August 17, 2009

 

Novozymes Q2 profit up 5.8 percent

 

 

Danish enzymes maker Novozymes reports a second-quarter operating profit increase of 5.8 percent from yearago amid low end of expectations.

 

The company said lower costs enabled it to maintain its full-year profit forecast.

 

Operating profit in the three months rose to 399 million Danish crowns (US$76 million) in the three months to end-June.

 

The company maintained its 2009 full-year forecast of an operating margin of 19-20 percent and "slightly positive" sales growth in local currencies.

 

Chief Executive Steen Riisgaard said volume is expected to slightly up this year while production facilities expansion especially in China and the US may be postponed.

 

Enzymes for bioethanol account for about a sixth of group revenue but Novozymes. Sales of technical enzymes, including those for ethanol production, were up by 6 percent to 624 million crowns.

 

However, sales of enzymes to the bioethanol industry were below expectations due to North American plant closures.

 

US ethanol producers including Aventine Renewable Holdings Inc., Renew Energy LLC and VeraSun Energy Corp, have filed for bankruptcy protection after facing volatile corn prices and reduced demand due to the recession.

 

Risgaard said some big producers that were exclusively using Novozymes enzymes went into bankruptcy, hence, capacity expansion will be postponed reflect the fact that volumes did not develop as predicted.

 

The US government has mandated the use of 1 billion gallons of cellulosic ethanol made from agricultural waste by 2013 and 16 billion gallons by 2022 despite some qualms in the world market.

 

Novozymes and competitor Danisco A/S said they will be ready to provide commercially viable enzymes to producers of cellulosic ethanol starting in 2010. Riisgard said he doesn't expect the fuel to be made on an industrial scale until 2012.