Novozymes reports drop Q1 bioenergy sales

By Erin Voegele | April 24, 2019

Novozymes released first quarter 2019 financial results April 24, reporting a 4 percent drop in sales. Bioenergy sales were down 8 percent due primarily to weaker performance of the U.S. ethanol industry, which was impacted by flooding during the quarter.

“The first-quarter decline in sales was no surprise—we communicated this back in January,” said Peder Hold Nielson, president and CEO of Novozymes. “We also expected U.S. bioethanol to be down, but the decline was larger than we had foreseen. The floods in the Midwest have made it tougher for our customers. With the problems continuing into April, it will be difficult to reach the top end of the guided organic sales growth range, and we adjust our outlook to 3-5 percent. We’re confident sales growth will increase during the year as innovations, the freshness platform, BioAg seasonality and Bioenergy all step up, and the Middle East comparison gets easier.”

Novozymes cited U.S. Energy Information Administration data that showed U.S. ethanol production was down 3-4 percent during the first quarter, when compared to the same period of 2018. “In the latter part of the first quarter, sales were further impacted by the Midwestern floods, and we estimate that Novozymes’ customers experienced an additional approximate 4 percent slowdown in ethanol production in the first quarter,” the company said in a statement. “At the same time, ethanol producer margins continue to be under pressure, and while inventories have come down, they are still elevated.”

Moving into the remainder of the year, Novozymes said growth in bioenergy sales is expected to be driven mainly by increased penetration from innovation as well as volume growth outside the U.S. market. The company said it currently expects U.S. ethanol production in 2019 to be lower than last year, with high ethanol inventories. With flooding impacts continuing into April and other factors, the company said it will need to see a step-up in U.S. ethanol production to be able to deliver mid-single-digit organic sales growth in bioenergy for the full year.