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Q4 2018

Satisfactory 2018 performance, in line with initial outlook. 2019 guidance of 3-6% organic sales growth and 28-29% EBIT margin

Organic sales growth of +4% (Q4: +2%) in 2018: Bioenergy +12%, Food & Beverages +5%, Agriculture & Feed +3%, Household Care 0%, Technical & Pharma -6%. EBIT margin 28.3%. Net profit growth +3%. Free cash flow before acquisitions DKK 2.3 billion.

Peder Holk Nielsen, President & CEO: “We had a satisfactory 2018, in line with the outlook parameters from the beginning of the year. This is good considering the negative impact from markets in the Middle East. In 2019, we expect to increase sales organically by between 3 and 6%. Growth comes from innovation and increased market penetration, particularly in the emerging markets. New game-changing solutions, such as freshness in laundry, Balancius™ for feed and yeast for Bioenergy, will make strong contributions to our topline – and make the world more sustainable. Although the outlook reflects uncertainties, our view on 2019 is positive.”

Highlights 2018:

  • Organic sales growth of +4% (Q4: +2%) and -1% in DKK (Q4: +1%)
  • Bioenergy strong; Food & Beverages solid; Agriculture & Feed growing; Household Care flat
  • +5% organic sales growth in emerging markets; developed markets +3%
  • 8 impactful product launches across businesses; good progress on the eight priority platforms
  • Solid EBIT margin of 28.3%, including productivity improvements and despite currency headwinds, increased commercial activity, increasing input costs and lower deferred income.
  • Net profit growth of +3% from lower net financial costs and lower effective tax rate
  • Free cash flow before acquisitions DKK 2.3 billion; net investments DKK 1.4 billion
  • Proposed dividend of 5 DKK/share. 11.1% growth in dividend. 44.6% payout ratio

2019 outlook: Organic sales growth of 3-6%, with an addition of ~1 percentage point for growth in DKK. The 3-6% range reflects strong new product performance and geopolitical uncertainty. Q1 is expected to see a slight decline in organic sales y/y, due to the Middle East, Feed and US baking. Second half y/y expected to be much stronger. EBIT margin at 28-29% supported by solid productivity gains. Net profit growth of 0-5%. CAPEX at DKK 1.0-1.3 billion. Free cash flow bef. acq. at DKK 2.2-2.6 billion. ROIC expected at ~23% (~24% excl. IFRS 16 Leases). Stock buyback program of up to DKK 2 billion. Capital Markets Day with strategy update planned for June 17.