Novonesis A/s Class B · OMXCOP:NSIS_B
Novonesis A/s Class B — Novozymes — 9M 2020 Earnings Presentation
65 slides from Novonesis A/s Class B's earnings presentation, Oct 21, 2020
Slide 1: Roadshow presentation 9M 2020
Roadshow presentation 9M 2020 Released on October 21 2020 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 26 • ESG overview 51 • Financial overview 58 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 Satisfactory first nine months despite COVID-19 implications. Full-year 9M 2020 Q3 2020 EBIT margin and FCF outlook raised; sales outlook maintained with Realized Realized midpoint of range as most likely outcome Sales performance, organic % +1 -3 • More customer-centric or
Slide 6: Organic sales performance by geography
Latest results Organic sales performance by geography Europe, Middle East ⚫ Main sites with production and R&D ⚪ Satellite production site ⚫ Satellite R&D site North America & Africa 32% 9M y/y: -4% Q3 y/y: -4% 9M y/y: 5% Q3 y/y: -1 % 40% of sales of sales ⚫ ⚪ ⚫ ⚫ ⚫ ⚫ ⚫ ⚪ ⚪ ⚫ Latin America Asia Paci
Slide 7: Household Care
Latest results Household Care Strong sales performance; Q3 impacted by destocking YTD organic sales performance (y/y) • Organic sales; 9M y/y: +7% (Q3 y/y: -1%) • Strong sales performance driven by rollout of the freshness technology and increased enzymatic penetration 7% • Sales amplified by COVID-
Slide 8: Food & Beverages
Latest results Food & Beverages Solid first nine months led by baking YTD organic sales performance (y/y) • Organic sales; 9M y/y: +5% (Q3 y/y: +1%) • Growth led by baking, beverages declined from lower 9% demand in brewing 4% 5% • Q3 impacted by destocking as expected, especially in baking 1% • Q3
Slide 9: Bioenergy
Latest results Bioenergy Improvement in Q3, though still below last year YTD organic sales performance (y/y) • Organic sales; 9M y/y: -11% (Q3 y/y: -5%) • U.S. ethanol production impacted by COVID-19 restrictions; 14% 10% less decline in Q3 • Sales outside the U.S. growing, also in Q3 -4% -7% • Intr
Slide 10: Agriculture & Feed
Latest results Agriculture & Feed Growth driven by Agriculture; Q3 significantly impacted by YTD organic sales performance (y/y) inventory adjustments in Feed • Organic sales; 9M y/y: +4% (Q3 y/y: -19%) • Agriculture performed well in upstream corn inoculants but weaker in downstream solutions; Q3 n
Slide 11: Financials – Performance 9M
Latest results Financials – Performance 9M Solid financial performance despite challenging conditions • Organic sales; 9M y/y: +1%; DKK sales -1% • Gross margin at 56.2% — benefiting from productivity improvements, lower input costs and one-offs • EBIT margin at 27.0% — roughly 1 %-point improvement
Slide 12: Financials – Outlook 2020
Latest results Financials – Outlook 2020 2020 outlook; • Organic sales performance of -2% to +2%, midpoint of range as most likely outcome • Household Care and Food & Beverages maintained at mid-single digit growth • Bioenergy and Technical & Pharma expected to decline double-digit • Agriculture & F
Slide 13: Summary
Latest results Summary Satisfactory performance considering COVID-19 implications • 2020 outlook for sales at -2% to +2%; increasingly gaining confidence that the midpoint of the range is the most likely outcome • Increased outlook for EBIT margin and FCF before acquisitions • New more customer-cent
Slide 14: Equity story
Equity story 14
Slide 15: Our products are used in +30 industries
Equity story Our products are used in +30 industries We launch 15-20 new products annually Enzymes are… ~90% ~10% Microbes are… of sales of sales … proteins that catalyze chemical reactions and thus often replace … living microscopic organisms, such as bacteria and fungi. They are chemicals in produ
Slide 16: 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 17: Turning amazing science into sustainable biological solutions
Equity story Novozymes is about turning amazing science into sustainable biological solutions Since 2013, we have more than doubled our average number of launches relative to the average number from 2000-2012 • Capitalize on critical mass and expertise to develop new cutting-edge Balanced customer-a
Slide 18: Enzyme technology improves gross margin and profitability
Equity story Enzyme technology improves Novozymes’ gross margin and profitability We re-invest ~13% 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 Consumer needs Industr
Slide 19: Solid global presence
Equity story Solid global presence Decentralized R&D meets local needs faster and better North America Europe, Middle East & Africa Sites: Multi-purpose ⚫ Main sites with production and R&D ⚪ Satellite production site ⚫ Satellite R&D site production and R&D Sites: HQ, Multi-purpose FTE’s: ~1,200 +1%
Slide 20: Uniquely diversified group creating synergies and opportunities
Equity story Uniquely diversified group creating synergies and opportunities We launch technologies in five main business segments Household Care Food & Beverages Bioenergy Agriculture & Feed Technical & Pharma 33% of ’19 sales 29% of ’19 sales 20% of ’19 sales 13% of ’19 sales 5% of ’19 sales >60%
Slide 21: Enzymes and microbes allow for the production of more with less
Equity story Enzymes and microbes allow for the production of more with less We are reducing CO2 emissions together with our customers Our innovations are paving the way for a better tomorrow Remove tough stains and enable Improve filtration and flavor of Save time, water, energy and Higher producti
Slide 22: Historical performance demonstrates delivery track record
Equity story Historical performance demonstrates delivery track record Organic sales EBIT NWC DKKbn Sales performance growth DKKbn EBIT margin margin DKKbn Net working capital /Sales 20 20% 7 40% 7 30% Organic sales growth Sales EBIT margin EBIT NWC/Sales NWC 6 6 24% 25% 23% 15 11% 5 27.2% 27.7% 27.
