Quarterly Report • Aug 10, 2016
Quarterly Report
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In the first half of 2016, sales grew by 3% organically and were flat in DKK compared with the first half of 2015. EBIT was on par, and the EBIT margin was 27.2%, also on par with the first half of 2015. Adjusting for the restructuring costs in Q1, the EBIT margin would have expanded to above 28% and EBIT growth to around 4% compared with the first half of 2015. Net profit grew by 8%. Net investments were DKK 542 million, free cash flow before acquisitions was DKK 1,354 million and ROIC (incl. goodwill) was 25.4%.
The outlook for full-year organic sales growth is adjusted to 2-4%, down from previously 3-5%. The adjustment reflects uncertainty in most of the industries in which Novozymes operates. The outlook for sales in DKK is unchanged. The outlook for each of EBIT, EBIT margin, net profit, net investments, free cash flow and ROIC is also unchanged.
| Realized | 2016 outlook | 2016 outlook | ||
|---|---|---|---|---|
| 1H 2016 | 1H 2015 | August 10* | April 20 | |
| Sales, DKKm | 7,038 | 7,028 | ||
| Sales growth, organic | 3% | 5% | 2-4% | 3-5% |
| Sales growth, DKK | 0% | 15% | 1-3% | 1-3% |
| Gross margin | 57.9% | 57.9% | ||
| EBIT, DKKm | 1,911 | 1,909 | ||
| EBIT growth | 0% | 12% | 1-3% | 1-3% |
| EBIT margin | 27.2% | 27.2% | ~28% | ~28% |
| Net profit, DKKm | 1,496 | 1,389 | ||
| Net profit growth | 8% | 8% | 8-10% | 8-10% |
| Net investments excl. acquisitions, DKKm | 542 | 371 | 1,100-1,200 | 1,100-1,200 |
| Free cash flow before acquisitions, DKKm | 1,354 | 1,616 | 2,400-2,600 | 2,400-2,600 |
| ROIC (including goodwill) | 25.4% | 26.4% | 25-26% | 25-26% |
| Avg. USD/DKK | 668 | 669 | 670 | 661 |
| EPS, DKK | 4.94 | 4.51 | ||
| EPS (diluted), DKK | 4.90 | 4.47 |
* Assumes exchange rates for the company's key currencies remain at the closing rates on August 9 for the rest of 2016.
Novozymes A/S CVR number: 10 00 71 27
August 10, 2016
Interim report for the first half of 2016. Company announcement No. 39
"Our business improved in the second quarter. We delivered strong earnings, and we increased our sales growth although we had aimed higher. We're on track to reach our full-year profit target, but we adjust our sales expectations due to the performance in the second quarter and the uncertainty facing many of our markets. Our pipeline of sustainable biological solutions remains strong, and we'll soon launch exciting, new innovation in BioAg."
Total sales in the first half of the year increased by 3% organically compared with the first half of 2015, and sales in DKK were flat. Sales to Household Care and Technical & Pharma were the most significant contributors to organic sales growth in the period.
Total sales: Organic: +3% DKK: 0%
Sales to the Household Care industry increased by 4% organically and by 3% in DKK compared with the first half of 2015.
Sales in Asia grew due to continued penetration in liquid formulas. Sales in Latin America stabilized and showed slight growth. Sales in North America grew solidly because of a continued demand for premium detergent products, while the European market was slightly positive.
Sales to the Food & Beverages industries increased by 3% organically and by 1% in DKK compared with the first half of 2015. Sales to the starch and brewing industries were the Household Care: Organic: +4% DKK: +3%
Food & Beverages: Organic: +3% DKK: +1%
main contributors to sales growth. Sales to the baking industry also grew moderately, whereas sales for the production of healthy foods declined.
Sales to the Bioenergy industry decreased by 6% organically and by 7% in DKK compared with the first half of 2015. U.S. ethanol production in the first half of 2016 is estimated to have been up by around 3% compared with the first half of 2015.
The margins for ethanol producers remained low in the first half of 2016. Novozymes' customers continued to focus on low-cost solutions, resulting in further negative product mix changes, and price competition in enzymes is tough. The recently launched products Avantec® Amp and Liquozyme® LpH contributed positively to the product mix, but not enough to offset the overall negative impacts from product mix and pricing.
Sales to the Agriculture & Feed industries increased by 1% organically and declined by 6% in DKK compared with the first half of 2015. This development was driven by strong growth in animal feed, although some of the growth was positively impacted by timing.
Sales development in BioAg was negative, primarily due to the changed production and sales pattern to our partner, as well as weaker demand for inoculants for soybeans in the U.S. Poor economics for farmers caused some to forgo the inoculant treatment, resulting in the lower demand.
Novozymes recognized DKK 84 million of deferred income as revenue compared with DKK 149 million in the first half of 2015.
Enzyme sales to the animal feed market grew strongly in the first half, driven by both protein-enhancing solutions and energy uptake products, whereas sales of phytases were flat. There is growing interest from poultry farmers in trialing the new probiotic Alterion®, but sales are still low.
