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Company update: Novozymes Q2 2011

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Industrial enzymes producer Novozymes saw a slight increase in second-quarter operating profit as sales slowed. Earnings before interest and tax (EBIT) rose to 578 million Danish crowns ($110 million) in April-June from 574 million in the same quarter last year.
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The company said the first half-year development was in line with expectations. Full-year 2011 sales and earnings outlook are maintained, and free cash flow expectation was increased.
 
Sales growth slowed somewhat after the strong first-quarter performance and is in line with expectations. The EBIT margin improved slightly despite the negative impact from acquisitions and unfavourable currency development.
 
Free cash flow was very strong as a result of a stronger net profit and lower taxes paid compared to the same period last year.
 
All expectations for full-year 2011 are maintained from previous guidance, except for free cash flow, which is increased.
 
In the first half of 2011:
  • Sales grew by 9% in Danish crowns (DKK) vs. H1 2010, with ~ 5%-points from acquisitions
  • The gross margin was 56.3% (57.0% excluding acquisitions), on par with H1 2010
  • EBIT was DKK 1,213 million (€162.8m) , an increase of 9% compared to H1 2010
  • The EBIT margin was 23.2% (23.9% excluding acquisitions), against 23.1% in H1 2010
  • Net profit was DKK 946 million (€126.9m), an increase of 15% compared to 1H 2010
  • Net investments excluding acquisitions totalled DKK 547 million (€73.4m), vs. DKK 554 million in H1 2010
  • Free cash flow before acquisitions was DKK 1,001 million, against DKK 425 million in 1H 2010
  • ROIC was 22.1%, against 24.0% in 1H 2010, including goodwill
 
“l'm satisfied with the half-year results, and although we're seeing increasing general uncertainty concerning the global economic situation and increased volatility in our end markets, we’re able to maintain our sales and earnings growth guidance for the full year,” says Steen Riisgaard, President & CEO.
 
He continues: “With the expectation of a stable cash flow improvement over the next couple of years, Novozymes has decided to initiate a stock buyback program and to gradually increase the dividend payout ratio, both starting in 2012.
 
“Finally, to support liquidity and to make Novozymes’ stock more accessible to retail shareholders, it has been decided to make a 1:5 stock split, expected to be effective as of December 1, 2011.”

by Dick Ziggers last update:6 Aug 2012

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