Novonesis A/s Class B · OMXCOP:NSIS_B
Novonesis A/s Class B — Novozymes — Non-Deal Roadshow (August 2015)
60 slides from Novonesis A/s Class B's roadshow presentation, Aug 6, 2015
Slide 1: Road Show presentation 1H 2015
Road Show presentation 1H 2015 August 6th 2015
Slide 2: 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, "be
Slide 3: Table of contents
Table of contents 1. 1H 2015 presentation 4 2. Novozymes Overview 10 3. Strategy 16 4. Segmental Overview 28 - Household Care 29 - Food & Beverages 32 - Bioenergy 35 - Agriculture & Feed 39 - Technical & Pharma 45 5. Sustainability 48 6. Financial Review 53 3
Slide 4: Quarterly Results
4 QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Slide 5: 1H 2015 Summary
1H 2015 Summary Strong earnings performance despite headwinds in Sales and organic growth 1H 2013 – 1H 2015 important markets DKKm 10% 8% 8.000 • 5% organic sales growth is below expectations. 15% growth in DKK sales – highest-ever reported sales in six months 8% 6% 7.000 6% 7.028 • Strong growth i
Slide 6: Sales growth slowed in Bioenergy
Sales growth slowed in Bioenergy 1H sales up by 2% organically U.S. semi-annual ethanol volume growth rates and Novozymes Bioenergy organic sales growth 1. Challenging market dynamics: U.S. ethanol volume growth Novozymes org. Bioenergy growth Volatile commodity prices and 35% low ethanol margins h
Slide 7: Sales & Markets
Sales & Markets 1H 2015 sales: DKK +15%, organic +5% Sales by industry, DKKm DKK growth org. growth Q2 2015 sales: DKK +13%, organic +1% Household 2.265 Household Care: Sales negatively impacted by uncertainty in Care 2.124 +7% / 0% emerging markets, a dynamic U.S. market and lower sales to one cu
Slide 8: R&D Update
R&D Update • Household Care: Working on new innovation for stain removal, hygiene improvement and dedicated emerging markets solutions to accelerate growth • Bioenergy: Expect to launch one or more innovations during 2H 2015 to address changing demands from U.S. corn ethanol producers • Animal Healt
Slide 9: 1H 2015 Financial Performance & Outlook
1H 2015 Financial Performance & Outlook Strong earnings performance in 1H 2015 Key Realized 2015 Outlook 2015 Outlook • Gross margin slightly up financials 1H 2015 Aug. 6 Apr. 23 • Disregarding the net one-time impact from The BioAg Alliance, Sales growth, org. +5% 4-7% 7-9% EBIT grew by ~20%, main
Slide 10: Novozymes Overview
10 QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Slide 11: Novozymes – the world leader in bioinnovation
Novozymes – the world leader Founded 1925 in bioinnovation Listed 2000 Ticker NZYM B Who are we? Exchange Copenhagen Market Cap* US$ ~15bn Long-term targets 8-10% organic sales 2015-2020: ≥ 26% EBIT margin ≥ 25% ROIC Global R&D intensive Profitable Majority owner Novo A/S ~6,500 employees, ~7,000 p
Slide 12: Experienced Leadership Team
Experienced Leadership Team Per Falholt Thomas Nagy Peder Holk Nielsen Benny D. Loft Andrew Fordyce Thomas Videbæk Executive Vice President, Executive Vice President, President and CEO Executive Vice President, Executive Vice President, Executive Vice President, Research and Development Supply Opera
Slide 13: Uniquely Diversified Group
Uniquely Diversified Group – Creates Synergies and New Opportunities • Unique biotech-focused business with a strong legacy of delivering growth, earnings, and cash flow • ~14% of annual sales invested in R&D • Global provider of enzymes to all market segments creates global market leader position •
Slide 14: Diversification in Revenue Streams Underpins Financial Position
Diversification in Revenue Streams Underpins the Company’s Strong Financial Position Industry growth profiles and 5-yr org. CAGRs Region growth profiles and 5-yr LCY CAGRs 7% 11% 14% 38% 35% HHC 17% F&B Europe, Middle East and Africa Industry BioE Region North America A&F Asia Pacific 18% T&P 34%
Slide 15: Global Production and R&D Setup
Global Production and R&D Setup 15 QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Slide 16: Strategy
16 QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Slide 17: 15 years of innovation-driven returns
15 years of Historical performance 30% 14.000 Sales DKKm innovation-driven EBIT margin 28% returns R&D/Sales ROIC 12.000 26% Strong absolute returns since 2000 10.000 24% • 2.5x sales • 4x EBIT 22% 8.000 • 5x net profit • DKK ~30bn In operating cash flows 20% 6.000 18% Driven by topline and levera
Slide 18: Competitive advantages across the value chain
Our set of competitive advantages Others and captive Novozymes across the value chain has led to a 26% 48% unique market-leading position Scale Quality Sustainability High barriers • Production: 5 core plants in 3 regions • Superior logistical agility due to full • Triple bottom line • More than 7,0
Slide 19: Investing for long-term growth; People, CAPEX and M&A
Investing for long-term growth; People, CAPEX and M&A DKK ~11bn in CAPEX 2000-2014 2x employees – from 3,208 FTE to 6,454 FTE EMEA 7000 Latin America NA 2000-04 6000 Asia Pacific 2005-09 North America 5000 2010-14 Denmark (incl. EMEA) 4000 3000 APAC 2000 LATAM 1000 0 2000 2014 DKK ~5bn spent on ac
