Novozymes 5% organic sales growth in Q3

Novozymes, the world’s largest industrial biotechnology company, today announced its results for the nine months of 2018. Organic sales growth of +4% (Q3: +5%) in the first nine months: Bioenergy +14%, Agriculture & Feed +5%, Food & Beverages +4%, Household Care 0%, Technical & Pharma -7%. EBIT margin 28.2%. Net profit growth +3%. FCF before acq. DKK 1,980 million. Full-year 2018 outlook; Net profit growth increased to 1-3%; Organic sales growth more likely to end toward the lower part of the 4-6% range, despite challenging markets in the Middle East.

Peder Holk Nielsen, President & CEO of Novozymes: “We delivered solid earnings and organic revenue growth of 5% in the third quarter and 4% after the first nine months. This is overall satisfactory, and we increase the outlook for net profit growth. Despite recent challenging markets in the Middle-East, we maintain our 4 – 6% organic revenue growth guidance, albeit with the likelihood that we will close the year toward the lower part of the range. On our innovation efforts, we further demonstrate our strong pipeline and ability to commercialize game – changing solutions with the third – quarter launch of Balancius™ for animal feed.”

Highlights 9M 2018:

  • Organic sales growth of +4% (Q2: +5%) and -4% in DKK. USD/DKK decline of 10% in 1H y/y
  • Growth in Food & Beverages and Agriculture & Feed; Bioenergy particularly strong
  • Household Care softer than expected, as Q2 was impacted by customers’ region-specific challenges in Brazil and North America
  • +7% organic sales growth in emerging markets; developed markets +2%
  • Good ramp-up of recent product launches. Freshness & hygiene platform in Household Care developing according to plan with first commercial product available in stores in the Philippines. Preparation of BioAg’s B-360 corn inoculant in Q2 after regulatory approval in Q1
  • EBIT margin of 28.1% (1H 2017: 27.1%; 28.5% excluding reorganization costs) impacted by currency headwind, increasing input costs and lower deferred income
  • Net profit growth of +5% from lower financial costs and lower effective tax rate
  • Free cash flow before acquisitions at DKK 890 million; CAPEX at DKK 635 million
  • Full-year 2018 outlook maintained on all parameters: Organic sales growth of 4-6% with continuing high uncertainty around global trade and agricultural markets. Household Care still expected to grow organically for the full year, supported by the freshness & hygiene platform.

Full-year 2018 outlook: Organic sales growth of 4-6% maintained. Toward lower part of the range more likely, despite challenging markets in the Middle East. Net profit growth outlook increased to 1-3% (~0%).