* Long-term sales guidance lowered to 7-10 pct annually
* Previous guidance was 8-10 pct
* Operating margins will grow at slower pace - CEO
(Adds details, quotes, share price)
By Teis Jensen
COPENHAGEN, Sept 4 Denmark's Chr. Hansen
lowered its long-term sales guidance due to the risk
that volatile prices of a food colouring made from insects could
prompt major customers to shift to synthetic alternatives made
Prices for Chr. Hansen's best-selling food colouring,
carmine, which is based on a type of lice mainly living in Peru,
have been volatile during the last couple of years due to big
differences in the size of harvests of the insect.
The company, which also produces bacteria for yoghurt and
cheese, lost a major South American customer in its March-May
third quarter, prompting a surprise profit warning in July.
It said it expected revenue to grow organically by 7 to 10
percent annually in the next five years, downgraded from an
earlier guidance of 8 to 10 percent.
"An aspect of volatility is the possibility of losing big
customers," Chief Executive Cees de Jong said at a capital
markets day on Wednesday.
"It is those type of impacts that could bring us to the
lower end of the guided range," he said. "We do not want to be
running after ourselves because we have given too narrow a
guidance," he said, explaining the lowering of guidance.
Chr. Hansen's Natural Colours Division accounted for 23
percent of group revenues in the first nine months of the
Two years ago carmine reached $120 a kilo from just $15 a
kilo the year before, although it has since plunged back to
De Jong, who took the helm in April, said operating margin
is expected to grow at a slower pace in the years ahead due to
investments in innovations, emerging markets and in the
exploration of new growth opportunities, such as microbiological
solutions for plant protection.
Analyst Michael Jorgensen from Alm. Brand Bank said in a
note to clients that Chr. Hansen's new long-term guidance was
disappointing and would prompt analysts to lower their growth
estimates for the company as its organic sales growth had been
between 8 and 10 percent since its initial public offering in
However another analyst, Morten Imsgard from Sydbank,
stressed that the underlying growth drivers for the company were
still intact and said the lower sales growth guidance merely
reflected more volatility in Chr. Hansen's markets.
Shares in Chr. Hansen fell by more than 3 percent in early
trade on Wednesday but gained later in the day to end down 0.2
percent at 190.90 crowns, against a 0.1 percent fall in the
Danish benchmark index OMXC20CAP.
(Reporting by Teis Jensen; Editing by Pravin Char)