Announcement of Results for Danisco's Q1 2001/02.Business Editors COPENHAGEN, Denmark--(BUSINESS WIRE)--Sept. 18, 2001 Danisco (CPH: DEMC DEMC Double Execution, Message Checksums .)(CPH:DEMCx.): 1 May 2001 - 31 July 2001 (Unaudited) -- Earnings up 7 per cent (EBITA) -- Operating margin of 18 per cent (EBITA) -- Robust growth in Asia-Pacific Sustained progress First quarter: Net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight in Danisco's main business areas - Ingredients, Sweeteners and Sugar - grew to DKK DKK In currencies, this is the abbreviation for the Danish Krone. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 4.3 billion (DKK 3.9 billion), up 12 per cent on the first quarter of last year. The Ingredients and Sweeteners segment reported 8 per cent growth. The sugar segment was up 15 per cent primarily due to expedited sales as a result of favourable world market prices and actions taken to compensate for the changes in the EU's sugar regime. Earnings (EBITA EBITA Earnings Before Interest Taxes Amortization ) in the main business areas increased to DKK 667 million (DKK 541 million), up 23 per cent. The Sugar segment accounted for the greatest improvement, up 46 per cent on the same period of last year. The progress in the Sugar segment was positively affected by the weakening of the Swedish krona Noun 1. Swedish krona - the basic unit of money in Sweden krona Swedish monetary unit - monetary unit in Sweden ore - a monetary subunit in Denmark and Norway and Sweden; 100 ore equal 1 krona against the euro and favourable market conditions for C sugar coupled with expedited sales. The Ingredients and Sweeteners segment advanced 7 per cent on the same period of last year.
KEY FIGURES AND FINANCIAL RATIOS
GROUP
Q1 Q1 YTD YTD
2000/01 2001/02 2000/01 2001/02
Profit and loss account in DKK million
Net sales 5,988 4,952 5,988 4,952
of which main business areas 3,891 4,341 3,891 4,341
Operating profit before
amortisation of goodwill
(EBITA) 603 678 603 678
of which main business areas 541 667 541 667
Amortisation of goodwill (110) (94) (110) ( 94)
Operating profit (EBIT) 493 584 493 584
of which main business areas 447 573 447 573
Profit on ordinary
activities before tax 320 444 320 444
Profit on ordinary activities 183 281 183 281
Consolidated profit 183 281 183 281
Danisco's share of
consolidated profit 173 267 173 267
Cash flows in DKK million
Cash flow from
operating activities 960 1,263 960 1,263
Cash flow from
investing activities 481 996 481 996
Cash flow from
financing activities (849)(2,422) (849)(2,422)
Total cash flow 592 (163) 592 (163)
Financial ratios
Diluted average
number of shares 1) 57,512 56,552 57,512 56,552
Diluted earnings per share (DEPS) 3.01 4.72 3.01 4.72
Cash flow per share 16.7 22.3 16.7 22.3
Net asset value per share (NAV) 242 231 242 231
31 30 31
July April July
2000 2001 2001
Balance sheet in DKK million
Assets total 35,322 31,956 28,239
Capital and reserves 13,935 12,795 13,048
Interest-bearing debt, net 11,581 11,278 8,519
Invested capital 24,775 23,007 19,973
1) Diluted: In the average number of shares it has been taken into account that shares under the share option programme may be subscribed for at a price lower than the market price. The key figures and financial ratios are calculated according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. "Guidelines for Computation of Financial Ratios and Key Figures 1997", issued by the Danish Society of Financial Analysts, on the basis of the Group's accounting policies. Please see Danisco's report and accounts 2000/01 for definitions. Danisco develops and produces food ingredients sweeteners and sugar. The Group employs 10,000 people in more than 40 countries. In 2000/01, Danisco boasted net sales of DKK 23.5 billion. Danisco's broad product portfolio includes emulsifiers, stabilisers, flavourings, various types of fat replacers and sweeteners such as xylitol xylitol /xy·li·tol/ (zi´li-tol) a five-carbon sugar alcohol derived from xylose and as sweet as sucrose; used as a noncariogenic sweetener and also as a sugar substitute in diabetic diets. and fructose fructose (frŭk`tōs), levulose (lĕv`yəlōs'), or fruit sugar, simple sugar found in honey and in the fruit and other parts of plants. . Most of these ingredients are produced from natural raw materials and contribute for instance to improving the texture of products such as bread, ice cream and yoghurt. Danisco is also one of the largest and most efficient sugar producers in Europe. Ingredients and Sweeteners -- Earnings up 7 per cent (EBITA) -- Operating margin of 18 per cent (EBITA) -- Robust growth in Asia-Pacific Net sales in Q1 2001/02 were up 8 per cent on the same period of last year. Operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: was 18 per cent (EBITA), on a par with the same period of last year. Earnings (EBITA) increased to DKK 387 million (DKK 363 million), up 7 per cent. Markets Net sales in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. advanced 6 per cent in USD USD In currencies, this is the abbreviation for the U.S. Dollar. