Novonesis A/s Class B · OMXCOP:NSIS_B
Novonesis A/s Class B — Novozymes — Non-Deal Roadshow (August 2019)
58 slides from Novonesis A/s Class B's roadshow presentation, Aug 8, 2019
Slide 1: Roadshow presentation 1H 2019
Roadshow presentation 1H 2019 Released on August 8, 2019
Slide 2: Table of contents
Table of contents Latest results 3 Overview and strategy 14 Market overview 25 Household Care 26 Food & Beverages 31 Bioenergy 36 Agriculture & Feed 40 Technical & Pharma 45 Sustainability 46 Financials and governance 50 22
Slide 3: Latest results
Rethink Tomorrow “ee ti i ie NA / ; aN soyozymes ;
Slide 4: Highlights
Highlights Second-quarter improvement, but overall 1H’19 2019 Key financials Realized Outlook disappointing 1H performance. 2H Sales growth, organic -3% 1-3% acceleration confirmed. EBIT margin 30.0% 28-29% • Agriculture & Feed, Bioenergy and Food & Beverages Net profit growth 1% 3-8% negatively aff
Slide 5: Organic sales growth by geography
Organic sales growth by geography North America 34%of sales Europe, the Middle East & Africa 37% of sales 1H y/y: -4% 1H y/y: 1% Q2 y/y: -3% Q2 y/y: 0% Developed Emerging 67% (1H 2019: 0% y/y) 33% Latin America 9% of sales (1H 2019: -8% y/y) Asia Pacific* 20% of sales 1H y/y: -3% 1H y/y: -9% Q2 y/y:
Slide 6: Household Care
Household Care 33% of sales First-half performance as expected • Organic sales growth of minus 2% y/y in 1H 2019 1H y/y organic sales growth • Weakness in the Middle East due to economic 4% distress • Continued trend of growth with regional customers 1% being offset by decline with global customers
Slide 7: Food & Beverages
Food & Beverages 29% of sales Weak start to the year • Organic sales growth of minus 2% y/y in 1H 2019 1H y/y organic sales growth • Baking down due to economic distress in the 8% Middle East and price declines in freshkeeping 5% 4% • Starch down due to wet weather in the US and Will be updated 3% h
Slide 8: Bioenergy
Bioenergy 19% of sales Market volatility impacts performance • Organic sales growth of minus 4% y/y in 1H 2019 1H y/y organic sales growth • Wet weather in the US Midwest and low producer 14% margins 7% • E15 approved for all-year sales but limited impact 2% in 2019 • Continued capacity expansion in
Slide 9: Agriculture & Feed
Agriculture & Feed 13% of sales Feed improving, BioAg impacted by wet weather in the US Midwest 1H y/y organic sales growth • Organic sales growth of minus 6% y/y in 1H 2019 19% • BioAg decline somewhat mitigated by improved Feed performance 1% 3% • Wet weather in the US Midwest negatively impacted
Slide 10: Eight new launches; three for the broad market
Eight new launches; three for the broad market Innova® Force Innova® Fit Fortiva® New enzymatic offering to Further expansion of the Next-generation yeast from meet demand for better yeast platform, enabling Novozymes yield and temperature penetration of Latin America robustness Latest results • Ove
Slide 11: Financials
Financials Financials as expected given weak top-line 1H’18 1H’19 performance Key financials Realized Realized Sales growth, organic 4% -3% • Organic sales growth of minus 3% y/y in 1H 2019 • US Midwest and emerging-market softness created headwinds, EBIT margin 28.1% 30.0% impacting Agriculture & F
Slide 12: Financials – 2019 outlook
Financials – 2019 outlook Full-year outlook maintained after June 6 update 1H’19 2019 Outlook Key financials Realized August 8* • Full-year outlook maintained on all parameters, with organic growth accelerating in second half Sales growth, organic -3% 1-3% • EBIT margin adjusted for one-offs expecte
Slide 13: Summary
Summary Better Second-quarter improvement, but disappointing 1H business performance. Acceleration expected in 2H with biology • Weaker-than-expected start to the year due to wet weather in the US Midwest and softness in some emerging markets – revised outlook issued on June 6 • Second-quarter perfo
Slide 14: Overview and Strategy
Rethink Tomorrow Overview and Strategy | | : » bis ex : NM soyozymes
Slide 15: World leader in Bioinnovation - Novozymes at a glance
World leader in Bioinnovation - Novozymes at a glance Solid financials (2018) Market leader 17 years of innovation driven growth • ~28% EBIT margin (2018) DKKm • ~48% of total market with DKK • ~24% ROIC (2018) 14.3bn in sales (2018) • ~5x EBIT (since IPO) 30% 16,000 • ~3x Sales (since IPO) • ~7x Ne
Slide 16: Uniquely diversified group creating synergies and opportunities
