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Novonesis AS Interim / Quarterly Report 2016
3377_rns_2016-04-20_0ece8955-0675-4f5c-8c14-104593962c5c.pdf
Interim / Quarterly Report
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Q1 sales growth as expected; 2016 full-year organic sales growth and net profit outlook maintained
In the first quarter of 2016, sales grew by 2% organically and by 1% in DKK compared with the first quarter of 2015. EBIT contracted by 3%, and the EBIT margin was 26.3%, a contraction of ~1 percentage point compared with the first quarter of 2015. Adjusting for the extraordinary costs related to the reorganization, the EBIT margin would have expanded to around 28%, and EBIT growth would have been around 4% compared with the first quarter of 2015. Net profit grew by 5%. Net investments were DKK 139 million, free cash flow before acquisitions was DKK 637 million and ROIC (incl. goodwill) was 25.0%.
The outlook for full-year organic sales growth and for net profit growth is unchanged. The outlook for sales and EBIT growth in DKK is adjusted from 3-5% to 1-3% to account for the lower currency exchange rates. The outlook for net investments, free cash flow and ROIC are all unchanged.
| Realized | 2016 outlook | 2016 outlook | ||
|---|---|---|---|---|
| Q1 2016 | Q1 2015 | April 20* | January 19 | |
| Sales, DKKm | 3,609 | 3,579 | ||
| Sales growth, organic | 2% | 8% | 3-5% | 3-5% |
| Sales growth, DKK | 1% | 18% | 1-3% | 3-5% |
| Gross margin | 57.6% | 57.7% | ||
| EBIT, DKKm | 950 | 979 | ||
| EBIT growth | -3% | 6% | 1-3% | 3-5% |
| EBIT margin | 26.3% | 27.4% | -28% | -28% |
| Net profit, DKKm | 745 | 707 | ||
| Net profit growth | 5% | 2% | 8-10% | 8-10% |
| Net investments excl. acquisitions, DKKm | 139 | 152 | 1,100-1,200 | 1,100-1,200 |
| Free cash flow before acquisitions, DKKm | 637 | 610 | 2,400-2,600 | 2,400-2,600 |
| ROIC (including goodwill) | 25.0% | 26.6% | 25-26% | 25-26% |
| Avg. USD/DKK | 677 | 662 | 661 | 685 |
| EPS, DKK | 2.45 | 2.29 | ||
| EPS (diluted), DKK | 2.43 | 2.27 |
- Assumes exchange rates for the company's key currencies remain at the closing rates on April 19 for the rest of 2016.
April 20, 2016
Interim report for the first three months of 2016.
Company announcement No. 20
Peder Holk Nielsen, President & CEO of Novozymes, comments:
"I'm very satisfied with our sales growth in the first quarter of 2016, given the tough comparables from the first quarter of last year. We expect that organic sales growth in the second quarter will be stronger than in the first quarter. Our profitability is also in line with our expectations, so we're on track to deliver on the targets that we set in January."
Novozymes A/S CVR number: 10 00 71 27
Rethink Tomorrow
novozymes
First three months of 2016. Company announcement No. 20
2/21
Sales and markets
Total sales in the first quarter increased by 2% organically, compared with the first quarter of 2015, and sales in DKK increased by 1%. Sales to Household Care and Technical & Pharma were the most significant contributors to organic sales growth in the period.
Total sales:
Organic: +2%
DKK: +1%
Sales in DKK million and growth rates, Q1 2016
Distribution of sales, Q1 2016
Household Care
Sales to the Household Care industry increased by 5% organically and by 4% in DKK compared with the first quarter of 2015.
Sales in certain emerging markets, such as China and India, grew strongly because of increasing penetration in liquid formulas, whereas sales in Latin America were down due to the difficult macrosituation in the region. Sales in North America grew solidly because of an increase in demand for premium detergent products, and the European market was slightly positive.
Household Care:
Organic: +5%
DKK: +4%
Rethink Tomorrow
novozymes
First three months of 2016. Company announcement No. 20
3/21
Food & Beverages
Sales to the Food & Beverages industries increased by 2% organically and by 1% in DKK compared with the first quarter of 2015. Sales to the baking and brewing industries were the main contributors to sales growth. Sales to the starch industry also grew slightly, whereas sales for the production of healthy foods were lower because of timing of sales for infant formula products.