Sales to the Technical & Pharma industries increased by 22% organically and by 18% in DKK compared with the first half of 2015, driven mainly by Pharma. The strong growth was mainly driven by sales of enzymes for pharmaceutical production, shipment of hyaluronic acid in Q1 and continued contributions from the royalty agreement with GSK. Bioenergy: Organic: (6)% DKK: (7)%
Agriculture & Feed: Organic: +1% DKK: (6)%
Technical & Pharma: Organic: +22% DKK: +18%
Europe/MEA: Organic: +9% DKK: +8%
North America: Organic: (7)% DKK: (9)%
Sales grew by 9% organically and by 8% in DKK compared with the first half of 2015. All areas contributed to growth, but the most significant areas were Technical & Pharma and Food & Beverages.
Sales decreased by 7% organically and by 9% in DKK compared with the first half of 2015. Sales to Household Care increased, whereas all other areas decreased.
Sales increased by 8% organically and by 5% in DKK compared with the first half of 2015. All areas contributed to growth, but the most significant areas were Household Care and Food & Beverages. Asia Pacific: Organic: +8% DKK: +5%
Sales increased by 8% organically, but decreased by 1% in DKK compared with the first half of 2015. All areas contributed to growth, but the most significant areas were Food & Beverages and Agriculture & Feed. Latin America: Organic: +8% DKK: (1)%
Total costs excluding net financials, share of losses in associates and tax were DKK 5,161 million, on par with the first half of 2015. Total costs: 0%
Gross profit was on par with the first half of 2015, as was the gross margin at 57.9%. Productivity improvements increased the gross margin, offset by the one-time reorganization costs. The severance pay in Supply Operations was DKK 32 million and, adjusting for this, the gross margin would have been above 58%. Gross margin: 57.9%
Operating costs were DKK 2,200 million and were also on par with the first half of 2015, as were operating costs as a percentage of sales at 31%. Operating costs: 0%
Other operating income totaled DKK 34 million, down from DKK 41 million in the first half of 2015.
Depreciation, writedowns and amortization were DKK 464 million, down 9% from DKK 512 million in the first half of 2015. The lower level was due to the absence of writedowns in 2016.
EBIT was on par at DKK 1,911 million, up from DKK 1,909 million in the first half of 2015. The EBIT margin was 27.2%, in line with the first half of 2015. Adjusting for the one-time reorganization costs, EBIT grew by around 4%, and the EBIT margin was above 28%.
Net financial income was DKK 9 million, an increase of DKK 122 million on the first half of 2015. This was mainly the result of a gain of DKK 33 million on net currency hedging/revaluation compared with a loss of DKK 65 million in the first half of 2015. Furthermore, Novozymes had a share of losses in associates of DKK 14 million, up from a loss of DKK 4 million in the first half of 2015.
Profit before tax was DKK 1,906 million, up 6% from the first half of 2015. The effective tax rate in the first half of 2016 was ~22%, against ~23% in the first half of 2015, benefiting from a lower tax rate in Denmark.
Net profit was DKK 1,496 million, an increase of 8% from DKK 1,389 million in the first half of 2015, primarily driven by the gain from net finance.
Cash flow from operating activities was DKK 1,896 million in the first half of 2016 compared with DKK 1,987 million in the first half of 2015.
Net investments excluding acquisitions totaled DKK 542 million compared with DKK 371 million in the first half of 2015. In the second quarter of 2016, Novozymes paid DKK 226 million for the land for the new Danish innovation campus.
Free cash flow before acquisitions was DKK 1,354 million compared with DKK 1,616 million in the first half of 2015. The decrease is primarily due to the investment in land.
Shareholders' equity at June 30, 2016, was DKK 10,963 million, down 5% from year-end 2015 because of lower comprehensive income and an increased dividend payout. Shareholders' equity was 62% of the balance sheet total, a decrease of 4 percentage points from year-end 2015.
At June 30, 2016, Novozymes had net interest-bearing debt of DKK 1,136 million compared with DKK 437 million at year-end 2015. Net interest-bearing debt-to-EBITDA, based on an extrapolated full-year EBITDA, was 0.2 at June 30, 2016.
Return on invested capital (ROIC), including goodwill, was 25.4%, 1 percentage point lower than for the first half of 2015. The decrease in ROIC was mainly a result of a higher capital base due to higher net working capital, and an increase in property, plant and equipment in the first half of 2016.
At June 30, 2016, the holding of treasury stock was 9.6 million B shares, equivalent to 3.1% of the common stock. In the first half of 2016, Novozymes repurchased 3.4 million shares with a transaction value of DKK 1,020 million under the stock buyback program initiated on February 15, 2016. The full program has a framework of DKK 2,000 million and is expected to be completed by the end of the year.
