Novonesis A/s Class B · OMXCOP:NSIS_B
Novonesis A/s Class B — Novozymes — Non-Deal Roadshow (February 2018)
55 slides from Novonesis A/s Class B's roadshow presentation, Feb 7, 2018
Slide 1: Roadshow Presentation FY 2017
Roadshow Presentation FY 2017 Released on February 7, 2018
Slide 2: Table of contents
Table of contents 1. Latest Results 3 2. Overview and Strategy 15 3. Market Overview 24 - Household Care 25 - Food & Beverages 28 - Bioenergy 30 - Agriculture & Feed 34 - Technical & Pharma 40 4. Sustainability 41 5. Financials and Governance 46 22 Latest Results • Overview and Strategy • Market Ove
Slide 3: Good momentum
Good momentum Solid progress on strategic priorities • Increased focus on high-growth opportunities and markets • More impactful innovation • Stronger connections between research, marketing and sales across industries and geographies Accelerating growth • Divisional structure works. More focused or
Slide 4: Highlights
Highlights Solid 2017 performance • Organic sales growth +4% (Q4: +4%) 2017 organic sales growth by segment • 4 out of 5 segments with organic growth ‒ diversity gives robustness: 11% • Household Care +1% (Q4: -3%) 9% • Food & Beverages +9% (Q4: +9%) • Bioenergy +11% (Q4: +14%) 2% 1% • Agriculture &
Slide 5: Organic sales growth by geography
Organic sales growth by geography +2% +4% Q4 y/y 12M y/y +3% +6% +12% Q4 y/y 36% +5% Q4 y/y 12M y/y of sales 12M y/y 34% 20% of sales of sales -11% -1% Q4 y/y 12M y/y 10% +3% 12M y/y 35% Emerging markets +5% of sales 12M y/y 65% -1% Developed markets +7% Q4 y/y Q4 y/y 5
Slide 6: Household Care
Household Care 32% of sales Modest sales growth in 2017. Q4 declined as expected Full-year organic sales growth • Organic growth y/y: 2017 +1%. Q4 -3% 9% • North America and Europe up for the year • Europe benefits from good dishwash enzyme sales growth 4% • Enzyme volume reductions by some large gl
Slide 7: Introducing our freshness & hygiene platform
Introducing our freshness & hygiene platform Current consumer challenges in laundry Trends increasing the need for freshness and hygiene Consumers turning to liquid detergents Yellow armpits, grime on Sweat and odor in Malodor issues in cuffs and collars sportswear washing machines Growth in use of
Slide 8: Food & Beverages
Food & Beverages 28%of sales Full-year organic sales growth Strong 2017 performance supported by continued good momentum in Q4 9% • Organic growth y/y: 2017 +9%. Q4 +9% • Solid growth across most platforms and regions; nutrition performed well 5% with increased uptake of innovation. Starch performed
Slide 9: Bioenergy
Bioenergy 18%of sales Full-year organic sales growth Good growth in enzymes for conventional biofuels 19% • Organic growth y/y: 12M +11%. Q4 +14% • US ethanol production estimated to be up 2-3% in 2017 and Q4. US 12% 11% ethanol inventories remain elevated • Growth in conventional biofuels driven ac
Slide 10: Agriculture & Feed
Agriculture & Feed 15%of sales 2017 impacted by weak farm economics Full-year organic sales growth • Organic growth y/y: 12M -3%. Q4 -7% • Pick-up in Q4 demand slow, as farmers expect continued tough 19% conditions. • Feed enzyme sales soft due to weak end-market demand 5% 7% 5% • Animal health cont
Slide 11: Priority innovation platforms
Priority innovation platforms Arrows denote progress to next phase over the past 12 months 11
Slide 12: Introducing “Solutions for water” as a new platform
Introducing “Solutions for water” as a new platform • The world treats an estimated 200 billion m3 of wastewater on an annual basis • Solving the world’s water problems is a monumental challenge for society • Sustainable Development Goal #6: Clean Water and Sanitation • HelloScience established as a
Slide 13: 2017 performance; 2018 outlook
2017 performance; 2018 outlook Solid performance • 4 out of 5 segments growing Key financials Realized Outlook (DKKm) 2017 2018 • Agriculture & Feed weak in Q4 Organic sales • Emerging-market investments increasing to support growth 4% 4-6% growth • EBIT margin solid at 27.9%. ~29% excluding one-tim
Slide 14: Summary
Summary Good momentum Accelerating growth Innovation is key. Faster commercialization Capital Market Days 2018 Save the date: September 17-18, Raleigh, NC 14
Slide 15: Turning amazing science into sustainable biological answers
