Sales and markets

    Organic sales growth was 7% in 2013. While all sales areas contributed to growth, Bioenergy and Household Care were the most significant sales contributors, reaching 6% and 9% respectively. Sales in Latin America were up 8%, with Agriculture & Feed and Household Care the strongest sales contributors.

    Total sales in 2013 were DKK 11,746 million, an increase of 5% compared with 2012. Exchange rates had a significant negative impact on sales, and sales in LCY were up by 8%. Acquisitions contributed approximately 1 percentage point to sales growth and, organically, sales grew by 7%. All sales areas contributed to this growth, with sales to the Household Care and Bioenergy industries the most significant contributors.

    SALES BY GEOGRAPHY AND SALES GROWTH

    Geographical distribution of sales and sales growth in 2013
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    2012
    2013

    Sales by industry

    ###GRAF - 2013 enzyme business and biobusiness sales by industry###

    Household Care

    Sales to the Household Care industry increased by 6% in DKK and by 9% in LCY compared with 2012. Sales growth was driven by continued strong demand from customers looking to improve wash performance, enable low-temperature washing and replace chemicals. Sales to emerging markets were a significant growth contributor.

    Food & Beverages

    Sales to the Food & Beverages industries were flat in DKK and increased by 3% in LCY compared with 2012. Sales for the production of healthy foods were the most significant growth contributor. Sales to the baking industry ended the year on par with 2012. Sales in the important freshkeeping area were slightly lower than last year, but sales growth in other baking application areas counterbalanced this impact. Sales to the starch industry also contributed moderately to growth due to positive developments in a number of markets making up for lower sales in China due to lower production of corn syrups and other corn-derived products.

    Bioenergy

    Sales to the Bioenergy industry were up by 9% in DKK and by 13% in LCY compared with 2012.###GRAF - 2012 MARKET SHARE IN ENZYMES FOR INDUSTRIAL USE### Organically, sales grew by 12%. The U.S. Energy Information Administration estimates that U.S. fuel ethanol production in 2013 ended on par with 2012, following a strong fourth quarter with estimated growth of 10-12% compared with the fourth quarter of 2012. Bioenergy sales increased by 28% organically in the fourth quarter of 2013 compared with the fourth quarter of 2012. Bioenergy sales benefited from continued positive developments in Novozymes’ novel yield discovery solutions Avantec®, Spirizyme® Achieve and Olexa®. Penetration of all three solutions continued strongly in Q4 as seen throughout the year.  

    Agriculture & Feed

    Sales to the Agriculture & Feed industries increased by 3% in DKK and by 8% in LCY compared with 2012. Organically, sales grew by 5%. Sales to the BioAg industry grew double digit due to a good performance in the Americas and strong growth in the new markets of Europe and Asia. Double-digit growth is very satisfactory given the high comparables following the Syngenta agreement in Q4 2012.

    The integration of TJ Technologies, Inc., acquired in June 2013, is considered complete. The sales impact has so far been limited due to the company’s focus on North American markets. Toward the end of 2013, Novozymes entered into an agreement with Monsanto to establish The BioAg Alliance. The alliance is expected to close early 2014 and is subject to approval by the relevant national antitrust authorities. Sales to the animal feed industry were slightly higher compared with last year. RONOZYME® ProAct continued to perform strongly in Europe and Latin America, whereas phytase enzyme sales were challenged in a tough competitive environment.

    ###Graf - Five-year sales development in enzyme business - Combination###

    Technical & Pharma

    Sales to the Technical & Pharma industries increased by 7% in DKK and by 10% in LCY compared with 2012. Organically, sales grew by 6%. This sales growth was driven by a strong increase in sales for the manufacture of pharmaceutical products. Sales growth was also supported by positive contributions from the textile and leather businesses.

    Helping customers stay profitable in a fiercely competitive ethanol market

    The U.S. Department of Agriculture has called the drought of 2012 the most severe and extensive in 25 years. When Novozymes Avantec® was launched in October of that year, corn yields were in hasty retreat, and corn prices went from around $6 to above $8 per bushel. At the time, there was also a chance that political support for the Renewable Fuel Standard could wane in Washington, D.C., creating further uncertainty about future demand for ethanol.

    “Customers are looking to improve yield while reducing overall input costs to improve margins,” explains Andrew Fordyce, Executive Vice President of Business Operations. “So we needed to convince them that enzymes are critical, not only for boosting yields, but also for increasing efficiency. If they can get more ethanol and high-value co-products such as corn oil out of their feedstock, they strengthen their business and maintain profitability.”

    Triple boost

    Novozymes made the strongest possible case for adopting enzymatic solutions by launching a new package of yield discovery solutions in June 2013. The company’s industry-leading liquefaction technology, Avantec®, was joined by Novozymes Olexa®, the first enzyme uniquely designed for corn oil recovery, and Novozymes Spirizyme® Achieve, the industry’s first fiber-degrading glucoamylase. Despite major market challenges, the package succeeded in establishing a new standard of efficiency for customers, while expanding the market for enzymes in the biofuel industry.

