Novonesis A/s Class B · OMXCOP:NSIS_B
Novonesis A/s Class B — Q1 2021 Earnings Presentation
67 slides from Novonesis A/s Class B's earnings presentation, Apr 27, 2021
Slide 1: Roadshow presentation Q1 2021
Roadshow presentation Q1 2021 Released on April 27, 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 overview 27 • ESG overview 53 • Financial overview 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
Latest results Highlights Q1 2021 Q1 2020 Stronger-than-expected start to the year; 3% organic sales growth and strong Realized Realized earnings. 2021 outlook maintained Sales performance, organic % 3 10 • Organic Q1 sales y/y: 3%. EBIT margin % 29.6 28.9 • Better-than-expected performance due to c
Slide 6: Household Care
Latest results Household Care Growth above expectations mainly due to timing, especially in 2021 perspectives emerging markets • Enzyme penetration in emerging markets • Organic Q1 sales y/y: 2%. • Freshness rollout with broad market launch • Penetration in emerging markets and the rollout of the •
Slide 7: Food, Beverages & Human Health
Latest results Food, Beverages & Human Health Strong performance, significantly above expectations 2021 perspectives • Organic Q1 sales y/y: 11%. • Food performance driven by innovation and emerging • Performance benefitted from customer stock building, faster markets penetration. emerging market re
Slide 8: Bioenergy
Latest results Bioenergy U.S. ethanol recovery continued but remains affected by 2021 perspectives COVID-19 restrictions • The U.S. ethanol production expected to gradually • Organic Q1 sales y/y: -9%. recover as COVID-19 restrictions are lifted. • U.S. ethanol demand and production remained weak du
Slide 9: Grain & Tech Processing
Latest results Grain & Tech Processing Strong growth, significantly above expectations 2021 perspectives • Organic Q1 sales y/y: 16%. • Growth in grain led by grain milling and vegetable oil • Performance benefitted from customer stock building, faster processing. emerging market recovery, and a bet
Slide 10: Agriculture, Animal Health & Nutrition
Latest results Agriculture, Animal Health & Nutrition Customer stock building benefitted performance above 2021 perspectives expectation • Double-digit underlying growth in agriculture from • Organic Q1 sales y/y: 0%. expansion across crops and regions. • Performance above expectations due to timing
Slide 11: Financials – Performance Q1
Latest results Financials – Performance Q1 Stronger start to the year than expected. 3% organic sales growth and 29.6% EBIT margin • Organic Q1 sales y/y: 3%. DKK sales flat including 3pp net negative impact from currencies and M&A. • Integration of recent Human Health acquisitions progressing well
Slide 12: Outlook 2021
Latest results Outlook 2021 Outlook maintained across key parameters • The better underlying momentum in the first quarter in some businesses does not change the full-year sales outlook due to timing factors, supply-chain volatility and continued COVID-19 related uncertainty. • Organic sales growth
Slide 13: Summary
Latest results Summary Stronger-than-expected start to the year; 3% organic sales growth and strong earnings. 2021 outlook maintained • Better-than-expected performance in the first quarter due to customer stock building, a faster-than- anticipated recovery in emerging markets, and better underlying
Slide 14: Equity story
Equity story 14
Slide 15: Novozymes – the world leader in Bioinnovation
Equity story 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 ax
Slide 16: Our products are used in +30 industries across 140 countries
Equity story 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 wa
Slide 17: 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 platform • Cutting-edge prote
Slide 18: Turning amazing science into sustainable biological solutions
Equity story 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
Slide 19: Enzyme technology improves gross margin and profitability
Equity story 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 1. Improve productio
Slide 20: Solid global presence
Latest results 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
Slide 21: Uniquely diversified group creating synergies and opportunities
Equity story 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
Slide 22: Delivering sustainability impact through our products
ESG overview 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
Slide 23: Historical performance demonstrates delivery track record
Equity story 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.
Slide 24: 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 Sustainable agriculture Commercial investments Innovation platform roll-outs Strategic opportunity areas • Broader commercial footprint and • The Freshness platfor
Slide 25: Measuring our future success
Equity story 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 diver
Slide 26: World leader in Bioinnovation
Equity story 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
Slide 27: Business overview
Business overview 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: Household Care overview
Business overview Household Care overview 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 sustai
Slide 30: 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 increasing Increase in synthetic Colder and shorter Shift in detergent de
Slide 31: 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 general and Presence and emerging market solutions to in Asia Pacific in particular unlock potent
Slide 32: Growth driver Detergent compaction
Business overview 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
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: Food, Beverages & Human Health overview
Business overview Food, Beverages & Human Health overview 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 quali
Slide 35: Growth driver Human Health
Business overview Growth driver Human Health Novozymes entering the attractive dietary supplement market through organic and inorganic growth 2020 Acquisition of Novozymes OneHealth will help people Acquisition of live healthierNovozymes OneHealth and better lives by will help people live rethinking
Slide 36: Growth driver Human Health
Business overview 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 re
Slide 37: Growth driver Alternative Specialty Protein
Business overview Growth driver Alternative Specialty Protein 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 requir
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: Bioenergy overview
Business overview Bioenergy overview 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
Slide 40: Market Bioenergy
Business overview 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 Key legislation: ⁓16bn China Renewable Fuel Standard ⁓0.9bn Ambition to achieve E10 likely to see
Slide 41: Case Ethanol production
Business overview 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 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 42: Growth driver: tailoring biology to maximize output
Business overview Growth driver 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 1.
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: Grain & Tech Processing overview
Business overview Grain & Tech Processing overview 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 dema
Slide 45: 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 46: Growth driver Vegetable oil processing
Business overview 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 oi
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: Agriculture, Animal Health & Nutrition overview
Business overview Agriculture, Animal Health & Nutrition overview 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 require
Slide 49: Case Our BioAg setup
Business overview Commercial and innovation partnership, 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 BIOYI
Slide 50: Case We are committed to our core technologies and partner 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 gut healt
Slide 51: 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 meat Scientific education of customers to Low margins leave the producers price changes increase penetration with different options 70% of the total
Slide 52: Attractive benefits of feed enzymes remain important driver
Business overview 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
Slide 53: ESG overview
ESG overview 53
Slide 54: Committed to making a better world
ESG overview 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
Slide 55: The world / Our operations: measuring our success
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 56: Environment: reducing the environmental impact of our operations
ESG overview 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
Slide 57: Social: continuing investing in the development of our employees
ESG overview 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 sati
Slide 58: Governance: Keeping the organization accountable
ESG overview 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 execu
Slide 59: Continuing our 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: Financial overview
Financial overview 60
Slide 61: Multiple tools to optimize cost base
Financial overview 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 Ge
Slide 62: Historical performance demonstrates delivery track record
Financial overview 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 1
Slide 63: 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 21% 20% 19% 3.0 19% 20% Net investments CAPEX to sales at
Slide 64: Shareholder distribution and dividend payouts
Financial overview 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 Shareh
Slide 65: 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 66: 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 67: Novozymes – Rethink Tomorrow
x novozymes' Rethink Tomorrow