Energy consumption and prices
The manufacture of enzymes requires relatively large amounts of energy, and the fluctuations in energy prices will therefore impact cost of goods sold. The risk of a negative impact from rising energy and CO2 prices is managed by optimizing the production process, for example by using gene technology and by partially hedging energy prices for a future period.
Raw material consumption and prices
A significant proportion of Novozymes’ raw materials is derived from agricultural produce, and the movement in such prices will therefore impact cost of goods sold. Novozymes tries to reduce the risk of a negative impact by optimizing the production process, for example by using gene technology and by ensuring the greatest possible flexibility in the use of raw materials.
Novozymes operates in many markets via sales companies and distributors, while production is restricted to a small number of countries. This entails a number of transactions, etc. between Group companies. Novozymes follows the OECD principles in setting internal settlement prices for these transactions, but this is a complicated area and entails a tax risk, among other things because the area is subject to political judgment in each individual country. Novozymes regularly enters into dialog with the tax authorities to reduce this risk.
The risk of personal injury, material damage, and other events beyond Group control, and any losses that Novozymes may cause, is covered by an extensive insurance program. Coverage in different areas is subject to a deductible based on Novozymes’ claims history. However, the current price of the policies and the coverage provided may be affected by external circumstances, such as natural disasters and similar.