Energy Future

Novozymes: Shale gas is no threat to our business


Fracking presents no risk to Novozymes' bioenergy business, the biotechnology firm's chief financial officer told CNBC on Thursday, after it beat first-quarter profit expectations.

Although 17 percent of the company's sales in the first quarter came from biofuel—a renewable substitute for petrol and diesel—CFO Benny Loft denied Novozymes' top line was threatened by interest in shale gas as an alternative source of cheap natural energy.

"The shale gas, I don't believe that a lot of people actually believe it will have a lot of impact on fuel consumption for the next many years," Loft told CNBC on Thursday, after Novozymes posted its results.

"There will be small pockets where shale gas can have an impact on fuel, but the majority of cars in the future will drive on fuel like ethanol. So I don't think it will have an impact."

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Novozymes' bioenergy business posted sales growth of 34 percent in the first quarter of 2014 compared with the same period last year. This made it Novozymes' strongest performing unit.

"The biofuel operation of Novozymes is today entirely based on ethanol, where we are doing extremely well, growing very nicely," said Loft.

"You can say the big opportunity for Novozymes is actually using biomass and producing ethanol from biomass, or helping the industry to do that."

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The Danish company reported operating profit for the first three months of year of 923 million krone ($171 million), 30 percent up on the same period last year. This topped analysts' forecasts for a 15.5 percent rise to 819 million krone.

Novozymes increased its full-year target for operating profit growth to 8-10 percent, as well as its outlook for net profit growth. However, the outlook for sales growth was adjusted slightly downwards, due to "unfavorable currency development."

The company reported on Wednesday that it would build a $36 million research and development center in North Carolina, dedicated to bioagriculture— specifically, improving crop yield, fertility and pest control using beneficial microorganisms found in soil. The new facility should create 100 jobs.

Correction: This article has been updated to reflect that 17 percent of Novozymes' sales were in its bioenergy division, in the first quarter of 2014.