Innovation and the development in emerging markets were the primary growth drivers for Novozymes in 2005.
Novozymes' 600+ products play an important role in the manufacture of many different products, including detergents, foods, animal feeds and cleaning agents. Enzymes and microorganisms for industrial use account for 95% and 5% respectively of Novozymes' sales. Our products are sold in around 130 countries worldwide.
Novozymes' biological solutions improve companies' performance and product quality in more than 40 different industries, while at the same time helping to save water, energy, raw materials and waste, to the benefit of both society and companies' earnings.
Novozymes generated sales of DKK 6,281 million in 2005, an increase of 5% on 2004. Growth in local currencies was 4%.
Enzymes for industrial use account for 95% of Novozymes' sales, making them our largest business area. They are divided into three categories:
Technical enzymes include products for the detergent industry and other technical enzymes i.a. for the starch, textile and fuel ethanol industries. The segment also includes products for the leather and forest products industries and various other smaller industries.
- Novozymes' total market share: approx. 45-50%
- Anticipated long-term annual sales growth for detergent enzymes: slightly positive
- Anticipated long-term annual sales growth for other technical enzymes: approx. 10-15%
Sales of detergent enzymes fell by 1% in 2005, slightly positively affected by exchange rate movements. High oil prices in 2005 pushed up detergent manufacturers' expenditure on raw materials. This had a negative effect on sales of enzymes to the industry as a result of detergent manufacturers focusing on making savings on ingredients. Novozymes is working on developing the market for detergent enzymes through the introduction of innovative new products with improved properties. We anticipate slight growth in sales of detergent enzymes in 2006.
Sales of other technical enzymes grew by 14%, primarily driven by significant growth in sales of enzymes to the fuel ethanol industry in the USA. Sales of enzymes to the starch and textile industries showed healthy growth. The increase in sales to the textile industry was mainly related to China and Southeast Asia.
Sales of enzymes to the fuel ethanol industry are concentrated primarily in the US market. The growth in sales was driven by several factors, including rising oil prices, a desire to increase the use of alternative energy sources in the USA and the subsequent political support.
After a period of stable sales, there was fresh growth in sales to the starch industry in 2005 due to increased sales of enzymes for the manufacture of sweeteners, especially in Asia.
Growth in the textile industry is driven primarily by enzymes for treating denim, but sales to the textile mill industry also contributed to growth in 2005.
Sales of hyaluronic acid to the cosmetics industry were lower than expected. Growth in sales of pharmaceutical proteins developed very satisfactorily, albeit from a relatively low level.
We anticipate continued good growth in sales of other technical enzymes in 2006. Growth in fuel ethanol is expected to continue to play a key role.
Food enzymes include products for the baking, brewing, alcohol, fruit juice and wine industries, and other food industries such as the dairy industry and the oils and fats industry.
- Novozymes' market share: approx. 30-35%
- Anticipated long-term annual sales growth: 10-15%
Growth within food enzymes in 2005 was 4% in DKK terms and slightly lower in local currencies. Growth was driven primarily by increased sales of enzymes for alcohol and the interest in enzymes for edible oils and fats, which rose significantly, albeit from a relatively low level. Sales of enzymes for the baking industry were slightly below the level for 2004. The main factor here was stockbuilding on the distributor side at the end of 2004. Sales to the brewing industry fell compared with 2004, mainly due to a levelling off in sales of enzymes for low-carbohydrate beer. A positive trend in sales to Asia and Latin America was not sufficient to balance this out.
Healthy growth in sales of food enzymes is expected in 2006.
Feed enzymes help to improve digestion and the uptake of nutrients from feed in pigs and poultry.
- Novozymes' market share: approx. 45-50%
- Anticipated long-term annual sales growth: approx. 10%
Sales of feed enzymes grew by just over 7% in 2005. This growth was due primarily to increased sales of phytases in North America and Asia, especially China. Sales of enzymes for improving the absorption of vegetable protein and the uptake of energy from high-fibre crops such as wheat and barley were on a par with sales in 2004.
Novozymes anticipates moderate growth in sales of feed enzymes in 2006.
This business area includes microorganisms for cleaning, wastewater treatment, aquaculture and biological plant care.
- Novozymes' market share: approx. 50%
- Anticipated long-term annual sales growth: approx. 10%
Sales of microorganisms in 2005 rose by 3% in DKK terms and by just under 4% in local currencies compared with 2004. There was a positive development in all segments, the most positive being the development in sales of microorganisms for wastewater treatment, and sales of microorganisms for aquaculture also made a good start. There was double-digit growth in the markets outside North America, where sales were on a par with 2004.
We anticipate growth in sales of microorganisms in 2006 to exceed our long-term growth expectations.
|State of competition|
Novozymes is the global market leader in enzymes and microorganisms for industrial use. The estimated share of the global market is 45% for enzymes and 50% for microorganisms.