Novozymes Reports Strong Sales in Q1, Establishes bioagriculture R&D Centre

24 Apr 2014 --- Novozymes has reported a strong first quarter of 2014 with an increase in sales of 11% compared with Q1 2013 (7% DKK, 10% LCY). In its Food & Beverage industries, sales were also up compared with the previous year, driven by healthy foods and the baking sectors.

Sales for the Food & Beverages industries increased by 5% in DKK and by 8% in LCY compared with the first quarter of 2013. Sales for the production of healthy foods and to the baking industry were the most significant growth contributors.

“We are actually seeing good demand across a broad set of industries but driving growth for us this quarter is baking and healthy concepts in particular,” a spokesperson for the company told Food Ingredients First. “Healthy concepts cover a number of areas, but for example it covers enzymes that enable lactose intolerant people to drink milk and enzymes to help mitigate the formation of acrylamide in fried and baked goods – these are strong growth areas.”

Sales to the baking industry benefited from a stabilization of sales for freshkeeping applications and good growth in other baking categories. Sales to the starch industry contributed only marginally to sales growth, as Chinese production of corn syrups and other corn-derived products was lower compared with the same period last year.

For the overall business, EBIT grew by 30%, and the EBIT margin was 30.4%, driven by a one-time positive impact from The BioAg Alliance of net around 4 percentage point and a better than expected development in underlying earnings.

As a result, expectations for full-year EBIT growth, EBIT margin, net profit growth, ROIC and free cash flow are increased, despite the unfavorable currency development. Expectations for full-year organic and LCY sales growth are maintained, and expectations for sales growth in DKK are adjusted for currency within previous range.

Peder Holk Nielsen, President and CEO of Novozymes, comments: “We’ve delivered a strong first quarter, and we’re increasing the outlook for full-year EBIT growth. Double-digit organic sales growth, good underlying earnings performance and completion of The BioAg Alliance agreement mark a good start to 2014. We had expected sales to come in strongly in the first quarter, especially in Bioenergy and Household Care, and I’m pleased to see that we continue to add more value for our customers and grow our business in these two important markets. Reported earnings are extraordinarily high due to the impact from The BioAg Alliance agreement. Underlying productivity has improved compared with last year, and this drives our increased expectations for EBIT growth and margin for the full year. Regarding The BioAg Alliance, it feels great to have kicked off one of Novozymes' most significant projects for the years ahead. We’re excited to get started and are focusing resources and efforts on ensuring success in BioAg."

Novozymes also announced the establishment of a new research and development center in the U.S. dedicated to its bioagriculture business. The center will be located near the Research Triangle Park in Cary, North Carolina where the company will invest $36 million over the next three years and create 100 new research and development jobs.

“The world needs sustainable agricultural solutions now more than ever before. By boosting our research and development of environmentally-friendly microbial technology, we will help farmers meet this demand sooner rather than later,” said Thomas Videbaek, Executive Vice President of Business Development. “The new R&D center in North Carolina is a concrete step to help speed our technology to market from a state with a long history of agricultural innovation.”

Scientists at the new site in North Carolina will research and develop beneficial microorganisms found in the soil. The resulting technology will focus on improved crop yield, fertility and pest control for growers around the world. The significant expansion of R&D resources will enable Novozymes’ scientists to pursue more and better biological solutions for the ever-changing challenges facing global agriculture.

“Novozymes and North Carolina have been good partners since we opened the doors to our North American headquarters here in 1979,” said Adam Monroe, President, Americas. “We look forward to opening our new facility in a state that has worked hand in hand with us over the years to help our business thrive.”

The location of the new facility will give Novozymes access to one of the largest biotech clusters in the U.S. Established in 1959, The Research Triangle Park (RTP) was created to attract and grow research and development operations in North Carolina. RTP is home to more than 170 global companies that foster a culture of scientific advancement and competitive excellence and is located between three major universities: Duke University in Durham, North Carolina State University in Raleigh, and the University of North Carolina at Chapel Hill.

“The research and development jobs Novozymes will create will further strengthen our hi-tech hub and be an example of the strong talent pool and attractive quality of life that characterizes Wake County, the Research Triangle and the state,” said North Carolina Governor Pat McCrory.

The project was made possible in part by a performance-based grant from the One North Carolina Fund of up to $400,000. The One NC Fund provides financial assistance, through local governments, to attract business projects that will stimulate economic activity and create new jobs in the state. Companies receive no money up front and must meet job creation and investment performance standards to qualify for grant funds. These grants also require and are contingent upon local matches.