Novozymes tackles drinks industry issues with new launches

By Jess Halliday

- Last updated on GMT

Related tags Enzymes Enzyme Beer

Novozymes has reported a strong set of results for first half 2007
and is set to achieve targets for the year as it keeps its ear to
the ground and develops new enzymes to serve trends and help
producers overcome difficulties.

In the food enzymes sector, the company experienced growth of six per cent over the same six month period last year, to DKK836m (€112.3). It said that this was driven mainly by sales to the baking and brewing industries, and enzymes for processed foods also delivered healthy sales growth. One detracting category, however, has been enzymes for beverage alcohol, which saw lower sales. This was particularly the case in the second quarter, when the effect of lower sales of these products contributed to a reduction in growth for food enzymes overall to two per cent. CFO Benny Loft told that this is the result of two factors. Firstly, higher grain prices have led beverage alcohol producers to cast about for alternative raw materials, which do not require many enzymes. Secondly, the company has faced increasing competition from Eastern Europe and China. Its strategy in staving off this competition involves developing new enzyme products that are cheaper to produce, thereby optimising costs. For instance Saczyme, for use in beverage alcohol and billed as "cost-effective"​ is one of the eight new enzymes launched in the first half of this year. Another new introduction is Ultraflo Max for the brewing industry, an enzyme said help optimize the production process by allowing long and consistent filtration. According to Loft, brewing enzymes have benefited from the poor barley quality in recent years, which has pushed up brewers' costs and led them to look to competing products. "They can replace some of the barley with enzymes, helping the big brewing companies maintain costs at a certain level,"​ he said. By region, Europe reported the highest growth for food enzymes. Demand also rose in Asia. This follows on from growth in the US, particularly in the bakery sector where Novozymes recently changed its distribution set-up to be able to target big baking factories. A key development for Novozymes in the first half of this year was the definitive agreement to acquire the enzyme business of Biocon, India, a move that will significantly increase its presence in the Indian market and in wine and juice enzymes in particular. The results for the food enzymes division are set against a positive backdrop for the company as a whole. Overall sales rose to DKK3,734m (€501.7n), from DKK 3,282m (€441m) for the 2006 period. Operating profit was up 20 per cent to DKK788m, including a one-off payment from the settlement of a patent dispute with Danisco of DKK75m. Steen Riisgaard, Novozymes' president and CEO expressed overall satisfaction with the company's results for the reporting period. "The results are fully in line with our outlook for the year… Productivity improvements have made a positive contribution to earnings, which have remained at a satisfactory level despite lower exchange rates and higher raw material prices."​ Novozyme's aim is to achieve sales of DKK10bn (€1.34bn) in 2010.

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