2 March 2009 - In 2009, we have witnessed a slowdown in the overall level of market activity across most of our ingredient segments and geographies, especially for Enablers and Sweeteners.
We believe 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, i.e. lower volumes. So far, we are seeing no indication that this trend is abating. On the other hand, we are encouraged by our current application pipeline addressing customer needs, and we welcome 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 DKK 20 million relating to unfavourable currency movements.
On that basis, we now expect group revenue of around DKK 13 billion (previously DKK 13.3 billion), corresponding to expected organic growth for the full year of approximately 4%. We expect group EBIT (before share-based payments but including corporate costs and central R&D) of around DKK 1,150 million compared to the estimate of around DKK 1,300 million that we published in connection with our Q2 2008/09 results in December 2008.
As a result of these developments, management is today announcing wide-ranging internal measures targeting existing projects and procedures and launching cost savings initiatives including a salary freeze for 2009 and hiring restrictions across the organisation. These measures should be seen in context with ongoing restructuring initiatives already being implemented. The initiatives are planned to lead to a reduction of around 200 positions in Western Europe and North America.
With reference to today’s other stock exchange notices (05/2009 and 06/2009) Danisco is lowering its FY 2008/09 Group profit outlook from around DKK 950 million 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 – (DKK 150 million)
Non-cash writedown on goodwill and fixed assets in Sweeteners – (DKK 560 million)
- Impact from closing the sale of Danisco Sugar A/S – (DKK 200 million)
Our expected revised outlook for 2008/09 is described in the full release (see the pdf).
Further details on our performance and outlook will be available on 18 March 2009 when we publish our Q3 2008/09 results.