Novonesis A/s Class B · OMXCOP:NSIS_B
Novonesis A/s Class B — Novozymes — Non-Deal Roadshow (October 2016)
63 slides from Novonesis A/s Class B's roadshow presentation, Oct 26, 2016
Slide 1: Road Show presentation Q3 2016
Road Show presentation Q3 2016 October 26th 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 12 3. Strategy 19 4. Market Overview 30 - Household Care 31 - Food & Beverages 35 - Bioenergy 38 - Agriculture & Feed 42 - Technical & Pharma 49 5. Sustainability 51 6. Financial Review 56 3
Slide 4: Latest results
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Slide 5: 9M 2016 summary
9M 2016 summary 9M sales lower than expected; EBIT & EBIT margin are Sales and organic growth 9M 2014 – 9M 2016 on par with last year DKKm 10% 8% 11.000 • 1% organic sales growth and -1% in DKK in the first 9 months of 2016. 8% 10.500 Growth driven by Household Care, F&B and Technical & Pharma 6% 4
Slide 6: Household Care & Technical
Household Care & Technical +1% / 0% Organic growth / DKK growth Household Care • Continued strong momentum in China and South East Asia, driven by increased penetration in liquid detergents. Growth offset by 3.484 3.484 weaker performance in Europe • Premium detergents still in demand in North Ameri
Slide 7: Hygiene solutions to deliver the next wave of growth for laundry
Hygiene solutions to deliver the next wave of growth for laundry in both developed and emerging markets Four key trends are increasing consumers’ Novozymes invests to ensure innovative, safe and natural laundry hygiene concerns solutions to address consumers’ hygiene concerns 1 Traditional enzyme s
Slide 8: Agriculture & Bioenergy
Agriculture & Bioenergy Organic growth / DKK growth Bioenergy • U.S. ethanol producers’ margins remain low, and producers are continuing their optimization programs and cost reductions, resulting in further downtrading -7% / -8 % 0% / -5% • Avantec® Amp progressing better, but uptake still slower t
Slide 9: Food & Beverages
Food & Beverages Organic growth / DKK growth Baking +1% / 0% • Baking marginally below last year, as good growth in Europe and Asia-Pacific was outweighed by increasing competition in the Americas Starch 2.815 2.802 • Solid growth in starch driven by increasing penetration across markets and appli
Slide 10: Research & Innovation update
Research & Innovation update Acquisition of Organo Balance Innovation Strengthening our microbial platform Exciting new launches expected in Q4 • Germany-based Organo Balance will be integrated as • SAT B-300 – new upstream inoculant to be part of Novozymes’ global R&D organization, enhancing launc
Slide 11: Financial performance & outlook
Financial performance & outlook 9M 2016: Earnings on par with last year Key Realized 2016 outlook financials 9M 2016 October 26 • Gross margin roughly on par with last year, as productivity improvements offset the one-time reorganization cost incurred in Q1 Sales growth, org. +1% ~2% • Adjusting fo
Slide 12: Novozymes Overview
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Slide 13: 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$ ~11bn 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 27.7%
Slide 14: 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 15: 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 16: 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 17: 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 18: 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 18 QUARTERLY RESULTS • NOV
Slide 19: Strategy
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Slide 20: 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 21: Novozymes’ purpose
Novozymes’ purpose 21 QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Slide 22: Our strategy puts partnerships front and centre
Our strategy puts partnerships front and centre 22 QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Slide 23: 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 24: 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 25: 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 Biomass Animal Food & Household Grain-based Technical BioAg Emerging Conversion Health & Beverages Care ethanol industries industries Nutrition Basic technologies
Slide 26: 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 27: Pipeline of 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 28: 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 improve profitability enzymes per m3 fermentation tank through genetic engineering of Equipment optimization Inpu
Slide 29: 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 30: Market overview
Market overview QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Slide 31: 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 32: 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 33: Opportunities for increasing enzyme inclusion in every wash load
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 34: 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 35: 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 36: 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 37: 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 38: Bioenergy Overview
Bioenergy Sales Sales DKKm ORG growth Overview 2.270 2.543 1.782 1.748 1.909 18% of sales in 2015 1% -9% 12% 19% -5% 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 39: Increasing complexity in ethanol production
Increasing complexity in ethanol production From standard to more Advancing enzyme design: Using our diagnostic program to deliver custom customized solutions fermentation solutions, tailored to a plant’s unique operating conditions Past Why utilize the Custom Solutions program? Basic products for
Slide 40: 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 41: 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 While several biomass conversion Europe 6. Beta Renewables ethanol plants are already operating, 7. ST1 more than 20 solid b
Slide 42: Agriculture & Feed Overview
Agriculture & Feed Sales Sales DKKm ORG growth 2.130 Overview 1.668 1.728 1.617 19% 1.371 15% of sales in 2015 956 2% 11% 13% 5% 7% 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 43: 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 44: 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 45: 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 46: 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 47: 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 48: Ag & Feed: Natural Growth Promotion
Ag & Feed: Natural Growth Promotion Relevance of innovation cluster The world needs sustainable efficiency gains in animal production • 9+ billion people by 2050 • Protein demand to double next 40 years • Feed costs in 50% of costs in animal production • Arable land per capita expected to decrease b
Slide 49: Technical & Pharma Overview
Technical & Sales Sales DKKm ORG growth Pharma 982 Overview 810 710 757 830 11% 9% 7% 6% 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 50: 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 51: Sustainability
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Slide 52: 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 53: Continuing the 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 54: 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 55: 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 56: Financial Review
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Slide 57: 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 58: 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 59: 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 60: 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 61: 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 62: 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 63: Novozymes – Rethink Tomorrow
x novozymes’ Rethink Tomorrow