• Organic Sales Growth: 8% for 2024, with a 7% growth in Q4.
• Pro Forma Adjusted EBITDA Margin: 36.1% for 2024, an increase of 2.3 percentage points from 2023.
• Gross Margin: 47.4% reported, 56.7% adjusted for purchase price allocation impacts.
• Revenue Synergy Program: On track for DKK200 million run rate, with initial contributions expected in 2025.
• Emerging Markets Growth: 12% growth for 2024.
• Food & Health Biosolutions Organic Sales Growth: 7% for 2024 and Q4.
• Household Care Organic Sales Growth: 13% for 2024.
• Adjusted Earnings Per Share: EUR1.28, a decrease of 15% compared to the previous year.
• Free Cash Flow: EUR667.5 million for 2024.
• 2025 Organic Sales Growth Outlook: 5% to 8%, with a 37% to 38% adjusted EBITDA margin expected.

• Warning! GuruFocus has detected 4 Warning Signs with NVZMF.

Release Date: February 26, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Novonesis (Novozymes) B (NVZMF) achieved an 8% organic sales growth in 2024, driven by a 6% volume increase and a 2% contribution from pricing.
• The company successfully integrated two strong organizations, maintaining high employee engagement with a score of 82, well above industry benchmarks.
• Novonesis is on track to realize a full-year revenue synergy program of DKK200 million, with initial contributions expected in 2025.
• The company has made significant progress in sustainability, reducing Scope 1 and 2 CO2 emissions by 63% since 2018, and 93% of its electricity usage is from renewable sources.
• Novonesis launched 45 new products in 2024, with nearly 30% of revenue coming from products launched within the past five years, solidifying its innovation leadership in biosolutions.

Negative Points

• The decision to exit Russia and Belarus is expected to negatively impact 2025 organic sales growth by around 1 percentage point.
• The divestment of the lactase enzyme business impacted growth negatively by around 1 percentage point in 2024.
• The company faces risks and uncertainties that could cause actual results to differ materially from forward-looking statements.
• The adjusted earnings per share decreased by 15% compared to the previous year, despite a 15% increase when adjusted for merger-related PPA amortization.
• The exit from certain countries is expected to impact full-year organic sales growth in Food & Beverages by around 3 percentage points.

Q & A Highlights

Q: Can you expand on the revenue synergies and the EUR200 million target? A: Ester Baiget, CEO, explained that they are on track to achieve the EUR200 million run rate due to strong customer interest and cross-fertilization of solutions. They expect 1% of the 2025 growth to come from these synergies, with a healthy pipeline supporting long-term innovation.

Q: Could you provide more detail on the areas where you're reinvesting for growth? A: Ester Baiget, CEO, mentioned investments in commercial capabilities, particularly in emerging markets, to enhance customer co-creation. They are also investing in production capacity and people to support growth, with a focus on tailored solutions and innovation.

Q: What are your expectations for raw material inflation and energy costs in 2025? A: Rainer Lehmann, CFO, stated that they expect an improvement in gross profit due to lower input costs, including energy, which is projected to be over 5% lower than in 2024. They are hedged 85% into 2025 for electricity in Europe.

Q: How do you view the potential impact of tariffs on your business? A: Ester Baiget, CEO, noted that while they monitor global trade tariffs closely, Novonesis' diverse portfolio and global footprint provide resilience. They are confident in their ability to support growth in key regions like North America.

Q: Can you elaborate on your R&D strategy and the use of AI? A: Claus Fuglsang, Chief Scientific Officer, explained that they manage a diverse R&D portfolio with varying timelines and risks. AI is integral to their discovery process, and they utilize both internal and collaborative supercomputing resources for enzyme design and innovation.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.