Novonesis A/s Class B · OMXCOP:NSIS_B
Novonesis A/s Class B — Novozymes — Non-Deal Roadshow (August 2016)
64 slides from Novonesis A/s Class B's roadshow presentation, Aug 10, 2016
Slide 1: Road Show presentation Q2 2016
Road Show presentation Q2 2016 August 10th 2016
Slide 2: 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, "be
Slide 3: Table of contents
Table of contents 1. Latest results 4 2. Novozymes Overview 13 3. Strategy 21 4. Market Overview 32 - Household Care 33 - Food & Beverages 37 - Bioenergy 40 - Agriculture & Feed 43 - Technical & Pharma 50 5. Sustainability 52 6. Financial Review 57 3
Slide 4: Latest results
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Slide 5: 1H 2016 Summary
1H 2016 Summary Sales and organic growth Q2 sales increased but were lower than expected 1H 2014 – 1H 2016 DKKm 12% 7.500 • 3% organic sales growth and flat sales in DKK in 1H 2016. Growth driven by Household Care, Food & Beverages and Technical 10% 8% 7.000 & Pharma 8% 6% 5% 6.500 • BioAg and Bioe
Slide 6: Household Care & Technical
Household Care & Technical +4% / +3% Organic growth / DKK growth Household Care • Satisfactory sales growth in HHC supported by demand for liquids 2.330 2.265 in Asia Pacific and premium detergents in North America. Europe and Latin American are both slightly positive for the first half of the year
Slide 7: Agriculture & Bioenergy
Agriculture & Bioenergy Organic growth / DKK growth Bioenergy • Sales contracted in the first half of the year as ethanol producers continued to optimize their production economy and enzyme spend. Tough price competition; producer margins remained low -6% / -7% +1% / -6% • Trialing of Avantec® Amp
Slide 8: The upcoming launch of the new corn inoculant
The upcoming launch of the new corn inoculant Our current business in BioAg New corn inoculant • Slightly less than half of our Ag/Feed • First ever inoculant for corn applied by a seed segment, soy being the primary crop company (upstream) • Sales growth in DKK is currently impacted • Launch plan
Slide 9: Food & Beverages
Food & Beverages Organic growth / DKK growth Baking +3% / +1% • Baking still driving growth, though more modestly than in recent years and mainly in Europe and emerging markets Starch • Solid growth in starch driven by increased penetration mainly in 1.856 1.846 Europe Food & Nutrition • Food & Nu
Slide 10: Research & Innovation update
Research & Innovation update Household Care Amplify Prime® best-in-class liquid amylase • In-depth cleaning at low temperatures • Best starch removal technology optimized for short wash cycles Progress Uno® protease for tough conditions • Exceptionally high performing protease that delivers consiste
Slide 11: Research & Innovation update: DONG REnescience plant
Research & Innovation update Novozymes to supply DONG’s new REnescience® plant in Northwich, U.K. – new biological waste-sorting technology QUARTERLY 11 RESULTS QUARTERLY • NOVOZYMES RESULTS OVERVIEW • NOVOZYMES • STRATEGY OVERVIEW • SEGMENTAL • STRATEGY OVERVIEW • MARKET • SUSTAINABILITY OVERVIEW •
Slide 12: Financial performance & outlook
Financial performance & outlook 1H 2016: Net profit in line with expectations Key Realized 2016 outlook financials 1H 2016 August 10 • Gross margin on par with first half last year, as productivity improvements offset the one-time reorganization cost incurred in Q1 Sales growth, org. 3% 2-4% • Adju
Slide 13: Novozymes Overview
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Slide 14: Novozymes – the world leader in bioinnovation
Novozymes – the world leader Founded 1925 in bioinnovation Listed 2000 Ticker NZYM B Who are we? Exchange Copenhagen Market Cap US$ ~13.5bn Global R&D intensive Profitable Majority owner Novo A/S ~6,500 employees, ~7,000 patents, $2bn in sales and controls 25.5% of 700 products in ~14% of sales 27.
