Thriving enzyme industry drives up Novozymes sales

By Laura Crowley

- Last updated on GMT

Related tags Cent Enzyme Currency

Europe's baking and brewing industry pushed Novozymes food enzymes
sales up by 6 per cent last year, according to financial results
released today.

The Danish company reported sales growth across the board, despite challenges from increased production costs and unfavourable exchange rate movements. This has spurred it to make plans for expanding enzyme production in the USA. "Sales growth has never been higher,"​ said Steen Riisgaard, president and CEO. "The financial results met expectations despite rising raw material and energy prices and the declining US dollar, so we are extremely pleased." Company financial results ​ Overall sales grew by 14 per cent in local currencies in 2007. However, with poor exchange rates having a negative effect on sales in Danish currency, this represents a 9 per cent increase in Kroner, to DKK 7,438m (€998m) up from DKK 6,802m (€925m) in 2006. Overall growth excluding acquisitions reached 12 per cent. Last July the company​ entered into a definitive agreement to acquire the enzyme business of Biocon in India to increase its presence in the Indian market and in wine and juice enzymes in particular. The buy was for a total consideration in Indian rupees equivalent to €83.4m. Operating profit rose by 11 per cent to DKK 1,481m (€199m), from DKK 1,340m (€180m) in 2006. Gross profit increased 8 per cent from DKK 3,655m (€490m) to DKK 3,949m (€530m). Meanwhile, gross margin dropped slightly from 53.7 per cent to 53.1 per cent. Ten new products were launched in 2007, proving the highest number ever for the company. The only one to be launched in the fourth quarter was Sucrozyme, an enzyme for the manufacture sweeteners. Enzymes ​ The most substantial rate of growth proved to be in its enzymes sector, its main sector, which climbed 10 per cent, rising to DKK 6,906m (€927m) from DKK 6,320m (€848m) in 2006. The increase in sales of food enzymes increased from DKK 1,603m (€215m) in 2006 to DKK 1,699m (€228m) in 2007. This translates into a 6 per cent increase, equal to 9 per cent when measured in local currencies. The company said this growth is mainly attributed to increased penetration of fresh-keeping enzymes in the baking industry in Europe, as well as increased use in the brewing industry as a result of rising ingredient prices coupled with a decline in quality. The World Enzymes​ by The Freedonia Group says the global market value for enzymes will reach almost $1.2bn (€816m) by 2011, following annual growth of almost 8 percent. The total food and beverage enzyme market makes up about 40 percent of the Industrial Enzyme category, which in turn constitutes 57 percent of the overall enzyme market. Novozymes is the leading global enzyme manufacturer, holding 26 percent of the total enzyme market and 46 percent of the industrial enzyme market. Future expansions ​ Riisgaard said: "We expect growth to remain high in 2008 and this means, together with the strong political support for bioethanol production in theUSA, we are increasing our expectation for long-term growth. Given this outlook, we will build more capacity in theUSA, simply to keep up with the growth." ​The company's North American sales increased by 26 per cent in local currencies, equalling 17 per cent in Kroner. This was mainly due to sales of enzymes for bioethanol production - the sector that experienced the most overall sales growth for the company. As a result, it intends to build a new enzyme plant in the USA at a total investment of DKK 300-500m (€40-67m) in 2009 to 2010. Novozymes predicts a growth in sales of 8 to 11 per cent for 2008 in DKK, with an operating profit of between 2 and 5 per cent.

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