Financial targets

Audited by PwC

Sales expectations

Total full-year sales are expected to grow by 7–10% in LCY and also organically. Based on exchange rates at January 20, 2011, sales growth in DKK is expected at 7–10%.

Within Enzyme Business, detergent and feed enzyme sales are expected to be the strongest contributors to full-year sales growth. One assumption included in the full-year sales growth expectation is that the US biofuel industry will produce roughly 13.8 billion gallons of ethanol during the year, corresponding to growth close to 5% over the 13.2 billion gallons of ethanol expected to have been produced in the US in 2010. BioBusiness’ sales are expected to undergo double-digit growth, supported in particular by strong sales of microorganisms.

Earnings expectations

EBIT is expected to grow by 8–11%, supported by sales growth, productivity improvements, and continued cost control. The expectation includes the investment of DKK 150 million in additional R&D and business-building activities. The EBIT growth expectation also takes into consideration the negative 2010 one-offs of approximately DKK 95 million. The leverage on EBIT from higher expected sales is expected to be neutralized by increased raw material prices.
The EBIT margin is expected to be 21–22%, taking into consideration the items explained under EBIT growth above.

Net profit is expected to grow by 8–11% in 2011 as a result of EBIT growth. Expected USD exposure for 2011 has been hedged at 5.85 DKK/USD. Roughly half of the expected USD exposure for 2012 has been hedged at 5.98 DKK/USD.

Investment, ROIC, and cash flow expectations

Investments are expected to be around DKK 1,400 million. The relatively high level is mainly related to the Nebraska enzyme facility, expected to begin production in early 2012.

Free cash flow before acquisitions is expected to be DKK 900–1,000 million.

The return on invested capital is expected to be 21–22%.

Capital structure

Novozymes takes a cautious approach to its capital structure and aims to ensure that the flexibility needed to pursue different business opportunities is always in place. Such business opportunities could include acquisitions. Novozymes’ equity ratio stood at 62% on December 31, 2010, but will fall slightly in 2011 as a result of dividend payments, a DKK 400 million stock buyback program initiated to cover employee incentive programs, and potentially also the USD 275 million (approx. DKK 1,560 million) EMD/Merck Crop BioScience acquisition announced in late December 2010.

Currency assumptions

The 2011 outlook is based on exchange rates for the company’s key currencies remaining at the closing rates on January 20, 2011, for the full year.




Average exchange rate 2009 745 536 5.73 78.47
Average exchange rate 2010  745 562 6.42 83.08
Closing rate January 20, 2011 745 553 6.72 83.99
Change in estimated exchange rate for 2011 compared to average exchange rate in 2010 0% -2% 5% 1%

Note: Other things being equal, a 5% movement in the USD is expected to have an annual impact on EBIT of DKK 60–80 million.

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Investing in additional and supportive growth opportunities
Novozymes’ current R&D pipeline and business activities are well positioned to achieve our long-term target of more than 10% annual organic growth. However, to explore additional and supportive growth opportunities, Novozymes has decided to allocate additional funds to selected R&D and business-building activities...