road show presentation q3 2016...• novozymes has acquired the germany-based organo balance to...
TRANSCRIPT
Road Show presentation Q3 2016
October 26th 2016
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, "believe," "anticipate," "expect," "estimate," "intend," "plan," "project," "could," "may," "might" and
other words of similar meaning.
Forward-looking statements are by their very nature associated with risks and uncertainties that may cause actual results to differ materially from expectations, both positively and negatively. The risks and uncertainties may, among other things, include unexpected developments in i) the ability to develop and market new products; ii) the demand for Novozymes’
products, market-driven price decreases, industry consolidation, and launches of competing products or disruptive technologies in Novozymes’ core areas; iii) the ability to protect and enforce the company’s intellectual property rights; iv) significant litigation or breaches of contract; v) the materialization of the company’s growth platforms, notably the opportunity for marketing biomass conversion technologies or the development of microbial solutions for broad-acre crops; vi) the
political conditions, such as acceptance of enzymes produced by genetically modified organisms; vii) the global economic and capital market conditions, including, but not limited to, currency exchange rates (USD/DKK and EUR/DKK in particular, but not exclusively), interest rates and inflation; viii) significant price decreases on input and materials that compete with Novozymes’ biological solutions. The company undertakes no obligation to update any forward-looking statements as a result of future developments or new information.
Forward-Looking Statements
2
Table of contents
1. Latest results
2. Novozymes Overview
3. Strategy
4. Market Overview
- Household Care
- Food & Beverages
- Bioenergy
- Agriculture & Feed
- Technical & Pharma
5. Sustainability
6. Financial Review
4
12
19
30
31
35
38
42
49
51
56
3
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
9M 2016 summary
2,541 2,922 2,884
27.4%*
27.7% 27.7%**
25%
26%
27%
28%
29%
9M 2014 9M 2015 9M 20162.000
2.500
3.000
3.500
4.000
EBIT and EBIT margin 9M 2014 – 9M 2016 Adjusted EBIT
Reported EBIT
9M sales lower than expected; EBIT & EBIT margin are
on par with last year
• 1% organic sales growth and -1% in DKK in the first 9 months of 2016.
Growth driven by Household Care, F&B and Technical & Pharma
• Bioenergy and BioAg continue to be low due to challenged ethanol plant
economics and slower uptake in BioAg in both the U.S. and Latin America
• Adjusting for the negative impact from the reorganization in Q1, EBIT
grew by more than 1% and the EBIT margin expanded to above 28%
Good progress on strategic priorities
• Novozymes has acquired the Germany-based Organo Balance to
strengthen our microbial platform
• Novozymes got a record-high score in the DJ Sustainability Index and
made it to the “A-list” in the CDP 2016 Climate Change Assessment
• Several innovations expected to be launched in Q4
2016 organic sales guidance around 2%; earnings
outlook adjusted within range
• Organic sales ~2% (prev. 2-4%); sales in DKK 0-1% (prev. 1-3%)
• EBIT margin, CAPEX, cash flow and ROIC all maintained
9,278 10,550 10,428
8%
4%
1%
-2%
0%
2%
4%
6%
8%
10%
9M 2014 9M 2015 9M 20168.000
8.500
9.000
9.500
10.000
10.500
11.000
Sales and organic growth 9M 2014 – 9M 2016
5
DKKm
DKKm
* Adjusted for the BioAg Alliance, the
EBIT margin would have been ~26.2% ** Adjusted for the reorganization,
the EBIT margin would have been ~28.3%
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Household Care & Technical
Household Care
• Continued strong momentum in China and South East Asia, driven
by increased penetration in liquid detergents. Growth offset by weaker performance in Europe
• Premium detergents still in demand in North America, driving solid sales, while Latin America is negative
Technical
• Textiles continue to do well, while sales to wastewater treatment and leather are flatter compared with last year
Pharma
• Strong growth in Pharma, driven by higher demand for albumin and pharma enzymes as well as increased royalties from GSK’s sale of Tanzeum®. Final sales of HA in Q1
3.484
836
3.484
718
Household Care Technical & Pharma
9M 2016
9M 2015
6
+1% / 0%
+20% / +16%
Organic growth / DKK growth
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Hygiene solutions to deliver the next wave of growth for laundry in both developed and emerging markets
Traditional enzyme solutions have enabled a switch to cold washing
Four key trends are increasing consumers’ laundry hygiene concerns
Novozymes invests to ensure innovative, safe and natural solutions to address consumers’ hygiene concerns
Cold wash
Rise of liquids
Changing textiles
Urbanization
Liquid detergents are a premium product and more user-friendly
The lower cost and higher flexibility of synthetics are driving more textile production using these materials
An increasing population searching for opportunities in the cities
Novozymes is a first mover in hygiene and has a dedicated team of scientists working on solutions that improve laundry hygiene
Novozymes expects to launch a portfolio of innovations within the hygiene platform over the coming period
2
1
3
4
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW 7
Agriculture & Bioenergy
Bioenergy
• U.S. ethanol producers’ margins remain low, and producers are
continuing their optimization programs and cost reductions, resulting in further downtrading