Food & Beverages:
Organic: +2%
DKK: +1%
Bioenergy
Sales to the Bioenergy industry decreased by 6% organically and by 5% in DKK compared with the first quarter of 2015. U.S. ethanol production is estimated to have increased by around 4% in the first quarter of 2016.
Bioenergy:
Organic: (6)%
DKK: (5%)
Novozymes' sales decreased because of customers' continued focus on low-cost solutions. This is due to the low-margin environment, which has persisted for close to a full year. Novozymes launched Avantec® Amp and Liquozyme® LpH in Q4 and Q3 2015 respectively. Both products have achieved roughly the expected market penetration, and trials of both are still ongoing. Exports of bioethanol from the U.S. continue to support the industry, while U.S. demand for bioethanol in gasoline remains at around 10% of gasoline demand.
Agriculture & Feed
Sales to the Agriculture & Feed industries decreased by 8% organically and by 10% in DKK compared with the first quarter of 2015. The decrease was primarily driven by BioAg and offset somewhat by a flat development in animal feed.
Agriculture & Feed:
Organic: (8)%
DKK: (10%)
BioAg sales declined in the first quarter of 2016, as sales for the North American season had already started in the fourth quarter of 2015; the comparison from the first quarter of 2015 was also very high. The penetration of BioAg products, especially in North America, is increasing at a steady pace. Novozymes recognized DKK 52 million of deferred income as revenue, compared with DKK 81 million in the first quarter of 2015.
Enzyme sales to the animal feed market were flat in the first quarter, with sales of protein-enhancing solutions up and sales of phytases down. Sales of Alterion®, the recently launched probiotic product for poultry, have started and are making a limited contribution to sales as a whole.
Technical & Pharma
Sales to the Technical & Pharma industries increased by 37% organically and by 35% in DKK compared with the first quarter of 2015, driven mainly by Pharma. The strong growth was mainly driven by timing of sales, final shipment of hyaluronic acid, and contributions from the royalty agreement with GSK. Sales to the textile and leather industries were also higher compared with the first quarter of 2015.
Technical & Pharma:
Organic: +37%
DKK: +35%
Rethink Tomorrow
novozymes
First three months of 2016. Company announcement No. 20
4/21
Sales by geography, Q1 2016
Europe, the Middle East & Africa
Sales grew by 11% organically and by 10% in DKK compared with the first quarter of 2015. All areas contributed to growth, but the most significant areas were Technical & Pharma and Agriculture & Feed.
Europe/MEA:
Organic: +11%
DKK: +10%
North America
Sales decreased by 7% organically and by 6% in DKK compared with the first quarter of 2015. Sales to Household Care and Technical & Pharma were the main drivers of growth, whereas sales to Agriculture & Feed and Bioenergy decreased.
North America:
Organic: (7)%
DKK: (6%)
Asia Pacific
Sales increased by 7% organically and by 5% in DKK compared with the first quarter of 2015. Sales to Household Care and Food & Beverages were the main contributors to sales growth, whereas sales to Agriculture & Feed were lower.
Asia Pacific:
Organic: +7%
DKK: +5%
Latin America
Sales decreased by 4% organically and by 12% in DKK compared with the first quarter of 2015. Sales to Food & Beverages and Technical & Pharma were the main drivers of sales growth, whereas sales to Agriculture & Feed decreased.
Latin America:
Organic: (4)%
DKK: (12%)
Costs and profit
Total costs excluding net financials, share of losses in associates and tax were DKK 2,668 million, an increase of 2% compared with the first quarter of 2015, driven by the reorganization.
Gross profit increased by 1%, and the gross margin was 57.6%, on par with the first quarter of 2015. Productivity improvements increased the gross margin, partially offset by the one-time reorganization costs.
Operating costs increased by 3% to DKK 1,138 million, driven mainly by the one-time reorganization costs. Operating costs as a percentage of sales were 32%, 1 percentage point higher than the first quarter of 2015.
- Sales and distribution costs increased by 2%, representing 12% of sales
- R&D costs increased by 7%, representing 14% of sales. Disregarding the one-time reorganization costs, R&D costs were roughly flat
- Administrative costs decreased by 4%, representing 6% of sales
Other operating income totaled DKK 9 million, down from DKK 16 million in the first quarter of 2015.
