Novozymes lowers full year outlook despite strong food and feed performances

21-Oct-2015 - Last updated on 22-Oct-2015 at 11:27 GMT

Danish biotech giant Novozymes narrowed the range of its full year outlook to the lower end as the firm reported a 17% rise in Q3 net profits and strong sales in Food & Beverages and feed and Agriculture & Feed.

The world's largest maker of industrial enzymes, nine month results were broadly in line with analysts' forecasts, according to Reuters, as it narrowed its full-year forecasts within initial ranges – lowering its full-year organic sales growth guidance to between 4% and 5% (from 4%-7% previously), and sales expectations in Danish kroner to increase by between 12%-13% (down from a previous guidance of 13%-16%).

The company also narrowed its expectations for full-year growth in earnings before interest and taxes (EBIT) to around 15%, down from 15%-17% previously, and for net profit to around 12% growth, adjusted from a previous estimate of 11%-13%.

Novozymes said the lower expectations for organic sales growth, coupled with changes in currency exchange rates since the previous guidance, were behind the new outlook.

Figures breakdown

In the first nine months of the year, sales for the Danish firm grew by 4% organically and by 14% in DKK, while EBIT grew by 15% - with a margin of 27.7%.

Net profit grew by 11%, and free cash flow before acquisitions came in at DKK 2,022 million (€271m).

Sales to the Agriculture & Feed and Food & Beverages industries were the most significant contributors to organic sales growth in the period in relative terms, said the firm – who revealed that sales in Food & Beverages increased by 5% organically and by 15% in DKK compared with the first nine months of 2014, while sales for Agriculture & Feed increased by 19% organically and by 23% in DKK.

“Sales to the baking industry and for the production of healthy foods were the main contributors to sales growth,” said Novozymes, adding that sales to the starch industry increased moderately, driven by recently launched innovations “and because the Chinese starch market was relatively stable compared with the same period last year.”

It added that Food & Beverages sales growth for the full year is expected to be driven by a continuation of the positive trends seen in baking and a stabilization of the Chinese starch conversion market.

Meanwhile, sales to the Agriculture & Feed industries, which benefited from strong performance in BioAg and increased sales in animal feed, are expected to grow strongly.

“Sales growth will benefit from a positive contribution from Feed, and BioAg sales are expected to grow strongly,” said the firm.