ROADSHOW PRESENTATION Q1 2014

Transcription

1 ROADSHOW PRESENTATION Q April 24, 2014

2 Table of Contents Table of Contents 1. Q presentation 2. Novozymes Overview 3. Strategy 4. Segmental Overview Household Care Food & Beverages Bioenergy Agriculture & Feed Technical & Pharma 5. Sustainability 6. Financial Review

3 QUARTERLY RESULTS QUARTERLY RESULTS OVERVIEW STRATEGY SEGMENTAL OVERVIEW SUSTAINABILITY FINANCIAL REVIEW

4 4 Safe Harbor Statement This presentation and its related comments contain forwardlooking statements, including financial expectations. Forward-looking statements are by their very nature associated with risks and uncertainties that may cause actual results to differ materially from expectations. The uncertainties may include unexpected developments in the international currency exchange and securities markets, marketdriven price decreases for Novozymes products, and the launch of competing products in Novozymes core areas.

5 5 Q Summary Strong first quarter performance 11% organic sales growth (DKK=7%). Strong as expected, driven by Household Care, Bioenergy and solid performance across markets 30% EBIT growth driven by one-time effect from The BioAg Alliance coupled with better than expected underlying earnings development The Bioag Alliance net impact on EBIT margin in Q1 is positive with around 4 %-points DKK 2,230 million in free cash flow bef. acquisitions 12% 10% 8% 6% 4% 2% 0% 2,734 Sales and organic growth Q Q % 2,845 3,033 11% 0% Q1'2012 Q1'2013 Q1'2014 DKKm 3,500 3,000 2,500 Important business milestones The BioAg Alliance approved and initiated Biopharma: Veltis albufuse technology platform for half-life extension gets first market approval FY-2014 profit expectations increased EBIT growth: % EBIT margin: ~26% Net profit growth: % 6-9% organic sales growth unchanged. Sales growth in DKK adjusted to 4-6% due to currencies 34% 32% 30% 28% 26% 24% 22% 20% 18% 16% 14% 12% EBIT and EBIT margin Q Q % 24.9% 24.9% +30% +4% Q1'2012 Q1'2013 Q1'2014 DKKm 1,

6 Sales & Markets Q sales: DKK +7%, LCY +10%, organic +11% Sales by industry, DKKm Q Q Household Care: Sales continued on growth track, as customer interest in optimizing formulations for performance, low temperature wash, and chemical replacement remain unchanged Household Care 1,080 1,013 +7%/+10% Food & Beverages: Growth in all markets, primarily driven by baking and healthy concepts Food & Beverages %/+8% Bioenergy: Penetration of Avantec, Spirizyme Achieve & Olexa continued to increase in a quarter with good underlying volume growth in US Bioenergy %/+34% Agriculture & Feed: Reported numbers impacted by BioAg Alliance. Organically, sales were down by 1% due to timing. Feed contributed positively Agriculture & Feed (11)%/(6)% Technical & Pharma: Sales of pharma enzymes for the manufacture of pharmaceuticals were the main growth driver Technical & Pharma %/+19% DKK growth/lcy growth 6

7 7 Business Development Activity Update The BioAg Alliance initiated Biomass Conversion industry under establishment Biopharma technology gets stamp of approval The BioAg Alliance approved and initiated February 10 Intangible assets and ~130 employees transferred to Monsanto Upfront payment received Good progress on integration and execution of 2014 plan 5 new commercial scale biomass conversion plants to come on-stream globally in Abengoa, USA POET-DSM*, USA Dupont, USA GranBio*, Brazil Raízen*, Brazil GlaxoSmithkline s GLP-1 product, Albiglutide, approved in the EU mid-march and in the US April 15, 2014 Drug to reach markets in second half of 2014 Albiglutide is based on Novozymes albumin-based half-life extension technology Veltis *NZ to supply enzymes

8 8 R&D Activity Update R&D gears up for The BioAg Alliance BioChemicals: Termination of Biopolypropylene project BioAg R&D focus on building new organization. First line of management in place New R&D site to be established on US East coast. Focus on BioAg. New employees primarily to join this site 2014 R&D ambition: Get daily working relationship up and running (governance, knowledge management, plans, reporting etc.) Ensure early pipeline development Strains already delivered to Monsanto for 2014 field trials Termination of R&D project with Braskem on the development of bio-based polypropylene Technical milestone deemed too hard to achieve vs. investment Still committed to other biochemicals projects

