Novozymes CFO Sees Strong Earnings Growth in Bioethanol

By Gustav Sandstrom

STOCKHOLM--Danish enzyme producer Novozymes A/S (NZYM-B.KO) expects strong sales and earnings growth in 2014 due to a solid development in its bioethanol segment, Chief Financial Officer Benny Loft said Tuesday.

"The underlying bioenergy market is flat, but Novozymes grows because of our strong technology," Mr. Loft said in an interview following the company's fourth-quarter earnings report.

North American companies that make biofuel out of sugar from corn strive to extract as much sugar as possible out of the grain because corn prices rose to extremely high levels last year, Mr. Loft said. Novozymes sells enzymes that let the ethanol producers extract 4% more sugar than normal from the corn, and it therefore expects to penetrate the market even further in 2014, he said.

Policy makers in the U.S., which makes up around 90% of Novozymes' turnover in the biofuels segment, want more ethanol to be produced and mixed into fuel for cars, but other parties, including the oil industry, are unsupportive of those plans, Mr. Loft said. The mixed support means that wider market growth is slow and uncertain, he added.

Still, Novozymes, which grew its share of the wider global enzyme market to 48% in 2013 from 47% in the previous year, has a particularly strong market position in the biofuels segment because it has no major rivals there apart from U.S.-based chemicals giant DuPont (DD), Mr. Loft said.

In total, Novozymes expects sales growth in Danish kroner of 4%-7% and operating profit growth of 6%-9% in 2014 from 2013, it said Tuesday. Its fourth-quarter net profit grew 14% year-on-year to 563 million Danish kroner ($102 million), beating analysts' expectations for DKK548 million.

At 0833 GMT, Novozymes shares were up 2.3% at DKK243.70 against a 0.7% rise in the wider Copenhagen market.

Write to Gustav Sandstrom at [e-mail]

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