Slide 15: Foundation ownership advocates long-term focus
Purpose of the Foundation: Foundation ownership advocates 1. provide a stable basis for the commercial and research activities of the companies long-term focus in Novo A/S 2. support physiological, endocrinological, metabolic and other medical research 3. contribute to the preservation and operation
Slide 16: Experienced leadership team
Experienced leadership team – with more than 23 years seniority on average with the business Andrew Fordyce Benny D. Loft Peder Holk Nielsen Tina S. Fanø Anders Lund Thomas Videbæk Executive Vice President, CFO & Executive Vice President, CEO & President Executive Vice President, Executive Vice Pres
Slide 17: Uniquely diversified group
Uniquely diversified group – Creates synergies and new opportunities • Unique biotech-focused business with a strong legacy of delivering growth, earnings, and cash flow • ~14% of annual sales invested in R&D • Global provider of enzymes to all market segments creates global market leader position •
Slide 18: Diversification in revenue streams underpins strong financial position
Diversification in revenue streams underpins the company’s strong financial position Industry growth profiles and 5-yr organic averages Region growth profiles and 5-yr DKK averages 7% 10% 15% 33% HHC 35% F&B 19% Europe, Middle East and Africa Industry BioE Region North America A&F Asia Pacific 18%
Slide 19: Global production and R&D setup
Global production and R&D setup - 5 Core production plants and 3 satellites - 3 Main R&D centers and 4 satellites Copenhagen, Denmark HQ+R&D+Production Beijing + Tianjin, China Hongda, China Core production plant Main R&D center Satellite production site Satellite R&D site 19 QUARTERLY RESULTS • NOV
Slide 20: Pipeline of significant market-expanding growth opportunities
Pipeline of significant market-expanding growth opportunities On top of the flow of innovation to existing markets, Novozymes is currently investing in innovation to expand the market for enzyme and microbial technology. Each of the innovation clusters below can potentially make a significant posit
Slide 21: Strategy
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Slide 22: 16 years of innovation-driven returns
16 years of Historical performance 30% 14.000 Sales DKKm innovation-driven EBIT margin 28% returns R&D/Sales ROIC 12.000 26% Strong absolute returns since 2000 10.000 24% • 2.8x sales • 4.6x EBIT 22% 8.000 • 5.9x net profit • DKK ~32bn In operating cash flows 20% 6.000 18% Driven by topline and le
Slide 23: Novozymes' purpose
Novozymes’ purpose 23 QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Slide 24: Our strategy puts partnerships front and centre
Our strategy puts partnerships front and centre 24 QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Slide 25: Our set of competitive advantages across the value chain
Our set of competitive advantages Others Novozymes across the value chain has led to a ~ 32% ~ 48% unique market-leading position Global enzyme Scale Quality Sustainability High barriers market DKK • Production: 5 core • Superior logistical • Triple bottom line • More than 7,000 ~25 bn plants in 3 r
Slide 26: Financial priorities and long-term targets
Financial priorities and long-term targets; - Innovation, growth & shareholders 6-7% >26% ≥25% ~14% <8% ~40% Org. sales EBIT margin ROIC R&D/sales CAPEX/ Dividend growth incl. goodwill sales payout 8-10% Org. Sales growth ambition Accumulated buybacks end of 2015 since IPO were DKK ~10 billion Accum
Slide 27: R&D investments drive growth and technology leadership
R&D investments drive growth today and enhance technology leadership for long-term impact Established business areas Growth platforms BioAg Food & Household Grain-based Technical Biomass Animal Emerging Beverages Care ethanol industries Conversion Health & industries Nutrition Basic technologies
Slide 28: Pipeline of significant market-expanding growth opportunities
