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Novozymes Reports Earnings for Agriculture and Feed Down

For the first half of 2017, Novozymes reported good results with 3 percent organic revenue growth, which was better than expected, according to the company. Overall, Household Care was up 1 percent, Food and Beverages was up 8 percent, and Bioenergy was up 7 percent. On the other side, Agriculture and Feed was down 6 percent, as well as Technical and Pharma by 4 percent.

Excluding reorganization costs, the earnings before interest and taxes (EBIT) margin was 28.5 percent, compared to the first half of 2016 at about 28 percent. Novozymes Maintains its 2017 outlook of 2 percent to 5 percent organic sales growth, around 28 percent reported EBIT margin, Danish krone (DKK) 2.0-2.2 billion free cash flow before acquisition, and a net profit growth of 2 percent to 5 percent.

“Overall, the first half was good, and better than expected,” says Peder Holk Nielsen, Novozymes president and CEO. “We had growth in the large segments and delivered 3 percent organic sales growth with a strong EBIT margin, excluding one-offs.

“We made important advances in our innovation pipeline within grain milling, vegetable oil and household care opening up new market segments. We should see growth pick up in the second half of the year, but also acknowledge the risk of agriculture-related markets changing swiftly. Consequently, we maintain our full-year expectation for organic growth, while DKK expectations have been adjusted to reflect weaker currencies.”

The company cites it’s Agriculture and Feed revenue is down due to changed BioAg moving its sales cycle from the first half of the year to the second half.

Novozymes reports: “In BioAg, sales declined as expected also into the second quarter of 2017 due to the ongoing change in sales cycles for parts of the business. From a market perspective, farm economics have not improved. Despite these headwinds, we expect an increase in revenue in the second half of the year compared with the year before as a result of both the change in sales cycles, which is shifting sales from the first to the second half of the year, and increased demand for our product Acceleron B-300 SAT.

“BioAg in-market sales grew satisfactorily from an Alliance point of view, despite current headwinds in the agricultural markets. Focus on development and rollout of new products and expanding into new regions to drive long-term growth in BioAg is a key priority.”

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