Our business is about turning amazing science into sustainable biological answers in a growing world 6,500 2nd 48% 76 million More than 6,500 active and In 2017, Science Magazine Market leader in industrial In 2017, our customers pending patents ranked Novozymes the enzymes with an estimated avoided
Slide 16: Overview and Strategy
%& Rethink Tomorrow novozymes’
Slide 17: Novozymes at a glance
Novozymes at a glance World leader in Bioinnovation Company background Global presence Listed 2000 • ~6,300 employees Ticker NZYM B • ~700 products sold in 140 countries • Major production footprint in 3 regions Exchange Nasdaq Copenhagen Market leader • ~48% Novozymes • Serving +40 different end ma
Slide 18: Experienced leadership team
Experienced leadership team – with 22 years seniority on average Thomas Peder Prisca Anders Tina Andrew Videbæk Holk Nielsen Havranek-Kosicek Lund Fanø Fordyce COO & Executive Vice President, CEO & President CFO & Executive Vice President, Executive Vice President, Executive Vice President, Executiv
Slide 19: Uniquely diversified group
Uniquely diversified group - creates synergies and opportunities Household Care Food & Bioenergy Agriculture & Technical and Beverages Feed Pharma Laundry detergents, Baking, Starch to syrups, Conventional biofuels Animal feed Textile & leather, Pulp & Dish wash detergents, Brewing & alcohol, Cellul
Slide 20: Solid financial track record driven by innovation
Solid financial track record driven by innovation 17 years of innovation driven growth 30% 16.000 28% 26% 14.000 Strong performance since 24% 2000 22% 12.000 • ~3x Sales 20% • ~5x EBIT 10.000 18% • ~6x Net Profit 16% • DKK ~26bn in FCF 8.000 14% Innovation is the recipe 12% 6.000 • DKK ~22bn spent o
Slide 21: Our global business serves a large number of local markets and industries
Our global business serves a large number of local markets and industries 36% EMEA NZ: HQ, Production R&D Main markets: HHC, F&B, Feed Acc CAPEX: ~ DKK 6.9bn FTE’s: ~2,900 5Y Avg growth: +5% 20% 34% ASIA PACIFIC NORTH AMERICA NZ: Production, R&D NZ: Production, R&D Main markets: Main markets: F&B, H
Slide 22: Our set of competitive advantages across the value chain
Our set of competitive advantages across the value chain has led to a unique market leading position Scale Quality Sustainability High barriers • Production: 5 core • Superior logistical • Sustainability is in our • Unique market-leading plants in 3 regions agility due to full DNA helping our positi
Slide 23: Developing new technology and business platforms
Developing new technology and business platforms Continued development …creates opportunities to in our technology base… develop new business platform Molecular biology Strain development using protein engineering, genetic modification, DNA sequencing, etc Bio- Yeast Agriculture Bio-informatics & Sy
Slide 24: Enzyme technology improves Novozymes’ profitability
Enzyme technology improves Novozymes’ profitability 3 ways to gain productivity improvements: Novozymes dedicates 10-15% of R&D spend to productivity improvement programs Purification Raw materials Fermentation Enzymes Formulation Micro-organisms 1 2 3 Improve production strain Optimize industrial p
Slide 25: Market Overview
& Rethink Tomorrow novozymes’
Slide 26: Household Care overview
Household Care overview 32% of sales Business Characteristics • Mainly laundry detergents but expanding into dish wash 5 year organic growth +9% +4% +1% +2% +1% • Top three detergent producers make up ~50% of the global market; top 20 at ~80% Sales in DKKm 4.702 4.717 4.632 • Developed markets ~2/3
Slide 27: Our enzyme technology adds significant benefits
Our enzyme technology adds significant benefits Eliminate Remove stains, Decrease dose, Preserve fabric Save energy, Deal with complex harsh chemicals boost whiteness increase performance texture, color water, time hygiene issues 27 Latest Results • Overview and Strategy • Market Overview • Sustaina
Slide 28: Consumers are shifting from traditional detergents to new formats
Consumers are shifting from traditional detergents to new formats and increased performance Global market 2010 Global market 2020E USD USD ~42bn +50bn Liquid Powder Unit dosage Powder Liquid Unit Dose 100% 90% 80% 70% Big differences 60% in detergent 50% applications 40% across 30% 20% geographies 1
Slide 29: Food and Beverages overview
