Novonesis A/s Class B · OMXCOP:NSIS_B
Novonesis A/s Class B — Novozymes — 1H 2021 Earnings Presentation
67 slides from Novonesis A/s Class B's earnings presentation, Aug 12, 2021
Slide 1: Roadshow presentation 1H 2021
Roadshow presentation 1H 2021 Released on August 12, 2021 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 14 • Business areas 27 • ESG 53 • Financials 60 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
Highlights 1H 2021 Q2 2021 Strong Q2 with 9% organic sales growth. Full-year outlook for organic sales and EBIT Realized Realized margin narrowed to high ends of ranges; ROIC incl. goodwill raised Sales performance, organic % 6 9 • Novozymes reaches a strategic milestone in the implementation of its
Slide 6: Household Care
Household Care Performance in line with expectations 2021 perspectives • Organic 1H sales growth y/y: -2% (Q2 y/y: -6%). • Enzyme penetration in emerging markets. • Continued growth from increased enzymatic penetration in • Freshness rollout with broad-market launch. emerging markets and the Freshne
Slide 7: Food, Beverages & Human Health
Food, Beverages & Human Health Strong performance, full-year outlook raised 2021 perspectives • Organic sales growth 1H y/y: 14% (Q2 y/y: 18%). • Food performance driven by innovation, emerging markets • Strong performance above expectations; all subareas and penetration and health-focused solutions
Slide 8: Bioenergy
Bioenergy Strong growth on top of COVID-19 impacted 1H’20 2021 perspectives • Organic sales growth 1H y/y: 16% (Q2 y/y: 54%). • Growth driven by gradual recovery in U.S. ethanol • Strong performance driven by recovery in U.S. ethanol production, capacity expansion in Latin America, and production an
Slide 9: Grain & Tech Processing
Grain & Tech Processing Strong performance across most subareas 2021 perspectives • Organic sales growth 1H y/y: 17% (Q2 y/y: 18%). • Growth expected across most subareas. • Better than expected development mainly due to stock • Innovation and market penetration driving growth in building. grain, an
Slide 10: Agriculture, Animal Health & Nutrition
Agriculture, Animal Health & Nutrition Decline as expected against difficult comparator 2021 perspectives • Organic sales growth 1H y/y: -9% (Q2 y/y: -19%). • Double-digit underlying growth in agriculture from • Decline due to negative base effects from BioAg one-off and expansion across crops and r
Slide 11: Financials – Performance 1H
Financials – Performance 1H Strong performance across sales, earnings and cash flow, including currency headwinds and M&A- related effects • Organic sales growth 1H y/y: +6%; DKK sales +3% y/y. • Strong gross margin at 58.4%, 210bps higher than last year driven by production efficiencies and product
Slide 12: Outlook 2021
Outlook 2021 Organic sales growth and EBIT margin outlook narrowed to high ends of previous ranges. All business areas expected to grow in 2021 • Organic sales growth of 4% to 6% with sales in reported DKK slightly less than 1p.p. lower — all business areas expected to grow in 2021. • EBIT margin at
Slide 13: Summary
Summary Strong Q2 with 9% organic sales growth. Full-year outlook for organic sales and EBIT margin narrowed to high ends of ranges; ROIC incl. goodwill raised • 2021 outlook updated: Organic sales guidance narrowed upwards to 4% to 6%, while still subject to COVID-19 uncertainty and expected 2H des
Slide 14: Equity story
Equity story 14
Slide 15: Novozymes – the world leader in Bioinnovation
Novozymes – the world leader in Bioinnovation Innovation-driven company with strong financials, market leadership and world-class ESG profile +10 years of innovation-driven growth and margin expansion Strong financials* 16 30% • EBIT margin of 26% Sales (left axis) EBIT margin (right axis) 28% • ROI
Slide 16: Our products are used in +30 industries across 140 countries
Our products are used in +30 industries across 140 countries We launch 15-20 new products annually Agriculture & Industrial Biosolutions In Agriculture and Industrial Biosolutions, we focus on improved performance in agriculture and industrial processes, including higher yields, less waste and bette
Slide 17: The world leader in industrial enzymes and microbes across the value chain
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 platform • Cutting-edge protein engineerin
Slide 18: Turning amazing science into sustainable biological solutions
Novozymes is about turning amazing science into sustainable biological solutions • Capitalize on critical mass and expertise to develop new cutting-edge Balanced customer-approach to new product launches technology and innovation 20 20 • Enable cross-fertilization to leverage innovation and synergie