Depreciation, writedowns and amortization: DKK 464 million
EBIT: DKK 1,911 million EBIT margin: 27.2%
Net financial gain and share of losses in associates: DKK 14 million
Effective tax rate: ~22%
Net profit: DKK 1,496 million
Operating cash flow: DKK 1,896 million
Net investments: DKK 542 million
Free cash flow before acquisitions: DKK 1,354 million
Equity ratio: 62%
Net interest-bearing debt-to-EBITDA: 0.2
ROIC: 25.4%
Treasury stock: 3.1%
Sustainability performance in the first half of 2016 was slightly below target for most parameters. Occupational accidents is an area of concern, and new initiatives with focus on improvements have been undertaken. Water and energy efficiency indicators were below the full-year targets and will be challenging to meet by the end of the year. The CO2 intensity performance was on target.
| 1H 2016 | 2016 target | |
|---|---|---|
| Water efficiency improvement on 2014 | 11% | 12% |
| Energy efficiency improvement on 2014 | 15% | 18% |
| CO2 intensity reduction on 2014 |
20% | 20% |
| Occupational accidents with absence per million working hours |
2.8 | ≤1.7 |
| Rate of absence | 2.0% | ≤2% |
| 2016 outlook | 2016 outlook | |
|---|---|---|
| August 10* | April 20 | |
| Sales growth, organic | 2-4% | 3-5% |
| Sales growth, DKK | 1-3% | 1-3% |
| EBIT growth | 1-3% | 1-3% |
| EBIT margin | ~28% | ~28% |
| Net profit growth | 8-10% | 8-10% |
| Net investments excl. acquisitions, DKKm | 1,100-1,200 | 1,100-1,200 |
| Free cash flow before acquisitions, DKKm | 2,400-2,600 | 2,400-2,600 |
| ROIC (including goodwill) | 25-26% | 25-26% |
| Avg. USD/DKK | 670 | 661 |
* Assumes that exchange rates for the company's key currencies remain at the closing rates on August 9 for the rest of 2016.
The organic sales outlook has been adjusted to 2-4% from previously 3-5%. This change is a reflection of the sales performance in Q2 and also the outlook for the rest of the year. Many of the industries in which Novozymes operates face uncertainties. The sales outlook in DKK for 2016 is unchanged. Novozymes still expects all areas except Bioenergy to deliver organic sales growth. However, the expectations for Agriculture & Feed have been reduced, primarily due to the performance in BioAg in the first half of 2016. Novozymes expects that growth will be skewed toward the end of the year due to the change in production pattern and seasonality in BioAg.
Household Care sales growth is expected to improve moderately compared with the 1% organic sales growth realized in 2015. Sales growth is expected to be driven by higher enzyme inclusion in liquid detergents across tiers and markets.
Food & Beverages sales growth is expected to be driven by a continued good performance by all major segments – baking, brewing and starch. Organic growth for the full year is expected to be in line with the company sales guidance.
Bioenergy sales are now expected to contract organically more than previously expected in 2016, as the competitive market for enzymes is expected to continue, driving prices down and offering lower in-use cost for ethanol producers. U.S. ethanol production in 2016 is expected to increase by around 2% compared with 2015. Novozymes expects to launch more innovation in the U.S. conventional ethanol market in the second half of the year.
Agriculture & Feed sales are now expected to deliver moderate sales growth, whereas Novozymes previously expected Agriculture & Feed growth to be solid. Both areas are expected to contribute positively. Expectations for the upcoming launch of the new corn inoculant are unchanged, and the intention is still to start selling the product to our partner this year. Novozymes now expects to recognize less than DKK 200 million of the deferred BioAg income as revenue in 2016, down from DKK ~210 million. Deferred income does not impact the calculation of organic sales growth rates; it impacts realized sales growth in DKK and has no cash flow impact.
Organic sales growth: 2-4% DKK sales growth: 1-3%
Technical & Pharma sales are expected to grow, primarily driven by the realized increase in sales to the pharmaceutical industries in the first half. Sales to the technical industries are also expected to increase.
The outlook for EBIT growth and EBIT margin is unchanged. EBIT growth is expected to be 1-3%. Novozymes expects to maintain the high level of profitability from 2015 and an EBIT margin of ~28%.
The effective tax rate is expected to be ~22%. The expectation for net profit growth is still 8-10%, driven by growth in EBIT and an expectation of lower net financial costs compared with 2015.
Net investments are expected to be DKK 1,100-1,200 million. Besides maintenance, most CAPEX will be spent on production capacity expansions and the new innovation campus in Lyngby, Denmark.
Free cash flow before acquisitions is expected to be DKK 2,400-2,600 million.
Return on invested capital including goodwill is expected at 25-26%.
EBIT growth: 1-3%
EBIT margin: ~28%
Effective tax rate: ~22% Net profit growth: 8-10%
Net investments: DKK 1,100-1,200 million
Free cash flow before acq.: DKK 2,400-2,600 million
ROIC: 25-26%
From a currency perspective, 2016 EBIT is most exposed to fluctuations in the USD and EUR.
Other things being equal, a +5% movement in USD/DKK is expected to have an annual positive impact on EBIT of DKK 90-110 million, and vice versa.