Total costs: +2%
Gross margin: 57.6%
Operating costs: +3%
Rethink Tomorrow
novozymes
First three months of 2016. Company announcement No. 20
5/21
Depreciation and amortization were DKK 231 million, up 2% from DKK 227 million in the first quarter of 2015.
EBIT declined by 3% to DKK 950 million, down from DKK 979 million in the first quarter of 2015. Adjusting for the one-time reorganization costs, EBIT would have grown by around 4%.
The EBIT margin was 26.3%, down 1.1 percentage points from 27.4% in the first quarter of 2015. Adjusting for the one-time reorganization costs, the EBIT margin would have been around 28%.
Net financial income was DKK 15 million, an increase of DKK 80 million on the first quarter of 2015. This was mainly the result of a gain of DKK 17 million on net currency hedging/revaluation compared with a loss of DKK 36 million in the first quarter of 2015. In addition, Novozymes had a share of losses in associates of DKK 10 million, up from a loss of DKK 2 million in the first quarter of 2015.
Profit before tax was DKK 955 million, up 5% on the first quarter of 2015. The effective tax rate in the first quarter of 2016 was 22.0%, against 22.5% in the first quarter of 2015, benefiting from a lower tax rate in Denmark.
Net profit was DKK 745 million, an increase of 5% from DKK 707 million in the first quarter of 2015, as the lower EBIT was offset by higher net financial gains and a lower tax rate.
Cash flow and balance sheet
Cash flow from operating activities was DKK 776 million in the first quarter of 2016, compared with DKK 762 million in the first quarter of 2015.
Net investments excluding acquisitions totaled DKK 139 million, compared with DKK 152 million in the first quarter of 2015.
Free cash flow before acquisitions was DKK 637 million, compared with DKK 610 million in the first quarter of 2015. The increase is primarily due to the higher net profit.
Shareholders' equity at March 31, 2016, was DKK 10,619 million, down 8% from year-end 2015 because of lower comprehensive income and an increased dividend payout. Shareholders' equity was 61% of the balance sheet total, a decrease of 4 percentage points from year-end 2015.
At March 31, 2016, Novozymes had net interest-bearing debt of DKK 1,252 million, compared with net interest-bearing debt of DKK 210 million at year-end 2015. Net interest-bearing debt-to-EBITDA, based on an extrapolated full-year EBITDA, was 0.3 at March 31, 2016.
Return on invested capital (ROIC), including goodwill, was 25.0%, 1.6 percentage points lower than for the first quarter of 2015. The decrease in ROIC was mainly a result of a higher capital base.
Depreciation and amortization: DKK 231 million
EBIT: DKK 950 million
EBIT margin: 26.3%
Net financial gain and share of losses in associates: DKK 5 million
Effective tax rate: 22.0%
Net profit: DKK 745 million
Operating cash flow: DKK 776 million
Net investments: DKK 139 million
Free cash flow before acquisitions: DKK 637 million
Equity ratio: 61%
Net interest-bearing debt-to-EBITDA: 0.3
ROIC: 25.0%
Rethink Tomorrow
novozymes
First three months of 2016. Company announcement No. 20
6/21
At March 31, 2016, the holding of treasury stock was 7.7 million B shares, equivalent to 2.5% of the common stock. In the first quarter of 2016, Novozymes repurchased 1.4 million shares with a transaction value of DKK 403 million under the stock buyback program initiated on February 15, 2016.
Novozymes canceled 3 million shares in the first quarter of 2016, as per company announcement No. 15 of March 30, 2016. Following the reduction, the common stock is DKK 620 million, divided into 310 million shares of DKK 2.
