Novonesis A/s Class B · OMXCOP:NSIS_B
Novonesis A/s Class B — Q1 2020 Earnings Presentation
64 slides from Novonesis A/s Class B's earnings presentation, Apr 29, 2020
Slide 1: Roadshow presentation Q1 2020
Roadshow presentation Q1 2020 Released on April 29 2020 Further investor relations information is available from the company’s website at investors.novozymes.com
Slide 2: Table of Content
Roadshow presentation Table of Content • Latest results 4 • Equity story 13 • Business overview 25 • ESG overview 50 • Financial overview 57 2
Slide 3: Forward Looking Statement
Disclaimer Forward Looking Statement 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 limite
Slide 4: Latest results
Latest results 4
Slide 5: Highlights
Latest results Highlights Strong first quarter; 2020 Outlook remains suspended Q1 2020 Q1 2019 Realized Realized • Strong sales across all main business segments and geographies Sales growth, organic % 10 -4 • Agile organization able to meet demand despite COVID-19 disruptions EBIT margin % 28.9 25.
Slide 6: Organic sales growth by geography
Latest results Organic sales growth by geography with main markets ⚫ Main sites with production and R&D ⚪ Satellite production site ⚫ Satellite R&D site Europe, Middle East North America & Africa 33% Q1 y/y: 8% Q1 y/y: 10% 38% of sales of sales ⚫ ⚪ ⚫ ⚫ ⚫ ⚫ ⚫ ⚪ ⚪ ⚫ Latin America Asia Pacific 10% Q1 y
Slide 7: Household Care
Latest results Household Care Strong start amplified by COVID-19 effects YTD organic sales growth (y/y) • Organic sales; Q1 y/y: +11% 11% • New Freshness solution for liquid and unit dose detergents made available 5% • COVID-19 related stockpiling, pantry loading and 1% 1% increased at-home usage -3
Slide 8: Food & Beverages
Latest results Food & Beverages Strong start led by baking YTD organic sales growth (y/y) • Organic sales; Q1 y/y: +11% 11% • Strong growth in baking, beverages and grains; food & 6% nutrition slightly down 5% • Saphera Fiber® – increasing fiber and sweetness with 2% no added sugar • Sales likely af
Slide 9: Bioenergy
Latest results Bioenergy Strong Q1 performance YTD organic sales growth (y/y) • Organic sales; Q1 y/y: +11% 11% 9% • Performance driven by Brazil, yeast and growth in US 6% production volumes • ‘Stay-at-home’ orders led to double-digit drop in US gasoline and ethanol demand in last week of March -6%
Slide 10: Agriculture & Feed
Latest results Agriculture & Feed Good start to the year YTD organic sales growth (y/y) • Organic sales; Q1 y/y: +8% 8% • Growth in both BioAg and Feed 2% • BioAg transitioning well to new set-up • TAEGRO® – biocontrol solution for fruit and vegetables -5% -6% 2020 perspectives -8% Q1’16 Q1’17 Q1’18
Slide 11: Financials
Latest results Financials Strong financial performance as top line growth emphasizes operational leverage • Organic sales; Q1 y/y: +10% • Gross margin at 57.1% - 160bps higher than last year driven by improved production efficiency, higher operational leverage and lower input costs • EBIT margin at
Slide 12: Quarterly summary
Latest results Quarterly summary Strong first quarter performance, but outlook suspended • Novozymes is clearly geared to deliver • Strong sales and financial performance despite COVID-19 disruptions • Outlook remains suspended as uncertainty persists especially concerning US ethanol demand and stoc
Slide 13: Equity story
Equity story 13
Slide 14: Our products are used in +30 industries
Equity story Our products are used in +30 industries We launch 15-20 new products annually Enzymes are… ~90% ~10% Microbes are… of sales of sales … proteins that catalyze chemical reactions and thus often … living microscopic organisms, such as bacteria and fungi. They replace chemicals in products
Slide 15: The world leader in industrial enzymes and microbes across the value chain
Equity story The world leader in industrial enzymes and microbes across the value chain We are uniquely positioned to drive innovation opportunities Innovation leadership Best-in-class production Diversified global presence • Strong R&D organization and broad technology • Cutting-edge protein engine
Slide 16: Turning amazing science into sustainable biological solutions
Equity story Novozymes is about turning amazing science into sustainable biological solutions Since 2013, we have more than doubled our average number of launches relative to the average number from 2000-2012 • Capitalize on critical mass and expertise to develop new cutting-edge Balanced customer-a
Slide 17: Enzyme technology improves gross margin and profitability
Equity story Enzyme technology improves Novozymes’ gross margin and profitability We re-invest ~13% of sales into R&D projects for product innovation and productivity improvement Product innovation Process innovation Technology development 2/3 1/3 Raw materials Micro-organisms Consumer needs Industr
Slide 18: Solid global presence
