Novozymes reports 2% increase in Q4 bioenergy sales

By Erin Voegele | January 23, 2020

Novozymes released fourth quarter 2019 financial results on Jan. 23, reporting a 2 percent growth in bioenergy sales during three-month period. Bioenergy sales for the full year, however, were down 3 percent when compared to 2018.

The company said its bioenergy business was negatively impacted by severe weather conditions in the U.S. Midwest and noted its ethanol customers pulled back more than the industry average as reported by the U.S. Energy Information Administration. Novozymes also said the North American market was impacted by low ethanol production margins, elevated inventories and fewer export opportunities. The continued capacity expansion of starch-based ethanol production in Latin America and the penetration of Novozymes’ new yeast platform, however, contributed positively to the performance.  

For the fourth quarter, Novozymes said U.S.-produced ethanol volumes declined less than in the preceding nine months. Continued expansion in starch-based ethanol production in Latin America also contributed to the 2 percent organic sales growth.

“Our yeast platform, Innova, continued to perform very well, and Brazil is on an exciting journey towards increased production of starch-based ethanol,” said Tina Sejersgård Fanø, executive vice president of agriculture and bioenergy, during an earnings call. “The Brazilian production reached close to 400 million gallons in 2019, and Novozymes is well positioned in the region with a strong setup of tailored solutions and industry expertise.”

Moving into 2020, Novozymes said uncertainty remains regarding the volume of ethanol that will be produced in the U.S. due to continued low margins and elevated inventories. The company said it currently estimates 2020 bioenergy sales to the U.S. to be flat with 2019.

“Growth in 2020 is expected to be driven by the continued capacity expansion in Brazil and further penetration of our Innova yeast platform,” Sejersgård Fanø said. “We expect a flat volume development in the U.S. market for 2020, as low ethanol producer margins, elevated inventories and small refinery exemptions are sources of uncertainty.”

Bioenergy accounted for 29 percent of Novozymes’ sales in 2019. The company also operates divisions dedicated to household care, food and beverages, agriculture and feed, and technical and pharma.

Overall, the company reported a 1 percent increase in sales for the fourth quarter. Sales were down 1 percent, however, for the full year. Net profit for the year was down 2 percent.