Novonesis A/s Class B · OMXCOP:NSIS_B
Novonesis A/s Class B — Novozymes — 9M 2018 Earnings Presentation
55 slides from Novonesis A/s Class B's earnings presentation, Oct 24, 2018
Slide 1: Roadshow Presentation 9M 2018
Roadshow Presentation 9M 2018 Released on October 24, 2018 * Rethink Tomorrow novozymes’ .
Slide 2: Table of contents
Table of contents 1. Latest Results... 3 2. Overview and Strategy... ccccceccssssssssscsnsessnsessnsessnsessnsesseceseceseeceneeceneeeeneess 15 3. Market Overview. ............cccccccccsscsssssessessessessessesneesessessssstsseessssessssecssecsssseeseeeceness 25 - Household Care 26 - Food & Beverage
Slide 3: Highlights
Highlights Satisfactory 9M; 5% organic sales growth in Q3 Organic sales growth +4% (Q3: +5%) * Bioenergy +14% (Q3: +15%) + Agriculture & Feed — +5% (Q3: +10%) * Food&Beverages +4% (Q3: +3%) + Household Care 0% (Q3: +2%) * Technical & Pharma -7% (Q3:-9%) * Growth in Agriculture & Feed and Food & Beve
Slide 4: Organic sales growth by region
Organic sales growth by region 9 35% +5 %o Emerging markets OM y/y 65% Developed markets, | j Me , novozymes*™ 4 Latest Results * Overview and Strategy * Market Overview * Sustainability * Financials and Governance
Slide 5: Household Care
Household Care 2% organic growth in the third quarter * Organic growth 9M 2018 y/y 0%; Q3 2018 y/y 2% * Global customers remain focused on cost optimization — in line with expectations * Overall sales to regional customers maintained good momentum - China in particular * Weakness in the Middle East
Slide 6: Food & Beverages
Food & Beverages 4% organic growth nine months into the year * Organic growth 9M 2018 y/y +4%; Q3 2018 y/y +3% * Food & Nutrition strong; Saphera® for dairy and increasing consumer health awareness * Starch growing although Asian market impacted by commodity price changes also in Q3 * Soft performan
Slide 7: Bioenergy
Bioenergy Continued strong momentum for conventional biofuels Organic growth 9M 2018 y/y +14%; Q3 2018 y/y +15% Innova® Drive yeast technology well received; new yeast Innova® Lift launched in Q4 Good growth across regions for conventional biofuels US and global ethanol production estimated to be up
Slide 8: Agriculture & Feed
Agriculture & Feed Solid performance in BioAg and Feed * Organic growth 9M 2018 y/y +5%; Q3 2018 y/y +10% * BioAg driven by Acceleron® B-360/B-300 for corn, and timing * Sales to animal feed challenged but grew organically in Q3; market conditions still difficult in Latin America + Alterion® product
Slide 9: R&D update
R&D update Animal health & nutrition Balancius™ + Novel enzyme (muramidase) for improving digestion and gut health in chickens + Estimated in-market sales potential of up to DKK 500 million per year * Launched in September together with alliance | partner DSM Bioenergy Innova® Lift Yeast technology
Slide 10: 9M 2018 financials
9M 2018 financials Satisfactory performance + Organic sales growth at +4% (Q3: +5%). Key financials Realized Realized , A - , (DKKm) 9M’18 —9M17 + +5% organic sales growth in emerging markets and +4% in developed markets Organic sales . growth C5 C5 * Currency impact on sales of -5% y/y. USD/DKK at
Slide 11: 2018 outlook
2018 outlook 2018 outlook; net profit growth increased to 1-3% * Organic sales growth likely to end toward the lower part of the 4-6% range despite Middle Eastern markets experiencing instability * Currency impact on DKK sales maintained at ~-3% * EBIT margin outlook maintained at ~28% * Net profit
Slide 12: Summary
Summary Satisfactory 9M; 5% organic sales growth in Q3 + Nine-months performance satisfactory; solid earnings Organic sales growth likely to end towards the lower part of the 4-6% range despite instable Middle Eastern markets Executing on strategic initiatives Several impactful innovations entering
Slide 13: Our business is about turning amazing science into sustainable biological answers
Our business is about turning amazing science into sustainable biological answers in a growing world 6500 > 2nd irae ane 48% 76 million More than 6,500 active and In 2017, Science Magazine Market leader in industrial In 2017, our customers pending patents ranked Novozymes the enzymes with an estimat
Slide 14: 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
Slide 15: Overview and Strategy
Xi Rethink Tomorrow novozymes’
Slide 16: Novozymes at a glance
Novozymes at a glance World leader in Bioinnovation Company background Global presence Listed 2000 ~6,300 employees a ~700 products sold in 140 countries Ticker NZYM B * Major production footprint in 3 regions Exchange Nasdaq Copenhagen Market leader ~48% Novozymes * Serving +40 different end market
Slide 17: Experienced leadership team
