Novonesis A/s Class B · OMXCOP:NSIS_B
Novonesis A/s Class B — Novozymes — 9M 2021 Earnings Presentation
72 slides from Novonesis A/s Class B's earnings presentation, Oct 27, 2021
Slide 1: Roadshow presentation 9M 2021
Roadshow presentation 9M 2021 Released on October 27, 2021 Further investor relations information is available from the company’s website at investors.novozymes.com
Slide 2: Agenda
Latest results 4 Welcome to the world´s leading biotech powerhouse 13 Key strategic initiatives 24 Financials 34 Agriculture & Industrial Biosolutions 44 Consumer Biosolutions 56 Research & Development 66 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: Highlights
Highlights Stronger performance leads to raised full-year outlook 9M 2021 Q3 2021 Realized Realized • Organic 9M sales growth y/y: 6% (Q3 y/y: 7%). Sales performance, organic % 6 7 • Well-diversified exposure with double-digit organic sales growth in three of the five EBIT margin % 28.8 29.1 busines
Slide 5: Household Care
Household Care Solid performance in EM and Freshness platform; Europe softer 2021 perspectives than expected • Enzyme penetration in emerging markets. • Organic 9M sales growth y/y: 0% (Q3 y/y: 3%). • Freshness rollout with broad market launch. • Performance mainly driven by increased enzymatic pene
Slide 6: Food, Beverages & Human Health
Food, Beverages & Human Health Strong performance above expectations 2021 perspectives • Organic 9M sales growth y/y: 15% (Q3 y/y: 16%). • Food performance driven by innovation, emerging • Strong performance above expectations; all subareas growing in markets penetration, health-focused solutions an
Slide 7: Bioenergy
Bioenergy Strong performance on a COVID-19 impacted baseline 2021 perspectives • Organic 9M sales growth y/y: 12% (Q3 y/y: 5%). • Growth driven by gradual recovery in U.S. ethanol • Strong 9M performance driven by recovery in U.S. ethanol production, capacity expansion in Latin America, volumes and
Slide 8: Grain & Tech Processing
Grain & Tech Processing Broad-based growth outperforming expectations 2021 perspectives • Organic 9M sales growth y/y: 12% (Q3 y/y: 4%). • Growth expected across most subareas. • Strong 9M performance outperforming expectations; both grain • Innovation and market penetration driving growth in and te
Slide 9: Agriculture, Animal Health & Nutrition
Agriculture, Animal Health & Nutrition Solid growth in line with expectations 2021 perspectives • Organic 9M sales growth y/y: -3% (Q3 y/y: 16%). • Full-year organic sales indication of low single-digit • Decline as expected due to negative base effect from BioAg one- growth. off and difficult compa
Slide 10: Financials – 9M performance
Financials – 9M performance Strong and better-than-expected performance across sales, earnings and cash flows • 9M organic sales growth y/y: 6%; DKK sales 5% y/y. • Gross margin strong at 58.2%; 200bps higher than last year, driven by production efficiencies and productivity improvements. • Strong E
Slide 11: Outlook 2021
Outlook 2021 Full-year outlook raised after stronger-than-expected performance • Organic sales growth of 5% to 6% with sales in reported DKK roughly on par. • EBIT margin at around 27%. • ROIC incl. goodwill at 20% to 21%. • Free cash flow before acquisitions at DKK 2.8bn to 3.2 billion. 2021 outloo
Slide 12: Summary
Summary Stronger performance leads to increased full -year outlook • Execution of strategic direction in focus – with clear emphasis on prioritization. • Investing for the long term while delivering in the shorter term. • Sustainability as an enabler of growth; COP26 meeting in November engaging com
Slide 13: Welcome to the world's leading biotech powerhouse
Welcome to the world´s leading biotech powerhouse
Slide 14: It starts with a purpose
It starts with What if… a purpose 10% of the world’s detergents 3% 10% of all liquid of chemical animal protein were transportation pesticides were was replaced with alternative biobased fuels were replaced with biobased biologicals protein then… 700 million tons 5 million tons of 300 million tons 2
Slide 15: The world needs a future built on biotech
The world needs a future built on biotech – and we intend to catalyze the change Being Acting on a good climate corporate change citizen Reducing Meeting waste regulations Feeding Winning a growing consumers population The Improving Enhancing people´s profitability health power of biotech Global nee
Slide 16: The ability to adjust is what shapes our future
