Introduction to
Feed Amino Acids
Bank of America Merrill Lynch Chemicals Conference
Dr. Reiner Beste
President Health & Nutrition 3 December 2014
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Financials for fiscal 2013
* Reorganized to Specialty Materials from January 2015
Consumer, Health & Nutrition Sales: €4,171 m
Adj. EBITDA / margin: €922 m / 22.1%
Baby Care (~20%)
Personal Care (~10%)
Comfort & Insulation (~10%)
Interface & Performance (~5%) Household Care (~5%)
Nutrition – Amino acids for efficient animal nutrition (~35% of segment sales)
CyPlus Technologies* (~5%) Health Care (~10%)
Positioning within Evonik Strong pillar of the
Consumer, Health & Nutrition Segment
SegmentBusiness Lines
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Table of contents
1 Facts & figures 2
Key success factors
3Future growth drivers
4Summary
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Top
#1
Market leader in amino acids for animal nutrition
>90%
Direct sales to customers Global production
setup on
4
continents
Feed supplementation with DL-Methionine saves
~23t
CO
2by emitting only 1t in production
Business at a glance
Preferred partner for sustainable and healthy animal nutrition products and solutions
>6%
Market growth for
methionine
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Amino acids
The building blocks of life
Proteins
• Fulfill vital tasks in the body
• e.g. building up muscles tissue, digesting food, contracting muscles, enabling immune system, etc.
20 amino acids
8 essential amino acids
e.g. Methionine, Lysine, Threonine
12 nonessential amino acids made up from
Produced by the human body itself Have to be ingested
as part of a healthy diet
e.g. via meat consumption
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Unselective
= Inefficient
Law of the minimum
Amino acids help to utilize feed efficiency
Law of the minimum Growth is controlled not by the total amount of resources available, but by the scarcest resource
Supplementing DL-Methionine
Selective
= Efficient
Using only conventional feed
resources
(e.g. soybeans)
The amino acid methionine limits
the growth of poultry
Amino acids
help to balance the amino acid composition in animal feed in such a way that the whole feed can be utilized efficiently be livestock
Balanced nutrition
• Reduced amount of feed needed (cost)
• Healthier livestock
• Reduced waste Example poultry nutrition
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Balanced Nutrition
Typical animal feed ingredients show imbalances in amino acid profiles
Balanced animal nutrition
Source: Evonik (AMINODat 2006)
52
37
77
44
98
118
87 70
97
107
59
93
0 100
Methionine Lysine Threonine
AMINODat®
Wheat Soy Peas Rape seed
Significant efficiency potential from use of amino acids Nutritional demand of broilers
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#1 Others
GBT Novus
CJ
Adisseo
Ajinomoto Feed additives market by product
(in € bn, 2013)
Amino acids market by company
(in € bn, 2013)
Others Organic
acids Vitamins
Minerals
Amino acids
• Amino acids making up biggest part
• Expected growth rate for amino acids:
7-9% (CAGR 2010-2017)
Global amino acids market
Evonik with market leading position
• Evonik with market leading position
• Sole supplier offering the first four limiting amino acids
• Strong competence in both chemical and biotechnology fields
(e.g. Methionine, Lysine)
€19 bn
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Global meat demand
Strong growth in global meat demand even outpaced by feed amino acids
• Growth driven by socio-demographic megatrends
• Poultry by far strongest growing type of meat (CAGR ~3%)
• Clear efficiency and hence cost and ecological advantages of amino acids vs. traditional feed resources
• Support from professionalization of farming and meat production
0 2.000 4.000 6.000
Lysine Methionine kt
2018 2016
2014 2012
2010 2008
2006
2004 2020
>8%
6-8%
CAGR
0 100 200 300 400
2020 2003
Developing countries
Developed countries
CAGR
(world)
1.8%
2.7%
Strong increase in global meat consumption Growth in amino acids even stronger
0.8%
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Increased efficiency &
quality of animal nutrition
Reduced feed costs for our customers Improved animal health
Increased sustainability of meat production
Feed supplementation with DL-Methionine saves about:
Efficient animal nutrition
Efficient animal nutrition
Answer to rising meat demand and scarce resources
With supplementing amino acids
-25%
Without supplementing amino acids
Use of antibiotics / kg salmon
140 g 0.08 g
1990
2009 -94%
23t
CO2
26t
Ammonia
7t
Nitrate
by emitting only 1t in production
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Table of contents
1
Facts & figures
2 Key success factors 3
Future growth drivers
4Summary
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Key success factors for efficient animal nutrition
Global market access
Leading cost position
System solution offering
Innovation leadership
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Mobile, Alabama, USA
Antwerp, Belgium
Wesseling, Germany
Singapore (H2 2014)
•
Global production setup•
Plants located strategically at logistics hubs•
Proximity to customers•
Favorable raw material access•
All facilities are world-scale sized•
Dedicated sales forces in more than 120 countries•
Direct sales to customers (>90%)•
First mover in emerging countriesCastro, Brazil (H1 2015)
Volgodonsk, Russia (H2 2015) Blair,
Nebraska, USA
Methionine production (Total Capacity 2013: ~430 kt, + 150 kt by Singapore plant, ramping-up since Nov. 2014) Lysine production (Capacity 2013: ~300kt)
Global market access
Global production setup and strong local
sales and service network
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•
60 years of experience and process know-how•
Continuously optimized production process•
Production fully backward integrated•
