Novozymes Reports 8% Growth in Q1 Food Enzyme Sales

Food enzyme sales increased by 8% in DKK and by 9% in LCY compared to the first quarter 2009.Higher demand for baking enzymes to improve quality and freshness in bread as well as enzymes for healthier concepts contributed positively to the development.

29 Apr 2010 --- Novozymes has reported a strong Q1 performance and increased expectations for full year 2010. Growth in the first quarter came from a strong underlying sales and earnings performance, but was also the result of a challenged first quarter 2009. The most important currencies have developed favorably since the previous guidance and are now expected to impact the full year positively. Sales are now expected to grow by 6–8% in DKK and by 4–6% in LCY. EBIT is expected to grow by 12–14%, and the EBIT margin is expected at around 21%. Net profit is expected to grow by 17–19%, and free cash flow before acquisitions is expected at DKK 800–900 million. For the first quarter 2010 sales increased by 9% in DKK and by 11% in local currency (LCY) over Q1 2009. Gross margin reached 56.3% compared to 54.3% for Q1 2009. EBIT was DKK 535 million, an increase of 33% compared to Q1 2009. EBIT margin reached 23.0% compared to 19.0% for Q1 2009.

Enzyme Business sales increased by 13% in DKK in the first quarter to DKK 2,154 million. Sales in LCY were up by 15%, and divestments of noncore activities in the food enzyme industry had a slightly negative impact on sales growth. All the main industries experienced growth in LCY, with detergent and technical enzymes being the strongest growth contributors in the period.

Food enzyme sales increased by 8% in DKK and by 9% in LCY compared to the first quarter 2009. The divestment of noncore ingredient activities in India impacted sales growth negatively by roughly 1 %-point. Higher demand for baking enzymes to improve quality and freshness in bread as well as enzymes for healthier concepts contributed positively to the development. The Opticake Fresh product for improved freshness in cakes, which was launched late 2009, is continuing to gain traction in the market and contributed positively to the sales development in the quarter. Enzyme sales to the brewing industry developed positively in the quarter, benefiting from higher beer volumes and a return to more normal inventory levels. Ondea Pro, an enzyme enabling production of high-quality beer from unmalted barley that was launched in the third quarter last year, also contributed to the positive sales growth in the quarter.

“I’m very pleased with the strong development in both sales and earnings. We saw improved demand in most markets, and earnings benefited from strong productivity improvements and higher capacity utilization in our enzyme production. We also successfully maintained tight cost management across the organization,” says Steen Riisgaard, President & CEO. He continues: “Although this quarter’s performance was very good, it’s important to remember that the first quarter last year was impacted by the global recession, and despite our strong start to the year, there’s still some uncertainty as to how markets will develop going forward. However, based on the first quarter’s strong development, and currencies that now seem to have turned our way, we're increasing our expectations for the full year.”