Slide 1: Roadshow Presentation 9M 2014
ROADSHOW PRESENTATION 9M 2014 October 23, 2014
Slide 2: Table of Contents
Table of Contents Table of Contents 2 1. 9M 2014 presentation 3-9 2. Novozymes Overview 10-16 3. Strategy 17-25 4. Segmental Overview 26 Household Care 27-30 Food & Beverages 31-32 Bioenergy 33-36 Agriculture & Feed 37-42 Technical & Pharma 43-45 5. Sustainability 46-50 6. Financial Review
Slide 3: Quarterly Results
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW QUARTERLY RESULTS QUARTERLY RESULTS • OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Slide 4: 9M 2014 Summary
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW 9M 2014 Summary Sales growth on track Sales and organic growth • 8% organic sales growth 9M 2012 – 9M 2014 DKKm • 3 %-points negative impact from currencies 10% 9.600 8% 7% • Sales growth as ex
Slide 5: Sales & Markets
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW Sales & Markets 9M 2014 sales: DKK +5%, LCY +8%, organic +8% Sales by industry, DKKm 9M 2014 9M 2013 Q3 2014 sales: DKK +8%, LCY +9%, organic +9% • Household Care: Sales as expected; Q3 gro
Slide 6: Business Development Update
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW Business Development Update Positive developments within Biomass conversion • Novozymes recognized as world • POET-DSM, Abengoa and Granbio started production in Q3. leader for corporate action
Slide 7: R&D Activity update
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW R&D Activity update New innovation in Q3 Ramp-up in BioAg R&D • Household Care: Medley®; a blended formulation that enables • Good progress in the collaboration easier application of more enzym
Slide 8: 9M 2014 Financial Performance
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW 9M 2014 Financial Performance Strong financial performance in 9M’14 2014 2014 Realized Outlook Outlook • +1 %-point underlying improvement in gross margin Key financials 9M 2014 Oct. 23 Aug. 14
Slide 9: Overview
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW INVESTOR PRESENTATION OVERVIEW QUARTERLY RESULTS • OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Slide 10: Novozymes – The World Leader in Bioinnovation
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW Novozymes – The World Leader in Bioinnovation Who are we? Founded 1925 Listed 2000 Global: +6,000 employees, 700 products in 140 countries Ticker NZYM B Exchange Copenhagen Market Cap* US$ 15bn
Slide 11: Experienced Leadership Team Exploring Growth & Value Creation Opportunities
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW Experienced Leadership Team Exploring Growth & Value Creation Opportunities Peder Holk Nielsen Thomas Videbæk Per Falholt Benny Loft Thomas Nagy Andrew Fordyce Per Falholt Peder Holk Nielsen An
Slide 12: Delivering Tomorrow's Solutions Today
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW Delivering Tomorrow’s Solutions Today Delivering solutions from Helping companies This unique approach nature: become more efficient: leads to: food applications, detergents, energy efficiency,
Slide 13: Uniquely Diversified Group - Creates Synergies and New Opportunities
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW Uniquely Diversified Group - Creates Synergies and New Opportunities • Unique biotech-focused business with a strong legacy of delivering growth, earnings, and cash flow • ~13-14% of annual sal
Slide 14: Diversification in Revenue Streams Underpins the Company's Strong Financial Position
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW Diversification in Revenue Streams Underpins the Company’s Strong Financial Position • Sales FY 2013 of DKK 11.7 bn (USD ~ 2.1 bn) • Strong profitability, 24.7% in EBIT margin FY 2013 • ROIC of
Slide 15: Global Production and R&D Setup
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW Global Production and R&D Setup Milwaukee, Wisconsin BioAg production Nottingham, England Bagsværd, Denmark Saskatoon, Canada Biopharma production Headquarters BioAg production (Albumin
Slide 16: Strategy
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW INVESTOR PRESENTATION STRATEGY QUARTERLY RESULTS • OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Slide 17: Undisputed Market Leader Expanding Enzyme Application
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW Undisputed Market Leader Expanding Enzyme Application Global enzyme market value: 2000: 2013: Global enzyme market value USD ~ 2.0bn USD ~ 3.8bn 2013: USD ~ 3.8bn Novozymes Rest of Novozymes Re
Slide 18: Multiple Drivers Create a Sustainable Business with Significant Growth Potential
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW Multiple Drivers Create a Sustainable Business with Significant Growth Potential Drivers Ambition • Energy efficiency Long-term financial targets: • Cost/performance > 10% sales growth • Waste
Slide 19: How Do We Get To +10% from 2015?