Feedstock security with long-term contracts•
High supply reliability for our customers•
Economies of scale with world-scale plants•
Sales, marketing and distribution synergies from offering several amino acidsRaw materials
Methionine specific
intermediates1 Methionine
Propene
Methanol Sulfur
Methane Ammonia
Acrolein
Hydrocyanic acid MMP
MetAMINO® Methyl mercaptane
Implemented Innovations:
•
Economy of scale of 150 kt plant-Verbund•
New highly efficient energy integration concept•
Utilization of proprietary process innovation in green-field set-upEvonik production set up
Advantages of Evonik setup in amino acids
Example: Unique setup of new Singapore Methionine complex
Leading cost position
Excellence in process technology and
significant economies of scale
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Customer Value Chain
Genetics/Reproduction Feed manufacturing Livestock production Consumption
Hatchery Breeding Feed formulation Feed mill management/ Nutrition/
Quality control Quality control
Livestock production management Retail/Consumer
Quality management
Purchasing Quality control
Evonik services
System solution offering
Tailor-made services along the value chain
of our customers
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Helping our customers to meet their sustainability challenges
All processing steps included
AMINOFootprint®: Easy-to-use software
Certified Information Sound decision
CO2 GWP
SO2 Acidification
PO4 Eutrophication
Certified results Differentiation One-to-one use in further processing steps Data
For all feed ingredients
Transport scenario
Interactive world map
Default diets
Customized by region
Diet comparison
Identify sustainable diets
Certified Input Certified data Certified information
System solution offering
Tailor-made services along the value chain
Example: AMINOFootprint
®- sustainabilty tool
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DL-Methionine for aquaculture® and AQUAVI®Lys for fish
Innovative Methionine source for crustaceans:
AQUAVI®Met-Met Key advantages:
Highly efficient substitution for traditional protein sources (fishmeal)
Scientifically proven performance for many aquatic species
Appropriate particle size distribution and low water solubility
2020 (projection)
51%
49%
70%
30%
2010
aquaculture wild catch
Dynamic of the Aquaculture Market New products for aquaculture
Innovation leadership
First amino acid player to offer a tailored
solution for efficient nutrition of crustaceans
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Table of contents
1
Facts & figures
2
Key success factors
3 Future growth drivers 4Summary
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Leveraging effect of
“next limiting” amino acids
Advantage of full amino acids portfolio Driving market growth through leveraging effect
Solution provider for sustainable nutrition
First mover and preferred development partner for new applications Methionine
Lysine New animal species &
new applications
Growing within the amino acid core Extending into next limiting amino acids and new application fields and species
Introducing + 1 kt Tryptophan
+ 2 kt Methionine + 7 kt Lysine + 3 kt Threonine
• Example Tryptophan:
• Sustainable nutrition concepts require further amino acids
• Aquaculture:
• AQUAVI®Met-Met
• AQUAVI®Lys
• Dairy Cows:
• Mepron®
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• Leveraging our strength of the amino acid core
• Drive differentiation to add value for customers and markets
• Generate additional growth beyond strong amino acid core
Growth Agenda
Portfolio strategy for animal nutrition
Future growth in the animal nutrition business
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Table of contents
1
Facts & figures
2
Key success factors
3Future growth drivers
4 SummaryDiese Markierung nach erfolgreicher Anwendung dieser Master löschen.
Summary
The preferred partner for the development of solutions for sustainable animal nutrition
• Market leader and sole supplier of the first four limiting amino acids with:
• Close customer partnerships & joint innovation
• Growth projects around the globe
• Well positioned to drive future growth by:
• Constantly extending the business into next limiting amino acids and new application fields and species
• Generate additional growth beyond strong amino
acid core
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Backup
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Strategic rationale
Investment program
Start-up of new Methionine complex in Singapore
Q4 2014 Start-up on time and on budget 2010-2012
Market analysis and investment decision
2012-2014 Construction Phase
• Methionine complex with a capacity of 150 kt and >€500 m investment volume
• Fully integrated facility, with all major precursors from in-house production
• New standards in production efficiency (raw materials, energy and labor productivity)
“Me5 Singapore” project overview
• Complete global asset footprint – perfect supplement to production sites in Europe and the United States
• Expand on cost and technology leadership
• Proximity to growth markets – excellent logistics hub for reaching all destinations in Asia
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“AQUAVI® Met-Met”, Antwerp
→ Methionine specialty for aquaculture applications
Further projects in amino acids
Support strong growth in the amino acid core business
Biolys ®, Brazil
→ 100 kt Biolys® site in Parana
→ Co-location Cargill corn mill 2
Biolys ®- JV, Russia
→ 100 kt Biolys® site in Volgodonsk, Rostov Prov.
→ C-Source (wheat) back-integration 3
1 • Unique product for high growth
market aquaculture
• Sustainability as growth driver
• Local production hub in Latin Am.
• Attractive feedstock availability (Sugar, Corn)
• Production hub in emerging Eastern Europe
• Attractive feedstock availability (Wheat)
Projects in execution Strategic rationale