Novozymes Delivers Impressive Results in First Half of 2023, Narrowly Adjusting Full Year Outlook

Novozymes has delivered an impressive 3% organic sales growth, despite a turbulent environment. The full-year organic sales growth outlook for 2023, however, has been slightly revised from 4-7% to 4-6%, due to destocking and weakened consumer demand. Pricing is likely to remain a key driver of Novozymes’ growth over this period.

Novozymes achieved impressive results in the first half of the 2023 financial year, with an impressive 3% organic sales growth, an EBIT-margin of 25% before special items, and ROIC including goodwill of 17% before special items. Despite a volatile market characterized by destocking and reduced consumer demand, the company maintained a bullish outlook adjusted from 4-7% to 4-6% organic sales growth for the full year. Novozymes’ impressive results were driven by its diverse solutions portfolio and broad end-market exposure.

Novozymes is proud to report results within expectations for the first half of 2023. Despite some challenges posed by higher-than-expected destocking and lower consumer demand in certain areas, the company is continuing its forward momentum with a total portfolio growth rate of 4-6%. This is an impressive result for a volatile market climate and further highlights the diversity and stability of the Novozymes portfolio.

At Novozymes, we are experiencing an ongoing high demand for our biosolutions, which means our customers can grow their businesses and preserve the planet’s resources while contributing to a better world. We are looking forward to a stronger performance in the second half of the year thanks to our product innovation, increased market penetration, as well as a more balanced demand level from our customers.

Novozymes and Chr. Hansen are one step closer to merging and creating a world-class biosolutions leader. With a partnership that boasts a robust biological arsenal, strong innovation capabilities, and peerless production facilities, the expected closing of the combination is slated for the fourth quarter of 2023 or the first quarter of 2024. This promises to be an exciting union that will revolutionize the way biosolutions are delivered to the world.

I am thrilled to share that the combination with Chr. Hansen is progressing as expected, and we have already submitted our application for approval in all the right jurisdictions. I am passionate about the potential of the combination and what it could mean for our customers, our employees, and the planet. With this new initiative, we’re eager to realize the full potential of biosolutions while optimizing both our financial and operational performance.

With an eye on the future of sustainable food production and people’s health, Novozymes kicked off the 2023 financial year with the launch of six new products, two of which went public. The company is also part of an innovative consortium, funded by the Bill & Melinda Gates Foundation, with the goal of developing a climate-neutral solution for converting CO2 into protein that bypasses water, agricultural land, and fertilizer requirements.

Business area results

In the first half of the 2023 financial year, Household Care saw a 1% organic growth, a stark contrast from the Food, Beverages & Human Health figures which saw a 6% decline. Bioenergy enjoyed a much more favourable outcome with a promising 27% increase, while Grain & Tech Processing experienced an unexpected -11% drop. Agriculture, Animal Health & Nutrition results were steadier with a 7% upturn.

Novozymes enjoyed a successful first half of 2023, with sales in line with expectations. This success was underpinned by the company’s diverse solutions, broad end-market exposure and programmable production. Not only did Novozymes meet revenue goals for the period, it also delivered profitability targets equably across its whole portfolio.

Organic sales continue to soar in Bioenergy, with double-digit growth, and Agriculture, Animal Health & Nutrition seeing a steady rise in demand for sustainable yield and health solutions. Across Household Care, more households are becoming customers, despite a decline in detergent volumes, while Food, Beverages, and Human Health have slumped due to destocking, a weakened consumer demand, supply-chain hiccups, and a delicate North American probiotics market. Despite a stable performance in grains, Grain & Tech Processing has dropped from reduced sales of COVID-19 test kit solutions and diminished demand for textile.

Regional results

Despite global uncertainty, we experienced impressive growth in the first half of our 2023 financial year in Europe, Middle East & Africa (1%), North America (6%), Latin America (16%), and even in the face of a decline in Asia Pacific (-5%).

Organic growth of 5% was seen in developed markets, with Bioenergy being the primary propellant of this success. Agricultural, Animal Health & Nutrition products also performed well, while Household Care managed to buck the trend of industry-wide volume decrease. Unfortunately, Food, Beverages & Human Health, as well as Grain & Tech Processing, both suffered from a decline in sales. Fortunately, emerging markets were not affected, with a flat performance observed in the region.

Bioenergy led the charge for growth in emerging markets, while Agriculture, Animal Health & Nutrition and Household Care all provided their own boosts. Unfortunately, Food, Beverages & Human Health and Grain & Tech Processing were unable to keep the pace, resulting in negative growth for those sectors.

Financial outlook for 2023

Due to an unforeseen level of destocking and weaker consumer demand, especially in the food sector, our organic sales growth predictions for the year have been revised from 4-7% to a more conservative 4-6%. However, this year’s growth should be buoyed by pricing strategies regardless of all the hiccups along the way. All areas are expected to benefit from positive pricing, while innovation and market penetration will help drive higher volumes of sales.

Although growth in the first half of the year may have been somewhat subdued due to the ongoing global economic situation, we anticipate a stronger performance in the second half. Much of this anticipated improvement should be attributed to the levelling-off of destocking that we expect in the coming period, especially in the food-related sectors. With no major changes forecasted, we remain confident in a successful outcome in the months ahead.

We strive to keep our EBIT margin before special items firmly at 25-26%, while our ROIC including goodwill before special items is optimally maintained at 16-17%, ensuring an optimal balance.

About Novozymes

At Novozymes, we are committed to making a meaningful impact on the planet and its inhabitants. Through the development of innovative biological solutions, we strive to improve industrial performance while preserving our resources and enhancing global well-being. Our range of enzyme and microbial technologies lead to increased agricultural yields, lower energy consumption, renewable fuel production, and other industry-wide advancements. As the world’s largest provider of these solutions, we are proud to play a part in creating a more sustainable future.

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