Equity story Solid global presence Decentralized R&D meets local needs faster and better North America Europe, Middle East & Africa Sites: Multi-purpose ⚫ Main sites with production and R&D ⚪ Satellite production site ⚫ Satellite R&D site production and R&D Sites: HQ, Multi-purpose FTE’s: ~1,200 +1%
Slide 19: Uniquely diversified group creating synergies and opportunities
Equity story Uniquely diversified group creating synergies and opportunities We launch technologies in five main business segments Household Care Food & Beverages Bioenergy Agriculture & Feed Technical & Pharma 33% of ’19 sales 29% of ’19 sales 20% of ’19 sales 13% of ’19 sales 5% of ’19 sales >60%
Slide 20: Enzymes and microbes allow production of more with less
Equity story Enzymes and microbes allow for the production of more with less We are reducing CO2 emissions together with our customers Our innovations are paving the way for a better tomorrow Remove tough stains and Improve filtration and flavor Save time, water, energy and Higher production output
Slide 21: Historical performance demonstrates delivery track record
Equity story Historical performance demonstrates delivery track record Organic sales EBIT NWC DKKbn Sales performance growth DKKbn EBIT margin margin DKKbn Net working capital /Sales 20 20% 7 40% 7 30% Organic sales growth Sales EBIT margin EBIT NWC/Sales NWC 6 6 24% 25% 23% 15 11% 5 27.2% 27.7% 27.
Slide 22: Finding sustainable answers to the world's problems
Equity story Finding sustainable answers to the world’s problems is core to Novozymes We are gearing the business for sustainable growth with ‘Better business with biology’ Sustainable Differentiate to succeed Invest in impact Spearhead new business agriculture Focusing the R&D pipeline Showing up f
Slide 23: Measuring our future success by 'Better business with biology'
Equity story Measuring our future success by ‘Better business with biology’ Mid-term targets 2020-2022 World Business Zymers CLIMATE Organic sales growth Enable learning Save 60 million tons CO2 5+% per year1 Score survey in 2022 by enabling low-carbon fuels in the transport sector in 2022 Nurture d
Slide 24: World leader in Bioinnovation
Equity story World leader in Bioinnovation Global leadership in enzyme and microbe development arise through a combination of competitive advantages +10 years of innovation-driven growth Sales (left) EBIT margin R&D/Sales ROIC 16 30% 15 28% 14 26% Company background 13 24% Unique sustainability prof
Slide 25: Business overview
Business overview 25
Slide 26: Household Care
Household Care The value we create Where we make a difference Our enzymes enable manufacturers to produce Innovative brands help grow your market share. We work with you to ensure our laundry and cleaning products that offer better biological solutions make your products stand out performance with r
Slide 27: Household Care overview
Business overview Household Care overview Key segment trends Main growth drivers • Strong interest in freshness solutions for • Higher enzyme inclusion and innovation to removal of malodor and grime, including in improve wash performance at low synthetics • Compaction of laundry detergents remains a
Slide 28: Growth driver Freshness platform
Business overview Growth driver Freshness platform Lifestyle changes are spurring demand for freshness, and we are on track to deliver DKK 1bn Consumers’ lifestyle changes are the drivers of growing hygiene needs… Urbanization Increase in Colder and shorter Shift in detergent increasing density synt
Slide 29: Growth driver Enzyme inclusion
Business overview Growth driver Enzyme inclusion We see large potential for future enzyme inclusion, especially in emerging markets Significant up-dosing and penetration potential in emerging markets in Presence and emerging market solutions to general and in Asia Pacific in particular unlock potent
Slide 30: Growth driver Detergent compaction
Business overview Growth driver Detergent compaction We believe enzymes can contribute even more to a detergent and to compaction Other Other Perfume Perfume Builders Builders Polymers Polymers Multienzymes Enzymes Surfactants Surfactants • New and more stable enzymes to replace • Freshness solution
Slide 31: Food & Beverages
Food & Beverages The value we create Where we make a difference Enzymes enable producers to diversify their It's hard to keep up with ever-changing food and beverage trends. Stay one step product ranges and develop products that stay ahead and get more out of your raw materials with leading enzyme i
Slide 32: Food & Beverages overview
Business overview Food & Beverages overview Key segment trends Main growth drivers • Growing informed consumption for high-quality, • Demand for better and more convenient food healthy and sustainable foods i.e. with awareness about food safety and • Plant protein, acrylamide removal, less sugar add
Slide 33: Growth driver The grain value chain
Business overview Growth driver The grain value chain Novozymes offers multiple solutions across the 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
