Peder Holk Nielsen, CEO, commenting on the release of the company’s Q4 and full year 2016 results, said the fourth quarter “came in as expected” at 6% organic sales growth, and sales grew by 8% in Danish Kroner (DKK) compared with Q4 2015, which was “a positive end to an otherwise challenging year.”
The Danish producer also announced full-year organic sales growth of 2% and 8% net profit growth, with its feed division cited as a strong contributor to that hike.
However, Nielsen said while 2017 will be a year with sustained investments in innovation, job shedding was inevitable:
“The divisions have reviewed their strategies and made significant changes to accelerate growth, for example shifting more resources to the emerging markets.
“As a consequence, we unfortunately need to lay off 198 employees to enable investments in market opportunities in both 2017 and 2018.”
Earnings for the full year
Novozymes reported that the earnings before interest and taxes (EBIT) margin for 2016 improved by 0.2 percentage points to 27.9%. EBIT for the full year was DKK 3,946m ($567m), up from DKK 3,884m in 2015. “Adjusting for the one-time reorganization costs, EBIT grew by more than 3%, and the EBIT margin was above 28%.”
Profit before tax for 2016 was DKK 3,881m, up 7% from DKK 3,621m in 2015. Net profit was DKK 3,050m, an increase of 8% from DKK 2,825m in 2015, driven by higher EBIT and lower net financial costs.
Solid growth in feed division
The producer reported “solid sales growth” in feed and moderate sales growth in its crop protection business in the last quarter, and for the full year.
“In Q4, sales grew strongly, reaching 22% organic growth. Sales development in BioAg was moderately positive, primarily driven by the ramp-up in Q4 in preparation for the 2017 North American growing season. Agricultural markets in the US and Latin America felt strong headwinds in 2016, which also affected farmers’ willingness to invest in biological solutions.
In 2016, it noted sales to the animal feed market grew solidly across the main markets: "The growth was driven by both carbohydrate- and protein-enhancing solutions.”
And the company said its new feed probiotic, Alterion, developed with Adisseo and launched last year, has been successful: “Trials have progressed well throughout the year.”
Year ahead
In 2017, Novozymes said it expects to deliver organic sales growth of 2 to 5%, with contributions from all five business areas: “We expect an EBIT margin of around 28%.”
The company reported it is to initiate a new stock buyback program, worth up to DKK 2bn.