• Avantec® Amp progressing better, but uptake still slower than
expected. Liquozyme® LpH doing well in the competitive liquefaction market
BioAg
• Sales in BioAg are down from last year, mainly due to changes in sales pattern. In addition, the lower commodity prices continued to impact in particular the premium inoculant segment
Animal Health & Nutrition
• Solid performance in Feed driven by strong in-market sales and
inventory building
• Alterion® launch is progressing according to plan
8
1.775 1.530
1.927 1.606
Bioenergy Agriculture & Feed
9M 2016
9M 2015
-7% / -8 % 0% / -5%
Organic growth / DKK growth
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Food & Beverages
Baking
• Baking marginally below last year, as good growth in Europe and
Asia-Pacific was outweighed by increasing competition in the Americas
Starch
• Solid growth in starch driven by increasing penetration across markets and application segments
Food & Nutrition
• Food & Nutrition continues to be negative with sales in the infant nutrition segment down significantly in the first nine months, partly
offset by strong growth in lactose reduction
Beverages
• Beverages are delivering solid growth across segments, mainly driven by sales in raw material optimizations for brewing
9
2.802 2.815
Food & Beverages
9M 2016
9M 2015
+1% / 0%
Organic growth / DKK growth
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Research & Innovation update
Strengthening our microbial platform
• Germany-based Organo Balance will be integrated as part of Novozymes’ global R&D organization, enhancing our capabilities within microbial technology
• Access to a large collection of strains and capabilities in microbial screening and assay technology
• Applications and know-how within microbial solutions across a number of industries, incl. Food, Feed and Animal Health & Nutrition
Exciting new launches expected in Q4
• SAT B-300 – new upstream inoculant to be launched with Monsanto’s Acceleron® corn brand
• A number of new innovations in Food & Beverages, mainly within starch and oil-seed refining
• First new product within sugarcane-based ethanol
for biofuels
10
Acquisition of Organo Balance Innovation
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Financial performance & outlook
9M 2016: Earnings on par with last year
• Gross margin roughly on par with last year, as productivity
improvements offset the one-time reorganization cost incurred in Q1
• Adjusting for negative one-time impact following the reorganization in
Q1, EBIT grew by more than 1%, while the EBIT margin expanded to
above 28%
• Net profit grew by 5% in the first 9 months
2016 organic sales guidance around 2%; earnings
outlook adjusted within range
• Organic sales growth outlook adjusted to ~2% from 2-4% previously;
sales growth in DKK adjusted to 0-1% from 1-3% previously
• Sales expected to pick up in Q4, driven by BioAg ramp-up to the
2017 season
• EBIT and net profit adjusted within previous guided range to reflect
lower sales growth
Key
financials Realized
9M 2016 2016 outlook
October 26
Sales growth, org. +1% ~2%
Sales growth, DKK (1%) 0-1%
EBIT growth (1%) 1-2%
EBIT margin 27.7% ~28%
Net profit growth 5% 8-9%
Net investments excl.
acq., DKKm 746 1,100-1,200
Free cash flow before
acq., DKKm 2,222 2,400-2,600
ROIC incl. goodwill 25.3% 25-26%
11 QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Novozymes – the world leader in bioinnovation
Who are we?
13
Founded 1925
Listed 2000
Ticker NZYM B
Exchange Copenhagen
Market Cap US$ ~11bn
Household Care & Technical
Industries Food & Beverage
Agriculture & Bioenergy
Research, Innovation &
Supply
Corporate Functions
Global R&D intensive Profitable Majority owner
Novo A/S
~6,500 employees,
700 products in
140 countries
~7,000 patents,
~14% of sales
spent on R&D
$2bn in sales and
27.7% EBIT margin
in 2015
controls 25.5% of
the capital and
70.4% of the votes
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Foundation ownership advocates long-term focus
14
0
50
100
150
200
250
300
A-shares B-shares
No
of
sh
are
s –
mil
lio
ns
Free-float
Treasury
Foundation100% 10%
(Holding company)
Large investments: Sonion
Chr. Hansen
Xellia
Financial investments Venture capital
Seed capital
Novo Group companies:
Novo A/S
controls
25.5% of
Novozymes’
capital and
70.7% of the
votes
Purpose of the Foundation: 1. provide a stable basis for the commercial
and research activities of the companies in Novo A/S
2. support physiological, endocrinological, metabolic and other medical research
3. contribute to the preservation and operation of Novo Nordisk A/S' research hospital activities
4. support other scientific as well as humanitarian and social purposes
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Experienced leadership team – with more than 23 years seniority on average with the business
Tina S. Fanø
Executive Vice President,
Agriculture & Bioenergy
Novozymes since 1993
Peder Holk Nielsen
CEO & President
Novozymes since 1984
Thomas Videbæk
COO & Executive Vice President,
Research, Innovation & Supply
Novozymes since 1988
Anders Lund
Executive Vice President,
Household Care &
Technical Industries
Novozymes since 1999
Benny D. Loft
CFO & Executive Vice President,
Corporate Functions
Novozymes since 1998
Andrew Fordyce
Executive Vice President,
Food & Beverages
Novozymes since 1993
15 QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET 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
• ~14% of annual sales invested in R&D