Pipeline of significant market-expanding growth opportunities On top of the flow of innovation to existing markets, Novozymes is currently investing in innovation to expand the market for enzyme and microbial technology. Each of the innovation clusters below can potentially make a significant posit
Slide 29: 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 Bio- Biomass Agriculture conversion Animal Molecular Bio-informatics Screening Industrial-scale Health & biology & Systems systems fermentation Nut
Slide 30: 3 levers to improve profitability
Fermentation technology Improve production strain Ability to produce more Optimize industrial production Process optimization Improve enzyme efficacy Protein engineering of – 3 levers to improves profitability enzymes per m3 fermentation tank through genetic engineering of Equipment optimization Inp
Slide 31: Investing for long-term growth; People, CAPEX and M&A
Investing for long-term growth; People, CAPEX and M&A, 2000-2015 DKK ~12bn in CAPEX 2000-2015 2x employees – from 3,208 FTE to 6,485 FTE Denmark & EMEA 2000-04 NA 7000 Latin America 2005-09 6000 Asia Pacific North America 2010-14 5000 Denmark & EMEA 2015 4000 APAC 3000 2000 LATAM 1000 0 2000 2015
Slide 32: Market overview
Market overview QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Slide 33: Household Care Overview
Household Care Sales Sales DKKm ORG growth Overview 3.973 4.222 4.353 4.632 3.514 33% of sales in 2015 7% 11% 9% 4% 1% 2011 2012 2013 2014 2015 Current Trends Growth Drivers Growth Barriers • Better-performing laundry • Higher enzyme inclusion and • Traditional consumer washing Applications deterge
Slide 34: A strong portfolio of innovation with global relevance
A strong portfolio of innovation with global relevance – built over the last 50 years 300+ brands Albania, Algeria, Argentina, Australia, Austria, Bangladesh, Belarus, Belgium, Bolivia, Bosnia-Herz., Brazil, Bulgaria, Cameroon, Canada, Chile, Colombia, Costa Rica, Croatia, Cyprus, Czech. Republic, D
Slide 35: Large opportunities for increasing enzyme inclusion in every wash
In emerging as well as developed markets, we see large opportunities for increasing enzyme inclusion in every wash load Enzyme spend index per wash load 2008 2014 All European high-performance detergents contain enzymes. Over time, enzyme inclusion can increase with innovation 100 Average-performan
Slide 36: Household Care: Hygiene solutions
Household Care: Hygiene solutions Relevance of Approach and status Next steps innovation cluster • We focus on establishing a • Identification of the root • The laundry industry is portfolio of solutions causes leading to laundry moving towards cold wash targeting the hygiene hygiene issues (as thes
Slide 37: Food & Beverages Overview
Food & Beverages Sales Sales DKKm ORG growth 3.715 Overview 3.033 3.186 3.190 3.278 27% of sales in 2015 8% 1% 3% 4% 5% 2011 2012 2013 2014 2015 Applications Current Trends Growth Drivers Growth Barriers Baking / Starch conversion / • Sustainability in production • High raw material prices • Consu
Slide 38: We cover a broad set of end markets and applications
We cover a broad set of end markets and applications – We operate in different parts of the value chain. Revenue-wise, the two parts are comparable Processing of Ag inputs Characteristics: Food products Characteristics: A global business with global Product-driven for developed solutions • Starch
Slide 39: Food & Beverages: Vegetable oil processing
Food & Beverages: Vegetable oil processing Relevance of Approach and status Next steps innovation cluster - Palm Oil Extraction as an • Currently Novozymes is example of activities • Novozymes believes our running proof-of-concept technology has the • The palm oil industry seeks on our first product
Slide 40: Bioenergy Overview
Bioenergy Sales Sales DKKm ORG growth Overview 2.270 2.543 1.909 18% 1.782 1.748 19% 12% 1% -5% -9% of sales in 2015 2011 2012 2013 2014 2015 Current Trends Growth Drivers Growth Barriers Applications • U.S. corn ethanol industry • Stable and coherent political • Lack of political commitment to Co
Slide 41: Ethanol production and outlook in the U.S.