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW How Do We Get To +10% from 2015? • History shows potential to grow 10% from a diversified set of industries, but not consistently • Consistent performance in existing business will lay foundati
Slide 20: 1. Drive Innovation – Because Innovation Drives Top-Line Growth
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW 1. Drive Innovation – Because Innovation Drives Top-Line Growth • Achieving growth through R&D investment remains a fundamental priority • >50 new product in the last 5 years, ~100 active proje
Slide 21: 2. Expand Opportunities; Developing new technology and business platforms
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW 2. Expand Opportunities; Developing new technology and business platforms Continued development in …creates opportunities to develop our technology base… new business platform Biomass Strain de
Slide 22: Business Development Nurtures Tomorrow's Business for Novozymes
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW Business Development Nurtures Tomorrow’s Business for Novozymes • Responsible for new business areas and Novozymes’ entire pipeline prioritization • Close coordination on pipeline, resource all
Slide 23: 3. Enzyme Technology Improves Profitability
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW 3. Enzyme Technology Improves Profitability • Focused on improving margins through sophisticated technological solutions • Achieved sales CAGR of 7% since 2000 with improving margins • Roughly
Slide 24: Cash Generation, Use, Capex and Future Priorities
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW Cash Generation, Use, Capex and Future Priorities – DKK billion Cash generation has tracked EBIT Cash for growth and shareholders 3,5 4,0 3,0 3,5 3,0 2,5 2,5 2,0 2,0 1,5 1,5 1,0 1,0 0,5 0,5 0,0
Slide 25: Segmental Overview
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW INVESTOR PRESENTATION SEGMENTAL OVERVIEW QUARTERLY RESULTS • OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Slide 26: Household Care Overview
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW Household Care Overview Household Care (36% of 2013 sales) Household Care Sales Sales DKK LCY growth 4.5 00 40% 4.222 4.2 50 3.973 4.0 00 35% 3.514 3.7 50 Laundry & dishwasher detergents Applic
Slide 27: Technology Adoption – Unique and Synergistic Enzyme System
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW Technology Adoption – Novozymes Goes to Market With a Unique and Synergistic Enzyme System Performance Enzyme synergy Protease Amylase Lipase Cellulase Mannanase Pectinase Sum Multi- Proteins S
Slide 28: Enzyme Systems are an Important, Yet Still Relatively Low Part of Detergent Raw Material Costs
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW Enzyme Systems are an Important, Yet Still Relatively Low Part of Detergent Raw Material Costs Raw mat. cost distribution in Raw mat. cost distribution top-tier powder detergent in top-tier liq
Slide 29: Three Game Plans Drive Growth in Household Care
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW Three Game Plans Drive Growth in Household Care Enzyme inclusion Drive innovation & new standards Drive innovation and set new standards • +50 years experience • 6 enzyme classes, 23 product li
Slide 30: Food & Beverages Overview
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW Food & Beverages Overview Food & Beverages (27% of 2013 sales) Food & Beverages Sales Sales DKK LCY growth 4.0 00 40% 3.7 50 Baking / Starch conversion / Brewing / 35% Application 3.5 00 Bevera
Slide 31: Fill and Manage the Pipeline - Enzyme Innovation to the Food Industry
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW Fill and Manage the Pipeline - Enzyme Innovation to the Food Industry Informed New economies Health & Wellbeing Convenience consumption and urbanization Reinforce customers’ Reduce costs Apply
Slide 32: Bioenergy Overview
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW Bioenergy Overview Bioenergy (16% of 2013 sales) Bioenergy Sales Sales DKK LCY growth 2.5 00 70% 2.2 50 60% Application Corn ethanol / Biomass conversion 2.0 00 1.846 1.909 1.782 1.748 50% 1.7
Slide 33: R&D Activity Update: Bioenergy Strategy Overview
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW R&D Activity Update: Bioenergy Strategy Overview Grain Ethanol (1G) Biomass Conversion (2G) New Opportunities - Drive more yield - Enable commercialization - Explore biodiesel and sugar cane 3.
