Novonesis A/s Class B · OMXCOP:NSIS_B
Novonesis A/s Class B — Novozymes — Non-Deal Roadshow (August 2017)
54 slides from Novonesis A/s Class B's roadshow presentation, Aug 11, 2017
Slide 1: Roadshow presentation 1H 2017
Roadshow presentation 1H 2017 August 11th 2017
Slide 2: Table of contents
1H results 2017 Table of contents 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 40 4. Sustainability 41 5. Financials and Governance 46 2
Slide 3: Good first half and momentum in the business
1H 2017 Good first half and momentum in 1H y/y organic sales growth per segment Highlights the business • Organic sales growth +3% (Q2: 2%) 8% 7% • Large segments growing organically: 1% ‒ Household Care +1% (Q2: +1%) ‒ Food & Beverages +8% (Q2: +10%) ‒ Bioenergy +7% (Q2: +8%) -4% • Timing main nega
Slide 4: Focus on Growth
4 Focus on Growth • Innovation drives revenue and earnings growth • Solid pipeline, and strong launch environment with increased commercial activity • Innovation across enzyme classes and applications supported by significant IP positions • Cross-fertilization yields unique advantages –> size matter
Slide 5: Household Care
Household Care First half in line with expectations 1H y/y organic sales growth • Good development in Asia Pacific as liquid formulations continue good growth supported by enzyme innovation 33% • Latin America down for the quarter of sales • Developed detergent markets only post slight growth due to
Slide 6: Food & Beverages
Food & Beverages Strong performance through first half 1H y/y organic sales growth • Solid growth in baking outside the US freshkeeping market. Good growth in Europe, Middle East and Africa region in Q2 offsets the 28% effects of reduced pricing in North America of sales 8% • Nutrition strong also i
Slide 7: Bioenergy
Bioenergy US ethanol production supports solid growth in enzymes for 1H y/y organic sales growth conventional biofuels • US ethanol production estimated to be up by 4% in both Q2 and 18% 1H. US ethanol inventories remain elevated, and ethanol margins 26% of sales thin 7% • Rest of World conventional
Slide 8: Agriculture & Feed
Agriculture & Feed Timing affects half year and quarterly sales growth 1H y/y organic sales growth • Feed enzymes sales lower in Q2 as expected, due to inventory 14% building in Q1. In-market sales growing in 1H y/y 19% of sales • Probiotics growing from a small base. Trials progressing as 13% plann
Slide 9: Innovation top of the agenda with four new launches
Medley® 2.0 – Emerging market innovation which combine enzyme solutions Innovation top of Enzyme solutions enabling better wash performance to small and medium-sized producers in emerging the agenda with markets four new launches in Q2 Progress® excel – new protease for liquid detergents Premium pro
Slide 10: Progress in pipeline
Progress in pipeline During Q2 2017 both the grain-milling and vegetable oil-processing program moved from the “Development” to the “Launch” stage Total pipeline has: Area Innovation Feasibility Discovery Development Launch Commercial 8 programs with significant market- Household Care Hygiene soluti
Slide 11: 1H performance and 2017 outlook
1H performance and 2017 outlook 1H 2017: Good half-year performance Key financials Realized 2017 outlook • Growth in the large segments: Household Care, (DKKm) 1H 2017 August 11 Food & Beverages, Bioenergy Organic sales growth +3% 2-5% • Agriculture & Feed impacted by timing • EBIT-margin excl. one-
Slide 12: Overview and Strategy
Overview and Strategy xO Rethink Tomorrow bal = novozymes’
Slide 13: Novozymes at a glance
World leader in Bioinnovation Company background Novozymes Global • ~6,200 employees Listed 2000 at a glance • ~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 creates high barriers to Uniquely diversified entry group, creates Household Food & Bioenergy Agriculture & Technic
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 (developing unproved Strategy, purpose technology) or the market risk (entry into new markets). If we see both a technology risk and a market risk, but it looks like the right and pa
Slide 16: Experienced leadership team
Experienced leadership team – with more than 25 years seniority on average Peder Holk Nielsen Thomas Videbæk Tina Sejersgård Fanø Andrew Fordyce Anders Lund CEO & President COO & Executive Vice President, Executive Vice President, Executive Vice President, Executive Vice President, Novozymes since 1
Slide 17: Our set of competitive advantages has led to a unique market-leading position
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 to • Sustainability is in our DNA • Unique market-leading position in regions full
Slide 18: 16 years of innovation-driven returns
16 years of Solid financial track record driven by innovation innovation-driven Strong returns since 2000 30,0% 16.000 • returns • 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 36% EMEA NZ: HQ, Production R&D Main markets: HHC, F&B, Feed & Pharma Acc CAPEX: ~ DKK 6bn 34% FTE’s: ~2,900 5Y Avg growth: +6% 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
Developing new Continued development …creates opportunities to 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
3 levers to improve profitability All our solutions are produced via 1 Improve 2 Optimize 3 Improve fermentation production strain industrial production Process optimization enzyme efficacy Ability to produce more enzymes per Protein engineering of enzymes technology m3 fermentation tank through gen
Slide 23: Market Overview
Market Overview xO Rethink Tomorrow : bal = novozymes’
Slide 24: Household Care overview
Current trends Household Care stats Shifting demographics Water scarcity Customer consolidation and urbanization Household Care Energy transition Convenience and Cost-based optimization of Overview cleanliness 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 consumers’ Novozymes invests to ensure innovative, safe enable a new wave laundry hygiene concerns and natural solutions to address consumers’ of growth in HHC in hygiene concerns 1 both the developed Cold wash Traditional enzyme solutions have and em