Slide 34: Growth driver Vegetable oil processing
Business overview Growth driver Vegetable oil processing Enzymatic applications for vegetable oil processing show huge potential New agro-processing applications • Novozymes offers multiple solutions across the value chain • Improving efficiency in vegetable oil production is a >DKK 1bn opportunity
Slide 35: Bioenergy
Bioenergy The value we create Where we make a difference Our enzymes and yeasts maximize the efficiency You work hard to create the most value at the lowest cost and to stay flexible enough of ethanol plants to adapt to changing markets. We work hard to deliver solutions and services that will Conve
Slide 36: Bioenergy overview
Business overview Bioenergy overview Key segment trends Main growth drivers • Growing demand for clean energy as climate • Stable and coherent political mandate to drive change and sustainability are high on public adoption of biofuels agendas • Increase in global biofuel mandates continues, 20% • I
Slide 37: Growth driver Bioenergy
Business overview Growth driver Bioenergy Sizeable market with growth opportunities +1.4bn European Union Renewable Energy Directive ⚫ = Production in bn gal per year North America +16bn Renewable Fuel Standard China +1.2bn E10 by 2022 Latin America +7.4bn RenovaBio +0.8bn India Strong governmental
Slide 38: Case Ethanol production
Business overview Case Ethanol production Global ethanol production US ethanol producer margin 40 0.7 Contribution margin (USD per gal) Rest of World China EU Brazil US 35 0.6 30 28.6 29.1 0.5 25.8 26.2 26.8 0.4 Billion gallons 25 0.3 20 6.8 6.9 7.9 8.6 7.2 0.2 15 0.1 10 0.0 14.8 15.4 15.9 16.1 15.8
Slide 39: Addressing complexity in bioethanol production
Business overview Growth driver Addressing complexity in bioethanol production Designing enzymes for individual plants The ethanol process • Enzymes are applied in multiple stages, along with yeast in fermentation • Using our diagnostic program to deliver custom fermentation solutions, tailored to a
Slide 40: Agriculture & Feed
Agriculture & Feed The value we create Where we make a difference Our solutions improve yields in farming and Enzymes and microbes are nature's own perfect tools. We put them to work in enhance the digestibility and nutritional value of agricultural solutions that increase the efficiency of crop and
Slide 41: Agriculture & Feed overview
Business overview Agriculture & Feed overview Key segment trends Main growth drivers • Agriculture affected by more frequent incidents • Governments in emerging economies focusing of extreme weather on agriculture productivity • Sustainable yield enhancement still in high demand as world population
Slide 42: Case Our new BioAg setup allows for broader outreach
Business overview Case Our new BioAg setup allows for broader outreach More flexible setup in the future will enable Novozymes to bring biological solutions to more partners and additional crops – and to continue the journey towards the targeted 250-500m acres by 2025 Partnership New continuation pa
Slide 43: Committed to core technologies and partnering with industry leaders
Business overview Case We are committed to our core technologies and partner with industry leaders to win We develop and commercialize these technologies together with our partners, who are leading players in their respective industry Feed and animal Bacillus for Hatchery Natural solutions Pond trea
Slide 44: Case Scientific evidence supports enzyme penetration
Business overview Case Scientific evidence supports enzyme penetration We enable livestock farmers to reduce feed costs Market is sensitive to feed and Scientific education of customers Low margins leave the producers meat price changes to increase penetration with different options 70% of the total
Slide 45: Attractive value propositions in feed enzymes
Business overview Growth driver Attractive value propositions in feed enzymes Phytase - Phosphate • Only 3-30% of phosphate in feed is available to the animal • Ronozyme NP® releases half of the phosphate bound – Ronozyme HiPhos® releases nearly all of it • Significant reduction in phosphorous excre
Slide 46: Technical & Pharma
Technical & Pharma The value we create Where we make a difference Our solutions improve processes across industries Our enzymatic and microbial solutions target your customers’ unmet needs across such as textiles & leather, wastewater, pulp & global markets. The result is a strong pipeline of custom
Slide 47: Technical & Pharma overview
Business overview Technical & Pharma overview Key segment trends Main growth drivers • Water scarcity and water pollution driving • Sustainability in technical industries such as legislation and demand for solutions that textiles reduce water consumption and improve water quality 5% • Consumer deman
Slide 48: Strategic opportunity areas