Food and Beverages overview 28% of sales Business Characteristics Processing agricultural inputs Food products 5 year organic growth • Relatively few product • Baking main market +3% +4% +5% +2% +9% categories • Broad customer/application base Sales in DKKm 4.041 • Fragmented global customer • ~80%
Slide 30: The grain value chain
The grain value chain • Significant presence in starch - industry leaders in enzymatic starch conversion for sweeteners • Portfolio that includes LpHera ®, Extenda ®, Secura ® and Sweetzyme ® • Frontia ® opens a new segment with our starch customers in wet milling, enhancing the yield of key value s
Slide 31: Bioenergy overview
Bioenergy overview 18% of sales Market Characteristics Conventional biofuels Biomass Conversion 5 year organic growth • Starch based ethanol is mainly a • Global business (EU, US, LATAM) +12% +19% ´-5% -3% +11% US market (+85%) • Dependency on political mandates Sales in DKKm • US corn ethanol indus
Slide 32: Ethanol production and margins
Ethanol production Bn gallons Global ethanol production Ethanol producer margin 30 1,60 1,40 margin cents per gal 25 1,20 Contribution 20 1,00 15 0,80 0,60 10 16.2- 13.8 14.8 15.2 15.8 16.3 0,40 5 0,20 0 0,00 2013 2014 2015 2016 2017E NA Brazil EU China RoW Total Ethanol Contribution Margin Price de
Slide 33: Addressing complexity in bioethanol production
Addressing complexity in bioethanol production Designing enzymes for individual plants Using our diagnostic program to deliver custom fermentation solutions, tailored to a plant’s unique operating conditions Past Present Future From standard to Basic products for Multiple offerings Increasingly cust
Slide 34: Policy objectives point to a doubling of ethanol by 2030
Policy objectives point to a doubling of ethanol by 2030 vs. today EUROPEAN UNION EU Renewable Energy Directive: 10% in transport by 2020* +1bn Post 2020 framework under TOTAL ADDITION BY 2030 development incl. mandate for 2G Ambitious national policies ~ 24bn gallons/year 1G and/or 2G in FIN, SE, D
Slide 35: Agriculture and Feed overview
Agriculture and Feed overview 15% of sales Market Characteristics Animal Health & Nutrition BioAg 5 year organic growth • Sales and distribution through • Sales and distribution through +5% +7% +19% +5% -3% partnerships partnership with Monsanto Sales in DKKm • Applications mainly for mono- • Americ
Slide 36: Inoculants hold significant opportunity for market expansion
Inoculants hold significant opportunity for market expansion across crops and geographies Factors driving inoculant growth: Soybean Pulses Alfalfa Canola Corn Wheat Cotton Rice Market expansion Global Planted Acres1 Significant opportunity across crops (5 year avg. ~ 260m ~190m ~15m ~85m ~425m ~549m
Slide 37: BioAg Alliance Pipeline
BioAg Alliance Pipeline Industry’s most advanced microbials platform and R&D capability The BioAg Alliance: R&D Development Pipeline The BioAg The BioAg Alliance Alliance PHASE 1: PHASE 2: PHASE 3: PHASE 4: DISCOVERY: EARLY ADVANCED Biologicals PROOF OF CONCEPT PRE-LAUNCH DEVELOPMENT DEVELOPMENT 10’
Slide 38: Scientific evidence supports enzyme penetration
Scientific evidence supports enzyme penetration - enabling livestock farmers to reduce feed cost Market is sensitive to feed and Low margins leave the producer Scientific education of customers to meat price changes different options increase penetration 70% of total cost of poultry production is fe
Slide 39: Attractive value propositions in feed enzymes
Attractive value propositions in feed enzymes Phytase ProAct® Others phosphate protein energy Only 3-30% of phosphate in feed is Maximizing protein utilization and Xylanase & glucanase increase non- available to the animal improving nutritional value starch polysaccharide digestion Ronozyme NP® rele
Slide 40: Animal health & nutrition
Animal health & nutrition The world needs sustainable efficiency gains in animal production. Improving the yield in animal production would have significantly positive impact in terms of global warming and use of agricultural land • 9+ billion people by 2050 • Protein demand to double next 40 years
Slide 41: Technical and Pharma overview
Technical and Pharma overview 7% of sales Business Characteristics Wastewater Treatment Textile, Leather, Pulp and paper 5 year organic growth • Microorganisms for industrial use • Enzymatic solutions and technical +6% +9% +6% +13% +2% in wastewater treatment support for processing textiles and • Ne