The ability to adjust is what shapes our future Agriculture, Animal Household Care Health & Nutrition 35% DKKm 13% 30% 16,000 Sales (right axis) 28% Grain & Tech Organic sales performance Processing 2020 sales split 26% EBIT margin 14,000 14% 24% R&D/Sales ROIC 22% 12,000 20% Bioenergy Food, Beverag
Slide 17: Uniquely diversified group creating synergies and opportunities
Uniquely diversified group creating synergies and opportunities We launch technologies in five main business areas Household Care Food, Beverages & Bioenergy Grain & Tech Agriculture, Animal Human Health Processing Health & Nutrition 35% of 2020 sales 20% of 2020 sales 18% of 2020 sales 14% of 2020
Slide 18: Creating a solid foundation for future growth
Creating a solid foundation for future growth Since 2019, we have… Optimized R&D and streamlined the pipeline Established an advanced portfolio segmentation logic Freed up resources to invest in growth areas Invested in new strategic opportunity areas – Human Health and Advanced Protein Solutions Fo
Slide 19: A world of opportunities requires prioritization
A world of opportunities requires prioritization Global market for chemicals, food and DKK ~100 bn health ingredients, feed additives, etc. Current addressable market for biotech DKK ~100 billion Alternative proteins Uncharted territory Novozymes accessed through today biotech… Microbes Enzymes 19 L
Slide 20: Latest results | Welcome to the world´s leading biotech powerhouse | Key strategic initiatives
20 Latest results | Welcome to the world´s leading biotech powerhouse | Key strategic initiatives | Financials | Agriculture & Industrial Biosolutions | Consumer Biosolutions | Research & Development
Slide 21: Investing for growth
Investing for growth Increasing investments in high growth areas and geographies + Establishing customer co-creation capabilities, production and commercial excellence Building and creating synergies across the organization to leverage the platforms Strengthening the use of M&A for technology and ma
Slide 22: Commitments to a healthy planet
Commitments to a healthy planet Business Zymers & society Operations Organic sales CAGR Include Climate 5% or higher until 2025 An inclusive and diverse workforce 50% reduction in absolute CO2 emissions from operations and supply chain by 2030 Achieve gender balance across all and net zero by 2050 E
Slide 23: x2030 Doubling sales … sustainably
x2030 2030 ambition Doubling sales … sustainably Accelerate Transform Enable towards a climate- food systems healthier lives neutral society 23 Latest results | Welcome to the world´s leading biotech powerhouse | Key strategic initiatives | Financials | Agriculture & Industrial Biosolutions | Consum
Slide 24: Key strategic initiatives
Key strategic initiatives Expand and Explore into adjacent high growth markets
Slide 25: Unlocking the full potential of our growth opportunities
Unlocking the full potential of our growth opportunities Expand Explore Evolve BioHealth & new options our core Human Nutrition for growth business Most of today’s Strategic opportunity areas Tomorrow’s current business and related business units potential platforms Unique competences and capabiliti
Slide 26: Expand and Explore target markets tap into global macro trends
Our Expand and Explore target markets tap into well recognized and substantial global macro trends Increasing focus on Reducing environmental products with impact and feeding a health benefits growing population Health Sustainability Replacing chemicals Alternative protein with biological sources be
Slide 27: Expanding BioHealth from a differentiated core platform
Expanding BioHealth from a differentiated Expand core platform to outperform market growth Innovate in consumer healthcare Channel cross- Market attractiveness selling Categories Market size and 5-year CAGR potential [DKK bn] until 2025 Metabolic & Cardio Health Dietary supplements 11 16 +5 8% Cogni
Slide 28: Expanding Human Nutrition into Advanced Protein Solutions
Expanding Human Nutrition building on existing capabilities Expand and accelerating into Advanced Protein Solutions Global plant-based retail market size 15-20% CAGR, 2020-2030 Protein extraction 162 Other Scale-up & 26 Plant-based meat commercialization of Plant-based dairy fermentation Protein 74
Slide 29: Customer Co-Creation Platform as a growth accelerator
Capital Markets Day 2021 │ Food, Beverages & Human Health Using our Customer Co-Creation Platform as a growth Evolve accelerator to strengthen capabilities for Food & Health Expand Novozymes Customers & partners Strengthening Food & Health co-creation capabilities Consumer Enzyme Application and Ful
Slide 30: Exploring new ventures to identify growth platforms
