Novozymes reports 1% organic sales growth in first 9 months of 2020

In Denmark, Novozymes released Q3 and year to date reporting that showed satisfactory performance despite COVID-19 implications. Q3 impacted by destocking, as expected. Full-year EBIT margin and FCF outlook raised. Organic sales growth outlook maintained with midpoint of range as the most likely outcome.

Organic sales growth of 1% (Q3: -3%) in the first nine months of 2020: Household Care 7% (Q3: -1%), Food & Beverages 5% (Q3: 1%), Bioenergy -11% (Q3: -5%), Agriculture & Feed 4% (Q3: -19%), Technical & Pharma -15% (Q3: 2%). EBIT margin at 27.0% (Q3: 26.1%) FCF bef. acq. at DKK 2.7 billion (Q3: DKK 0.7 billion).

Ester Baiget, President & CEO: “Our performance in the first nine months was satisfactory, especially considering the COVID-19 implications. Results are driven by our versatile portfolio and the organization’s ability to rapidly adapt to a changing environment. Combining this with an increased customer focus, also in the innovation cycle, I’m confident that we’re setting the scene for a stronger future performance. Looking at 2020, we continue to see considerable COVID-19 related uncertainty and consequently we maintain the range for organic sales growth at -2% to +2%. However, we are increasingly gaining confidence that the midpoint of the range is the most likely outcome. We raise the EBIT margin outlook to 26-27% and FCF before acquisitions to DKK 2.6- 3.0 billion.”

In summary:

• Strong growth in Household Care and solid growth in Food & Beverages driven by innovation and COVID19 related effects, and despite destocking
• Declines in Bioenergy and Technical & Pharma with COVID-19 and social distancing as main explanations
• Emerging market growth at +3% organically; developed markets flat, mainly due to declining U.S. ethanol production
• Innovation launches in Q3; Microvia bacterial hard-surface bio-cleaning solution and LpHera nextgeneration solution for higher yield starch processing. In addition, the Fiberex platform was introduced for enhanced corn conversion into ethanol and higher value by-products
• Solid earnings at 27.0% EBIT margin and strong FCF generation at DKK 2.7 billion before acquisitions
• September 1 reorganisation setting the direction towards a clear customer-centric focus across activities