitalization of development expenditures to a lower level this will reduce the EBIT margin level by between 1 and 1.5 percentage points.

The full year EBIT margin for 2012/13 came in at 27.2 percent before impairment charges.

De Jong said the company would favour smaller bolt-on acquisitions over major deals.

“I would also expect us to form more partnerships and alliances - especially in the Health & Nutrition division”.

Chr. Hansen has entered a strategic alliance with U.S. chemical company FMC Corporation to develop products for biological plant protection, a new business area. ($1 = 0.7260 euros) (Reporting by Teis Jensen, Editing by Patrick Lannin)

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