Slide 1: Road Show presentation 9M 2015
Road Show presentation 9M 2015 October 22nd 2015
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation and its related comments contain forward-looking statements, including statements about future events, future financial performance, plans, strategies and expectations. Forward-looking statements are associated with words such as, but not limited to, "be
Slide 3: Table of contents
Table of contents 1. Latest results 4 2. Novozymes Overview 11 3. Strategy 18 4. Segmental Overview 30 - Household Care 31 - Food & Beverages 33 - Bioenergy 36 - Agriculture & Feed 40 - Technical & Pharma 46 5. Sustainability 49 6. Financial Review 54 3
Slide 4: Latest results
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Slide 5: 9M 2015 Summary
9M 2015 Summary 9M sales in line with expectations Sales and organic growth 9M 2013 – 9M 2015 • 4% organic sales growth driven by Agriculture & Feed and Food & DKKm Beverages. 14% growth in DKK. 3% organic sales growth in Q3 10% 8% 11.000 • Challenging market conditions in Household Care and Bioene
Slide 6: Ethanol plant economics per quarter
Ethanol plant economics per quarter – revenue, corn and EBITDA Assumptions: Yields: A changing environment • 100m gal/yr dry-grind ethanol plant • Ethanol: 2.8 gal/bushel for ethanol producers: • Equal production through quarters (25m gal) • DDGS: 16 lb/bushel • Avg. quarterly pricing used • Corn
Slide 7: Bioenergy Sales
Bioenergy Sales US quarterly ethanol volume growth rates and NZ organic growth U.S. ethanol volume growth Novozymes org. Bioenergy growth 40% 9M sales down 1% organically due to mix and share pressure – negative 6% in Q3 alone 30% Sales stabilized from Q2 to Q3, both in DKK and USD 20% 10% Innovatio
Slide 8: Sales & Markets
Sales & Markets 9M 2015 sales: DKK +14%, organic +4% Sales by industry, DKKm DKK growth /org. growth Q3 2015 sales: DKK +11%, organic +3% Household 3.484 Household Care: Strong growth from a number of important customers Care 3.262 +7%/1% across markets offset challenging LATAM, a dynamic U.S. mar
Slide 9: Business Development and R&D Update
Business Development and R&D Update Hyaluronic acid activities closed Acquisition of probiotic capabilities Two new products launched: • Commercial outlook no longer • Arkansas, U.S.-based company Bioenergy: Novozymes Liquozyme® LpH warranted ongoing investment specialized in probiotics for poultr
Slide 10: 9M 2015 Financial Performance & Outlook
9M 2015 Financial Performance & Outlook Strong earnings performance after 9M 2015 Key Realized 2015 Outlook 2015 Outlook • Gross margin up due to productivity improvements financials 9M 2015 Oct. 22 Aug. 6 • Disregarding the net one-time impact from The BioAg Alliance, Sales growth, org. +4% 4-5% 4
Slide 11: Novozymes Overview
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Slide 12: Novozymes – the world leader in bioinnovation
Novozymes – the world leader Founded 1925 in bioinnovation Listed 2000 Ticker NZYM B Who are we? Exchange Copenhagen Market Cap US$ ~15bn Long-term targets 8-10% organic sales 2015-2020: ≥ 26% EBIT margin ≥ 25% ROIC Global R&D intensive Profitable Majority owner Novo A/S ~6,500 employees, ~7,000 pa
Slide 13: Foundation ownership advocates long-term focus
Purpose of the Foundation: Foundation ownership advocates 1. provide a stable basis for the commercial and research activities of the companies long-term focus in Novo A/S 2. support physiological, endocrinological, metabolic and other medical research 3. contribute to the preservation and operation
Slide 14: Experienced Leadership Team
Experienced Leadership Team Per Falholt Thomas Nagy Peder Holk Nielsen Benny D. Loft Andrew Fordyce Thomas Videbæk Executive Vice President, Executive Vice President, President and CEO Executive Vice President, Executive Vice President, Executive Vice President, Research and Development Supply Opera
Slide 15: Uniquely Diversified Group
Uniquely Diversified Group – Creates Synergies and New Opportunities • Unique biotech-focused business with a strong legacy of delivering growth, earnings, and cash flow • ~14% of annual sales invested in R&D • Global provider of enzymes to all market segments creates global market leader position •
Slide 16: Diversification in Revenue Streams Underpins Financial Position
Diversification in Revenue Streams Underpins the Company’s Strong Financial Position Industry growth profiles and 5-yr org. CAGRs Region growth profiles and 5-yr LCY CAGRs 7% 11% 14% 38% 35% HHC 17% F&B Europe, Middle East and Africa Industry BioE Region North America A&F Asia Pacific 18% T&P 34%
Slide 17: Global Production and R&D Setup
Global Production and R&D Setup - 5 Core production plants and 3 satellites - 3 Main R&D centers and 4 satellites Core production plant Main R&D center Satellite production site Satellite R&D site 17 QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL
Slide 18: Strategy
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Slide 19: 15 years of innovation-driven returns
15 years of Historical performance 30% 14.000 Sales DKKm innovation-driven EBIT margin 28% returns R&D/Sales ROIC 12.000 26% Strong absolute returns since 2000 10.000 24% • 2.5x sales • 4x EBIT 22% 8.000 • 5x net profit • DKK ~30bn In operating cash flows 20% 6.000 18% Driven by topline and levera
