Novonesis A/s Class B · OMXCOP:NSIS_B
Novonesis A/s Class B — Novozymes — FY2018 Earnings Presentation
54 slides from Novonesis A/s Class B's earnings presentation, Jan 24, 2019
Slide 1: Roadshow presentation 12M 2018
Roadshow presentation 12M 2018 Released on January 24, 2019
Slide 2: Summary / Table of contents
Summary Table of contents Satisfactory 2018 results – financial outlook met • Latest results; Satisfactory results guidance parameters from beginning of 3 2018 met Overview • Challenging Middleand strategy Eastern markets were the main 15 unexpected drag on organic sales growth • Good Market overvie
Slide 3: Latest results
Latest results
Slide 4: Highlights
Highlights Satisfactory 2018 performance Key financials February 2018 2018 (DKKbn) Outlook Realized • Financial guidance parameters met as set out at the beginning of 2018 Sales growth, organic 4-6% 4% • Bioenergy strong; solid performance in Food & Beverages; growth in Agriculture & Feed; Household
Slide 5: Organic sales growth by geography
Organic sales growth by geography Europe, the Middle East & Africa North America 34% of sales 36% of sales 12M 2018 y/y: 5% 12M 2018 y/y: 1% Q4 y/y: 3% Q4 y/y: 1% Developed Emerging 65% (12M 2018: 3% y/y) 35% (12M 2018: 5% y/y) Latin America 10% of sales Asia Pacific 20% of sales 12M 2018 y/y: 6% 12
Slide 6: Household Care
Household Care 32% of sales Flat performance in 2018 FY organic sales growth 4% • Organic growth 12M 2018 0% y/y; Q4 2018 1% y/y • Weakness in the Middle East due to economic distress and trade sanctions • Global customers continued cost optimization – in line with expectations • Sales to regional c
Slide 7: Food & Beverages
Food & Beverages 29% of sales FY organic sales growth Solid and wide-ranging growth 9% • Organic growth 12M 2018 +5% y/y; Q4 2018 +7% y/y • Broad-based growth; especially strong in food & nutrition and beverages • Strong growth in oils & fats 5% 5% • Baking performed well in Asia Pacific but hampere
Slide 8: Bioenergy
Bioenergy 19% of sales Continued strong momentum for biofuels FY organic sales growth 19% • Organic growth 12M 2018 +12% y/y; Q4 2018 +5% y/y • New yeast technology well received; second product, Innova ® Lift, launched in 11% 12% Q4 • Good growth across regions for conventional biofuels • US and gl
Slide 9: Agriculture & Feed
Agriculture & Feed 14% of sales Mixed year with strong growth in BioAg FY organic sales growth • Organic growth 12M 2018 +3% y/y; Q4 2018 -3% y/y 19% • Strong BioAg performance driven by Acceleron® B-360 • Sales to animal feed challenged; difficult market conditions in Latin America • Alterion® prod
Slide 10: R&D update – priority innovation platforms
R&D update – priority innovation platforms Freshness solutions for laundry detergents Arrows denote progress over the past 12 months. 10 Latest results • Overview and strategy • Market overview • Sustainability • Financials and governance
Slide 11: Two exciting collaborations
Two exciting collaborations Making every drop count BioSec® - our first product from the water platform launched in December Leveraging technology that partly originates from our biomass conversion research The Copenhagen wastewater treatment facility BIOFOS is the first end-user applying our enzyma
Slide 12: Financials – 2018
Financials – 2018 Satisfactory 2018 Key financials 2017 February 2018 2018 • Initial 2018 financial outlook parameters met (DKKbn) Realized Outlook Realized • Organic sales growth at +4% • Middle East and Feed were main negative surprises Sales growth, organic 4% 4-6% 4% • Reported EBIT margin at 28
Slide 13: Financials – 2019 outlook
Financials – 2019 outlook 3-6% organic sales growth and solid earnings • Organic sales growth guidance of 3-6%. Key financials 2018 2019 Currencies add ~1pp in reported Danish kroner (DKKbn) realized outlook • Growth expected in all businesses as well as from both emerging and Sales growth, organic
Slide 14: Summary
Summary Summary Satisfactory 2018 results Satisfactory 2018 results – financial outlook met • Satisfactory results; guidance from beginning of 2018 met • • Satisfactory Challenging Middle results; Eastern guidance marketsfrom parameters were the main beginning of unexpected drag on 2018 met sales gr
Slide 15: Overview and strategy
Overview and strategy
Slide 16: World leader in Bioinnovation - Novozymes at a glance
