Novozymes reports reduced bioenergy sales

By Erin Voegele | October 26, 2016

On Oct. 26, Novozymes released third quarter financial results, reporting that sales to the bioenergy industry were down 7 percent organically and down 8 percent in Danish krones (DKK) during the first nine months of the year when compared to the same period of 2015. U.S. ethanol production during the three quarters of this year is estimated to be up 3.5 percent compared to the same period of last year.

According to Novozymes, ethanol producers have continued to focus on low-cost solutions, resulting in negative product mix and price changes. Avantec Amp and Liquosyme LpH continued to increase penetration and contributed positively to the product mix, but not enough to offset the overall negative impacts from product mix and pricing.

The company also indicated it still expects bioenergy sales to contract organically for the full year, as the competitive market for enzymes for ethanol production is expected to continue. U.S. ethanol production for the full year is expected to increase by approximately 2 percent when compared to 2015, and Novozymes expects to continue launching new enzymes for corn ethanol production next year.

Overall, Novozymes reported that sales grew 1 percent organically and declined 1 percent in DKK when compared to the first nine months of 2015. Sales outside North America were up 5 percent organically, while sales in North America were down 6 percent organically due to bioenergy, food and beverage, and bioag. Sales in the third quarter were down 3 percent organically, but the company said it still expects moderate organic growth during the final quarter of the year. For the full year, organic sales growth is currently expected to be approximately 2 percent.

The EBIT margin was on par, and EBIT declined by 1 percent when compared to the first nine months of 2015. Adjusted for the restructuring costs in the first quarter, the EBIT margin would have expanded to above 28 percent and EBIT growth to above 1 percent when compared to the first nine months of last year.

Gross profit was down 2 percent when compared to the first three quarters of 2015, and the gross margin was 57.7 percent. Profit before taxes was DKK 2.86 billion ($419.24 million), up 4 percent from the first nine months of last year. Net profit was DKK 2.25 billion, up 5 percent when compared to the same period of last year.

While bioenergy sales were down 7 percent organically, household care and food and beverage were each up 1 percent organically. Agriculture and feed sales were maintained organically when compared to the same period of 2015, while technical and pharma sales were up 20 percent organically.

Household care sales accounted for 33 percent of sales during the first nine months of the year, followed by food and beverage at 27 percent, bioenergy at 17 percent, agriculture and feed at 15 percent and technical and pharma at 8 percent.

Approximately 37 percent of sales were to Europe, up 5 percent organically. In addition, 33 percent of sales were to North America, down 6 percent organically, while 20 percent were to Asia Pacific, up 7 percent organically, and 10 percent were to Latin America, up 1 percent organically.