Slide 20: Our set of competitive advantages
Our set of competitive advantages Others and captive Novozymes across the value chain has led to a 26% 48% unique market-leading position Scale Quality Sustainability High barriers • Production: 5 core plants in 3 regions • Superior logistical agility due to full • Triple bottom line • More than 7,0
Slide 21: Investing for long-term growth; People, CAPEX and M&A
Investing for long-term growth; People, CAPEX and M&A DKK ~11bn in CAPEX 2000-2014 2x employees – from 3,208 FTE to 6,454 FTE EMEA 7000 Latin America NA 2000-04 6000 Asia Pacific 2005-09 North America 5000 2010-14 Denmark (incl. EMEA) 4000 3000 APAC 2000 LATAM 1000 0 2000 2014 DKK ~5bn spent on ac
Slide 22: Growth until 2020 driven by established industries and platforms
Growth until 2020 expected to be driven by established industries with additional growth from platforms Novozymes’ organic growth average, Growth platforms - BioAg - Biomass Conversion - Animal Health & Nutrition Established industries - Household Care - Grain-based ethanol - Food & Beverages - Te
Slide 23: Strategy
23 QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Slide 24: Our new strategy puts partnerships front and center
Our new strategy puts partnerships front and center for success in creating impact 24 QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Slide 25: R&D spend
R&D spend We expect the 16% R&D costs DKKm 2.000 relative spend on R&D/Sales 1.800 R&D to fluctuate 15% 1.600 around 1.400 1.200 14% 1.000 of sales 800 This will allow us to continue the 600 trend of being the investment 13% leader in microbial technologies 400 and industrial enzyme innovation 200
Slide 26: R&D investments drive growth and technology leadership
R&D investments drive growth today and enhance technology leadership for long-term impact Established business areas Growth platforms BioAg Food & Household Grain-based Technical Biomass Animal Emerging Beverages Care ethanol industries Conversion Health & industries Nutrition Basic technologies
Slide 27: Developing new technology and business platforms
Developing new technology and business platforms Continued development …creates opportunities to in our technology base… develop new business platform Bio- Biomass Agriculture conversion Animal Molecular Bio-informatics Screening Industrial-scale Health & biology & Systems systems fermentation Nut
Slide 28: 3 levers to improve profitability
Fermentation technology Improve production strain Ability to produce more Optimize industrial production Process optimization Improve enzyme efficacy Protein engineering of – 3 levers to improves profitability enzymes per m3 fermentation tank through genetic engineering of Equipment optimization Inp
Slide 29: Financial priorities
Financial priorities; - Innovation, growth & shareholders 2015 to 8-10% ~14% ~8% 40% 2bn + Organic R&D CAPEX Dividend 2015 Initiatives & 2020: sales payout buyback returns growth ratio ROIC expected at ≥ 25%: Net-Interest-Bearing-Debt/EBITDA 1,0 NIBD DKKm 2.500 • Growth in net profit 0,8 2.000 0,
Slide 30: Segmental Overview
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Slide 31: Household Care Overview
Household Care Sales Sales DKKm ORG growth 4.222 4.353 Overview 3.324 3.514 3.973 13% 11% 7% 9% 4% of sales in 2014 2010 2011 2012 2013 2014 Current Trends Growth Drivers Growth Barriers Applications • Better-performing laundry • Innovation to raise detergent • Sustained low input costs that deterg
Slide 32: A strong portfolio of innovation with global relevance
A strong portfolio of innovation with global relevance – built over the last 50 years 300+ brands Albania, Algeria, Argentina, Australia, Austria, Bangladesh, Belarus, Belgium, Bolivia, Bosnia-Herz., Brazil, Bulgaria, Cameroon, Canada, Chile, Colombia, Costa Rica, Croatia, Cyprus, Czech. Republic, D
Slide 33: Large opportunities for increasing enzyme inclusion in every wash
In emerging as well as developed markets, we see large opportunities for increasing enzyme inclusion in every wash load Enzyme spend index per wash load 2008 2014 All European high-performance detergents contain enzymes. Over time, enzyme inclusion can increase with innovation 100 Average-performan
Slide 34: Food & Beverages Overview
Food & Beverages Sales Sales DKKm ORG growth Overview 3.033 3.186 3.190 3.278 2.850 12% 8% 3% 4% 1% of sales in 2014 2010 2011 2012 2013 2014 Applications Current Trends Growth Drivers Growth Barriers Baking / Starch conversion / • Growth in processed foods in • High raw material prices • Consumer
Slide 35: We cover a broad set of end markets and applications
We cover a broad set of end markets and applications – We operate in different parts of the value chain. Revenue-wise, the two parts are comparable Processing of Ag inputs Characteristics: Food products Characteristics: A global business with global Product-driven for developed solutions • Starch
Slide 36: Bioenergy Overview
Bioenergy Sales Sales DKKm ORG growth 2.270 Overview 1.846 1.909 1.782 1.748 19% 19% 12% 1% -9% of sales in 2014 2010 2011 2012 2013 2014 Current Trends Growth Drivers Growth Barriers Applications • Sustainable energy for • Political mandates to drive • An energy industry with vested Corn ethanol
Slide 37: Ethanol production and outlook in the U.S.
