June 27, 2019 / 7:41 AM / 2 months ago

UPDATE 1-Shares of Denmark's Chr Hansen tumble after sales warning

(Recasts with share price fall)

COPENHAGEN, June 27 (Reuters) - Shares in Danish food ingredients maker Chr Hansen slumped 13% after it reported disappointing quarterly profit and cut its sales outlook for the year, hurt by a poor performance at its food colouring and animal health businesses.

Chr. Hansen, which produces enzymes and bacteria for the dairy, wine and meat industries, is one of the world’s top three producers of probiotics for animals, alongside Dupont and Lallemand.

In a statement late on Wednesday, the company said it expects 7-8% organic sales growth for the year ending in August, down from its previous forecast of 9-11% growth. It kept its target of an EBIT margin before special items of around 29.5%.

Third-quarter operating profit before special items rose 9%to 91.7 million euro ($104.13 million) but was about 3% lower than the average analyst forecast, Refinitiv data showed. Net profit in the third quarter rose 10% to 66.5 million euros.

Chr Hansen shares fell around 13% in early trade on Thursday, trading at the bottom of the Stoxx 600 index and set for its worst one-day performance.

The company’s colours business has suffered from slowing growth after a period of benefiting from higher demand for natural products from foodmakers and consumers in recent years. Chr Hansen also cited a weaker environment in emerging markets.

The sales warning prompted J.P. Morgan to cut its rating on the company to underweight from neutral.

“While margin disappointments in past quarters have largely been ignored by the market, a degradation in top-line cannot be ignored this time around,” the analysts said in a research note. ($1 = 0.8807 euros) (Reporting by Stine Jacobsen, editing by Deepa Babington)

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