Slide 19: Enzyme technology improves gross margin and profitability
Enzyme technology improves Novozymes’ gross margin and profitability We re-invest 13-14% 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 Industrial-scale fermentation Con
Slide 20: Solid global presence
Solid global presence Decentralized R&D meets local needs faster and better Europe, Middle East & Africa +3% 5Y avg. organic ~2,800 FTE’s 39% sales perf. 32% HQ, Multi-purpose production, R&D of 2020 sales of 2020 sales North America -1% ~1,200 FTE’s HQ, Multi-purpose production, R&D 5Y avg. organic
Slide 21: Uniquely diversified group creating synergies and opportunities
Uniquely diversified group creating synergies and opportunities We launch technologies in five main business areas Household Care Food, Beverages & Bioenergy Grain & Tech Processing Agriculture, Animal Human Health Health & Nutrition 35% of 2020 sales 20% of 2020 sales 18% of 2020 sales 14% of 2020
Slide 22: Delivering sustainability impact through our products
Delivering sustainability impact through our products We are reducing CO2 emissions together with our customers Enabling a low carbon future In 2020, we saved 49 million tons of CO2 by Detergent Animal feed Textile enabling low carbon fuels in the transport 100 kg CO2 130 kg CO2 350 kg CO2 sector. p
Slide 23: Historical performance demonstrates delivery track record
Historical performance demonstrates delivery track record Organic sales EBIT NWC DKKbn Sales performance performance DKKbn EBIT margin margin DKKbn Net working capital /Sales 20 20% 7 40% 7 30% Organic sales performance Sales EBIT margin EBIT NWC/Sales NWC 6 6 24% 25% 23% 15 5 27.2% 27.7% 27.9% 27.9
Slide 24: Finding sustainable answers to the world’s problems
Finding sustainable answers to the world’s problems is core to Novozymes We are gearing the business for sustainable growth Sustainable agriculture Commercial investments Innovation platform roll-outs Strategic opportunity areas • Broader commercial footprint and • The Freshness platform is the most
Slide 25: Measuring our future success
Measuring our future success ‘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 year Score survey in 2022 by enabling low-carbon fuels in the transport sector in 2022 Nurture diversity EBIT mar
Slide 26: World leader in Bioinnovation
World leader in Bioinnovation Global leadership in enzyme and microbe development arise through a combination of competitive advantages Mastering the full value chain +10 years of innovation-driven growth and margin expansion 16 30% Sales (left axis) R&D/Sales EBIT margin ROIC 28% 14 26% 12 24% Inno
Slide 27: Business areas
Business areas 27
Slide 28: Household Care
Household Care The value we create Innovative brands help grow your market share. We work with you to ensure our biological solutions make your products stand out Laundry Automatic dishwash Eliminate Remove stains, Decrease dose, harsh chemicals boost whiteness increase performance SDG impact Hand d
Slide 29: Overview Household Care
Overview Household Care Key trends Growth drivers • Strong interest in freshness solutions for the removal of • Higher enzyme inclusion and innovation addressing key malodor and grime in clothing consumer pain points e.g. improved wash performance • Renewed industry focus on sustainable detergents b
Slide 30: Growth driver Freshness platform
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 increasing Increase in synthetic Colder and shorter Shift in detergent density fabrics wash
Slide 31: Growth driver Enzyme inclusion
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 general and Presence and emerging market solutions to in Asia Pacific in particular unlock potential 7x enzyme up-d
Slide 32: Growth driver Detergent compaction
Growth driver Detergent compaction We believe enzymes can contribute even more to a detergent and to compaction Other Perfume Other Perfume Builders Builders Polymers Polymers Enzymes Multienzymes Surfactants Surfactants • Using new as well as existing enzymes in higher • Freshness solutions to redu
Slide 33: Food, Beverages & Human Health
Food, Beverages & Human Health The value we create Consumer trends in the Food & Beverages space are constantly evolving. Stay ahead using leading biological innovation to both meet demand with new product claims and by getting more out of your raw materials. Baking Food & protein Freshness Health,
Slide 34: Overview Food, Beverages & Human Health
Overview Food, Beverages & Human Health Key trends Growth drivers • Strong consumer demand for new plant-based proteins • Demand for better and more convenient food with drives industry innovation awareness about food safety and “naturally healthy” • Focus on improved product quality and taste • Con
