Novozymes’ Capital Markets Day: business, partnership and the road ahead
This past week, Novozymes held its biannual Capital Markets Day (CMD) event. These events are a chance for investors, analysts, and the media to meet face-to-face with Novozymes’ executive management and other senior leadership to understand progress with the business. We’ve also recently launched a new purpose and strategy – “Partnering for impact” – so this CMD event had a new twist, with some of our most important partners joining our business unit leaders to discuss business, partnership and the road ahead.
For the Biomass sessions, we welcomed João Alberto Abreu (aka Beto) from Raízen. Beto is Raízen’s Executive Director of Agroindustrial and a key stakeholder in the partnership between Raízen and Novozymes. He shared the stage with Novozymes’ VPs for Biomass, Sebastian Søderberg (Commercial) and Claus Crone Fuglsang (R&D). Their full joint presentation is available here, but I have a few points from Beto’s presentation that I’d like to note.
First, while Raízen is one of Brazil’s largest companies, it’s safe to assume that it isn’t as well known abroad as it is in Brazil. So Beto shared some interesting facts about the company, including that it cultivates around 900,000 hectares of land. To put this in context for his largely Danish audience, Beto explained that this figure is roughly equal to 25% of Denmark’s total land area. He focused on describing how cellulosic ethanol is a core part of Raízen’s strategy, due to the need to do more with the raw materials it has available (through better utilization of biomass and more value generated per hectare) and the need to increase the productivity of its existing asset base (through integration of 1G mills with 2G). Another driver is the view that the Brazilian market is in the near-term short ethanol and market fundamentals will only drive greater domestic ethanol demand in the future. It’s quite a compelling story to explain cellulosic ethanol as a logical and integrated extension of Raízen’s current business. Finally, Beto touched on progress to date in CoPi (the company’s first cellulosic ethanol plant), and its 2G plans both for the near-future and the longer-term. While it’s clear there’s still work to be done to show the technology works at full scale, there are plenty of reasons to be bullish about Raízen’s and cellulosic ethanol’s future in Brazil.
The Raízen perspective fit nicely into the overall theme for the Biomass session at CMD, which was that – despite challenges in commercialization and a longer-than-expected ramp-up timeline – there continues to be substantive progress towards demonstrating 2G’s viability and competitiveness. It’s been a long journey and there’s likely to be further bumps along the road, but the fundamental facts are undeniable – there are better ways to use the world’s abundance of agricultural waste/biomass, and we still need sources of energy with lower GHG intensity. This is why Novozymes remains committed to making 2G a success, working side-by-side with like-minded partners like Raízen.