Novonesis A/s Class B · OMXCOP:NSIS_B
Novonesis A/s Class B — Novozymes — Q1 2013 Earnings Presentation
59 slides from Novonesis A/s Class B's earnings presentation, Apr 25, 2013
Slide 1: Roadshow Presentation Q1 2013
ROADSHOW PRESENTATION Q1 2013 April 25, 2013
Slide 2: Table of Contents
Table of Contents Topic: Page no.: Index 2 Q1 2013 presentation 3-15 1. Novozymes Overview 16-22 2. Strategy 23-28 3. Segmental Overview 29 Enzyme Business 30 • Household Care 31-33 • Food & Beverages 34-35 • Bioenergy 36-39 • Feed & Other Technical 40-41 BioBusiness • Microorganisms 42-43 • Biophar
Slide 3: Safe Harbor Statement
Safe Harbor Statement This presentation and its related comments contain forward-looking statements, including financial expectations. Forward-looking statements are by their very nature associated with risks and uncertainties that may cause actual results to differ materially from expectations. The
Slide 4: Q1 2013 Summary
Q1 2013 Summary Q1 sales as expected Key financials Q1 2013 Q1 2012 • Q1 sales growth at low end of full-year guidance • Sales growth still expected to increase during 2013 Total sales, DKKm 2,845 2,734 Sales growth, DKK 4% - Solid profitability Sales growth, LCY 5% - • EBIT margin of 24.9% ‒ on par
Slide 5: Household Care Enzymes Sales
Household Care Enzymes Sales Q1 2013 sales: Household Care Enzymes Sales DKK +6%, LCY +7% • Q1 sales in line with expectations 4.2 50 Sales DKK LCY growth 40% • Main growth drivers remained in place: 3.780 4.0 00 3.7 50 35% • Increased enzyme penetration across tiers 3.325 3.5 00 3.151 to enhance de
Slide 6: Food & Beverages Enzymes Sales
Food & Beverages Enzymes Sales Q1 2013 sales: Food & Beverages Enzymes Sales DKK (2)%, LCY 0% • Good performance in enzyme sales for Sales DKK LCY growth starch conversion and healthy concepts 4.0 00 40% 3.7 50 • Baking enzyme sales were lower due to 3.5 00 35% 3.186 competitive pressure in freshkee
Slide 7: Bioenergy Enzymes Sales
Bioenergy Enzymes Sales Q1 2013 sales: Bioenergy Enzymes Sales DKK (8)%, LCY (7)% • The EIA Q1 estimate for ethanol production Sales DKK LCY growth 70% is a volume decline of 13-14% 2.5 00 2.2 50 • Roll-out of Novozymes Avantec® gaining 60% traction, partly offsetting the volume 2.0 00 47% 1.846 1.7
Slide 8: Feed & Other Technical Enzymes Sales
Feed & Other Technical Enzymes Sales Q1 2013 sales: Feed & Other Technical Enzymes Sales DKK +12%, LCY +13% • Animal feed enzyme sales were the main Sales DKK LCY growth 50% growth driver 2.0 00 • Continued growth in penetration of 1.7 50 40% RONOZYME® ProAct in emerging markets 1.449 and Europe 1.5
Slide 9: Enzyme Business Sales Overview
Enzyme Business Sales Overview Q1 2013 sales: Enzyme Business Sales DKK +2%, LCY +3% Q1 2012 – Q1 2013 • 2013 sales started slowly as expected • Growth expected to pick up over the next 3 29 quarters, as new innovation penetrates the 64 market • All enzyme sales areas expected to contribute to growt
Slide 10: BioBusiness Sales Overview
BioBusiness Sales Overview Q1 2013 sales: BioBusiness Sales DKK +23%, LCY +24%, organic +22% Q1 2012 – Q1 2013 Microorganisms 2 (2) • Q1 2013 sales: DKK +23%, LCY +24% 11 – acquisition impact: +3% 67 Biopharma • Strong organic sales growth driven by BioAg sales 9 across the Northern Hemisphere and t
Slide 11: BioBusiness Activity Update
BioBusiness Activity Update Organizational changes in BioBusiness The ambition remains to be an incubator for growth platforms, but now across technology platforms: - Biomass conversion - Biopharma - BioAg - Animal Health & Nutrition - Other growth platforms 11
Slide 12: R&D Update
R&D Update R&D organizational changes Optimizing to bring innovation to market faster and with more impact Organizing to cater for core business, growth platforms and productivity improvements R&D resource allocation expected to remain at 13-14% of sales 12
Slide 13: Supply Operations Update
Supply Operations Update Supply Operations organizational changes One organization to drive supply of product and productivity improvements across technologies and regions The new enzyme plant in Nebraska will ramp up during 2013 The Hyaluronic Acid (HA) plant is ready, once customer trialing