9 9 Q Financial Performance Strong results for Q Double digit organic sales growth Key financials Realized Q Outlook April Outlook Jan. 21 The BioAg Alliance gave one-time boost to profit and cash flow Better than expected underlying earnings development drive increased FY 2014 expectations Negative net investments due to transfer of assets to Monsanto and slow start to the CAPEX year 2014 profit outlook increased ~26% EBIT margin 8-10% EBIT and net profit growth 21-22% ROIC 6-9% organic sales growth maintained. Sales growth in DKK adjusted to 4-6% due to currency headwind DKK 2 Bn share buy-back program initiated DKK 313 million spent in Q1, DKK 2 billion to be spent in total in 2014 Sales growth, DKK +7% 4-6% 4-7% Sales growth, LCY +10% 6-9% 6-9% Sales growth, org. +11% 6-9% 6-9% EBIT growth +30% 8-10% 6-9% EBIT margin 30.4% ~26% 25-26% Net profit growth 35% 8-10% 6-9% Net investments excl. acq., DKKm Free cash flow before acq., DKKm (334) 900-1,000 2,230 3,300-3, ,100 3,200-3,300 ROIC incl. goodwill 25.6% 21-22% ~21%

10 INVESTOR PRESENTATION OVERVIEW QUARTERLY RESULTS OVERVIEW STRATEGY SEGMENTAL OVERVIEW SUSTAINABILITY FINANCIAL REVIEW

11 11 Novozymes The World Leader in Bioinnovation Who are we? Global: +6,000 employees, 700 products in 140 countries Founded 1925 Listed 2000 Ticker NZYM B R&D intensive: ~7,000 patents, 13-14% of sales spent on R&D Profitable: $2.1bn/ 1.5bn in sales and 24.7% EBIT margin in 2013 Exchange Market Cap* Long-term targets: Copenhagen US$ 15bn > 10% organic sales growth from 2015 > 24% EBIT margin > 22% ROIC Majority owner Novo A/S controls 25.9% of the capital and 70.5% of the votes Household Care Food & Beverages Bioenergy Agriculture & Feed Technical & Pharma *A+B shares Apr, 2014

12 Experienced Leadership Team Exploring Growth & Value Creation Opportunities Per Falholt Thomas Nagy Peder Holk Nielsen Benny Loft Andrew Fordyce Thomas Videbæk Per Falholt Executive Vice President, Research and Development Novozymes since 1984 Background: Chemical engineering Peder Holk Nielsen President and CEO Novozymes since 1984 Background: Chemical Engineering Andrew Fordyce Executive Vice President, Business Operations Novozymes since 1993 Background: Chemical Engineering Thomas Nagy Executive Vice President, Supply Operations Novozymes since 1986 Background: Chemical Engineering Benny D. Loft Executive Vice President, CFO and Corporate Functions Novozymes since 1998 Background: State-authorized public accountant Thomas Videbæk Executive Vice President, Business Development Novozymes since 1988 Background: Chemical Engineering 12

13 Delivering Tomorrow s Solutions Today Delivering solutions from nature: food applications, detergents, pharmaceutical products, the energy sector and countless other applications Helping companies become more efficient: energy efficiency, saving raw materials, reducing waste and replacing chemicals This unique approach leads to: more with less higher quality, lower costs, better yields and a better environment 13

14 Uniquely Diversified Group - Creates Synergies and New Opportunities Unique biotech-focused business with a strong legacy of delivering growth, earnings, and cash flow ~13-14% 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 36% 27% 16% 14% 7% 14

15 Diversification in Revenue Streams Underpins the Company s Strong Financial Position Sales FY 2013 of DKK 11.7 bn (USD ~ 2.1 bn) Strong profitability, 24.7% in EBIT margin FY 2013 ROIC of 20% FY %/+6% 2013 Sales by geography 2013 Sales by industry Asia Pacific 19% DKK growth/lcy growth +8%/+17% Latin America 10% Europe, Middle East and Africa 38% +6%/+7% Percentage of sales: 7% 14% 16% 27% Technical & Pharma Agriculture & Feed Bioenergy Food & Beverages 757 1,668 1,909 DKKm 3,190 DKK growth/ LCY growth +7%/+10% +3%/+8% +9%/+13% 0%/+3% +4%/+7% North America 33% 36% Household Care 4,222 +6%/+9% 15

