Cheap oil hurts Novozymes' bioenergy ops, growth forecast
Danish biotech firm Novozymes A/S (CPH:NZYM-B) expects 2016 to be a challenging year for sales growth as low oil prices take a toll on its bioenergy business.
Bioenergy sales contracted 5% organically compared to 2014, the company's 2015 report showed this week. In the fourth quarter, they registered an even steeper 15% year-on-year drop.
The strong performance in the agriculture and feed segment compensated for the weakness in bioenergy so Novozymes reported organic sales growth of 4% for 2015. The firm expects its sales to the bioenergy industry to be also down in 2016, while it guided for 3%-5% organic growth in 2016 overall sales.
"Novozymes maintains its ambition to accelerate sales growth to 8-10% organically. However, as a result of the current depressed commodity prices and the uncertainties these entail for Bioenergy and growth in emerging markets, Novozymes expects annual organic sales growth from 2017 through to the end of the decade to be in line with the historical performance of 6-7%."
The bioenergy business, which offers enzymes for biofuel production including starch-based and cellulosic ethanol, is suffering as low oil and ethanol prices reduce profitability for customers and fuel uncertainty as to when second-generation biofuels will commercialise.