Other things being equal, a +5% movement in EUR/DKK is expected to have an annual positive impact on EBIT of DKK 150-200 million, and vice versa.
| 2016 | 2017 | |||||||
|---|---|---|---|---|---|---|---|---|
| Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | |
| USD | ~100% hedged; ~90% via forward contracts at 6.75 USD/DKK and ~10% via options at 6.58 |
~100% hedged via forward contracts at 6.65 USD/DKK |
- | - | ||||
| EUR | ~40% hedged via forward contracts at 7.39 EUR/DKK |
- | - | - | - | - | - | - |
The outlook is based on exchange rates for the company's key currencies remaining at the closing rates on August 9, 2016, for the full year.
| (DKK) | EUR | USD | BRL | CNY |
|---|---|---|---|---|
| Average exchange rate 2015 | 746 | 673 | 205 | 107 |
| Average exchange rate 1H 2015 | 746 | 669 | 226 | 108 |
| Average exchange rate 1H 2016 | 745 | 668 | 181 | 102 |
| Closing rate August 9, 2016 | 744 | 671 | 212 | 101 |
| Estimated average exchange rate 2016* | 744 | 670 | 196 | 101 |
| Change in estimated exchange rate 2016 compared with average exchange rate 2015 |
0% | 0% | -4% | -5% |
* Estimated average exchange rate is calculated as the average exchange rate Jan-Jun 2016 combined with the closing rate on August 9 for the rest of 2016.
The Interim report for the first half of 2016 has been prepared in accordance with IAS 34 and the additional Danish regulations for the presentation of quarterly interim reports by listed companies. The Interim report for the first half of 2016 follows the same accounting policies as the annual report for 2015, except for all new, amended or revised accounting standards and interpretations (IFRSs) endorsed by the EU effective for the accounting period beginning on January 1, 2016. These IFRSs have not had any impact on the Group's interim report.
This company announcement and its related comments contain forward-looking statements, including statements about future events, future financial performance, plans, strategies and expectations. Forward-looking statements are associated with words such as, but not limited to, "believe," "anticipate," "expect," "estimate," "intend," "plan," "project," "could," "may," "might" and other words of similar meaning. Forwardlooking statements are by their very nature associated with risks and uncertainties that may cause actual results to differ materially from expectations, both positively and negatively. The risks and uncertainties may, among other things, include unexpected developments in i) the ability to develop and market new products; ii) the demand for Novozymes' products, market-driven price decreases, industry consolidation, and launches of competing products or disruptive technologies in Novozymes' core areas; iii) the ability to protect and enforce the company's intellectual property rights; iv) significant litigation or breaches of contract; v) the materialization of the company's growth platforms, notably the opportunity for marketing biomass conversion technologies or the development of microbial solutions for broad-acre crops; vi) political conditions, such as acceptance of enzymes produced by genetically modified organisms; vii) global economic and capital market conditions, including, but not limited to, currency exchange rates (USD/DKK and EUR/DKK in particular, but not exclusively), interest rates and inflation; viii) significant price decreases for inputs and materials that compete with Novozymes' biological solutions. The company undertakes no obligation to update any forward-looking statements as a result of future developments or new information.
| Investor Relations: | ||
|---|---|---|
| Martin Riise | +45 3077 0738 | [email protected] |
| Klaus Sindahl | +45 5363 0134 | [email protected] |
| Nicolai Agerskov Kobborg | +45 3077 1348 | [email protected] |
| Press and media: | ||
| Rene Tronborg (DK) | +45 3077 2274 | [email protected] |
| Frederik Bjoerndal (Europe) | +44 (0) 7976 138 265 | [email protected] |
| Johan Melchior | +45 3077 0690 | [email protected] |
The Board of Directors and the Executive Leadership Team have considered and approved the interim report for Novozymes A/S for the first half of 2016. The interim report has not been audited or reviewed by the company's independent auditor.
The interim report for the first half of 2016 has been prepared in accordance with IAS 34 and the additional Danish regulations for the presentation of quarterly interim reports by listed companies.
In our opinion the accounting policies used are appropriate, the Group's internal controls relevant to preparation and presentation of an interim report are adequate, and the interim report gives a true and fair view of the Group's assets, liabilities, net profit and financial position at June 30, 2016, and of the results of the Group's operations and cash flow for the first half of 2016.
We further consider that the Management review in the preceding pages gives a true and fair view of the development in the Group's activities and business, the profit for the period and the Group's financial position as a whole, and a description of the most significant risks and uncertainties to which the Group is subject.