Uniquely diversified group creating synergies and opportunities Household Care Food & Bioenergy Agriculture & Feed Technical & Organic growth Beverages Organic growth Organic growth Pharma 19% 19% Organic growth Organic growth 13% 11% 12% 9% 9% 7% 6% 4% 5% 5% 5% 4% 2% 2% 3% 2% 1% 1% 0% 2014 2015 201
Slide 17: Our global business serves a lot of local markets and industries
Our global business serves a lot of local markets and industries North America 34% Europe, the Middle East & 36% of ’18 sales Africa of ’18 sales Sites: Production, R&D Main markets: Bioenergy, HHC, F&B, Sites: HQ, Production R&D BioAg Main markets: HHC, F&B, Feed Acc CAPEX: ~DKK 4.3bn Acc CAPEX: ~
Slide 18: Competitive advantages across the value chain
Competitive advantages across the value chain has led to a unique market leading position Sustainability • Sustainability is in our DNA helping our customers to save an estimated 88 million tons of CO2 (2018) • Triple bottom line • Pioneering life cycle assessment documentation Scale • Production: 5
Slide 19: Enzyme technology improves Novozymes’ profitability
Enzyme technology improves Novozymes’ profitability Novozymes dedicates 10-15% of R&D spend to productivity improvement programs 3 ways to gain productivity improvements Purification Raw materials Fermentation Enzymes Formulation Micro-organisms Improve production strain Optimize industrial producti
Slide 20: Better business with biology
Better business with biology Focus areas Differentiate to succeed Invest in impact Spearhead new business Adapt our approach to fit industry Show up for our customers with Unfold high-potential impact areas potential and concentrate on strong commercial teams, capable in a dynamic, efficient process
Slide 21: Differentiate to succeed with assigned roles for each industry
Differentiate to succeed with assigned roles for each industry Development seed Fueling mid-term growth but still evolving New strategic opportunity Contributing to long-term growth Growth star Every industry Fueling short-term growth plays an with sharp focus on execution important role Value creat
Slide 22: Invest in impact by focusing the R&D pipeline
Invest in impact by focusing the R&D pipeline Before Better business with biology Value Value New strategic opportunities Risk Risk Project resource allocation Project resource allocation *Illustrative example 22 Latest results • Overview and strategy • Market overview • Sustainability • Financials
Slide 23: Broader technology offerings increase opportunities over time
Broader technology offerings increase opportunities over time Past Present Future Enzymes Enzymes Enzymes Microbes Microbes 23 Latest results • Overview and strategy • Market overview • Sustainability • Financials and governance
Slide 24: Spearhead new business in areas of global need
Spearhead new business in areas of global need Contaminant removal Human oral and gut health Specialty alternative proteins Protecting water resources by Increasing health and Feeding the world by providing applying biological solutions wellbeing with clinically alternative specialty protein to remo
Slide 25: Market overview
Rethink Tomorrow ” a \(\/ Hf = oe? ex : soyozymes
Slide 26: Household Care overview
Household Care overview Key industry trends Product launches (2018) Organic growth • Growth in the liquid and unit dose • Licheninase – A new +9% +4% +1% +2% 0% market, driven by consumer enzyme launched for convenience and stronger automatic dishwashing, Sales in commercial focus on these targeting
Slide 27: Our enzyme technology adds significant benefits
Our enzyme technology adds significant benefits Eliminate Remove stains, Decrease dose, Preserve fabric Save energy, Deal with complex harsh chemicals boost whiteness increase performance texture, color water, time hygiene issues 27 Latest results • Overview and strategy • Market overview • Sustaina
Slide 28: Lifestyle changes are increasing the demand for freshness
Lifestyle changes are increasing the demand for freshness, and we are on track to deliver DKK 1bn Freshness Urbanization Synthetics Malodor Grime Key consumer concerns identified by Cold wash Detergent Body soils Novozymes format Consumers’ lifestyle changes are …which center around issues the drive
Slide 29: Large potential for future enzyme inclusion in emerging markets
We see large potential for future enzyme inclusion, especially in emerging markets Emerging markets Significant up-dosing and penetration potential in emerging markets in Presence and emerging market solutions general and Asia Pacific in particular to unlock potential • Innovation hubs in China, Ind
