Novonesis A/s Class B · OMXCOP:NSIS_B
Novonesis A/s Class B — Novozymes — Non-Deal Roadshow (April 2018)
54 slides from Novonesis A/s Class B's roadshow presentation, Apr 25, 2018
Slide 1: Roadshow Presentation Q1 2018
Roadshow Presentation Q1 2018 Released on April 25, 2018
Slide 2: Table of contents
Table of contents 1. Latest Results 3 2. Overview and Strategy 14 3. Market Overview 24 - Household Care 25 - Food & Beverages 28 - Bioenergy 30 - Agriculture & Feed 34 - Technical & Pharma 40 4. Sustainability 41 5. Financials and Governance 46 22 Latest Results • Overview and Strategy • Market Ove
Slide 3: Highlights
Highlights Distribution of sales & organic growth, Q1 y/y Q1 sales in line with expectations; strong margins -10% • Organic sales growth +2% 6% -5% • Largest industries growing 15% +1% 33% • Household Care +1% • Food & Beverages +5% 18% • Bioenergy +9% +9% • Agriculture & Feed -5% 28% • Technical &
Slide 4: Organic sales growth by geography
Organic sales growth by geography -3% Q1 y/y +13% +1% Q1 y/y 36% Q1 y/y of sales 33% 22% of sales of sales +1% Q1 y/y 9% +6% 35% Emerging markets of sales Q1 y/y 65% Developed markets +0% Q1 y/y 4
Slide 5: Household Care
Household Care 33% of sales Sales in Household Care slightly better than expected Quarterly y/y organic sales growth • Organic growth Q1 2018 y/y +1% 4% • Mixed performance in laundry; soft start in developed markets offset by good development in emerging markets 1% 1% 1% • China, Southeast Asia and
Slide 6: Food & Beverages
Food & Beverages 28% of sales Solid start to the year supported by recent product innovation Quarterly y/y organic sales growth and focused sales efforts 11% 10% • Organic growth Q1 2018 y/y +5% 9% • Solid growth across all major industry segments 6% 5% • Baking performed well despite reduced prices
Slide 7: Bioenergy
Bioenergy 18% of sales Continued good momentum in enzymes for biofuels Quarterly y/y organic sales growth • Organic growth Q1 2018 y/y +9% • US and global ethanol production estimated to have been flat in Q1 2018. Producer 16% margins are improving but inventories remain elevated 14% • Good growth i
Slide 8: Agriculture & Feed
Agriculture & Feed 15% of sales Soft start due to comparisons and poor farm economics Quarterly y/y organic sales growth • Organic growth Q1 2018 y/y -5% 8% • Sales to animal feed ended down as expected due to tough comparisons 2% • BioAg sales decreased following continued poor farm economics and n
Slide 9: R&D update
R&D update Innova® Drive – improving ethanol yield through faster fermentation Our first launch within yeast for conventional biofuels that enables faster fermentation and works well under acidic and high-temperature conditions Innova® Drive enables leverage of our market-leading position within enz
Slide 10: Q1'18 financials
Q1’18 financials Sales as expected; strong margins • Overall sales growth as expected Key financials Realized Realized (DKKm) Q1’18 Q1’17 • Largest industries growing • 6% organic sales growth in emerging markets Organic sales growth 2% 3% • Negative currency impact of ~8% on sales, mainly from weak
Slide 11: 2018 outlook
2018 outlook Guidance maintained on all parameters • Organic sales growth expectation of 4-6% with growth from all segments Key financials Realized Outlook (DKKm) Q1’18 2018 • As communicated in February 2018, sales growth in the first half expected to be slower than in the second half of the year O
Slide 12: Summary
Summary • On track to deliver 4-6% organic sales growth for the full year • Delivering on key strategic initiatives • Strong innovation agenda with many near-to-market opportunities 12
Slide 13: Turning amazing science into sustainable biological answers
Our business is about turning amazing science into sustainable biological answers in a growing world 6,500 2nd 48% 76 million More than 6,500 active and In 2017, Science Magazine Market leader in industrial In 2017, our customers pending patents ranked Novozymes the enzymes with an estimated avoided
Slide 14: Overview and Strategy
& Rethink Tomorrow novozymes' °
Slide 15: Novozymes at a glance
Novozymes at a glance World leader in Bioinnovation Company background Global presence Listed 2000 • ~6,300 employees Ticker NZYM B • ~700 products sold in 140 countries • Major production footprint in 3 regions Exchange Nasdaq Copenhagen Market leader • ~48% Novozymes • Serving +40 different end ma
Slide 16: Experienced leadership team
Experienced leadership team – with 22 years seniority on average Thomas Peder Prisca Anders Tina Andrew Videbæk Holk Nielsen Havranek-Kosicek Lund Fanø Fordyce COO & Executive Vice President, CEO & President CFO & Executive Vice President, Executive Vice President, Executive Vice President, Executiv
Slide 17: Uniquely diversified group
Uniquely diversified group - creates synergies and opportunities Household Care Food & Beverages Bioenergy Agriculture & Technical & Feed Pharma Laundry detergents, Baking, Starch to syrups, Conventional biofuels Animal feed Textile & leather, Pulp & Dishwash detergents, Brewing & alcohol, Healthy C
