Letter from the Board of Directors:
    Strategy in focus

    2013 was an important year for Novozymes: A change in leadership, new long-term corporate targets, organizational changes, acquisitions, partnerships and alliances all put strategy and execution in focus. The year also brought healthy organic sales and earnings growth, illustrating once again the strength of a diversified business with innovation at its core.

    New leadership, same strategy, different organization

    At the beginning of 2013, Novozymes conducted a planned management succession process resulting in the appointment of Peder Holk Nielsen as the company’s second CEO from April 1. The Board emphasized that the task ahead is not about revolutionizing the company. Rather it is about the evolution of the existing strategic foundation to take the company further toward its vision of providing sustainable biological solutions that create the necessary balance between better business, cleaner environment and better lives.

    Although Novozymes might look the same today as it did last year, much changed within the company in 2013. The organization adopted a new structure to sharpen focus on the customer, internal processes and procedures were reviewed, and new R&D application units and novel growth platforms were created, all to help achieve Novozymes’ long-term targets. 

    Innovation drove growth in 2013

    All sales areas contributed to a 5% increase in sales in DKK, a 6% increase in EBIT and a record-high EBIT margin of 24.7% in 2013, with particular progress in Bioenergy and Household Care. The growth in both of these industries demonstrates the power of innovation.

    In Bioenergy, the underlying bioenergy market was flat, yet Novozymes delivered double-digit organic sales growth due to new enzyme technology that gives customers higher yields of ethanol and corn oil, while also saving energy in their production.

    In Household Care, customers continued to benefit from higher inclusion of enzyme systems in detergents, as Novozymes has advanced the technology to a point where it enables customers to produce better and more sustainable detergents without additional costs. 

    Growth platforms with exciting potential

    Novozymes invests 13-14% of sales in R&D. A large portion of this funding is dedicated to new ideas and technology as a source of new business opportunities, productivity improvements and growth in the longer term. Novozymes has built two strong platforms with the intention of transforming how farmers grow crops and how waste is utilized. The BioAg and biomass conversion platforms both offer exciting potential for Novozymes and witnessed exciting developments in 2013.

    The world’s first commercial-scale cellulosic ethanol plant was inaugurated by Beta Renewables, a Novozymes partner, in Crescentino, Italy. The plant is significant, with the initial capacity to convert agricultural residues, waste and energy crops into 50 million liters of ethanol per year. Novozymes also entered into important new collaboration agreements with M&G Chemicals, which is looking to produce bioplastics in China once financing is in place, and with Raízen on the production of cellulosic ethanol in Brazil. These partnerships and the inauguration of the plant in Italy are critical for showing politicians, investors and the world in general that biomass conversion technology is ready for commercialization.

    “Novozymes invests 13-14% of sales in R&D. A large portion of this funding is dedicated to new ideas and technology as a source of new business opportunities and growth in the longer term.”

    Within BioAg, Novozymes entered into a long-term strategic alliance with Monsanto, one of the world’s largest agricultural technology companies. The Board is excited about The BioAg Alliance’s potential to develop biological solutions for farmers worldwide. The BioAg Alliance is expected to support our sales growth in both the short and the long term. Furthermore, it will allow Novozymes to strengthen its established microbial technology position and fermentation competencies, and invest significantly in innovation to develop the agricultural biologicals market. For its part, Monsanto brings to The BioAg Alliance competencies, agricultural know-how and a commercial infrastructure that are second to none.

    These platforms could transform Novozymes’ future business, and the Board will closely monitor progress in these areas in these crucial early years. In the meantime, Novozymes plans to continue to reap the rewards of its diversified business model, delivering consistent sales and earnings growth through innovation and increased productivity.
     

     

    January 2014
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    The Board of Directors
    Novozymes A/S
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