Treasury stock: 2.5%
Sustainability
Sustainability performance in the first quarter of 2016 was slightly below target for most parameters. Occupational accidents continue to be an area with strong focus on improvements. Water efficiency and energy efficiency indicators were below the full year targets, but are still expected to be reached by the end of the year. The CO₂ intensity performance exceeded the target.
| Q1 2016 | 2016 target | |
|---|---|---|
| Water efficiency improvement on 2014 | 11% | 12% |
| Energy efficiency improvement on 2014 | 16% | 18% |
| CO₂ intensity reduction on 2014 | 21% | 20% |
| Occupational accidents with absence per million working hours | 2.1 | ≤1.7 |
| Rate of absence | 2.1% | ≤2% |
Rethink Tomorrow
novozymes
First three months of 2016. Company announcement No. 20
7/21
2016 outlook
| | 2016 outlook
April 20 | 2016 outlook
January 19 |
| --- | --- | --- |
| Sales growth, organic | 3-5% | 3-5% |
| Sales growth, DKK | 1-3% | 3-5% |
| EBIT growth | 1-3% | 3-5% |
| 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 | 661 | 685 |
- Assumes that exchange rates for the company's key currencies remain at the closing rates on April 19 for the rest of 2016.
Sales outlook
The organic sales outlook for 2016 is unchanged. The sales guidance in DKK is adjusted to 1-3% from 3-5%, to reflect lower exchange rates. Organic sales growth for the second quarter is expected to be above the full year guided range, and organic sales growth for the second half of the year is expected to be around the full year guided range.
Household Care sales growth is still expected to improve, compared with the 1% organic sales growth realized in 2015. Sales growth is expected to be driven by higher enzyme inclusion in detergents across tiers and markets to enhance wash performance and sustainability. Growth in Household Care is expected to be volatile through the year.
Food & Beverages sales growth is expected to be driven by a continuation of the positive trends seen in baking in 2015 and in the first quarter of 2016, supported by growth in the starch business driven by increased penetration of recently launched innovation. Healthy concepts are also expected to contribute to sales growth.
Bioenergy sales are still expected to contract organically in 2016, as the challenging market environment in the U.S. with high inventories, high ethanol production and low producer margins is expected to continue. U.S. ethanol production in 2016 is expected to be on par with 2015. The enzyme solutions launched in the fall of 2015 are performing well and will help to offset the negative price/mix impact and market share losses.
Agriculture & Feed sales are still expected to deliver solid sales growth, driven by both BioAg and animal feed. In 2016, Novozymes expects to recognize DKK ~210 million of the deferred BioAg income as revenue. In the first quarter of 2016, Novozymes recognized DKK 52 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.
Technical & Pharma sales are expected to grow, primarily driven by the realized increase in sales to the pharmaceutical industries in the first quarter. Sales to the technical industries are also expected to increase.
Organic sales growth: 3-5%
DKK sales growth: 1-3%
Rethink Tomorrow
novozymes
First three months of 2016. Company announcement No. 20
8/21
Profit outlook
EBIT growth is adjusted downwards from 3-5% to 1-3% due to lower exchange rates. 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 expansions in R&D, notably 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%
Currency exposure
Sales by currency, 2015
EUR USD
CNY DKK
Others
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 impact on EBIT of DKK 90-110 million.
Other things being equal, a 5% movement in EUR/DKK is expected to have an annual impact on EBIT of DKK 150-200 million.
Hedging of net currency exposure
| 2016 | ||||
|---|---|---|---|---|
| Q1 | Q2 | Q3 | Q4 | |
| USD | ~100% hedged; ~90% via forward contracts at 6.75 USD/DKK and ~10% via options at 6.58 | |||
| EUR | ~40% hedged via forward contracts at 7.39 EUR/DKK | - | - | - |
Rethink Tomorrow
novozymes
First three months of 2016. Company announcement No. 20
9/21
The outlook is based on exchange rates for the company's key currencies remaining at the closing rates on April 19, 2016, for the full year.
| (DKK) | EUR | USD | BRL | CNY |
|---|---|---|---|---|
| Average exchange rate 2015 | 746 | 673 | 205 | 107 |
| Closing rate April 19, 2016 | 744 | 656 | 184 | 101 |
| Estimated average exchange rate 2016* | 745 | 661 | 182 | 102 |
| Change in estimated exchange rate 2016 compared with average exchange rate 2015 | 0% | -2% | -12% | -5% |
- Estimated average exchange rate is calculated as the average exchange rate YTD combined with the closing rate April 19, 2016 for the rest of 2016.
Rethink Tomorrow
novozymes
First three months of 2016. Company announcement No. 20
10/21
Accounting policies
The Interim report for the first 3 months 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 3 months 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.
