Novozymes Reports Satisfactory 2006

26/01/07 2006 was a very satisfactory year for Novozymes. The company reported growth of 11% in earnings, 8% in sales and free cash flow of DKK 1,058 million were fully in line with the outlook. Growth is expected to continue in 2007.

Sales in 2006 rose by 8% to DKK 6,802 million from DKK 6,281 million in 2005. Measured in local currencies, growth was 9%. Operating profit rose by 11% to DKK 1,340 million, compared with DKK 1,206 million last year. The operating profit margin for 2006 was 19.7%, against 19.2% in 2005. Net financial costs in 2006 were DKK 122 million, compared with DKK 56 million in 2005.

Net profit climbed 6% to DKK 911 million from DKK 861 million. Adjusted for a negative effect relating to employee share options, net profit was 8% higher than in 2005. Earnings per share (diluted) were DKK 14.09, equivalent to an increase of 10% on last year. Free cash flow before acquisitions rose by 7% to DKK 1,058 million from DKK 991 million. Free cash flow after acquisitions was DKK 581 million in 2006. Return on invested capital (ROIC) rose to 20.2% from 19.3% in 2005, the company reported.

Assuming exchange rates based on the spot rates on January 24, 2007, growth in sales is expected to be 7-9% in 2007, equivalent to growth of 8-10% in local currencies. Operating profit is expected to grow by 5-7%, negatively affected by exchange rate movements. Net profit for the year is expected to increase by 5-7%, and free cash flow before acquisitions is expected to be in the region of DKK 800-900 million. Share buy-backs of up to DKK 500 million are expected in 2007. A dividend of DKK 4.50 per share for 2006 will be proposed to the Annual General Meeting of Shareholders.

"We are very satisfied with the results for 2006," says Steen Riisgaard, President & CEO. "Sales developed as expected and, although the price trend for raw materials and energy worked against us, our productivity improvements enabled us to achieve higher earnings than originally expected. Our earnings have reached the long-term financial targets, so during 2006 we increased the focus on accelerating growth in sales, both organic and through acquisitions. Our ambition is to achieve sales of DKK 10 billion in 2010. This is a very ambitious vision, requiring organic growth of 8-9% within the enzyme and microorganisms business, as well as further acquisitions. At the same time we are retaining the long-term financial targets."

The Board of Directors has approved two new incentive programmes for Executive Management and other employees respectively, both related to fulfilment of the ambition of DKK 10 billion in 2010.