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Univar to Distribute Novozymes' Baking Solutions in Russia

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Univar Inc.’s (UNVR - Free Report) subsidiary, Univar LLC, has announced a deal with Novozymes to expand the geographical scope of its collaboration to add Russia with enzymes for the baking industry.

The agreement provides Univar a platform for expanding into the Russian food and beverage market. Univar sees significant growth potential for the Novozymes portfolio, which will provide innovative process solutions to the baking industry.

Univar stated that it will initially start with developing opportunities for the baking industry within the St. Petersburg and Moscow regions, which represents nearly 50% of the total Russian bakery market.

Also, Univar will focus on improving the quality and freshness of baked goods through the Novozymes Novamyl baking freshness enzyme. The move is in response to the recent Russian government regulations that aims to reduce food waste through retailer incentives.

To improve crumb softness, moistness, mouthfeel and elasticity during storage, Novamyl can be used with buns, bread, rolls as well as lean sweet baked goods in both packaged (or industrial) and artisanal segments.

Univar’s shares have lost 29.6% over a year compared with the 39.5% decline recorded by its industry.

Univar’s adjusted earnings were 42 cents per share in the second quarter, down 10.6% year over year. The figure missed the Zacks Consensus Estimate of 44 cents.

Revenues rose 9% year over year to $2,584.6 million. However, it lagged the Zacks Consensus Estimate of $2,810.2 million.

The company revised its adjusted EBITDA forecast considering lower-than-expected demand for chemicals and ingredients, higher expected net cost synergies from Nexeo and outlook from many supplier partners. It now sees adjusted EBITDA between $725 million and $740 million, compared with its prior view of $740 million and $760 million.

Univar is progressing well with the integration of Nexeo's chemical distribution customers, suppliers and support functions. The company now sees higher cost saving synergies from Nexeo than what it had originally anticipated. It has raised its guidance for annual net synergy from $100 million to $120 million (before tax). Univar expects to achieve $20 million in net synergies this year, higher than the initial expectations of $10 million.

Zacks Rank & Key Picks

Univar currently carries a Zacks Rank #5 (Strong Sell).

Some better-ranked stocks in the basic materials space are Kinross Gold Corporation (KGC - Free Report) , Alamos Gold Inc (AGI - Free Report) and Arconic Inc (ARNC - Free Report) , all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Kinross has an expected earnings growth rate of 140% for 2019. The company’s shares have surged 62.3% in the past year.

Alamos Gold has projected earnings growth rate of 280% for the current year. The company’s shares have rallied 55.1% in a year’s time.

Arconic has an estimated earnings growth rate of 42.7% for the current year. Its shares have moved up 23.6% in the past year.

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