Novozymes Raises Outlook as Profit Rises

Date:29 October 2010

Type:Business News

Source:Food Ingredients First

Sector:Enzymes

Summary:Riisgaard: "Demand remained high in three out of four enzyme areas, and earnings continued to be positively affected by good productivity improvements, high capacity utilization, and tight cost management."

Oct 29 2010 --- Novozymes has reported that sales and earnings growth remained strong nine months into the year. Demand was high in the enzyme business, and the development in costs continued to be under tight control. Based on the stronger than expected underlying growth in the enzyme business during the first nine months of the year, full-year sales are now expected to grow by 12–13% in DKK and by 9–10% organically. EBIT is expected to grow by 24–25%, and the EBIT margin is expected to be around 22%. Net profit is expected to grow by 28–29%, investments are expected to be around DKK1,250 million (EUR168 million), and free cash flow before acquisitions is expected at DKK 1,000 million.

For the first nine months of 2010:
•    Sales increased by 17% in DKK, 12% in local currency (LCY), 13% organically over 9M 2009
•    Gross margin reached 56.0% compared to 55.1% for 9M 2009
•    EBIT was DKK 1,700 million, an increase of 35% compared to 9M 2009
•    EBIT margin reached 23.2% compared to 20.0% for 9M 2009
•    Net profit was DKK 1,264 million, an increase of 42% compared to 9M 2009
•    Net investments excl. acq. were DKK 787 million versus DKK 605 million in 9M 2009
•    Free cash flow before acquisitions was DKK 975 million against DKK 865 million in 9M 2009
•    ROIC was 24.3% compared to 20.7% for 9M 2009

“I can’t be anything but very pleased looking at the continued strong development in both sales and earnings nine months into the year," says Steen Riisgaard, President & CEO. He continues: "Demand remained high in three out of four enzyme areas, and earnings continued to be positively affected by good productivity improvements, high capacity utilization, and tight cost management. The potential slowdown in the global economy that concerned us after the half year hasn’t materialized. However, we have moved into a tougher comparison period as last year’s second half, and especially the fourth quarter, is more challenging than the first half year. We're somewhat cautious regarding the full-year outlook, but with another strong quarter on the books and despite a less favorable full-year currency outlook, we're able to increase full-year expectations.”