Cultures buck the downward trend at Danisco in Q2

By Guy Montague-Jones

- Last updated on GMT

Related tags Danisco Bacteria

Danisco has reported a drop in quarterly revenues but culture sales grew strongly thanks largely to continued conversion from bulk starter to Direct Vat Inoculation (DVI).

Reported group sales in the second quarter ending October 31 fell 3.2 per cent to DKK 3.239bn (€435m) but this was largely the result of a 16 per cent drop in sweetener sales.

Cultures, meanwhile, was the strongest performing division, posting a 3 per cent rise in reported sales and a 7 per cent organic increase.

Growth drivers

Danisco spokesperson Carl Corneliussen said the continued conversion from bulk starter to DVI technology was the driving factor behind this growth.

DVI is a method of applying Lactic Acid Bacteria (LAB), otherwise known as starters, to cheese, yoghurts and fermented milks, whereby a highly concentrated ‘ready made’ starter is added directly to products. Corneliussen said DVI saves time and offers increased precision and efficiency.

Strong performance in Asia Pacific also helped to bolster quarterly sales of cultures. Danisco said the sales comparison was favourable because of the indirect impact of the melamine scandal in China last year.

Looking ahead, Danisco expects culture sales to be a strong driver for future growth. To support that anticipated growth and enhance its health and nutrition claims, the Danish ingredients firm has a number of recent investments.

In August, Danisco announced plans to invest €60m in additional frozen cultures capacity over the coming three years. Its new competence centre in microbiology and biotechnology in Dangé, France, is also now fully operational.

Group performance

Away from cultures, other Danisco divisions reported mixed results in the second quarter. In organic sales terms, enablers fell 4 per cent, sweeteners dropped 16 per cent and the Genencor division recorded a 2 per cent increase.

On the basis of these results, Danisco has lowered its revenue outlook for 2009/2010 to DKK 13.25bn from its previous estimate of DKK 13.5bn.

Profit forecasts have also been lowered. Danisco has cuts its expected profit for the year to above DKK 200m from DKK 700m, because of the goodwill writedown in sweeteners and adjustments of deferred taxes.

For the second quarter, cost saving initiatives helped the company to record a 25 per cent increase in operating profit to DKK 379m. Group EBIT (before Bio Chemicals Projects (BCP)) also increased 25 per cent year-on-year to DKK 407m, prompting Danisco to up its EBIT forecast for the year to DKK 1,450-1,500m (after BCP).

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