Sales growth remains strong at Novozymes
Novozymes Group announces financial statement for the first nine months of 2008. Nine months into 2008 sales growth remains strong at 16% in local currencies. Earnings also developed well, with an operating margin of 18.5%. Expected full-year sales and earnings growth are increased in DKK due to improved exchange rates.
- Sales up by 16% in local currencies (LCY) and 9% in DKK to DKK 6,121m in the first nine months of 2008
- 15% LCY growth in the third quarter (11% DKK growth)
- 13% organic growth across the business in the first nine months
- 16% LCY growth within enzymes in the first nine months
- 53.2% gross margin compared to 53.0% in the same period of 2007
- Operating profit of DKK 1,134m, a 6% increase, excluding one-off item in 2007
- Operating profit margin of 18.5% compared to 19.2% in 2007, excluding one-off item
- Net profit increase of 9% to DKK 821m, excluding one-off item in 2007
- Free cash flow before acquisitions DKK 500m against DKK 923m in 2007
- Net interest-bearing debt of DKK 1,580m compared to DKK 1,769m at year-end 2007
“Sales are outperforming our expectations, and it looks as if we will see the highest annual sales growth ever,” says Steen Riisgaard, President and CEO. “Despite the turbulent times the world is currently facing, our business continues to deliver strong sales and earnings performance. I'm very pleased with what seems to be a very strong year for Novozymes.”
Outlook for 2008
Novozymes increases its 2008 growth expectations in DKK due to favorable exchange rate levels. Assuming that exchange rates for the company's key currencies remain at their current levels for the remainder of the year:
- Expected 2008 sales growth is increased to 9–11% in DKK (from 8–10%), LCY growth is retained at 13–15%
- Expected growth in operating profit is increased to 5–7% (from 4–6%) in DKK
- Expected growth in net profit is increased to 7–9% (from 6–8%) in DKK
Total sales in the first nine months rose by 16% in local currencies (LCY). Excluding acquisitions, growth was 13%. Exchange rate developments during the period, especially for the USD, affected sales negatively resulting in growth of 9% in DKK. Sales in the third quarter were up by 15% in LCY and 11% in DKK. Acquisitions contributed 2 percentage points to the quarterly growth.
All enzyme areas continued to perform very well nine months into the year and were up by a total of 16% in LCY and 10% in DKK. Organic growth in the period was approximately 15% for the enzyme areas. Microorganism sales experienced 7% organic growth in the period. The activities acquired within biological agriculture (BioAg) continued to deliver higher growth than expected. Biopharmaceutical Ingredients (BPI) was as expected the only area with an unfavorable development.
Sales of technical enzymes rose by 17% in LCY and 7% in DKK in the first nine months of 2008. Approximately 1 percentage point can be attributed to the activities acquired in India in 2007. Enzyme sales to the fuel ethanol industry continued on the strong growth path and showed no sign of slowdown during the period. After the first nine months Novozymes' enzyme sales growth outperforms growth in North American fuel ethanol output.
Sales of textile enzymes for abrasion of denim fell further during the period, as a result of the continued strong fashion trend in favor of darker denims and a deepening market depression as US denim demand slows. Total textile sales were down 14% in the period.
Click here to read more details on Q3 results: