Danisco cultures show best performance during 04
the drop in flavour sales and weak growth in other ingredients made
by the group, thanks to the strong synergies offered by its Rhodia
acquisition, writes Dominique Patton.
The Danish company said yesterday that its original cultures -those developed prior to the Rhodia deal - recorded a 22 per cent growth in sales during fiscal 04-05, driven by the synergies from integrating Rhodia.
This compares to an 8 per cent decline in flavours, hit by the cold summer last year, declining citrus and vanilla prices and a fall in carbonate beverage sales.
While flavours accounted for roughly half of the DKK4 billion (€537m) in sales generated by the specialty products unit, cultures - including the health-boosting probiotic bacteria - made up 'a significant part' of the other half, according to a Danisco spokesman.
Cultures are currently performing well, with Danisco's key rival in this area, Chr Hansen, also seeing strong growth in this business.
However Danisco's acquisition of Rhodia in February 2004 gave it a lead on its main rival, making it the world's leading supplier of cultures and also the leading supplier of probiotics to supplements - a position previously held by Rhodia.
The full-year results, to which Rhodia contributed for 11 months, reveal the benefits of this acquisition. In the specialty products unit overall - including flavours, cultures and enzymes prior to the recent Genencor acquisition - all of the 28 per cent currency adjusted growth can be attributed to the Rhodia acquisition.
In cultures specifically, two products developed after the Rhodia acquisition, helped the good growth, said the company spokesman : the recently launched Choozit culture for cheese fermentation and Yomix for yoghurts.
Howaru, a strain developed by Danisco for the dairy industry, is also doing well, and is currently marketed by firms in South Africa, eastern Europe and Chile.
Latin America's growing market for probiotic drinking yoghurt helped drive a 9 per cent sales growth in this region.
Overall, the group reported an 8.8 per cent rise in sales to DKK17.8 billion (€2.4bn) but operating profit before special items (EBIT) fell this year to DKK2.07 billion, down nearly 2 per cent on 2003/04.
An "extensive restructuring programme" is expected to cut costs in the specialty products division by DKK75 million. So far, the programme has resulted in the closure of four sites, reducing the total to 12.
