Difficult agricultural markets impact Novozymes 2019 results, organic sales performance of -1%

January 26, 2020 |

In Denmark, Novozymes announced 2019 financial results with a 1% increase in household care, but with decreases in food and beverages (-1%), bioenergy (-3%), agriculture & feed (-5%), and tech and pharma (-3%). EBIT margin 28.1% (~26% underlying). Net profit decline of 2%. Free cash flow before acquisitions DKK 2.2 billion. However, they expect a stronger performance in 2020 with an organic sales growth of 1-5% reflecting solid new product performance but uncertainty remains about agricultural markets.

Tina Sejersgård Fanø, Executive Vice President, Agriculture & Bioenergy, said, “2019 was a tough and unpredictable year for our Bioenergy business. During the year, the U.S. ethanol industry was challenged by low producer margins, elevated inventories and severe weather conditions in the U.S. Midwest.”

Fanø also said, “Our yeast platform, Innova, continued to perform very well, and Brazil is on an exciting journey towards increased production of starch-based ethanol. The Brazilian production reached close to 400 million gallons in 2019, and Novozymes is well positioned in the region with a strong setup of tailored solutions and industry expertise. In the U.S., the Environmental Protection Agency finalized a more flexible regulation for vapor pressure, allowing for up to 15% ethanol blends all year round. This removed one of the more significant barriers to wider sales of E15 in the U.S.

Peder Holk Nielsen, President & CEO said, “Despite sales improving in the second half of the year, our 2019 performance was not satisfactory. Our ag – exposed businesses were volatile and did poorly , whereas Household Care showed healthy signs of recovery in the third and fourth quarters. 2019 was also a year of change, with the launch o f our strategy ‘Better business with biology’. Driven by innovation, broader commercial presence and a stronger focus on execution and follow – up, we expect to do better in 2020. Nevertheless, we are cautious about the volatile ag – exposed businesses”.

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