Slide 20: Growth until 2020 driven by established industries and platforms
Growth until 2020 expected to be driven by established industries with additional growth from platforms Novozymes’ organic growth average, Growth platforms - BioAg - Biomass Conversion - Animal Health & Nutrition - Pharma Established industries - Household Care - Grain-based ethanol - Food & Bever
Slide 21: Strategy
21 QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Slide 22: New strategy puts partnerships front and center
Our new strategy puts partnerships front and center for success in creating impact 22 QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Slide 23: R&D spend
R&D spend We expect the 16% R&D costs DKKm 2.000 relative spend on R&D/Sales 1.800 R&D to fluctuate 15% 1.600 around 1.400 1.200 14% 1.000 of sales 800 This will allow us to continue the 600 trend of being the investment 13% leader in microbial technologies 400 and industrial enzyme innovation 200
Slide 24: R&D investments drive growth and technology leadership
R&D investments drive growth today and enhance technology leadership for long-term impact Established business areas Growth platforms BioAg Biopharma Food & Household Grain-based Technical Biomass Animal Emerging Beverages Care ethanol industries Conversion Health & industries Nutrition Basic tech
Slide 25: Developing new technology and business platforms
Developing new technology and business platforms Continued development …creates opportunities to in our technology base… develop new business platform Bio- Biomass Agriculture conversion Animal Molecular Bio-informatics Screening Industrial-scale Health & Biopharma biology & Systems systems fermen
Slide 26: 3 levers to improve profitability
Fermentation technology Improve production strain Ability to produce more Optimize industrial production Process optimization Improve enzyme efficacy Protein engineering of – 3 levers to improves profitability enzymes per m3 fermentation tank through genetic engineering of Equipment optimization Inp
Slide 27: Financial priorities
Financial priorities; - Innovation, growth & shareholders 2015 to 8-10% ~14% ~8% 40% 2bn + Organic R&D CAPEX Dividend 2015 Initiatives & 2020: sales payout buyback returns growth ratio Net-Interest-Bearing-Debt/EBITDA ROIC expected at ≥ 25%: 1,0 NIBD DKKm 2.500 • Growth in net profit 0,8 2.000 NIBD
Slide 28: Segmental Overview
28 QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Slide 29: Household Care Overview
Household Care Sales Sales DKKm ORG growth 4.222 4.353 Overview 3.324 3.514 3.973 13% 11% 7% 9% 4% of sales in 2014 2010 2011 2012 2013 2014 Current Trends Growth Drivers Growth Barriers Applications • Better-performing laundry • Innovation to raise detergent • Sustained low input costs that deterg
Slide 30: A strong portfolio of innovation with global relevance
A strong portfolio of innovation with global relevance – built over the last 50 years 300+ brands Albania, Algeria, Argentina, Australia, Austria, Bangladesh, Belarus, Belgium, Bolivia, Bosnia-Herz., Brazil, Bulgaria, Cameroon, Canada, Chile, Colombia, Costa Rica, Croatia, Cyprus, Czech. Republic, D
Slide 31: Opportunities for increasing enzyme inclusion in every wash load
In emerging as well as developed markets, we see large opportunities for increasing enzyme inclusion in every wash load Enzyme spend index per wash load 2008 2014 All European high-performance detergents contain enzymes. Over time, enzyme inclusion can increase with innovation 100 Average-performan
Slide 32: Food & Beverages Overview
Food & Beverages Sales Sales DKKm ORG growth Overview 3.033 3.186 3.190 3.278 2.850 12% 8% 3% 4% 1% of sales in 2014 2010 2011 2012 2013 2014 Applications Current Trends Growth Drivers Growth Barriers Baking / Starch conversion / • Growth in processed foods in • High raw material prices • Consumer
Slide 33: We cover a broad set of end markets and applications
We cover a broad set of end markets and applications – We operate in different parts of the value chain. Revenue-wise, the two parts are comparable Processing of Ag inputs Characteristics: Food products Characteristics: A global business with global Product-driven for developed solutions • Starch
Slide 34: Bioinnovation can have a greater impact on consumers and society
Bioinnovation and Novozymes can have a greater impact on consumers and society Four defining trends set the scope for future growth… More Health Emerging markets Consumers wanting with less industrialization more natural foods … and define innovation opportunities for the future Unlock new Enhance
Slide 35: Bioenergy Overview
Bioenergy Sales Sales DKKm ORG growth 2.270 Overview 1.846 1.909 1.782 1.748 19% 19% 12% 1% -9% of sales in 2014 2010 2011 2012 2013 2014 Current Trends Growth Drivers Growth Barriers Applications • Sustainable energy for • Political mandates to drive • An energy industry with vested Corn ethanol
Slide 36: Ethanol production and outlook in the U.S.
