Assessing Novonesis' Sales Momentum Amid Margin Concerns

In the dynamic landscape of industrial biotechnology and electrical infrastructure, two companies-Novonesis and Legrand-offer a compelling case study in contrasting corporate strategies. While Novonesis, the 2024 merger of Novozymes and Chr. Hansen, has captured headlines with robust sales growth, its margin pressures raise red flags. Meanwhile, Legrand, a leader in electrical systems, has demonstrated disciplined margin management, leveraging data center demand and operational efficiency to outperform expectations. This analysis dissects their trajectories, offering insights for investors navigating divergent paths in capital allocation.

Novonesis: Sales Growth Outpaces Profitability

Novonesis delivered a 9% organic sales growth in the first half of 2025, driven by strong demand in its Food & Health and Planetary Health segments, particularly in emerging markets, which surged 12% year-over-year. The company narrowed its full-year sales growth outlook to 6–8%, a testament to its ability to capitalize on global trends like sustainable agriculture and functional foods. However, profitability has lagged.

In Q2 2025, Novonesis reported group revenue of €1.02 billion, slightly below consensus, with EBITDA of €371 million-5% shy of forecasts-resulting in a 36.4% margin, below the expected 37.7%, according to Investing.com. This miss triggered a 6% share price drop, underscoring investor concerns. Despite cost synergies from its 2024 merger reaching full run rate, the company's operating margin fell to 17.5% in 2025 from 23.5% in the prior year, according to MarketScreener. Analysts attribute this to currency headwinds and integration costs, though Novonesis maintains its full-year EBITDA margin guidance of 37–38%.

Legrand: Margin Discipline Fuels Resilience

Legrand, by contrast, has turned margin management into a science. The electrical infrastructure giant raised its 2025 adjusted operating margin outlook to 20.5–21% of sales, up from 20.5% previously, driven by its data center business, according to Legrand's 2025 first-half results. This segment, which grew sevenfold since 2018, accounted for 24% of H1 2025 sales and is projected to exceed €2 billion by year-end, as reported by Reuters.

Legrand's first-half adjusted EBIT reached €1 billion, exceeding market expectations, with an operating margin of 21.0% after acquisitions, per the company's 2025 first-half results. The company's CEO emphasized pricing discipline and operational efficiency as cornerstones of its strategy, reinforced by strategic acquisitions and innovation in high-growth areas like smart buildings, according to Legrand's 2025 first-quarter results. Even amid global trade uncertainties, Legrand maintained a 20.7% adjusted operating margin in Q1 2025, reflecting its Ambitions 2030 plan's focus on margin resilience, according to BusinessWire.

Contrasting Strategies: Sales vs. Margins

The divergence in outcomes stems from structural differences. Novonesis' margin pressures reflect the challenges of integrating two large biotech firms while navigating currency volatility and pricing constraints in commoditized markets. Legrand, however, has insulated itself through strategic verticals like data centers, where demand is inelastic and margins are protected by technological differentiation.

Legrand's ability to raise its margin outlook while Novonesis adjusts its EBITDA forecast to the lower end of its range highlights this gap, as noted in an AOL report and earlier commentary from MarketScreener. For Novonesis, the path forward hinges on sustaining cost synergies and passing cost increases to customers-a delicate balancing act in markets where pricing power is limited. Legrand's playbook, meanwhile, offers a blueprint for leveraging high-growth sectors and disciplined cost control to compound margins.

Conclusion: Navigating the Divergence

Investors must weigh Novonesis' sales momentum against its margin vulnerabilities. While its 9% organic growth and emerging market tailwinds are promising, the recent EBITDA miss and operating margin contraction signal risks. Legrand, conversely, exemplifies how strategic focus on high-margin verticals and operational rigor can transform margin management into a competitive advantage.

For Novonesis, the coming quarters will test its ability to convert sales growth into sustainable profitability. For Legrand, the challenge lies in maintaining its momentum as data center demand matures. In both cases, the interplay between top-line growth and margin discipline will define long-term value creation.