Slide 1: Roadshow presentation 12M 2019
Roadshow presentation 12M 2019 Released on January 23, 2020 ~ Rethink Tomorrow novozymes’ *
Slide 2: Agticulture »
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Slide 3: Rethink Tomorrow
Rethink Tomorrow novozymes’ *
Slide 4: Highlights
Highlights Second-half improvement; unsatisfactory 2019 sales performance * Organic sales 12M y/y: -1%; Q4 y/y: +1% * Poor overall sales performance mainly due to difficult agricultural markets * Good second-half momentum in Household Care * Solid financials with reported EBIT margin of 28.1% (Q4: 2
Slide 5: Organic sales growth by geography
Organic sales growth by geography 5 North America 3 3% of sales 12M y/y: 6% Q4 y/y: -8% Latin America 10% of sales 12M y/y: +5% Q4 y/y: +19% { Developed 66% y/y 12M: -1% / Q4:-1% /y 12M: -1% / Q4: +5%| Latest results* Overview and strategy * Market overview * Sustainability * Financials and governan
Slide 6: Household Care
Household Care Good momentum continued in Q4 * Organic sales 12M y/y: +1%; Q4 y/y: +5% + Solid growth with local customers and in the emerging markets continued in Q4 + Performance throughout the year in line with expectations + Freshness rollout progressing as planned from both a commercial and inn
Slide 7: Food & Beverages
Food & Beverages Difficult year; second half improvement * Organic sales 12M y/y: -1%; Q4 y/y: +2% * Growth in Q4 driven by food & nutrition, baking and brewing * Full year with positive result in food & nutrition and brewing offset by difficult conditions in starch processing * Growing demand for n
Slide 8: Bioenergy
Bioenergy Weak performance with a challenged US ethanol industry * Organic sales 12M y/y: -3%; Q4 y/y: +2% + Less decline in US ethanol production in Q4 y/y + US ethanol industry challenged by low producer margins, elevated inventories and severe weather conditions in the US Midwest * Yeast platform
Slide 9: Agriculture & Feed
Agriculture & Feed Challenged Ag-markets overshadowing growth from innovation * Organic sales 12M y/y: -5%; Q4 y/y: -9% * Q4 decline mainly due to weak farm economics and Latin American planting + BioAg sales declined mainly due to severe weather conditions in the US Midwest; corn inoculants perform
Slide 10: Year of change product launches
Year of change 20 product launches + Three new products launched in Q4, of which two for the broad market + Nine new broad market solutions and eleven tailored solutions in 2019: + Frontia® Jade; a new addition to our grain milling platform for the Chinese market + Innova® Force and Innova® Fit; rec
Slide 11: Sustainability and non-financial targets
Sustainability and non-financial targets 2022 targets Save CO, emissions by enabling low carbon fuels in the transport sector z 3 Reach people by providing laundry solutions that replace chemicals 5 Gain food by improving efficiency from farm to table Reduce absolute CO, emissions from operations" D
Slide 12: Financials
Financials Unsatisfactory sales performance despite second-half pickup * Organic sales 12M y/y: -1%; Q4 y/y: +1% * Full-year gross margin ~200bp below last year due to lower operational leverage, lower deferred income and restructuring effects * EBIT margin 12M: 28.1%; Q4: 29.6% * Q4 positively impa
Slide 13: Financials — 2020 outlook
Financials — 2020 outlook Organic sales growth of 1-5% with higher underlying EBIT margin and cash flow + 1-5% organic sales growth + Outlook range reflects higher uncertainty to the more agriculturally-exposed of the 5 business areas + EBIT margin of ~27% compared to ~26% underlying in 2019 + Net i
Slide 14: Summary
Summary Second-half improvement; unsatisfactory 2019 sales performance. Stronger performance expected in 2020 * Volatile ag-exposed businesses were heavily impacted by severe weather conditions in the US Midwest + Stronger performance expected in 2020, driven by innovation, stronger commercial prese
Slide 15: Overview and Strategy
Overview and Strategy Rethink Tomorrow novozymes’ *
Slide 16: World leader in Bioinnovation - Novozymes at a glance
World leader in Bioinnovation - Novozymes at a glance Market leader + ~48%* of total market with DKK 14.4bn in sales (2019) ~3x Sales (since IPO) Serving +40 different end markets Innovation is the core + Innovation focused on enzymes and microbes +100 new product launches Close to 600bps in gross m
Slide 17: What are enzymes and microbes?
