Novozymes reports solid start to 2006
quarter of 2006, providing a good basis for further expansion.
Sales for the quarter increased by 11 per cent to DKK 1,633 million from DKK 1,476 million in the same period of 2005, and the outlook for 2006 has been maintained.
However net profit for the period rose by just 2 per cent to DKK 196 million from DKK 193 million. Adjusted for the negative effect relating to employee share options, the company said that net profit for the period rose by 7 per cent.
"Novozymes has made a good start to 2006," said Steen Riisgaard, president and CEO.
"We achieved pleasing top-line growth of 11 per cent, positively affected by exchange rates. And underlying sales are also showing a higher rate of growth than in 2005.
"In addition, the first quarter has once again demonstrated the company's ability to continuously optimise production and therefore increase profitability, despite rising energy and raw material prices. Sales are developing as expected, and the outlook for growth in both sales and in earnings remains unchanged."
Assuming there is no change in exchange rates, Novozymes is confident that its outlook for 2006 will be maintained. Growth in sales is expected at 7 to 9 per cent, equivalent to 6 to 8 per cent measured in local currency.
Growth in operating profit is expected at 7 to 9 per cent, while the outlook for net profit is expected at 5 to 7 per cent. Outlook for free cash flow also remains unchanged at DKK 750-850 million.
This solid financial position should help Novozymes to identify further expansion opportunities. Chairman of the board of directors Henrik Gurtler recently stated that the company plans to "focus even more on top line growth and market-expanding activities".
This was reiterated this week by Riisgaard.
"In January 2006 Novozymes acquired a small company in China within the biopolymers area. Novozymes continuously assesses potential candidates for acquisition, primarily outside the enzyme business area, which could strengthen the company's position within the area in question."
Novozymes has been quick to develop viable alternatives for food makers, and the establishment of new market segments has ensured that the enzymes market, despite modest general growth, remains lucrative.
While the volumes of pure enzyme protein produced are very small, their value reached over $2 billion (€ 1.53bn) in 2004. A recent report from Business Communications Company estimates that by 2009 the market will reach € 1.83 billion.
The market for bakery enzymes came in at € 32.1 million in 2003, expected to climb to € 52.3 million by 2010.