Novozymes’ ten-year high: Biosolutions drive double-digit growth in a volatile market

26 Jan 2023 --- Enzymes manufacturer Novozymes has forecasted an outlook of between 4% to 7% for the 2023 financial year, having ended 2022 strong with 11% sales growth in Q4 despite a strained market. The company’s sales are the highest in a decade. 

Toward the end of 2022, Novozymes acquired Chr. Hansen to expand its portfolio in the nutrition industry. The merger resulted in a US$12.3 billion deal, writing history as the largest Danish merger on record and will close by the end of this year.

The deal will result in the dissolution of Chr. Hansen by the fourth quarter of 2023. The new company is expected to post annual revenues upwards of €3.5 billion (US$3.7 billion).

“Novozymes delivers historically strong growth in a volatile market environment by leveraging the strength of our well-diversified portfolio, unique production capabilities and broad market presence,” says Ester Baiget, president and CEO at Novozymes. 

“We know that biotech holds the key to addressing some of the world’s biggest challenges and our growth in 2022 confirms that our biosolutions are more relevant than ever. We will continue the strong momentum from 2022 into 2023.”

Return on investmentNovozymes achieved double-digit growth across three of its five business divisions.
In the 2022 financial year, Novozymes invested ~11% of total revenue in research and development and launched 26 biosolutions, adding to its already large portfolio of more than 700. The company reports an EBIT margin (earnings before interests and taxes) before special items of 26% and a return on invested capital (ROIC), including goodwill before special items of approximately 18%. 

“We expect to unlock additional growth opportunities and accelerate our strategic ambition by the proposed combination of Novozymes and Chr. Hansen,” explains Baiget.

Organic performance by business category includes 1% growth in household care, 10% in food, beverages & human health, 25% in bioenergy, 10% in grain and tech processing and 8% in agriculture, animal health and nutrition.

Novozymes performed within guidance in all five business areas including household care, F&B and human health, agriculture and animal health and nutrition, grain and tech processing and bioenergy with double-digit growth tracked across  three of the five areas.

Developed and emerging markets
Novozymes expects solid sales growth of up to 7%, driven by pricing and volume growth. Pricing is expected to contribute more than half of sales growth. Developed and emerging markets also grew at 9%.

Growth rates per region were 6% in Europe, the Middle East & Africa, 11% in North America, 10% in Asia Pacific and 16% in Latin America.The company expects sales growth of up to 7% in 2023 driven by pricing and volume growth. 

Pricing is expected to contribute more than half of the organic sales growth.

Increasing sustainability
The company also emphasized its sustainability successes for the year, noting that it is one of the first companies in the world to receive validation of its net-zero targets by the Science Based Targets Initiative.

Meanwhile, Novozymes reduced the carbon emissions from operations by 63% from a 2018 baseline. Additionally, the company highlights that 34% of its revenue came from biosolutions that reduce food waste and help transform food systems. 

Moreover, the company revealed that 76% of its revenue came from biosolutions that reduce fossil fuel consumption, reduce CO2 emissions and contribute to climate neutrality.

“Sustainability is in our DNA, and Novozymes succeeds by combining our financial and non-financial performance. In 2022, more than 90% of our revenue contributed to a healthier planet by accelerating toward a climate-neutral society, transforming food systems, and enabling healthier lives, and we will continue to expand the reach of our biosolutions to enable a better world,” Baiget underscores.

By Inga de Jong

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