Novozymes Shift to Emerging Markets Leads to Job Losses

20 Jan 2017 --- Global biotechnology company Novozymes has announced a full-year organic sales growth of 2 percent and an 8 percent net profit growth at the time same as axing almost 200 jobs. The Danish producer of enzymes has laid off 198 employees, 62 of them in Denmark.

Releasing the group financial statement for 2016, the company says sales grew by 2 percent organically and by 1 percent in DKK, primarily driven by agriculture and feed and technical and pharma. The EBIT margin improved by 0.2 percentage points to 27.9 percent. EBIT(earnings before tax and interest) grew by 2 percent, while net profit increased by 8 percent. 

In Q4, sales grew by 6 percent organically and by 8 percent in DKK compared with Q4 2015. The proposed dividend payout of DKK 4.0 per share is equivalent to dividend growth of 14 percent and a payout ratio of 39 percent.

“Q4 came in as expected at 6 percent organic sales growth, marking a positive end to an otherwise challenging year. 2017 will be a year with sustained investments in new innovation. The divisions have reviewed their strategies and made significant changes to accelerate growth, for example shifting more resources to the emerging markets. As a consequence, we unfortunately need to lay off 198 employees to enable investments in market opportunities in both 2017 and 2018,” says president & CEO of Novozymes, Peder Holk Nielsen. 

Looking ahead for 2017, Novozymes expects to deliver organic sales growth of 2-5 percent. 

“We expect an EBIT margin of around 28 percent and a ROIC incl.goodwill of 24-25 percent. A new stock buyback program worth up to DKK 2 billion is planned,” says a statement. 

“Novozymes sees long-term opportunities within industrial biotechnology and will continue to invest in innovation to realize the potential of its pipeline. Successful commercialization of the pipeline makes a return to historical organic sales growth rates achievable. Novozymes now allocates additional resources to high-growth opportunities, primarily in emerging markets, while safeguarding profitability,” it adds.