Slide 18: Solid financial track record driven by innovation
Solid financial track record driven by innovation 17 years of innovation driven growth 30% 16.000 28% 26% 14.000 Strong performance since 24% 2000 22% 12.000 • ~3x Sales 20% • ~5x EBIT 10.000 18% • ~6x Net Profit 16% • DKK ~26bn in FCF 8.000 14% 12% 6.000 Innovation is the core 10% 8% • DKK ~22bn sp
Slide 19: Priority innovation platforms
Priority innovation platforms Arrows denote progress to next phase over the past 12 months 19 Latest Results • Overview and Strategy • Market Overview • Sustainability • Financials and Governance
Slide 20: 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 Acc CAPEX: ~ DKK 6.9bn FTE’s: ~2,900 5Y Avg growth: +5% 20% 34% ASIA PACIFIC NORTH AMERICA NZ: Production, R&D NZ: Production, R&D Main markets: Main markets: F&B, H
Slide 21: Our set of competitive advantages across the value chain
Our set of competitive advantages across the value chain has led to a unique market leading position Scale Quality Sustainability High barriers • Production: 5 core plants • Superior logistical agility • Sustainability is in our • Unique market-leading in 3 regions due to full control of value DNA h
Slide 22: 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 Molecular biology Strain development using protein engineering, genetic modification, DNA sequencing, etc Bio- Yeast Agriculture Bio-informatics & Sy
Slide 23: Enzyme technology improves Novozymes' profitability
Enzyme technology improves Novozymes’ profitability 3 ways to gain productivity improvements: Novozymes dedicates 10-15% of R&D spend to productivity improvement programs Purification Raw materials Fermentation Enzymes Formulation Micro-organisms 1 2 3 Improve production strain Optimize industrial p
Slide 24: Market Overview
& Rethink Tomorrow novozymes' °
Slide 25: Household Care overview
Household Care overview 32% of sales Business Characteristics • Mainly laundry detergents but expanding into dishwash 5 year organic growth +9% +4% +1% +2% +1% • Top three detergent producers make up ~50% of the global market; top 20 at ~80% Sales in DKKm 4.702 4.717 4.632 • Developed markets ~2/3 o
Slide 26: 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 26 Latest Results • Overview and Strategy • Market Overview • Sustaina
Slide 27: Consumers are shifting to new detergent formats and performance
Consumers are shifting from traditional detergents to new formats and increased performance Global market 2010 Global market 2020E USD USD ~42bn +50bn Powder Liquid Unit dosage Powder Liquid Unit Dose 100% 90% 80% 70% Big differences in 60% detergent 50% applications across 40% geographies 30% 20% 1
Slide 28: Food and Beverages overview
Food and Beverages overview 28% of sales Business Characteristics Processing agricultural inputs Food products 5 year organic growth • Relatively few product categories • Baking main market +3% +4% +5% +2% +9% • Fragmented global customer base • Broad customer/application base Sales in DKKm 4.041 •
Slide 29: 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 30: Bioenergy overview
Bioenergy overview 18% of sales Market Characteristics Conventional biofuels Biomass Conversion 5 year organic growth • Starch based ethanol is mainly a US • Global business +12% +19% ´-5% -3% +11% market (+85%) • Dependency on political mandates Sales in DKKm • US corn ethanol industry affected by
Slide 31: Ethanol production
Ethanol production Global ethanol production Ethanol producer margin Bn gallons 30 1,60 1,40 margin cents per gal 25 1,20 Contribution 20 1,00 15 0,80 0,60 10 14.8 15.2 15.8 16.2 0,40 13.8 5 0,20 0 0,00 2013 2014 2015 2016 2017 NA Brazil EU China RoW Total Ethanol Contribution Margin Price developme
Slide 32: 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 Past Present Future From standard to Basic products for Multiple offerings Increasingly cust
Slide 33: Policy objectives point to a doubling of ethanol by 2030
Policy objectives point to a doubling of ethanol by 2030 vs. today EUROPEAN UNION EU Renewable Energy Directive: 10% in transport by 2020* +1bn Post 2020 framework under TOTAL ADDITION BY 2030 development incl. mandate for 2G Ambitious national policies ~ 24bn gallons/year 1G and/or 2G in FIN, SE, D
Slide 34: Agriculture and Feed overview
Agriculture and Feed overview 15% of sales Market Characteristics Animal Health & Nutrition BioAg 5 year organic growth • Sales and distribution through • Sales and distribution through +5% +7% +19% +5% -3% partnerships partnership with Monsanto Sales in DKKm • Applications mainly for mono-gastric •
Slide 35: Inoculants hold significant opportunity for market expansion
Inoculants hold significant opportunity for market expansion across crops and geographies Factors driving inoculant growth: Soybean Pulses Alfalfa Canola Corn Wheat Cotton Rice Market expansion Global Planted Acres1 Significant opportunity across crops and (5 year avg. ~ 260m ~190m ~15m ~85m ~425m ~