Forward-looking statements
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. Forward-looking 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.
Contact information
Investor Relations:
Martin Riise +45 3077 0738 [email protected]
Klaus Sindahl +45 5363 0134 [email protected]
Nicolai Agerskov Kobborg [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]
Rethink Tomorrow
novozymes
First three months of 2016. Company announcement No. 20
11/21
Statement of the Board of Directors and Executive Leadership Team
The Board of Directors and the Executive Leadership Team have considered and approved the interim report for Novozymes A/S for the first three months of 2016. The interim report has not been audited or reviewed by the company's independent auditor.
The interim report for the first three months 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 March 31, 2016, and of the results of the Group's operations and cash flow for the first three months 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, April 20, 2016
EXECUTIVE LEADERSHIP TEAM
Peder Holk Nielsen
President & CEO
Benny D. Loft
Thomas Videbæk
BOARD OF DIRECTORS
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
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novozymes
First three months of 2016. Company announcement No. xx
12/21
Appendices
| 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: 55 00 71 27
Rethink Tomorrow
novozymes
First three months of 2016. Company announcement No. 20
13/21
Appendix 1 Main items and key figures
1.1 Key figures
| (DKK million) | Q1 2016 | Q1 2015 | % change |
|---|---|---|---|
| Revenue | 3,609 | 3,579 | 1% |
| Gross profit | 2,079 | 2,064 | 1% |
| Gross margin | 57.6% | 57.7% | |
| EBITDA | 1,181 | 1,206 | (2)% |
| EBITDA margin | 32.7% | 33.7% | |
| Operating profit /EBIT | 950 | 979 | (3)% |
| EBIT margin | 26.3% | 27.4% | |
| Share of losses in associates | (10) | (2) | |
| Net financials | 15 | (65) | |
| Profit before tax | 955 | 912 | 5% |
| Tax | (210) | (205) | 2% |
| Net profit | 745 | 707 | 5% |
| Earnings per DKK 2 share | 2.45 | 2.29 | 7% |
| Earnings per DKK 2 share (diluted) | 2.43 | 2.27 | 7% |
| Net investments | 139 | 152 | |
| Free cash flow before acq. and purchase of financial assets | 637 | 610 | |
| Return on invested capital (ROIC), incl. goodwill | 25.0% | 26.6% | |
| Net interest-bearing debt | 1,252 | 210 | |
| Equity ratio | 60.7% | 61.0% | |
| Return on equity | 26.8% | 25.1% | |
| Debt-to-equity | 11.8% | 1.9% | |
| NIBD/EBITDA | 0.3 | 0.0 | |
| Number of employees | 6,378 | 6,486 | |
| Novozymes' stock | Mar. 31, 2016 | Mar. 31, 2015 | |
| --- | --- | --- | |
| Common stock (million) | 310.0 | 313.0 | |
| Net worth per share (DKK) | 34.25 | 35.96 | |
| Denomination of share (DKK) | 2.00 | 2.00 | |
| Nominal value of common stock (DKK million) | 620.0 | 626.0 | |
| Treasury stock (million) | 7.7 | 5.3 |
Rethink Tomorrow
novozymes
First three months of 2016. Company announcement No. 20
14/21
1.2 Income statement
| (DKK million) | Q1 2016 | Q1 2015 |
|---|---|---|
| Revenue | 3,609 | 3,579 |
| Cost of goods sold | (1,530) | (1,515) |
| Gross profit | 2,079 | 2,064 |
| Sales and distribution costs | (418) | (408) |
| Research and development costs | (502) | (467) |
| Administrative costs | (218) | (226) |
