Earnings Season – 5 Companies remain strong in wild 2020

4% overall organic growth for Novozymes in first half-year of 2020

In Denmark, Novozymes reports a robust first-half 2020 results despite significant headwinds, especially in Bioenergy; organic sales growth of 4% and EBIT margin of 27.5%. Novozymes also reinstated its full-year 2020 organic sales outlook at -2% to +2%.

Household Care, Food & Beverages and Agriculture & Feed are all expected to deliver mid-single-digit growth while Bioenergy and Technical & Pharma carry the most uncertainty in terms of the full-year performance. The EBIT margin is expected at around 26% supported by productivity improvements and cost control, while much weaker currency effects, lower operational leverage and the acquisition of PrecisionBiotics Group are all expected to hamper margin performance. The 2019 underlying EBIT margin was ~26%. Free cash flow before acquisitions is expected at DKK 2.4 to 2.8 billion with ROIC including goodwill at 18 to 19%. The stock buyback program totaling up to DKK 1.5 billion and the dividend policy and capital structure policy all remain unchanged.

First half organic sales growth of 4% (DKK 3%): Household Care 11%, Food & Beverages 7%, Bioenergy -15%, Agriculture & Feed 17%, Tech. & Pharma -22%. EBIT margin at 27.5% and free cash flow before acquisitions of DKK 2.1 billion.

Ester Baiget, President & CEO: “I am very pleased to note that we delivered solid results of 4% organic sales growth with strong earnings and cash flows during what was a turbulent first six months of the year. The agility and resilience of Novozymes’ business demonstrates that fundamentals are in place to deliver innovation and sustainable solutions to customers. The pandemic is still very present, and we continue to take all necessary measures to keep our employees safe, protect the business and maintain our ability to supply our customers. But as countries and economies carefully reopen, we now reinstate our 2020 outlook with an organic sales performance of -2% to +2%, an EBIT margin of around 26% including much weaker currency effects, and free cash flow before acquisitions of 2.4 to 2.8 billion DKK.”