Ethanol production and outlook in the U.S. – Production has stabilized at 10% of U.S. gasoline consumption + exports U.S. ethanol production volumes have stabilized U.S. Ethanol blend: ~10% of gasoline consumption 20 CAGR 12% Billion Gallons 15 +0.3% 10% 8% 10 6% 5 4% 2% 0 0% 2006 2007 2008 2009 201
Slide 38: Bioenergy strategy overview
Bioenergy strategy overview Total production cost development 3.00 gal/bu Biodiesel 7 2 Other ethanol per bushel of corn 160 Enzyme Developments 2013 Ethanol yield 140 Enzyme Developments New Innovation Global 2.85 120 Enzyme and Process Developments gal/bu 100 biofuels production, Avantec®, Spirizy
Slide 39: Project pipeline Biomass conversion
Project pipeline Publicly announced, commercial biomass conversion projects under development by region (Q1/2015)* Biomass conversion Novozymes serves 5 out of 7 commercial facilities Europe 6. Beta Renewables − Maabjerg Bioenergy − ST1 − Ethanol Europe − Energo Chemica While several biomass conve
Slide 40: Agriculture & Feed Overview
Agriculture & Feed Sales Sales DKKm ORG growth Overview 1.668 1.728 1.617 1.371 956 13% 11% 7% 5% 2% of sales in 2014 2010 2011 2012 2013 2014 Current Trends Growth Drivers Growth Barriers • Rising demand for food as • High input costs for farmers • Biological solutions at Feed alliance The BioAg Al
Slide 41: Microbial solutions for agriculture
Microbial solutions for agriculture Microbials, notably bacteria and How are microbials applied? fungi, are types of agricultural biologicals that protect crops from pests and diseases and enhance plant productivity and fertility. Seed treatment BioControl There are approximately • Complements or p
Slide 42: Inoculants hold significant opportunity for market expansion
Inoculants hold significant opportunity for market expansion across crops and geographies Soybean Pulses Alfafa Canola Corn Wheat Cotton Rice Factors driving inoculant growth: Global Planted Acres1 Market expansion ~ 260m ~190m ~15m ~85m ~425m ~549m ~80m ~400m (5 year avg. 2009–2013) Inoculants Trea
Slide 43: The power of The BioAg Alliance
The power of The BioAg Alliance A unique opportunity…to combine Novozymes’ and Monsanto’s capabilities and establish industry's most advanced microbial platform A premier vehicle for bringing microbes to market and a sustainable Agriculture platform for farmers to produce more with less A joint focu
Slide 44: Building a stronger offering within animal farming
Building a stronger offering within animal farming Enzymes for nutritional Adjacency: Adjacency: enhancement of feed – a strong core built animal health enabling additives “To help feed a growing world, we work with new feed over 20 years (e.g..probiotic ingredients partners to develop and drive ad
Slide 45: Attractive Value Propositions in Animal Feed enzymes
Attractive Value Propositions in Animal Feed enzymes Phytase – phosphate ProAct® – protein Others – energy • Only 3-30%* of phosphate in feed is • Maximizing protein utilization and • Xylanase & glucanase increase non- available to the animal improving nutritional value starch polysaccharide digesti
Slide 46: Technical & Pharma Overview
Technical & Sales Sales DKKm ORG growth Pharma Overview 748 810 710 757 830 11% 9% 6% -6% -5% 2010 2011 2012 2013 2014 of sales in 2014 Current Trends Growth Drivers Growth Barriers Applications • Better and more sustainable • Sustainability in technical • Fragmented and chemically drug delivery an
Slide 47: Pharma overview: three technology offerings
Pharma overview Three technology offerings targeting pharmaceuticals Existing business Emerging business Enzymes for Biocatalysis Recombinant Albumin VELTIS® Enzyme portfolio used as catalysts Recombinant albumins used as Albumin-based technology for half-life extension through albumin fusion or f
Slide 48: Multiple opportunities and revenue streams in Pharma from Albumin