| Other operating income, net | 9 | 16 |
| Operating profit / EBIT | 950 | 979 |
| Share of losses in associates | (10) | (2) |
| Net financials | 15 | (65) |
| Profit before tax | 955 | 912 |
| Tax | (210) | (205) |
| Net profit | 745 | 707 |
| Attributable to | ||
| Shareholders in Novozymes A/S | 744 | 706 |
| Non-controlling interests | 1 | 1 |
| Specification of net financials | ||
| Foreign exchange gain/(loss), net | 16 | (37) |
| Interest income/(costs) | (5) | (11) |
| Other financial items | 4 | (17) |
| Net financials | 15 | (65) |
| Earnings per DKK 2 share | 2.45 | 2.29 |
| Average no. of A/B shares outstanding (million) | 303.2 | 308.4 |
| Earnings per DKK 2 share (diluted) | 2.43 | 2.27 |
| Average no. of A/B shares, diluted (million) | 306.0 | 311.0 |
Rethink Tomorrow
novozymes
First three months of 2016. Company announcement No. 20
15/21
1.3 Statement of comprehensive income
| (DKK million) | Q1 2016 | Q1 2015 |
|---|---|---|
| Net profit | 745 | 707 |
| Currency translation of subsidiaries and non-controlling interests | (323) | 547 |
| Tax on currency translation of subsidiaries | 10 | 20 |
| Currency translation adjustments | (313) | 567 |
| Cash flow hedges | ||
| Fair value adjustments | 45 | (65) |
| Tax on fair value adjustments | (9) | 28 |
| Fair value adjustments reclassified to Financial income/costs | 7 | (31) |
| Tax on reclassified fair value adjustments | (2) | (7) |
| Cash flow hedges | 41 | (75) |
| Other comprehensive income | (272) | 492 |
| Comprehensive income | 473 | 1,199 |
| Attributable to | ||
| Shareholders in Novozymes A/S | 472 | 1,196 |
| Non-controlling interests | 1 | 3 |
Rethink Tomorrow
novozymes
First three months of 2016. Company announcement No. 20
16/21
Appendix 2 Distribution of revenue
2.1 By industry
| (DKK million) | 2016 Q1 | 2015 Q1 | % change | % currency impact | % M&A impact | % organic growth |
|---|---|---|---|---|---|---|
| Household Care | 1,176 | 1,127 | 4 | (1) | 0 | 5 |
| Food & Beverages | 926 | 921 | 1 | (1) | 0 | 2 |
| Bioenergy | 626 | 660 | (5) | 1 | 0 | (6) |
| Agriculture & Feed | 582 | 649 | (10) | (3) * | 1 | (8) |
| Technical & Pharma | 299 | 222 | 35 | (2) | 0 | 37 |
| Sales | 3,609 | 3,579 | 1 | (1) | 0 | 2 |
- The effect from changes in deferred income is included in the currency impact. Realized currency impact was 0%.
| 2016 | 2015 | % change | ||||
|---|---|---|---|---|---|---|
| (DKK million) | Q1 | Q4 | Q3 | Q2 | Q1 | Q1/Q1 |
| Household Care | 1,176 | 1,148 | 1,219 | 1,138 | 1,127 | 4 |
| Food & Beverages | 926 | 900 | 969 | 925 | 921 | 1 |
| Bioenergy | 626 | 616 | 639 | 628 | 660 | (5) |
| Agriculture & Feed | 582 | 524 | 465 | 492 | 649 | (10) |
| Technical & Pharma | 299 | 264 | 230 | 266 | 222 | 35 |
| Sales | 3,609 | 3,452 | 3,522 | 3,449 | 3,579 | 1 |
2.2 By geography
| (DKK million) | 2016 Q1 | 2015 Q1 | % change | % currency impact | % M&A impact | % organic growth |
|---|---|---|---|---|---|---|
| Europe, Middle East & Africa | 1,340 | 1,214 | 10 | (1) | 0 | 11 |
| North America | 1,275 | 1,363 | (6) | - | 1 | (7) |
| Asia Pacific | 692 | 658 | 5 | (2) | 0 | 7 |
| Latin America | 302 | 344 | (12) | (8) | 0 | (4) |
| Sales | 3,609 | 3,579 | 1 | (1) | 0 | 2 |
The effect from changes in deferred income is included in the currency impact.