• Global provider of enzymes to all market segments creates global market leader position
• Leveraging competencies across segments accelerates pace of innovation, reduces competition and creates high barriers to entry
Household Care Food & Beverages Bioenergy Agriculture & Feed Technical & Pharma
Laundry & Dishwasher detergents,
Cleaning products
Baking, Starch to syrups, Brewing &
Alcohol, Healthy concepts
Corn ethanol
Cellulosic biofuels
Animal feed
BioAgriculture
Textile & Leather, Pulp & Paper,
Wastewater, Pharma ingredients
33% 27% 18% 15% 7%
16 QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Industry growth profiles and 5-yr organic averages Region growth profiles and 5-yr DKK averages
33%
27% 18%
15%
7%
HHC
F&B
BioE
A&F
T&P
35%
36%
19%
10%
Europe, Middle East and Africa
North America
Asia Pacific
Latin America
Diversification in revenue streams underpins the company’s strong financial position
0
1
2
3
4
5
2011 2012 2013 2014 2015
Bn
DK
K
HHC 6%
F&B 4%
BioE 4%
A&F 11%
T&P 5%
0
1
2
3
4
5
6
2011 2012 2013 2014 2015
Bn
DK
K
EMEA 6%
NA 7%
AP 8%
LA 14%
17
Industry Region
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
18
Satellite production site
Core production plant
Main R&D center
Satellite R&D site
Beijing + Tianjin, China
Hongda, China
Copenhagen, Denmark HQ+R&D+Production
Global production and R&D setup - 5 Core production plants and 3 satellites - 3 Main R&D centers and 4 satellites
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
16 years of innovation-driven returns
Strong absolute returns since 2000
• 2.8x sales
• 4.6x EBIT
• 5.9x net profit
• DKK ~32bn In operating cash flows
Driven by topline and leverage
• ~7% organic sales CAGR
• +5.8 %-points gross margin
• +11.0 %-points EBIT margin
• +15.9 %-points ROIC
Innovation is the recipe
• DKK 18bn invested in R&D
• +100 new solutions marketed
20
10%
12%
14%
16%
18%
20%
22%
24%
26%
28%
30%
0
2.000
4.000
6.000
8.000
10.000
12.000
14.000Sales DKKm
EBIT margin
R&D/Sales
ROIC
Historical performance
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Novozymes’ purpose
21 QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Our strategy puts partnerships front and centre
22 QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Our set of competitive advantages across the value chain has led to a unique market-leading position
23
Scale Quality Sustainability High barriers
• Production: 5 core
plants in 3 regions
• Research &
Development: 2/3
of total investment
of industry
• Technical
services: half of
commercial
organization “on
site”
• Market &
technology
coverage
• Superior logistical
agility due to full
control of value
chain
• Right quality for
customers and
regulatory
requirements
• Triple bottom line
• Trusted long-term
partner
• Pioneering life
cycle assessment
documentation
• More than 7,000
patents
• Diverse biotech
know how and
investments
needed to
compete
• Customer
partnerships
• Manufacturing
expertise
48%
20%
32%
Source: Novozymes estimate
Novozymes Others
Genencor (DuPont)
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
~ ~
~
Global enzyme
market DKK ~25 bn
Financial priorities and long-term targets; - Innovation, growth & shareholders
~14% R&D/sales
<8% CAPEX/
sales
~40% Dividend
payout
≥25% ROIC
incl. goodwill
>26% EBIT margin
6-7% Org. sales
growth
8-10% Org. Sales growth ambition
Accumulated buybacks end of 2015 since IPO were DKK ~10 billion
Accumulated dividend and stock buybacks of ~DKK 17 billion since 2000
Total shareholder return 2000-2015 of ~17% per year CAGR
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW 24
R&D investments drive growth today and enhance technology leadership for long-term impact
Established business areas
Basic technologies Advance understanding, application support, development and formulation of biological systems
R&D investments in production systems and productivity
Growth platforms
Household
Care
Food &
Beverages
Grain-based
ethanol BioAg
Biomass
Conversion
Animal
Health &
Nutrition
Emerging
industries Technical
industries
25 QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Developing new technology and business platforms
Continued development in our technology base…
…creates opportunities to develop new business platform
Biomass
conversion
Bio-
Agriculture
Animal
Health &
Nutrition
Emerging
platforms
Molecular
biology
Bio-informatics
& Systems
biology
Screening
systems
Industrial-scale
fermentation
Strain development
using protein
engineering,
genetic
modification, DNA
sequencing, etc
Application of
computer
algorithms in the
computational
discovery of
enzymes in DNA
databases
Application of high-
throughput robotics
to find the best
enzyme candidates
Production of
enzymes and
proteins whilst
continuously
optimizing and
improving yields
26 QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Area Innovation Feasibility Discovery Development Launch Commercial
Household Care Hygiene solutions
Household Care
Tailored emerging markets solutions
Food & Beverage
Vegetable oil processing
Bioenergy Biomass conversion
Agriculture & Feed
Natural growth promotion
Agriculture & Feed
Enhanced corn inoculant
Agriculture & Feed
New transformative BioAg solutions
Pipeline of significant market-expanding growth opportunities
On top of the flow of innovation to existing markets, Novozymes is currently investing in innovation to expand the market for enzyme and microbial technology. Each of the innovation clusters below can potentially make a significant positive impact on sustainability and sales.
