Group financial statement for first quarter of 2008: Growth continues for Novozymes

2008 kicked off with high sales growth, leading to an upwards adjustment in local currencies. Expected sale of enzymes for detergents and feed significantly increased. Despite unfavorable exchange rates, the outlook for net profit 2008 in DKK is maintained.


Earnings development was good in the first quarter, and the developments in energy and raw material prices were in line with expectations. Overall, the financial results in the first quarter were very satisfactory, particularly given the generally unfavorable exchange rates movements.

  • Novozymes’ sales rose by 11% in local currencies in the first quarter of 2008. Calculated in DKK sales rose by 5% to MDKK 2,026 from MDKK 1,931 in 2007
  • Operating profit rose by 4% to MDKK 372 from MDKK 359 in 2007. Adjusted for exchange rate movements, growth was approximately 13%
  • The operating profit margin for the quarter was 18.4% against 18.6% in 2007
  • Net profit for the period rose by 4% to MDKK 264 against MDKK 254 in 2007
  • Earnings per share (diluted) were DKK 4.19 for the first quarter, an increase of 5%
  • Free cash flow before acquisitions was MDKK 221 against MDKK 308 in 2007
  • Return on invested capital (ROIC) fell to 19.3% from 22.4% in the first quarter of 2007
" The high growth rate is continuing in 2008", says Steen Riisgaard, President and CEO. "We have not seen, and there is no sign of, a slowdown in sales or earnings. In fact the first quarter was better than expected, so we are increasing our sales expectations for the year. However, the declining dollar is eroding growth and earnings in DKK. It is somewhat frustrating that the underlying busines performance does not show in the results in DKK, because things are going really well."
Outlook for 2008
Novozymes is increasing its sales growth expectations for 2008 to 12-15% (from 11-14%) in local currencies, based on increased growth within detergent and feed enzymes. Novozymes is maintaining its outlook for net profit and free cash flow for the year in DKK. Assuming that exchange rates for the company's key currencies remain at their current low levels for the remainder of 2008, growth of 6-9% is expected in sales in DKK (previously 8-11%), with growth in operating profit in DKK of 1-4% (previously 2-5%). Note that growth in financial results is based on 2007, excluding one-off items.