Chr. Hansen (Sell, TP: DKK490.49) - FC&E margin disappointment
Q1 organic sales growth was above our estimate and in line with consensus at c10% (we forecast 9.0%, consensus 9.9%), while reported revenue growth was low at c5.3% (we forecast 6.2%, consensus 7.2%). The EBIT margin of 25.4% disappointed (we forecast 26.0%, consensus 26.6%) due to the FC&E division. The 2017/18 guidance of 8–10% organic growth and a ~28.9% EBIT margin was unchanged. We expect the shares to trade down 3–5%+ 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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