27 QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Raw materials
Micro-organisms
Enzymes
Fermentation
Purification
Formulation
Fermentation technology – 3 levers to improve profitability
• All of Novozymes’ solutions are produced via fermentation
• Dedicated R&D investment (10-15% of R&D investment) goes to improving production systems
• Achieved sales CAGR of 7% since 2000 with improving margins
Improve
production strain
Ability to produce more
enzymes per m3
fermentation tank through
genetic engineering of
host organism
Optimize
industrial production
Process optimization
Equipment optimization
Input optimization
Improve
enzyme efficacy
Protein engineering of
enzymes improves
efficacy. Customers
buy efficacy, not
volume
28 QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
DKK ~5bn spent on acquisitions
Investing for long-term growth; People, CAPEX and M&A, 2000-2015
0
1000
2000
3000
4000
5000
6000
7000
2000 2015
2x employees – from 3,208 FTE to 6,485 FTE
Latin America
Asia Pacific
North America
Denmark & EMEA
>1.5bn DKK
> 500m DKK
>100m DKK
<100m DKK
BioAg
Enzymes
Biopharma
Biologicals
2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3 2 0 1 4 2 0 1 5 2 0 1 6
Earth Bioscience
Philom Bios Turfal
EMD
CropBioscience
Natural
Industries
TJ
Technologies
BioAg Alliance
with Monsanto
Biocon Enzymes
BioGaia Delta GroPep
Iogen
Enzymes
Divestment Roots Octen Gamlen
BETA
Renewables
Sybron Jefferies Semco Roots
29
DKK ~12bn in CAPEX 2000-2015
Pacific Vet
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
NA 2000-04
2005-09
2010-14
LATAM
APAC
Denmark & EMEA
2015
Divestment Biopharma (Lund) Organo Balance
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Market overview
33% of sales in 2015
Household Care Overview
Applications Laundry & dishwasher detergents Novozymes market share
>60% Competition Dupont
31
Current Trends Growth Drivers Growth Barriers
• Better-performing laundry
detergents – also at low
temperatures, reducing water
and energy usage
• Optimization of detergent
formulations to decrease cost
and cost volatility
• More sustainable operations
and products
• Changing consumer
preferences toward liquids
and compacted products
• Customer consolidation
• Sustained low surfactant
prices
• Higher enzyme inclusion and
innovation to improve wash
performance at low
temperatures, improve
sustainability and optimize
formulations
• Demand for better-performing
products in emerging markets
• GDP and population growth in
emerging markets
• Traditional consumer washing
habits, e.g. high temperatures
• Regulations favoring
surfactants over enzymes in
emerging market product
standards
• Technology development
needed to boost enzyme
performance in liquid
detergents
• Sustained low petrochemical
input costs reducing the
adoption rate of high-
performance enzymes
3.514 3.973 4.222 4.353 4.632
7% 11% 9%
4% 1%
2011 2012 2013 2014 2015
Sales Sales DKKm ORG growth
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
A strong portfolio of innovation with global relevance – built over the last 50 years
300+ brands
~100 countries
Albania, Algeria, Argentina, Australia, Austria, Bangladesh, Belarus, Belgium, Bolivia, Bosnia-Herz., Brazil, Bulgaria, Cameroon, Canada, Chile, Colombia, Costa Rica, Croatia, Cyprus, Czech. Republic,
Denmark, Dominican Rep., Ecuador, Egypt, El Salvador, Estonia, Ethiopia, Finland, France, Germany, Great Britain, Greece, Guatemala, Honduras, Hong Kong, Hungary, India, Indonesia, Iran, Ireland, Israel,
Italy, Ivory Coast, Japan, Jordan, Kenya, Lebanon, Lithuania, Luxembourg, Malaysia, Mauritius, Mexico, Morocco, Myanmar, Netherlands, New Zealand, Nigeria, Norway, Oman, P.R. China, Pakistan,
Panama, Peru, Philippines, Poland, Portugal, Puerto Rico, Qatar, Romania, Russian Fed., Saudi Arabia, Serbia, Singapore, Slovakia, South Africa, South Korea, Spain, Sri Lanka, Sudan, Sweden,
Switzerland, Syria, Taiwan, Tanzania, Thailand, Trinidad &Tobago, Tunisia, Turkey, Uganda, Ukraine, United Arab Emirates, USA, Uzbekistan, Venezuela, Vietnam, Yemen
10 best-in-class
product families
Coronase®, Liquanase®, Savinase®, Stainzyme®, Amplify®, Lipex®, Carezyme®, Celluclean®, Mannaway®, xPect®,
Intensa Evity®, Blaze Evity®
New stabilization
technology Novozymes Evity® is a range of highly robust and stable enzymes
6 enzyme
classes
1 platform of enzyme and microbial technology
Protease Amylase Lipase Cellulase Mannase Pectate Lyase
32 QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
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
European high-
performance detergent
European average-
performance detergent
U.S. average-performance
detergent
Emerging markets average-
performance detergent
European high-
performance detergent
2008 2014
60
100
50 50
10
Average-performance detergents offer dual opportunities; to
penetrate more brands and to increase performance with enzyme-
including brands (in the EU, 70-75% contain enzymes today; in the
US, 65-70%)
Emerging markets offer vast
opportunities for increasing
penetration (~40% today) and
performance
All European high-performance detergents contain enzymes. Over
time, enzyme inclusion can increase with innovation
33 QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
34
Household Care: Hygiene solutions
Approach and status
• We focus on establishing a
portfolio of solutions
targeting the hygiene
issues i.e. odor and deep-
cleaning and other related
issues
• Hygiene solutions will
allow our customers to
differentiate in the laundry
detergent market through
new claims. Our
experience within laundry,
including sensory and
other assay knowhow puts
us is a good position to
address the issues
• We are exploring a number
of technologies to develop
hygiene solutions together
with our customers
Relevance of
innovation cluster
• The laundry industry is
moving towards cold wash
and less water usage –
both positive trends from a
sustainability perspective
• Especially cold wash result
in increased bacteria-
related odor issues and
general challenges in wash
performance
• Hygiene solutions
addressing these related
issues and challenges
would potentially truly
enable the sustainable
cold wash trend in laundry
and can also enable fewer
re-washes
Next steps
• Identification of the root
causes leading to laundry
hygiene issues (as these
are very different
compared to the traditional
stain cleaning)
• Together with our
customers to develop the
right solutions addressing
unmet consumer needs
and ways to position the
products in the market in
the right way
• Establish a hygiene
platform (portfolio of
technologies and products)
- first products within the
platform are expected
launched within the next 3
years
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
27% of sales in 2015
Food & Beverages Overview
Applications Baking / Starch conversion / Brewing / Beverage alcohol / Healthy concepts Novozymes market share 30-40% Competition DSM, Dupont, regional
35
3.033 3.186 3.190 3.278 3.715
8%
1% 3% 4% 5%
2011 2012 2013 2014 2015
Sales Sales DKKm ORG growth
Current Trends Growth Drivers Growth Barriers
• Sustainability in production
processes, packaging, etc.
