Chr. Hansen (Sell, TP: DKK489.78) - Natural Colors disappoints
Q2 organic sales growth was above our estimate but below consensus at c9% (we forecast 8.4%, consensus 9.7%), with lower sales growth in Natural Colors of 4% (we forecast 9.2%, consensus 8.7%). The EBIT margin of 27.0% was in line (we forecast 26.6%, consensus 26.9%). The 2017/18 guidance of 8–10% organic growth and a ~28.9% EBIT margin was unchanged, but Natural Colors sales growth is now expected to be below the long-term ambitions of c10%. We expect the shares to trade down 1–3% today following the report.Chr. Hansen is a biosciences group based in Denmark. Co. develops and supplies natural ingredient solutions for the food, pharmaceutical, nutritional, and agricultural industries worldwide. Co. operates in three divisions: Cultures and Enzymes (develops, produces, and sells cultures, enzymes, and probiotics for the food and dairy industries); Health and Nutrition (develops products for the dietary supplement, over-the-counter pharmaceutical, infant formula, and animal feed industries); and Natural Colors (develops natural color solutions to the food industry, primarily for the beverage, dairy, confectionery, fruit preparation and ice cream, as well as functional blends for processed meats).
DNB Markets is the investment banking arm of DNB Bank ASA and is focused primarily on the Nordic region, as well as internationally on niches such as global shipping, energy and related services, and seafood. DNB Markets offers services in FICC, Equities and Investment Banking advisory from offices in Oslo, Stockholm, London, Singapore and New York. Equity research coverage is offered on c250 Nordic companies. DNB was ranked no.2 in Extel Nordic Research 2017. The DNB Markets’ Credit and FICC Macro & FX Research teams are repeatedly highly rated by Prospera Nordic Institutional Investor Surveys.
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