Novonesis A/s Class B · OMXCOP:NSIS_B
Novonesis A/s Class B — Novozymes — Non-Deal Roadshow (January 2017)
53 slides from Novonesis A/s Class B's roadshow presentation, Jan 18, 2017
Slide 1: Road Show presentation Full year 2016
Road Show presentation Full year 2016 January 18th 2017
Slide 2: Table of contents
Table of contents Full year results 2016 1. Latest results 3 2. Overview and Strategy 12 3. Market Overview 23 - Household Care 24 - Food & Beverages 27 - Bioenergy 29 - Agriculture & Feed 33 - Technical & Pharma 39 4. Sustainability 40 5. Financials and Governance 45 2 2
Slide 3: Good progress on strategic priorities
Organic growth Good progress on strategic priorities 5-year organic growth and DKKm 2016 came in at • Our pipeline of significant market-expanding +4% +7% +7% +4% +2% +2%. EBIT margin opportunities is advancing as planned expanded to the • 4 new products launched in Q4 2016; 8 total launches in 2016
Slide 4: Novozymes will keep investing in the future of biological solutions
Novozymes will keep investing in Novozymes will maintain a significant R&D investment Long-term targets: level the future of • Progress on adjusting pipeline and innovation programs Return biological • Reallocation of resources to high-growth opportunities to historical solutions and growth markets
Slide 5: Household Care grew 2% in 2016
Household Care Solid sales growth in Q4 taking 2016 to 2% growth Quarterly organic growth and DKKm grew 2% in 2016 • This was driven by a strong contribution in Asia from new +2% +5% +4% -5% +5% product launches in the liquid segment and good driven by U.S. and underlying market growth. North Americ
Slide 6: Technical & Pharma grew 13% in 2016
Technical & Pharma Technical & Pharma did well in 2016, while Q4 was down Quarterly organic growth and DKKm +21% +37% +9% +16% -12% grew 13% in 2016 • Good uptake of our Pharma enzymes and albumin. We also saw increased royalties from GSK’s sale of Tanzeum® with solid growth • In sales to the Techni
Slide 7: Bioenergy was up 7% in Q4 and down 3% for the full year
Bioenergy was up Market share in 2016 stable despite intense competition Quarterly organic growth and DKKm 7% in Q4 and 3% • Full-year sales down 3%, despite ethanol production up 3% -15% -6% -6% -8% +7% down ended down in the US, and 2% globally 663 3% for the full • Continued product trialing by e
Slide 8: Agriculture & Feed grew 5% in 2016
Agriculture & Feed 2016 showed solid performance of enzymes for Animal Feed Quarterly organic growth and DKKm grew 5% in 2016, • Animal feed enzyme grew steadily across main markets, +18% -8% +13% -3% +22% driven by strong plus good traction in trialing of our probiotics 677 growth in Q4 • Modest gr
Slide 9: Food & Beverages grew 2% in 2016
Food & beverages Food & Beverages growth driven by emerging markets and Quarterly organic growth and DKKm grew 2% in 2016. sales to the starch industry +4% +2% +4% -2% +4% Beverages and • Strong growth in Asia Pacific, broadly across segments 947 with baking and starch in China as key drivers Starch
Slide 10: Strong pipeline of significant market-expanding growth opportunities
Strong 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 and thereby grow sales. Most of the innovation programs below have the p
Slide 11: EBIT margin, net profit growth and ROIC targets all reached
EBIT margin, net profit growth and EBIT margin expanded through tight cost control Key financials Realized 2017 outlook ROIC targets all • Underlying gross margin on par with last year (DKKm) FY 2016 January 18 Sales growth +2% 2-5% reached as guided • Adjusting for the restructuring in 2016, the EB
Slide 12: Overview and Strategy
Overview and Strategy
Slide 13: Novozymes at a glance
World leader in Bioinnovation Company background Novozymes Global Listed 2000 at a glance • ~6,500 employees • ~700 products sold in 140 countries Ticker NZYM B • Major production footprint in 3 regions Exchange Nasdaq Copenhagen Market Leader in industrial enzymes CEO Peder Holk Nielsen • ~48% Novo
Slide 14: Uniquely diversified group, creates synergies and opportunities
Global provider of enzymes to all market segments creates global market leader position. Leveraging competencies across segments accelerates pace of innovation, reduces competition and Uniquely creates high barriers to entry diversified group, Household Food & Bioenergy Agriculture & Technical & cre
Slide 15: Strategy, purpose and partnerships
Our Strategy The strategy for Novozymes when looking to expand into new areas is to assume either the technology risk Strategy, purpose (developing unproved technology) or the market risk (entry into new markets). If we see both a technology risk and a and partnerships market risk, but it looks like