16 Global Production and R&D Setup Milwaukee, Wisconsin BioAg production Saskatoon, Canada BioAg production R&D Blair, Nebraska Enzyme production Nottingham, England Biopharma production (Albumin) R&D Bagsværd, Denmark Headquarters R&D Pilot plant Kalundborg, Denmark Enzyme production Shenyang, China Microorganisms production Tokyo, Japan R&D Davis, California R&D Houston, Texas BioAg production Raleigh, North Carolina Enzyme production R&D Salem, Virginia Microorganisms production Ottawa, Canada Enzyme production Curitiba, Brazil Enzyme production BioAg production R&D Bangalore, India Enzyme production R&D Beijing, China R&D Tianjin, China Enzyme production Biopharma production (hyaluronic acid) Shanghai, China Enzyme production Shandong, China Innovation centre Pilar, Argentina BioAg production 16

17 INVESTOR PRESENTATION STRATEGY QUARTERLY RESULTS OVERVIEW STRATEGY SEGMENTAL OVERVIEW SUSTAINABILITY FINANCIAL REVIEW

18 Undisputed Market Leader Expanding Enzyme Application Global enzyme market value: 2000: DKK ~ 12bn 2013: DKK ~ 22bn Global enzyme market value 2013: DKK ~ 22bn Rest of market 58% Novozymes 42% Rest of market 52% Novozymes 48% Others and captive 26% Market potential* Current enzyme market DKK ~ 22bn DSM 6% Genencor (DuPont) 20% Novozymes 48% Untapped market Multi-billion (US$) Rules of competition dictated by innovation *Global markets for chemicals, food ingredients, feed additives, etc. 18

19 Multiple Drivers Create a Sustainable Business with Significant Growth Potential Drivers Ambition Energy efficiency Cost/performance Waste reduction Sustainability Scarce raw materials Long-term financial targets: > 10% sales growth from 2015 > 24% EBIT margin > 22% ROIC Replacing chemicals 19

20 Growth platforms 20 How Do We Get To +10% from 2015? History shows potential to grow 10% from a diversified set of industries, but not consistently Consistent performance in existing business will lay foundation for +10% Growth platforms will add layers of growth to enable +10% All 5 sales areas have the potential to deliver +10% growth within the 5-year period Historic performance & size of areas, 2013 DKKm Future growth to come from Household Care Food & Beverages Bioenergy 4,222 3,190 1, Organic CAGR: 9% 5% 5% Established businesses Household Care 1G bioenergy Food & Beverages + Technical + Transformational opportunities Biomass Conversion BioAg Agriculture & Feed Technical & Pharma 1, % 1% Growth contributors Animal Health & Nutrition Biopharma

21 1. Drive Innovation Because Innovation Drives Top-Line Growth Achieving growth through R&D investment remains a fundamental priority >50 new product in the last 5 years, ~100 active projects in current portfolio R&D investment-reaping rewards with increasing diverse revenue streams R&D Expenditure (DKK million) Sales CAGR of ~7% Sales DKKm EBIT margin R&D/Sales ROIC 26% 14,000 1,207 1,360 1,464 1,527 1,528 24% 22% 20% 18% 16% 14% 12,000 10,000 8,000 6,000 4,000 12% 2,000 10%

22 2. Expand Opportunities; Developing new technology and business platforms Continued development in our technology base creates opportunities to develop new business platform 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 Bio- Agriculture Animal Health & Nutrition Biomass conversion Biopharma Emerging platforms 22

23 23 Business Development Nurtures Tomorrow s Business for Novozymes Responsible for new business areas and Novozymes entire pipeline prioritization Close coordination on pipeline, resource allocation and customers Business development organization to cater for alternative business models and new business areas Innovation & business development crucial in all industries Novozymes serves Business Development Business Operations Innovation clusters Emerging platforms Growth platforms Customers Academia Radical ideas Internal ideas Undisclosed projects Biomass conversion BioAg Animal Health & Nutrition Biopharma Established businesses: HHC F&B 1G fuel Technical M&A + partnerships

