12 May 2021 - Just over a year ago, Dan Meagher officially took the helm as CEO and President at Novus International, with plans to lead the company to further success in the animal nutrition space with a clear trajectory in the gut health segment.
A few months later, in July 2020, after a period of evaluation and understanding of what it will take to become a gut health leader, Novus implemented a new corporate structure and established a regional operating model, aimed at creating a leaner and more agile setup with increased customer proximity. These changes are part of a multi-phase strategic plan called “Project Destiny.”
Project Destiny is above all a means to reduce complexity, simplify processes, as well as provide higher autonomy and accountability. It is the name Novus has given to its strategy of focusing on core businesses, technologies, and competences.
Providing an update on the project, Meagher last week told Feedinfo that the company’s strategy revolves around the HMTBa molecule (found in the company’s methionine product, as well as its organic trace minerals, nutritional feed acids, and other solutions).
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“We have a powerful basis with the HMTBa molecule,” Meagher said, adding that the versatility of the molecule will allow his company to further understand animal gut health, fuel the in-house R&D pipeline, and study potential new applications by expanding on synergies across platforms and species. “We are going to continue to look at technologies that we may want to develop ourselves or bring in,” he added. |
Dan MeagherThe company is also looking at strengthening its pipeline of development by seeking new technologies. One example is Novus’ ongoing enzyme and biotechnology partnership with Agrivida (a sales and R&D cooperation announced in January 2021), which in Meagher’s words provides another “pathway”.
And there are other Project Destiny-related R&D collaborations Novus is working on. And although Meagher did not disclose any names, he said that they complement the company’s existing core platforms.
Meagher also indicated that agtech is a field which has a lot of potential, notably diagnostics and digital.
Commenting on the agtech opportunity, Meagher said: “The amount of money being invested into the early stages of agtech development is huge, but of course commercialisation is always a challenge. With our background and experience, I think there is a big opportunity for us to add agtech to our framework.”
Timeline?
Novus will continue to implement the new strategic direction over the coming months and years.
Asked if Novus has a specific timeline to execute Project Destiny, Meagher said there is nothing definite. However, contrary to some other corporate reorganisation strategies, Destiny is tweaked on an ongoing basis, thus making it more flexible and adapted to the evolution of the marketplace, according to the Novus CEO.
“We will never change for the sake of change,” he commented.
And, even with last week’s leadership re-organisation (including an appointment of a Chief Innovation Officer and the creation of a new Chief Strategic Marketing and Technology Officer role), Meagher said these latest moves are not another restructuring but instead adjustments to point Novus in a more collaborative and sustainable direction.
“A lot has happened in the first year and I am pleased with the new structure,” Meagher said, adding that the company owners, Mitsui & Co. (U.S.A.), Inc. and Nippon Soda Co., Ltd. are equally pleased.
“We have helped them understand the importance of gut health in animals, and they like what they have seen,” Meagher said.
From the production and operational standpoint, Meagher added that there is no doubt that the company’s facilities will benefit from the strategic refocus.
Although he did not comment on any specific capacity plans, he did say that one immediate goal for the firm is to grow globally with its specialties offering and cashing in on the continued adoption of Novus’ products in Asia and in other significant markets.
Selling Non-Core Platforms
Project Destiny has already led to some business restructuring, notably with the sale earlier this year of the feed quality and pigments business to EW Nutrition, which was deemed non-core. The sale included a few brands and a production facility in Constanti, Spain.
“We are pleased to have found a committed owner for these platforms so that they may continue bringing value to the industry,” Meagher said in early-February. “This event is a significant milestone in our Project Destiny journey.”
Meagher confirmed that the proceeds of the feed quality and pigments business sale will be used in alignment with Destiny, which he expects will be reinvested in new technologies.
“What we’ll do isn’t yet defined,” he told Feedinfo. “But we want to reutilise the proceeds in what’s next. But of course, we will have to make the right business decisions and have the support from our owners.”
When asked if Novus would consider selling other operations that are non-core, the CEO answered affirmatively.
“We are reducing complexity and we don’t want to dilute our focus on what isn’t core,” he said, adding that ideally, every platform should fit the core, but if one turns out to be not profitable, less competitive, or doesn’t demonstrate the added value sought after, then the company will have to “deal with it.”
Meagher, however, shared that his company is close to announcing something regarding a possible sale of a non-core platform, saying that negotiations are currently taking place, and that the market may find out what the outcome is in the next 3-4 months.
Methionine is Core
As Meagher explained, Novus has a strong foundation with the HMTBa molecule. But given the commoditised nature of the methionine market and Novus’s exposure to its volatility; especially in a year which included COVID-19, hurricanes in the Gulf Coast region, and on top of that the severe US winter storms, we asked him if Project Destiny could eventually move forward without the ALIMET methionine business.
In response, he said: “Taking methionine away from the core platforms is not going to happen.”
“Methionine is still an extremely valuable input in animal production and HMTBa differentiates us in that market,” he added. “We have a great asset and there will be opportunities to debottleneck and improve cost structure. This year was a challenge, but we have proven to be resilient. We have no intentions of exiting the methionine business.”
The priority for Novus in methionine, according to Meagher, is to re-emerge from the past year’s challenges and keep track of market conditions. He reiterated that there will be opportunities moving forward to improve the existing business structure and improve cost efficiency in order to stay competitive.
And asked about a possible resurrection of ‘Project Newton’ – Novus’ plan to expand methionine capacity in Calhoun County, Texas, which was discontinued in April 2019 – or about a similar new factory project, Meagher stressed that it wouldn’t be in the company’s best interest to do a new methionine project like Project Newton.
“I don’t see a project like Newton being brought back to the table,” he said.
“We’ve got a good asset with additional capacity opportunities right now in Chocolate Bayou, Texas,” he added. “I like where we are today.”
