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Q2 2023

Diversified portfolio creates overall stability in a volatile environment

Ester Baiget, President & CEO: “Our diverse portfolio of solutions and broad end-market exposure creates stability in a volatile environment and drives the delivery of our profitability targets. This is possible thanks to our unique capabilities with similar earnings across business areas, and a robust production setup. Full-year organic sales growth is narrowed slightly to 4-6%, and consistent with our initial guidance, we continue to expect a stronger second half supported by pipeline innovation, increased market penetration, and a softer comparator. We are moving firmly towards the implementation of our strategy and with 2025 targets well within reach, we continue to invest accordingly. We’re working hard to drive even stronger performance as we continue to progress on closing the combination with Chr. Hansen in Q4 2023 or in Q1 2024.”

Sales and financial performance (1H comments unless otherwise indicated)

  • Sales growth in DKK at 2% (3% organic, -1% currency, 0% M&A). (Q2 at 2% organic, -4% currency, 0% M&A)
  • Organic growth was supported by solid and broad-based pricing of ~6% (Q2 ~6%); volumes down ~3% in 1H (Q2 down ~3%).
    • Household Care 1% (Q2 flat): Growth in developed markets from increased penetration and despite declining in-market detergent volumes. Emerging markets grew slightly despite the impact of the war in Ukraine.
    • Food, Beverages & Human Health -6% (Q2 -3%): Negatively impacted by destocking and lower consumer demand, as well as Human Health being impacted by supply-chain constraints and a soft North American probiotics market. Adjusted for the large comparator one-off in the first quarter, performance in the business area declined by roughly 2% in the first half.
    • Bioenergy 27% (Q2 26%): Continued strong demand across geographies and a broad, differentiated portfolio of solutions for multiple end-markets.
    • Grain & Tech Processing -11% (Q2 -14%): Grain performance offset by expected softness in tech from reduced sales of solutions for Covid-19 test kits and, additionally, declining demand in textile.
    • Agriculture, Animal Health & Nutrition 7% (Q2 -7%): Growth driven by performance in Animal Health & Nutrition with strong demand for sustainable yield and health solutions. Performance in Agriculture muted following destocking in the value chain.
  • Organic sales growth in developed markets 5% (Q2 3%); emerging markets flat (Q2 -1%).
  • EBIT margin before special items (b.s.i.) at 25.0% (Q2 24.0%). Sequential gross margin improvement since Q3 2022, leading to a 1H 2023 gross margin of 54.7% (Q2 55.4%).
  • ROIC incl. goodwill, b.s.i. at 17.0% (ROIC incl. goodwill at 15.9%) and FCF bef. acq. at DKK 0.5 billion.
  • Net profit at DKK 1.4 billion including special items and ETR (effective tax rate) at 23%.
  • Solid balance sheet at 1.2x NIBD/EBITDA.


Key events:

  • Collaboration between Novozymes, the Novo Nordisk Foundation, the Bill & Melinda Gates Foundation, and other relevant players to explore the production of food proteins through fermentation of captured CO2.
  • Early-stage partnership with Arla Foods Ingredients to explore the area of advanced protein solutions made with precision fermentation. Initial focus is protein ingredients for medical nutrition.
  • Three products launched in Q2, of which one was public, and a total of six products in the first half year.
  • Interim dividend pay-out of ~50% of adjusted net profit for the period January 1 to August 31, 2023, expected to be approved by the Board of Directors to honor existing shareholders ahead of combination with Chr. Hansen. Pay-out date set for October 17, 2023.

2023 outlook:

  • Full-year organic sales growth outlook narrowed to 4-6% (previously 4-7%). Pricing is expected to be the main driver of the organic growth. Sales mix is expected to be different from earlier indication with stronger performance now expected in Bioenergy. Softer indication for Food, Beverages & Human Health and Grain & Tech Processing mainly following destocking and lower consumer demand, both business areas still with stronger growth acceleration in the 2nd half of the year.
  • Outlook for EBIT margin b.s.i. and ROIC incl. goodwill b.s.i. maintained at 25-26% and 16-17% respectively.