Ethanol production and outlook in the U.S. – Production has stabilized at 10% of U.S. gasoline consumption + exports U.S. ethanol production volumes have stabilized U.S. Ethanol blend: ~10% of gasoline consumption 20 12% Billion Gallons 15 10% 8% 10 6% 5 4% 2% 0 0% 2006 2007 2008 2009 2010 2011 2012
Slide 42: Project pipeline biomass conversion
Project pipeline Publicly announced, commercial biomass conversion projects under development by region* biomass conversion Novozymes serves 5 out of 8 commercial facilities Europe 6. Beta Renewables 7. ST1 − Maabjerg Bioenergy − Ethanol Europe − Energo Chemica While several biomass conversion eth
Slide 43: Agriculture & Feed Overview
Agriculture & Feed Sales Sales DKKm ORG growth 2.130 Overview 1.668 1.728 1.617 19% 15% 1.371 956 13% 11% 7% 5% 2% of sales in 2015 2010 2011 2012 2013 2014 2015 Current Trends Growth Drivers Growth Barriers • Rising demand for food and • High input costs for farmers • Low pricing for traditional Fe
Slide 44: Microbial solutions for agriculture
Microbial solutions for agriculture Microbials, notably bacteria and How are microbials applied? fungi, are types of agricultural biologicals that protect crops from pests and diseases and enhance plant productivity and fertility. Seed treatment BioControl There are approximately • Complements or p
Slide 45: Inoculants hold significant opportunity for market expansion
Inoculants hold significant opportunity for market expansion across crops and geographies Soybean Pulses Alfafa Canola Corn Wheat Cotton Rice Factors driving inoculant growth: Global Planted Acres1 Market expansion ~ 260m ~190m ~15m ~85m ~425m ~549m ~80m ~400m (5 year avg. 2009–2013) Inoculants Trea
Slide 46: The BioAg Alliance
The power of The BioAg Alliance A unique opportunity…to combine Novozymes’ and Monsanto’s capabilities and establish industry's most advanced microbial platform A premier vehicle for bringing microbes to market and a sustainable Agriculture platform for farmers to produce more with less A joint focu
Slide 47: Building a stronger offering within animal farming
Building a stronger offering within animal farming Enzymes for nutritional Adjacency: Adjacency: enhancement of feed animal health enabling – a strong core built additives “To help feed a growing world, we work with new feed over 20 years (e.g..probiotics ingredients with Adisseo & partners to deve
Slide 48: Attractive value propositions in animal feed enzymes
Attractive value propositions in animal feed enzymes Phytase – phosphate ProAct® – protein Others – 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 digesti
Slide 49: Ag & Feed: Natural Growth Promotion
Ag & Feed: Natural Growth Promotion Relevance of Approach and status Next steps innovation cluster • As part of our efforts to • First product in our • The world needs leverage biological innovation cluster “Natural sustainable efficiency solutions to enable growth promotion” is gains in animal prod
Slide 50: Technical & Pharma Overview
Technical & Sales Sales DKKm ORG growth Pharma 982 Overview 810 710 757 830 11% 7% 6% 9% 6% -5% 2011 2012 2013 2014 2015 of sales in 2015 Current Trends Growth Drivers Growth Barriers Applications • Better and more sustainable • Sustainability in technical • Fragmented and chemically drug delivery
Slide 51: Albumedix works as a stand-alone pharma company
Albumedix works as a stand-alone pharma company, maturing opportunities within Albumin to maximize value creation Veltis® – Drug candidates using Albumedix’ albumin technologies for half-life extension (license revenue) Partner Drug PI PII PIII MA Market Tanzeum/Eperzan (Albiglutide) - GLP1 for Diab
Slide 52: Sustainability
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Slide 53: New long-term targets focus on world impact
