Novozymes Reduces Full-Year Outlook While Food & Beverages Remain Strong
22 Oct 2015 --- Novozymes, the world’s largest producer of industrial enzymes, today announced its results for the first nine months 2015. Sales grew by 4% organically and by 14% in DKK compared with the same period in 2014. Full-year guidance was reduced from 13-16% to 12-13% as a result of a volatile and uncertain first half 2015.
The 2015 outlook for organic sales growth is adjusted within the previous range to 4-5% (4-7% at previous guidance). Sales in DKK are now expected to increase by 12-13% (13-16% at previous guidance). The expectation for EBIT growth is adjusted to ~15% and net profit growth to ~12% (15-17% and 11-13% respectively at previous guidance). The expectation for EBIT margin is unchanged.
Peder Holk Nielsen, President and CEO of Novozymes, comments: “Our performance was in line with expectations nine months into the year: record earnings on a relatively low topline growth. We're on track to meet the full-year organic sales and profit outlook, as we continue to focus our efforts on driving innovation and sales growth.”
Total sales in the first nine months of 2015 increased by 4% organically compared with the first nine months of 2014. Exchange rates had a positive impact on sales, and sales were up by 14% in DKK to a total of €1.4bn. Sales to the Agriculture & Feed and Food & Beverages industries were the most significant contributors to organic sales growth in the period in relative terms, with the Food & Beverages division achieving sales of €377, from €328m, an increase of 5%. Food and Beverages was also the second largest division by sales, with 27% of the share of sales, second only to Household Care with 33%.
Sales to the Food & Beverages industries increased by 5% organically and by 15% in DKK compared with the first nine months of 2014. In the third quarter alone, sales grew by 6% organically compared with the third quarter of 2014. Sales to the baking industry and for the production of healthy foods were the main contributors to sales growth in the first nine months of 2014. Sales to the starch industry increased moderately, driven by recently launched innovation and because the Chinese starch market was relatively stable compared with the same period last year.
In the Europe, the Middle East & Africa region sales grew by 4% organically and by 5% in DKK compared with the first nine months of 2014. Sales to the Food & Beverages and Household Care industries were the most significant growth contributors to sales growth, whereas sales to the Agriculture & Feed industries were lower. In North America sales increased by 3% organically and by 18% in DKK compared with the first nine months of 2014. Sales to the Agriculture & Feed and Food & Beverages industries were the main drivers of sales growth, whereas sales to the Bioenergy and Household Care industries decreased. In the Asia Pacific region sales increased by 7% organically and by 23% in DKK compared with the first nine months of 2014. Sales to the Agriculture & Feed and Household Care industries were the main drivers of sales growth, whereas sales to the Bioenergy industry and Technical & Pharma were lower. While in Latin America, sales increased by 5% organically and by 16% in DKK compared with the first nine months of 2014. Sales to the Agriculture & Feed and Food & Beverages industries were the main drivers of sales growth, whereas sales to the Household Care industry were lower.
The sales performance after the first nine months of 2015 was in line with the expectations provided in August. The uncertainty and volatility of the first half of 2015 persisted into the third quarter, but the business environment is not believed to have deteriorated in the third quarter. Novozymes continued to focus its efforts on improving sales growth across the business and especially within Household Care and Bioenergy. Positive developments in agriculture and food markets continue to make up for some of the weakness in Household Care and Bioenergy and, for full-year 2015, the outlook for organic sales growth within the previous range to 4-5% has been adjusted, compared with 4-7% at previous guidance. Based on exchange rates at October 21, 2015, sales growth in DKK is now expected to be 12-13%, compared with 13-16% at previous guidance.
Food & Beverages sales growth is expected to be driven by a continuation of the positive trends seen in baking and a stabilization of the Chinese starch conversion market. Healthy concepts are also expected to contribute to sales growth.