What are enzymes and microbes? Enzymes are... Catalytic Fast +... proteins which catalyze chemical reactions and thus often replace chemicals in products and industrial productions + The benefits include higher yields from a production process, improved performance of a product and new product prope
Slide 18: Uniquely diversified group creating synergies and opportunities
Uniquely diversified group creating synergies and op Household Care Organic growth 2% 1% 1% 1% 0% 2015 2016 2017 2018 2019 33% of ‘19 sales Laundry Automatic dishwash Hand dishwash Professional cleaning Food & Beverages Organic growth 9% 5% 5% 2% 1% 2015 2016 2017 2018 2019 29% of ‘19 sales Baking G
Slide 19: Global footprint
Global footprint 33% of '19 sales North America Sites: Multipurpose production, R&D FTE’s: ~1,200 5Y avg. organic sales growth: +1% Latin America 10% of '19 sales Sites: Regional production FTE's: ~300 5Y avg. organic sales growth: +4% Main sites with production and R&D 19 Latest results * Overview
Slide 20: Competitive advantages across the value chain
Competitive advantages across the value chain has led toa unique market leading position 20 Quality Superior logistical agility due to full control of value chain Ability to tailor solutions to specific customer and market needs First mover in a number of markets lead by ability to innovate High qua
Slide 21: Production value chain
Purification Raw materials Fermentation Enzymes Formulation Micro-organisms
Slide 22: Focus areas: Differentiate to succeed
22 Focus areas Differentiate to succeed Adapt our approach to fit industry potential and concentrate on significant opportunities across markets and segments Invest in impact Show up for our customers with strong commercial teams, capable of guiding innovation and services to deliver on customer goa
Slide 23: Differentiate to succeed with assigned roles for each industry
Differentiate to succeed with assigned roles for each industry Development seed Fueling mid-term growth but still evolving New strategic opportunity Contributing to long-term growth Growth star Fueling shortterm growth with sharp focus on execution Every industry plays an important role Anchor busin
Slide 24: Invest in impact by focusing the R&D pipeline
Invest in impact by focusing the R&D pipeline Before Value A\ Se @ @ e @ e r ) e@ e @ e ® e@ e e e e e e > Risk e@ Project resource allocation *Illustrative example 24 Latest results * Overview and strategy * Market overview * Sustainability * Financials and governance Value A\ Better business with
Slide 25: Broader technology offerings increase opportunities over time
Broader technology offerings increase opportunities over time Future Present Past novozymes’ * 25 Latest results * Overview and strategy * Market overview * Sustainability * Financials and governance
Slide 26: Human oral and gut health
Human oral and gut health Increasing health and wellbeing with clinically roven products for hum oral and_gut health 16 Latest results® Overview and strategy + er + Sustainability + Financials and governance
Slide 27: Rethink Tomorrow
Rethink Tomorrow novozymes’ *
Slide 28: Household Care overview
Household Care overview Key industry trends Product launches (2019) + Consumers are willing to pay more for + Medley® 3.0 - Next generation natural products of liquid blends upgraded with * Compaction of laundry detergents remains a the latest technology to meet strong trend, driven by increased sal
Slide 29: Our enzyme technology adds significant benefits
Our enzyme technology adds significant benefits Ste? lel tar G AR Eliminate Remove stains, Decrease dose, Preserve fabric Save energy, Deal with complex harsh chemicals boost whiteness increase performance texture, color water, time hygiene issues * novozymes’ 29 Latest results * Overview and strate
Slide 30: Lifestyle changes
Li lerchanges freshness, and we Synthetics Cold wash Detergent format Consumers’ lifestyle changes are N e the drivers of growing hygiene needs... : of odor and grime Sources: Novozymes consumer study; Euromonitor, Jan 2018; Minte|GNPD, April 2018; UNFPA, April 2048; Grand View Research; April 2018
Slide 31: Large potential for future enzyme inclusion in emerging markets
We see large potential for future enzyme inclusion, especially in emerging markets Significant up-dosing and penetration potential in emerging markets in general and Asia Pacific in particular Billion tons, ——— 7x enzyme up-dosing opportunity Dosing (indexed) 14 100 12 80 10 8 5x volume 60 opportuni
Slide 32: Biological detergents: enzymes can contribute even more
