Novozymes has released fourth quarter and full year 2018 financial results, reporting strong sales growth for its bioenergy segment. Overall the company’s sales grew by 4 percent organically when compared to 2017.

Sales for the bioenergy segment grew by 12 percent organically for the full year when compared to 2017. For the fourth quarter alone, sales for the segment were up 5 percent when compared to the same period of the previous year.

“2018 was a very good year for our Bioenergy business supporting decarbonization of transport,” said Tina Sejersgård Fanø, executive vice president of agriculture and bioenergy at Novozymes, during an investor call. “For the full year we delivered 12 percent organic sales growth, which came on top of a strong 11 percent growth in 2017. The fourth quarter was, as expected, a bit softer with 5 percent organic growth driven by lower ethanol volumes and a tough comparison from Q4 2017.”

Novozymes said strong growth within enzymes for conventional biofuels continued throughout 2018, driven by broad technology offerings and tailored customer solutions. “Growth was driven by a strong momentum due to our broad technology base, the launch of our yeast products—Innova Drive and Lift—for conventional biofuels, and good performance in Latin America with producers expanding into corn-based ethanol production,” Sejersgård Fanø said.

The company estimates U.S. and global ethanol production was up approximately 1 percent in 2018 when compared to the previous year. During the fourth quarter, however, production was down an estimated 3 percent. Novozymes noted ethanol producer margins were under pressure, and inventory levels were elevated.

Moving into 2019, Novozymes said organic sales growth for its bioenergy sector is expected to be driven mainly by increased penetration from innovation as well as volume growth outside the U.S. market. The company currently expects U.S. ethanol production this year to be down slightly when compared to 2018, with ethanol inventory levels expected to remain high this year. Novozymes currently expects high-single-digit growth in bioenergy for the full year.

Sejersgård Fanø also discussed the potential of increased biofuel use, including the potential of E15 in the U.S. “We´re happy to see continued discussions supporting expanded use of biofuels,” she said. “In the U.S. we are awaiting clarity on E15, which is expected sometime before summer. In Brazil, the RenovaBio framework should support the continued expansion of corn-based ethanol production. China is investing in new capacity, and the REDII directive has been adopted in the EU, with Member States now working on the implementation process.”

In addition to bioenergy, Novozymes also operates segments dedicated to household care, food and beverages, agriculture and feed, and technical and pharma. Overall, the company reported 4 percent organic sales growth for 2018, with 2 percent organic sales growth for the fourth quarter. For the current year, Novozymes expects to achieve organic sales growth of 3-6 percent.