Slide 14: Q1 2013 Financial Performance
Q1 2013 Financial Performance DKKm Q1 2013 Q1 2012 change Sales 2,845 2,734 +4% Gross profit 1,655 1,578 +5% Gross margin 58.2% 57.7% EBIT 709 680 +4% EBIT margin 24.9% 24.9% Net profit 514 510 +1% EPS (diluted) 1.62 1.59 +2% Operating cash flow 260 614 (58)% Net investments excl. acq. 178 158 13% F
Slide 15: 2013 Financial Outlook
2013 Financial Outlook Key financials 25.04.2013 21.01.2013 2012 Sales, DKKm - - 11,234 Sales growth, DKK 5-8% 4-7% 7% Sales growth, LCY 5-8% 5-8% 3% Sales growth, organic 5-8% 5-8% 4% EBIT, DKKm - - 2,745 EBIT growth 4-7% 4-7% 17% EBIT margin ~24% ~24% 24.4% Net profit - - 2,016 Net profit growth 6
Slide 16: Overview
INVESTOR PRESENTATION OVERVIEW OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Slide 17: Novozymes – The World Leader in Bioinnovation
OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW Novozymes – The World Leader in Bioinnovation • Business consists of two segments: Enzyme Business and BioBusiness Founded 1925 • 2012 sales: DKK 11,234 million Listed 2000 • 2012 EBIT margin: 24.4% Ticker NZYM B Exchange C
Slide 18: Experienced Leadership Team Exploring Growth & Value Creation Opportunities
OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW Experienced Leadership Team Exploring Growth & Value Creation Opportunities Peder Holk Nielsen Thomas Videbæk Per Falholt Benny Loft Thomas Nagy Andrew Fordyce Per Falholt Peder Holk Nielsen Andrew Fordyce Executive Vice Pr
Slide 19: Delivering Tomorrow's Solutions Today
OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW Delivering Tomorrow’s Solutions Today Delivering solutions from Helping companies This unique approach nature: become more efficient: leads to: food applications, detergents, energy efficiency, saving raw “more with less” p
Slide 20: Uniquely Diversified Group Creates Synergies and New Opportunities
OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW 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 provid
Slide 21: Diversification in Revenue Streams Underpins Strong Financial Position
OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW Diversification in Revenue Streams Underpins the Company’s Strong Financial Position • Enzymes account for 90% of turnover • Sales FY 2012 of DKK 11,234 billion (USD ~ 2 billion) • Strong profitability, 24.4% in EBIT margin
Slide 22: Global Production and R&D Setup
OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW Global Production and R&D Setup Nottingham, England Bagsværd, Denmark Biopharma production Headquarters Saskatoon, Canada (Albumin) R&D BioAg production R&D Pilot plant R&D Kalundborg, Denmark Blair, Nebraska
Slide 23: Strategy
INVESTOR PRESENTATION STRATEGY OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Slide 24: Undisputed Market Leader Expanding Enzyme Application
OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW Undisputed Market Leader Expanding Enzyme Application Global enzyme market value: 2000: 2012: Global enzyme market value DKK ~ 12bn DKK ~ 21bn 2012: DKK ~ 21bn Novozymes Rest of Novozymes Rest of 47% Others and 42% market m
Slide 25: Multiple Drivers Create a Sustainable Business with Significant Growth Potential
OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW Multiple Drivers Create a Sustainable Business with Significant Growth Potential Drivers Ambition • Energy efficiency Long-term financial targets: • Cost/performance > 10% sales growth • Waste reduction > 24% EBIT margin •
Slide 26: 1. Innovation-driven Top-Line Growth
OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW 1. Innovation-driven Top-Line Growth • Achieving growth through R&D investment remains a fundamental priority • > 50 product introductions in the last 5 years, ~ 100 active projects in current portfolio • R&D investment-rea
Slide 27: 2. Expand Opportunities By Leveraging Expertise
OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW 2. Expand Opportunities By Leveraging Expertise Continued development in …creates opportunities to apply the following areas… technology in other areas Strain development using Molecular protein engineering, genetic biology
