Novozymes retains positive outlook after Q3 results

By Caroline Scott-Thomas

- Last updated on GMT

Related tags Raw material Raw material prices Enzyme

Novozymes has reported a better than forecast profit in the third quarter of 2009, on the back of higher sales volumes and better productivity – although sales of food enzymes have fallen.

The industrial enzymes manufacturer saw its operating profit increase to 455m Danish kroner (DKK) (€61.1m) in the third quarter to the end of September, compared to 385m DKK (€51.7m) for the same quarter last year. In addition, it has forecast “slightly positive”​ sales growth of about two percent for the full year, but said it expects a full-year profit margin of about 20 percent – the level it has achieved in the first three quarters of 2009, up from the 18.5 percent achieved in the same period last year.

However, while sales of detergent, technical and fuel ethanol enzymes were up in the first nine months of 2009, sales of food enzymes fell by two percent in DKK. While sales of enzymes for the baking industry were “almost on a par with the same period of 2008”,​ sales of brewing enzymes​were down, “unfavorably impacted by lower raw material prices in particular,”​ the company said. When raw material prices are low, brewers are less likely to turn to enzymes in order to cut costs.

In addition, sales growth in Europe was static, at one percent in DKK and zero percent in local currency, while it saw the greatest sales growth in North America and Asia Pacific regions, both at six percent in DKK.

Novozymes president and CEO Steen Riisgaard said in a statement: “I’m pleased to see a slight underlying sales improvement in the third quarter, supporting our full-year growth expectations. Also, our narrowed profit growth guidance indicates slightly less uncertainty, at least compared to what we expected after the half-year results. It’s comforting to see that the work we're putting into productivity improvements, combined with a cost-cautious approach, continues to benefit our operations.”

Novozymes’ results also included a discussion of sustainability issues, and noted that consumption of water relative to goods was up three percent, while energy use was 11 percent less than the same nine month period last year. The company has set itself a target of water and energy consumption of two percent less than sales growth, so although water consumption is one percentage point below target, energy consumption is well ahead of target, the company said.

Novozymes’ portfolio for the food and beverage industries includes its Acrylaway enzyme, introduced in 2007 to cut acrylamide content in toasted, fried and baked goods; as well as others for the production of bread, wine and fruit juice. Its most recent enzyme development for the industry is Ondea Pro, a brewing enzyme capable of working without malt and with barley as the only raw material – enabling brewers to cut costs by reducing the amount of raw material needed, as well as cutting out the carbon footprint left behind by malt production.

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