Novozymes sees organic sales growth for second quarter

By Aerin Einstein-Curtis

- Last updated on GMT

© GettyImages/ takasuu
© GettyImages/ takasuu
Agriculture and feed sales provide a bump in organic sales during Novozymes’ second quarter, as the company acknowledges continuing trade uncertainty.

Overall, the Denmark-based company saw organic sales growth of 4% for the first half of the year, although a drop of 4% in Danish Kroner and net profit growth of about 5%, the company reported. It released second-quarter results Friday.

However, revenue for the quarter was DKK 3.49bn, down slightly from the DKK 3.538bn for the second quarter of 2017, the company said. Gross profit also dropped to DKK 1.98bn from DKK 2.05bn.

Earnings before interest, taxes, depreciation and amortization (EBITDA) dropped to DKK 1.19bn for the second quarter and were flat at DKK 2.46bn for the first part of the year, Novozymes said. The operating profit for the first part of the year was flat at DKK 1.97bn, but dropped slightly for the quarter to DKK 957m.

The company’s performance for the first half of the year was satisfactory, said Peder Holk Nielsen, president and CEO of Novozymes.

“Bioenergy performed very well, whereas Household Care was softer than expected. Our innovation pipeline is solid, and a stronger commercial and emerging market focus is paying off,” ​he said in an earnings release. “We’re launching a new, exciting product for animal health, and both our freshness & hygiene platform for laundry and the new corn inoculant are making good progress.”

There were positive elements from the company’s agriculture and feed business said Tina Sejersgård Fanø, executive vice president for agriculture and bioenergy with Novozymes. Animal probiotics were one area that performed well in multiple regions.

“Innovation-driven growth is key to Novozymes and we are about to launch new exciting products in both animal health and BioAg,” ​she told us.

Segment highlights

Results were somewhat mixed for the company segments, according to earning results.

Results for bioenergy saw a 14% growth in sales for the first part of the year, and a 20% growth for the second quarter, the company reported. However, sales for technical and pharma dropped 6% for the start of the year and were flat for the quarter.

“Sales in the agriculture and feed business picked up and posted 13% organic sales growth in the second quarter,” ​said Sejersgård Fanø. There was a demand within the business for animal probiotics, which had strong sales across all regions.

“In BioAg, we saw strong growth in the second quarter,” ​she said. “After the Q1 regulatory approval of the new B-300/B-360 inoculants, we were able to produce and ship some volumes to our alliance partner, Monsanto, already in the second quarter.”

“This was a bit earlier than expected and allows the alliance to prepare even better for the 2019 planting season,”​ she added.

The company reported sales for the agriculture and feed business for the first half of the year of DKK 957m, a drop from the DKK 1.01bn the previous year. Sales for the second quarter were DKK 441m, up from DKK 428m for the second quarter of 2017.

Going forward, organic sales are expected to be driven by BioAg as new product launches are planned, the company reported. However, sales to the agriculture-related markets do bring some uncertainty based on global farm economics and trade issues.

In household care, sales growth dropped slightly for the first half of the year and was down 2% from the same quarter in 2017, the company said. For food and beverage growth was up 4% for the quarter and the first half of the year.

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