World leader in Bioinnovation - Novozymes at a glance 17 years of innovation driven growth Market leader Solid financials (2018) DKKm • ~48% of total market with • ~28% EBIT margin (2018) 30% 16,000 DKK 14.3bn in sales (2018) • ~24% ROIC (2018) • ~3x Sales (since IPO) • ~5x EBIT (since IPO) 28% • Se
Slide 17: Uniquely diversified group creating synergies and opportunities
Uniquely diversified group creating synergies and opportunities Household Care Food & Beverages Bioenergy Agriculture & Feed Technical & Pharma Organic growth Organic growth Organic growth Organic growth Organic growth 9% 19% 19% 13% 4% 9% 5% 5% 11% 12% 6% 4% 7% 5% 2% 2% 3% 1% 1% 2% 0% -5% -3% -3% -
Slide 18: Our global business serves a large number of local markets and industries
Our global business serves a large number of local markets and industries North America 34% of sales Europe, the Middle East & Africa 36% of sales Sites: Production, R&D Sites: HQ, Production R&D Main markets: Bioenergy, HHC, F&B, BioAg Main markets: HHC, F&B, Feed Acc CAPEX: ~DKK 4.3bn Acc CAPEX: ~
Slide 19: 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 20: Developing new technology and business platforms
Developing new technology and business platforms Continued development in our technology base… …creates opportunities to develop new business platform Molecular biology Strain development using protein engineering, genetic modification, DNA sequencing, etc. Bio- Bio-informatics & Systems biology Agr
Slide 21: 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 22: Novozymes four strategic focus areas
Novozymes four strategic focus areas Rally for change We will form partnerships and networks with customers, consumers, governments, suppliers, academia and others around us to make a sustainable difference Lead innovation We will inspire and excite our customers by delivering more significant innov
Slide 23: Executive Leadership Team
Executive Leadership Team Anders Prisca Peder Tina Andrew Thomas Lund Havranek-Kosicek Holk Nielsen Fanø Fordyce Videbæk Household Care & Finance, IR, IT & Legal CEO & President Agriculture & Bioenergy Food & Beverages Research, Innovation & Supply Technical Industries Executive Vice President CFO &
Slide 24: Market overview
Market overview
Slide 25: Household Care overview
Household Care overview Key industry trends Product launches Organic growth • Growth in the liquid and unit dose • Licheninase – A new enzyme +9% +4% +1% +2% 0% market, driven by consumer launched for automatic convenience and stronger commercial dishwashing, targeting dried- Sales in DKKm focus on
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: Emerging markets will be driving growth going forward
Emerging markets will be driving growth going forward In the past, the majority of the But with the ongoing rise …70% of the detergent market growth detergent business was centered on of emerging markets… is expected to come outside of developed markets developed markets Bn USD 80 CAGR ‘17-’22 +4% 0
Slide 28: Food & Beverages overview
Food & Beverages overview Key industry trends Product launches Organic growth • Consumer focus on health, wellness • Palmora® – Our first solution +4% +5% +2% +9% +5% and natural products for the palm oil industry • Increase in raw material costs and • Frontia® – A new technology Sales in DKKm focus
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 Key industry trends Product launches Organic growth • Growing calls for lower CO2 • Innova® Drive – Novozymes’ +19% -5% -3% +11% +12% emissions in the transportation first launch within yeast for sector, driving demand for conventional biofuels. Innova® Sales in DKKm ethanol Drive
Slide 31: Price development in ethanol and corn
1.0 1.5 2.0 2.5 3.5 3.0 31 Q1 2013 Q2 2013 $ per gal Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Sources: EIA, Ethanol RFA Q1 2015 Q2 2015 Q3 2015 Corn Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Ethanol Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Ethanol production Q2 2018 Q3 2018 Price development in
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 From standard to Past Present Future Basic products for Multiple offerings across Increasing
Slide 33: Policy objectives point to a doubling of ethanol by 2030 vs. today
