Novozymes announces increased bioenergy sales in Q3 results

By Erin Voegele | October 29, 2014

Novozymes recently released third quarter financial results, reporting a 9 percent organic sales growth for the quarter. During the first nine months of the year, sales grew organically by 8 percent. Novozymes indicated sales to the bioenergy industry were the most significant contributor to sales growth.

Earnings before interest and tax (EBIT) grew by 16 percent during the first nine months of the year, and the EBIT margin was 27.4 percent, a 2.4 percent increase compared to the same period of 2013. Net profit was DKK 1.92 billion ($329 million) for the first nine months of 2014, up 17 percent from the same period of the prior year.

Sales to the bioenergy industry during the first nine months of the year reached DKK 1.63 million, up 19 percent from the previous year. Sales in the household care industry were up 3 percent, sales in the food and beverage industry were up 2 percent, sales in the agriculture and feed industry were up 2 percent and sales in the technical and pharma industry were up 5 percent.

Sales to the bioenergy industry accounted for 18 percent of total sales. The household care industry, food and beverage industry, agriculture and feed industry and technical and pharma industry accounted for a respective 35 percent, 26 percent, 14 percent and 7 percent of sales.

According to Novozymes, bioenergy sales are expected to grow, mainly as a result of the increased penetration of the company’s Avantec, Spirizyme, Achieve and Olexa products. The company’s 2014 sales outlook is based on the expectation that U.S. fuel ethanol production will be just above 14 billion gallons the year. That estimate assumes U.S. ethanol production during the fourth quarter will be consistent with production during the same period of last year.

Regionally, sales in North American increased by 9 percent in DKK compared to the first nine months of 2013. Sales to the bioenergy and agriculture and feed industries were the main growth drivers.

Moving into the fourth quarter, Novozymes indicated organic sales growth is expected to be slightly lower, primarily due to expected lower growth rates in bioenergy and food and beverages. Full year organic sales growth is now expected to be in the 7-8 percent range.

During a call to discuss the financial results, Peder Hold Nielsen, president and CEO of Novozymes, said cash flow has been strong and the company is in an excellent financial position to invest in future growth. “One of the areas we continue to invest in is biomass conversion,” he said. “It’s been good to see positive developments over the last few months with plant openings, and new plant announcements, and political support for advanced biofuels in Europe.”

Andy Fordyce, executive vice president of business operations at Novozymes, called the company’s bioenergy segment its brightest star of the year, with 23 percent organic sales growth during the first nine months. So far this year, he said U.S. ethanol market product is up approximately 10 percent. Fordyce also noted that the company has new innovation in its bioenergy pipeline that will hit the markets within the next six months.

Thomas Videbæk, vice president of business development, spoke briefly about Beta Renewables’ cellulosic ethanol plant in Crescentino, Italy. Upgrades completed over the summer have started to contribute to higher production volumes, he said, adding that capacity utilization is increasing as the facility optimizes production and further improves the process and engineering. Videbæk also addressed a new law approved by the Italian government that mandates the inclusion of 1 percent advanced biofuel in gasoline and diesel by 2022. “It’s the first time a European country mandates the use of advanced biofuels, and it’s a critical first political step towards more advanced biofuels throughout Europe,” he said.