Novozymes reports slight decrease in bioenergy sales

By Erin Voegele | May 03, 2016

In April, Novozymes released first quarter 2016 financial results, reporting that bioenergy sales decreased by 6 percent organically during the quarter. For the full year, the company expects to see a small contraction in bioenergy sales.

Overall, Novozymes reported a 2 percent in organic sales growth during the quarter, when compared to the same three-month period of 2015. EBIT contracted by 3 percent and the EBIT margin was 26.3 percent.

Sales to the bioenergy sector were down 6 percent organically when compared to the first quarter of last year. Sales in many of Novozymes’ other divisions were up. Household care increased by 5 percent organically, with food and beverage sales up 2 percent organically and technical and pharma sales up 37 percent organically. Sales also fell by 8 percent organically in agriculture and feed.

Bioenergy accounted for 17 percent of Novozymes sales during the quarter, with household care, food and beverage, agriculture and feed, and technical and pharma at 33 percent, 26 percent, 16 percent and 8 percent, respectively.

During an investor call Tina Sejersgard Fano, executive vice president of agriculture and bioenergy, noted Novozymes had anticipated a decline in bioenergy sales, as ethanol producers margins are lower than when compared to the first quarter of 2015. This means they are seeking lower cost technologies, she said. Despite the fact that producer margins are low, Fano noted that U.S. ethanol output grew by approximately 4 percent during the quarter. Domestic ethanol demand in the U.S. remains close to 10 percent to gasoline consumption and exports of ethanol from the U.S. are solid, she continued. Ethanol inventories are also high, Fano said, noting the low margins will probably last until supply and demand for ethanol finds a balance.

According to Fano, the Avantec Amp and LIquozyme LpH products launched by Novozymes in the bioenergy sector have been well received by customers. We have run more than 50 trials in the first quarter and have seen good pickup from our customers, she continued. For the full year, Fano said Novozymes expects to see a small contraction in the bioenergy segment, although she noted visibility in the industry is still not great and conditions for customers could either improve or degrade.