Slide 42: Sustainability
& Rethink Tomorrow novozymes’
Slide 43: New long-term targets focus on world impact 2020
New long-term targets focus on world impact 2020 New IMPACT targets Novozymes’ Updated operational targets • 10 transformative innovations • Save 100 million tons of CO2 unique contribution: Environment People • 5 partnerships for change • Reach 6 billion people with our • Energy efficiency • Occupa
Slide 44: We plan to continue our journey of operational excellence
We plan to continue our journey of operational excellence • Novozymes has over time proved how investments in efficiency and optimization programs pay off not only from a sustainability perspective but also from an economic perspective • In the US we have a biogas plant which turns wastewater into s
Slide 45: Reducing CO2 emissions together with our customers
We are reducing CO2 emissions together with our customers by offering solutions that help produce more with less In 2017, Novozymes helped customers save 76 million tons of CO2 through the application of Novozymes’ products Detergent: Animal feed: Textile: Cereals: 100 kg CO2 80 kg CO2 1100 kg CO2 1
Slide 46: Remuneration principles for the Executive leadership team
Novozymes’ remuneration principles for the Executive leadership team Remuneration principles ensure close alignment with long term shareholder interests, links remuneration to shareholder gains and losses, and ensures management retention Annual remuneration scheme Long term incentive program (2017-
Slide 47: Financials & Guidance
%& Rethink Tomorrow novozymes’
Slide 48: Historical performance demonstrates track of delivery
Historical performance demonstrates track of delivery Long term targets 17 years of organic growth 16.000 14.000 12.000 10.000 DKKm 8.000 Return 6.000 4.000 to historical 2.000 organic revenue 0 growth rates Profitability has benefitted from productivity improvements and operational leverage 2000-20
Slide 49: Historical performance: debt, ROIC and CAPEX
Historical performance demonstrates track of delivery Net interest-bearing debt 2.000 1,0 0,8 Long term targets 0,6 NIBD/EBITDA 1.000 0,4 0,2 DKKm 0 0,0 -0,2 0-1x -1.000 -0,4 Net interest bearing- debt-to-EBITDA Net Interestbearing debt NIBD/EBITDA 15.000 ROIC 30% 25% 10.000 20% ROIC DKKm 15% ≥25% 5
Slide 50: Limited exposure to raw material fluctuations
Novozymes carries limited exposure to raw material fluctuations Factors impacting COGS Split of Cost of Goods sold • Productivity improvements, input prices, Raw materials consist primarily of different currency carbohydrates. Approximately 50% of raw material input are e.g., sucrose, maltose, gluco
Slide 51: Since 2000 DKK ~23bn returned to shareholders
Since 2000 DKK ~23bn has been returned to shareholders through dividend or share buybacks Dividend of DKK 4.50 per share for 2017 (up 12,5% from 2016), corresponding to a total dividend pay-out of DKK 1,318m (pay-out ratio of 42.3%). It has been proposed to initiate a new stock buyback program worth
Slide 52: Shareholder distribution
Shareholder distribution Novozymes “B”-shares are listed on the Shareholder distribution of B common stock* Copenhagen stock exchange under the symbol Novo A/S was the only major stockholder holding more “NZYM B” than 5% of Novozymes common stock Dec 31 2017 North Two share classes; A and B shares A
Slide 53: Foundation ownership advocates long-term focus
Foundation ownership advocates long-term focus Purpose of the Foundation: Structure of Novo Holdings and ownership The Novo Nordisk Foundation is an independent Danish foundation with corporate interests. The objective of the Novo Nordisk Foundation is twofold: to provide a stable basis for the comm
Slide 54: Our investor relations team
Our investor relations team Further investor relations information is available from the company homepage at investors.novozymes.com Tobias Björklund Elsebeth Kjærsgaard Klaus Sindahl Naja Wivel Head of investor relations IRO IRO Coordinator, +45 3077 8682 +45 3077 2510 +45 5363 0134 +45 3077 2076 t
Slide 55: Forward-looking statements
Forward-looking statements This presentation and its related comments contain forward-looking statements, including statements about future events, future financial performance, plans, strategies and expectations. Forward-looking statements are associated with words such as, but not limited to, "bel