Novozymes raises earnings outlook after strong results

By Anthony Fletcher

- Last updated on GMT

Related tags: Cent, Currency, Generally accepted accounting principles

Novozymes has reported 'highly satisfactory' results for the first
nine months of 2006, enabling the enzyme giant to adjust the
outlook for earnings upwards.

Operating profit and sales grew by 11 per cent and eight per cent respectively, in line with the Danish firm's expectations.

Net profit for the period rose by only one per cent to DKK 671 million, from DKK 664 million. But Novozymes claimed that adjusted for a negative effect relating to employee share options, net profit for the period was just over four per cent higher than for the same period of last year.

"We are very pleased with the results,"​ said Steen Riisgaard, president and CEO of Novozymes. "We have had a really good third quarter with underlying growth in sales of 11 per cent, and are standing by our outlook for sales for the year within the range originally indicated to the market.

"At the same time we have seen pleasing productivity improvements, enabling us to adjust the outlook for earnings upwards."

Sales of food enzymes rose by 8 per cent in DKK in the first nine months of the year compared with 2005, including a positive exchange rate effect of 1 percentage point. This growth was primarily due to the trend in sales of baking enzymes, with the new distribution set-up in North America having a particularly positive impact.

Growth in sales of enzymes for beverage alcohol and processed foods remained healthy, drivenpartly by increasing demand from Asia.

The company also launched a number of new products and projects in 2006. Cerezyme for example, an enzyme for brewing based on sorghum, was launched in the second quarter.

And in August 2006 Novozymes provided a bid for the Australian biotech company GroPep as part of its strategy to leverage the companys biotech expertise and technology platform. The company has said that it is looking to build a new business area in recombinant ingredients for the biopharmaceutical industry.

"I am pleased to say, that based on the satisfactory result of the independent expert's assessment of the takeover scheme, GroPeps board of directors now confirms its unanimous recommendation that shareholders vote in favour of the share scheme.

"We thereby expect the transaction to be completed by year-end."

Novozymes said that following the publication of its results last week, it was now adjusting its outlook for earnings and free cash flow upwards for 2006, assuming exchange rates remain the same. Growth in sales is expected to be approximately eight per cent (previously seven to nine per cent), equivalent to approximately 8 per cent (previously six to eight per cent) measured in local currencies.

Furthermore, operating profit is now expected to grow by approximately ten per cent (previously seven to nine per cent). The outlook for free cash flow before acquisitions is being increased to DKK 950-1,000 million (previously DKK 850- 950 million.

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