| (DKK million) | 2016 | 2015 | % change | |||
|---|---|---|---|---|---|---|
| Q1 | Q4 | Q3 | Q2 | Q1 | Q1/Q1 | |
| Europe, Middle East & Africa | 1,340 | 1,162 | 1,300 | 1,186 | 1,214 | 10 |
| North America | 1,275 | 1,241 | 1,118 | 1,291 | 1,363 | (6) |
| Asia Pacific | 692 | 679 | 669 | 662 | 658 | 5 |
| Latin America | 302 | 370 | 435 | 310 | 344 | (12) |
| Sales | 3,609 | 3,452 | 3,522 | 3,449 | 3,579 | 1 |
Rethink Tomorrow
novozymes
First three months of 2016. Company announcement No. 20
17/21
Appendix 3 Statement of cash flows
3.1 Statement of cash flows
| (DKK million) | 3M 2016 | 3M 2015 |
|---|---|---|
| Net profit | 745 | 707 |
| Reversals of non-cash items | 449 | 403 |
| Tax paid | (227) | (190) |
| Interest received | 1 | 1 |
| Interest paid | (4) | (14) |
| Cash flow before change in working capital | 964 | 907 |
| Change in working capital | ||
| (Increase)/decrease in receivables | (58) | (242) |
| (Increase)/decrease in inventories | 43 | 6 |
| Increase/(decrease) in trade payables and other liabilities | (181) | 80 |
| Increase/(decrease) in exchange gain/loss | 8 | 11 |
| Cash flow from operating activities | 776 | 762 |
| Investments | ||
| Purchase of intangible assets | (13) | - |
| Sale of property, plant and equipment | 10 | 1 |
| Purchase of property, plant and equipment | (136) | (153) |
| Cash flow from investing activities before acquisitions and purchase of financial assets | (139) | (152) |
| Free cash flow before acquisitions and purchase of financial assets | 637 | 610 |
| Business acquisitions and purchase of financial assets | - | (35) |
| Free cash flow | 637 | 575 |
| Financing | ||
| Borrowings | 513 | - |
| Repayments of borrowings | (30) | (377) |
| Hedging of net investments | - | (210) |
| Purchase of treasury stock | (403) | (421) |
| Sale of treasury stock | 16 | 56 |
| Dividend paid | (1,061) | (925) |
| Cash flow from financing activities | (965) | (1,877) |
| Net cash flow | (328) | (1,302) |
| Unrealized gain/(loss) on currencies and financial assets, included in cash and cash equivalents | (6) | 6 |
| Change in cash and cash equivalents, net | (334) | (1,296) |
| Cash and cash equivalents, net, at January 1 | 796 | 2,453 |
| Cash and cash equivalents, net, at March 31 | 462 | 1,157 |
Undrawn committed credit facilities at March 31, 2016, were DKK 2,000 million.
Rethink Tomorrow
novozymes
First three months of 2016. Company announcement No. 20
18/21
Appendix 4 Balance sheet and Statement of shareholders' equity
4.1 Balance sheet, Assets
| (DKK million) | Mar. 31, 2016 | Dec. 31, 2015 |
|---|---|---|
| Completed IT development projects | 77 | 87 |
| Acquired patents, licenses and know-how | 1,370 | 1,425 |
| Goodwill | 1,116 | 1,140 |
| IT development projects in progress | 26 | 24 |
| Intangible assets | 2,589 | 2,676 |
| Land and buildings | 2,577 | 2,665 |
| Plant and machinery | 4,092 | 4,237 |
| Other equipment | 584 | 611 |
| Assets under construction and prepayments | 676 | 649 |
| Property, plant and equipment | 7,929 | 8,162 |
| Deferred tax assets | 453 | 459 |
| Other financial assets (non-interest-bearing) | 139 | 139 |
| Investment in associate | 81 | 91 |
| Other receivables | 88 | 116 |
| Non-current assets | 11,279 | 11,643 |
| Raw materials and consumables | 339 | 339 |
| Goods in progress | 559 | 578 |
| Finished goods | 1,312 | 1,364 |
| Inventories | 2,210 | 2,281 |
| Trade receivables | 2,531 | 2,558 |
| Tax receivables | 372 | 156 |
| Other receivables | 343 | 294 |
| Receivables | 3,246 | 3,008 |
| Other financial assets (non-interest-bearing) | 62 | 20 |
| Cash and cash equivalents | 732 | 839 |
| Current assets | 6,250 | 6,148 |
| Assets | 17,529 | 17,791 |
Rethink Tomorrow
novozymes
First three months of 2016. Company announcement No. 20