Slide 23: 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 with ‘Better business with biology’ Sustainable Differentiate to succeed Invest in impact Spearhead new business agriculture Focusing the R&D pipeline Showing up f
Slide 24: Measuring our future success by 'Better business with biology'
Equity story Measuring our future success by ‘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 year1 Score survey in 2022 by enabling low-carbon fuels in the transport sector in 2022 Nurture d
Slide 25: World leader in Bioinnovation
Equity story World leader in Bioinnovation Global leadership in enzyme and microbe development arise through a combination of competitive advantages +10 years of innovation-driven growth Sales (left axis) EBIT margin R&D/Sales ROIC 16 30% 15 28% 14 26% Company background 13 24% Unique sustainability
Slide 26: Business overview
Business overview 26
Slide 27: Household Care
Household Care The value we create Where we make a difference Our enzymes enable manufacturers to produce Innovative brands help grow your market share. We work with you to ensure our biological laundry and cleaning products that offer better solutions make your products stand out performance with r
Slide 28: Household Care overview
Business overview Household Care overview Key segment trends Main growth drivers • Strong interest in freshness solutions for removal of • Higher enzyme inclusion and innovation to improve malodor and grime, including in synthetics wash performance at low temperatures, improve • Compaction of laundr
Slide 29: 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 30: 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 31: Growth driver Detergent compaction
Business overview Growth driver Detergent compaction We believe enzymes can contribute even more to a detergent and to compaction Other Other Perfume Perfume Builders Builders Polymers Polymers Multienzymes Enzymes Surfactants Surfactants • New and more stable enzymes to replace • Freshness solution
Slide 32: Food & Beverages
Food & Beverages The value we create Where we make a difference Enzymes enable producers to diversify their product It's hard to keep up with ever-changing food and beverage trends. Stay one step ahead and ranges and develop products that stay fresh longer get more out of your raw materials with lea
Slide 33: Food & Beverages overview
Business overview Food & Beverages overview Key segment trends Main growth drivers • Growing informed consumption for high-quality, • Demand for better and more convenient food with healthy and sustainable foods i.e. awareness about food safety and “naturally • Plant protein, acrylamide removal, les
Slide 34: 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 35: Growth driver Vegetable oil processing
Business overview Growth driver Vegetable oil processing Enzymatic applications for vegetable oil processing show huge potential New agro-processing applications • Novozymes offers multiple solutions across the value chain • Improving efficiency in vegetable oil production is a >DKK 1bn opportunity
Slide 36: Bioenergy
Bioenergy The value we create Where we make a difference Our enzymes and yeasts maximize the efficiency of You work hard to create the most value at the lowest cost and to stay flexible enough to ethanol plants adapt to changing markets. We work hard to deliver solutions and services that will help
Slide 37: Bioenergy overview
Business overview Bioenergy overview Key segment trends Main growth drivers • Growing demand for clean energy as climate • Stable and coherent political mandate to drive change and sustainability are high on public adoption of biofuels agendas • Increase in global biofuel mandates continues, 20% • I
Slide 38: Market Bioenergy
Business overview Market Bioenergy Sizeable market with local political support 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 by 2022 Latin America
Slide 39: 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 40: Growth driver Addressing complexity in bioethanol production
Business overview Growth driver Addressing complexity in bioethanol production Designing enzymes for individual plants The ethanol process • Enzymes are applied in multiple stages, along with yeast in fermentation • Using our diagnostic program to deliver custom fermentation solutions, tailored to a
Slide 41: Agriculture & Feed
Agriculture & Feed The value we create Where we make a difference Our solutions improve yields in farming and enhance Enzymes and microbes are nature's own perfect tools. We put them to work in agricultural the digestibility and nutritional value of animal feed solutions that increase the efficiency
Slide 42: Agriculture & Feed overview
Business overview Agriculture & Feed overview Key segment trends Main growth drivers • Agriculture affected by more frequent incidents of • Governments in emerging economies focusing on extreme weather agriculture productivity • Sustainable yield enhancement still in high demand as world population
Slide 43: Case Our new BioAg setup allows for broader outreach
Business overview Case Our new BioAg setup allows for broader outreach More flexible setup in the future will enable Novozymes to bring biological solutions to more partners and additional crops – and to continue the journey towards the targeted 250-500m acres by 2025 Partnership New continuation pa