Biological detergents: We believe enzymes can contribute even more to a detergent Biological . detergent and to compaction . New and more stable enzymes to replace surfactants Freshness solutions to reduce the need for perfume Other Perfume Enzymes to replace polymer functions, such as fabric care a
Slide 33: Food & Beverages overview
Food & Beverages overview Key industry trends Growing consumer demand for high quality, healthy and sustainable foods Consumers focus on brands using local and Product launches (2019) Frontia® Jade - New addition to our grain-milling platform for the Chinese market, extracting extra value from corn
Slide 34: Better food for a growing world
Better food for a growing world Trends EM industrialization g ee More natural foods, please 34 Latest results * Overview and strategy * Market overview * Sustainability + Financials and governance More with less Health Opportunities New substrate streams Freshness and taste S Productivity and yield
Slide 35: The grain value chain
The grain value chain + Significant presence in starch - industry leaders in enzymatic starch conversion for sweeteners * Portfolio that includes LpHera®, Extenda®, Secura® and Sweetzyme® + Frontia® opens a new segment with our starch customers in wet milling, enhancing the yield of key value stream
Slide 36: Enzymatic applications for vegetable oil processing
Enzymatic applications for vegetable oil processing show huge potential 2) oo oo oo oo 3) Specialty fats producer Specialty oils & fats Q Oilseed OO00 1 Mill 2) Refinery Extraction Refining 2 4 Oleo player Oleochemicals 36 Latest results * Overview and strategy * Market overview * Sustainability + F
Slide 37: Increasing consumer health awareness
Increasing consumer health awareness drives food trends and opportunities Trans fats and enzymatic interesteri- fication Acrylamide removal Low Less sugar Plant lactose added protein 37 Latest results * Overview and strategy * Market overview * Sustainability + Financials and governance
Slide 38: Bioenergy overview
Bioenergy overview Key industry trends Growing demand for clean energy as climate change and sustainability are high on public agendas Increase in global biofuel mandates continues, driven by key emerging markets Strong pressure on US ethanol industry due to low producer margins and high inventories
Slide 39: Bioenergy opportunities based on policy plans
Bioenergy - a lot of opportunities exist based on policy plans Ain mandate currently waived due to lack of 39 22bn . (gallons per year) ¢ ~ +13bn GPY NORTH AMERICA Renewable Fuel Standard Production: 15.8bn GPY Potential addition: +13bn gallons by 2030* cluding RFS cellulosic volume capacity. Latest
Slide 40: Ethanol production
Ethanol production 40 Global ethanol production (billion gallons) US Ethanol producer margin MB Global MH RoW Mi) China MEU MM Brazil MENA 25.083 25.774 26.182 26.810 i 14.807, 15.413] 15.936] 28570 29.784 25 2,0 45 1,0 0,5 0,0 116.064] Contribution margin ($/gallon) 2014 2015 2016 2017 Price develo
Slide 41: Addressing complexity in bioethanol production
Addressing complexity in bioethanol production Designing enzymes for individual plants Using our diagnostic program to deliver custom fermentation solutions, tailored to a plant’s unique operating conditions Past Present Basic products for >) liquefaction and From standard to more customized .>) liq
Slide 42: Agriculture & Feed overview
Agriculture & Feed overview Key industry trends Agriculture affected by more frequent extreme weather conditions Sustainable yield enhancement still in high demand as world population grows, putting pressure on agricultural sector to produce more and better products while minimizing negative environ
Slide 43: Bayer and Novozymes
Bayer and Novozymes. continue close commercial {and innovation partnership in CORN. In bioyielé outside of corn, Bayer continues as the main ‘commercialization partner in the key SOY markets of the US,, Argentina, and Brazil PARTNERSHIP CONTINUATION e future, more flexible setup allows Novozymes to
Slide 44: Scientific evidence supports enzyme penetration
Scientific evidence supports enzyme penetration - enabling livestock farmers to reduce feed cost 70% of total cost of poultry production is feed including additives which is around 5%. Market is sensitive Poultry producer margins are low when: * Feed prices are hig! to feed and meat >] + Meat prices
Slide 45: Attractive value propositions in feed enzymes
Attractive value propositions in feed enzymes ada le w Estimated penetration * Only 3-30% of phosphate in feed is available to the animal across species + Ronozyme NP® releases half of the phosphate bound - 100% Ronozyme HiPhos® releases nearly all of it * Significant reduction in phosphorous excret