Strategic opportunity areas How it fits with ‘Better business with biology’ Human oral and gut health Differentiate to succeed Invest in impact Spearhead new business Focusing the R&D pipeline Showing up for our customers – and change the world Strategic opportunity areas *Illustration Contributing
Slide 49: Human oral and gut health; Specialty alternative proteins
Business overview Human oral and gut health Specialty alternative proteins Deliver clinically-proven products for Providing alternative specialty protein human oral and gut health for food ingredients via fermentation Connecting our discovery engine with consumer insights enables innovative Strong R
Slide 50: ESG overview
ESG overview 50
Slide 51: Committed to making a better world
ESG overview Committed to making a better world At Novozymes, sustainability is a key component of our business strategies and management processes We manage our performance on material ESG issues through In 2015, we made the UN Sustainable Development Goals (SDGs) our own. The SDGs inspired our pur
Slide 52: The world; Our operations
ESG overview The world Our operations Measuring our success Measuring our success Novozymes is committed to help solving three global challenges: We hold ourselves accountable for reducing the negative impact Climate, Water and sustainable Production & Consumption from our operations in these areas
Slide 53: Produce more with less
ESG overview Produce more with less We are reducing CO2 emissions together with our customers In 2019, our customers saved an estimated 87 million tons of CO2 emissions by applying Novozymes’ products. The savings achieved are equivalent to taking approximately 36 million cars off the road 87,000,00
Slide 54: Continuing our journey of operational excellence
ESG overview We plan to continue our journey of operational excellence Since 2010, we have grown our revenue by 48%, while absolute emissions from Novozymes’ operations have risen by only 6% Decoupling resource consumption from economic growth Steady improvement in employee metrics 30% (4)% 77 31% R
Slide 55: Keeping the organization accountable
ESG overview Keeping the organization accountable Sustainability governance, activities and targets are anchored and executed across functions and operations Broad remuneration policy and sustainability governance Sustainability Awards and Recognition The new incentive program covers the Executive L
Slide 56: Combating the world's pressing problems
ESG overview Novozymes combating the world’s pressing problems Sustainability drives the way we do business and we have always taken the triple bottom line approach We are committed to doing our part and to helping the world reach the goals of the Paris Agreement Absolute, not relative measures of C
Slide 57: Financial overview
Financial overview 57
Slide 58: Historical performance demonstrates delivery track record
Financial overview Historical performance demonstrates delivery track record Mid-term targets 2020-2022 Organic sales DKKbn growth Sales performance 25 20% Organic sales growth Sales Sales performance Organic revenue growth of +5% per year1 20 11% 10% 7% 7% 7% 14.0 14.1 14.5 14.4 14.4 15 11.2 DKK EB
Slide 59: Historical performance demonstrates delivery track record
Financial overview Historical performance demonstrates delivery track record Model assumptions 2020-2022 DKKbn NWC/Sales Net working capital 5.0 30% NWC/Sales NWC Net working capital Improving as a percentage of sales 4.5 4.0 24% 25% 23% 3.5 20% 19% 3.0 19% 20% Net investments CAPEX to sales at or l
Slide 60: Limited exposure to raw material fluctuations
Financial overview Novozymes carries limited exposure to raw material fluctuations Factors impacting COGS Factors impacting our input prices Split of Cost of Goods Sold Note: accounting practice implies that there is a time lag Raw materials consist primarily of different chemicals and between curre
Slide 61: Shareholder distribution and dividend payouts
Financial overview Shareholder distribution and dividend payouts As of December 2019 • Novo Holdings held 25.5% of the share capital and controlled 72.0% of votes (all A shares and 8.6% of B shares) • Novozymes had more than 52,000 shareholders of whom 95% were private shareholders in Denmark • ~50
Slide 62: Foundation ownership advocates long-term focus
Financial overview Foundation ownership advocates long-term focus Purpose of the Foundation Structure and ownership The Novo Nordisk Foundation is an independent Danish foundation with corporate interests. The objective of the Novo Nordisk Foundation is twofold: Novo Nordisk Institutional and privat
Slide 63: Our investor relations team
Financial overview Our investor relations team Further investor relations information is available from the company’s website at investors.novozymes.com Tobias Björklund Carl Ahlgren Naja Wivel Ulrik Wu Svare Head of Investor relations IR officer (US) Coordinator IR officer +45 3077 8682 +1 919 702
Slide 64: novozymes' Rethink Tomorrow
x novozymes' Rethink Tomorrow