Slide 28: 3. Enzyme Technology Improves Profitability
OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW 3. Enzyme Technology Improves Profitability • Focused on improving margins through sophisticated technological solutions • Achieved sales CAGR of 7% since 2000 with improving margins • Roughly 20% of the R&D spend goes into
Slide 29: Segmental Overview
INVESTOR PRESENTATION SEGMENTAL OVERVIEW OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW • APPENDIX
Slide 30: Enzyme Business Unique Industry Trends
OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW Enzyme Business Unique Industry Trends Industry Unique Trends Recent Launches Innovation Household Laundry Performance claims Chemical replacement Lipoclean XPect New Cold water wash Compaction Celluclean Care functionaliti
Slide 31: Household Care Enzymes Overview
OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW Household Care Enzymes Overview Household Care Enzymes (34% of 2012 sales) Household Care Enzymes Sales Sales DKK LCY growth 4.2 50 40% 3.780 4.0 00 3.7 50 35% 3.5 00 3.325 3.2 50 3.151 30% 3.0 00 2.672 2.498 2.7 50 25% App
Slide 32: Enzymes are Gaining Traction in Detergents
OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW Enzymes are Gaining Traction in Detergents The advantages of ..drive new product ..increasing the enzymes.. launches.. overall penetration of enzymes # of detergents Share of detergents containing enzymes with enzymes Wash
Slide 33: Replacing Chemicals in Detergents
OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW Replacing Chemicals in Detergents Raw mat. cost distribution in Raw mat. cost distribution top-tier powder detergent Benefits: in top-tier liquid detergent Surfactan • Reduce oil price sensitivity ts • Improve wash performa
Slide 34: Food & Beverages Enzymes Overview
OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW Food & Beverages Enzymes Overview Food & Beverages Enzymes (28% of 2012 sales) Food & Beverages Enzymes Sales Sales DKK LCY growth 4.0 00 40% 3.7 50 3.5 00 35% 3.186 3.033 3.2 50 Baking / Starch conversion / Brewing / 3.0 0
Slide 35: Fill and Manage the Pipeline - Enzyme Innovation to the Food Industry
OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW Fill and Manage the Pipeline - Enzyme Innovation to the Food Industry Informed New economies Health & Wellbeing Convenience consumption and urbanization Reinforce customers’ Reduce costs Apply regionally brand • Claims • Pr
Slide 36: Bioenergy Enzymes Overview
OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW Bioenergy Enzymes Overview Bioenergy Enzymes (16% of 2012 sales) Bioenergy Enzymes Sales Sales DKK LCY growth 2.5 00 70% 2.2 50 60% 2.0 00 47% 1.846 1.782 1.748 50% 1.7 50 Application Corn ethanol / Biomass conversion 1.480
Slide 37: Production of Biofuels and Beyond
OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW Production of Biofuels and Beyond Raw material Production process End product Sugarcane Extraction Ethanol Residues Bagasse; Energy Classical corn Butanol Milling Cooking Enzymes Cooking Residues Fermentable sugar DDGS; Fee
Slide 38: The Renewable Fuel Standard (RFS2) in the US Mandates Strong Growth of Biofuels Usage
OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW The Renewable Fuel Standard (RFS2) in the US Mandates Strong Growth of Biofuels Usage RFS2 = mandated blending of biofuels in the US 40 Current RFS targets 35 2012 2013 2014 30 16 Starch 13.2bn 13.8bn 14.4bn 25 Bn gallons 2
Slide 39: Developing Enzymes for Advanced Biofuels in Close Co-operation with Global Partners
OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW Developing Enzymes for Advanced Biofuels in Close Co-operation with Global Partners 39
Slide 40: Feed & Other Technical Enzymes Overview
OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW Feed & Other Technical Enzymes Overview Feed & Other Technical Enzymes (13% of 2012 sales) Feed & Other Tech. Enzymes Sales Sales DKK LCY growth 2.0 00 50% 1.7 50 40% 1.5 00 1.449 FEED: Monogastric animals / Substituting 1.
