Novozymes Profits Rise But Food Enzyme Sales Down

Sales of enzymes to the baking industry were almost on par with the same period of 2008. Enzyme sales to the brewing industry improved in the third quarter.

28 Oct 2009 --- The world's largest industrial enzyme maker Novozymes has reported that sales in the first nine months increased by 3% in DKK and fell by 2% in local currency (LCY) compared to the same period last year. Earnings before interest and tax (EBIT) rose to 455 million Danish crowns ($91 million) in the three months to the end of September from 385 million in the same quarter last year.

Seen in isolation, sales in Q3 2009 improved by 3% in DKK and by 1% in LCY compared to Q3 2008. Operating profit increased by 11% to DKK 1,257 million for the first nine months of 2009 compared to the same period last year. Operating profit margin for the first nine months of 2009 increased to 20.0% compared to 18.5% for the same period in 2008. Free cash flow increased to DKK 865 million in the first nine months of 2009 compared to DKK 500 million for the same period last year.

Expected 2009 sales growth is maintained at slightly positive in LCY and at more than 2% in DKK. Full-year expectations for operating and net profit growth are adjusted to now be at the upper end of the previous guidance, and the expectation for free cash flow is increased, mainly due to a lower investment level.

"I'm pleased to see a slight underlying sales improvement in the third quarter, supporting our full-year growth expectations. Also, our narrowed profit growth guidance indicates slightly less uncertainty, at least compared to what we expected after the half-year results," says Steen Riisgaard, President and CEO. “It’s comforting to see that the work we're putting into productivity improvements, combined with a cost-cautious approach, continues to benefit our operations."

Enzyme Business sales increased by 2% in DKK in the first nine months, whereas sales in LCY were down by 3%. In particular, enzyme sales to the animal feed, food, and textile industries were challenged in the first nine months. On a positive note, third-quarter enzyme sales improved compared to the first six months of the year. Sales of detergent enzymes and enzymes for fuel ethanol production developed especially well in the quarter.

After the first nine months, sales of food enzymes were down by 2% in DKK and by 6% in local currency. Sales of enzymes to the baking industry were almost on par with the same period of 2008. Enzyme sales to the brewing industry improved in the third quarter. However, after the first nine months, brewing enzyme sales continued to be unfavorably impacted by lower raw material prices in particular. The company also reported an 11% LCY decline in feed enzyme sales.