October 24, 2018 / 8:25 AM / a year ago

Shares in enzymes maker Novozymes tumble as Middle East sales drag

COPENHAGEN (Reuters) - Shares in enzymes maker Novozymes (NZYMb.CO) fell more than 7 percent on Wednesday after the Danish company said full-year sales were likely to be at the low end of its forecast range due to weakness in Middle East markets.

Novozymes, whose clients include Procter and Gamble (PG.N), is a world leader in enzymes that replace chemical agents in detergents and enzymes used in the production of food, animal feed and corn-based bioethanol fuel.

“We see that the lira crisis and the economic situation in Turkey together with the sanctions in Iran and also weaker economics in countries like Saudi Arabia and Egypt have dampened the growth in that region,” Chief Financial Officer Prisca Havranek-Kosicek told Reuters after the company reported third-quarter results.

The negative impact is expected to continue in the fourth quarter, she said.

The company maintained its 2018 outlook for organic sales growth of 4 to 6 percent, but said sales were “more likely” to end toward the lower part of the range.

It actually lifted its forecast for 2018 net profit growth to 1 to 3 percent from 0 percent previously, but that was mainly due to a lower tax rate than previous expected, said Havranek-Kosicek.

Europe, the Middle East and Africa accounted for 37 percent of group sales in the first nine month of this year.

Challenges in Middle East markets were expected to shave around 1 percentage point off full-year sales growth, the CFO later told analysts.

Novozymes reported a third-quarter operating profit of 1.04 billion crowns, in line with analysts’ forecast.

Sales at the company’s key household care unit, which sells enzymes to big companies like Procter and Gamble, rose 2 percent in the quarter while growth for the first nine months was flat.

“We had hoped for more for the full year,” said Havranek-Kosicek.

A bright spot for the household division, which accounts for around a third of total revenues, was sales of enzymes for dishwasher detergents where recent launches include a product that targets oat fibers such as dried-in cereals.

Shares in Novozymes recovered some early losses and were down 4.9 percent at 0743 GMT.

Reporting by Stine Jacobsen; Editing by Susan Fenton

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