Novonesis B Unsp/Adr

Ladies and gentlemen, welcome to the Novo Natis full-year financial statement for 2024 and annual report 2024 conference call. I'm Yusuf, the course call operator. I would like to remind you that all participants will be in listen-only mode and that the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or for broadcast. At this time, it's my pleasure to hand over to Tobias Cornelius Björklund. Please go ahead.

Thank you very much, Operator, and welcome everyone to the NovoNesis conference call relating to the full year performance of 2024. My name is Tobias Björklund, and as said, I'm heading up the investor relations here at NovoNesis. In this call, our CEO, Esther Barchett, and our CFO, Reiner Lehmann, will review our pro forma performance for the year, as well as the outlook for 2025. Attending today's call, we also have Jacob Poulsen, EVP of Food and Beverage Biosolutions, Amy Beirich, EVP of Human Health Biosolutions, Tina Ferner, EVP of Planetary Health Biosolutions, and Klaus Kroner-Fuhlsang, Chief Scientific Officer. The conference call will take about one hour, including Q&A. Please change to the next slide. And this is to remind you that the information presented during the call is unaudited and that management may make forward-looking statements. These statements are based on current expectations and beliefs. and they involve risks and uncertainties that could cause actual results to differ materially from those described in any forward-looking statement. With that, I will now hand you over to our CEO, Esther Bajet. Esther, please.