24 3. Enzyme Technology Improves Profitability Focused on improving margins through sophisticated technological solutions Achieved sales CAGR of 7% since 2000 with improving margins Roughly 20% of the R&D spend goes into productivity improvements 3 ways to gain productivity improvements FERMENTATION 3 FORMULATION Optimize industrial production Process optimization Equipment optimization Input optimization RAW MATERIALS PURIFICATION ENZYMES 1 MICRO- ORGANISMS Improve production strain Ability to produce more enzymes per m 3 fermentation tank through genetic engineering of host organism 2 Improve enzyme efficacy Protein engineering of enzymes improves efficacy. Customers buy efficacy, not volume 24

25 Cash Generation, Use, Capex and Future Priorities DKK billion Cash generation has tracked EBIT Cash for growth and shareholders EBIT Operational cash flow 1 2 Dividends Capex Acquisitions Buybacks CAPEX DK & new facilities EMEA NA APAC LATAM ; DKK +15bn* in operational cash flow to be invested in: 1. Innovation 2. Business development 3. Acquisitions 4. CAPEX as needed 5. Return to shareholders * Estimated as a simple progression of current operational cash flow with 10% growth p.a. 25

26 INVESTOR PRESENTATION SEGMENTAL OVERVIEW QUARTERLY RESULTS OVERVIEW STRATEGY SEGMENTAL OVERVIEW SUSTAINABILITY FINANCIAL REVIEW

27 4,500 4,250 4,000 3,750 3,500 3,250 3,000 2,750 2,500 2,250 2,000 1,750 1,500 1,250 1, Household Care Overview Household Care (36% of 2013 sales) Household Care Sales Sales DKK LCY growth 3,973 4,222 40% 35% Application Laundry & dishwasher detergents Microbials for cleaning solutions 3,324 3,514 30% 2,853 Competitors Genencor (Dupont) 25% 20% Growth Drivers Performance claims / GDP & Population / Sustainability / Replacement of traditional chemicals / Oil price volatility 15% 13% 7% 11% 9% 10% Growth Barriers Sustained low oil price / Economical slowdown / Consumer preferences & behavior / Competition 4% 5% 0% Recent Launches Evity plaform for laundry, Blaze Evity for ADW, Cellusoft@LT, Lipoclean, Xpect

28 Enzymes are Gaining Traction in Detergents The advantages of enzymes....drive new product launches....increasing the overall penetration of enzymes Wash performance # of detergents containing enzymes launched globally Share of detergents with enzymes % 90% Europe Surfactants Builders Chemicals replacement % 70% 60% NA LATAM % 40% AP MEA Cost stability % % % Compaction 0 0% Source: Novozymes estimates and Mintel

29 Replacing Chemicals in Detergents Raw mat. cost distribution in top-tier powder detergent Surfactan ts Builders Benefits: Reduce oil price sensitivity Improve wash performance - e.g. cold-water wash Compaction Sustainability Raw mat. cost distribution in top-tier liquid detergent Enzymes 6% Perfume 4% Others 7% Bleach 8% Polymers 4% Enzymes 0-12% of raw material costs Today Enzymes 3-5% of raw materials globally Enzymes 12% Perfume 7% Others 4% Polymers 1% Builders 8% Future Builders 34% Enzymes 0-20% of raw material costs Enzymes >10% of raw materials globally Surfactants 37% Novozymes unique enzyme toolbox can replace a part of the chemical surfactants & builders Surfactants 68% Source: Agglomerations and Novozymes estimates Enzyme classes in toolbox: Proteases, amylases, mannanases, lipases, pectinases, cellulases 29

30 4,000 3,750 3,500 3,250 3,000 2,750 2,500 2,250 2,000 1,750 1,500 1,250 1, Food & Beverages Overview Food & Beverages (27% of 2013 sales) Food & Beverages Sales Sales DKK LCY growth 40% Application Competitors Baking / Starch conversion / Brewing / Beverage alcohol / Healthy concepts DSM, Genencor (Dupont), AB Enzymes 2,466 2,850 3,033 3,186 3,190 35% 30% 25% Growth drivers BAKING: GDP / Convenience / Whole grain breads / Healthy foods / Raw material replacement BREWING: Alternative raw materials / Process Streamlining / Branding / Emerging markets / Sustainability OTHERS: Healthy foods & concepts / Yield improvement / High sugar price 11% 8% 20% 15% 10% Growth barriers BAKING: Competition BREWING: Enduring low malt prices / Changing legislations about min. malt content & alcohol taxation / Brewing traditions OTHERS: Lack of regulations 3% 0% 1% % 0% Recent Launches Sensea Attenuzyme Novamyl Pro Panazea Opticake Fresh 30