Slide 16: Experienced leadership team
Experienced leadership team – with more than 24 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: Our set of competitive advantages across the value chain
Our set of competitive advantages across the value chain has led to a unique marketleading position 1 2 3 4 Scale Quality Sustainability High Barriers • Production: 5 core plants in 3 • Superior logistical agility due • Sustainability is in our DNA • Unique market-leading regions to full control of
Slide 18: 16 years of innovation-driven returns
16 years of innovation-driven Solid financial track record driven by innovation Strong returns since 2000 returns 30.0% 16,000 • • 2.8x Sales 4.7x EBIT 27.5% 14,000 • 6.3x Net Profit 25.0% • DKK ~36bn in Cash Flows 22.5% 12,000 20.0% Innovation is the recipe 10,000 17.5% • DKK ~20bn spent on R&D • +
Slide 19: Our global business serves a large number of local markets and industries
Our global business serves a large number of local markets and industries EMEA NZ: HQ, Production R&D 36% Main markets: HHC, F&B, Feed & Pharma Acc CAPEX: ~ DKK 6bn FTE’s: ~2,900 5Y Avg growth: +6% 34% Beijing & Tianjin Denmark North America 20% NZ: Production, R&D Main markets: Asia Pacific Bioener
Slide 20: R&D investments drive growth today and enhance 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 Adv
Slide 21: Developing new technology and business platforms
Continued development …creates opportunities to Developing new in our technology base… develop new business platform technology and business Molecular biology • Strain development using protein platforms engineering, genetic modification, DNA sequencing, etc Bio- Biomass Bio-informatics & Systems bi
Slide 22: All our solutions are produced via fermentation technology
3 levers to improve profitability All our solutions are produced via 1 Improve 2 Optimize 3 Improve fermentation production strain Ability to produce more enzymes industrial production Process optimization enzyme efficacy Protein engineering of enzymes technology per m3 fermentation tank through gen
Slide 23: Market Overview
Market Overview
Slide 24: Household Care Overview
Current trends Household Care stats Shifting demographics Water scarcity Customer consolidation and urbanization Household Care Energy transition Convenience Cost-based optimization Overview and cleanliness of formulation 33% Growth drivers 5 year organic growth • Demand for better products in Emerg
Slide 25: Our technology makes a difference
Our technology makes a difference Eliminate Decrease dose, Remove stains, Preserve fabric Save energy, harsh chemicals increase performance boost whiteness texture, color water, time LATEST RESULTS • OVERVIEW AND STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIALS AND GOVERNANCE 25
Slide 26: Hygiene Care will enable a new wave of growth in HHC
Hygiene Care will Four key trends are increasing Novozymes invests to ensure innovative, enable a new consumers’ laundry hygiene concerns safe and natural solutions to address wave of growth in consumers’ hygiene concerns 1 HHC in both the Cold wash Traditional enzyme solutions develop and have enab
Slide 27: Food & Beverages Overview
Current trends Food & Beverages stats Shifting demographics Water scarcity Consumer focus on health, and urbanization wellness and natural Food & Beverages products Overview Digitalization of the global economy Increased cost of raw materials Customers consolidating operations but diversifying 26% b
Slide 28: We cover a broad set of end markets and applications
In Food & Beverages we operate in different parts of the value chain. Revenue-wise, the two parts are comparable We cover a broad set of end markets Processing of Ag inputs A global business with global solutions Food products Product-driven for developed markets and applications Starch processing B
Slide 29: Bioenergy Overview
Current trends Bioenergy stats Volatile commodity prices Waning public US corn ethanol squeezing customer margins support for biofuels industry affected by Bioenergy low corn prices Overview Digitalization of the global economy Energy transition 17% Growth drivers 5 year organic growth • Industry co
Slide 30: Increasing complexity in bioethanol production
Advancing enzyme design: Increasing Using our diagnostic program to deliver custom fermentation solutions, tailored to a plant’s unique operating conditions complexity in bioethanol From standard to more customized solutions production Past Present Future Basic products for Multiple offerings Increa
Slide 31: Ethanol production and outlook in the U.S.