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. terms, of which 4 per cent was due to the acquisition of Florida Flavors. In DKK terms the increase was 11 per cent. Net sales in South America South America, fourth largest continent (1991 est. pop. 299,150,000), c.6,880,000 sq mi (17,819,000 sq km), the southern of the two continents of the Western Hemisphere. showed an increase of 6 per cent on Q1 2000/01 in DKK terms. The cyclical cyclical Of or relating to a variable, such as housing starts, car sales, or the price of a certain stock, that is subject to regular or irregular up-and-down movements. movements in this region impacted negatively on the sales performance. In Europe, the sales efforts changed from being country-focused to industry-focused have had the desired effect, as sales grew 5 per cent in DKK terms compared with Q1 2000/01. The breakdown of this increase was uneven, as sales in Western Europe Western Europe The countries of western Europe, especially those that are allied with the United States and Canada in the North Atlantic Treaty Organization (established 1949 and usually known as NATO). rose 6 per cent, while declining 5 per cent in Eastern Europe Eastern Europe The countries of eastern Europe, especially those that were allied with the USSR in the Warsaw Pact, which was established in 1955 and dissolved in 1991. . Sales growth in Asia-Pacific is sustained with an increase of 11 per cent in Q1 2001/02 relative to the same quarter of last year. The Chinese and South Korean markets remain buoyant and show very satisfactory growth rates Growth Rates The compounded annualized rate of growth of a company's revenues, earnings, dividends, or other figures. Notes: Remember, historically high growth rates don't always mean a high rate of growth looking into the future. . The Japanese market is still characterised by uncertain economic prospects. Products Sales of Texturant Products were up 6 per cent on the same period of last year. Particularly sales of functional systems to the baking and dairy industries showed healthy growth. The acquisition of Germantown on 15 August 2001 has provided Danisco with unique market coverage in Australia and New Zealand New Zealand (zē`lənd), island country (2005 est. pop. 4,035,000), 104,454 sq mi (270,534 sq km), in the S Pacific Ocean, over 1,000 mi (1,600 km) SE of Australia. The capital is Wellington; the largest city and leading port is Auckland. , markets that were previously covered through sales agents. Further, the acquisition has added additional functional systems capacity. Integration of Germantown has been initiated and will be consolidated from the second quarter of 2001/02. Raw material prices for texturants showed a rising trend during the quarter. Efforts are being made to offset this cost increase through efficiency enhancement and price adjustments. Sales of Speciality Products, including flavours, bio- and feed ingredients, showed an increase of 9 per cent on the first quarter of 2000/01. Asia-Pacific and parts of Europe saw healthy growth rates in the flavour (jargon) flavour - (US: flavor) 1. Variety, type, kind. "DDT commands come in two flavors." "These lights come in two flavors, big red ones and small green ones." See vanilla. 2. The attribute that causes something to be flavourful. segment. Florida Flavors, acquired in May 2001, has contributed special know-how on flavours to the fruit juice industry. Integration of the business is proceeding according to plan. Sales in the Sweeteners segment were up 11 per cent on the same quarter of last year. A major part of this increase results from the continuously strong sales performance of xylitol in Asia-Pacific, particularly in South Korea where Danisco has captured a significant market share. Sales of other naturally based sweeteners remained on a par with Q1 2000/01. Earnings (EBITA) were positively affected by Danisco's currency hedging of JPY JPY In currencies, this is the abbreviation for the Japanese Yen. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. against USD in December 2000. Sugar -- Sales expedited to compensate for changed sugar regime -- Favourable currency effects contributed significantly to earnings improvement of 46 per cent (EBITA) -- Favourable market conditions for C sugar Net sales in Q1 2001/02 were 15 per cent higher and earnings (EBITA) 46 higher than in the same period of last year. Operating margin (EBITA) increased to 15 per cent, reflecting an increase of 3 percentage points compared with the same period of last year. Earnings (EBITA) benefited from the weakening of the Swedish krona against the euro. The total currency effect is estimated at DKK 40 million, of which DKK 15 million derives from a reduction of costs in Sweden measured in Danish kroner. Compared with 1999/2000 the total sugar output in the EU fell from 18.2 million tonnes to 15.8 million tonnes in 2000/01, which means there has been a reduced supply of C sugar, which has led to an improved world market price. Further, Danisco has been able to market considerably larger sales volumes of C sugar relative to the same period of last year. Expedition of sales resulted in an earnings improvement (EBITA) of DKK 55 million in the first quarter, which will impact negatively on earnings in the rest of the year. Since this year's first field samples of beets made in early August, weather conditions have been particularly favourable for beet beet, biennial or annual root vegetable of the