Novozymes Food and Beverages business boosts “satisfactory 2018 performance”
24 Jan 2019 --- Global biotechnology company Novozymes has announced “a satisfactory 2018 performance,” which was in line with its initial outlook. The Danish firm has pegged its 2019 guidance of 3-6 percent organic sales growth and 28-29 percent EBIT margin. The company also highlighted organic sales growth of +4 percent (Q4: +2 percent) in 2018 and -1 percent in DKK (Q4: +1 percent). The company also reports that it was a “solid year” for its food and beverage categories with full-year sales growing by 5 percent.
Peder Holk Nielsen, President & CEO of Novozymes, says: “We had a satisfactory 2018, in line with the outlook parameters from the beginning of the year. This is good considering the negative impact from markets in the Middle East.”
In 2019, the company expects to increase its sales organically by between 3 and 6 percent. Growth is expected to come from innovation and increased market penetration, particularly in emerging markets, according to Nielsen.
“New game-changing solutions, such as Balancius for feed and yeast for Bioenergy, will make strong contributions to our top line – and make the world more sustainable. Although the outlook reflects uncertainties, our view on 2019 is positive,” he stresses.
Andrew Fordyce, Executive Vice President, Food & Beverages, Novozymes Commenting on the Food and Beverages business, Andrew Fordyce, Executive Vice President, Food & Beverages, Novozymes tells FoodIngredientsFirst: “Overall, 2018 was a solid year for our Food & Beverages business; full-year sales grew 5 percent organically and by 7 percent in the fourth quarter.”
High-performance standouts for the year included food and nutrition, vegetable oil processing and Novozymes’ beverage businesses.
“We see good opportunities for our business coming from consumers’ desires for healthier diets and clean label foods; our food and nutrition and vegetable oil processing businesses benefited strongly in 2018 from these long-term consumer trends,” notes Fordyce.
Enzymes for lactose reduction and plant protein processing helped customers to provide more “free-from” and vegetarian options for their consumers, he says. “Also, Novozymes’ enzymes that eliminate trans-fats in edible oil and reduce acrylamide in processed foods helped our customers to respond to regulation aimed at healthier diets.”
“I’m satisfied with our performance in 2018 and am pleased to see that our growth came from a broad base. This picture continues to reflect our opportunity in 2019 as we are working hard with customers to transform the quality and sustainability of the world’s food & beverage industries.”
Food & Beverages
Food & Beverages sales grew by 5 percent organically and by 2 percent in DKK in 2018. In Q4 year-on-year, growth was 7 percent both organically and in DKK. Food & Beverages delivered solid and wide-ranging growth, including in Q4, says Novozymes.
Both emerging and developed markets posted growth in 2018 compared with 2017. Food & nutrition and beverages were the most significant growth contributors, while baking experienced a slight decline, notes the company. This decline was caused by two main factors: the planned price decreases in the North American fresh keeping market and loss of business in the Middle East. However, sales of baking enzymes to the European and African markets performed well, almost offsetting the negatives.
Novozymes highlights growth from all industries except baking. Beverages stood out, together with significant progress in food and nutrition. Solutions for low-lactose dairy, trans fat reduction and acrylamide reduction maintained their good momentum, supported by increasing health awareness trends among consumers. Also, sales to the starch industry were satisfactory, despite pressure from commodity pricing in Asia Pacific.
Novozymes outlook for 2019
Organic sales growth of 3-6 percent, with an addition of ~1 percentage point for growth in DKK. The 3-6 percent range reflects strong new product performance and geopolitical uncertainty. Q1 is expected to see a slight decline in organic sales y/y, due to the Middle East, Feed and US baking. Second half y/y expected to be much stronger, according to Novozymes.
Sustainability
Novozymes has introduced annual sustainability targets until new longer-term targets have been established. The goal for 2018 was to grow the absolute consumption of water and energy and absolute CO2 emissions at a lower rate than the organic sales growth. Novozymes reached most of the sustainability targets set for 2018, although the CO2 emissions target came in slightly short of expectations because of mix changes that led to an unfavorable energy mix.
Yesterday, FoodIngredientsFirst reported that Novozymes' bio-innovation enables higher agricultural yields, low-temperature washing, energy-efficient production, renewable fuel and many other benefits that the world relies on today and in the future.
Sustainability has been an integrated part of Novozymes' business strategy for many years, Rasmus von Gottberg, Vice President, Food & Beverages at Novozymes, told FoodIngredientsFirst. “We have solutions that address many of the challenges that the world is facing; climate change, food and water scarcity.”
“Fighting food waste is a priority to feed a growing world population. Bread is one example of food waste that could often be avoided and Novozymes enzymes make bread stay fresh for longer. That is beneficial for the environment, manufacturers and consumers,” he explained.
“Novozymes’ enzymes also improve the quality of food and enable more efficient use of local raw materials, such as beer from cassava or sorghum. Our enzymes help brewers make more consistent products with local raw materials. This cuts down on transport and supports local farmers,” he added.