Slide 41: Attractive Value Propositions in Animal Feed
OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW Attractive Value Propositions in Animal Feed Phytase - phosphate •Only 3–30%* of phosphate in feed is available to the animal •Ronozyme NP® releases half of the phosphate bound – Ronozyme HiPhos® releases nearly all of it •
Slide 42: Microorganisms Overview
OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW Microorganisms Overview Microorganisms (8% of 2012 sales) Microorganisms Sales Sales DKK LCY growth 1.2 00 95% 86% 85% 944 1.0 00 BioAgriculture / Wastewater treatment / 75% Application Industrial & Household cleaning / 767
Slide 43: BioAgriculture – Novozymes is a Leading Player in Biofertility
OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW BioAgriculture – Novozymes is a Leading Player in Biofertility Why? BioAg: Interesting Potential • Leveraging existing R&D and technology capabilities to build another biological 2007: Philom 2011: 2012: Natural 2010: Turfa
Slide 44: Biopharma Overview
OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW Biopharma Overview Biopharma (1% of 2012 sales) Biopharma Sales Sales DKK LCY growth 42 5 60% 40 0 37 5 42% 35 0 40% 32 5 23% Albumin / Hyaluronic acid / Medical 30 0 Application 20% devices / Drug delivery & formulation 27
Slide 45: New cGMP Hyaluronic Acid Facility Is Commercial
OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW New cGMP Hyaluronic Acid Facility Is Commercial - Setting a New Product Standard Bacillus Subtilis fermentation • No animal-derived raw materials Safety • No organic solvents (aqueous recovery) • Simple growth medium free o
Slide 46: Biopharma Overview
OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW Biopharma Overview The classic pharma value chain Drug Drug Sales and Manufacturing Distribution Discovery Development Marketing Novozymes Hyaluronic Acid: Albumin: • Applications for medical devices, drug formulation and •
Slide 47: Conversion of Renewables into Chemicals - Technology, Partners, and Projects
OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW Conversion of Renewables into Chemicals - Technology, Partners, and Projects Example of joint collaboration on a renewable chemical: New fermentation-enabled route to acrylic acid Starch, 3-Hydroxy-pro Bioacrylic Glucose Bi
Slide 48: Sustainability
INVESTOR PRESENTATION SUSTAINABILITY OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Slide 49: Recognized as a sustainability-driven organization
OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW Recognized as a sustainability-driven organization Novozymes in the Dow Jones Sustainability Indexes (DJSI): Top 1% of Environmental Investment Organization carbon reporting • Included in DJSI Biotechnology sector since 200
Slide 50: Three-pronged Core of Novozymes' Sustainability
OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW Three-pronged Core of Novozymes’ Sustainability Economic growth Use of natural resources It’s all in the numbers Scientific - All products are life-cycle assessed (LCA) Bioinnovation approach - LCA integrated in value chain
Slide 51: Reducing CO2 Emissions Together with our Customers
OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW Reducing CO2 Emissions Together with our Customers • In 2012, Novozymes helped customers save 48 million tons of CO2 – roughly equal to 3/4 of Denmark’s annual CO2 emission • Novozymes’ vision: working towards a future wher
Slide 52: Sustainability Targets
OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW Sustainability Targets Long-term targets added Targets 2012 2012 2013 2015 (index 2005) targets realized target target • Be recognized as a global leader within sustainability Water efficiency 33% 32% 35% 40% • Be a globall
Slide 53: Financial Review
INVESTOR PRESENTATION FINANCIAL REVIEW OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Slide 54: Historical Performance Demonstrates Track Record of Delivery
OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW Historical Performance Demonstrates Track Record of Delivery 2000-2012 sales CAGR of ~7% 58% Gross margin 20% 12.000 56,2% Sales DKKm Growth 55,6% 16% 56% 57,2% 9.000 12% 53,3% 53,1% 55,7% 54% 6.000 52,4% 8% 51,8% 53,7% 53,
Slide 55: Cost of Goods Sold
OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW Cost of Goods Sold Split of COGS • Factors impacting COGS development: • Productivity improvements, input prices, currency 35% • Note: accounting practice implies that 45% there is a time lag between current price levels an
Slide 56: Dividend and Stock Buyback History
OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW Dividend and Stock Buyback History • Proposed 2012 dividend per share DKK 2.20, up 16%, payout ratio Dividend / Buybacks 34.1% - subject to approval at the DKK million Dividend per Annual General Meeting, February share, DK
Slide 57: Shareholder Distribution
OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW Shareholder Distribution B shares listed in Copenhagen Shareholder distribution of under the symbol “NZYM B” B common stock* • Two share classes; A and B shares Rest of • B shares listed in Copenhagen World Novo A/S 3% Denm
Slide 58: Investor Relations Contacts
OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW Investor Relations Contacts Thomas Steenbech Bomhoff Martin Riise Mobile (USA): +1 919 649 2565 Tel.: +45 4446 0738 Mobile (DK):+45 3077 1226 Mobile: +45 3077 0738 E-mail: tsbm@novozymes.com E-mail: mrsn@novozymes.com Furth
Slide 59: Novozymes – Rethink Tomorrow
novozymes’ Rethink Tomorrow