Novozymes Cuts Forecast After Disappointing Q2, Boosted by Bakery

06 Aug 2015 --- Novozymes has reported that sales in the first half of 2015 grew by 5% organically and by 15% in DKK compared with 1H 2014. EBIT grew by 12%, and the EBIT margin was 27.2%. Adjusting for the one-time impact from The BioAg Alliance in Q1 2014, EBIT grew by ~20%, and the EBIT margin expanded by ~1 percentage point compared with 1H 2014. The EBIT margin improvement was mainly due to currencies and operational efficiencies. Net profit grew by 8%, and free cash flow before acquisitions came in at DKK 1,616 million (EUR217 million).

 
The 2015 outlook for organic sales growth was revised to 4-7% (7-9% at previous guidance). Sales in DKK are now expected to increase by 13-16% (16-18% at previous guidance). The expectation for EBIT margin is increased to 27-28% (~27% at previous guidance). The expectations for EBIT growth, net profit growth, cash flow and ROIC are unchanged.

Peder Holk Nielsen, President and CEO of Novozymes, comments: “First-half earnings have been very satisfactory, but we need to increase growth. Some customers in Household Care and Bioenergy are challenged by volatile markets, creating short-term headwinds for us until we have fully adapted. Good developments in other areas such as Agriculture & Feed and Food & Beverages balance things out but don’t make up for the headwinds. We therefore reduce our sales growth expectations for the full year. We maintain our full-year profit outlook, as we see improved productivity and operational efficiencies leading to a higher EBIT margin.”

Sales to the Food & Beverages industries increased by 5% organically and by 15% in DKK compared with the first half of 2014. Sales to the baking industry and for the production of healthy foods were the main contributors to sales growth, with sales to the baking industry benefiting from increased enzyme demand across product categories and regions. Sales to the starch industry increased moderately due to customer appreciation of recently launched innovations and continued stabilization of the Chinese starch market.