Ethanol production and outlook in the U.S. – Production has stabilized at 10% of U.S. gasoline consumption + exports U.S. ethanol production volumes have stabilized U.S. Ethanol blend: ~10% of gasoline consumption 20 CAGR 12% Billion Gallons 15 +0.3% 10% 8% 10 6% 5 4% 2% 0 0% 2006 2007 2008 2009 201
Slide 37: Bioenergy Strategy Overview
Bioenergy Strategy Overview Total production cost development 3.00 gal/bu Biodiesel 7 2 Other ethanol per bushel of corn 160 Enzyme Developments 2013 Ethanol yield 140 Enzyme Developments New Innovation Global 2.85 120 Enzyme and Process Developments gal/bu 100 biofuels production, Avantec®, Spirizy
Slide 38: Project pipeline Biomass conversion
Project pipeline Publicly announced, commercial biomass conversion projects under development by region (Q1/2015)* Biomass conversion Novozymes serves 5 out of 7 commercial facilities Italy − Beta Renewables − Maabjerg Bioenergy − ST1 − Ethanol Europe − Energo Chemica While several biomass convers
Slide 39: Agriculture & Feed Overview
Agriculture & Feed Sales Sales DKKm ORG growth Overview 1.668 1.728 1.617 1.371 956 13% 11% 7% 5% 2% of sales in 2014 2010 2011 2012 2013 2014 Current Trends Growth Drivers Growth Barriers • Rising demand for food as • High input costs for farmers • Biological solutions at Feed alliance The BioAg Al
Slide 40: Microbial solutions for agriculture
Microbial solutions for agriculture Microbials, notably bacteria and How are microbials applied? fungi, are types of agricultural biologicals that protect crops from pests and diseases and enhance plant productivity and fertility. Seed treatment BioControl There are approximately • Complements or p
Slide 41: Inoculants hold significant opportunity for market expansion
Inoculants hold significant opportunity for market expansion across crops and geographies Soybean Pulses Alfafa 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 Trea
Slide 42: The power of The BioAg Alliance
The power of The BioAg Alliance A unique opportunity…to combine Novozymes’ and Monsanto’s capabilities and establish industry's most advanced microbial platform A premier vehicle for bringing microbes to market and a sustainable Agriculture platform for farmers to produce more with less A joint focu
Slide 43: Building a stronger offering within animal farming
Building a stronger offering within animal farming Enzymes for nutritional Adjacency: Adjacency: enhancement of feed – a strong core built animal health enabling additives “To help feed a growing world, we work with new feed over 20 years (e.g..probiotic ingredients partners to develop and drive ad
Slide 44: Attractive Value Propositions in Animal Feed enzymes
Attractive Value Propositions in Animal Feed enzymes Phytase – phosphate ProAct® – protein Others – energy • Only 3-30%* of phosphate in feed is • Maximizing protein utilization and • Xylanase & glucanase increase non- available to the animal improving nutritional value starch polysaccharide digesti
Slide 45: Technical & Pharma Overview
Technical & Sales Sales DKKm ORG growth Pharma Overview 748 810 710 757 830 11% 9% 6% -6% -5% 2010 2011 2012 2013 2014 of sales in 2014 Current Trends Growth Drivers Growth Barriers Applications Textiles / Leather / Pulp & Paper • Better and more sustainable • Sustainability in technical • Fragmen
Slide 46: Pharma Overview. Four technology offerings
Pharma Overview. Four technology offerings Existing business Emerging business Enzymes for Biocatalysis Recombinant Albumin VELTIS® Hyaluronic Acid Enzyme portfolio used as catalysts Recombinant albumins used as Albumin-based technology for half- Bacillus-derived for the production of ingredients
Slide 47: Multiple opportunities and revenue streams in Pharma from Albumin
