Novozymes Conference Call 9M October 25, 2017

Transcription

1 Novozymes Conference Call 9M 2017 October 25, 2017

2 9M 2017 Highlights Continued good momentum Organic sales growth +4% (Q3: +8%) Large segments growing organically: Household Care +2% (Q3: +4%) Food & Beverages +9% (Q3: +11%) Bioenergy +10% (Q3: +16%) Improving relative to after first-half year: Agriculture & Feed -2% (Q3: +8%) Technical & Pharma -3% (Q3: -1%) Emerging and developed markets +4% resp. (org. 9M y/y) 9M EBIT margin 27.9%. Q3 EBIT margin 29.6% Solid cash flow generation at DKK 2.1bn Uncertainty regarding agriculture-related markets for Q4 Full-year outlook adjusted: Organic revenue growth now 3-5% (2-5%) EBIT growth now 2-4% (1-4%) and EBIT margin ~28% Net profit growth 2-5% (2-5%) incl. DKK 60m financial item write-down (DKK 47m post-tax) in Q3 9M y/y organic sales growth per segment 2% Household Care 9% Food & Bev 9M EBIT margin 10% Bioenergy 27,7% 27,7% -2% Ag & Feed 27,9% 9M'15 9M'16 9M'17-3% Tech & Pharma 2

3 Organic sales growth by geography +4% 9M y/y +12% Q3 y/y 33% +4% 9M y/y +5% Q3 y/y 37% +6% 9M y/y +6% Q3 y/y 20% +3% 9M y/y +10% Q3 y/y 10% 9M y/y organic sales growth Emerging markets: +4% (Q3 y/y +9%) Developed markets:+4% (Q3 y/y +8%) 3

4 Household Care 33% First nine months in line with expectations Organic growth y/y: 9M +2%. Q3 +4% Growth in both developed and emerging markets Enzyme technology for liquid formulations supporting growth in Asia Pacific, in particular China Top-20 customer focus supports sales growth Continued good performance for dishwash segment Full-year Household Care organic growth expected to be modest 9M y/y organic sales growth 8% 5% 1% 1% 2% 9M'13 9M 14 9M'15 9M'16 9M'17 Quarterly y/y organic sales growth Innovation and emerging markets in focus Freshness and hygiene platform on track for launch in Q4 Market presence in emerging markets increasing according to plan and new technology support growth Continued focus on new innovation to enable detergent differentiation in the marketplace 5% 4% 1% 1% -5% Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 4

5 Food & Beverages 28% Solid performance also nine months into the year Organic growth y/y: 9M +9%. Q3 +11% Nutrition continues good momentum, driven by both lactose reduction in dairy and infant nutrition Starch continues strong performance, driven mainly by China Continued strong uptake of baking solutions outside US freshkeeping market, and North America stable Beverages post good growth 9M y/y organic sales growth 9% 5% 5% 3% 1% 9M'13 9M 14 9M'15 9M'16 9M'17 Growing interest in recent launches. Emerging market push moves ahead Frontia gaining interest with our established customers in the starch-processing segment Palmora for vegetable oil processing generating solid interest Market presence in emerging markets increasing according to plan Quarterly y/y organic sales growth 10% 6% 4% 11% -2% Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 5

6 Bioenergy 18% Solid growth in enzymes for conventional biofuels Organic growth y/y: 9M +10%. Q3 +16% US ethanol production estimated to be up ~2% in first 9M y/y (Q3 y/y estimated flat). US ethanol inventories remain elevated Growth in conventional biofuels driven across geographies by increased penetration of new technology and less trialing in customer base Biomass conversion contributing but small part of overall sales US ethanol production expected to post slight growth for M y/y organic sales growth 23% 8% 10% -1% -7% 9M'13 9M 14 9M'15 9M'16 9M'17 Update on recent country-specific biofuel news Increased Brazilian import tariffs likely to have little impact on US ethanol depends partly on local Brazilian supply/demand US EPA discussions ongoing: Removal of RVP restriction (to allow E15+ all year round), ethanol exports included in RIN credit calculation, 2018 RVO blend mandate, RFS point of obligation Chinese bioethanol announcement supportive of global industry, but more visibility needed. Novozymes well established in China Quarterly y/y organic sales growth 16% 7% 6% 8% -8% Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 6

7 Agriculture & Feed 14% Growth picking up after -6% in 1H y/y Organic growth y/y: 9M -2%. Q3 +8% Sales increased due to expected sales cycle change in Agriculture from first to second half of the year Feed enzymes sales lower in Q3 due to volatile inventories and soft end-market demand Probiotics continue good growth from a low base. Approval for Alterion in China supports this growth Full-year performance includes uncertainty regarding both Agriculture and Feed for Q4. Farmers still challenged 9M y/y organic sales growth 9% 8% 19% 0% -2% 9M'13 9M 14 9M'15 9M'16 9M'17 Quarterly y/y organic sales growth Focus on innovation and market expansion Acceleron B-300 SAT expected to see a step up in acre penetration relative to last year New products and expansion into new regions will support and drive long-term growth in Agriculture 22% 8% 2% -3% -16% Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 7

8 Innovation and science-based culture Acceleron B-200 SAT Medley Progress Excel Hello Science Freshness and Hygiene (Q4e) 2017 Q1 Q2 Q3 Q4 Spirizyme T Palmora Frontia Progress In World s 2nd best science employer according to Science Magazine 8

9 9M performance and 2017 outlook 9M 2017: Continued good momentum, better than expected Continued growth in the large segments: Household Care, Food & Beverages, Bioenergy Agriculture & Feed improving EBIT margin solid at 27.9% (Q3: 29.6%) Net profit growth 4%, including DKK 60m write-down of financial asset in Q3 (DKK 47m post-tax) Solid free cash flow generation of DKK 2.1bn, including close to DKK 1bn in net investments DKK 1.7bn worth of shares bought back within the DKK 2.0bn framework for 2017 Emerging market investments to support growth moving ahead 2017 outlook adjusted Organic revenue growth now 3-5% (2-5%) EBIT growth now 2-4% (1-4%) and EBIT margin ~28% Net profit growth 2-5% (2-5%), including financial item writedown in Q3 Uncertainty regarding volatile agriculture-related markets for Q4 Key financials (DKKm) Realized 9M outlook October 25 Organic sales growth +4% 3-5% DKK sales growth +4% 2-4% EBIT growth +5% 2-4% EBIT margin 27.9% ~28% Net profit growth +4% 2-5% Net investments excl. M&A Free cash flow excl. M&A ROIC incl. goodwill 978 1,600-1,800 2,113 2,100-2, % ~25% 9

10 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 inputs 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. 10 Forward-looking statements This presentation and its related comments contain forward-looking statements, including statements about future events, future financial performance, plans, strategies and expectations. Forward-looking statements are associated with words such as, but not limited to, "believe," "anticipate," "expect," "estimate," "intend," "plan," "project," "could," "may," "might" and other words of similar meaning.

11 Q&A Continued good momentum, better than expected Full-year outlook adjusted after better-than-expected 9M performance Stronger connection between application R&D and commercial organization enables more impactful innovation Our business is about turning amazing science into sustainable biological answers in a growing world, and our focus is on creating long-term value 11