Exploring new ventures to Explore identify the most viable and significant growth platforms of Enable the future healthier lives Focus on opportunities addressing our core sustainability commitments Sales potential of at least DKK 500-1,000 million Accelerate towards a Transform Material sales poten
Slide 31: Biological alternatives to synthetic fertilizers
Opportunity to reduce environmental Explore impact using biological alternatives to synthetic fertilizers Market Replace a fraction of the >100 bn USD nitrogen fertilizer market used to feed over half the world’s population Biological solution that is non-pollutant to water quality and marine wildli
Slide 32: Step-change in plastic recyclability with enzymes
Opportunity to drive a step-change in Explore plastic recyclability by applying enzymes and microbial science Polymer Market modification Use enzymes to increase recyclability of 53 million tons of PET bottles and fibers currently sent to incineration or landfill Polymer recycling Technology Opportu
Slide 33: Enzymatic carbon capture
Opportunity to reduce greenhouse Explore gas emissions through enzymatic carbon capture Market Total Remove a fraction of the 37 greenhouse billion tons of CO2 emitted annually into the atmosphere gas emissions Representing 75% of all Billion tonnes CO2 CO2 utilization greenhouse gases causing equiv
Slide 34: Financials
Financials * Rethink Tomorrow novozymes"
Slide 35: Strong and improving financials despite lower organic growth
Strong and improving financials despite lower organic growth from 2015 to 2020 Organic sales DKKbn performance Sales % Profitability 20 15% 80 15 10% 60 56.2% 57.2% 57.2% 57.4% 58.1% 57.5% 57.9% 57.4% 55.3% 56.0% 7% 7% 7% 10 4% 4% 4% 4% 5-6%5% 40 2% 27.2% 27.7% 27.9% 27.9% 28.3% 28.1% 26.1% 26.0% 0%
Slide 36: Improved cash utilization and earnings quality
Improved cash utilization and earnings quality, combined with normalization of investments, has increased cash generation Net working capital Net investments Free cash flow before net acquisitions NWC/Sales DKKbn CAPEX/Sales DKKbn FCF bef. acq./Sales DKKbn 30% 5 15% 2.0 35 34% 5 13% 30 25% 24% 4 12%
Slide 37: Returning all excess cash to shareholders
We continue to be disciplined and diligent in returning all excess cash to shareholders Continuously improved payout ratio 10 years accumulated returns of DKK ~26 billion (2011-2020) DKKbn Payout ratio DKKbn 7 60% 30 55% 52% 15 26 6 Target payout ratio 50% 25 47% 45% 42% 45% 5 39% 38% 40% 20 36% 37%
Slide 38: Foundation ownership advocates long-term focus
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 private • To provide a st
Slide 39: Targeting leverage around 1x NIBD/EBITDA
Targeting a capital structure with a leverage around 1x NIBD/EBITDA and return of all excess cash to shareholders DKKbn NIBD/EBITDA Leverage in line with strategic direction 5.0 1.0 0.8 0.8 Leverage at around 1x 4.0 NIBD/EBITDA but could temporarily go higher on 0.5 acquisitions of strategic assets
Slide 40: Capital allocation to drive shareholder value creation
Capital allocation to drive shareholder value creation via sustainable and profitable long-term growth Investing Return to Acquisitions We will not for growth shareholders Investing in people, Acquisitions as a Cash return to shareholders Expand outside our innovation and supporting tool to build th
Slide 41: Diversified portfolio with broad-based organic growth
Diversified portfolio with broad-based organic growth and continued strong profitability Sales drivers Profitability drivers Organic sales CAGR of 5% or higher until 2025 Long term value creation by securing long term profitable growth and reinvesting optimization yields into the business Above aver
Slide 42: Unlocking growth - to drive shareholder value
Unlocking growth - to drive shareholder value Business Zymers & society Operations Organic sales CAGR Include Climate 5% or higher until 2025 An inclusive and diverse workforce 50% reduction in absolute CO2 emissions from operations and supply chain by 2030 EBIT margin Achieve gender balance across
Slide 43: Agriculture & Industrial Biosolutions
Capital Markets Day 2021 │ Agriculture & Industrial Biosolutions Agriculture & Industrial Biosolutions Helping customers boost performance and differentiate through biological solutions
Slide 44: Bioenergy
Capital Markets Day 2021 │ Bioenergy Bioenergy Sales split* 18% of Key trends group sales North America ~75% Europe & Asia Pacific ~15% Increasing push for clean energy solutions ~10% Latin America Organic sales performance Increased geographical 16% diversification 11% 12% Mid-to-high single digit*