Slide 36: 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 Biologicals PROOF OF CONCEPT PRE-LAUNCH DEVELOPMENT DEVELOPMENT 10’s
Slide 37: Scientific evidence supports enzyme penetration
Scientific evidence supports enzyme penetration - enabling livestock farmers to reduce feed cost Market is sensitive to feed and meat Low margins leave the producer different Scientific education of customers to price changes options increase penetration 70% of total cost of poultry production is fe
Slide 38: Attractive value propositions in feed enzymes
Attractive value propositions in feed enzymes Phytase ProAct® Others phosphate protein energy Only 3-30% of phosphate in feed is available Maximizing protein utilization and Xylanase & glucanase increase non-starch to the animal improving nutritional value polysaccharide digestion Ronozyme NP® relea
Slide 39: Animal health & nutrition
Animal health & nutrition The world needs sustainable efficiency gains in animal production. Improving the yield in animal production would have significantly positive impact in terms of global warming and use of agricultural land • 9+ billion people by 2050 • Protein demand to double next 40 years
Slide 40: Technical & Pharma overview
Technical & Pharma overview 7% of sales Business Characteristics Wastewater Treatment Textile, Leather and Pulp & paper 5 year organic growth • Microorganisms for industrial use in • Enzymatic solutions and technical +6% +9% +6% +13% +2% wastewater treatment support for processing textiles and • New
Slide 41: Sustainability
& Rethink Tomorrow novozymes' °
Slide 42: New long-term targets focus on world impact 2020
New long-term targets focus on world impact 2020 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 • Occupa
Slide 43: 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 44: Reducing CO2 emissions together with our customers
We are reducing CO2 emissions together with our customers by offering solutions that help produce more with less In 2017, Novozymes helped customers save 76 million tons of CO2 through the application of Novozymes’ products Detergent: Animal feed: Textile: Cereals: 100 kg CO2 80 kg CO2 1100 kg CO2 1
Slide 45: Remuneration principles for the Executive leadership team
Novozymes’ remuneration principles for the Executive leadership team Remuneration principles ensure close alignment with long term shareholder interests, links remuneration to shareholder gainsand losses, and ensures management retention Annual remuneration scheme Long term incentive program (2017-2
Slide 46: Financials and Governance
& Rethink Tomorrow novozymes' °
Slide 47: Historical performance demonstrates track of delivery
Historical performance demonstrates track of delivery Long term targets 17 years of organic growth 16.000 14.000 12.000 10.000 DKKm 8.000 Return 6.000 4.000 to historical 2.000 organic revenue 0 growth rates Profitability has benefitted from productivity improvements and operational leverage 2000-20
Slide 48: Historical performance demonstrates track of delivery
Historical performance demonstrates track of delivery Net interest-bearing debt 2.000 1,0 0,8 Long term targets 1.000 0,6 NIBD/EBITDA 0,4 0,2 DKKm 0 0,0 -0,2 0-1x -1.000 -0,4 Net interest bearing- debt-to-EBITDA Net Interestbearing debt NIBD/EBITDA 15.000 ROIC 30% 25% 10.000 20% ROIC DKKm 15% ≥25% 5
Slide 49: 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, input prices, currency Raw materials consist primarily of different carbohydrates. Approximately 50% of raw material • Note: accounting practice implies tha
Slide 50: Since 2000 DKK ~25bn returned to shareholders
Since 2000 DKK ~25bn has been returned to shareholders through dividend or share buybacks At the annual shareholders’ meeting in March 2018, a dividend of DKK 4.50 per share for the 2017 financial year (an increase of 13% compared with 2016), was approved. This resulted in a total dividend payment o
Slide 51: Shareholder distribution
Shareholder distribution Novozymes “B”-shares are listed on the Copenhagen Shareholder distribution of B common stock* stock exchange under the symbol “NZYM B” Novo Holdings was the only major stockholder holding more than 5% of Novozymes common stock Two share classes; A and B shares North America;
Slide 52: Foundation ownership advocates long-term focus
Foundation ownership advocates long-term focus Purpose of the Foundation: Structure of Novo Holdings and ownership The Novo Nordisk Foundation is an independent Danish foundation with corporate interests. The objective of the Novo Nordisk Foundation is twofold: to provide a stable basis for the comm
Slide 53: Our investor relations team
Our investor relations team Further investor relations information is available from the company homepage at investors.novozymes.com Tobias Björklund Elsebeth Kjærsgaard Klaus Sindahl Naja Wivel Head of investor relations IRO IRO Coordinator +45 3077 8682 +45 3077 2510 +45 5363 0134 +45 3077 2076 to
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