Novozymes’ F&B Q1 sales buoyant on back of flatbread needs

25-Apr-2018 - Last updated on 25-Apr-2018 at 10:28 GMT

Andrew Fordyce, EVP of Novozymes' F&B division, reports on strong growth in emerging markets. Pic: Novozymes

Novozymes’ food and beverage division posted a 5% growth for Q1 2018, driven by an increased uptake in solutions for specific bread types consumed in Asia Pacific and Latin America.

According to Andrew Fordyce, EVP, Food & Beverages, Novozymes, the company is “manning up” across regions where it has identified opportunities.

The company posted a 6% growth in emerging markets for the first quarter, while developed markets were on a par with last year.

“We continue to see an increase in demand for our F&B solutions in emerging markets as producers look to improve quality, reduce cost, and increase variety for their consumers,” he said.

Earlier this month, the Danish enzymes maker opened an Innovation & Technology Center in Istanbul to develop baking enzymes that will prevent flatbreads traditionally eaten across the Middle East and Africa from going stale.

“This state-of-the-art baking lab will enable us to further partner with customers to develop region-specific baking solutions,” said Fordyce.

Health impact on bottom line

The Copenhagen-based company is also exploring concepts to reduce the amount of sugar used in baking in emerging market countries in response to demand from their growing middle-classes for healthier options.

“Trends continue towards healthy, “clean label” foods with less additives. Consumers are more aware than ever of the health impacts of the foods they consume,”

Highlights:

Organic sales growth of 2% and -6% in DKK
Household Care +1%
Food & Beverages +5%
Bioenergy +9%
Agriculture & Feed -5%
Technical & Pharma -10%
Free cash flow before acquisitions at DKK 403m ($66.07m)
Dividend payout of DKK 4.50 ($7.37) per share: 42% payout ratio
Full-year 2018 outlook maintained

said Fordyce, noting the company’s on-trend sugar- and low-lactose solution saw increased sales in Latin America.

He also noted that, in the EU, Novozymes’ acrylamide-reducing solution was seeing an increased focus following legislation coming into effect.

“We continue to invest in and develop our innovative solutions to help our customers improve the quality of their food and beverage products, and are pleased to see the positive and profitable momentum continue,” added Fordyce.

First quarter earnings

Novozymes posted a 2% growth for its first-quarter earnings – aligned with expectations – despite a significant currency headwind, which saw a US$/DKK decline of 13% in Q1 y/y.

The company also said sales through its BioAg alliance with US seeds company Monsanto Co were hit by Indian tariffs.

“There is still some uncertainty in the agriculture-related business, including from recent geopolitical tensions. However, with current insight, we remain firm about accelerating sales growth throughout 2018 and beyond,” said Peder Holk Nielsen, Novozymes’ president & CEO.

Novozymes’ operating profit increased by 28.9% to DKK 1.016bn ($166.43m), in line with the same quarter last year (27.0%), due to timing of emerging markets’ ramp-up costs.

Holk Nielsen added the company is “well in line to deliver on out full-year sales growth outlook of 4-6%, despite a significant currency headwind.”