U.S. ethanol production volumes have stabilized 20 US Ethanol production grew Ethanol Est. ~3% in 2016 totalling to an Billion Gallons 15 estimated 15.3bn gallons. production and 10 Global production was up ~2% outlook in the 5 U.S. 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Slide 32: Project pipeline biomass conversion
Publicly announced, commercial biomass conversion projects Project pipeline under development by region* biomass conversion Europe 6. Beta Renewables 7. ST1 − Maabjerg Bioenergy − Ethanol Europe Novozymes serves 5 out of 8 − Energo Chemica commercial facilities While several biomass conversion ethan
Slide 33: Agriculture & Feed Overview
Agriculture & Feed stats Agriculture & Feed Current trends Overview Transition to sustainable agriculture Digitalization of the global economy Consumer focus on health, wellness and Partnerships: Shifting demographics Farmers sensitive to natural products 16% and urbanization fluctuations in commodi
Slide 34: LATEST RESULTS • OVERVIEW AND STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIALS AND
LATEST RESULTS • OVERVIEW AND STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIALS AND GOVERNANCE 34 34 QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Slide 35: LATEST RESULTS • OVERVIEW AND STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIALS AND
LATEST RESULTS • OVERVIEW AND STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIALS AND GOVERNANCE 35 35 QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Slide 36: Inoculants hold significant opportunity for market expansion
Inoculants hold significant opportunity for market expansion across crops and geographies Soybean Pulses Alfalfa 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 Tre
Slide 37: Attractive value propositions in animal feed enzymes
Our offerings in animal feed enzymes Phytase ProAct® Others Attractive value phosphate protein energy propositions in • Only 3-30%* of phosphate in feed is available to the animal • Maximizing protein utilization and improving nutritional value • Xylanase & glucanase increase non- starch polysacchar
Slide 38: Animal Health & Nutrition Natural Growth Promotion
Animal Health & Relevance of innovation cluster Our partner in AH&N Nutrition 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 Natural Growth • Arable land per capi
Slide 39: Technical & Pharma Overview
Technical & Pharma stats Current trends Water scarcity Shifting demographics and Continuous optimization Technical & urbanization in textile industry Pharma Overview 8% Growth drivers 5 year organic growth +1% +3% +4% +5% +2% • Increasing demand for wastewater solutions due to increasing water quali
Slide 40: Sustainability
Sustainability 40
Slide 41: 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 • Occupationa
Slide 42: We plan to continue our journey of operational excellence
We plan to 160% Decoupling resource consumption from economic growth Novozymes has over time proved how investments in continue our % change from 2005 baseline 140% Gross profit efficiency and optimization programs pay off not only journey of 120% Sales from a sustainability operational 100% perspec
Slide 43: 69 million tons of CO2 saved with customers
We are reducing CO2 emissions together with our customers by offering In 2016, Novozymes solutions that help produce more with less helped customers save 69 million tons of CO2 through Dairy: Margarine: Vegetable oil: Cereals: the application of 230 kg CO2 23 kg CO2 44 kg CO2 110 kg CO2 per ton of m
Slide 44: Novozymes' remuneration principles for the Executive leadership team
Remuneration principles ensure close alignment with long term shareholder interests, links remuneration to shareholder gains and losses, Novozymes’ and ensures management retention remuneration Annual remuneration scheme Long term incentive program (2017-2019) principles for the Salary and cash bonu
Slide 45: Financials and Governance
Financials and Governance 45
Slide 46: Historical performance demonstrates track record of delivery
Historical 16 years of organic growth and improved margins Long term Targets performance Sales DKKm EBIT margin 27.9% 20,000 30% demonstrates 18,000 EBIT margin 16,000 25% track record of 14,000 16.7% 18.5% 14,142 20% Return DKKm 12,000 delivery 10,000 8,146 15% to historical 8,000 6,000 5,033 10% g
Slide 47: Historical performance demonstrates track record of delivery
Net interest-bearing debt Targets Historical 2,000 Net Interestbearing debt NIBD/EBITDA 1.00 <1.0x NIBD/EBITDA performance 1,500 0.80 DKKm 0.60 1,000 demonstrates 500 0.40 0.20 Net interestbearing- Debt- to-EBITDA track record of 0 -500 0.00 delivery -1,000 -0.20 -0.40 ROIC 15,000 Invested Capital R
Slide 48: Novozymes carries limited exposure to raw material price
Novozymes carries limited exposure to Split of Cost of Goods sold* Factors impacting COGS • Productivity improvements, raw material input prices, currency fluctuations Energy/utilities • Note: accounting practice implies that there is a time & others; 20% lag between current price levels and COGS Fa
Slide 49: Since 2000 close to DKK 20bn returned to shareholders
Since 2000 close DKK ~20bn has Proposed dividend of DKK 4.00 per share for 2016 (up 14% from 2015), which will correspond to a total dividend pay-out of DKK 1,190m (pay-out ratio of 39%). Dividend will be disbursed on Feb 27 2017 been returned to In addition it has been decided to initiate a new sto
Slide 50: Shareholder distribution
Shareholder distribution of B common stock* Novozymes “B”-shares are listed on the Copenhagen stock exchange under the Shareholder symbol “NZYM B” distribution Two share classes; A and B shares North America; 20% – All “B”- shares listed in Copenhagen under the symbol “NZYM B” Novo A/S; Rest of Euro
Slide 51: Foundation ownership advocates long-term focus
Structure of the Novo group and ownership Purpose of the Foundation: Foundation 1. provide a stable basis for the commercial and research activities of ownership the companies in Novo A/S advocates 2. support physiological, endocrinological, metabolic and other long-term focus medical research 3. co
Slide 52: Novozymes Investor Relations team
Novozymes Investor Relations team Martin Riise Nicolai Kobborg Head of Investor Relations Manager, Investor Relations Mobile: +45 3077 0738 Mobile: +45 3077 1348 E-mail: mrsn@novozymes.com E-mail: niak@novozymes.com Klaus Sindahl Naja Wivel Sr. Manager, Investor Relations Coordinator, Investor Relat
Slide 53: 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, "bel