31 31 Fill and Manage the Pipeline - Enzyme Innovation to the Food Industry Health & Wellbeing Convenience Informed consumption New economies and urbanization Reinforce customers brand Claims Safety Sustainability Reduce costs Process streamlining Improve Raw mat utilization Apply regionally Enzyme applications vary with geography

32 2,500 2,250 2,000 1,750 1,500 1,250 1, Bioenergy Overview Bioenergy (16% of 2013 sales) Bioenergy Sales Sales DKK LCY growth 70% 60% Application Corn ethanol / Biomass conversion 1,846 1,782 1,748 1,909 50% Competitors Genencor (Dupont), Captive producers 1,480 40% Growth drivers Sustainability & CO 2 / High oil price / Raw material prices / Political mandate / Energy security / Rural development 30% Growth barriers Sustained low oil price / Competing technologies / Lack of infrastructure / Blend wall & ILUC Public debate / Loss of political support 3% 19% 1% 13% 20% 10% 0% Recent launches Avantec, Olexa Spirizyme Achieve -9% %

33 Fermentable sugar Production of Biofuels and Beyond Raw material Production process End product Sugarcane Extraction Co-products Bagasse; Energy Ethanol Classical corn Raw corn starch hydrolysis Milling Milling Cooking Cooking Enzymes Enzymes Co-products DDGS; Feed, Corn oil Co-products DDGS; Feed, Corn oil Butanol Biogas Polypropylene Other crops Milling Cooking Enzymes Co-products DDGS; Feed Acrylic acid Biomass Collection Pretreatment Enzymes Co-products * Lignin; Energy, biochemical Etc. *In the US Department of Energy Biomass-model the lignin residue is burned to power the production plant 33

34 Many More Potential Customers Are Interested in Biomass Conversion Today than 5 Years Ago The number of projects choosing enzymatic hydrolysis conversion has increased from 7 in 2008 to 26 in 2013 In addition to projects publicly announced, there is a significantly larger pipeline of projects in the making The market has shifted from a U.S. play to a global opportunity Important to note that not all facilities on the drawing board will make it commercially Commercial projects by region, POET-DSM - DuPont - Project Alpha - Fiberight - Abengoa - Canergy - Greenfield 6 - GranBio - Raizen - OAI - Rhodia - TMO - Colbiocel 2 - Crescentino - Maabjerg 2 - MYBiomass - Sabah 9 - Cofco/Sinopec - SQ - Datang - Dacheng - HNTG - Longlive - ZTE - Stategrid - Jilin Fuel Commercial projects: Projects either completed, under construction or publicly announced using enzymatic hydrolysis 34

35 Biomass Conversion; Food, Feed, Fuel, Chemicals and Materials Made from Biomass and Waste A transformational opportunity for Novozymes Turning renewable low-value carbon into high-value product is revolutionary Enzymes poised to be a leading conversion technology Entire field to be the focus of significant innovation once commercialization has caught on Potential offered by biorefining by 2030: ~8.2 million man-years employment 475 million tons CO2 reductions/year $3,000 billion in accrued revenue for a $500 billion investment Source: Moving Towards a Next-Generation Ethanol Economy, Bloomberg New Energy Finance,

36 2,000 1,750 1,500 1,250 1, Agriculture & Feed Overview Agriculture & Feed (14% of 2013 sales) Agriculture & Feed Sales Sales DKK LCY growth 88% Application FEED: Monogastric animals / Substituting phosphate / Enhancing protein uptake AGRICULTURE: Agricultural Biologicals, innoculants etc./ Aquaculture 1,371 1,617 1,668 78% 68% Competitors FEED: Genencor (Dupont) AGRICULTURE: BASF, Bayer CropScience and smaller regional players % 58% 48% Growth drivers FEED: Feed to meat conversion / Phosphate prices / Grain prices / Growing meat consumption / Regulatory requirements AGRICULTURE: Yield enhancement / High fertilizer prices / High Ag commodity prices / 14% 38% 28% 18% Growth barriers FEED: Low feed ingredient prices / Competitive pressure / Lower meat consumption AGRICULTURE: Low raw material prices / Small but emerging field 3% 1% 8% % -2% Recent launches Ronozyme HiPhos, Ronozyme ProAct MET52, Taegro 36