Multiple opportunities and potential revenue streams in Pharma from Albumin Veltis® – Drug candidates using Novozymes’ albumin technologies for half-life extension Partner Drug PI PII PIII MA Market Tanzeum/Eperzan (Albiglutide) - GLP1 for Diabetes rIX-FP - Once weekly for Hemophilia B Albutropin -
Slide 49: Sustainability
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Slide 50: New long-term targets focus on world impact
New long-term targets focus on world impact New IMPACT targets Novozymes’ Updated operational targets • 10 transformative innovations • Save 100 million tons of CO2 unique contribution: Environment People • 5 partnerships for change • Reach 6 billion people with our • Energy efficiency • Occupation
Slide 51: We plan to continue our journey of operational excellence
We plan to continue our journey of operational excellence Decoupling resource consumption Steady improvement in employee metrics from economic growth 3,5% 120% Gross 12 profit 3,0% % change from 2005 baseline 100% Sales 10 2,5% 80% Employee 8 absence (%) 2,0% 60% 6 1,5% Water 40% 4 1,0% Energy 20%
Slide 52: Remuneration Principles for Executive Leadership
Remuneration Principles for Executive Leadership • Novozymes’ principles for Annual remuneration scheme Long term incentive program Executive Leadership (2014-2016) 18 remuneration ensure close % stock & options awarded 100 Max 2 months of 90 alignment with long-term 16 base salary cash bonus link
Slide 53: Reducing CO2 Emissions Together with our Customers
Reducing CO2 Emissions Together with Dairy: Margarine: Vegetable oil: Cereals: our Customers 230 kg CO2 per ton of mozzarella 23 kg CO2 per ton of hardstock 44 kg CO2 per ton of oil 110 kg CO2 per ton of bread In 2014, Novozymes helped customers save Beverage: Detergent: Textile: Cosmetics: 25 kg C
Slide 54: Financial Review
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Slide 55: Demonstrates Track Record of Delivery – I/II
Historical Performance Demonstrates Track Record of Delivery – I/II 2000-2014 sales Sales DKKm Growth Gross margin 20% 15.000 60% 57,2% 16% 12.000 58% 56,2% 55,6% 12% 9.000 56% 57,2% 57,4% 53,3% 53,1% 8% 6.000 54% 52,4% 55,7% 51,8% 4% 3.000 52% 53,7% 53,5% 52,0% 52,6% 51,8% 0% 0 50% EBIT EBIT DKKm E
Slide 56: Demonstrates Track Record of Delivery – II/II
Historical Performance Demonstrates Track Record of Delivery – II/II NIBD NIBD DKKm NIBD/EBITDA CAPEX Capex DKKm CAPEX/sales 1,0 2.500 20% 1.500 0,8 2.000 16% 1.200 0,6 1.500 12% 900 0,4 1.000 8% 600 0,2 500 4% 300 0,0 0 -0,2 -500 0% 0 ROIC Inv.Cap. DKKm ROIC, incl. goodwill Free Cash Flow FCF bef.
Slide 57: Low Exposure to Raw Material Fluctuations
Low Exposure to Raw Material Fluctuations Indirect production costs Raw materials 45% Factors impacting COGS development: 35% • Productivity improvements, input prices, currency • Note: accounting practice implies that there is a time lag between current price levels and COGS Split of Factors impa
Slide 58: Dividend and Stock Buyback History
Dividend and Stock Buyback History • DKK 3.00 dividend per share paid out for 2014 up 20%, payout ratio 36.6% • Dividend pay-out ratio to increase to ~40% over next couple of years • Expected buyback program in 2015 of up to DKK 2 billion • Accumulated buybacks end of 2014 since IPO were DKK 7.7 b
Slide 59: Shareholder Distribution
Shareholder Distribution Rest of world Novo A/S 4% Denmark 10% 21% B shares listed in Copenhagen under the symbol “NZYM B” North America • Two share classes; A and B shares 18% Shareholder • B shares listed in Copenhagen under the symbol “NZYM B” distribution • “A” share capital and 26,071,400 of B
Slide 60: Investor Relations Contacts
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 Mobile (DK): +45 3077 0738 E-mail: ksdh@novozymes.com E-mail: mrsn@novozymes.com Further investor relat
Slide 61: Novozymes IR app
Novozymes . be MyIRApp G vy in 2] Novozymes IR Novozymes Copenhagen Stock Exchange Follow Latest share price, Investor Relations events, Key financials, Stock performance, Stock exchange news releases, Annual and Quarterly reports on the go. Share Graph D Share Information ; Download Novozymes IR ap