Novonesis A/S: A Compelling Case for Growth and Dividend Resilience Amid Strategic Expansion

In the ever-evolving biosolutions sector, Novonesis A/S (ISIN: DK0060336014, symbol: NSIS B) has emerged as a standout performer, blending robust operational execution with a clear-eyed vision for the future. The company's first-half 2025 results, coupled with its ambitious 2030 strategic targets, paint a compelling picture of a business poised to deliver both growth and income for long-term investors. Let's dissect the numbers, the strategy, and the dividend story to assess why Novonesis could be a high-conviction dual-play stock.

H1 2025: A Masterclass in Margin Expansion and Revenue Growth

Novonesis's H1 2025 performance was nothing short of stellar. Total net sales surged to EUR 2,096.1 million, a 9% organic growth year-over-year, driven by strong demand in both its Food & Health and Planetary Health Biosolutions divisions. Emerging markets contributed 12% organic growth, outpacing the 8% in developed markets, a trend that aligns with global demographic and consumption shifts. Pricing power, while modest at 1 percentage point of total growth, underscored the company's ability to navigate inflationary pressures.

But the real magic happened on the bottom line. Adjusted EBITDA hit EUR 783.4 million, with a margin of 37.4%—a 210-basis-point improvement compared to H1 2024. This margin expansion was fueled by economies of scale, cost synergies (now at 100% run rate), and disciplined cost management. Even with currency headwinds, the company's adjusted EBITDA margin remained resilient, a testament to its operational rigor.

Net income followed suit, with adjusted net profit of EUR 365.9 million, up 23% year-over-year. Free cash flow before acquisitions reached EUR 307.1 million, providing ample flexibility for reinvestment or shareholder returns. These metrics highlight a company that's not just growing sales but doing so profitably—a rare and valuable trait in today's market.

2030 Strategic Targets: A Roadmap for Sustained Outperformance

Novonesis's “GROW” strategy, unveiled in August 2025, sets ambitious yet achievable targets for the next five years. The company aims for organic sales CAGR of 6–9% through 2030, driven by volume growth and pricing (1–2% annually). Emerging markets, already outperforming, are expected to remain a key growth engine, while both divisions—Food & Health and Planetary Health Biosolutions—are aligned to deliver within the target range.

Profitability targets are equally impressive. The company is eyeing an adjusted EBITDA margin of ~39% by 2030, up from 37.4% in H1 2025. This assumes full realization of synergies, innovation investments, and continued cost discipline. Additionally, Novonesis aims for an adjusted ROIC of ~16% by 2030, a significant leap from the 8.3% pro forma ROIC in 2024. These metrics suggest a business that's not only scaling but doing so with increasing efficiency.

The dividend story, however, requires closer scrutiny. Novonesis targets a 40–60% payout ratio of adjusted net profit, balancing shareholder returns with reinvestment. The interim dividend of 2.25 DKK (EUR 0.30) for H1 2025, representing 65.1% of adjusted net profit, already hints at a generous but sustainable payout. Yet, the 1-Year Payout Ratio of 124.75% in 2024 raises questions about short-term sustainability. However, when smoothed over three years, the ratio drops to 63.32%, indicating a more balanced approach.

Dividend Resilience: A Double-Edged Sword?

Novonesis has maintained a 25-year dividend continuity streak, with a current yield of 1.48% as of August 2025. While the 1-Year Payout Ratio exceeds 100%, this is partly due to short-term earnings volatility rather than structural issues. The company's free cash flow of EUR 307.1 million in H1 2025 and a NIBD/EBITDA ratio of 2.1x provide a buffer to support dividends even during downturns.

Critically, Novonesis's share buyback program (EUR 100 million completed in June 2025) and strategic acquisitions, such as the dsm-firmenich Feed Enzyme Alliance, signal a commitment to enhancing shareholder value. These moves also diversify revenue streams, reducing reliance on any single market or product.

Risks and Considerations

While Novonesis's trajectory is impressive, investors must remain vigilant. Currency fluctuations and macroeconomic headwinds could pressure margins, particularly in emerging markets. Additionally, the high 1-Year Payout Ratio necessitates confidence in the company's ability to sustain earnings growth. However, the alignment of current performance with 2030 targets—particularly the 39% EBITDA margin—suggests management is on track to deliver.

Investment Thesis: A Dual-Play for Growth and Income

Novonesis A/S checks all the boxes for a high-conviction investment:
1. Revenue and margin growth: Strong organic sales and EBITDA expansion demonstrate operational excellence.
2. Strategic clarity: The 2030 targets are ambitious yet achievable, with clear metrics for success.
3. Dividend resilience: A long-standing payout history, combined with a capital allocation model that prioritizes sustainability, makes it a compelling income play.

For investors seeking exposure to the biosolutions sector, Novonesis offers a rare combination of growth and income. While the stock's 1.48% yield may not be eye-popping, its 10-year average of 1.46% and dividend continuity provide a stable foundation. Pair this with double-digit EBITDA growth and a debt-to-EBITDA ratio of 2.1x, and Novonesis emerges as a well-balanced, long-term opportunity.

Final Takeaway

Novonesis A/S is more than a “buy-and-hold” stock—it's a business with a clear roadmap to outperform. Its ability to scale profitably, coupled with a disciplined approach to capital allocation, positions it as a leader in the biosolutions sector. For those willing to look beyond short-term volatility, Novonesis offers a compelling case for growth and dividend resilience. As the company marches toward its 2030 targets, the question isn't whether it can deliver—but how much more it might exceed expectations.

Investment Advice: Consider a position in Novonesis A/S for a diversified portfolio seeking exposure to high-margin biosolutions growth and sustainable income. Monitor quarterly free cash flow and EBITDA margin trends to gauge progress toward 2030 goals.