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Food testing remains strong for Eurofins

By Joe Whitworth+

04-Mar-2014

Emerging markets, regulation and food fraud scandals such as horse meat helped Eurofins record strong full year 2013 results.

The firm said the food testing business remains positive supported by the introduction of regulation (US), trade and wealth (emerging markets), food testing in response to scandals (Europe), or outsourcing activities.

The group’s Central Laboratory business has been affected by the move of its US site to a larger campus in Lancaster, Pennsylvania.

Discovery Services is combining two players which the group acquired (Cerep and Panlabs) but need further integration to achieve the desired performance levels.

The firm also reported on what it described as “site rationalization projects” affecting Denmark, Germany, Japan, France and US.   

US organic growth

Eurofins’ biggest market, the US, made up 22.5% of revenues, continuing to see strong organic growth. In 2013 revenues increased 17.9% to €276.1m, versus €234.2m in 2012.

The domestic food testing market remains on a growth path following the introduction of the Food Safety Modernization Act (FSMA) in early 2011, which has prompted industry to take a closer look at the safety and quality of all food products across the supply chain.

Eurofins said new segments, especially in the neutraceuticals market, are also pushing the need for more testing for proper labelling, or to verify the nutritional claims of manufacturers.

The firm is moving its southern US food testing hub into a site with double the capacity at the University of New Orleans campus in Louisiana.

Europe view

France generated 17.9% of total revenues, at €219.7m, a 7.7% increase versus 2012.

The group’s Competence Centre for Authenticity in Nantes continues to benefit from increased volumes on the back of media coverage of fraud in the food supply chain (e.g. presence of pork in halal meat, or mislabelling).

Large but low-volume departments of small water-testing laboratories were consolidated into one of the two industrialized sites in Maxéville and Vergèze.

Revenues from Germany, the group’s third largest market generating 17.3% of total revenues, were €211.7m representing growth of 11%.

The group is in the process of streamlining three small laboratories in the south of Germany.

Eurofins benefitted from increased volumes following the horse meat scandal in Europe, as the bulk of analyses was performed at the competence centre for contaminants testing in Hamburg, and for DNA Analysis in Ebersberg.

The outsourcing agreement with Danone for its infant nutrition analysis also delivered market share gains.

In Denmark, Eurofins is combining five small and mid-sized laboratories into a large site in Vejen.

England presence

The UK & Ireland, which generate 5.2% of group revenues, grew 17.8% to €63.4m in 2013 driven by steady market share gains as the increased capacity from the new Wolverhampton laboratory allowed more customers to be reached.

Eurofins was able to perform a large part of the analyses in the UK during the fallout from the horse meat scandal. The outsourcing agreement with Cranswick at the beginning of the year has allowed the group to gain further traction with existing and potential customers.

Asia and Nordic regions

Revenues from Asia Pacific and emerging markets have increased 58.6% to €129.8m in 2013. This means that they now generate 10.6% of total revenues, from 7.8% in 2012.

The firm said a large part of the growth is on the back of acquisitions to expand its footprint, businesses in Japan, China and Brazil have all seen growth on volume ramp-up as the markets in these geographies grow and it takes market share.

Eurofins moved its Japanese food and environment testing hub during the year from Tokyo to Yokohama, where costs are lower.

In the Nordic region, revenues increased 9.7% to €159.8m, and make up 13% of total sales.

Eurofins’ capabilities at the competence centre for vitamin analysis in Denmark allows it to capture share of the growth that is being driven by increased volumes from Western dairy exporters following the milk scandal in China.

Eurofins’ revenues from the Benelux increased 28.3% to €113.4m and made up 9.3% of revenues in 2013.

The increased volumes in food and dairy testing and business ramp-up at the competence Centre for carbohydrates set-up in 2012 drove organic growth.

In this region, it is consolidating several small laboratories into two recently-extended sites in Belgium and The Netherlands.

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