Novozymes, Inc. kicked off the 2023 financial year with a bang. In the first three months, the company reported an impressive 5% organic sales growth, an EBIT-margin of 26.0% before special items, and an ROIC including goodwill of 17.7% before special items. This strong performance has established a solid foundation for the full year, for which an organic sales growth outlook of 4-7% has been confirmed.
Novozymes delivered a strong end to the first quarter with a positive impact from pricing that will continue throughout 2023. Our confidence in the sales growth outlook of 4-7% for the year is further reinforced by our solid Q1 results.
We are capitalizing on our broad portfolio of sustainable solutions and diverse end-market exposure in more than 30 different industries to drive our strategy forward. This is a testament to our commitment to ensuring a bright future through sustainability and innovation.
Last month, we achieved an incredible milestone when our shareholders gave their approval to the proposed merger with Chr. Hansen. This exciting development brings us closer to creating a premier global biosolutions partner and we’re now working hard to secure the necessary regulatory approvals.
By joining forces, we will be able to unlock greater value for customers, shareholders, and our employees while actively contributing to a healthier planet. We’re confident that this is the right path forward and we look forward to the exciting possibilities ahead.
After receiving strong support from shareholders of both companies, the proposed combination of Novozymes and Chr. Hansen was officially approved at Extraordinary General Meetings on March 30. This momentous closure is expected to be completed in the fourth quarter of 2023 or the first quarter of 2024, bringing the two companies together and creating exciting opportunities for the future.
Growth driven by Bioenergy and Agriculture, Animal Health & Nutrition
For the first quarter of the year, Household Care saw a positive organic performance of 2%, while Food, Beverages & Human Health saw a decrease of 8%. On the other hand, Bioenergy experienced an impressive growth of 28%, and Grain & Tech Processing experienced a decline of 9%. Agriculture, Animal Health & Nutrition saw an organic performance of 19%.
Novozymes saw impressive growth in the first quarter of 2021, supported by both volume growth and effective pricing. The Bioenergy and Agriculture, Animal Health & Nutrition segments experienced double-digit growth, while Household Care saw increased penetration in developed markets.
Although Food, Beverage & Human Health experienced a decline due to supply-chain constraints and a soft North American probiotic market, Grain & Tech Processing saw a solid grain performance, despite softness in the Tech Processing segment due to lower sales of solutions for covid-19 test kits and textile production.
Developed markets is the main driver of growth
The first quarter saw a strong performance in Latin America, with an organic growth rate of 21%, while Europe, Middle East & Africa recorded a more modest 2%. North America saw a solid 7% growth, while Asia Pacific experienced a slight decline of -2%.
Sales in developed and emerging markets grew organically, with Bioenergy driving growth in the former and Agriculture, Animal Health & Nutrition in the latter. Household Care achieved solid growth despite industry decline in developed markets, while Food, Beverages & Human Health, and Grain & Tech Processing decreased in both regions. Pricing was strong in both markets, and double-digit growth was seen in Agriculture, Animal Health & Nutrition and Bioenergy in emerging markets.
Financial outlook for 2023
Organic sales growth is projected to stay within the range of 4-7%. This full-year growth will be propped up by higher pricing in comparison to 2022, along with an increase in volume. Positive pricing across all business sectors is expected to account for more than half of the total organic sales growth, while innovation and a greater market reach will be the primary contributors to the volume growth.
Although the first quarter of the year ended with stronger figures than expected, partially due to timing, more modest growth is expected for the first half of the year. This outlook does not include any significant changes to the current global economic climate.
EBIT margin before special items is expected to be in the range of 25-26%, while ROIC including goodwill before special items is projected to be at 16-17%. These figures show a promising outlook for the company’s future performance.
Novozymes is pioneering a revolution in biological solutions that is transforming the way we do business. Our world-leading enzyme and microbial technologies are helping to make industrial processes more efficient, sustainable, and beneficial to the planet and its inhabitants.
By enabling higher agricultural yields, low-temperature washing, energy-efficient production, and renewable fuel, we are helping build a brighter future. We invite you to join us in our mission to Rethink Tomorrow.