Novozymes shares surge as bioenergy tops expectations

Source: By Julie Astrid Thomsen, Reuters • Posted: Thursday, October 26, 2017

COPENHAGEN, Oct 25 (Reuters) – Denmark’s Novozymes reported third-quarter sales and earnings ahead of forecasts on Wednesday and raised its outlook as more powerful enzymes products drove demand from ethanol makers, sending its shares up six percent to a two-year high.

Ethanol is made by using enzymes to break down and ferment sugars in organic materials, such as corn, but second generation ethanol, made from more stubborn cellulose using new processes, could raise production.

Sales at Novozymes’ bioenergy unit rose by 16 percent in the quarter compared to the less than three percent expected by analysts, as ethanol firms chose the new products and showed improved buying power, Sydbank analyst Morten Imsgard said.

But for sales to continue to rise over time, customers must build more plants, which will only happen if the oil price rises to a higher level, Chief Executive Peder Holk Nielsen told Reuters.

Shares in Novozymes were up 5.5 percent at 349 Danish crowns at 1056 GMT after it reported third-quarter operating profits (EBIT) of 1.06 billion Danish crowns ($167.74 million), beating analyst expectations of 1.01 billion.

The company adjusted its guidance for 2017 to an organic sales growth of 3-5 percent from 2-5 percent and maintained expectations of 28 percent reported EBIT-margin.

Novozymes’ largest business area is sales of enzymes to detergent makers as Procter & Gamble and Henkel but the company also has divisions in food & beverages and agriculture. ($1 = 6.3194 Danish crowns) (Reporting by Julie Astrid Thomsen, editing by Terje Solsvik)