Increased use of enzymes by brewers and demand for baking enzymes in emerging markets have helped Novozymes achieve impressive sales growth in its food division in the first half of 2008.
The Danish enzyme and biobusiness company supplies to a broad slate of industries, including detergents, textiles and pharmaceuticals – as well food and beverage manufacturers.
In the first six months of 2008 it saw sales of DKK 4059m (c €544.2m at today’s exchange rates), up 16 per cent in local currencies and 9 per cent in DKK. Operating profit was up 5 per cent to DKK 749m (€100.4m), excluding a one-off item that lifted comparable 2007 profit to DKK 788m (€105.7m).
In food enzymes, which accounted for 23 per cent of sales overall, the growth rate was in line with that for the company as a whole (15 per cent in local currencies, 9 per cent DKK).
In October 2007 Novozymes acquired Indian enzyme firm Biocon in order to raise its profile in the emerging market of India. According to Novozymes, use of enzymes is still in its infancy in India, but awareness of their potential and benefits in food and beverage formulation is growing.
This acquisition is said to have contributed 5 per cent of the food enzyme growth over all in H1.
However the areas highlighted as impacting sales figures most favourably were brewing, baking and processed food enzymes.
“Brewers are increasing their enzyme consumption, enabling more consistent quality and improved yields,” said the firm.
It added that greater demand for baking enzymes stemmed from emerging markets and North America – especially enzymes that can help products stay fresh for longer.
In April Novozymes announced a development aimed at just this. It teamed up with Puratos to put its enzyme technology into Puratos’ cake improver Acti-Fresh.
The result is said to provide 30-35 per cent additional softness and moistness compared with standard cakes, and extend the freshness of the product over time. Softness and moistness can be maintained for four weeks, and even up to three months, after baking, said the companies.
Overall, president and CEO Steen Riisgard expressed satisfaction at the results for the six month period.
“There is really good momentum in our business… and despite challenging exchange rate movements in the first half and high raw material prices, earnings are keeping pace with growth.
“We can’t be anything but satisfied with results like these.”
The outlook for the company now looks good fore the rest of the year – if key exchange rates remain at their current levels for the rest of the year. It has said it expects to see sales growth at the higher end of its previously stated expectations – that is, 13 to 15 per cent.
No major acquisitions are being planned, “as the high priority continues to be given to developing growth opportunities in the existing business”.
By 2010 Novozymes would like to achieve sales of DKK 10bn (€1.34bn), primarily through organic growth. While this is seen as possible, unfavourable exchange rates are seen as the biggest single threat to achieving the ambition.