Danisco: cuts its full-year profit expectations

Copenhagen / DK. (das) In 2009 Danisco A/S has witnessed a slowdown in the overall level of market activity across most of the company´s ingredient segments and geographies, especially for Enablers and Sweeteners.

Danisco believes this has been caused by a combination of destocking and caution in the value chain combined with sluggish end user demand due to the general economic downturn; in example lower volumes. So far, the company is seeing no indication that this trend is abating. On the other hand, Danisco is encouraged by its current application pipeline addressing customer needs, and it welcomes the prospects of lower input costs on the back of lower raw material prices. The short-term earnings outlook has also been influenced by around 20 million DKK relating to unfavourable currency movements – Danisco says in a trading statement.

On that basis, Danisco now expects group revenue of around 13 billion DKK (previously 13,3 billion DKK), corresponding to expected organic growth for the full year of approximately four percent. The company expects group EBIT (before share-based payments but including corporate costs and central R+D) of around 1’150 million DKK compared to the estimate of around 1’300 million DKK that Danisco published in connection with its second quarter 2008/2009 results in December 2008. Now Danisco is lowering its FY 2008/2009 Group profit outlook from around 950 million DKK to a break-even result. In summary, the reduction in profit is caused by three main factors:

• Ordinary earnings outlook impacted by lower business activity in 2009 – (150 million DKK)
• Non-cash writedown on goodwill and fixed assets in Sweeteners – (560 million DKK)
• Impact from closing the sale of Danisco Sugar A/S – (200 million DKK)

Info: Lowering earnings expectations for FY 2008/2009 – (PDF | 35 KB)