Slide 30: Biological detergents: enzymes can contribute even more
Biological detergents: We believe enzymes can contribute even more to a detergent Biological detergent and to compaction • New and more stable enzymes to replace surfactants • Freshness solutions to reduce Other the need for perfume Perfume • Enzymes to replace polymer Other functions, such as fabri
Slide 31: Food & Beverages overview
Food & Beverages overview Key industry trends Product launches Organic growth • Consumer focus on health, wellness (2018) +4% +5% +2% +9% +5% and natural products • Palmora® – Our first • Increase in raw material costs and solution for the palm oil industry Sales in focus on production process DKKm
Slide 32: Better food for a growing world
Better food for a growing world Trends Opportunities EM industrialization More with less New substrate Productivity streams and yield More natural foods, Health Freshness Health, safety please and taste and sustainability 32 Latest results • Overview and strategy • Market overview • Sustainability •
Slide 33: The grain value chain
The grain 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 segment with our starch customers in wet milling, enhancing the yield of key value stream
Slide 34: Enzymatic applications for vegetable oil processing show huge potential
Enzymatic applications for vegetable oil processing show huge potential New agro- processing applications End products • Cooking oil • Margarine & shortenings • Novozymes offers multiple • CBE solutions across the value • OPO, etc. chain 3 Specialty fats producer • Low trans fat Specialty oils & fat
Slide 35: Increasing consumer health awareness drives food trends
Increasing consumer health awareness drives food trends and opportunities Healthy food trends Trans fats and Acrylamide enzymatic removal interesteri- fication Low Less sugar Plant lactose added protein Source: Novozymes revenue estimates 35 Latest results • Overview and strategy • Market overview •
Slide 36: Bioenergy overview
Bioenergy overview Key industry trends Product launches (2018) Organic growth • Growing calls for lower CO2 • Innova® Drive – Novozymes’ first launch within yeast for +19% -5% -3% +11% +12% emissions in the transportation sector, driving conventional biofuels. demand for ethanol Innova® Drive is aim
Slide 37: Bioenergy - a lot of opportunities exist
Bioenergy - a lot of opportunities exist Ramping up +1bn GPY commercially in EUROPEAN UNION emerging markets Total additional GPY by 2030 Renewable Energy Directive Production: 1.4bn GPY to be ready for 24bn Potential addition: +1bn gallons by 2030 expected shift (gallons per year) +13bn GPY CHINA E
Slide 38: Ethanol production
Ethanol production Global ethanol production (billion gallons) Ethanol producer margin 28.570 Contribution margin ($/gallon) 25.774 26.182 26.810 2.5 25.083 RoW 23.422 China 2.0 6.860 7.920 EU 1.5 6.760 7.200 6.760 6.267 Brazil 1.0 0.5 13.816 14.313 14.807 15.413 15.936 16.061 NA 0.0 2013 2014 2015
Slide 39: Addressing complexity in bioethanol production
Addressing complexity in bioethanol production Designing enzymes for individual plants Using our diagnostic program to deliver custom fermentation solutions, tailored to a plant’s unique operating conditions From standard to Past Present Future Basic products for Multiple offerings across Increasing
Slide 40: Agriculture & Feed overview
Agriculture & Feed overview Key industry trends Product launches (2018) Organic growth • Consumer focus on health, • Acceleron® B-360 ST – A +7% +19% +5% -3% +3% wellness and natural products biological seed treatment that • Sensitivity to fluctuations in promotes symbiosis between microbes and corn
Slide 41: Our new BioAg setup allows for broader outreach
Our new BioAg setup allows for broader outreach 41
Slide 42: Scientific evidence supports enzyme penetration
Scientific evidence supports enzyme penetration - enabling livestock farmers to reduce feed cost 70% of total cost of poultry production is feed including additives which is around 5%. Market is sensitive Poultry producer margins are low when: • Feed prices are high to feed and meat • Meat prices ar
Slide 43: Attractive value propositions in feed enzymes
Attractive value propositions in feed enzymes Phytase Estimated penetration Phosphate • Only 3-30% of phosphate in feed is available to the animal across species • Ronozyme NP® releases half of the phosphate bound – 100% Ronozyme HiPhos® releases nearly all of it • Significant reduction in phosphoro
