Margin expansion despite challenging markets
Both Ingredients and Sugar achieved EBIT margin expansion Y/Y, thus enabling us
to report 5% growth in EBIT before special items in the face of challenging
market conditions, particularly higher raw material costs and a weakened USD.
CEO Tom Knutzen comments: ‘We have reported another quarter of expansion in the
underlying EBIT margin of our Ingredients business despite soaring input costs,
and we will continue our focus on value creation. As a result of our decision
to demerge Sugar, we are currently also reviewing the strategic direction and
priorities of our core Ingredients business, including a review of our capital
structure.'
Highlights
•Ingredients' topline grew organically by 3% in H1 2007/08 driven by higher
prices. The Bio Ingredients division was the main growth contributor with 5%.
We expect organic topline growth to increase for Ingredients over the coming
quarters
•Our Ingredients business achieved an EBIT margin of 14.2% in H1 2007/08
against 13.5% in H1 2006/07 driven by advances in both Bio Ingredients and
Texturants & Sweeteners
•Sugar's good start to the year continued, and cost containment efforts and an
improved sales mix further enhance our confidence in this year's earnings
potential. The EU sugar reform remains a challenge until fully implemented, but
we maintain our confidence in our long-term financial targets for Sugar
•We are continuing to work towards independence for Sugar. In October, we
appointed Deutsche Bank to be our advisors in this process
Outlook for 2007/08
For the Group, we still expect an EBIT of at least DKK 1.95 billion.
As a result of the weakening USD, we lower our EBIT outlook for Ingredients by
approximately
DKK 50 million to around DKK 1.6 billion.
For Sugar, we upgrade our EBIT by DKK 50 million, to around DKK 500 million,
after satisfactory operating performance in H1.
For the group, we now expect to report profit for the year before share-based
payments of around DKK 1.5 billion (previously at least DKK 1.45 billion). See
page 12 for further details.
Read more in the attached file.
