Our long-term targets guide us toward our overall goal of helping the world become more sustainable, at the same time as ensuring Novozymes’ continued growth and value creation.
Balancing financial, social and environmental aspects
Novozymes seeks to generate economic, environmental and social value. This is the triple bottom line approach we have always taken and which is engrained in our purpose, strategy and long-term targets. The triple bottom line approach ensures that business decisions balance financial, social and environmental considerations, always keeping in mind the best interests of our stakeholders.
Long-term sustainability targets
We launched our six long-term sustainability targets in 2015, inspired by the UN’s 17 Sustainable Development Goals (SDGs)The UN Sustainable Development Goals (SDGs) are an intergovernmental set of 17 aspirational goals with 169 targets. The goals were officially implemented on September 25, 2015.. The goals form the blueprint for a better and more sustainable future for all. They address global challenges such as widespread poverty and hunger, inequality, climate change and water scarcity.
The SDGs encourage global businesses, national governments and wider society to use and develop solutions that contribute toward sustainable growth. Novozymes was one of the first companies to link its business targets to the SDGs. The opportunity to provide solutions to these global challenges translates into business opportunities for Novozymes and strong partnerships with like-minded stakeholders.
Long-term financial targets
Novozymes’ long-term financial targets expire at the end of 2019. They reflect our commitment to deliver economic value through organic sales growthSales growth from existing business, excluding sales from business acquisitions and divestments, measured in local currency. at an attractive earnings level, while investing sensibly to drive additional long-term profitable sales growth. Delivering high economic value ensures that we are able to continue investing in innovation and driving a sustainability agenda. Growing organic sales is a priority, because only by selling more of our solutions will we achieve the sustainable impact we strive for and so live up to our purpose.
We continue to invest in strengthening our leadership position within industrial biotechnology and in leveraging the potential of our innovation pipeline (see Business model). From the perspective of profitability and return on capital, Novozymes’ other two long-term financial targets are EBIT marginEarnings before interest and tax as a percentage of revenue. of 26% or above and Return on invested capital (ROIC)Adjusted operating profit (NOPAT) after tax as a percentage of average invested capital. EBIT is adjusted for net foreign exchange gains/losses and share of result in associates. including goodwill of 25% or above (before the implementation of IFRS 16 Leases). The ROIC target excludes the impact of potential acquisitions.
For 2019 specifically, we expect to increase organic sales by 3-6%. Growth comes from innovation and increased market penetration, particularly in the emerging marketsMarkets that are becoming more advanced, usually by means of rapid growth and industrialization.. New game-changing solutions, such as freshness in laundry, Balancius™ for feed and yeastSingle-celled microorganism, part of the fungus kingdom. for Bioenergy, will make strong contributions to our topline – and make the world more sustainable. Although the outlook reflects uncertainties, our view on 2019 is positive.
ROIC is expected at around 23% (2018: 24.2%) in 2019. The average calculation of invested capitalTotal assets excluding interest-bearing assets and minority investments less interest-bearing liabilities. See "Invested capital" section. now includes a higher end balance following the major investment programs that we announced early in 2017. Adjusting for the implementation of IFRS 16 Leases, which has a negative impact of around 1 percentage point, the outlook for ROIC would have been around 24% for 2019.