• Food safety and informed food
consumption
• Consumer interest in health
and wellness properties of
food
• More convenience in food
preparation
• Food producer focus on cost
optimization, processing aids
and brand building
• Consolidation of food &
beverage producers
• Growth in processed foods in
emerging markets
• High raw material prices
leading to demand for
production process
optimizations
• Enzymes for safer and
healthier foods
• Growth in grain and oil-seed
processing
• GDP and population growth
as well as industrialization in
emerging markets
• Consumer preferences for
traditional foods
• Consumer skepticism about
technology in food & beverage
production
• Conservative industries
• Fragmented and local markets
and dietary habits
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
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
A global business with global
solutions
Characteristics:
• Starch processing main
business
• Fewer product categories
• DuPont main competitor
• Fragmented global customer
base
• ~60% direct sales
• ~60% emerging markets
Food products
Product-driven for developed
markets
Characteristics:
• Baking main market
• Many products to many end
customers
• Competition more dispersed
and local
• ~80% direct sales
• ~30% emerging markets
Brewing
Starch processing
Beverage
alcohol
Oils & fats
processing
Juice & wine
Baking
Infant food
Acrylamide
reduction Low lactose
Flavor
enhancement
36 QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Food & Beverages: Vegetable oil processing
37
Approach and status - Palm Oil Extraction as an
example of activities
• The palm oil industry seeks
to improve its sustainability
footprint. Novozymes is
working together with our
customers to develop the
optimal product solutions in
support of that process
• This could enable palm oil
millers to extract more oil
from existing plant
installations, which is a
significant economic and
sustainability driver for
countries like Malaysia and
Indonesia
• Today ~240 Mln tonnes of
fresh fruit bunch are
harvested and processed
per year. The market is
expected to grow ~5% until
2020
Relevance of
innovation cluster
• Novozymes believes our
technology has the
potential to improve
industrial processes in the
vegetable oil processing –
enabling millers of
vegetable oils such as
palm, soy and rapeseed to
produce more oil with the
same or less input thereby
improving the economic as
well as environmental
footprint of their industry
• We are currently marketing
solutions for soy and
rapeseed processing, and
are exploring additional
applications in these
substrates as well as in
palm processing
Next steps
• Currently Novozymes is
running proof-of-concept
on our first products within
palm oil extraction with
selected customers to
validate performance
improvement
• Developing next
generation solutions for
soy and rapeseed for
broader scope of
application
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
18% of sales in 2015
Bioenergy Overview
Applications Corn ethanol / Biomass conversion -Mainly a U.S. business today Novozymes U.S. market share ~55% Competition Dupont + regional niche
38
1.782 1.748 1.909 2.270
2.543
1%
-9%
12% 19%
-5%
2011 2012 2013 2014 2015
Sales DKKm ORG growthSales
Current Trends Growth Drivers Growth Barriers
• U.S. corn ethanol industry
affected by overcapacity and
low margins
• Advanced second-generation
biofuels not fully
commercialized
• Low oil prices, putting pressure
on ethanol prices
• Stable and coherent political
mandate to drive adoption of
biofuels
• Innovation for yield
enhancement and chemical
cost reduction
• Demand for CO2 reductions in
transportation sector
• Focus on domestic economy,
energy and job creation
• Lack of political commitment to
set and enforce blending
mandates
• An energy industry with a
vested interest in traditional
fuels
• Competition with other
industries and technologies
• for feedstock conversion
• Competition with other
transportation technologies for
“best way” to reduce CO2
emissions
• Customers focusing on costs in
a low-margin environment
• Low oil prices
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Increasing complexity in ethanol production
Advancing enzyme design: Using our diagnostic program to deliver custom
fermentation solutions, tailored to a plant’s unique operating conditions
Why utilize the Custom Solutions program?
• Increasingly unique operating conditions require more targeted solutions to maximize performance
• Operational targets also change with market conditions
• Ability to access Novozymes library including over 25 unique molecules for commercial ethanol production
39 QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Past
Basic products for liquefaction
and saccharification
Present
Multiple offerings across
liquefaction and saccharification
Future
Increasingly customized
solutions for liq and sacc, novel
solutions for other process steps
From standard to more customized solutions
The Ethanol Process: Enzymes are applied in multiple stages, along with yeast in fermentation
Ethanol production and outlook in the U.S. – Production has stabilized at 10% of U.S. gasoline consumption + exports
Sources: US Energy Information Agency; annual energy outlook, April 2015, US Department of Agriculture, F.O Licht, Renewable Fuel Association and Houston Biofuel Consultants LLC
0
20
40
60
80
100
120
2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039
Ind
ex
Gasoline volumes are stable today. 2040 outlook is for lower volumes driven by mileage standards
0
5
10
15
20
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Billio
n G
allo
ns
U.S. ethanol production volumes have stabilized
0
200
400
600
800
1.000
1.200
1.400
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Millio
n G
allo
ns
U.S. ethanol exports have increased since 2009
0%
2%
4%
6%
8%
10%
12%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
U.S. Ethanol blend:
~10% of gasoline consumption
40 QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Project pipeline biomass conversion
Novozymes serves 5 out of 8 commercial facilities
While several biomass conversion ethanol plants are already operating, more than 20 solid biomass conversion
projects are under development globally (not all publicly announced) Different business models: • Co-marketing with Beta
Renewables • Project development • Large strategic partners e.g. Raízen
41
Publicly announced, commercial biomass conversion projects under development by region*
Brazil 4. Raízen
5. GranBio
− Solvay
− CTC
United States 1. POET/DSM
2. Dupont
3. Abengoa
− Beta Renewables
− ZeaChem
− ICM
− Sweetwater
Europe 6. Beta Renewables
7. ST1
− Maabjerg Bioenergy
− Ethanol Europe
− Energo Chemica
India and South East Asia
− Beta Renewables
− India Oil
− CVC India
− Brooke Sarawak
China 8. Longlive
− Petro China
− Cofco
− Tianguan Group