Slide 27: Food & Beverages overview
Current trends Food & Beverages stats Shifting demographics Water scarcity Consumer focus on health, and urbanization wellness and natural products Food & Beverages Overview Digitalization of the global economy Increased cost of raw materials Customers consolidating operations but diversifying brand
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 Food products set of end markets Processing of Ag inputs A global business with global solutions Product-driven for developed markets and applications Starch processing B
Slide 29: Bioenergy overview
Current trends Bioenergy stats Volatile commodity prices Waning public support US corn ethanol industry squeezing customer margins for biofuels affected by low corn prices Bioenergy 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 across
Slide 31: U.S. ethanol production volumes have stabilized
U.S. ethanol production volumes have stabilized 20 US Ethanol production grew ~3% in 2016 totalling to 15.3bn gallons. Ethanol production Billion Gallons 15 Global production was up ~2% and outlook in the 10 U.S. 5 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 U.S. eth
Slide 32: Project pipeline biomass conversion
Publicly announced, commercial biomass conversion projects under development by region* Project pipeline 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 and Farmers sensitive to natural products 16% 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: BioAg Alliance Pipeline
BioAg Alliance Pipeline Industry’s most advanced microbials platform and R&D capability The BioAg Alliance: R&D Development Pipeline TheBioAg The BioAg Alliance Alliance PHASE 1: PHASE 2: PHASE 3: PHASE 4: DISCOVERY: EARLY ADVANCED PROOF OF CONCEPT PRE-LAUNCH Biologicals 10’s of Thousands Thousands
Slide 38: Attractive value propositions in animal feed enzymes
Our offerings in animal feed enzymes Phytase ProAct® Others Attractive value phosphate protein energy • Maximizing protein utilization and • Xylanase & glucanase increase non- propositions in • Only 3-30%* of phosphate in feed is available to the animal improving nutritional value starch polysacchar
Slide 39: Animal Health & Nutrition: Natural Growth Promotion
Animal Health & Relevance of innovation cluster Our partners 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 cap
Slide 40: Technical & Pharma overview
Technical & Pharma stats Current trends Water scarcity Shifting demographics and Continuous optimization in Technical & Pharma urbanization textile industry Overview 8% Growth drivers 5 year organic growth -5% +6% +9% +6% +13% • Increasing demand for wastewater solutions due to increasing water qual
Slide 41: Sustainability
Sustainability xO 4, Rethink Tomorrow ae bal : novozymes’
Slide 42: 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 43: 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 efficiency and % change from 2005 baseline continue our 140% Gross profit optimization programs pay off not only from a sustainability journey of 120% Sales perspective but also fro
Slide 44: We are reducing CO2 emissions together with our customers
We are reducing CO2 emissions together with our customers by offering solutions In 2016, Novozymes that help produce more with less helped customers save 69 million tons of CO2 through the Dairy: Margarine: Vegetable oil: Cereals: application of 230 kg CO2 23 kg CO2 44 kg CO2 110 kg CO2 per ton of m
Slide 45: Novozymes' management remuneration principles
Remuneration principles ensure close alignment with long term shareholder interests, links remuneration to shareholder gains and losses, and ensures Novozymes’ management retention remuneration Annual remuneration scheme Long term incentive program (2017-2019) principles for the Salary and cash bonu
Slide 46: Financials and Governance
Financials and Governance xO Rethink Tomorrow bal = novozymes’
Slide 47: 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 track 18.000 25% EBIT margin 16.000 14.142 record of delivery 14.000 16,7% 18,5% 20% Return DKKm 12.000 10.000 8.146 15% to historical 8.000 6.000 5.033 10% g
Slide 48: Historical performance demonstrates track record of delivery
Net interest-bearing debt Targets Net Interestbearing debt NIBD/EBITDA 2.000 1,00 Historical 0,80 NIBD/EBITDA 1.500 performance <1.0x DKKm 0,60 1.000 0,40 500 demonstrates track 0 0,20 Net interestbearing- 0,00 Debt- to-EBITDA record of delivery -500 -0,20 -1.000 -0,40 ROIC 15.000 Invested Capital R
Slide 49: Novozymes carries limited exposure to raw material
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 lag others; 20% between current price levels and COGS Fa
Slide 50: Since 2000 close DKK ~20bn has been returned to shareholders
Since 2000 close DKK Dividend of DKK 4.00 per share for 2016 (up 14% from 2015), corresponding to a total dividend pay-out ~20bn has been of DKK 1,190m (pay-out ratio of 39%). Dividend was disbursed on Feb 27 2017 returned to the In addition it was decided to initiate a new stock buyback program wor
Slide 51: Shareholder distribution
Shareholder distribution of B common stock* Novozymes “B”-shares are listed on the Copenhagen stock exchange under the symbol Shareholder “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; 10% – All “A
Slide 52: 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 53: Novozymes Investor Relations team
Novozymes Investor Relations team Tobias Bjørklund Klaus Sindahl Naja Wivel Officer, Investor Relations Elsebeth Kjærsgaard Head of Investor Relations Coordinator, Investor Relations Officer, Investor Relations Mobile: +45 3077 8682 Mobile: +45 5363 0134 Mobile: +45 3077 2076 E-mail: elgs@novozymes.
Slide 54: 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