Slide 45: Additional opportunities as the industry continues to diversify
Additional opportunities as the industry continues to diversify Today Tomorrow Future More to go for in optimizing Diversification into new value Adjacent opportunities for plant performance streams beginning to emerge sustainable energy (beyond 2025) 45 Latest results | Welcome to the world´s leadi
Slide 46: Global demand for more sustainable transportation is increasing
Global demand for more sustainable transportation is increasing Regional starch-based ethanol volume estimates Global starch-based ethanol volume estimates EU 1.8 BGY* BGY Estimate to 2025 30 low-single digit Low growth CAGR decline** 25 20 North America 15 15.9 BGY* Estimate to 2025 China 10 roughl
Slide 47: Sustainable diesel production has significant potential
Sustainable diesel production has significant potential with increased adaptation of biotechnology Feedstocks Fuel types End markets Global volume estimates BGY 30 Renewable diesel (HVO) Renewable diesel Drop in alternative to Biodiesel diesel 22 Vegetable oils 20 Soy, rapeseed, canola, palm 20 6 5
Slide 48: Grain & Tech Processing
Capital Markets Day 2021 │ Grain & Tech Processing Grain & Tech Processing Sales split* Key trends 14% of group sales Tech ~30% Consumers pushing increased sustainability deeper into the ~70% food value chains Grain Organic sales performance Stable demand growth for 17% grains & oils, driven by 9% M
Slide 49: Strategic growth opportunities and fine-tuning commercial approach
Portfolio of exciting strategic growth opportunties and a fine-tuning of the commercial approach Strengthen customer experience with digitally-enabled solutions and Yield Process infrastructure optimization Sustainability Selected strategic growth areas Starch Sustainable plastics Specialty oils & f
Slide 50: Agriculture, Animal Health & Nutrition
Capital Markets Day 2021 │ Agriculture, Animal Health & Nutrition Agriculture, Animal Health & Nutrition Sales split* Key trends 13% of group sales Agriculture ~35% Increasing crop yields and chemical reduction ~65% Animal Health & Nutrition Organic sales performance Regulation and consumer push for
Slide 51: Capturing high growth potential in Ag biologicals
Capital Markets Day 2021 │ Agriculture, Animal Health & Nutrition Capturing high growth potential in Ag biologicals High value crops Agriculture inputs* USD ~300 billion, 1-2% CAGR Organic farming Fertilizers 190 Crop protection 61 6 67 Seed & traits 37 Chemicals Regional Biologicals expansion Micro
Slide 52: BioControl
Capital Markets Day 2021 │ Agriculture, Animal Health & Nutrition Strong partnering model combined with a new direct go-to-market model R&D partnerships Commercial partnerships Commercial and innovation partnership, including in upstream corn Commercial collaboration BioYield for Argentina Commercia
Slide 53: Leveraging strong position in Nutrition into Animal Health
Capital Markets Day 2021 │ Agriculture, Animal Health & Nutrition Leveraging strong position in Nutrition into the higher growth area of Animal Health Partnerships Animal Nutrition & Health Market* Technology USD ~50 billion, CAGR 3-4% Estimated CAGR ’20-’25E synergies Paraciticides 10 ~4% Vaccines
Slide 54: Nutrition
Capital Markets Day 2021 │ Agriculture, Animal Health & Nutrition Increasing focus on animal health solutions complementing strong feed enzymes alliance with DSM R&D partnerships Commercial partnerships Microbes Health Enzymes Á Nutrition Enzymes 54 Latest results | Welcome to the world´s leading bi
Slide 55: Consumer Biosolutions
Consumer Biosolutions Helping customers meet consumer demand through biological solutions
Slide 56: Household Care
Capital Markets Day 2021 │ Household Care Household Care Sales split* Key trends 35% of group sales Home Care & Professional ~20% Hygienically Clean ~80% Laundry Organic sales performance Convenience SDG impact 5% Low- 2% 1% 1% single digit** 0% -2% Sustainability 2016 2017 2018 2019 2020 1H 2021 20
Slide 57: Emerging markets offer significant opportunities
Emerging markets offer significant opportunities Big potential in emerging markets Detergent Enzyme Sales representation volume* penetration** ~4x ~1/6 DM EM DM EM +50% commercial FTEs recruited in emerging markets since 2019 * Total global detergent volume. The figures include both enzymatic and no
Slide 58: Strong signs of success for the Freshness solution
Strong signs of success for the Freshness solution New dimension of “clean” Consumers ask for new solutions Novozymes Freshness Washed without Novozymes’ Experience issues with re- 65% occurring odor from sweat Freshness technology Freshness Report that their clothes 50% smell even though they Fabri
