Our financial results for 2015 show double-digit growth in earnings and a substantial improvement in the EBIT margin. The financial results are more than satisfactory, but organic sales growth was harder to achieve in 2015. Due to a good performance in Agriculture & Feed and Food & Beverages, we were able to deliver organic sales growth of 4%. However, we also saw how quickly markets and customers can change their preferences following sharp changes in commodity prices and exchange rates, and sales growth in Household Care and particularly in Bioenergy disappointed.
"On top of commercial activities, we invested DKK 1.9 billion in R&D, paving the way for more sustainable solutions for our customers to secure long-term sustainable growth."
Investing in innovation
Our focus in 2015 was on addressing this slower sales growth, improving our agility and getting growth back on track. On top of commercial activities, we invested DKK 1.9 billion in R&D, paving the way for more sustainable solutions for our customers to secure long-term sustainable growth. This investment will support both our current and future technology platforms, help build a strong innovation pipeline across markets and make it possible for us to improve our efficiency and earnings.
The year’s R&D highlights include our achievements together with Monsanto, our partner in The BioAg Alliance. Results from our 2015 field trial program were announced in early January 2016. We tested more than 2,000 microbial strains across 500,000 field trial plots, and the best new strains delivered an average yield increase of 4-5 bushels per acre in corn and 1.5 in soy. The tests also included an enhanced corn inoculant product that increased yields by an average of 4 bushels per acre and is scheduled for launch in 2017. Another highlight in R&D was the number of new production strains we were able to develop and introduce in our manufacturing plants during the year, enabling us to reduce fermentation costs in enzyme production. We also saw how radically technology is advancing and strengthening our ability to learn about nature, microorganisms and enzymes, which is encouraging in terms of our ability to innovate for future impact. The new ground we are breaking in R&D makes Novozymes an attractive employer, not least to scientists, as confirmed in October by the international journal Science, which ranked Novozymes the best science employer in the world within biotech, pharma and related industries.
Novozymes strengthened existing partnerships and adjusted its portfolio of growth platforms during the year. We acquired Pacific Vet Group-USA, Inc. to strengthen our knowledge and innovation capabilities in probiotics for animals. We also decided to close down our hyaluronic acid activities within the Biopharma area, as the outlook no longer warranted continued investment in building the business.
Biological answers for better lives in a growing world
In autumn 2015, world leaders met in New York to adopt the new UN Sustainable Development Goals, which will guide global efforts to improve lives and sustainability over the next 15 years. Novozymes represented the private sector at the assembly and reiterated our position that carbon emissions need to carry a cost that alters behaviors and incentivizes investment in sustainable solutions. In December, cross-sector participants from business, government, finance, the UN and civil society reached a historic agreement at the UN Climate Change Conference (COP21) in Paris. Novozymes showed strong leadership in the run-up to COP21. We called for an agreement to limit global temperature rise and for the adoption of stable carbon-pricing mechanisms.
Our sustainability efforts once again won recognition during the year. Novozymes scored 90 out of 100 in the Chemical Industry sector of the Dow Jones Sustainability Index, placing us among the top 3% of sustainability leaders in the sector worldwide. This confirms the validity of our long-term ambition of making a real and lasting impact on the world. ###FACT:OUTLOOK###
Long-term organic sales growth target revised
In light of developments in 2015 and the sales outlook for 2016, the Leadership Team has reviewed the assumptions for sales growth for the remainder of the decade. We continue to have an ambition to accelerate sales growth to 8-10% organically. However, as a result of the current depressed commodity prices and the uncertainties these entail for Bioenergy and growth in emerging markets, Novozymes expects annual sales growth from 2017 through to the end of the decade to be in line with the historical performance of 6-7%. The long-term targets for EBIT margin, ROIC and sustainability are unchanged.
Innovation and technological leadership lie at the heart of Novozymes' competitiveness and long-term value creation. Consequently, we will continue to invest to retain our leadership position within industrial biotechnology and to advance the field, improving the long-term opportunities to create a sustainable impact on the world and grow our business.
"The Partnering for Impact strategy has enabled us to rethink relationships and business models and think more in terms of partnerships."
Guided by "Partnering for Impact"
In January 2015, we updated Novozymes’ purpose statement and launched our strategy Partnering for Impact. These have been great instruments in guiding the business, including at a time when we have been challenged by lower sales growth. Our purpose in particular has spurred motivation internally and been embraced wholeheartedly by our employees. Externally, it has been a good tool for closer dialogue with authorities, customers and other stakeholders on what Novozymes aims to achieve, and how our customers can make an impact by using our solutions. The Partnering for Impact strategy has enabled us to rethink relationships and business models and think more in terms of partnerships.
Our strategy builds on our past successes, has taken us through a challenging year and gives us an even sharper focus going forward. I look forward to taking on new challenges in 2016 together with Novozymes’ dedicated employees and all of our customers and partners.
|Peder Holk Nielsen|
|President & CEO|