− M&G Chemicals
− NTL
*Non-exhaustive
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
15% of sales in 2015
Agriculture & Feed Overview
42
Feed alliance The BioAg Alliance
Applications Enzymes for
nutritive
enhancement of
feed for pigs and
chicken
Microbes for crop yield
enhancement and to
fend off pests and
diseases
Market
share
25-30%
(enzymes only)
Leading producer of
inoculants. Small
presence in biopesticides
Competition Dupont, AB
Vista, regional
BASF, Bayer, regional
956
1.371 1.617 1.668 1.728
2.130
2%
11% 13%
5% 7%
19%
2010 2011 2012 2013 2014 2015
Sales DKKm ORG growthSales
Current Trends Growth Drivers Growth Barriers
• Rising demand for food and
feed as populations grow
• Pressure on available land to
farm and sustainability in
farming
• Focus on yield maximization
• Global growth in protein
consumption due to change in
dietary habits
• Increasing consumer
awareness of food supply
origins and integrity
• Growing demand for reduced
use of antibiotics in farm
animals
• High input costs for farmers
• GDP and population growth in
emerging markets
• Increased demand for food
and protein
• Regulatory requirements for
more sustainable farming
practices
• Consumers demanding better
and more sustainable foods
• Focus on animal welfare
• Increased chemical and
fertilizer scarcity
• Low pricing for traditional
fertilizers, pesticides and
crops
• Biotechnology solutions at
relatively early stage of
development
• Technology robustness
• Incomplete scientific
understanding of plant and
animal microbiome
• Unclear regulation
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
There are approximately
in 1 tablespoon of soil1
Microbial solutions for agriculture
Microbials, notably bacteria and fungi, are types of agricultural biologicals that protect crops from pests and diseases and enhance plant productivity and fertility.
43
1. North Carolina State
University Cooperative
Extension
How are microbials applied?
Seed treatment
Foliar
In-furrow
BioControl
• Complements or potentially replaces
chemical pesticides
• Provides additional modes of action
BioYield
• Utilizes nutrients in the soil
• Creates stronger, healthier plants
• Provides new options for sustainable
agriculture
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
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
(5 year avg. 2009–2013) ~ 260m ~190m ~15m ~85m ~425m ~549m ~80m ~400m Market expansion
• Significant opportunity across crops and geographies Inoculants Treated
Acres2 ~55-60% ~ 15% ~50% ~ 5% ~ 5% <1% <1% <1%
BioAg Existing Product Portfolio
Immediate commercial portfolio
• Working from strong starting position with existing commercial products NA
LATAM
RoW
Current Inoculants Treatment Regime
Advantageous commercial footprint
• Monsanto’s broad global footprint enabling upstream distribution and leveraging relationships with distributor and retail channels
Upstream (Seed Company)
Midstream (Distributor/Retailer)
Downstream (Grower)
1. Source: FAO stats and Internal estimates 2. Internal 2014 estimates
Strong product position Moderate product position Minor product position No current product position
1
2
3
44 QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
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 focus to transition this small niche into mainstream Ag practice
The power of The BioAg Alliance
45
ESTABLISHED MICROBIAL LEADERSHIP INDUSTRY-LEADING R&D CAPABILITY AND COMMERCIAL FOOTPRINT
REGULATORY
REGISTRATIONS
PROCESS
OPTIMIZATION
Extensive microbial library
Strain optimization & formulation
World-class fermentation
Existing microbial products
Unique microbial library
Leading field testing network
Global commercial footprint
Ability to unlock placement with precision
agriculture
The BioAg Alliance
+
DIS
CO
VE
RY
COMMERCIALIZATION
MANUFACTURING SELECTED
MICROBES CUSTOMERS
FIELD
TESTING
SMALL-SCALE
FERMENTATION
DISCOVERY
COLLABORATIONS
IN-LICENSING PRODUCTS &
COMPLEMENTARY TECHNOLOGIES
OUT-LICENSING
OPPORTUNITIES
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Building a stronger offering within animal farming
“To help feed a growing world, we work with partners to develop and drive adoption of proven biological innovations that improve feed efficiency and animal health”
46
Partner model
Novozymes
• Screening & in vitro
• Upscaling & production
• A shared vision • Aligned strategic interests in the project and the product • Willingness to invest • Complementary capabilities
Business development
Adjacency:
enabling
new feed
ingredients
Adjacency:
animal health
additives
(e.g..probiotics
with Adisseo &
PVG acquisition)
Enzymes for
nutritional
enhancement of feed
– a strong core built
over 20 years
• Upgrading of co-and by-products to higher value products, enabling category shifts
• Leveraging existing market access, customer relationships and our strong technical capabilities within raw material processing from adjacent industries
• Enzymatic and microbial solutions for natural growth promotion
• Leveraging large collection of microbial diversity and strong technical capabilities in microbe ecology, analytics and production
Partner
• In vivo & application
• Sales & marketing
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Attractive value propositions in animal feed enzymes
• Only 3-30%* of phosphate in feed is available to the animal
• Ronozyme NP® releases half of the phosphate bound – Ronozyme HiPhos® releases nearly all of it
• Farmers can save 25-100%* of added mineral phosphate
• Significant reduction in phosphorous excretion from animals
• Maximizing protein utilization and improving nutritional value
• Targets nearly all protein sources in feed • Improves protein digestibility by > 20%*,
increasing feed conversion • Reduces need for additional protein feed,
such as soybean meal
• Xylanase & glucanase increase non-starch polysaccharide digestion
• Amylase improves starch digestibility, releasing more energy
• Cellulase improves fiber digestion • Grain feed savings of ~ 2.5%* • Less pollution (ammonia, nitrate, nitrous
oxide and CO2)
* Dependent on multiple factors – animal species, age, feed composition and other additives
Phytase – phosphate ProAct® – protein Others – energy
47 QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
48 QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Ag & Feed: Natural Growth Promotion
48
Approach and status
As part of our efforts to leverage biological solutions to enable efficiency gains
in animal products, we aim to leverage our capabilities to develop additives for
natural growth promotion
In 2015 we initiated a partnership with Adisseo with the shared ambition to
enter and develop the market for probiotics
In 2016 H1, Alterion® was released together with Adiesseo which is a probiotic
for poultry, as the first product in our innovation cluster “Natural growth
promotion”.
