By FLEMMING EMIL HANSEN
COPENHAGEN--Danish industrial enzymes producer Novozymes
lowered its growth expectations for 2012 because severe drought
in the U.S and lower fuel consumption will cut into enzyme
sales for biofuel production this year, but
the long-term outlook remains optimistic, the company's chief
financial officer said.
The bioethanol industry is pressured at the moment.
It's very difficult to convince producers they should use more
enzymes in the production, Benny Loft said in a
Thursday interview, explaining why the company lowered its
growth guidance despite posting consensus-beating
Bioethanol production and profitability
has been hampered by the drought in the US, which has pushed up
the prices for corn, the main ingredient in the production of
Additional pressure has been added by a decline in overall
fuel consumption in the US, Mr. Loft said. With more than 50%
of global bioethanol production, the US is the
defining market for Novozymes' biofuel enzymes business.
For 2012, the US biofuel output estimate has been lowered to
13.4 billion gallons from 14.2 billion gallons, but Novozymes
still expects the market to return to growth in the longer
The problems in the corn-based bioethanol production
should be little more than a blip. We still hope the output
will go to 15 billion gallons within a couple of years,
Mr. Loft said, adding that hopes are still high that the
next-generation biofuel technology will create a sustainable
boom in the sector.
The journey in second-generation bioethanol is only just beginning, and
it will be a huge market for enzymes in coming years, Mr.
In the short term, however, the industry crisis has caused
Novozymes to postpone the launch of a new and more efficient
enzyme from late summer to year-end, he said.
Our starch segment has also performed below our
initial expectations in the first half, but the rest of our
business segments are running really well, and the customer
interest remains strong, Mr. Loft said.
For the second quarter, Novozymes reported a 9% increase in
net profit and 12% growth in sales. It lowered the full-year
organic sales growth expectations to between 3% and 5%, from
between 4% and 8% previously, but also yanked up the guidance
for growth in earnings before interest and tax to between 11%
and 14%, from 9% to 12% previously.
The higher Ebit expectation can be ascribed largely to
broad-based cost cuts. Due to the considerable macroeconomic
uncertainty we faced at the beginning of the year, we asked
that all employees show restraint in their spending. They've
been very good at that, Mr. Loft said.
Dow Jones Newswires