Novonesis details financial outlook upgrade at Capital Markets Day 2024

21 Jun 2024 --- Novonesis’ Capital Markets Day provided insights on the company’s strategy in capturing the accelerating organic sales growth, upgraded to the upper end of the 5-7% range and the increase of the pro forma adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) margin to 35-36%.

The company is maintaining its target for organic sales growth at 6-8% CAGR through 2025 with an adjusted EBITDA margin of ~37%.

Nutrition Insight attended the event, held on June 18, where the company reconfirmed its ambition to further accelerate organic sales growth beyond 2025.

“Demand for sustainable biosolutions will continue to grow stronger as the world needs answers to the increasing need to feed and fuel a growing world sustainably,” comments Ester Baiget, president and CEO of Novonesis. The seamless integration of our two companies has already created a stronger foundation to capture and accelerate growth in the attractive biosolutions space.”

“We are committed to leading the transformation of societies and economies to secure healthier lives and a healthier planet.

During Capital Markets Day, we spoke to Jacob Vishof Paulsen, executive VP of F&B biosolutions at the company, who said: “It’s great to be out here and to tell that to the audience, an audience I’ve met many times before, and to convey to them that we are in a great place.”

“It’s great to share our excitement as well as concrete examples of what it is we are achieving as new, stronger witnesses. That’s what I’m really looking forward to. I’ve been in this industry for 20 years as part of Chr, Hansen and now I’m part of this new, fantastic project,” he adds. 

Demand for sustainable biosolutions will continue to grow stronger, says CEO Ester Baiget.Targets until 2025
Novonesis sets out to leverage its capabilities and to deliver on its potential, enabling the company to confirm its targets until 2025, setting the ambition to accelerate its profitable organic sales growth thereafter.

Cost synergy implementation currently ahead of plan with a run rate of ~80% by the end of June 2024. Meanwhile, the reconfirmation of the sales synergy target is €200 million (US$215 million) run-rate four years after completion of the combination and the cost synergy target is at between €80 and 90 million (US$86 and 97 million) run-rate three years after completion of the combination.

Novonesis asserts that its margin expansion is supported by a strong focus on productivity improvements, economies of scale and synergies. Beyond 2025, it aims to deliver accelerated sustainable organic sales growth from its underlying business in combination with “new and de-risked innovation and growth opportunities.”

The company aims for EPS accretion to be maintained at a mid-single-digit percentage in the third year after the merger and a clear capital allocation model with an expected dividend payout ratio of 40-60%.

Lastly, Novonesis expresses its dedication to a sustainable future with clear non-financial targets and commitments. Its current long-term financial targets only run to 2025, and the new long-term financial targets are expected to be released in the second half of 2025. 

Portfolio on offer
Paulsen asserts that Novonesis stands out on the market with its unique portfolio that leverages the combination of the two companies’ selection of bacteria, yeast, probiotics, enzymes and proteins.

“We are four months into R&D together as Novonesis, and creating patterns takes quite a long time. I was quite amazed two weeks ago when the team came to me and said, ‘Now we’re ready to release a pattern of compost solutions of enzymes and microbes’. And I think that’s where we really start seeing that we move from this, from the PowerPoint, into real action.”

Novonesis portfolio that leverages the combination of two companies’ selection of ingredients and products.He explains that this speed of development is possible because the team behind the company has been deeply invested in the science on the matter for years.” For example, in the cheese industry, we have launched two new enzymes, which are already being invoiced by customers. We are deep in the cheese industry, and we have an even more powerful access to in-science technology in combination with the microbes.”

He communicates Novonesis’s plans to capture the bigger picture of the ongoing transformation of the food system, “both in the core, where we need to get more out of the milk sources and ensure it’s not wasted more out of flour resources in our core business making bread.” 

“And then there is the plant-based transition, where it’s again all about these compost solutions. We were individually working with some of the key customers on this, and now we’re combining the teams. It’s very practical. We were working on the raw material, improving the old base for legal base products, and then the other team was working on the fermentation,” he details. 

“Now we bring the teams together at one meeting with the customer, and that just gives us a fantastic feeling of being able to accelerate the value creation with the customers,” concludes Paulsen.

By Milana Nikolova