Slide 35: Growth driver Human Health
Growth driver Human Health Novozymes entering the attractive dietary supplement market through organic and inorganic growth 2020 Public announcement 2019 Human Health Novozymes OneHealth will help people live healthier and better lives by as a strategic rethinking tomorrow within human health, and f
Slide 36: Growth driver Human Health
Growth driver Human Health Strong innovation engine and multichannel strategy deliver products for consumer health Strategic portfolio addressing broad health categories Oral Care Digestive and Gut Health Immune Health Metabolic Health Cognitive Health With multichannel strategy represented by the 3
Slide 37: Growth driver Advanced Protein Solutions
Growth driver Advanced Protein Solutions Fermentation-based specialty protein ingredients to address consumer needs Consumers are actively looking to replace animal-based proteins, mainly due to concerns on Health Sustainability Yet many consumer feel current alternatives require compromises on Tast
Slide 38: Bioenergy
Bioenergy The value we create You work hard to create the most value at the lowest cost and to stay flexible enough to adapt to changing markets. We work hard to deliver solutions and services that will help you succeed Conventional biofuels Yield improvement Reduced Biomass chemical spend conversio
Slide 39: Overview Bioenergy
Overview Bioenergy Key trends Growth drivers • US ethanol industry is under strong pressure due to the • Industry consolidation and focus on process economics COVID-19 pandemic induced drop in gasoline driving demand for biological solutions that enhance consumption, the many small refinery exemptio
Slide 40: Market Bioenergy
Market Bioenergy Market growth likely to be centered in Latin America European Union ⁓1.5bn Key legislation: Renewable Energy Directive ⚫ = Production in bn gal per year North America ⁓16bn China Key legislation: Renewable Fuel Standard ⁓0.9bn Ambition to achieve E10 likely to see reduced focus Lati
Slide 41: Case Ethanol production
Case Ethanol production Global ethanol production US ethanol producer margin Contribution margin (USD per gal) 40 0.7 Rest of World China EU Brazil US 35 0.6 30 28.6 29.1 0.5 25.8 26.2 26.8 26.1 0.4 Billion gallons 25 0.3 20 6.8 6.9 7.9 8.6 7.2 7.9 0.2 15 0.1 10 0.0 14.8 15.4 15.9 16.1 15.8 13.9 5 -
Slide 42: Growth driver Process optimization
Growth driver Process optimization Tailoring biology to maximize output for each plant The ethanol process • Enzymes are applied in multiple stages, along with yeast in fermentation • Using our data insights we deliver custom fermentation solutions, tailored to a plant’s unique operating conditions
Slide 43: Grain & Tech Processing
Grain & Tech Processing The value we create Grain milling & We help optimize starch and grain processing, improve industry profitability and produce the starch processing highest value output possible. In the technical areas, our enzymatic and microbial solutions target customers’ unmet needs across
Slide 44: Overview Grain & Tech Processing
Overview Grain & Tech Processing Key trends Growth drivers • Focus on cost reduction, process optimization and yield • Demand for optimization of starch processes continues enhancement including higher protein extraction from in current environment grain processing • Increased demand for sugar repla
Slide 45: Growth driver The grain value chain
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 opportunity with
Slide 46: Growth driver Vegetable oil processing
Growth driver Vegetable oil processing Enzymatic applications for vegetable oil processing has vast potential New agro-processing applications • Novozymes offers multiple solutions across the value chain (i.e., from higher yields in oil extraction & refining to transformation of oils & fats into spe
Slide 47: Agriculture, Animal Health & Nutrition
Agriculture, Animal Health & Nutrition The value we create Enzymes and microbes are nature's own perfect tools. We put them to work in agricultural solutions that increase the efficiency of crop and livestock production. BioAgriculture Animal health Powerful Bioyield protection enhancement SDG impac
Slide 48: Overview Agriculture, Animal Health & Nutrition
Overview Agriculture, Animal Health & Nutrition Key trends Growth drivers • World population growth and changing dietary habits • Governments in emerging economies focusing on affecting demand for protein and other food sources agriculture productivity • Stricter regulatory requirements for more sus