Bagsvaerd, August 10, 2016
Peder Holk Nielsen President & CEO
Benny D. Loft CFO
Thomas Videbæk COO
Henrik Gürtler Chairman Jørgen Buhl Rasmussen Vice Chairman Heinz-Jürgen Bertram Lars Green Lena Bech Holskov Anders Hentze Knudsen Lars Bo Køppler Agnete Raaschou-Nielsen Mathias Uhlén
| Appendix 1 | Main items and key figures | 13 |
|---|---|---|
| 1.1 Key figures | 13 | |
| 1.2 Income statement | 14 | |
| 1.3 Statement of comprehensive income | 15 | |
| Appendix 2 | Distribution of revenue | 16 |
| 2.1 By industry | 16 | |
| 2.2 By geography | 16 | |
| Appendix 3 | Statement of cash flows | 17 |
| 3.1 Statement of cash flows | 17 | |
| Appendix 4 | Balance sheet and Statement of shareholders' equity | 18 |
| 4.1 Balance sheet, Assets | 18 | |
| 4.2 Balance sheet, Liabilities | 19 | |
| 4.3 Statement of shareholders' equity | 20 | |
| Appendix 5 | Miscellaneous | 21 |
| 5.1 Product launches in 2016 | 21 | |
| 5.2 Company announcements for the fiscal year 2016 | 21 | |
| 5.3 Financial calendar | 21 |
Novozymes A/S CVR number: 10 00 71 27
| (DKK million) | 1H 2016 | 1H 2015 | % change | Q2 2016 | Q2 2015 | % change |
|---|---|---|---|---|---|---|
| Revenue | 7,038 | 7,028 | 0% | 3,429 | 3,449 | (1)% |
| Gross profit | 4,077 | 4,069 | 0% | 1,998 | 2,005 | (0)% |
| Gross margin | 57.9% | 57.9% | 58.3% | 58.1% | ||
| EBITDA | 2,375 | 2,421 | (2)% | 1,194 | 1,215 | (2)% |
| EBITDA margin | 33.7% | 34.4% | 34.8% | 35.2% | ||
| Operating profit / EBIT | 1,911 | 1,909 | 0% | 961 | 930 | 3% |
| EBIT margin | 27.2% | 27.2% | 28.0% | 27.0% | ||
| Share of losses in associates | (14) | (4) | (4) | (2) | ||
| Net financials | 9 | (113) | (6) | (48) | ||
| Profit before tax | 1,906 | 1,792 | 6% | 951 | 880 | 8% |
| Tax | (410) | (403) | 2% | (200) | (198) | 1% |
| Net profit | 1,496 | 1,389 | 8% | 751 | 682 | 10% |
| Earnings per DKK 2 share | 4.94 | 4.51 | 10% | 2.49 | 2.22 | 12% |
| Earnings per DKK 2 share (diluted) |
4.90 | 4.47 | 10% | 2.46 | 2.20 | 12% |
| Net investments | 542 | 371 | ||||
| Free cash flow before acq. and purchase of financial assets |
1,354 | 1,616 | ||||
| Return on invested capital (ROIC), incl. goodwill |
25.4% | 26.4% | ||||
| Net interest-bearing debt | 1,136 | (62) | ||||
| Equity ratio | 61.7% | 61.1% | ||||
| Return on equity | 26.5% | 24.7% | ||||
| Debt-to-equity | 10.4% | (0.6)% | ||||
| NIBD/EBITDA | 0.2 | 0.0 | ||||
| Number of employees | 6,385 | 6,536 | ||||
| Novozymes' stock | Jun. 30, 2016 |
Jun. 30, 2015 |
||||
| Common stock (million) | 310.0 | 313.0 | ||||
| Net worth per share (DKK) | 35.32 | 35.73 | ||||
| Denomination of share (DKK) | 2.00 | 2.00 |
Nominal value of common stock (DKK million) 620.0 626.0 Treasury stock (million) 9.6 6.9
| (DKK million) | 1H 2016 | 1H 2015 | Q2 2016 | Q2 2015 |
|---|---|---|---|---|
| Revenue | 7,038 | 7,028 | 3,429 | 3,449 |
| Cost of goods sold | (2,961) | (2,959) | (1,431) | (1,444) |
| Gross profit | 4,077 | 4,069 | 1,998 | 2,005 |
| Sales and distribution costs | (810) | (788) | (392) | (380) |
| Research and development costs | (958) | (974) | (456) | (507) |
| Administrative costs | (432) | (439) | (214) | (213) |
| Other operating income, net | 34 | 41 | 25 | 25 |
| Operating profit / EBIT | 1,911 | 1,909 | 961 | 930 |
| Share of losses in associates | (14) | (4) | (4) | (2) |
| Net financials | 9 | (113) | (6) | (48) |
| Profit before tax | 1,906 | 1,792 | 951 | 880 |
| Tax | (410) | (403) | (200) | (198) |
| Net profit | 1,496 | 1,389 | 751 | 682 |
| Attributable to | ||||
| Shareholders in Novozymes A/S | 1,494 | 1,388 | 750 | 682 |
| Non-controlling interests | 2 | 1 | 1 | - |
| Specification of net financials | ||||
| Foreign exchange gain/(loss), net | 33 | (65) | 17 | (28) |
| Interest income/(costs) | (13) | (21) | (8) | (10) |
| Other financial items | (11) | (27) | (15) | (10) |
| Net financials | 9 | (113) | (6) | (48) |
| Earnings per DKK 2 share | 4.94 | 4.51 | 2.49 | 2.22 |
| Average no. of A/B shares outstanding (million) | 302.3 | 307.6 | 301.4 | 306.9 |
| Earnings per DKK 2 share (diluted) | 4.90 | 4.47 | 2.46 | 2.20 |
| Average no. of A/B shares, diluted (million) | 305.2 | 310.7 | 304.4 | 310.5 |
| (DKK million) | 1H 2016 | 1H 2015 | Q2 2016 | Q2 2015 |