37 37 The BioAg Alliance with Monsanto - Aiming to Build Next Important Yield Platform for Farmers INTEGRATED SYSTEM Multiple components converging to drive yield and productivity with more platforms coming together in more ways than ever Biologicals offer farmers another tool to improve yield EMERGING TRENDS Replacing agricultural inputs with sustainable, cost-effective solutions that can increase yield using less input Increasing pressure to bring market solutions with faster development cycles compared with other Ag innovations BREEDING BIOTECHNOLOGY BIOLOGICALS CHEMISTRY AGRONOMICS Plant health & bionutrients Extended disease protection In-season insect control Improved biofertility

38 Combined Leadership: Combination of Novozymes and Monsanto Establishes Industry's Most Advanced Microbials Platform ESTABLISHED MICROBIAL LEADERSHIP World leader in microbial technology; discovery, development and production Existing microbial business including standalone pipeline, extensive microbial libraries and intellectual property Current commercial portfolio including products and infrastructure + INDUSTRY-LEADING R&D CAPABILITY AND COMMERCIAL FOOTPRINT Industry-leading R&D network that allows for scaled testing and development Complementary microbial assets including extensive microbial libraries and intellectual property Global commercial reach across crops, brands and geographies to drive commercial opportunity The BioAg Alliance ELEVATES MICROBIALS AS NEXT MAJOR BEYOND-THE-SEED OPPORTUNITY TO DRIVE YIELD AND SUSTAINABILITY PLATFORM PRODUCTS PIPELINE Industry s only integrated platform with established capability in discovery, development and commercialization of microbial solutions Current commercial product portfolio that generated ~$120M in 2012 revenue Complementary organizations to co-fund significant R&D effort and leverage existing microbials from both companies for industry s most advanced microbials pipeline 38

39 39 Power of Microbial Technology: Novozymes Proven Microbials portfolio CURRENT PRODUCT PORTFOLIO CASE: JUMPSTART 1 Biofertility products 2 Bioyield enhancers 3 Biocontrol products 1. Microorganism applied to to the the seed before planting 2. The The active ingredient, a a soil soil fungus, grows on on the the roots and and solubilizes the the residual soil soil phosphate, unavailable for for plant use use Phosphate solubilization Nitrogen fixation Plant growth & health Biofungicides Bioinsecticides 3. Yield increases due due to to superior nutrient uptake in in plant s early life life stage JumpStart TagTeam, Cell-Tech, Optimize Torque, Proventus, Taegro, Actinovate MET52 Ratchet, QuickRoots A phosphate inoculant that grows along the roots, making more soil and fertilizer phosphate available to the plant Nitrogen-fixating inoculants Combined products utilize a combination of traditional nitrogen inoculant with LCO (lipochitooligosaccharide) & JumpStart Unique LCO molecule enhances nutritional capabilities, driving natural growth processes, which enhances plant health and crop performance Microbial seed inoculant for increased yield Slows down the resistance of current spray chemicals, thereby extending the life of those chemicals, within high-value fruits and vegetables Bacterial-based biofungicide for disease control Wide mode of action to help break resistance in current chemical products within high-value fruits and vegetables as well as turf and ornamentals

40 INDEXED REVENUE Ag Biologicals Market: Novozymes Has Developed a Significant Business in Fast Growth Market AG BIOLOGICALS MARKET 1 Market Segmented by Product Class NOVOZYMES BIOAG s SALES DEVELOPMENT HISTORICAL RESULTS: 2003 = 100 Microbial Pesticides Microbial Innoculants Beneficial Insects Biochemical 2/3rd Microbials NOVOZYMES BIOAG SALES GROWTH: Fast growth through key investments and core competencies in Microbials Other 150 MARKET ECONOMICS: Estimated Sales $2.3B Annual Growth Mid-Teens CAGR Industry growth driven by increasing demand for green ag chemical options FACTORS: Novozymes BioAg 2012 annual revenue of approximately $120 million North America accounts for roughly 2/3 of sales Innoculants for nitrogen fixation for soy and other pulse crops account for the single biggest application 1. Monsanto estimates of Ag Biologicals industry based on a combination of research data from DunhamTrimmer, Agrow, MarketsandMarkets, Frost & Sullivan, Boston Consulting Group, BCC Research 2. Novozymes Internal analysis. Combined sales development from the combined business of EMD/Merck Crop Bioscience, Philom Bios, EBS and Turfal. Does not include Natural Industries and TJ Technology 40