Slide 49: Case Our BioAg setup
Commercial and innovation partnership, All icons? including in upstream corn Case Our BioAg setup We have increased our focus on biocontrol to complement our leading bioyield technology base Commercial and innovation collaboration Commercial partnership for downstream products in Canada BIOYIELD Enh
Slide 50: Case We are committed to our core technologies and partner with industry leaders
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 gut health enzymes monogast
Slide 51: Case Scientific evidence supports enzyme penetration
Case Scientific evidence supports enzyme penetration We enable livestock farmers to reduce feed costs Market is sensitive to feed and meat Scientific education of customers to Low margins leave the producers price changes increase penetration with different options 70% of the total cost of poultry p
Slide 52: Attractive benefits of feed enzymes across species
Attractive benefits of feed enzymes remain important driver for products across species Phytase - Phosphate • Only limited amount of phosphate in feed is available to the animal • Farmers can save 25-100% of added inorganic phosphate • HiPhos® releases >80% of the bound phosphorous and lowers the an
Slide 53: ESG
ESG 53
Slide 54: Committed to making a better world
Committed to making a better world Novozymes is positioned to deliver on the world’s most pressing problems Sustainability is deeply integrated in our purpose Sustainability drives how operate - Let’s rethink tomorrow Sustainability drives the way we do business Our solutions contribute to reducing
Slide 55: The world Our operations
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 Climate Clima
Slide 56: Environment: reducing the environmental impact of our operations
Environment: We continued to reduce the environmental impact of our operations Decoupling resource consumption from economic growth 29% We have stepped up on our commitments to address climate, water and Reduction (year-on-year) in absolute CO2 production and consumption emissions 69% 2% Renewable e
Slide 57: Social: continuing investing in the development of our employees
Social: We plan to continue investing in the development of our employees Since 2010, see a steady improvement on our key employee engagement metrics We made good progress on our employee targets for 2022 81 33% ✓ Enable learning score: 78 achieved in our employment survey Employee satisfaction Wome
Slide 58: Governance: Keeping the organization accountable
Governance: Keeping the organization accountable Sustainability activities and targets are anchored and executed across the organization Strong oversight of sustainability performance across Novozymes Sustainability is integrated into long-term incentive programs Provides input to executive manageme
Slide 59: Commitment to good performance on material sustainability issues
Continuing our commitment to good performance on material sustainability issues ESG rating agencies have recognized and endorsed our strong commitment to ESG issues Our strong ESG performance is endorsed by rating agencies... … and we continue to support the global call for collective action on mate
Slide 60: Financials
Financials 60
Slide 61: Multiple tools to optimize cost base
Multiple tools to optimize cost base 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 current price levels and COGS Geographical location
Slide 62: Historical performance demonstrates delivery track record
Historical performance demonstrates delivery track record Mid-term targets 2020-2022 Organic sales DKKbn performance Sales performance 25 20% Organic sales performance Sales performance Organic revenue growth of +5% per year Sales 20 10% 7% 7% 7% 14.0 14.1 14.5 14.4 14.4 14.0 15 11.2 DKK EBIT margin
Slide 63: Historical performance demonstrates delivery track record
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 21% 20% 19% 3.0 19% 20% Net investments CAPEX to sales at or less than 8% 2.5
Slide 64: Shareholder distribution and dividend payouts
Shareholder distribution and dividend payouts As of December 2020 • Novo Holdings held 25.5% of the share capital and controlled 72.4% of votes (all A shares and 8.2% of B shares) • Novozymes had more than 54,000 shareholders of whom 95% were private shareholders in Denmark Shareholder distribution
Slide 65: Foundation ownership advocates long-term focus
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 private • To provide a st
Slide 66: Contact Our investor relations team
Contact 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 6144 +45 30
Slide 67: novozymes' Rethink Tomorrow
x novozymes' Rethink Tomorrow