Novozymes: Bioenergy segment impacted by COVID-19

By Erin Voegele | April 14, 2020

Novozymes has reported its bioenergy segment experienced 11 percent organic growth during the first quarter of 2020. Growth in the segment, however, is not expected to continue for the remainder of the year due to the impact of COVID-19 on the U.S. ethanol industry.

“Social distancing caused by COVID-19 has raised a lot of uncertainty, particularly about U.S. gasoline demand and, consequently, about U.S. ethanol production in 2020,” said Novozymes in a statement released on April 7. Financial performance of the company’s bioenergy business is largely dependent on the performance of the U.S. ethanol industry, including ethanol volumes produced.  The company’s bioenergy segment accounted for 18 percent of total revenue for 2019.

During a conference call held April 7, Novozymes officials noted that its 2020 guidance released on Jan. 23 assumed 2020 ethanol production in the U.S. would be flat when compared to 2019. That outlook is no longer relevant, the company official said, noting that uncertainty in the U.S. gasoline and ethanol markets makes it difficult to estimate what full-year performance for the bioenergy segment will be.

During the call, Novozymes CEO Ester Baiget stressed that that the company’s top priority is the health and safety of its employees. She said the company is following all relevant COVID-19 guidance at its global locations and confirmed that Novozymes’ manufacturing sites are fully operational.

Novozymes is scheduled to release first quarter financial results on April 29 and hold an associated earnings call. The company may provide additional details regarding COVID-19 impacts to its bioenergy segment at that time.