Thank you. Thank you, Tobias, and welcome, everyone. Thank you for joining us this morning. Could you please turn to slide number three? Thank you. I would like to start off with expressing my sincere gratitude to all of our stakeholders. Thank you to our shareholders for their continued confidence and support. Thank you to our customers and suppliers for their continued partnership. And I really want to extend a special thank you to our incredible employees. Your unwavering commitment and continued focus on customer centricity have been crucial to the success of the integration. I would also like to take this opportunity to say a few words about Jacob. It was announced last Friday that he has decided to take a role at another company. I am excited for him on this opportunity. However, I'm also sad to see him leave. Jacob has been important to NovoNesis, and he has been a strong leader of the food and beverages business, creating an excellent team around him. We're far ahead in the process to find a replacement, and we'll let you know soon in more due course. Jacob, who's sitting here with us in the room, Jacob, my sincere thank you to you for your time and for your significant contribution to NovoNesis. We will miss you, Jacob, but also we wish you all the very, very, very best. With this said, let us now look at our performance. This year has been truly remarkable. We successfully brought together two strong organizations to create NovoNesis, and we're now operating as a unified company. I'm incredibly pleased to say that our performance clearly demonstrates we are delivering on the promises we made. In terms of the integration, we have achieved all the key milestones we are seeking for. We have set the organization and established a unified company culture. while securing that our house is in order. We have maintained a high-paying engagement through this transition, with a score of 82, and we are well above industry benchmarks. Customer centricity has been a key focus during the integration, and we have seamless collaboration across functions, allowing us to respond effectively and efficiently to customers' evolving needs. We have successfully positioned NovoNesis as the leading biosolutions company, Our innovative solutions and industry expertise differentiate us from competition, and we clearly see the increased interest in NovoNesis when we're engaging directly with our customers as well as trade shows and industry events. We have made significant progress in unlocking the three-year cost synergy program, achieving already an 80% run rate in the first year. We are on track to realize the four-year revenue synergy program of 200 million run rate. with initial contributions expected by 2025 of 1% of the organic sales growth outlook. Our commitment to sustainability is integral to who we are. 83% of our revenue is documented and aligned to six of the United Nations Sustainable Development Goals. Additionally, we are well on track to deliver our long-term sustainability ambitions. Since 2018, we have reduced our scope 1 and 2 CO2 emissions by 63%, and at the same time, growing the business by more than 25% for the same period. And 93% of the electricity that we use is from renewable sources. If we now move on the performance for the year, we deliver a strong broad-based organic growth of 8%, driven by a 6% volume increase and a 2% contribution from pricing. Emerging markets were particularly strong, delivering 12% growth for the year. Looking at the four quarters specifically, we saw continued broad-based organic sales growth of 7%, also supported by a 2% contribution from pricing. The strong sales growth, coupled with cost synergies and operational excellence, led to 36.1% pro forma adjusted EBITDA margin for the year, an increase of 2.3 percentage points compared to 2023. Close to 30% of our revenue comes from product launch within the past five years. And in 2024, we launched 45 new products across industries and geographies, solidifying our innovation leadership in bio solutions. With our expertise, with our global reach, with our passionate team, NovoNessus is well positioned to lead the way toward a healthier planet and healthier lives. We've consistently delivered on our promises, building a robust foundation, Our deep customer focus combined with our R&D and production capabilities prepare us to meet the growing demand for bio-solutions. We are pleased with our progress and where we stand, also recognizing that the integration process is a journey. We're continuing to drive synergistic capabilities, and we keep focused on business continuity. We're validating and conforming our view of growth acceleration for the next strategy period. We will share this with you in August in relation to the first half year announcement. Two weeks ago, we announced the acquisition of DSM for Munich part of the FIT-ENSEM alliance, unlocking further value in a core business. We expect to close this deal in the course of 2025, and I am very pleased we will now drive the full value chain in animal solutions, delivering stronger revenue growth and earnings accretion for Nobonesses. All in all, 2025 will also be a good year. A year where we expect continued strong growth performance of 5% to 8%, which includes but a one percentage point negative effect from the decision to exit Russia and Belarus for the legacy Christian Hansen businesses. Additionally, we expect continued strong earnings development with a 37% to 38% outlook for the adjusted EBITDA margin. With that, we're now ready to dive into the divisional performance in more detail. Could you please start and turn to slide number four? Thank you. Food and health biosolutions delivered 7% organic sales growth in 2024 and 7% in the fourth quarter. Within food and health, food and beverages represent 74% of sales, and human health represents 26%. For 2025, we expect this division to deliver organic sales growth within the same range as for the group, with relatively stronger growth in human health. Please turn to slide number five. Thank you. Food and beverages delivered 8% organic sales growth in 2024. This was mainly driven by volume, while pricing impacted positively in line with the group. Growth was broadly anchored across geographies and sub-areas and driven mainly by dairy. The strong growth in dairy was driven by both fresh dairy and cheese, supported by upselling and a strong customer adoption of innovation. Dairy growth was anchored across all regions. China... which is a small part of our dairy business, so a slightly negative development, as our innovation momentum was offset by the declining Chinese dairy market. In fresh dairy, we see an increasing demand for our tailored solutions in the high-protein space. Cheese is benefiting from good momentum in conversions and adoption of solutions for productivity improvements. Baking delivers solid performance and benefited from increased penetration and innovation. Across remaining sub-areas, we also saw a solid development. Our solutions in food and beverages enable customers to reformulate, enable our customers to create better solutions for consumers to enjoy cleaner labeled products, including less fat, less salt, and less sugar. In plant-based solutions, we have seen a growing momentum during 2024, with an increasing activity with our customers and supported by a strong value proposition in combining both cultures and enzymes. for better taste, better texture, and healthy nutrients. Looking at the fourth quarter, organic growth was 6% driven by dairy, with both fresh dairy and cheese contributing. Performance across the remaining sub-areas was solid. Growth in 2025 in food and beverages is expected to be driven by all sub-areas, including also a positive impact from synergies. Momentum is expected to continue to be strong and only partially impacted by the exit from center countries during the second quarter for legacy Christian Hansen businesses. The exit of those countries is expected to impact fully organic sales growth in food and beverages by around three percentage points. Please turn to slide number six. Thank you. Human health delivered 5% organic growth in 2024. We have seen the expected growth acceleration in the second half of 2024 at double digits, where the first half was impacted by a strong comparable from last year. Growth was mainly volume-driven, where pricing contributed positively. Advanced protein solutions contributed strongly and in line with expectations, as we continue to scale up production and supply to the Anchor customer. Additionally, the sales growth included around one percentage point of deferred revenue, following the updated contractual agreements. Dietary supplements was flat as the U.S. market growth was muted. We experienced strong growth in Asia-Pacific as we see increased demand for our solutions in this growing market. The women's health and infant nutrition categories show it the strongest growth. HMO faced a high comparable and decline as expected. The fourth quarter delivered 10% organic sales growth. Growth was driven by all segments, including a low single-digit amount of default revenue. For 2025, growth in human health will be driven by a continued positive momentum in dietary supplements, supported by a positive impact from cross-selling synergies and by advanced protein solutions. Therefore, revenue will contribute by around one percentage point. Please turn to slide number seven. Thank you. Planetary health biosolutions delivered 9% organic sales growth in 2024 and 7% in the fourth quarter. Household care represents 35% of the division and agriculture and tech represents 65%. For 2025, we expect this division to deliver organic sales growth within the same range as for the group, with relative stronger growth in agricultural, energy, and tech. Please turn to slide number eight. Thank you. Household care delivered 13% organic sales growth in 2024. Growth was driven by increased penetration and innovation across both emerging and developed markets. Additionally, solid industry volume growth as well as pricing supported the performance. In emerging markets, we benefited from early years commercial investments, enabling NovoNesis to cater for local demand. Developed markets were driven by innovation, with a solid impact from the FreshNAS platform, including also the recently launched Luminos. In the fourth quarter, organic sales increased by 7%. The expected slowdown towards the end of the year materialized to a lesser extent, and growth continued to be driven by increased penetration and innovation as well as pricing. Industry volumes were also supportive in the quarter, and pricing continued to be solid with innovation also as a driver of growth. During the quarter, we launched one new product, making three in total for 2024. For 2025, we expect growth in household care to normalize after a very strong 2024. Key growth drivers continue to be innovation, increased penetration in both developed and emerging markets, continuous support from pricing, and industry volume growth. And please turn to slide number nine. Agricultural, energy, and tech deliver organic sales growth for 6% in 2024. This was driven by double-digit growth in energy and supported by both agricultural and tech. Growth was driven mainly by volume, and pricing also contributed positively in line with the group. The strong performance in energy was led by Latin America and India, driven by capacity expansion of corn-based ethanol production and supported by the ramp-up volumes for second-generation ethanol. A solid performance in North America was driven by increased penetration and innovation and including ethanol production growth of around 3%, according to EAA. Additionally, biodiesel contributed positively, mainly driven by emerging markets. Growth in agricultural was supported by both animal and plant. Solid underlying growth in animal was impacted by a demand year-on-year comparable due to order timing, while growth in plant was impacted by the stocking. Tech was driven by... was driven by bioprocessing, including processing aids for biopharma production, as well as grain processing. In the fourth quarter, organic sales growth was 6%, led by agricultural and energy. The drivers for energy were the same as those for the full-year performance. Strong growth in agricultural was led by animal, with increasing penetration of innovation, and growth in tech was driven by bioprocessing. In the quarter, we launched several exciting solutions across the sub-areas. and I would like to highlight Avorsa Advance, which is one product in a series of innovative solutions accelerating the penetration of enzymes in the production process of biodiesel. For 2025, growth in agricultural energy and tech is expected across all sub-areas, supported by a positive impact from synergies mainly in agricultural. Growth is expected to be driven and led by energy, driven by a continued capacity expansion in emerging markets and penetration of innovation in North America. And now, let me hand over to Rainer for the review of the 2024 financials and the outlook for 2025. Rainer, please.