Novozymes (NVZMY) Q1 2026 Earnings Call Transcript
Bullish Chemicals - Specialty 16.78B Denmark
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Novonesis posted 2025 organic growth of 7%, a 37.1% adjusted EBITDA margin, and guided 2026 to 5–7% organic growth with 37–38% EBITDA margin, supported by the Feed Enzyme Alliance and ongoing AI-driven innovation.
⭐ Key Highlights
Full-year organic sales up 7% despite currency headwinds and exiting certain countries
Company delivered 7% organic sales growth for 2025, aided by broad-based volume growth and around 1 percentage point each from pricing and sales synergies, offset by roughly 1 percentage point due to exits.
Adjusted EBITDA margin at 37.1% in line with guidance
Adjusted EBITDA margin reached 37.1% for 2025, driven by gross-margin improvements and full ramp of cost synergies, with currency headwinds partially offsetting the gains.
Feed Enzyme Alliance acquisition contributing to growth and margins
June 2024 acquisition contributed to 0.25 percentage point to the EBITDA margin and supported near-term growth across divisions; full-year and Q4 benefits were in line with expectations.
Strong 2026 guidance: 5–7% organic sales growth and 37–38% adjusted EBITDA margin
Guidance for 2026 calls for 5–7% organic growth (net of exits ~1%), with a margin expansion to 37–38% aided by gross-margin strength, full-year effect of the alliance, and synergies.
Significant R&D emphasis and AI-driven innovation moat
Investing >€400m in R&D annually; ~10,000 patents; AI accelerates lead-time from years to months and expands innovation potential across strain design and production.
✔Positive Signals
- Strong 2025 organic growth of 7% across divisions, despite exit headwinds
- Adjusted EBITDA margin of 37.1% aligned with guidance and aided by cost synergies
- Feed Enzyme Alliance integration delivering margin and growth benefits ahead of schedule
- 2026 guidance of 5–7% organic growth with 37–38% EBITDA margin shows continued margin expansion
- Large ongoing R&D investment (>€400m) and AI-driven innovation pipeline enhancing competitive moat
✖Negative Signals
- Currency headwinds impacting margin (around 0.5–1.0 percentage points)
- Exit from certain countries weighing on near-term growth, especially in H1 2026
- Agriculture, Energy & Tech segment had timing-related obstacles causing Q4 softness
- One-off plant realignment costs in Q4 2025 (~€66m total special items in 2025)
- Higher capex plan (12–14% of sales) to support growth and ERP implementation
📊Financial Results
- 2025 sales grew 7% organically (5% reported), with currencies providing a 3% headwind and M&A contributing ~1%
- Adjusted gross margin improved to 59.1% (+240 bps YoY); operating expenses at 29.5% of sales (up 1 pp due to reinvestment in commercial presence)
- Adjusted EBITDA margin 37.1% for 2025; Q4 margin 36.6% (one-off plant realignment and FE Alliance contribution ~0.5 pp)
- Diluted adj. EPS: €1.49, up 16% YoY; normalized EPS (excluding PPA amortization) €1.99, up 15%
- Operating cash flow €1.22bn in 2025; free cash flow before acquisitions €770m (19% of sales); capex €471m (11.3% of sales)
🔮Future Guidance
- 2026 organic sales growth guidance: 5–7% (includes ~1% impact from exiting certain countries; ~1 pp from synergies)
- 2026 adjusted EBITDA margin guidance: 37–38% (currency headwinds ~0.5 pp; full-year impact of FE Alliance and synergies)
- Capex expected to be 12–14% of sales in 2026 to support capacity expansion (US dairy culture, enzyme production footprint, ERP rollout)
- Net debt/EBITDA targeted around 1.7x by year-end 2026; tax rate guided at 22–23%
💡Interesting Insights
- AI integration is emphasized as a differentiator with a data moat (100,000+ strains, 15 million enzyme structures) enabling faster lead-candidate development and production improvements
- Management highlighted that the timing effects in Agriculture are reversible and that Q1 2026 shows strong momentum, suggesting near-term visibility improves
- The company plans to maintain a mulitple-geo, multi-segment capacity expansion, including U.S. dairy culture expansion and capex in emerging markets
Detailed Analysis
AI-generated summary of Novozymes earnings call transcript.
Novonesis finished 2025 with solid, broad-based growth across its Food & Beverages, Human Health, Planetary Health, Household Care, and Agricultural, Energy & Tech divisions, aided by the Feed Enzyme Alliance integration and a robust pipeline of 33 new biosolutions launched in 2025. The company faced currency headwinds and exited certain countries, yet delivered a 7% organic sales increase and an adjusted EBITDA margin of 37.1%, in line with guidance. For 2026, management sees 5–7% organic growth and a 37–38% adjusted EBITDA margin, expecting improvement from gross margin, the alliance’s full-year impact, and ongoing synergies, while also planning continued capex expansion and higher R&D investment to sustain an innovation-led growth engine. Key questions from the call centered on timing effects in Agriculture, the durability of Human Health growth, and how AI-enabled innovation will translate into future product launches and KPIs.
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