Relevance of innovation cluster
The world needs sustainable efficiency gains in animal production
• 9+ billion people by 2050
• Protein demand to double next 40 years
• Feed costs in 50% of costs in animal production
• Arable land per capita expected to decrease by 35% from 2000 to 2050
• Antibiotic resistance and regulation are driving the need for alternatives
to antibiotics
Improving the yield in animal production would have significantly positive
impact in terms of global warming and use of agricultural land
Alterion® consistently improves the gut health of poultry which yields a lower Feed Conversion Ratio (FCR) and increase Body Weight Gain (BWG).
7% of sales in 2015
Sales Technical & Pharma Overview
Applications Textiles / Leather / Pulp & Paper Albumin / Biocatalysis Novozymes market share ~50% (enzymes only) Competition Dupont + regional
49
Current Trends Growth Drivers Growth Barriers
• Better and more sustainable
drug delivery and formulation
• Cost-cutting in technical
industries
• Consumer demand in
emerging markets for
improved textile quality and
longevity
• Sustainability in technical
industries such as textiles
• Non-animal, recombinant
input sources in pharma
• Better drug-delivery dosing
regimes
• Fragmented and chemically
driven technical industries
• Conservatism in pharma
production
• Long and resource-intensive
development cycles in pharma
810 710 757
830 982
11%
-5%
6% 9% 6%
2011 2012 2013 2014 2015
Sales DKKm ORG growth
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Partner Drug PI PII PIII MA Market
Tanzeum/Eperzan (Albiglutide) - GLP1 for Diabetes
rIX-FP - Once weekly for Hemophilia B
rVIIa-FP - Novel drug for Hemophilia A+B
Albumedix works as a stand-alone pharma company, maturing opportunities within Albumin to maximize value creation
Partner Drug PI PII PIII MA Market
MMR Vaccine and ProQuad
IVF media
Surgical sealent
N/A Cardiovascular surgey device coating
N/A Artificial lung/ lung damage
N/A Stem cell media
N/A Anemia
N/A Urology
N/A Blood marrow / bone cancer
Recombumin® – Drugs manufactured or formulated using Albumedix’ recombinant albumin (product sales revenue)
50
several projects in pre-clinical to PII with large/medium pharma and smaller biotech
Several projects in feasibility and pre-clinical with large/medium pharma and smaller biotech.
Veltis® – Drug candidates using Albumedix’ albumin technologies for half-life extension (license revenue)
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
New long-term targets focus on world impact
New IMPACT targets
Company performance – the traditional view on sustainbaility
World needs – areas where we can make an impact
Social Environmental
• 10 transformative innovations • 5 partnerships for change • Educate 1 million people • Enable Zymers to develop
• Save 100 million tons of CO2 • Reach 6 billion people with our
biological solutions
Sustainable
raw materials
Resource
efficiency
Product
stewardship
Health &
Safety
Human &
labor rights
Employee
satisfaction
Sustainable
growth Education
Health and
livelihoods
Climate
change
Novozymes’ unique contribution:
Updated operational targets Environment • Energy efficiency • Water efficiency • Reduction in CO2 intensity • Renewable energy • Supplier program • Gold Class RobecoSAM rating • Carbon Disclosure Project A List
People • Occupational accidents • Employee absence • Employee “satisfaction and
motivation” • Employee “opportunities for
development” • Women in senior management
Governance (economic)
Corporate
governance
Business
integrity &
antitrust
Economic
growth
Job
creation
Supplychain
management
52 QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Steady improvement in employee metrics
We plan to continue our journey of operational excellence
Decoupling resource consumption from economic growth
0%
20%
40%
60%
80%
100%
120%
140%
160%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
% c
han
ge
fro
m 2
00
5 b
as
eli
ne
Sales
Gross profit
Water
Energy
CO2 emissions
53 QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
0,0%
0,5%
1,0%
1,5%
2,0%
2,5%
3,0%
3,5%
0
2
4
6
8
10
12
Occupational accidentsper million working hours
Employee absence (%)
Remuneration principles for executive leadership
• Novozymes’ principles for Executive Leadership remuneration ensure close alignment with long-term shareholder interests, links remuneration to shareholder gains and losses, and ensures management retention
• In 2015, Executive leadership team of 6 received DKK 51 million in remuneration (incl. pension) + DKK 34 million in expensed stock/based incentive programs
Annual remuneration scheme
Long term incentive program (2014-2016)
• Economic profit as measurement • 50% stock options, 50% stocks • Opportunity to double annual remuneration • Maximum clause caps upside (max. cap = 2x
intrinsic value at establishment ex. inflation) • Stock options awarded annually (3-year vesting
period), stocks in 2017 (no vesting period)
0
2
4
6
8
10
12
14
16
18
Mo
nth
s o
f sala
ry p
er
year