Slide 59: Biologicals are a small fraction of laundry detergent ingredients
Biologicals make up only a small fraction of laundry detergent ingredients today Plastic Raw material costs* Plastics used for the detergent packaging Other Perfumes Scent and malodor masking Most ingredients in laundry Perfume detergents are fossil-based. Actually, only less than 15%** Polymers and
Slide 60: Consumers asking for more sustainable solutions
Consumers asking for more sustainable solutions Renewable Biodegradable 60 Latest results | Welcome to the world´s leading biotech powerhouse | Key strategic initiatives | Financials | Agriculture & Industrial Biosolutions | Consumer Biosolutions | Research & Development
Slide 61: Food, Beverages & Human Health
Capital Markets Day 2021 │ Food, Beverages & Human Health Food, Beverages & Human Health Sales split* Key trends 20% of group sales Food ~75% Human Health*** ~5% Health & ~20% Nutrition Beverages Organic sales performance Plant-based foods 14% & beverages High- 8% single digit** SDG impact 4% 3% 1%
Slide 62: Taste, texture and nutrition of plant-based alternatives need to improve
Capital Markets Day 2021 │ Food, Beverages & Human Health Taste, texture and nutrition of plant-based alternatives need to improve Barriers for consumer adoption of Improving plant-based plant-based meat and dairy alternatives products with biology Eliminate E-numbers Taste and texture Less salt Mor
Slide 63: Enzymes and probiotics promote consumer health benefits
Capital Markets Day 2021 │ Food, Beverages & Human Health Enzymes and probiotics promote consumer health benefits in new categories Consumer health benefit Gut Immunity Sleep Mood Dairy Food category Snacks Baking Expanding Beverages into new opportunities 63 Latest results | Welcome to the world´s
Slide 64: Enabling customers to meet increasing consumer demands
Capital Markets Day 2021 │ Food, Beverages & Human Health Enabling customers to meet increasing consumer demands with biological solutions Novozymes Customers & partners Strengthening application and co-creation capabilities Consumer Enzyme Application and Full ingredient End understanding developme
Slide 65: Research & Development
Research & Development A unique fully integrated biotech powerhouse
Slide 66: Novozymes at the forefront of biotechnology
Novozymes has always been and continues to 2030’s be at the very forefront of biotechnology Quantum computing and digital twins applied to biology AI-driven science and synthetic The forefront of biotechnology biology 2020’s CRISPR, omics, big High- data, nano-scale DNA sequencing throughput and mod
Slide 67: A unique fully integrated biotech powerhouse
We are a unique fully integrated biotech powerhouse + + World-class bio- High-quality scale-up and Mastery of real-world engineering toolbox manufacturing applications 67 67 Latest results | Welcome to the world´s leading biotech powerhouse | Key strategic initiatives | Financials | Agriculture & In
Slide 68: Reshaping R&D for higher focus on topline growth
Reshaping R&D for higher focus on topline growth Higher More resources for More focus on efficiency product development unlocking growth Early customer validation ~50 ~80% ~70% ~100 High growth opportunities Active R&D resource R&D resource allocation Targeted M&As pipeline projects allocation withi
Slide 69: Customer centricity at the heart of innovation process
Putting customer centricity at the heart of our innovation process Solution-oriented approach Learn Design + Early customer validation Test Build = Highest likelihood of commercial success Customer interaction 69 Latest results | Welcome to the world´s leading biotech powerhouse | Key strategic init
Slide 70: Flexible innovation models meeting different customer needs
Flexible innovation models meeting different customer needs Radical innovation Application innovation Near-to-market innovation 70 Latest results | Welcome to the world´s leading biotech powerhouse | Key strategic initiatives | Financials | Agriculture & Industrial Biosolutions | Consumer Biosolutio
Slide 71: Pipeline built on clear value propositions
The pipeline is built on a clear set of value propositions to our customers and society Sustainability and chemical Superior performance replacement and customer value Benefits to health and nutrition 71 Latest results | Welcome to the world´s leading biotech powerhouse | Key strategic initiatives |
Slide 72: Contact Our investor relations team
Contact 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 6144 +45 30