Slide 44: 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 45: 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 46: Growth driver Attractive value propositions in feed enzymes
Business overview Growth driver Attractive value propositions in feed enzymes Phytase - Phosphate • Only 3-30% of phosphate in feed is available to the animal • Ronozyme NP® releases half of the phosphate bound – Ronozyme HiPhos® releases nearly all of it • Significant reduction in phosphorous excre
Slide 47: Technical & Pharma
Technical & Pharma The value we create Where we make a difference Our solutions improve processes across industries such Our enzymatic and microbial solutions target your customers’ unmet needs across global as textiles & leather, wastewater, pulp & paper and markets. The result is a strong pipeline
Slide 48: Technical & Pharma overview
Business overview Technical & Pharma overview Key segment trends Main growth drivers • Water scarcity and water pollution driving • Sustainability in technical industries such as textiles legislation and demand for solutions that reduce water consumption and improve water quality • Major apparel com
Slide 49: Strategic opportunity areas
Strategic opportunity areas Catalysts to solve global needs How it fits with ‘Better business with biology’ Human oral and gut health Differentiate to succeed Invest in impact Spearhead new business Focusing the R&D pipeline Showing up for our customers – and change the world *Illustration Strategic
Slide 50: Human oral and gut health; Specialty alternative proteins
Business overview Human oral and gut health Specialty alternative proteins Deliver clinically-proven products for Providing alternative specialty protein human oral and gut health for food ingredients via fermentation Connecting our discovery engine with consumer insights enables innovative biologic
Slide 51: ESG overview
ESG overview 51
Slide 52: Committed to making a better world
ESG overview Committed to making a better world At Novozymes, sustainability is a key component of our business strategies and management processes We manage our performance on material ESG issues through relevant In 2015, we made the UN Sustainable Development Goals (SDGs) our targets and KPIs own.
Slide 53: The world; Our operations
ESG overview The world Our operations Measuring our success Measuring our success Novozymes is committed to help solving three global challenges: Climate, We hold ourselves accountable for reducing the negative impact Water and sustainable Production & Consumption from our operations in these areas
Slide 54: Produce more with less
ESG overview Produce more with less We are reducing CO2 emissions together with our customers In 2019, our customers saved an estimated 87 million tons of CO2 emissions by applying Novozymes’ products. The savings achieved are equivalent to taking approximately 36 million cars off the road 87,000,00
Slide 55: We plan to continue our journey of operational excellence
ESG overview We plan to continue our journey of operational excellence Since 2010, we have grown our revenue by 48%, while absolute emissions from Novozymes’ operations have risen by only 6% Decoupling resource consumption from economic growth Steady improvement in employee metrics 30% (4)% 77 31% R
Slide 56: Keeping the organization accountable
ESG overview Keeping the organization accountable Sustainability governance, activities and targets are anchored and executed across functions and operations Broad remuneration policy and sustainability governance Sustainability Awards and Recognition The new incentive program covers the Executive L
Slide 57: Novozymes combating the world's pressing problems
ESG overview Novozymes combating the world’s pressing problems Sustainability drives the way we do business and we have always taken the triple bottom line approach We are committed to doing our part and to helping the world reach the goals of the Paris Agreement Absolute, not relative measures of C
Slide 58: Financial overview
Financial overview 58
Slide 59: 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 60: Historical performance demonstrates delivery track record
Financial overview Historical performance demonstrates delivery track record Mid-term targets 2020-2022 Organic sales DKKbn growth Sales performance 25 20% Organic sales growth Sales Sales performance Organic revenue growth of +5% per year1 20 11% 10% 7% 7% 7% 14.0 14.1 14.5 14.4 14.4 15 DKK EBIT ma
Slide 61: 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 20% 19% 3.0 19% 20% Net investments CAPEX to sales at or l
Slide 62: Shareholder distribution and dividend payouts
Financial overview Shareholder distribution and dividend payouts As of December 2019 • Novo Holdings held 25.5% of the share capital and controlled 72.0% of votes (all A shares and 8.6% of B shares) • Novozymes had more than 52,000 shareholders of whom 95% were private shareholders in Denmark • ~50
Slide 63: 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 64: 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 65: Rethink Tomorrow
x novozymes' Rethink Tomorrow