Novozymes Earnings: EBIT Down 9%; 2023 Organic Sales Growth Outlook Narrowed

Wide-moat Novozymes reported second-quarter EBIT of DKK 1 billion, down 9% versus 2022 and 6% below the company-compiled consensus. Across all segments, except for bioenergy, organic sales growth fell below the expectations laid out in the company's compiled consensus. The company's less robust performance in the first half prompted Novozymes to revise its 2023 guidance for organic growth, now projecting a range of 4% to 6% (previously 4% to 7%), primarily because of destocking and lower consumer demand. Despite this adjustment, the EBIT margin was maintained at the level of 25% to 26%, driven by pricing. Our expectations are still in line; consequently, we maintain our fair value estimate of DKK 395. At current levels, the shares look undervalued.