Bioenergy sales contribute to Novozymes' 2013 growth

By Erin Voegele | January 21, 2014

Novozymes has released its 2013 financial results, reporting that all financial targets for the year were met or exceeded. Overall organic sales growth was 7 percent. Sales to the bioenergy and household care industries were the most significant contributors of growth. The company’s EBIT grew by 6 percent and net profit by 9 percent. EBIT margin increased by 0.3 percent, reaching 24.7 percent.

Peter Holk Nielsen, president and CEO of Novozymes, called 2013 a very exciting year for the company. During a call to discuss the annual financial results, Nielson noted that Novozymes achieved significant progress with its biomass conversion platform last year. “We’ve signed important agreements and started to operate the world’s first commercial biomass conversion plant in Italy,” he said.

Novozymes reported a 12 percent organic sales growth for its bioenergy business. The bioenergy business accounted for 16 percent of all Novozymes’ sales last year. During the fourth quarter of 2013, Novozymes reported that bioenergy sales increased by 28 percent organically compared to the fourth quarter of 2012. The company noted that bioenergy sales benefited from continued positive developments in Novozymes’ novel yield discovery solutions Avantec, Spirizyme Achieve and Olexa.

“Our bioenergy business had a great year. On a flat U.S. market, it posted 12 percent organic sales growth,” said Andrew Fordyce, executive vice president of business operations. “The growth was driven by innovation as our recently launched yield discovery solutions penetrated the market. Avantec, Olexa and Spirizyme Achieve were all well received by customers and sales improved as the year progressed. The lower corn prices and high DDGS prices have had a slightly negative impact on the value we bring, but it’s only a few customers that have changed their enzyme strategy on the basis of this.”

Moving into 2014, Novozymes said its bioenergy sales are expected to benefit from increased penetration of the Avanteic, Spirizyme Achieve and Olexa yield discovery solutions. The company has based its 2014 sales outlook on the expectation that the U.S. will produce approximately 13.5 billion gallons of ethanol in 2014, a production level slightly higher than what was achieved last year.

Novozymes’ biomass conversion sales are expected to slowly materialize in 2014 and contribute more significantly to sales growth beginning in 2015. The company’s long-term targets assume it will supply at least 15 biomass conversion plants by the end of 2017. Within its results, Novozymes indicated that it has signed a number of supply agreements to biomass conversion projects last year, and expects its growth assumption to hold. The 15 plants are expected to come through Beta Renewables and through close partnerships with other biomass, ethanol and chemical companies. By the close of 2013, the company said it had formed agreements for planned facilities that would take it about one-third of the way to its goal.

In November Novozymes announced it would support M&G Chemicals’ vision for biobased plastics with a $35 million cornerstone investment in the company’s initial public offering (IPO). In its financial report, Novozymes noted that it has been informed that the IPO has been shelved. However, M&G Chemicals informed Novozymes that it is still committed to growing its business in China and will continue to do so irrespective of the decision to postpone the IPO. Development of the biorefinery remains contingent on successful financing, and Novozymes indicated it remains committed to providing M&G Chemicals with $35 million in financial support. However, the exact form and details of that investment have not yet been determined.