However, despite current challenging market conditions, the long-term growth outlook remains very positive for that division, said the Danish company
The probiotic, cultures and enzymes maker saw revenues of €949m for its overall business for the full year, compared to €859m in 2014/15, translating as 12% organic growth.
But Chr. Hansen reported o% organic growth for its health and nutrition sector division in Q4 2015/2016 and, in terms of the full year, only 2% such growth.
Animal health revenue was lower for the full year in markets such as North and South America, Europe, Middle East and Africa, it said.
Dairy market dynamics
Christian Barker, executive VP of the Danish company’s animal health and nutrition business, said the animal health space has experienced numerous challenges such as oversupply in the dairy market coupled with low output prices exacerbated by the Russian ban, contracting demand, and the end of the EU milk quota.
But the company is beginning to see an uplift in that market. “Several producers are starting to raise their milk prices,” said Barker.
In North America, animal health was negatively impacted by insourcing by a major customer and tough market conditions in 2015/216, he added.
He told us, though, that the division saw pockets of growth, particularly in China and other regions of Asia. And notable in product performance during the year were the company’s silage inoculants, said Barker.
He sees a gradual return to growth in the animal health and nutrition business towards the mid to end of 2017. “But we expect strong growth in the animal health business in the next five years, the fundamentals are strong,” he added.
The company is gearing up to launch new products in terms of its poultry and swine portfolio to capitalize on that momentum, said the VP.
The increasing shift away from antibiotics and the pressure now coming from investors, governments and international organizations on that front will create considerable opportunities for nutritional alternatives such as probiotics, said Barker.
Meanwhile the company said the integration of the US microbial technology developer, Nutritional Physiology Company (NPC), which it acquired for $185m in January this year, has progressed as planned.
That producer is mainly focused on the feedlot and dairy cattle segments: “Revenue from NPC was in line with expectations," said the Danish firm.