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Q3 2022

Full-year upgrade from October 7 confirmed by a strong start to Q4

Ester Baiget, President & CEO: “With 9% organic sales growth in the first nine months and a strong start to the fourth quarter, we are well on track to deliver on our guidance upgrade from October 7. This also includes delivering on the sales growth indications for each of our five business areas. Our efforts to enhance Novozymes’ commercial capabilities are progressing well, and with more than two thirds of the price increases for 2023 already committed, we feel comfortable with our 25%+ EBIT margin expectation. We continue to focus on the future and make significant investments in strategic areas. Combined with a well-diversified product portfolio and end-market exposure we are well positioned to deliver on our growth ambitions”.

Sales and financial performance:

  • Sales growth in DKK at 17% (9% organic, 7% currency, 1% M&A), Q3 DKK sales growth at 16% (6% organic, 9% currency, 1% M&A).
  • Broad-based and strong performance across the business:
    • Bioenergy 26% (Q3: 32%): Strong growth across regions and applications, led by the North and Latin America, driven by a broad and innovative solution toolbox in a favorable market environment.
    • Grain & Tech Processing 11% (Q3: 7%): Strong performance led by double-digit growth in Grain, driven by favorable market conditions and innovation. Tech Processing also grew, although at a lower rate.
    • Food, Beverages & Human Health 8% (Q3: 2%): Broad-based growth, led by innovation, a focus on healthy choices, and supported by an environment focused on yield and optimization. Human Health performed well with double-digit growth in Q3, whereas Food was negatively impacted by timing.
    • Agriculture, Animal Health & Nutrition 7% (Q3: –7%): Solid performance driven by strong growth in Animal Health & Nutrition. Agriculture declined in Q3 due to timing.
    • Household Care 0% (Q3: -1%): Performance in line with expectations, including a negative impact from the war in Ukraine, especially in the third quarter.
  • Organic sales growth: developed markets 10% (Q3: 9%); emerging markets 7% (Q3: 1%).
  • EBIT margin at 27.2% (Q3: 29.5%). Adjusted for nonrecurring items affecting y/y comparability, the EBIT margin was around 26% (Q3: ~25%). Gross margin lower as expected from higher input, logistics and energy costs, partly offset by productivity improvements and slight price increases, also in Q3. The gross margin in Q3 additionally impacted by negative mix due to sales timing whereas the 21st.BIO accounting gain impacting other operating income positively.
  • Net profit strong with an increase of 11% (Q3: 37%).
  • ROIC incl. goodwill at 17.8%, impacted by lower EBIT margin, acquisitions and growth investments.
  • FCF before acquisitions at DKK 1.5bn, including stronger operating cash flow and higher investments including the Advanced Protein Solutions production line in Blair, US.
  • A solid balance sheet with a net-debt/EBITDA ratio of 1.0x.

 

Key events:

  • Thirteen product launches in the first nine months of the year of which nine were public. This includes seven product launches in the third quarter of which three were public.
  • Selection of locations for customer co-creation centers in North America and Europe finalized.
  • Participation at UNGA in New York with the focus on accelerating the transition towards a greener economy.
  • In October, aligned with the company’s strategic direction, Novozymes signed an agreement to divest selected waste-water treatment products, with expected closing in 2023.

2022 outlook:

  • Strong start to the fourth quarter confirms the 8-9% full-year organic sales growth outlook. This follows the third quarter sales that was impacted by timing in Food, Beverages & Human Health and Agriculture, Animal Health & Nutrition.
  • The outlook for EBIT margin and ROIC, incl. goodwill is maintained whereas FCF bef. acq. is reduced by DKK 400m due to phasing between 2022/2023, as the construction of the Advanced Protein Solutions production line in Blair is progressing very well within the maintained timeline and investment level of DKK ~2bn.