February 7, 2018 / 9:22 AM / 5 months ago

UPDATE 1-Novozymes results miss estimates as household care drags

(Adds CEO comments, share move)

By Tommy Lund

Feb 7 (Reuters) - Danish enzymes maker Novozymes reported fourth-quarter results below market expectations on Wednesday as organic growth at its biggest division, Household Care, declined.

The news sent the company’s shares down as much as 7 percent to five-and-a-half month lows. A 12.5 percent increase in dividend and a 2 billion Danish crown ($332.34 million) shares buyback failed to cheer investors.

“Household Care, has failed to deliver the top-line growth that we and the market expected after a relatively strong Q317 so this will be the focus of market concern today,” Investec analyst Ian Hunter, who has a “sell” rating on the stock, said in a note.

Revenue declined by 1 percent to 3.67 billion crowns at Novozymes, a world leader in enzymes that replace chemical agents in detergents and speed production of food, animal feed and corn-based bioethanol fuel.

Sales in the Household Care business fell 3 percent in the quarter on an organic basis.

Group results were also hurt by a 7 percent drop in sales at its Agriculture & Feed business.

Novozymes Chief Executive Peder Holk Nielsen said farmers are under pressure due to the low prices of agricultural produce, including corn and soy. He does not expect the market to change this year.

“Farmers in the Americas are not doing too well, and that, of course, creates a little bit of a depressed backdrop for growing our business.”

He cautioned against reading too much into one quarter’s results for the Household Care business.

Fourth quarter earnings before interest and tax (EBIT) fell 4 percent to 1.02 billion Danish crowns ($169.85 million), missing the 1.07 billion crown expected by analysts.

The company said it expects 2018 overall organic sales growth between 4 and 6 percent. It reported 4 percent growth in 2017. ($1 = 6.0052 Danish crowns) (Reporting by Tommy Lund and Boleslaw Lasocki in Gdynia; Editing by Thyagaraju Adinarayan/Keith Weir)

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