Novonesis A/s Class B · OMXCOP:NSIS_B
Novonesis A/s Class B — Novozymes — Non-Deal Roadshow (January 2016)
63 slides from Novonesis A/s Class B's roadshow presentation, Jan 19, 2016
Slide 1: Road Show presentation FY 2015
Road Show presentation FY 2015 January 19th 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 11 3. Strategy 18 4. Segmental Overview 29 - Household Care 30 - Food & Beverages 34 - Bioenergy 37 - Agriculture & Feed 40 - Technical & Pharma 48 5. Sustainability 51 6. Financial Review 56 3
Slide 4: Latest results
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Slide 5: 2015 Summary
2015 Summary Solid financial results; strong earnings Sales and organic growth 2013-2015 on moderate sales growth DKKm • 4% organic sales growth driven by Agriculture & Feed and Food & 10% 15,000 Beverages. 12% growth in DKK. 2% organic sales growth in Q4 8% 7% 7% 14,000 14,002 • Challenging market
Slide 6: U.S. biofuels – a slow-growth industry
U.S. Ethanol Production Bioenergy Sales, USD 160 U.S. biofuels – a slow-growth industry 140 • 14.8 billion gallons of ethanol produced by the U.S. ethanol industry in 2015*, up ~3% 120 • U.S. ethanol production grew by 2% per year on Index (2010 = 100) average from 2010 to 2015. Novozymes’ global Bi
Slide 7: Household Care market remains attractive despite challenging 2015
Household Care market remains attractive despite challenging 2015 Unique negative events in 2015 not deemed systemic • One customer reducing spend on specific enzymes • Latin America weak due to currencies and macro Sales growth to improve in 2016 as we work through challenges; growth skewed toward
Slide 8: Sales & markets
Sales & markets Full-year 2015 sales: DKK +12%, organic +4% Sales by industry, DKKm DKK growth /org. growth Q4 2015 sales: DKK +9%, organic +2% Household 4,632 Household Care: Strong growth from a number of important customers Care 4,353 +6% / +1% across markets offset by a challenging Latin Ameri
Slide 9: 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 10: Financial performance & outlook
Financial performance & outlook 2015: Strong earnings performance • EBIT grew by close to 20%. EBIT margin expanded by ~1.5 %- Key Realized 2016 outlook points on a like-for-like basis Jan. 19 financials 2015 • Gross margin up 0.7 %-point due to productivity improvements and lower raw material pric
Slide 11: Novozymes Overview
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Slide 12: 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 bn 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 13: 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 14: Experienced leadership team
Experienced leadership team Benny D. Loft Thomas Videbæk Per Falholt Peder Holk Nielsen Thomas Nagy Andrew Fordyce Executive Vice President, Executive Vice President, Executive Vice President, President and CEO Executive Vice President, Executive Vice President, CFO and Corporate Functions Business
Slide 15: 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 16: 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 17: 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 Core production plant Main R&D center Satellite production site Satellite R&D site 17 QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL
Slide 18: Strategy
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Slide 19: 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 20: 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 21: Investing for long-term growth; People, CAPEX and M&A
Investing for long-term growth; People, CAPEX and M&A 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 DKK ~5bn sp
Slide 22: Strategy
22 QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Slide 23: New strategy puts partnerships front and center
Our new strategy puts partnerships front and center for success in creating impact 23 QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Slide 24: We expect the relative spend on R&D to fluctuate
R&D spend: DKK 18 bn accumulated since IPO We expect the 16% 2,000 relative spend on R&D costs DKKm R&D/Sales Avg. Ratio 1,800 R&D to fluctuate 15% 1,600 around 1,400 1,200 14% 1,000 of sales 800 This will allow us to continue the 600 trend of being the investment 13% leader in microbial technologi
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 BioAg Food & Household Grain-based Technical Biomass Animal Emerging Beverages Care ethanol industries Conversion Health & 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: 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 28: Financial priorities; Innovation, growth & shareholders
Financial priorities; - Innovation, growth & shareholders Novozymes long-term growth ambition: 8-10% Organic sales growth from 2016 to 2017 through to the end of the ~14% <8% ~40% 2bn decade is expected to be in R&D CAPEX Dividend 2016 2020: line with the historical performance of 6-7% payout rati
Slide 29: Segmental Overview
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Slide 30: Household Care Overview
Household Care Sales Sales DKKm ORG growth Overview 3,973 4,222 4,353 4,632 3,514 11% 9% 7% 4% 1% of sales in 2015 2011 2012 2013 2014 2015 Current Trends Growth Drivers Growth Barriers • Better-performing laundry • Higher enzyme inclusion and • Traditional consumer washing Applications detergents
Slide 31: 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 32: 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 33: 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 34: Food & Beverages Overview
Food & Beverages Sales Sales DKKm ORG growth 3,715 Overview 3,033 3,186 3,190 3,278 8% 3% 4% 5% 1% of sales in 2015 2011 2012 2013 2014 2015 Applications Current Trends Growth Drivers Growth Barriers Baking / Starch conversion / • Sustainability in production • High raw material prices • Consumer
Slide 35: 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 36: 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 37: Bioenergy Overview
Bioenergy Sales Sales DKKm ORG growth Overview 2,270 2,543 1,782 1,748 1,909 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 Corn e
Slide 38: 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 39: Project pipeline biomass conversion
Project pipeline Publicly announced, commercial biomass conversion projects under development by region (Q4/2015)* biomass conversion Novozymes serves 5 out of 7 commercial facilities Europe 6. Beta Renewables 7. ST1 − Maabjerg Bioenergy − Ethanol Europe − Energo Chemica While several biomass conv
Slide 40: Agriculture & Feed Overview
Agriculture & Feed Sales Sales DKKm ORG growth 2,130 Overview 1,668 1,728 1,617 19% 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 Feed a
Slide 41: 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 42: 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 43: The power of 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 44: The power of The BioAg Alliance
The power of The BioAg Alliance 44 QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Slide 45: 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 46: 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 47: 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 48: Technical & Pharma Overview
Technical & Sales Sales DKKm ORG growth Pharma 982 Overview 810 710 757 830 11% 9% 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 and
Slide 49: Pharma overview: three technology offerings
Pharma overview Three technology offerings targeting pharmaceuticals Novozymes branded business Albumedix, wholly owned subsidiary Enzymes for Biocatalysis Recombinant Albumin VELTIS® Enzyme portfolio used as catalysts for the production of pharmaceuticals. Recombinant albumins used as Albumin-bas
Slide 50: Multiple opportunities in pharma from albumin
Multiple opportunities and potential revenue streams in pharma from albumin Veltis® – Drug candidates using Novozymes’ albumin technologies for half-life extension Partner Drug PI PII PIII MA Market Tanzeum/Eperzan (Albiglutide) - GLP1 for Diabetes rIX-FP - Once weekly for Hemophilia B Albutropin -
Slide 51: Sustainability
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL 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: 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 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 • SEGMENTAL 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 proposed 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 b
Slide 61: Shareholder distribution
Shareholder distribution Rest of world Novo A/S 4% Denmark 10% 21% B shares listed in Copenhagen under the symbol “NZYM B” North America • Two share classes; A and B shares 20% 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 Thomas Steenbech Bomhoff Martin Riise Klaus Sindahl Mobile (DK):+45 3077 1226 Mobile (USA): +1 919 649 2565 Mobile (DK): +45 5363 0134 E-mail: tsbm@novozymes.com Mobile (DK): +45 3077 0738 E-mail: ksdh@novozymes.com E-mail: mrsn@novozymes.com Further investor relat
Slide 63: 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