|---|---|---|---|---|
| Net profit | 1,496 | 1,389 | 751 | 682 |
| Currency translation of subsidiaries and non-controlling interests |
(154) | 236 | 169 | (311) |
| Tax on currency translation of subsidiaries | 2 | 21 | (8) | 1 |
| Currency translation adjustments | (152) | 257 | 161 | (310) |
| Cash flow hedges | ||||
| Fair value adjustments | 29 | 26 | (16) | 91 |
| Tax on fair value adjustments | (7) | (5) | 2 | (33) |
| Fair value adjustments reclassified to Financial income/costs | (26) | (31) | (33) | - |
| Tax on reclassified fair value adjustments | 6 | 7 | 8 | 14 |
| Cash flow hedges | 2 | (3) | (39) | 72 |
| Other comprehensive income | (150) | 254 | 122 | (238) |
| Comprehensive income | 1,346 | 1,643 | 873 | 444 |
| Attributable to | ||||
| Shareholders in Novozymes A/S | 1,345 | 1,641 | 873 | 445 |
| Non-controlling interests | 1 | 2 | - | (1) |
| 2.1 By industry | ||||||
|---|---|---|---|---|---|---|
| 2016 | 2015 | % change | % currency | % M&A | % organic | |
| (DKK million) | 1H | 1H | impact | impact | growth | |
| Household Care | 2,330 | 2,265 | 3 | (1) | 0 | 4 |
| Food & Bev erages |
1,856 | 1,846 | 1 | (2) | 0 | 3 |
| Bioenergy | 1,196 | 1,288 | (7) | (1) | 0 | (6) |
| Agriculture & Feed | 1,078 | 1,141 | (6) | (8) * | 1 | 1 |
| Technical & Pharma | 578 | 488 | 18 | (4) | 0 | 22 |
| Sales | 7,038 | 7,028 | 0 | (3) | 0 | 3 |
| Sales | 7,038 | 7,028 | 0 | (3) | 0 | 3 |
|---|---|---|---|---|---|---|
| * The effect from changes in deferred income is included in the currency impact. Realized currency impact was -1.7%. | ||||||
| 2016 | 2015 | % change | % currency | % M&A | % organic | |
| (DKK million) | Q 2 |
Q 2 |
impact | impact | growth | |
| Household Care | 1,154 | 1,138 | 1 | (3) | 0 | 4 |
| Food & Bev erages |
930 | 925 | 1 | (3) | 0 | 4 |
| Bioenergy | 570 | 628 | (9) | (3) | 0 | (6) |
| Agriculture & Feed | 496 | 492 | 1 | (14) * | 2 | 13 |
| Technical & Pharma | 279 | 266 | 5 | (4) | 0 | 9 |
| Sales | 3,429 | 3,449 | (1) | (5) | 0 | 4 |
| Sales | 3,429 | 3,449 | (1) | (5) | 0 | 4 | |
|---|---|---|---|---|---|---|---|
| * The effect from changes in deferred income is included in the currency impact. Realized currency impact was -4.3%. | |||||||
| 2016 | 2015 | % change | |||||
| (DKK million) | Q 2 |
Q 1 |
Q 4 |
Q 3 |
Q 2 |
Q 1 |
Q2/Q2 |
| Household Care | 1,154 | 1,176 | 1,148 | 1,219 | 1,138 | 1,127 | 1 |
| Food & Bev erages |
930 | 926 | 900 | 969 | 925 | 921 | 1 |
| Bioenergy | 570 | 626 | 616 | 639 | 628 | 660 | (9) |
| Agriculture & Feed | 496 | 582 | 524 | 465 | 492 | 649 | 1 |
| Technical & Pharma | 279 | 299 | 264 | 230 | 266 | 222 | 5 |
| Sales | 3,429 | 3,609 | 3,452 | 3,522 | 3,449 | 3,579 | (1) |
| 2016 | 2015 | % change | % currency | % M&A | % organic | |
|---|---|---|---|---|---|---|
| (DKK million) | 1H | 1H | impact | impact | growth | |
| Europe, Middle East & Africa | 2,586 | 2,400 | 8 | (1) | 0 | 9 |
| North America | 2,416 | 2,654 | (9) | (2) | 0 | (7) |
| Asia Pacific | 1,387 | 1,320 | 5 | (3) | 0 | 8 |
| Latin America | 649 | 654 | (1) | (9) | 0 | 8 |
| Sales | 7,038 | 7,028 | 0 | (3) | 0 | 3 |
| Sales | 7,038 | 7,028 | 0 | (3) | 0 | 3 |
|---|---|---|---|---|---|---|
| 2016 | 2015 | % change | % currency | % M&A | % organic | |
| (DKK million) | Q 2 |
Q 2 |
impact | impact | growth | |
| Europe, Middle East & Africa | 1,246 | 1,186 | 5 | (2) | 0 | 7 |
| North America | 1,141 | 1,291 | (12) | (5) | 1 | (8) |
| Asia Pacific | 695 | 662 | 5 | (5) | 0 | 10 |
| Latin America | 347 | 310 | 12 | (9) | 0 | 21 |
| Sales | 3,429 | 3,449 | (1) | (5) | 0 | 4 |
| Sales | 3,429 | 3,449 | (1) | (5) | 0 | 4 | |
|---|---|---|---|---|---|---|---|
| The effect from changes in deferred income is included in the currency impact. | |||||||
| 2016 | 2015 | % change | |||||
| (DKK million) | Q 2 |
Q 1 |
Q 4 |
Q 3 |
Q 2 |
Q 1 |
Q2/Q2 |
| Europe, Middle East & Africa | 1,246 | 1,340 | 1,162 | 1,300 | 1,186 | 1,214 | 5 |
| North America | 1,141 | 1,275 | 1,241 | 1,118 | 1,291 | 1,363 | (12) |
| Asia Pacific | 695 | 692 | 679 | 669 | 662 | 658 | 5 |
| Latin America | 347 | 302 | 370 | 435 | 310 | 344 | 12 |
| Sales | 3,429 | 3,609 | 3,452 | 3,522 | 3,449 | 3,579 | (1) |
