Bagsvaerd, Denmark
October 23, 2014
- Novozymes announces 9% growth within Q3.
- The robust sales in spite of an uncertain economic climate are driven by relevant innovations that target a variety of markets and industries
Biotech is all about diversity - the diversity of nature, the diversity of life, and the diversity of solutions that can change the world around us. As technology becomes more sophisticated, this diversity in nature becomes more accessible to us all.
“Like nature, our business is truly diverse,” says Peder Holk Nielsen. “Through combining industrial insight with our unique biotechnology platform, we have been able to create diverse solutions that are relevant for a wide range of customers in many different markets throughout the world today. That is why our sales remain strong in spite of signs of uncertainty in the global economy and in some of our markets.”
In 2013, Novozymes was estimated to have a 48% share of the global enzyme market, selling more than 700 products all over the world for applications as diverse as detergents, biofuels, agriculture, food and beverages, biopharmaceuticals, wastewater, textiles and pulp and paper. Today’s announcement shows that Novozymes’ business has developed well during the first nine months, with sales in line with expectations and an increase in outlook for full-year profit.
A business based on diversity
At a time when sales to the Household Care and Food & Beverages industries in China are proving to be a difficult, it is these very industries that are driving the current growth in Europe, the Middle East & Africa. Within Food & Beverages, sales to the starch industry have witnessed a minor decline so far in 2014. Yet it is the technology and learnings from the starch processing industry that inspired the innovations driving the Bioenergy industry, and here sales are thriving – up 23% and considered to be the most significant contributor to Novozymes’ sales growth in 2014.
It is this diversity – in technologies, customers, markets and regions – that lies behind Novozymes’ steady growth during the first nine months of this year and ever since inception.
“I am excited to see our Bioenergy business drive our growth – again. The strong sales were mainly driven by increased penetration of our yield discovery innovations targeting the US ethanol market,” says Peder Holk Nielsen. “Our sales to the Household Care industry were also positive, with sales in emerging markets helping to secure our global sales growth despite weakness in China.”
An innovation-driven company
More than 20% of Novozymes’ global workforce is engaged in R&D, with an annual spend of approximately 14% of revenue on R&D. Innovation is a key driver for Novozymes’ top and bottom line, with focus on continuously developing the existing product portfolio while also devoting significant resources to long-term radical innovation in order to ensure long-term growth.
“Medley®, our most recent solution targeting the Household Care industry, exemplifies the diversity that is so important for Novozymes,” says Peder Holk Nielsen. “Medley is based on a diverse blend of enzymes and the resulting solution simplifies the production of high-performing detergents. When developing Medley, we considered the type of stain removal most needed in specific regions. Depending on where our customers are located, the stains they most wish to tackle could be could be curry stains, grease, baby food or coffee, so we developed specific Medley offerings to meet the diverse needs of the regions. In other words, we are bringing even more value to more customers in more regions.”
Interim report for the first 9 months of 2014
Increased expectations for full-year profit. 2014 sales growth on track
Sales growth in the first nine months was in line with expectations. Organically, sales grew by 8% (5% DKK, 8% LCY) compared with the first nine months of 2013. In the third quarter alone, sales grew by 9% organically compared with Q3 2013. EBIT grew by 16%, and the EBIT margin was 27.4%, up 2.4 percentage points compared with the first nine months of 2013. Around half of the EBIT margin increase was a result of the one-time positive impact from The BioAg Alliance and the other half due to improved underlying profitability. Free cash flow came in strongly at DKK 4,319 million due to the positive one-time impact from The BioAg Alliance, higher profit, a low level of CAPEX and a lower net working capital ratio.
The full-year organic sales growth outlook is narrowed in at the middle of the previous range to 7-8% from 6-9%. This is expected to translate into ~6% sales growth in DKK. Full-year expectations for EBIT growth are increased to 14-15% and for net profit growth to 13-14%, both up from 9-11%. The EBIT margin is now expected at 26-27%, up from around 26%. Expectations for ROIC, including goodwill, are increased to 22-23%, up from ~22%. Lastly, expectations for free cash flow are revised upward by DKK 400-500 million to DKK ~4,300 million, due to expectations of higher profit, lower CAPEX and a lower net working capital ratio.
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Please read the full announcement in PDF format
