Novozymes Strategy & Growth - Euroland

Novozymes Strategy & Growth Danske Bank, Navigating the Nordics Stockholm, June 9th 2015

Anders Lund

VP, Head of Marketing

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

Session outline

• Novozymes strategy

• Household care

• Food & Beverages

• Bioenergy

• New growth platforms

3

Novozymes the world leader in Bioinnovation

Household Care

Food & Beverages

Bioenergy Agriculture &

Feed Technical &

Pharma

Founded 1925

Listed 2000

Ticker NZYM B

Exchange Copenhagen

Market Cap* US$ ~15bn

Long-term targets 2015-2020: 8-10% organic sales

≥ 26% EBIT margin

≥ 25% ROIC

Global: ~6,500 FTE’s, 700 products in 140 countries

R&D intensive: ~7,000 patents, ~14% of sales spent on R&D

Profitable: $2bn in sales and 27.2% EBIT margin in 2014

Majority owner Novo A/S controls 25.5% of the capital and 70.4% of the votes

Who we are?

4

Key facts

*A+B shares May, 2015

15 years of innovation-driven returns

Strong absolute returns since 2000

2.5x sales

4x EBIT

5x net profit

DKK ~30bn In operating cash flows

Driven by topline and leverage

~7% organic sales CAGR

+5.4 %-points gross margin

+10.5 %-points EBIT margin

+12.9 %-points ROIC

Innovation is the recipe

DKK 16bn invested in R&D

+100 new solutions marketed

5

10%

12%

14%

16%

18%

20%

22%

24%

26%

28%

30%

0

2.000

4.000

6.000

8.000

10.000

12.000

14.000

Sales DKKm EBIT margin R&D/Sales ROIC

Our set of competitive advantages across the value chain has led to a unique market-leading position

Scale

• Production: 5 core plants

in 3 regions

• Research & Development:

2/3 of total investment of

industry

• Technical services: half of

commercial organization

“on site”

• Market & technology

coverage

Sustainability

• Pioneering sustainability:

• Triple bottom line

• Life cycle assessment

documentation

• Trusted long-term partner

High barriers

• More than 7,000 patents

• Diverse biotech know

how and investments

needed to compete

• Customer partnerships

• Manufacturing expertise

6

Novozymes

48%

Genencor (DuPont)

20%

DSM 6%

Others and

captive 26%

Novozymes

48%

Genencor (DuPont)

20%

DSM 6%

Others and

captive 26%

48%

20%

6%

26%

Source: Novozymes estimate

Novozymes

Dupont

DSM

Others

7

Our new strategy puts partnerships front and center for success in creating impact

8

Growth until 2020 expected to be driven by established industries with additional growth from platforms

~7% Novozymes’ organic growth average, 2010-2014

~7% Growth platforms’ organic growth average, 2010-2014

~7% Established industries’ organic growth average, 2010-2014

9

2010 2011 2012 2013 2014

Long-term

organic growth target

8-10%

Established industries are

the basis for growth

Growth platforms expected to

enable 8-10% growth

Diversification in revenue

streams important for solidity

2015 2016 2017 2018 2019 2020

1

2

3 Growth platforms

- BioAg

- Biomass Conversion

- Animal Health & Nutrition

- Pharma

Established industries

- Household Care

- Grain-based ethanol

- Food & Beverages

- Technical

Household Care

18% 35% 26% 14% 7%

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

Household Care: A strong portfolio of innovation with global relevance built over last 50 years

11

6 enzyme classes

10 best-in-class product families

Coronase®, Liquanase®, Savinase®, Stainzyme®, Amplify®, Lipex®, Carezyme®, Celluclean®, Mannaway®, xPect®, Intensa Evity®, Blaze Evity®

~100 countries

300+ brands

Etc.

1 platform of enzyme and microbial technology

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

New stabilization technology Novozymes Evity® is a range of highly robust and stable enzymes

Pectate

lyase Mannanase Cellulase Lipase Amylase Protease

Innovation has driven growth and solidity over the long-term.

• Enzyme market leader with +60% global market share

• 13 new nonexclusive products and 2 technology platforms launched within last 5 years

• Current market dynamics adds uncertainty short-term, but long-term case intact. Last 5 years, quarterly growth has fluctuated between -2 and +19%

12

-

500

1.000

1.500

2.000

2.500

3.000

3.500

4.000

4.500

5.000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

DK

K m

illio

n

2000 • ~80% of sales from 5 customers • ~30% emerging markets

2014 • ~80% of sales from 20 customers • ~45% from emerging markets

2000-2009 CAGR: 4%

2010-2014 CAGR: 8%

3 priorities govern Household Care R&D

Strengthen partnerships with global innovators to increase enzyme inclusion

Enable broader penetration in emerging markets

Explore novel biological solutions and new wash categories

Strategy – Sustainability – Innovation – Household Care – Bioenergy – Food & Beverages

13

1. 2. 3.