Slide 46: Committed to core technologies and partnering with industry leaders
We are committed to our core technologies and partner with industry leaders to win Enzymes Probiotics + Full portfolio of feed enzymes * Growing area for Novozymes with pipeline of products + Recently launched game-changing innovation + Alterion® tracking well + Improve the sustainability of livesto
Slide 47: Technical & Pharma overview
Technical & Pharma overview Key industry trends + Water scarcity and water pollution driving legislation and demand for solutions that reduce water consumption and improve water quality + Major apparel companies are rethinking their supply chains to accommodate increased public interest for sustaina
Slide 48: Rethink Tomorrow
Rethink Tomorrow novozymes’ *
Slide 49: Sustainability drives how we do business
Sustainability drives how we do business WORLD By 2030, we will help... 2022 targets By 2030, we will achieve... CLIMATE Limit global warming increase to 1.5 degrees Save 60 million tons CO, by enabling low-carbon fuels rt sector in 2022 50% reduction in absolute CO, emissions from operations on our
Slide 50: Continuing our journey of operational excellence
We plan to continue our journey of operational excellence + Novozymes has over time proved how investments in efficiency and optimization programs pay off not only from a sustainability perspective but also from an economic perspective + Inthe US we have a biogas plant which turns wastewater into st
Slide 51: Rethink Tomorrow
Financials and governance Rethink Tomorrow novozymes’ *
Slide 52: Historical performance demonstrates track of delivery
Historical performance demonstrates track of delivery Turnover development Mid-term targets 2020-2022 44%, md 14,002 14,142 14,531 14,390 14,374 15,000 7 ao.510 . & 10,000 S 5,000 5 0 2011 2015 2016 2017 2018 2019 EBIT margin 30% 27.2% 27.7% © 27.9% ~—-27.9%_ ~—«28.3% 28.1% eon 3% 24.4% 24.7% 20% .
Slide 53: Historical performance demonstrates track of delivery
Historical performance demonstrates track of delivery Net working capital . Model assumptions 2020-2022 4,000 3,478 7 30% | 3,000 so 2,741 2,768- — 20% & e 3: rt = 2,088. ~ .2,023 - - 8 i = vo | 1,943 ims - -1,720' 028 10% $ + Improving as % of sales a - on 8 a 0 -10% 1. a 2013 m 2015 2016 «= 2017S
Slide 54: Limited exposure to raw material fluctuations
Novozymes carries limited exposure to raw material fluctuations Factors impacting COGS Split of Cost of Goods sold + Productivity improvements Raw materials consist primarily of different chemicals and + Input prices carbohydrates e.g. sucrose, maltose, glucose and starch + Currency Note: accounting
Slide 55: DKK ~23.2bn returned to shareholders since 2010
DKK ~23.2bn returned to shareholders since 2010 5.25 1.60 1,519 1,000 786 504 4 1,438 5 , 1,062 1,190 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019* || Buyback (DKKm) HB Dividend (DKKm) = Dividend per share (DKK) *proposed novozymes” 55 Latest results * Overview and strategy * Market overview *
Slide 56: Shareholder distribution
Shareholder distribution Two share classes; A and B shares + All “B”- shares listed in Copenhagen under the symbol “NZYM B” + All “A” share capital and 20,461,400 “B”-shares are held by Novo Holdings, who is fully owned by the Novo Nordisk Foundation As of December 2019 * Novo Holdings, owned 25.5%
Slide 57: Remuneration principles for the Executive leadership team
Remuneration principles for the Executive leadership team Remuneration principles ensure close alignment with long term shareholder interests, links remuneration to shareholder gains and losses, and ensures management retention Annual remuneration scheme Salary and cash bonus 20. ——— Max 2 months of
Slide 58: Foundation ownership advocates long-term focus
Foundation ownership advoca Purpose of the Foundation The Novo Nordisk Foundation is an independent Danish foundation with corporate interests. The objective of the Novo Nordisk Foundation is twofold: * To provide a stable basis for the commercial and research activities conducted by the companies w
Slide 59: Our investor relations team
Our investor relations team Further investor relations information is available from the company homepage at investors.novozymes.com Naja Wivel Coordinator +45 3077 2076 nwv@novozymes.com Ulrik Wu Svare IR « novozymes” 59 Latest results * Overview and strategy * Market overview * Sustainability + Fi
Slide 60: 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, "bel