    Avantec®, Spirizyme® Achieve and Olexa® together can deliver up to a 5% higher yield of ethanol, up to 8% decrease in energy and up to 13% more corn oil.

    “By delivering innovations that dramatically increase yield and at the same time inventing a whole new enzyme category with Olexa®, we were able to expand the potential market for enzymes and deliver more value,” Fordyce adds.

    Rapid product adoption

    These solutions have been quickly adopted by the market, thanks in part to an active drive by the sales and technical service teams. “Back in April 2013, when our lab tests revealed how powerful these solutions could be, we challenged our account teams to reduce the time to trial and set some very ambitious monthly targets,” says Jack Rogers, Global Marketing Manager. 

    Rogers says that the risk of launching solutions that radically alter the market at a turbulent time was mitigated by strong customer relationships:

    “We were able to minimize risk by working closely with our customers to make sure they had the opportunity to successfully trial the products and experience the benefits. Without a pre-existing bond of trust, we would not have been able to complete so many successful trials so quickly.” 

    Riding out uncertainty

    The 2013 corn harvest was one of the best in U.S. history, and corn prices have dropped to $4-5 per bushel. However, the price of ethanol is also down due to overcapacity. And even though demand is slowly growing, it is not growing fast enough to make up for the market’s inability to significantly exceed the 10% “blend wall.”

    “There will always be a certain level of uncertainty in the biofuels market,” Fordyce says. “Our strategy is to continue the evolution of technology that helps our customers boost yield, increase efficiency and ultimately stay profitable in a fiercely competitive market.”

    Sales by geography

    ###Graf - Sales by region###

    Sales in Europe, the Middle East & Africa (Europe/MEA) grew by 6% in DKK and by 7% in LCY compared with 2012. Sales to the Household Care and Technical & Pharma industries were the most significant growth drivers, whereas sales to the Agriculture & Feed industries were slightly lower due to the significant BioAg sales in Europe in Q4 2012.

    Sales in North America increased by 4% in DKK and by 7% in LCY compared with 2012. Sales to the Bioenergy and Agriculture & Feed industries were the strongest growth drivers, whereas sales to the Household Care and Food & Beverages industries came in slightly lower than in 2012.

    Sales in Asia Pacific were up by 2% in DKK and by 6% in LCY compared with 2012. Sales to the Household Care and Food & Beverages industries were the main contributors to sales growth, whereas sales to the Bioenergy industry were lower.

    Sales in Latin America were up by 8% in DKK and by 17% in LCY compared with 2012. All sales areas contributed positively to the sales growth, with sales to the Agriculture & Feed and Household Care industries as the strongest contributors.

    Product launches in 2013

    Q1 2013 Novozymes Viscozyme® Wheat HT: A thermostable xylanase enzyme solution that effectively reduces viscosity, delivering operational flexibility, lower energy usage and higher yields when producing ethanol from wheat and other cereals           
    Q2 2013 Novozymes Olexa®: A protease enzyme solution designed to release more corn oil for recovery in ethanol production, while increasing the ethanol yield through improved yeast health during fermentation            
    Q2 2013 Novozymes Spirizyme® Achieve: A unique saccharification enzyme solution that improves the conversion of dextrins into glucose for ethanol fermentation by unlocking fiber-bound starch that is inaccessible to traditional fermentation solutions           
    Q2 2013 Novozymes Blaze® Evity® 16 L: A liquid protease enzyme solution that enables superior high stability in gels, gelpacs and liquids for automatic dishwashing detergents with a new non-boron stabilization technology (DSAA)           
     Q3 2013 Peltec® X-Zyme by Novozymes and Lanxess: The solution optimizes soaking and liming, and allows leather tanneries to increase the quality of hides, while reducing chemicals used and significantly improving efficiency and sustainability
     Q4 2013 Evity® platform for powder laundry detergents: Evity is a novel formulation technology, offering improved enzyme stability. The launch includes six granulate products for the powder detergent segment
    Q4 2013 Evity® platform for liquid laundry detergents: Evity is a novel formulation technology, offering improved enzyme stability. The launch includes three products for the liquid detergent segment
    Q4 2013 Novozymes Acrylaway® HighT: A thermostable asparaginase that reduces acrylamide formation in food processing at high temperatures (above 100°C)
    Q4 2013 Novozymes Cellusoft® LT: The first true low-temperature cellulase developed for textile mills and laundries, giving more flexibility in textile processing, improving textile quality and bringing savings in water, energy and process time
    Q4 2013 Novozymes Sensea®: An amylase for bread and cakes, targeted to cost-effectively replace chemical emulsifiers. Benefits include improved moistness, melting characteristics and overall eating experience
    Q4 2013 Novozymes Attenuzyme® Pro: A new blended product for the brewing industry, allowing cost-effective, consistent attenuation control regardless of raw material variability or process fluctuations