Novozymes Q1 Results in Line With Expectations
23 Apr 2015 --- Novozymes, the world’s largest producer of industrial enzymes, today announced its first quarter results for 2015. Sales in the first quarter of 2015 grew by 8% organically and by 18% in DKK compared with Q1 2014. EBIT grew by 6%, and the EBIT margin was 27.4%.
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 Q1 2014. The EBIT margin expansion was mainly due to currencies. Net profit grew by 2%, and free cash flow before acquisitions came in at DKK 610 million.
Specifically, sales of food & beverages were up by 16%, compared with the same period in 2014. Overall, food & beverages took 26% of sales share, second only to Household Care. Sales to the baking industry and for the production of healthy foods continued the positive development from 2014 and were the most significant growth contributors. Sales to the starch industry were stable.
Sales in Europe, the Middle East & Africa (Europe/MEA) grew by 4% organically and by 5% in DKK compared with the first quarter of 2014. All sales areas contributed to sales growth. Sales to the Agriculture & Feed industries were the strongest growth driver.
North American sales increased by 15% organically and by 30% in DKK compared with the first quarter of 2014. Sales to the Agriculture & Feed and Bioenergy industries were the main drivers of the strong sales growth, whereas sales to the Household Care industries were lower.
Sales in Asia Pacific increased by 5% organically and by 21% in DKK compared with the first quarter of 2014. Sales to the Agriculture & Feed and Food & Beverages industries were the main contributors to sales growth, whereas sales to the Technical & Pharma industries were lower.
In Latin America sales were up by 8% organically and by 20% in DKK compared with the first quarter of 2014. Sales growth was driven by sales to the Agriculture & Feed and Food & Beverages industries, whereas sales to the Household Care industries were lower.
The 2015 outlook is adjusted for currencies only. Organic sales growth is expected at 7-9%. Currencies are expected to provide further tailwind, and sales in DKK are now expected to increase by 16-18% compared with 13-15% at previous guidance. The expectation for EBIT growth is increased by 3 percentage points to 15-17%, and the EBIT margin is adjusted to ~27%. The expectation for net profit growth is increased to 11-13%, up from 10-12%. Expectations for net investments, cash flow and ROIC are unchanged.
“First-quarter sales and earnings were good and, overall, in line with our expectations at 8% organic sales growth and an EBIT margin above 27%,” said CEO Peder Holk Nielsen. “We see good developments within the agriculture and food markets but also detect a growing uncertainty in Household Care and Bioenergy, as customers navigate volatile currency, grain and energy markets. We're positive about the year as a whole and, due to the appreciation of the US dollar, we increase our outlook.”