Experienced leadership team Thomas Videbzek COO & Executive Vice President, Research, Innovation & Supply ‘Novozymes since 1988 + Overview and Strategy * Holk Nielsen CEO & President Novozymes since 1984 view * Sustainability * Fin Prisca Havranek-Kosicek CFO & Executive Vice President, Finance, IR,
Slide 18: Uniquely diversified group
Uniquely diversified group - creates synergies and opportunities Household Care Food & Bioenergy Agriculture & Technical & Beverages Feed Pharma { [a ig o. 1 6 ran Y oo "se & Laundry detergents, Baking, Starch to syrups, Conventional biofuels Animal feed Textile & leather, Pulp & Dishwash detergents
Slide 19: Solid financial track record driven by innovation
Solid financial track record driven by innovation 30% 28% 26% 24% 22% 20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% 19 17 years of innovation driven growth o SP MP © S} S 9 Ss FLOPS KS Sf mam Sales DKKm EBIT margin =R&D/Sales |==ROIC Latest Results * Overview and Strategy * Market Overview * Sustainability
Slide 20: Priority innovation platforms
Priority innovation platforms Innovation Freshness and Hygiene Household Care ’ solutions Tailored emerging-market solutions Vegetable oil processing — Household Care Grain milling —— Animal health New transformative BioAg solutions Biomass conversion O Solutions for Water O Arrows denote progress t
Slide 21: Our global business serves a large number of local markets
Our global business serves a large number of local markets and industries EMEA NZ: HQ, Production R&D Main markets: HHC, F&B, Feed Acc CAPEX: ~ DKK 6.9bn FTE?s: ~2,900 SY Avg growth: +5% ASIA PACIFIC NZ: Production, R&D Main markets: F&B, HHC, Tech & Feed Acc CAPEX: DKK ~2,8bn FTE's: ~1,800 BY Avg g
Slide 22: Our set of competitive advantages across the value chain
Our set of competitive advantages across the value chain has led to a unique market leading position Scale * Production: 5 core plants in 3 regions + Novozymes’ R&D investment equals 2/3 of total industry investments * Technical services: half of commercial organization “on site” + Market & technolo
Slide 23: 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 o Molecular biology B Strain development using protein engineering, genetic modification, DNA sequencing, etc Bio-informatics & Systems biology Ap
Slide 24: Purification, raw materials, fermentation
Purification Raw materials Fermentation Enzymes Formulation Micro-organisms
Slide 25: Market Overview
Market Overview Xi Rethink Tomorrow novozymes’
Slide 26: Household Care overview
Household Care overview 32% Business Characteristics + Mainly laundry detergents but expanding into dishwash 5 year organic growth 9 49% —-+4% ~~ $1% = 4#2% 41% * Top three detergent producers make up ~50% of the global market; top 20 at ~80% SalesinDKKm =| 4.702 4717 * Developed markets ~2/3 of glo
Slide 27: Enzyme benefits in laundry
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’ 27 Latest Results * Ove * Market Overview * Sust: * Financials and Governance
Slide 28: Consumers are shifting from traditional detergents to new formats
Consumers are shifting from traditional detergents to new formats and increased performance Global market 2010 Global market 2020E Fe a Sa Steg © oa sams ea | ar a - —— Powder Liquid Unit Dose 100% a -~ 80% . *, NY Big differences aa . fo in detergent 50% applications 40% across 30% ; 20% geographie
Slide 29: Food and Beverages overview
Food and Beverages overview 58% RS of sales Business Characteristics —_ Processing agricultural inputs Food products 5 year organic growth * Relatively few product * Baking main market +3% +4% +5% 42% +9% categories * Broad customer/application base i . PP Sales inDKKm 4,041 Fragmented global custom
Slide 30: Significant presence in starch
• 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 streams - protein and starch
Slide 31: Bioenergy overview
Bioenergy overview 18% of sales Market Characteristics Conventional biofuels Biomass Conversion 5 year organic growth * Starch based ethanol is mainly a * Global business 412% +19% 5% -3% +11% US market (+85%) + Dependency on political mandates Sales in DKKm + US corn ethanol industry affected | + F
Slide 32: Contribution margin c/gal
Contribution margin c/gal 0 1 0,2 0,4 0,6 0,8 1,2 1,4 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018
Slide 33: 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 Future From standard to Basic products for Multiple offerings Increasingly cust
Slide 34: Policy objectives point to a doubling of ethanol by 2030
Policy objectives point to a doubling of ethanol by 2030 vs. today EUROPEAN UNION EU Renewable Energy Directive: 10% in transport by 2020* Post 2020 framework under development incl. mandate for 2G Ambitious national policies 1G and/or 2G in FIN, SE, DK, IT, FR, SK ~ 4bn gl/year +1bn gl ~ 24bn gallo
Slide 35: Agriculture and Feed overview