Policy objectives point to a doubling of ethanol by 2030 vs. today +1bn EUROPEAN UNION Renewable Energy Directive TOTAL ADDITION BY 2030 Production: 1.4bn gl/year Potential addition: +1bn gl by 2030 24bn gallons/year +5bn +13bn CHINA E10 by 2020 Production: 6-700m gl/year Potential addition: NORTH A
Slide 34: Agriculture and Feed overview
Agriculture and Feed overview Key industry trends Product launches Organic growth • Consumer focus on health, • Acceleron® B-360 ST – A biological +7% +19% +5% -3% +3% wellness and natural products seed treatment that promotes • Sensitivity to fluctuations in symbiosis between microbes and Sales in
Slide 35: Inoculants hold significant opportunity for market expansion across crops and geographies
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 Legacy Monsanto Biologicals Projects Biologicals R&D Target Crop Phase* Enhancement** Corn Soy 1 2 3 4 Dev. Subm. BioAg Alliance1 Collaborative YIELD & ABIOTIC STRESS
Slide 37: Scientific evidence supports enzyme penetration
Scientific evidence supports enzyme penetration - enabling livestock farmers to reduce feed cost Market is sensitive Scientific education of Low margins leave to feed and meat customers to increase the producer price changes penetration different options 70% of total cost of poultry production is fe
Slide 38: 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 39: Partnerships help drive innovation in feed & animal health
Partnerships help drive innovation in feed & animal health Co-create the future of feed Partnerships 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
Slide 40: Technical & Pharma overview
Technical & Pharma overview Key industry trends Product launches 5 year organic growth • Continuous focus on process • BioSec® – Novozymes’ first product for sludge +9% +6% +13% +2% -6% optimization and cost dewatering. BioSec® is aimed at municipal reduction wastewater treatment Sales in DKKm • Wat
Slide 41: Sustainability
Sustainability
Slide 42: Our long-term targets focus on world impact 2020
Our long-term targets focus on world impact 2020 Impact targets Company performance – the World needs – areas where we can • 10 transformative innovations • 5 partnerships for change traditional view on sustainability make an impact • Educate 1 million people • Enable Zymers to develop • Save 100 mi
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: We are 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 2018, Novozymes helped customers save 88 million tons of CO2 through the application of Novozymes’ products Detergent: Animal feed: Textile: Cereals: 100 kg CO2 130 kg CO2 350 kg CO2 1
Slide 45: Novozymes' 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 gains and losses, and ensures management retention Annual remuneration scheme Long term incentive program (2017-
Slide 46: Financials and governance
Financials and governance
Slide 47: Historical performance demonstrates track of delivery
Historical performance demonstrates track of delivery 18 years of organic growth 16,000 14,000 12,000 Long term targets 10,000 • Return to historical organic DKKm 8,000 revenue growth rates 6,000 4,000 • ≥26% EBIT margin 2,000 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2
Slide 48: Historical performance demonstrates track of delivery
Historical performance demonstrates track of delivery Net interest-bearing debt 2,000 1.0 Long term targets 0.8 NIBD/EBITDA 1,000 0.6 0.4 • 0-1x Net interest bearing- DKKm 0.2 0 0.0 debt-to-EBITDA -0.2 -1,000 -0.4 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2
Slide 49: Novozymes carries 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 50: Since 2000 DKK ~27bn returned to shareholders
Since 2000 DKK ~27bn has been returned to shareholders through dividend or share buybacks Dividend / Buybacks 5,000 5.00* Dividend Buyback Dividend per share (right) 4.50 5.00 4,500 4.00 Dividend per share, DKK 4,000 3.50 4.00 3.00 3,500 2.50 3.00 DKK million 2.20 3,000 1.90 1.60 2.00 2,500 1.15 2,0
Slide 51: 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 “NZYM B” more than 5% of Novozymes common stock • All “A” share capital and 21,991,400 “
Slide 52: 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: • To provide a stable basis for the commercial and resea
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 Carl Ahlgren Naja Wivel IR officer Coordinator Head of Investor relations +45 3077 2783 +45 3077 2076 +45 3077 8682 cxal@novozymes.com nwv@novozymes.c
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