19/21
4.2 Balance sheet, Liabilities
| (DKK million) | Mar. 31, 2016 | Dec. 31, 2015 |
|---|---|---|
| Common stock | 620 | 626 |
| Currency translation adjustments | 225 | 538 |
| Cash flow hedges | 61 | 20 |
| Retained earnings | 9,713 | 10,396 |
| Equity attributable to shareholders in Novozymes A/S | 10,619 | 11,580 |
| Non-controlling interests | 14 | 13 |
| Shareholders' equity | 10,633 | 11,593 |
| Deferred tax liabilities | 776 | 715 |
| Provisions | 185 | 186 |
| Deferred income | 730 | 769 |
| Other liabilities | 0 | 12 |
| Other financial liabilities (interest-bearing) | 1,199 | 1,202 |
| Other financial liabilities (non-interest-bearing) | 14 | 14 |
| Non-current liabilities | 2,904 | 2,898 |
| Other financial liabilities (interest-bearing) | 785 | 74 |
| Other financial liabilities (non-interest-bearing) | 13 | 42 |
| Provisions | 74 | 55 |
| Trade payables | 932 | 1,189 |
| Deferred income | 230 | 223 |
| Tax payables | 527 | 369 |
| Other payables | 1,431 | 1,348 |
| Current liabilities | 3,992 | 3,300 |
| Liabilities | 6,896 | 6,198 |
| Liabilities and shareholders' equity | 17,529 | 17,791 |
Rethink Tomorrow
novozymes
First three months of 2016. Company announcement No. 20
20/21
4.3 Statement of shareholders' equity
| (DKK million) | Attributable to shareholders in Novozymes A/S | Non-controlling interests | Total | ||||
|---|---|---|---|---|---|---|---|
| Common stock | Currency translation adjustments | Cash flow hedges | Retained earnings | Total | |||
| Shareholders' equity at January 1, 2016 | 626 | 538 | 20 | 10,396 | 11,580 | 13 | 11,593 |
| Net profit for the period | 744 | 744 | 1 | 745 | |||
| Other comprehensive income for the period | (313) | 41 | (272) | - | (272) | ||
| Total comprehensive income for the period | (313) | 41 | 744 | 472 | 1 | 473 | |
| Purchase of treasury stock | (403) | (403) | (403) | ||||
| Sale of treasury stock | 16 | 16 | 16 | ||||
| Write-down of common stock | (6) | 6 | - | - | |||
| Dividend | (1,061) | (1,061) | - | (1,061) | |||
| Stock-based payment | 51 | 51 | 51 | ||||
| Tax related to equity items | (36) | (36) | (36) | ||||
| Changes in shareholders' equity | (6) | (313) | 41 | (683) | (961) | 1 | (960) |
| Shareholders' equity at March 31, 2016 | 620 | 225 | 61 | 9,713 | 10,619 | 14 | 10,633 |
| Shareholders' equity at January 1, 2015 | 639 | 431 | (10) | 10,209 | 11,269 | 11 | 11,280 |
| Net profit for the period | 706 | 706 | 1 | 707 | |||
| Other comprehensive income for the period | 565 | (75) | 490 | 2 | 492 | ||
| Total comprehensive income for the period | - | 565 | (75) | 706 | 1,196 | 3 | 1,199 |
| Purchase of treasury stock | (421) | (421) | (421) | ||||
| Sale of treasury stock | 56 | 56 | 56 | ||||
| Write-down of common stock | (13) | 13 | - | - | |||
| Dividend | (925) | (925) | - | (925) | |||
| Stock-based payment | 24 | 24 | 24 | ||||
| Tax related to equity items | 55 | 55 | 55 | ||||
| Changes in shareholders' equity | (13) | 565 | (75) | (492) | (15) | 3 | (12) |
| Shareholders' equity at March 31, 2015 | 626 | 996 | (85) | 9,717 | 11,254 | 14 | 11,268 |
Rethink Tomorrow
novozymes
First three months of 2016. Company announcement No. 20
21/21
Appendix 5 Miscellaneous
5.1 Product launches in 2016
| 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 |
5.2 Company announcements for the fiscal year 2016
(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 |
5.3 Financial calendar
| 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 |
About Novozymes
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, energy-efficient 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 CVR number: 55 00 71 27, 201600502-01
Rethink Tomorrow
Novozymes A/S
Krogshoejvej 36
2880 Bagsvaerd
Denmark
Phone: +45 4446 0000
novozymes