41 Attractive Value Propositions in Animal Feed Phytase phosphate 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 %* of added mineral phosphate Significant reduction in phosphorous excretion from animals ProAct protein 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 Others energy 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 CO 2 ) * dependent on multiple factors animal species, age, feed composition and other additives 41

42 1, Technical & Pharma Overview Technical & Pharma (14% of 2013 sales) Feed & Other Tech. Enzymes Sales Sales DKK LCY growth 45% Application TECH: Textiles / Leather / Pulp & Paper PHARMA: Albumin / Hyaluronic acid / Biocatalysis 35% Competitors Genencor (Dupont), Alternative technologies and products % % 15% Growth drivers TEXTILE: Lighter textile shades / Sustainability PHARMA: Animal free materials / Consistent quality / Reliable sustained supply / Collaborative partnerships -2% -9% % 5% -5% -17% Growth barriers TEXTILE: Fashion cycles / Fragmented industry PHARMA: Long sales cycle times / Competing and emerging technologies -15% -25% Recent launches Peltec X-Zyme Terminox Supreme Hyasis Albuflex

43 43 Pharma Overview The classic pharma value chain Drug Discovery Drug Development Manufacturing Distribution Sales and Marketing Novozymes Hyaluronic Acid Recombinant Albumin VELTIS Enzymes for Biocatalysis Bacillus-derived hyaluronic acid offering superior safety, consistency and performance offers cost savings and minimized risk High quality and animal-free recombinant albumins developed to provide customers with a safe and consistent, regulatory compliant product Next generation albumin-based technology to create longer-lasting drugs through albumin fusion or chemical conjugation Comprehensive biocatalysis enzyme portfolios including lipases, proteases, esterases, oxidoreductases and amylolytic enzymes Used as an ingredient in medical devices and pharmaceutical products Used as an ingredient to stabilise drug and vaccine products and in medical devices Improved dosing regimes for increased patient compliance Improved yields, simplified processes and fewer byproducts in API manufacturing

44 A number of VELTIS candidates are in clinical development Albiglutide (GLP-1 albumin fusion) for diabetes type II, approved in both the EU and the US in 1H 2014 Publicly available information on companies using Novozymes VELTIS technology: Company Deal Drug Target Preclin PI PII PIII MAA stage Fusion + expression Several molecules (G-CSF, BNP, ) Biobetters X X X Fusion Blood coagulation factors FIX, FVIIa, + others X X X Fusion + expression Kunitz Domain proteins and antibody fragment Several X 44

45 INVESTOR PRESENTATION SUSTAINABILITY QUARTERLY RESULTS OVERVIEW STRATEGY SEGMENTAL OVERVIEW SUSTAINABILITY FINANCIAL REVIEW

46 46 Recognized as a Sustainability-Driven Organization Novozymes in the Dow Jones Sustainability Indexes (DJSI): Included in DJSI Biotechnology sector since 2000, and sector leader and Gold Class rating in in Sustainable Asset Management (SAM) Sustainability Yearbook Best in Class Storebrand SRI Member of FTSE4Good Global and Europe Member of SB20 by SustainableBusiness.com PRIME status by oekom research Founding member of the Sustainability Consortium # 3 in Carbon Disclosure Project Annual Nordic Leadership Index

47 Three-pronged Core of Novozymes Sustainability Scientific approach It s all in the numbers - All products are life-cycle assessed (LCA) - LCA integrated in value chain from R&D to S&M - Carbon footprint and emissions abatement Economic growth TIME Use of natural resources Bioinnovation Governance structure Sustainability is in our DNA - Corp. Governance structure - Sustainability department - Mission, Vision, Values - Compensation Green technology Green means business Our innovative green solutions embed sustainability and drive new business opportunities Cost reduction Business dev. Risk mitigation 47