Agriculture and Feed overview Market Characteristics Animal Health & Nutrition BioAg + Sales and distribution through + Sales and distribution through partnerships partnership with Monsanto + Applications mainly for mono- + Americas ~90% of sales gastric animals (poultry and swine) + Key crops: Soy,
Slide 36: Strong product position
1. Source: FAO stats and Internal estimates 2. Internal 2014 estimates Strong product position Moderate product position Minor product position No current product position 36
Slide 37: Discovery to launch phases
PHASE 1: PHASE 2: PHASE 3: PHASE 4: DISCOVERY: EARLY ADVANCED PROOF OF CONCEPT PRE-LAUNCH DEVELOPMENT DEVELOPMENT 10’s of Thousands Thousands of Confirmed Hits / Commercial Final Launch Hits of Microbes Candidates Commercial Leads Candidates Preparation • ® • ® • ® • ® • ®
Slide 38: Scientific evidence supports enzyme penetration
Scientific evidence supports enzyme penetration - enabling livestock farmers to reduce feed cost 38 Market is sensitive to feed and meat price changes 70% of total cost of poultry production is feed including additives which is around 5%. Poultry producer margins are low when: * Feed prices are high
Slide 39: Attractive value propositions in feed enzymes
Attractive value propositions in feed enzymes Phytase ProAct® ve Others phosphate protein 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 digestion Ronozyme NP® r
Slide 40: Animal health & nutrition
Animal health & nutrition The world needs sustainable efficiency gains in animal production. Improving the yield in animal production would have significantly positive impact in terms of global warming and use of agricultural land + 9+ billion people by 2050 + Protein demand to double next 40 years
Slide 41: Technical & Pharma overview
Technical & Pharma overview Business Characteristics Wastewater Treatment + Microorganisms for industrial use in wastewater treatment Textile, Leather and Pulp & paper + Enzymatic solutions and technical support for processing textiles and + New initiatives to target e.g. leather sludge watering and
Slide 42: Sustainability
Sustainability Xi Rethink Tomorrow novozymes’
Slide 43: IMPACT targets and operational targets
IMPACT targets Novozymes’ 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 • Occupational accidents • Educate 1 million people biological soluti
Slide 44: Change since 2005
Change since 2005 150% 100% 50% 0% 44 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 pet In the US we have a biogas plant w
Slide 45: Reducing CO2 emissions together with our customers
We are reducing CO, emissions together with our customers by offering solutions that help produce more with less In 2017, Novozymes helped customers save 76 million tons of CO, through the application of Novozymes’ products ny O. Detergent: Animal feed: Tox: Cereals: 100 kg CO, 80 kg CO, 1100 kg CO,
Slide 46: Remuneration principles for the Executive leadership team
Novozymes’ 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 Long term incentive program (2017-
Slide 47: Financials and Governance
Financials and Governance Xi Rethink Tomorrow novozymes’
Slide 48: Historical performance demonstrates track of delivery
Historical performance demonstrates track of ‘ . Long term targets 17 years of organic growth eee 16,000 £ Fa Return to historical organic revenue growth rates Profitability has benefitted from productivity improvements and operational leverage 2000-2017 30% 24,7% ” 26% 19,2 20,0% = 2 16,7% ele 20%
Slide 49: Historical performance demonstrates track of delivery
Historical performance demonstrates track of delivery Net interest-bearing debt 2,000 ) ve 1.0 wee, ote, os 4,000 tee eet te I 06 g E Meet te oe OBE 0 = oi,” yo g = 00 & 02> 2 4,000 048 SHEP FESS FES PH LK PK KS 2 Net Interestbearing debt ¢ « ¢ eNIBD/EBITDA oa <l My So ye > b> SF KK FFF SSF SCM SKS
Slide 50: 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, input prices, Raw materials consist primarily of different currency carbohydrates. Approximately 50% of raw material input are e.g., sucrose, maltose, gluco
Slide 51: Dividend / Buybacks
Dividend / Buybacks 5,000 5,00 Dividend Buyback Dividend per share 4,00 4,500 Dividend per share, DKK 4,000 3,00 DKK million 2,00 3,500 1,00 3,000 0,00 2,500 -1,00 2,000 -2,00 1,500 -3,00 1,000 -4,00 500 -5,00 0 -6,00
Slide 52: Shareholder distribution
• • • • • *Distribution equals where shares are managed, Dec 2017
Slide 53: No of shares – millions
350 300 No of shares – millions 250 200 150 Free-float 100 Treasury Foundation 50 0 A-shares B-shares
Slide 54: 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 Carl Ahigren IR % novozymes’ 54 Latest Results * Overview and Strategy * Market Overview * Sustainability * Fina
Slide 55: Forward-looking statements
55 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, "