New long-term targets focus on world impact 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 • Occupation
Slide 54: We plan to continue our journey of operational excellence
We plan to continue our journey of operational excellence Decoupling resource consumption Steady improvement in employee metrics from economic growth 160% Gross 12 3,5% profit 140% % change from 2005 baseline 3,0% Sales 10 120% 2,5% 8 100% 2,0% 80% 6 1,5% 60% Water 4 Energy 1,0% 40% Occupational a
Slide 55: Remuneration principles for executive leadership
Remuneration principles for executive leadership • Novozymes’ principles for Annual remuneration scheme Long term incentive program Executive Leadership (2014-2016) 18 remuneration ensure close % stock & options awarded 100 Max 2 months of 90 alignment with long-term 16 base salary cash bonus link
Slide 56: Reducing CO2 emissions together with our customers
Reducing CO2 emissions together with Dairy: Margarine: Vegetable oil: Cereals: our customers 230 kg CO2 per ton of mozzarella 23 kg CO2 per ton of hardstock 44 kg CO2 per ton of oil 110 kg CO2 per ton of bread In 2015, Novozymes helped customers save Beverage: Detergent: Textile: Cosmetics: 25 kg C
Slide 57: Financial Review
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Slide 58: Historical performance demonstrates track record of delivery – I/II
Historical performance demonstrates track record of delivery – I/II Sales Sales DKKm Growth Gross margin 18% 15.000 60% 58,1% 57,2% 14% 12.000 58% 56,2% 55,6% 10% 9.000 56% 57,2% 57,4% 53,3% 53,1% 6% 6.000 54% 52,4% 55,7% 51,8% 2% 3.000 52% 53,7% 53,5% 52,0% 52,6% 51,8% -2% 0 50% EBIT EBIT DKKm EBIT
Slide 59: Historical performance demonstrates track record of delivery – II/II
Historical performance demonstrates track record of delivery – II/II NIBD NIBD DKKm NIBD/EBITDA CAPEX Capex DKKm CAPEX/sales 1,0 2.500 20% 1.500 0,8 2.000 16% 1.200 0,6 1.500 12% 900 0,4 1.000 8% 600 0,2 500 4% 300 0,0 0 -0,2 -500 0% 0 ROIC Inv.Cap. DKKm ROIC, incl. goodwill Free Cash Flow FCF bef.
Slide 60: Limited exposure to raw material fluctuations
Limited exposure to raw material fluctuations Indirect production costs Raw materials 45% Factors impacting COGS development: 35% • Productivity improvements, input prices, currency • Note: accounting practice implies that there is a time lag between current price levels and COGS Split of Factors
Slide 61: Dividend and stock buyback history
Dividend and stock buyback history • DKK 3.50 dividend per share paid for 2015 up 17%, payout ratio 37.6% • Dividend pay-out ratio to increase to ~40% over next couple of years • Expected buyback program in 2016 of up to DKK 2 billion • Accumulated buybacks end of 2015 since IPO were DKK 9.7 billi
Slide 62: Shareholder distribution
Shareholder distribution Rest of world Novo A/S 4% Denmark 10% 19% B shares listed in Copenhagen under the symbol “NZYM B” North America • Two share classes; A and B shares 21% Shareholder • B shares listed in Copenhagen under the symbol “NZYM B” distribution • “A” share capital and 26,071,400 of B
Slide 63: Investor Relations contacts
Investor Relations contacts Martin Riise Klaus Sindahl Nicolai Kobborg obile (DK): +45 3077 0738 M Mobile (DK): +45 5363 0134 obile (DK): +45 3077 1348 M E-mail: mrsn@novozymes.com E-mail: ksdh@novozymes.com E-mail: niak@novozymes.com Further investor relations information is available fro
Slide 64: Novozymes IR app
Novozymes . be MyIRApp G vy in 2] Novozymes IR Novozymes Copenhagen Stock Exchange Follow Latest share price, Investor Relations events, Key financials, Stock performance, Stock exchange news releases, Annual and Quarterly reports on the go. Share Graph D Share Information ; Download Novozymes IR ap