Novozymes Looks to Become More Nimble to Fend Off DuPont ThreatAndrew Noel
Novozymes A/S is looking for ways to shorten the time needed to bring new products from its laboratories to customers as the world’s largest supplier of enzymes fends off competition from DuPont Co.
First-quarter sales of enzymes that enable dirt and stain removal at lower washing-machine water temperatures rose 10 percent in constant currencies, the Bagsvaerd, Denmark-based company said today. Demand is “very strong,” and DuPont is very probably looking to expand in that market, Novozymes Chief Financial Officer Benny Loft said in a phone interview.
Novozymes will sustain the recent pace of innovation in 2014, Loft said. Demand for enzymes for household use in emerging markets helped drive Novozymes’ first-quarter profit gains. The company is facing more competition from DuPont since the Wilmington, Delaware-based company’s $7.1 billion purchase in 2011 of Copenhagen-based rival Danisco.
“When you’re seeing such strong growth for our enzymes, the assumption we make is that DuPont is looking into these places,” Loft said. “Then it’s down to our ability to innovate even faster so we can have something that we can offer that’s perhaps even better.”
Rather than investing more resources, increasing agility means improving on what historically was a six- to nine-month period to get laboratory discoveries into the marketplace, Loft said. Improvements are possible in product screening and getting scientists to work more closely on pilot projects and with factory managers to smooth out scaling up production, he said.
Novozymes is reviewing its food- and beverage-additive business after disappointing results, seeking additional ways to generate sales from its technology.
“We are really trying hard to stay where we are, even increase our share,” Loft said. “There are a lot of things we can do, and it’s not just spending more money.”
The company raised its profit forecast today after beating analysts’ estimates in the first three months of the year. Earnings before interest and taxes will rise 8 percent to 10 percent, compared to a prior 6 percent to 9 percent range, the manufacturer said. Margins are expected to be about 26 percent of sales, including a one-time gain from a cooperation project with Monsanto Co.
Novozymes rose as much as 6.1 percent to a record 269.4 kroner and was trading 0.5 percent higher at 255.4 kroner as of 1:31 p.m. in Copenhagen.
First-quarter Ebit surged 30 percent from a year earlier to 923 million kroner ($171 million). Sales advanced 6.6 percent to 3.03 billion kroner. Adjusted earnings per share were 2.18 kroner, exceeding an estimate by Citigroup Inc. analysts of 1.8 kroner.
In household care, the company benefited as a multinational customer became a bigger client after ceasing its internal enzyme operations. Updated enzymes that offer improved yields at biofuel plants are gaining traction in an increasingly competitive market and a booming U.S. shale industry, and there are signs of recovery in enzymes for animal feed, Loft said.