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Q2 2019

2019 outlook confirmed; second-half acceleration supported by innovation

2019 outlook confirmed on all fronts following the adjustments communicated on June 6. First-half year-on-year (y/y) organic sales growth of -3%: Household Care -2%, Food & Beverages -2%, Bioenergy -4%, Agriculture & Feed -6%, Technical & Pharma +2%. EBIT margin 30.0%. Net profit up 1 percentage point (y/y). Free cash flow before acquisitions DKK 1.2 billion.

Peder Holk Nielsen, President & CEO: Peder Holk Nielsen, President & CEO: “Our half-year sales performance is not satisfactory, but as expected, following the revised full-year outlook on June 6. Softness in US agriculture and some emerging markets, including the Middle East, has created headwinds. We’re confident sales growth will accelerate in the second half of the year as the Freshness platform, BioAg and Bioenergy all step up, and the Middle East comparison eases. We're now in the process of executing on the updated strategy and reallocation program that we announced on June 16.”

Highlights 1H 2019:

  • On track to deliver on the 2019 outlook following the June 6 adjustments
  • Three new product launches in Q2 for the global ethanol industry: Innova® Force, Innova® Fit and Fortiva®
  • Negative impact from US agriculture, the Middle East, weakness in starch in Asia Pacific and price adjustments in US baking enzymes
  • Developed markets flat; 8% organic sales decline in emerging markets, mainly due to the Middle East but also softness in some emerging markets, such as China
  • Reported EBIT margin at 30.0%, supported by one-offs from accumulated deferred income relating to BioAg and the divestment of the remaining pharma-related royalty in Q2
  • Net profit up 1% y/y, positively impacted by one-offs, but reduced by US dollar hedging
  • Free cash flow before acquisitions DKK 1.2 billion; net investments DKK 0.4 billion
  • Shares totaling DKK 731 million bought back within the 2019 stock buyback program of up to DKK 2 billion

The Board of Directors proposes the election of Mr. Cees de Jong as a new board member, subject to approval at the annual shareholders’ meeting on February 26, 2020.

2019 outlook: Organic sales growth 1-3%, with an expected 0.5-1 percentage point addition to growth in DKK. The 1-3% range reflects acceleration in the second half. EBIT margin at 28-29% including ~2 percentage points from one-offs. Net profit growth of 3-8%. CAPEX at DKK 1.0-1.2 billion. FCF bef. acq. at DKK 1.9-2.3 billion. ROIC at ~23% (~24% excl. IFRS 16 – Leases).