Max 2 months ofbase salary cashbonus linked tofulfilment of EBITand sustainabilitytargets
Max 3 months ofbase salary cashbonus linked tofulfilment ofpersonal targets
Base salary
0
10
20
30
40
50
60
70
80
90
100
0,0 0,5 1,0 1,5 2,0 2,5 3,0 3,5 4,0 4,5 5,0 5,5 6,0
% s
tock &
op
tio
ns a
ward
ed
Bn DKK of accumulated economic profit
54 QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Cereals:
110 kg CO2 per ton of bread
Detergent:
50-150 kg CO2 per ton of laundry
Beverage:
25 kg CO2 per 1000 litre of beer
Vegetable oil:
44 kg CO2 per ton of oil
Dairy:
230 kg CO2 per ton of mozzarella
Margarine:
23 kg CO2 per ton of hardstock
Animal feed:
80 kg CO2 per ton of feed
Textile:
1100 kg CO2 per ton of fabric
Agriculture:
15 kg CO2 per ton of corn
Leather:
100 kg CO2 per ton of hide
Paper making:
150 kg CO2 per ton of pulp
Cosmetics:
190 kg CO2 per ton of fatty acid ester
Reducing CO2 emissions together with our customers
In 2015, Novozymes helped customers save
tons of CO2 through the application of
Novozymes’ products, equivalent to taking 25 million cars off the road
Novozymes’ vision: working towards a future where biological solutions create
the necessary balance between a better business, a cleaner environment and better lives
55 QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Historical performance demonstrates track record of delivery – I/II
-2%
2%
6%
10%
14%
18%
0
3.000
6.000
9.000
12.000
15.000
Sales Sales DKKm Growth
16%
18%
20%
22%
24%
26%
28%
0
1.000
2.000
3.000
4.000
5.000
EBIT EBIT DKKm EBIT margin
52,0%
52,4%
51,8%
51,8%
52,6%
53,3%
53,7%
53,1%
53,5%
55,6%
55,7%
56,2%
57,2%
57,2%
57,4%
58,1%
50%
52%
54%
56%
58%
60%
Gross margin
4%6%8%
10%12%14%16%18%
Cost ratios S&D ratio R&D ratio Adm ratio
57 QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Historical performance demonstrates track record of delivery – II/II
0
750
1.500
2.250
3.000
3.750
4.500
8%
16%
24%
32%
40%
Free Cash Flow FCF bef. acq. DKKm FCF bef. acq./sales
0%
4%
8%
12%
16%
20%
0
300
600
900
1.200
1.500
CAPEX Capex DKKm CAPEX/sales
0
3.000
6.000
9.000
12.000
15.000
8%
12%
16%
20%
24%
28%
ROIC Inv.Cap. DKKm ROIC, incl. goodwill
-0,2
0,0
0,2
0,4
0,6
0,8
1,0
-500
0
500
1.000
1.500
2.000
2.500
NIBD NIBD DKKm NIBD/EBITDA
58 QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Limited exposure to raw material fluctuations
Factors impacting COGS development: • Productivity improvements, input prices, currency • Note: accounting practice implies that there is a
time lag between current price levels and COGS Factors impacting Novozymes’ input prices: • Geographical location, e.g., differences in input • Contractual agreements, e.g., timing, duration • Substitution possibilities, i.e., flexibility in use of
different inputs, not dependent upon one source • Price development on other products produced by
our suppliers from the same input
Raw materials consist primarily of different carbohydrates. Approximately 50% of raw material input are e.g., sucrose, maltose, glucose, starch.
35%
20%
45%
Split of COGs
59
Raw materials
Energy, utilities & others
Indirect production costs
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Dividend and stock buyback history
• DKK 3.50 dividend per share paid for 2015 up 17%, payout ratio 37.6%
• Dividend pay-out ratio to increase to ~40% over next couple of years
• Expected buyback program in 2016 of up to DKK 2 billion
• Accumulated buybacks end of 2015 since IPO were DKK 9.7 billion
• Accumulated dividend and stock buybacks of ~ DKK 16.7 billion since 2000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Buyback 8 424 185 392 847 1.053 1.107 500 0 0 0 400 832 0 2.000 2.000
Dividend 124 146 162 217 231 255 278 309 326 358 504 600 687 786 925 1.062
DPS 0,33 0,40 0,45 0,63 0,70 0,80 0,90 1,00 1,05 1,15 1,60 1,90 2,20 2,50 3,00 3,50
0,00
0,50
1,00
1,50
2,00
2,50
3,00
3,50
0
500
1.000
1.500
2.000
2.500
3.000
3.500
Div
iden
d p
er
sh
are
, D
KK
DK
K m
illio
n
Dividend / Buybacks
Dividend Buyback DPS
60
Buyback
Dividend
DPS
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Shareholder distribution
B shares listed in Copenhagen under the symbol “NZYM B” • Two share classes; A and B shares
• B shares listed in Copenhagen under the symbol “NZYM B”
• “A” share capital and 26,071,400 B shares held by Novo A/S, the management company of the Novo Nordisk Foundation
• As of Aug 2016, Novo A/S owns 25.5% of the share capital and controls 71% of votes (All A shares & ~10% of B shares)
19%
32%
3%
11%
21%
10% 4%
Shareholder distribution
of B common stock*
*Distribution equals where shares are managed, Aug 2016
61
Denmark
Rest of world
Novo A/S
North America
Rest of Europe
Own shares
UK
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Nicolai Kobborg
Mobile (DK): +45 3077 1348
E-mail: [email protected]
Martin Riise
Mobile (DK): +45 3077 0738
E-mail: [email protected]
Klaus Sindahl
Mobile (DK): +45 5363 0134
E-mail: [email protected]
Investor Relations contacts
Further investor relations information is available from the company homepage at www.novozymes.com/investor
62