| Net profit 1,496 1,389 Reversals of non-cash items 937 795 Tax paid (295) (265) Interest received 2 3 Interest paid (15) (26) Cash flow before change in working capital 2,125 1,896 Change in working capital (Increase)/decrease in receivables 103 (129) (Increase)/decrease in inventories (74) (79) Increase/(decrease) in trade payables and other liabilities (266) 284 Increase/(decrease) in exchange gain/loss 8 15 Cash flow from operating activities 1,896 1,987 Investments Purchase of intangible assets (59) (7) Sale of property, plant and equipment 17 6 Purchase of property, plant and equipment (500) (370) Cash flow from investing activities before acquisitions (542) (371) and purchase of financial assets Free cash flow before acquisitions and purchase of financial assets 1,354 1,616 Business acquisitions and purchase of financial assets - (35) Free cash flow 1,354 1,581 Financing Borrowings 1,196 74 Repayments of borrowings (692) (406) Hedging of net investments - (398) Purchase of treasury stock (1,020) (970) Sale of treasury stock 26 66 Dividend paid (1,061) (925) Cash flow from financing activities (1,551) (2,559) Net cash flow (197) (978) Unrealized gain/(loss) on currencies and financial assets, (3) 1 included in cash and cash equivalents Change in cash and cash equivalents, net (200) (977) Cash and cash equivalents, net, at January 1 796 2,453 Cash and cash equivalents, net, at June 30 596 1,476 |
(DKK million) | 1H 2016 | 1H 2015 |
|---|---|---|---|
Undrawn committed credit facilities at June 30, 2016, were DKK 3,500 million.
| (DKK million) | Jun. 30, 2016 |
Jun. 30, 2015 |
Dec. 31, 2015 |
|---|---|---|---|
| Completed IT development projects | 113 | 90 | 87 |
| Acquired patents, licenses and know-how | 1,324 | 1,657 | 1,425 |
| Goodwill | 1,122 | 1,144 | 1,140 |
| IT development projects in progress | 20 | 4 | 24 |
| Intangible assets | 2,579 | 2,895 | 2,676 |
| Land and buildings | 2,831 | 2,639 | 2,665 |
| Plant and machinery | 4,096 | 4,065 | 4,237 |
| Other equipment | 575 | 581 | 611 |
| Assets under construction and prepayments | 705 | 602 | 649 |
| Property, plant and equipment | 8,207 | 7,887 | 8,162 |
| Deferred tax assets | 462 | 485 | 459 |
| Other financial assets (non-interest-bearing) | 139 | 49 | 139 |
| Investment in associates | 76 | 21 | 91 |
| Other receivables | 76 | 122 | 116 |
| Non-current assets | 11,539 | 11,459 | 11,643 |
| Raw materials and consumables | 325 | 345 | 339 |
| Goods in progress | 615 | 550 | 578 |
| Finished goods | 1,401 | 1,452 | 1,364 |
| Inventories | 2,341 | 2,347 | 2,281 |
| Trade receivables | 2,471 | 2,383 | 2,558 |
| Tax receivables | 372 | 216 | 156 |
| Other receivables | 311 | 357 | 294 |
| Receivables | 3,154 | 2,956 | 3,008 |
| Other financial assets (non-interest-bearing) | 12 | 42 | 20 |
| Cash and cash equivalents | 711 | 1,522 | 839 |
| Current assets | 6,218 | 6,867 | 6,148 |
| Assets | 17,757 | 18,326 | 17,791 |
| (DKK million) | Jun. 30, 2016 |
Jun. 30, 2015 |
Dec. 31, 2015 |
|---|---|---|---|
| Common stock | 620 | 626 | 626 |
| Currency translation adjustments | 387 | 687 | 538 |
| Cash flow hedges | 22 | (13) | 20 |
| Retained earnings | 9,920 | 9,883 | 10,396 |
| Equity attributable to shareholders in Novozymes A/S | 10,949 | 11,183 | 11,580 |
| Non-controlling interests | 14 | 13 | 13 |
| Shareholders' equity | 10,963 | 11,196 | 11,593 |
| Deferred tax liabilities | 733 | 731 | 715 |
| Provisions | 188 | 180 | 186 |
| Deferred income | 678 | 811 | 769 |
| Other liabilities | 0 | 17 | 12 |
| Other financial liabilities (interest-bearing) | 1,717 | 1,226 | 1,202 |
| Other financial liabilities (non-interest-bearing) | 21 | 15 | 14 |
| Non-current liabilities | 3,337 | 2,980 | 2,898 |
| Other financial liabilities (interest-bearing) | 130 | 234 | 74 |
| Other financial liabilities (non-interest-bearing) | 27 | 84 | 42 |
| Provisions | 68 | 123 | 55 |
| Trade payables | 1,060 | 1,438 | 1,189 |
| Deferred income | 226 | 241 | 223 |
| Tax payables | 662 | 596 | 369 |
| Other payables | 1,284 | 1,434 | 1,348 |
| Current liabilities | 3,457 | 4,150 | 3,300 |
| Liabilities | 6,794 | 7,130 | 6,198 |
| Liabilities and shareholders' equity | 17,757 | 18,326 | 17,791 |
| Attributable to shareholders in Novozymes A/S | |||||||
|---|---|---|---|---|---|---|---|
