Comparative cost of enzymes is boon to Novozymes

The enzyme specialist yesterday reported total annual sales of DKK 8146m (c €1093m at today’s exchange rates) for full year 2008, growth of 13 per cent in local currencies. The operating profit margin was DKK 1504m, up 7 per cent, and the margin 18.5 per cent.

Food enzymes account for 22 per cent of Novozymes overall sales. This part of the business saw a 10 per cent increase in sales in local currencies (7 per cent in DKK) last year.

“High raw material prices and limited resources in the food industry drive and accelerated rate of penetration over the year, as the relative cost savings offered by enzyme technology increased,”​ says the company.

Two of the growth percentage points were attributed to the activities of Biocon, the Indian business that was acquired in October 2007 in order to raise its profile in the emerging market of India.

Nonetheless in Q4 – a quarter marked by global economic uncertainty – food enzyme sales declined by 6 per cent in local currencies and 3 per cent in DKK.

This is in keeping with lower Q4 growth across Novozymes as a whole, explained by caution on the part of customers, who responded to global economic slowdown by de-stocking, Novozymes said in its report.

Long-term targets​

Novozymes is uncowed by lower growth in the fourth quarter of the year, and despite acknowledging the uncertain economic outlook is actually raising its long-term targets.

Expressing his satisfaction with the performance, CEO Steen Riisgaard said: “Lower growth in the fourth quarter may point to a slowdown as we do into 2009, but we see very favourable trends and opportunities further ahead, so we have upped our level of ambition and increased our long-term targets.”​

The long-term targets are organic sales of 10 per cent per year, plus enzymes for conversion of biomass; operating profit margin of 20 per cent; and return on invested capital of more than 200 per cent.

Popular food enzymes ​

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Three of the five new enzymes launched in Q4 were in the food sector: Lactose Oxidase, for adding value to the whey stream; Pectinex Ultra Mash, for boosting the yield of apple juice production; and Novozym 12001, to enable soy protein to be used in more food applications.

In terms of top performers for the year, brewing, baking and beverage alcohol enzymes all performed “especially well”​.