road show presentation q2 2016 · presentation q2 2016 august 10 th 2016 ... forward -looking...
TRANSCRIPT
Road Show presentation Q2 2016
August 10th 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
13
21
32
33
37
40
43
50
52
57
3
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
1H 2016 Summary
1.710 1.909 1.911
28.1%*
27.2% 27.2%**
22%
24%
26%
28%
30%
1H 2014 1H 2015 1H 20161.600
1.700
1.800
1.900
2.000
EBIT and EBIT margin 1H 2014 – 1H 2016
Q2 sales increased but were lower than expected
• 3% organic sales growth and flat sales in DKK in 1H 2016.
Growth driven by Household Care, Food & Beverages and Technical
& Pharma
• BioAg and Bioenergy came in below expectations, whereas Feed had
strong growth. BioAg was negative because of change in sales
pattern from LY and slower U.S. demand. Bioenergy continued to be
challenged as customers focus on low cost and optimizations
• Adjusting for negative one-time impact following the reorganization in
Q1, EBIT grew by ~4% and EBIT margin expanded to above 28%
Full year profitability outlook is maintained;
Organic sales outlook adjusted due to uncertainties
• Organic sales 2-4% (adjusted from 3-5% previously)
• Sales in DKK 1-3%
• EBIT growth 1-3%
• EBIT margin ~28%
• Net profit growth 8-10%
• ROIC 25-26%
6.094 7.028 7.038
8%
5% 3%
0%
2%
4%
6%
8%
10%
12%
1H 2014 1H 2015 1H 20165.500
6.000
6.500
7.000
7.500
Sales and organic growth 1H 2014 – 1H 2016
5
DKKm
DKKm
* Adjusted for the BioAg Alliance, EBIT
margin would have been ~26% ** Adjusted for the reorganization,
EBIT margin would have been ~28%
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Household Care & Technical
Household Care
• Satisfactory sales growth in HHC supported by demand for liquids
in Asia Pacific and premium detergents in North America. Europe and Latin American are both slightly positive for the first half of the year
• New innovation launched with Amplify Prime® and Progress Uno®
Technical
• Textiles and leather continue to drive solid growth in Technical for the first half of the year
Pharma
• Very strong growth in Pharma in the first half of the year driven by increased royalty streams, higher demand for pharma enzymes and sales of hyaluronic acid in Q1
2.330
578
2.265
488
Household Care Technical & Pharma
1H 2016
1H 2015
6
+4% / +3%
+22% / +18%
Organic growth / DKK growth
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Agriculture & Bioenergy
Bioenergy
• Sales contracted in the first half of the year as ethanol producers
continued to optimize their production economy and enzyme spend. Tough price competition; producer margins remained low
• Trialing of Avantec® Amp and Liquozyme® LpH is progressing,
however the conversion rate from trialing into commercial sales is slightly slower than expected due to current environment
BioAg
• Sales in BioAg are down from last year, mainly due to changes in sales pattern and tight economy among U.S. soybean farmers
Animal Health & Nutrition
• Strong performance in Feed for the first half, partly driven by weak comparison level and timing. Protein-enhancing enzymes
continued to deliver strong growth. Our carbohydrases were also positive, while phytases were on par with last year
• Interest in trialing our recently launched probiotic Alterion® is increasing, but sales are still small
7
1.196
1.078
1.288 1.141
Bioenergy Agriculture & Feed
1H 2016
1H 2015
-6% / -7% +1% / -6%
Organic growth / DKK growth
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
The upcoming launch of the new corn inoculant
Our current business in BioAg
• Slightly less than half of our Ag/Feed segment, soy being the primary crop
• Sales growth in DKK is currently impacted positively by deferred income
• Revenue per acre varies, and depends on crop type, product benefits and geography
New corn inoculant
• First ever inoculant for corn applied by a seed company (upstream)
• Launch plan for 2017 on track (Novozymes ramp-up 2nd half 2016)
• 2015 field test showed > 4 bushel/acre at a 65% win rate. Final yield to be determined Jan, 2017
• Novozymes’ revenue will depend on corn price and pricing strategy – wide adoption targeted
• New product to be launched under Monsanto’s Acceleron® brand with the potential to reach 100m acres by 2025
8 QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Food & Beverages
Baking
• Baking still driving growth, though more modestly than in recent
years and mainly in Europe and emerging markets
Starch
• Solid growth in starch driven by increased penetration mainly in Europe
Food & Nutrition
• Food & Nutrion still contracting as sales for infant formulas remain challenged – other sales areas perform well
Beverages
• Good start in Beverages across segments – in particular, our
sales of raw material optimization products to the brewing segment are demonstrating healthy growth
9
1.856 1.846
Food & Beverages
1H 2016
1H 2015
+3% / +1%
Organic growth / DKK growth
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Research & Innovation update
Amplify Prime® best-in-class liquid amylase
• In-depth cleaning at low temperatures
• Best starch removal technology optimized for short
wash cycles
Progress Uno® protease for tough conditions
• Exceptionally high performing protease that delivers consistent wash performance even in water-rich
concentrations
• Reduces or eliminates the need for stabilizers
• Increases formulation flexibility
10
Household Care
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
11
Research & Innovation update
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • SEGMENTAL OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Novozymes to supply DONG’s new REnescience® plant in Northwich, U.K. – new biological waste-sorting technology