| Currency | Non | ||||||
| Common | translation | Cash flow | Retained | controlling | |||
| (DKK million) | stock | adjustments | hedges | earnings | Total | interests | Total |
| Shareholders' equity at January 1, 2016 | 626 | 538 | 20 | 10,396 | 11,580 | 13 | 11,593 |
| Net profit for the period | 1,494 | 1,494 | 2 | 1,496 | |||
| Other comprehensive income for the period | (151) | 2 | (149) | (1) | (150) | ||
| Total comprehensive income for the period | (151) | 2 | 1,494 | 1,345 | 1 | 1,346 | |
| Purchase of treasury stock | (1,020) | (1,020) | (1,020) | ||||
| Sale of treasury stock | 26 | 26 | 26 | ||||
| Write-down of common stock | (6) | 6 | - | - | |||
| Dividend | (1,061) | (1,061) | - | (1,061) | |||
| Stock-based payment | 84 | 84 | 84 | ||||
| Tax related to equity items | (5) | (5) | (5) | ||||
| Changes in shareholders' equity | (6) | (151) | 2 | (476) | (631) | 1 | (630) |
| Shareholders' equity at June 30, 2016 | 620 | 387 | 22 | 9,920 | 10,949 | 14 | 10,963 |
| Shareholders' equity at January 1, 2015 | 639 | 431 | (10) | 10,209 | 11,269 | 11 | 11,280 |
| Net profit for the period | 1,388 | 1,388 | 1 | 1,389 | |||
| Other comprehensive income for the period | 256 | (3) | 253 | 1 | 254 | ||
| Total comprehensive income for the period | 256 | (3) | 1,388 | 1,641 | 2 | 1,643 | |
| Purchase of treasury stock | (970) | (970) | (970) | ||||
| Sale of treasury stock | 66 | 66 | 66 | ||||
| Write-down of common stock | (13) | 13 | - | - | |||
| Dividend | (925) | (925) | - | (925) | |||
| Stock-based payment | 52 | 52 | 52 | ||||
| Tax related to equity items | 50 | 50 | 50 | ||||
| Changes in shareholders' equity | (13) | 256 | (3) | (326) | (86) | 2 | (84) |
| Shareholders' equity at June 30, 2015 | 626 | 687 | (13) | 9,883 | 11,183 | 13 | 11,196 |
| Q1 2016 | Alterion® – a probiotic solution for poultry that promotes more sustainable animal farming by improving feed conversion and gut health as well as helping to reduce the use of antibiotic growth promoters in poultry farms |
|---|---|
| Q1 2016 | Saphera® – the only lactase on the market that offers better control of lactose elimination, better sweetness stability during shelf life of sugared dairy products and improved suitability in fermented dairy products such as yoghurt |
| Q2 2016 | Amplify Prime® – best-in-class liquid amylase optimized for short wash cycles and in-depth cleaning at low temperatures |
| Q2 2016 | Progress Uno® – a protease for tough conditions that delivers consistent wash performance even in water-rich concentrations, and reduces or eliminates the need for stabilizers as well as increasing the formulation flexibility |
(Excluding management's trading in Novozymes' stock, major shareholder announcements and stock buyback status)
| January 19, 2016 | Group financial statement for 2015 |
|---|---|
| January 29, 2016 | Initiation of stock buyback program 2016 |
| February 8, 2016 | Changes in organizational structure and Executive Leadership Team |
| February 12, 2016 | Candidate for the Board of Directors will not seek election |
| February 24, 2016 | Novozymes A/S Annual Shareholders' Meeting 2016 |
| March 30, 2016 | Reduction of share capital |
| April 20, 2016 | Interim report for the first 3 months of 2016 |
| August 10, 2016 | Interim report for the first half of 2016 |
| October 26, 2016 | Interim report for the first 9 months of 2016 |
|---|---|
| January 18, 2017 | Group financial statement for 2016 |
| February 22, 2017 | Novozymes A/S Annual Shareholders' Meeting 2017 |
Novozymes is the world leader in biological solutions. Together with customers, partners and the global community, we improve industrial performance while preserving the planet's resources and helping build better lives. As the world's largest provider of enzyme and microbial technologies, our bioinnovation enables higher agricultural yields, low-temperature washing, energyefficient production, renewable fuel and many other benefits that we rely on today and in the future. We call it Rethink Tomorrow. www.novozymes.com
Novozymes A/S Krogshoejvej 36
2880 Bagsvaerd Denmark
Phone: +45 4446 0000
Novozymes A/S CVR number: 10 00 71 27, 201600502-01
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