family Chenopodiaceae (goosefoot family). The beet (Beta vulgaris) has been cultivated since pre-Christian times. development and the potential for the year's sugar production is fully satisfactory. At this stage Danisco Sugar expects an overall production well above the quotas specified by the EU, but lower than the record production of recent years. Other business Danisco Foods (fruit and condiments) performed to expectations, whereas Danisco Pack UK underperformed because of sustained low demand for corrugated board Noun 1. corrugated board - cardboard with corrugations (can be glued to flat cardboard on one or both sides) corrugated cardboard cardboard, composition board - a stiff moderately thick paper in the UK resulting from the recession-like situation in the UK manufacturing industry. Associated undertakings Income from associated undertakings, Genencor and Amcor Flexibles Europe, amounted to minus DKK 5 million. Danisco Venture Danisco Venture was set up on 1 May 2001. Since then, efforts have been targeted at building a portfolio of potential venture projects. These efforts were successful and a number of venture projects have been identified. Hence, the coming months will be used to convert these venture opportunities into actual investments. Divestments and acquisitions In conjunction with the acquisition of Cultor, Danisco established a divestment divestment to strip one's investment from an entity. programme. With the sale of Danisco Pack UK this programme has almost been completed and with a satisfactory result. Work on divesting the remaining activities (Danisco Foods) will continue. Danisco continues expansion through organic growth as well as acquisitions, like the recent acquisition of Germantown. The consolidation of Germantown will, as announced, affect the consolidated profit negatively in the year of consolidation due to increasing costs relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc amortisation Noun 1. amortisation - the reduction of the value of an asset by prorating its cost over a period of years amortization reduction, step-down, diminution, decrease - the act of decreasing or reducing something 2. of goodwill and interest expenses. The acquisition is expected to meet Danisco's financial target of a return on investment exceeding the weighted average cost of capital Weighted average cost of capital (WACC) Expected return on a portfolio of all a firm's securities. Used as a hurdle rate for capital investment. Often the weighted average of the cost of equity and the cost of debt The weights are determined by the relative proportions of equity (WACC WACC See: Weighted average cost of capital ) in the third full financial year after the acquisition, at the latest. Accounting policies IAS See iPlanet Application Server. 1. (computer) IAS - The first modern computer. It had main registers, processing circuits, information paths within the central processing unit, and used Von Neumann's fetch-execute cycle. 39 Financial Instruments: Recognition and Measurement has become effective and is applied as from the current financial year. Apart from this, the accounting policies applied are unchanged from those applied in the annual accounts. Implementation of IAS 39 has not impacted on the profit and loss account. Capital and reserves were revalued at the beginning of the quarter by an amount of DKK 42 million, representing the value of forward exchange contracts as hedging for future transactions. This amount was not previously taken to the balance sheet but was stated in a note, cf. Danisco's report and accounts 2000/01 note 24. Outlook for 2001/02 In the Ingredients and Sweeteners segment, the acquisition of Germantown has led to an upward adjustment of our forecast, and we thus expect full- year earnings (EBITA) to exceed DKK 1.4 billion. The Sugar segment is still expected to see full-year earnings (EBITA) of DKK 1.1 billion. The consolidated profit for 2001/2002 is expected to be DKK 900-975 million against our previous estimate of DKK 0.9 -1.0 billion, thereby narrowing our forecast by DKK 25 million due to the sale of Danisco Pack UK and dilution effect from the acquisition of Germantown. The second quarter of 2001/02 should see a consolidated profit of DKK 175 - 225 million. The above expectations for the future are inherently associated with uncertainty and risks, which may imply that actual results will deviate from forecasts. 18 September 2001 Hugo Schroder, Chairman of the Board of Directors Alf Duch-Pedersen, CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. Financial calendar 17 Dec.2001 Q2 accounts (Aug.-Oct.) 20 Mar.2002 Q3 accounts (Nov.-Jan.) 30 Apr.2002 End of financial year 19 Jun.2002 Accounts for 2001/02 05 Sep.2002 Annual General Meeting 18 Sep.2002 Q1 accounts (May-July) This announcement of quarterly results is also available at www.danisco.com. The meeting for institutional investors Institutional Investor A non-bank person or organization that trades securities in large enough share quantities or dollar amounts that they qualify for preferential treatment and lower commissions. , equity analysts and the press to be held today at 3pm can be followed at the above website and www.stockwise.dk |
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