Multiple opportunities and potential revenue streams in Pharma from Albumin Veltis® – Drug candidates using Novozymes’ albumin technologies for half-life extension Partner Drug PI PII PIII MA Market Tanzeum/Eperzan (Albiglutide) - GLP1 for Diabetes rIX-FP - Once weekly for Hemophilia B Albutropin -
Slide 48: Sustainability
48 QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Slide 49: 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 • Occupation
Slide 50: Continuing the journey of operational excellence
We plan to continue our journey of operational excellence Decoupling resource consumption Steady improvement in employee metrics from economic growth 3,5% 120% Gross 12 profit 3,0% % change from 2005 baseline 100% Sales 10 2,5% 80% Employee 8 absence (%) 2,0% 60% 6 1,5% Water 40% 4 1,0% Energy 20%
Slide 51: Remuneration Principles for Executive Leadership
Remuneration Principles for Executive Leadership • Novozymes’ principles for Annual remuneration scheme Long term incentive program Executive Leadership (2014-2016) 18 remuneration ensure close % stock & options awarded 100 Max 2 months of 90 alignment with long-term 16 base salary cash bonus link
Slide 52: Reducing CO2 Emissions Together with our Customers
Reducing CO2 Emissions Together with Dairy: Margarine: Vegetable oil: Cereals: our Customers 230 kg CO2 per ton of mozzarella 23 kg CO2 per ton of hardstock 44 kg CO2 per ton of oil 110 kg CO2 per ton of bread In 2014, Novozymes helped customers save Beverage: Detergent: Textile: Cosmetics: 25 kg C
Slide 53: Financial Review
53 QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Slide 54: Demonstrates Track Record of Delivery – I/II
Historical Performance Demonstrates Track Record of Delivery – I/II 2000-2014 sales Sales DKKm Growth Gross margin 20% 15.000 60% 57,2% 16% 12.000 58% 56,2% 55,6% 12% 9.000 56% 57,2% 57,4% 53,3% 53,1% 8% 6.000 54% 52,4% 55,7% 51,8% 4% 3.000 52% 53,7% 53,5% 52,0% 52,6% 51,8% 0% 0 50% EBIT EBIT DKKm E
Slide 55: Demonstrates Track Record of Delivery – II/II
Historical Performance Demonstrates Track Record of Delivery – II/II NIBD NIBD DKKm NIBD/EBITDA CAPEX Capex DKKm CAPEX/sales 1,0 2.500 20% 1.500 0,8 2.000 16% 1.200 0,6 1.500 12% 900 0,4 1.000 8% 600 0,2 500 4% 300 0,0 0 -0,2 -500 0% 0 ROIC Inv.Cap. DKKm ROIC, incl. goodwill Free Cash Flow FCF bef.
Slide 56: Low Exposure to Raw Material Fluctuations
Low Exposure to Raw Material Fluctuations Indirect production costs Raw materials 45% Factors impacting COGS development: 35% • Productivity improvements, input prices, currency • Note: accounting practice implies that there is a time lag between current price levels and COGS Split of Factors impa
Slide 57: Dividend and Stock Buyback History
Dividend and Stock Buyback History • DKK 3.00 dividend per share paid out for 2014 up 20%, payout ratio 36.6% • Dividend pay-out ratio to increase to ~40% over next couple of years • Expected buyback program in 2015 of up to DKK 2 billion • Accumulated buybacks end of 2014 since IPO were DKK 7.7 b
Slide 58: Shareholder Distribution
Shareholder Distribution Rest of world Novo A/S 4% Denmark 10% 21% B shares listed in Copenhagen under the symbol “NZYM B” North America • Two share classes; A and B shares 18% Shareholder • B shares listed in Copenhagen under the symbol “NZYM B” distribution • “A” share capital and 27,779,900 B sh
Slide 59: Investor Relations Contacts
Investor Relations Contacts Thomas Steenbech Bomhoff Martin Riise Klaus Sindahl Mobile (DK):+45 3077 1226 Mobile (USA): +1 919 649 2565 Mobile (DK): +45 5363 0134 E-mail: tsbm@novozymes.com Mobile (DK): +45 3077 0738 E-mail: ksdh@novozymes.com E-mail: mrsn@novozymes.com Further investor relat
Slide 60: Novozymes – Rethink Tomorrow
x novozymes’ Rethink Tomorrow