Novonesis AS — Earnings Release 2016

Oct 26, 2016

Net profit growth of 5%; 2016 organic sales guidance around 2%; earnings
outlook adjusted within range

In the first nine months of 2016, sales grew by 1% organically and declined by
1% in DKK compared with the first nine months of 2015. Sales outside North
America increased by 5% organically, while sales in North America declined by
6% organically due to Bioenergy, Food & Beverages, and BioAg. As communicated
in the half-year report, Novozymes expected growth in the second half to be
skewed toward the end of the year. Sales in Q3 were lower than expected,
declining by 3% organically, but Novozymes still expects moderate organic
growth in the final quarter of the year.

The EBIT margin was on par, and EBIT declined by 1% compared with the first
nine months of 2015. Adjusting for the restructuring costs in Q1, the EBIT
margin would have expanded to above 28% and EBIT growth to above 1% compared
with the first nine months of 2015.

The outlook for full-year organic sales growth is adjusted to around 2%, from
previously 2-4%. The adjustment reflects the sales performance in the first
nine months, and continued challenges in Household Care, Food & Beverages and
agricultural markets. The outlook for sales growth in DKK is reduced to 0-1%,
from previously 1-3%, due to the adjusted organic sales guidance. The outlooks
for EBIT growth and net profit growth are also adjusted within the previously
guided range.

Peder Holk Nielsen, President & CEO of Novozymes, comments: “Our new
innovations have had a slower pick-up than anticipated, so our sales growth is
weaker than we had expected at the beginning of the year. In spite of this, we
expect to deliver 8-9% net profit growth. We will push through this period of
low growth by shifting more resources to customer engagement and accelerating
innovation while reducing our cost level elsewhere. Our pipeline of sustainable
biological solutions is strong, and we’re launching a number of promising new
products in the coming quarters.”

Read the full announcement in PDF