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Novozymes posts resilient performance despite COVID-19, reinstates 2020 outlook

August 13, 2020
Life sciences

Novozymes says its net profits for the second quarter of 2020 dropped 28% year on year (YOY), to 646 million Danish krone ($102 million) on 3% YOY lower sales, to DKr3.35 billion.

EBITDA and EBIT also declined 24% and 27%, to DKr1.17 billion and DKr867 million, respectively.

The disproportional fall in profits this year is mainly attributed to a decrease in other operating income, which in 2019 included the recognition of DKr287 million in deferred income related to the termination of the BioAg alliance and DKr153 million in proceeds from the divestment of a pharma-related royalty, the company says.

“The pandemic is still very present, and we continue to take all necessary measures to keep our employees safe, protect the business, and maintain our ability to supply our customers. But as countries and economies carefully reopen, we now reinstate our 2020 outlook with an organic sales performance of -2% to +2%, an EBIT margin of around 26% including much weaker currency effects, and free cash flow before acquisitions of DKr2.4–2.8 billion,” says Ester Baiget, president and CEO at Novozymes.

Sales in the company’s household care business grew by 11% organically YOY, driven by COVID-19-related stockpiling effects that continued into April but eased toward the end of the quarter, and the increased demand for higher-performance quality detergents, Novozymes says. Sales in the food and beverages business went up 3% organically YOY mainly due to increased at-home consumption with growth in freshkeeping and flour-correction technologies as well as in solutions targeting consumer-health trends such as acrylamide reduction, the company says. The agriculture and feed business also saw organic growth of 27%, which included a positive settlement contribution related to the former BioAg setup.

However, sales of Novozymes’ bioenergy business declined by 37% organically, mainly due to the significant drop in ethanol production in North America, as the full impact of the stay-at-home restrictions, related to COVID-19, materialized, the company says. Technical and pharma also saw a 34% organic drop in sales, attributed to the continuation of last year’s decline in China’s textile production, with volumes shifting away from China to countries with lower enzyme penetration. The decline was further amplified by COVID-19 lockdowns and their impact on the textile and apparel industry, Novozymes says.

Operating free cash flow was DKr1.45 billion, an increase of DKr401 million compared with the second quarter of 2019. The improvement was mainly due to higher sales, gross margin expansion, and lower operating costs, the company says.

By: Sotirios Frantzanas

Source: Chemical Week

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