Novozymes (NVZ.L) released its 1Q09 report showing a slight profit growth, despite global economic downturn and a troubled US bioethanol industry that caused sales to be lower than expected.
The company said expected full-year sales growth is now slightly positive, reflecting 1Q sales and reduced expectations.
Novozymes said development in profits and cash flow was better than expected for the quarter. Expected 2009 operating profit margin is increased to 19–20%. However, current exchange rates reduce full-year operating profit growth in Danish krones (DKK).
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“We entered 2009 knowing it would be a tough year, and sales in the first quarter more than
confirmed this. The extent of the global economic downturn indicated by the first quarter has taken
us and some of our customers by surprise. This, and declining sales to the US bioethanol industry,
resulted in sales below expectations,” says Steen Riisgaard, President and CEO. “We’re consequently
reducing our 2009 sales outlook, to now only slightly positive growth. On a positive note, we expect
to improve profit margins. However, overall, we still face high uncertainty as to what may lie ahead.”
Total sales rose by 5% to DKK 2,126 million. Exchange rates, especially the strengthened US dollar, impacted sales positively by 5%.
Net financials improved by DKK 22 million compared to 1Q08, resulting in an income of DKK 2 million. This development is
mainly explained by currency gains in 1Q09. Change in
liability in relation to employee stock options was on level with 1Q08.
Profit before tax increased by 15% to DKK 405 million from DKK 352 million in 1Q08. Net profit for 1Q increased by 13% to DKK 298 million against DKK 264 million in the same period of 2008.
Novozymes is reducing its 2009 sales growth outlook from 3–8% in LCY to
now only slightly positive. Sales outlook for BioBusiness is maintained, while
Enzymes Business’ adjusted full-year sales expectations are based on the
following assumptions:
-
That the 2009 US Renewable Fuel Standard (RFS) is sustained, i.e.,
10.5 billion gallons of bioethanol blending is mandated, excluding
transfer of 2008 excess blending (so-called RINS) - That there is no further deterioration in global economic activity
In March, Novozymes broke ground on a new production facility in Blair, Nebraska.
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