Food & Beverages

18% 35% 26% 14% 7%

Household Care

Food & Beverages

Bioenergy

Agriculture & Feed

Technical & Pharma






biofuels



• Pulp & Paper

• Wastewater

• Pharma

ingredients

Food & Beverages enzymes summary The largest category in the enzyme world

A small fraction of food ingredients and processing aids

A global industry with many applications


15

Baking

Food & Nutrition

Starch, oils & fats

DKK ~9bn

DKK ~15bn

DKK +300bn

DKK ~9bn

Food Ingredients

• Flavors &

colors

• Processing

ingredients

• Preservatives

• Specialty

proteins

• Other

ingredients

Enzymes

• Food & Beverages

Enzymes for

• Detergents

• Biofuels

• Feed

• Technical

applications

Source: Novozymes own estimates, Leatherhead, expert interviews, GXC, Freedonia, Euromonitor Source: Novozymes own estimates

Beverages

F&B enzyme market

Novozymes sales, DKKm 2000-2014

Novozymes is the global leader in the Food & Beverages enzyme market

Most fragmented and diverse market for Novozymes

• Broad portfolio of 300+ products across applications

• Top 5 customers make up ~20% of sales

• Distributors important for global reach (~30% of sales)

Strong market position and robust growth driver

• Novozymes is #1 in all the main markets where it plays

• 6% sales CAGR since IPO – 26% of Group sales today

• Fragmented industry structure and industry profile make for slower ramp-up of new products, but long lifetime

Source: Novozymes own estimates.

DSM, DuPont,

Others

+ Captive

0

1000

2000

3000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

+6%


16

Bioinnovation and Novozymes can have a greater impact on consumers and society

Claas: Can you illustrate this or graphically show the two sides of the equation. No

need to use numbering and the numbers don’t

correspond


17

More with less

Health Emerging markets industrialization

Consumers wanting more natural foods

Four defining trends set the scope for future growth…

… and define innovation opportunities for the future

Unlock new

substrate streams

Enhance

productivity offering

in existing markets

Freshkeeping

Remove unwanted

compounds

Food & Beverages

18% 35% 26% 14% 7%

Household Care

Food & Beverages

Bioenergy

Agriculture & Feed

Technical & Pharma






biofuels



• Pulp & Paper

• Wastewater

• Pharma

ingredients

Bioenergy: Innovation can grow the enzyme market, even in an underlying flat market

19

-20%

-10%

0%

10%

20%

30%

40%

Q1'10 Q2'10 Q3'10 Q4'10 Q1'11 Q2'11 Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15

U.S. quarterly ethanol volume growth rates and Novozymes organic growth (quarter over last year quarter)

NZ org. Bioenergy growth Eth.vol. growth

Avantec® launched

Spirizyme Achieve® and

Olexa® launched

Source: EIA and Novozymes

Further innovation targeted, along different paths – Novozymes to launch new innovation in 2015

2,70

2,80

2,90

3,00

3,10

3,20

3,30

3,40

3,50

2012-2014 2015-2017 2018-? 2020+

Eth

an

ol yie

ld p

er

bu

sh

el o

f co

rn, g

al/b

u

20

Sta

rch

&

Su

ga

r

Fib

er

New processes

and biological

solutions convert

corn fiber into

ethanol

New enzyme and

yeast-based

innovation

Avantec®, Olexa®

& Spirizyme

Achieve®

Remaining fiber

pool potentially

converted into

ethanol

Innovation direction

Starch

Fiber

Increasing ethanol yield Increasing throughput Reducing other costs

Converting fiber into ethanol

New growth platforms

We are building 4 growth platforms for long-term impact by leveraging Novozymes’ core capabilities and experience

Agriculture holds great opportunities and is ”home” to 3 of the platforms, but we are not limited to agriculture.

Partnerships are critical for existing and new platforms.

22

BioAgriculture

The BioAg Alliance is dedicated to

fundamentally enhancing the

research and development of

naturally derived microbial

technology to enable farmers

globally to produce more crops from

arable land while using fewer

resources.

Animal Health & Nutrition

To help feed the world, we work with

partners to develop and drive

adoption of proven biological

innovations that improve feed

efficiency and animal health.

Biomass Conversion

Through strong partnerships we

work to transform underutilized

agricultural biomass into renewable

energy and chemicals to achieve

greater productivity from land, drive

rural economic development, and

reduce GHG emission intensity from

energy and chemical production.

Biopharma

In Biopharma we work to improve

the lives of people globally by

delivering consistent and proven

innovation to enhance drug delivery

and formulation of drugs.

Conclusion

• Long-term topline growth seen as main driver of value creation

• Strategic direction reflects priority of growth, while remaning a highly profitable company

• Strong competitive position built on heritage and compounded investments in technology and assets

• Established industries are foundation for growth

• New growth platforms to contribute to growth as they ramp up towards long-term impact

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Novozymes Strategy & Growth - Euroland