Novozymes releases Q1 results, announces deal with St1 Biofuels

By Erin Voegele | May 05, 2015

Novozymes recently issued its interim financial report for the first quarter of 2015 and announced a deal to supply enzyme technology to St1 Biofuels’ proposed cellulosic biofuel plant in Finland.

The St1 Biofuels project in Kajaani, Finland, will be colocated at a sawmill site. The commercial-scale project will use sawdust from softwood as feedstock to produce cellulosic ethanol. According to Novozymes, the process uses steam-explosion to open up the cellulosic structures of the sawdust, followed by enzymatic hydrolysis to extract the sugars for ethanol fermentation. St1 Biofuel’s proprietary pretreatment process is called Cellunolix.

Information released by Novozymes indicates that while St1 Biofuels will construct and operate the plant, it will be owned by North European Bio Tech Oy, with production capacity leased by NEB’s sister company North European Oil Trade Oy. NEB is an associated company of SOK Corp and St1.

The plant is initially expected to produce 10 million liters (2.7 million gallons of ethanol, but could be scaled up to produce 50-100 million liters. Total investment is expected to be €40 million ($44.75 million), with 30 percent covered by an investment grant. Construction is scheduled to begin during the second half of this year, with production expected to begin next year.

“I am delighted that our enzymes have been chosen for this pioneering project in Finland,” says Sebastian Søderberg, vice president of biomass conversion at Novozymes. “It marks an important step for Finland and other countries around the world that have ample softwood supplies.” 

In late April, Novozymes released its interim report for the first three months of 2015, reporting sales grew by 8 percent organically when compared to the same period of the prior year. EBIT grew by 6 percent and EVIT margin was 27.4 percent.

“First-quarter sales and earnings were good and, overall, in line with our expectations at 8 percent organic sales growth and an EBIT margin above 27 percent,” said Peder Holk Nielsen, president and CEO of Novozymes. “We see good developments within the agriculture and food markets but also detect a growing uncertainty in household care and bioenergy, as customers navigate volatile currency, grain and energy markets. We're positive about the year as a whole and, due to the appreciation of the U.S. dollar, we increase our outlook.”

According to the interim report, sales for the company’s bioenergy segment grew 8 percent organically when compared to the first quarter of last year. The increase is attributed to an estimated 5 percent increase in U.S. production of ethanol. The household care segment grew by 2 percent organically, while the food and beverage segment grew by 5 percent organically, the agriculture and feed segment grew by 43 percent organically and the technical and pharma segment grew by 4 percent organically. During the first quarter, bioenergy accounted for 18 percent of Novozymes’ sales.

Regarding U.S. ethanol production, Novozymes noted the industry is going through a period of low ethanol margins and is focused on reducing costs. According to Novozymes, this environment creates more uncertainty and a more challenging market environment for the rollout of its yield discovery platform. Moving into the remainder of 2015, Novozymes said bioenergy sales are expected to witness a more dynamic year. While low margins and a focus on cost reductions casts uncertainty on how 2015 will develop, the company said U.S. ethanol production looks strong and might increase compared with 2014 and exceed current expectations of stable U.S. volumes.

For 2015, Novozymes expects overall organic sales growth for the full year to range from 7-9 percent, with EBIT expected to grow by 15-17 percent and EBIT margin expected to be approximately 27 percent. The company has also noted that the agreement with ST1 Biofuels is not expected to impact its financial outlook for 2015.