Chr. Hansen Drops After Lowering This Year’s Growth Forecast

Chr. Hansen A/S, the world’s biggest maker of dairy enzymes, dropped the most since its 2010 initial stock sale after cutting its full-year sales forecast on lower prices for the red pigment carmine.

Sales will probably rise 6 percent to 7 percent on a like-for-like basis, down from an earlier targeted range of 7 percent to 9 percent, the Hoersholm, Denmark-based company said in a statement today. Third-quarter profit of 34.9 million euros ($45 million) fell short of the 37.8 million-euro average of eight analysts’ estimates compiled by Bloomberg.

Shares of the maker of enzymes that create the holes in emmental cheese fell as much as 7.8 percent, the steepest intraday decline since the stock began trading in June 2010. Weaker demand of probiotics for yogurt in North America and Europe also stifled growth. A large customer in South America switching to a synthetic alternative to Chr. Hansen’s natural coloring will weigh on fourth-quarter sales, the company said.

“We don’t like to disappoint the market, but Chr. Hansen has never been a company with a straight line of growth from quarter to quarter,” Chief Financial Officer Klaus Pedersen said in an interview today. Sales increased 9.9 percent in the past fiscal year and 15 percent in the year prior. “Most companies would envy our growth.”

Probiotic Clampdown

The company is also feeling the effects from a clampdown by the European Food Safety Authority on the health claims of probiotics in yogurt, which account for almost 20 percent of sales at Chr. Hansen’s cultures and enzymes division.

Since December, references to probiotic benefits are no longer allowed on yogurt labels in Europe, though food manufacturers are still keen to differentiate their products to maintain higher prices, Chief Executive Officer Cees de Jong said. Revenue at the cultures and enzymes unit grew 7 percent in the third quarter, sustained by “healthy growth” in Asia Pacific and South America.

The company doesn’t currently see a risk that other regions will adopt the same stance as Europe, Pedersen said.

“This is really a European theme,” de Jong said. “We would consider dealings with EFSA as a bump in the road, and it’s not the end of probiotics.”

De Jong, who took the helm in April, is reorganizing the company into three geographic regions to improve sales to strengthen the focus on customers and “move regional commercial decision-making and corporate leadership closer.”

Chr. Hansen traded 4.9 percent lower at 190.9 kroner in Copenhagen trading as of 1:02 p.m. local time.

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