Slide 34: Production of Biofuels and Beyond
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW Production of Biofuels and Beyond Raw material Production process End product Sugarcane Extraction Ethanol Co-products Bagasse; Energy Fermentable sugar Classical Butanol Milling Cooking Enzyme
Slide 35: Many More Potential Customers Are Interested in Biomass Conversion Today
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW Many More Potential Customers Are Interested in Biomass Conversion Today Than 5 Years Ago • The number of projects choosing enzymatic hydrolysis conversion has increased from 7 in 2008 to 26 in
Slide 36: Agriculture & Feed Overview
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW Agriculture & Feed Overview Agriculture & Feed (14% of 2013 sales) Agriculture & Feed Sales Sales DKK LCY growth 2.0 00 88% FEED: Monogastric animals / Substituting 1.7 50 1.668 78% phosphate /
Slide 37: Agricultural Biologicals is a Niche Market with Significant Opportunities
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW Agricultural Biologicals is a Niche Market with Significant Opportunities AG BIOLOGICALS MARKET1 AG MICROBIALS MARKET1 MARKET SEGMENTED BY PRODUCT CLASS MARKET SEGMENTED BY CROP Microbial P
Slide 38: Combination of Novozymes and Monsanto Capabilities Establishes Microbial Platform
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW Combination of Novozymes and Monsanto Capabilities Establishes Industry's Most Advanced Microbial Platform ESTABLISHED MICROBIAL LEADERSHIP • World leader in microbial technology; discovery, de
Slide 39: Power of Microbial Technology: Proven Microbial Portfolio
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW Power of Microbial Technology: Novozymes’ Proven Microbial Portfolio CURRENT PRODUCT PORTFOLIO 1 2 Biocontrol Inoculants products Nutrient Nitrogen Biofungicides Bioinsecticides efficiency fixa
Slide 40: Bridging BioAg Revenue in The BioAg Alliance
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW Bridging BioAg Revenue in The BioAg Alliance 2013 revenue In + Deferred 2014 before Alliance Alliance income revenue *excl. growth Monsanto Gap to Sales & Deferred income share of 2013 distribu
Slide 41: Attractive Value Propositions in Animal Feed
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW Attractive Value Propositions in Animal Feed Phytase – phosphate • Only 3-30%* of phosphate in feed is available to the animal • Ronozyme NP® releases half of the phosphate bound – Ronozyme HiP
Slide 42: Technical & Pharma Overview
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW Technical & Pharma Overview Technical & Pharma (14% of 2013 sales) Technical & Pharma Sales Sales DKK LCY growth 1.0 00 45% TECH: Textiles / Leather / Pulp & Paper Application PHARMA: Albumin /
Slide 43: Pharma Overview. Four technology offerings
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW Pharma Overview. Four technology offerings The classic pharma value chain Drug Sales and Drug Discovery Manufacturing Distribution Development Marketing Novozymes Existing business Emerging bus
Slide 44: Multiple opportunities and potential revenue streams in Pharma from Albumin
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW Multiple opportunities and potential revenue streams in Pharma from Albumin 1 Veltis® pipeline – Drug candidates using Novozymes ‘albumin technologies for half-life extension Partner Drug PI PI
Slide 45: Sustainability & Corp. Governance
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW INVESTOR PRESENTATION SUSTAINABILITY & CORP. GOVERNANCE QUARTERLY RESULTS • OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Slide 46: Three-pronged Core of Novozymes' Sustainability
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW Three-pronged Core of Novozymes’ Sustainability Economic growth Use of natural resources It’s all in the numbers Scientific - All products are life-cycle assessed (LCA) Bioinnovation approach -
Slide 47: Remuneration Principles for Executive Leadership
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW Remuneration Principles for Executive Leadership • Novozymes’ principles for Executive Leadership remuneration ensure close alignment with long-term shareholder interests, links remuneration to
Slide 48: Reducing CO2 Emissions Together with our Customers
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW Reducing CO2 Emissions Together with our Customers • In 2013, Novozymes helped customers save 52 million tons of CO2 through the application of Novozymes’ products, equivalent to taking 20 mill
Slide 49: Sustainability Performance and Targets
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW Sustainability Performance and Targets 2013 2013 2014 Targets targets realized target Long-term sustainability targets Water efficiency (index 2005) 35% 33% 34% • Be recognized as a global lead
Slide 50: Financial Review
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW INVESTOR PRESENTATION FINANCIAL REVIEW QUARTERLY RESULTS • OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Slide 51: Historical Performance Demonstrates Track Record of Delivery
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW Historical Performance Demonstrates Track Record of Delivery 2000-2013 sales CAGR of ~7% 58% Gross margin 57,2% 20% 15.000 56,2% Sales DKKm Growth 55,6% 16% 12.000 56% 57,2% 12% 9.000 53,3% 53,
Slide 52: Low Exposure to Raw Material Fluctuations
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW Low Exposure to Raw Material Fluctuations Split of COGS • Factors impacting COGS development: • Productivity improvements, input prices, currency 35% • Note: accounting practice implies that 45
Slide 53: Dividend and Stock Buyback History
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW Dividend and Stock Buyback History • 2013 dividend per share DKK 2.50, up 13%, payout ratio DKK million Dividend / Buybacks Dividend per 35.7% share, DKK Dividend Buyback DPS • Expected buyback
Slide 54: Shareholder Distribution
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW Shareholder Distribution B shares listed in Copenhagen Shareholder distribution of under the symbol “NZYM B” B common stock* • Two share classes; A and B shares Rest of • B shares listed in Cop
Slide 55: Investor Relations Contacts
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW Investor Relations Contacts Thomas Steenbech Bomhoff Martin Riise Klaus Sindahl Mobile (DK):+45 3077 1226 Mobile (USA): +1 919 649 2565 Mobile (DK): +45 5363 0134 E-mail: tsbm@novozymes.com Mob
Slide 56: Novozymes – Rethink Tomorrow
novozymes’ Rethink Tomorrow