48 Reducing CO 2 Emissions Together with our Customers In 2013, Novozymes helped customers save 52 million tons of CO 2 through the application of Novozymes products, equivalent to taking 20 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 Net CO 2 saving using 1kg enzyme in different production processes 3400 kg 3800 kg 30 kg 40 kg 100 kg 150 kg 150 kg 200 kg Up to 600 kg 1300 kg BIOCATALYSIS CEREAL FOOD OILS & FATS PAPER ANIMAL FEED LEATHER TEXTILES BIOETHANOL DETERGENT FOOD 48

49 49 Sustainability Performance and Targets - Good progress om 2013, but not all targets met Targets 2013 targets 2013 realized 2014 target Long-term sustainability targets Water efficiency (index 2005) 35% 33% 34% Energy efficiency (index 2005) 42% 40% 42% CO2 efficiency (index 2005) 50% 54% >50% Million tons CO2 emission reduced Occupational accidents per mio. working hours < <3.0 Rate of absence <3% 1.8% <3% Employee turnover 4-9% 7.5% 4-9% Supplier adherence to our supplier program Satisfaction and motivation score in employee survey Opportunities for professional and personal development score in employee survey 95% 97% 97.5% New leaders appointed who are women 30% 26% 30% New leaders appointed of a nationality other than Danish 55% 44% 55% Be recognized as a global leader within sustainability Be a globally preferred employer, attracting global talent as a diverse and inclusive workplace Ensure 100% supplier adherence to Novozymes supplier program for commercial, quality and sustainability performance in 2015 Champion the inclusion of biofuels as a high-impact opportunity area in the U.N. s Sustainable Energy for All initiative in 2015 Rating from SAM in the Sustainability Yearbook 2014 Gold Gold Medal class rating

50 INVESTOR PRESENTATION FINANCIAL REVIEW QUARTERLY RESULTS OVERVIEW STRATEGY SEGMENTAL OVERVIEW SUSTAINABILITY FINANCIAL REVIEW

51 51 Historical Performance Demonstrates Track Record of Delivery 20% 16% sales CAGR of ~7% Sales DKKm Growth 15,000 12,000 58% 56% Gross margin 55.6% 57.2% 56.2% 57.2% 12% 8% 4% 0% 9,000 6,000 3, % 52% 50% 53.3% 53.1% 52.4% 51.8% 53.7% 53.5% 52.6% 52.0% 51.8% 55.7% 26% 24% 22% 20% 18% EBIT DKKm EBIT EBIT margin 4,000 3,000 2,000 1,000 16% 12% 8% Capex DKKm CAPEX CAPEX/sales 1,500 1, % 0 4% 0 28% 24% 20% 16% 12% Inv.Cap. DKKm ROIC ROIC, incl. goodwill 12,000 9,000 6,000 3,000 24% 20% 16% 12% FCF bef. acq. DKKm Free Cash Flow FCF bef. acq./sales 2,000 1,500 1, % 0 8% 0

52 52 Low Exposure to Raw Material Fluctuations 45% Split of COGS 35% 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 Raw materials 20% Energy/utilities & others Indirect production cost Raw materials consist primarily of different carbohydrates. Approximately 50% of raw material input are e.g., sucrose, maltose, glucose, starch. 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

53 53 Dividend and Stock Buyback History 2013 dividend per share DKK 2.50, up 13%, payout ratio 35.7% Expected buyback program in 2014 of up to DKK 2 billion Accumulated buybacks end of 2013 since IPO were DKK 5.7 billion DKK million 1,600 1,400 1,200 1,000 Dividend / Buybacks Dividend Buyback DPS Dividend per share, DKK Accumulated dividend and stock buybacks of ~ DKK 10.7 billion since Buyback ,05 1, Dividend DPS

54 54 Shareholder Distribution B shares listed in Copenhagen under the symbol NZYM B Shareholder distribution of B common stock* Two share classes; A and B shares B shares listed in Copenhagen under the symbol NZYM B Novo A/S 11% Rest of World 3% Denmark 19% A share capital and 27,779,900 B shares held by Novo A/S, the management company of the Novo Nordisk Foundation North America 15% Novo A/S owns 25.5% of the share capital and controls 70.4% of votes (All A shares & ~11% of B shares) Rest of Europe 13% Own shares 2% UK 37% *Distribution equals where shares are managed, January 2014

55 Investor Relations Contacts Thomas Steenbech Bomhoff Martin Riise Klaus Sindahl Mobile (DK): Mobile (USA): Mobile (DK): Mobile (DK): Further investor relations information is available from the company homepage at 55

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