Bakery innovations drive satisfying performance for Novozymes
The Denmark based company – dedicated to enzymes and microbes – said sales had grown by 4% in the first nine months of 2017 and by 8% in Q3.
“This was satisfying and better than expected,” said Peder Holk Nielsen, president and CEO of Novozymes. “EBIT margin was solid, as was free cash flow.”
The company reported a 27.9% EBIT margin growth to DKK 9m, compared to 27.7% in the same period a year ago.
Q3 EBIT margin grew by 29.6%, versus Q3 2016 growth of 28.7%, while free cash flow before acquisitions was DKK 2.1bn ($0.25bn).
It also said it had seen a 4% y-o-y organic growth in both emerging and developed markets for the nine-month period. All the main geographical locations posted single digit growth rates and Nielsen said Novozymes continues to seek opportunities to grow in emerging markets.
World’s second best science employer
Nielsen said the company - which was voted the “World’s Second Best Science Employer” by Science magazine earlier this month – experienced solid growth in its three largest segments, including Food & Beverages, which saw a 9% climb for 9 months and 11% for Q3.
Bioenergy +10%
Food & Beverages +9%
Household Care +2%
Agriculture & Feed -2%
Technical & Pharma -3%
He noted food nutrition and starch were the main drivers here, both benefitting from launches that have taken place over the last two years.
Fresh bakery innovations
In bakery – which delivered particularly impressive results in Q3 - fresh-keeping, dough strengthening and flour improving enzyme solutions continued to drive a positive trend with baking customers, , Andrew Fordyce, EVP of Food & Beverages told BakeryandSnacks.
“We are seeing an increase in demand for our F&B solutions particularly within Asia, Africa and the Middle East.
Frontia introduces enzymatic separation to the wet milling process, improving yield by releasing more starch and proteins from corn, and saving millers money.
Quara LowP is a “degumming” solution for vegetable oil refineries, improving the vegetable oil refining process and reducing the need for chemicals.
“Also, in the EU, there is increased interest in our acrylamide-reducing solution, Acrylaway, due to impending legislation across a wide variety of baked goods,” he said.
Regarding starch and grain milling, Fordyce said Novozymes experienced growing sales in Frontia and Quara LowP, the company’s recent launches in grain milling and vegetable oil processing.
Reduced lactose
On the food and nutrition front, Fordyce noted consumers are more than ever aware of health and the solutions on offer.
“We see strong growth in areas like reduced lactose dairy products and reduced added sugar solutions … and tailwinds from these underlying market dynamics reiterates the positive development for the launch of Saphera. Billions of people around the world are lactose-intolerant, and our lactase solution platform offers them a wider choice of dairy products,” said Fordyce.
“With stronger innovation and a well-diversified business showing good, solid momentum, we are positive looking ahead,” said Nielsen.
Full-year outlook
After a better than expected performance for the first nine months of 2017, Novozymes has adjusted its expectation for the full year.
It has adjusted its organic revenue growth to 3-5% from 2-5%, but maintains an EBIT margin guidance at around 28%. The company forecasts DKK revenue growth of between 2-4% (from 1-4%), and cash flow at DKK 2.1-2.3bn ($0.25-$0.27bn), versus DKK 2-2.2bn - $0.26-$0.27bn).
Net profit growth is expected to remain at 2-5%, including the DKK 60m ($7.1m) write-down on net financials (DKK 47m - $5.6m - post-tax) in Q3.
Novozymes is a world leader in biological solutions, with 6,500 employees in over 30 industries and a DKK 14bn ($1.67bn) turnover.