Slide 44: Committed to core technologies and partnering with industry leaders
We are committed to our core technologies and partner with industry leaders to win Enzymes Probiotics • Full portfolio of feed enzymes • Growing area for Novozymes with pipeline of products • Recently launched game-changing innovation • Alterion® tracking well • Improve the sustainability of livesto
Slide 45: Technical & Pharma overview
Technical & Pharma overview Key industry trends Product launches 5 year organic growth • Continuous focus on • BioSec® – Novozymes’ first product for sludge +9% +6% +13% +2% -6% process optimization and dewatering. BioSec® is aimed at municipal cost reduction wastewater treatment • Water scarcity dr
Slide 46: Sustainability
Rethink Tomorrow ” a \(\/ Hf = oe? ex : soyozymes
Slide 47: Sustainability drives how we do business
Sustainability drives how we do business CLIMATE WATER PRODUCTION & CONSUMPTION WORLD Limit global warming Ensure clean and Produce more and better By 2030, we will help... increase to 1.5 degrees efficient water use products with less impact 2022 targets Save 60 million tons CO2 Reach > 4 billion p
Slide 48: We plan to continue our journey of operational excellence
We plan to continue our journey of operational excellence • Novozymes has over time proved how investments in efficiency and optimization programs pay off not only from a sustainability perspective but also from an economic perspective • In the US we have a biogas plant which turns wastewater into s
Slide 49: Remuneration principles for the Executive leadership team
Remuneration principles for the Executive leadership team Remuneration principles ensure close alignment with long term shareholder interests, links remuneration to shareholder gains and losses, and ensures management retention Annual remuneration scheme Long term incentive program (2017-2019) Salar
Slide 50: Financials and governance
Rethink Tomorrow Financials and governance “ee ti i ie NA / ; aN soyozymes ;
Slide 51: Historical performance demonstrates track of delivery
Historical performance demonstrates track of delivery Turnover development Mid-term targets 2020-2022 +5% 14,002 14,142 14,531 14,390 15.000 11,234 11,746 12,459 9.724 10,510 • Organic revenue growth of 5+% DKKm 10.000 5.000 per year 0 (2020 likely impacted by portfolio changes) 2010 2011 2012 2013
Slide 52: Historical performance demonstrates track of delivery
Historical performance demonstrates track of delivery Net working capital Model assumptions 2020-2022 3.000 2.741 2.768 30% 2.195 NWC/Sales 1.943 2.088 2.023 20% 2.000 1.580 1.720 DKKm 1.076 10% • Improving as % of sales 1.000 0% 0 -10% 2010 2011 2012 2013 2014 2015 2016 2017 2018 NWC to sales (righ
Slide 53: Limited exposure to raw material fluctuations
Novozymes carries limited exposure to raw material fluctuations Factors impacting COGS Split of Cost of Goods sold • Productivity improvements Raw materials consist primarily of different carbohydrates. • Input prices Approximately 50% of raw material input are e.g., sucrose, maltose, glucose and st
Slide 54: DKK ~20bn returned to shareholders since 2010
DKK ~20bn returned to shareholders since 2010 5.00 4.50 4.00 3.50 3.00 3.318 3.438 3.062 3.190 2.50 2.925 2.20 1,90 2.000 2.000 2.000 1,60 2.000 2.000 1.519 1.000 832 786 504 400 1.438 1.062 1.190 1.318 687 786 925 504 600 2010 2011 2012 2013 2014 2015 2016 2017 2018 Buyback (DKKm) Dividend (DKKm) D
Slide 55: Shareholder distribution
Shareholder distribution Two share classes; A and B shares Shareholder distribution of B common stock* • All “B”- shares listed in Copenhagen under the symbol Novo Holdings was the only major stockholder holding more “NZYM B” than 5% of Novozymes common stock • All “A” share capital and 21,991,400 “
Slide 56: Foundation ownership advocates long-term focus
Foundation ownership advocates long-term focus Purpose of the Foundation Structure and The Novo Nordisk Foundation is an independent Danish ownership foundation with corporate interests. The objective of the Novo Nordisk Foundation is twofold: • To provide a stable basis for the commercial and resea
Slide 57: Our investor relations team
Our investor relations team Further investor relations information is available from the company homepage at investors.novozymes.com Tobias Björklund Carl Ahlgren Naja Wivel Ulrik Wu Svare Head of Investor relations IR officer Coordinator IR officer +45 3077 8682 +45 3077 2783 +45 3077 2076 +45 3077
Slide 58: 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