Novozymes A/S : Interim report for the first 9 months of 2016

In the first nine months of 2016, sales grew by 1% organically and declined by 1% in DKK compared with the first nine months of 2015. Sales outside North America increased by 5% organically, while sales in North America declined by 6% organically due to Bioenergy, Food & Beverages, and BioAg. As communicated in the half-year report, Novozymes expected growth in the second half to be skewed toward the end of the year. Sales in Q3 were lower than expected, declining by 3% organically, but Novozymes still expects moderate organic growth in the final quarter of the year.

The EBIT margin was on par, and EBIT declined by 1% compared with the first nine months of 2015. Adjusting for the restructuring costs in Q1, the EBIT margin would have expanded to above 28% and EBIT growth to above 1% compared with the first nine months of 2015.

The outlook for full-year organic sales growth is adjusted to around 2%, from previously 2-4%. The adjustment reflects the sales performance in the first nine months, and continued challenges in Household Care, Food & Beverages and agricultural markets. The outlook for sales growth in DKK is reduced to 0-1%, from previously 1-3%, due to the adjusted organic sales guidance. The outlooks for EBIT growth and net profit growth are also adjusted within the previously guided range.

Peder Holk Nielsen, President & CEO of Novozymes, comments:

'Our new innovations have had a slower pick-up than anticipated, so our sales growth is weaker than we had expected at the beginning of the year. In spite of this, we expect to deliver 8-9% net profit growth. We will push through this period of low growth by shifting more resources to customer engagement and accelerating innovation while reducing our cost level elsewhere. Our pipeline of sustainable biological solutions is strong, and we're launching a number of promising new products in the coming quarters.'

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