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Financial performance & outlook
1H 2016: Net profit in line with expectations
• Gross margin on par with first half last year, as productivity
improvements offset the one-time reorganization cost incurred in Q1
• Adjusting for the net one-time impact from the reorganization, EBIT
grew by ~4% and EBIT margin expanded to above 28%
• Net profit grew by 8% in 1H in line with guidance
• We are halfway through the DKK 2bn share buyback program
2016 profitability outlook maintained;
organic sales growth adjusted
• Profitability maintained; productivity improvements and operational
efficiencies are expected to lead to a higher EBIT margin in H2
• Organic sales growth outlook adjusted from 3-5% to 2-4% due to
market uncertainties. Sales growth in DKK maintained at 1-3%
• Changes in sales pattern to our partner in BioAg means growth will
be skewed towards the end of the year
Key
financials Realized
1H 2016 2016 outlook
August 10
Sales growth, org. 3% 2-4%
Sales growth, DKK 0% 1-3%
EBIT growth 0% 1-3%
EBIT margin 27.2% ~28%
Net profit growth 8% 8-10%
Net investments excl.
acq., DKKm 542 1,100-1,200
Free cash flow before
acq., DKKm 1,354 2,400-2,600
ROIC incl. goodwill 25.4% 25-26%
12 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?
14
Founded 1925
Listed 2000
Ticker NZYM B
Exchange Copenhagen
Market Cap US$ ~13.5bn
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
15
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
16 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%
17 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%
18
Industry Region
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
19
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
Area Innovation Feasibility Discovery Development
t Launch Commercial
Household Care Hygiene solutions
Household Care
Tailored emerging markets solutions
Food & Beverages Beverages
Vegetable oil processing
Bioenergy
Biomass conversion conversion
Agriculture & Feed Feed
Natural growth promotion
Agriculture & Feed Feed
Enhanced corn inoculant
Agriculture & Feed Feed
New transformative transformative BioAg
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.
20 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
22
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
23 QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Our strategy puts partnerships front and centre
24 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
25
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 26
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
27 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 & Beverages
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.
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW 28
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
29 QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Raw materials
Micro-organisms
Enzymes
Fermentation
Purification
Formulation
Fermentation technology – 3 levers to improves 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
30 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
31
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)
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
33
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
34 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
35 QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
36
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
37
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
38 QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Food & Beverages: Vegetable oil processing
39
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
40
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
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
41 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
42
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
43
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.
44
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
45 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
46
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”
47
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
48 QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
Ag & Feed: Natural Growth Promotion
49
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
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
Next steps
• First product in our
innovation cluster “Natural
growth promotion” is
expected to launch in the
first half of 2016
• In the medium term, we
aim to develop species
extensions and novel
generation probiotics
QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
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
50
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)
51
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
53 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
54 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
55 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
56 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
58 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
59 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
60
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
61
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
62
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
63 QUARTERLY RESULTS • NOVOZYMES OVERVIEW • STRATEGY • MARKET OVERVIEW • SUSTAINABILITY • FINANCIAL REVIEW
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