roadshow presentation 9m 2019...presentation 9m 2019 released on october 23, 2019 22 table of...

Roadshow presentation9M 2019

Released on October 23, 2019

22

Table of contents

Latest results 3

Overview and strategy 14

Market overview 25

Household Care 26

Food & Beverages 31

Bioenergy 36

Agriculture & Feed 40

Technical & Pharma 45

Sustainability 46

Financials and governance 50

Latest results

Highlights

Third-quarter acceleration, but weaker than expected due to difficult agriculturally-exposed businesses

• Commercialization of innovation progressing as planned

• Bioenergy, Agriculture & Feed and starch processing (Food & Beverages) adversely affected by persistent headwinds

• EBIT margin at 27.6% 9M y/y, in line with expectations and impacted by one-offs related to the updated strategy

• Full-year organic sales guidance: -2% to flat

• Implementation of updated strategy

4

Key financials9M’19

Realized2019

Outlook*

Sales growth, organic -2% -2-0%

EBIT margin 27.6% 27-28%

Net profit growth -7% -5-0%

Net investments excl. acquisitions (DKKbn) 0.6 0.8-1.0

Free cash flow before acquisitions (DKKbn) 2.1 1.9-2.3

ROIC incl. goodwill 21% ~21%**

5%

1%

Food & Beverages

Household Care

Bioenergy Ag & Feed Tech & Pharma

0%

Total

1%

-1%

-5%-3%

-4%

3%

-14%

-3%-2%

9M’19Q3’19

Organic sales growth by business area

* Assumes that the exchange rates for the company’s key currencies remain at the rates prevailing on October 22 for the rest of 2019.** The implementation of IFRS 16 – Leases has a negative impact on ROIC of approximately 1 percentage point.

Latest results • Overview and strategy • Market overview • Sustainability • Financials and governance

34%y/y 9M: -3% / Q3: +6%

66%y/y 9M: -1% / Q3: -2%

Developed Emerging

Organic sales growth by geography

5

33%of sales

North America

9M y/y: -5%

Q3 y/y: -7%

37%of sales

9M y/y: 2%

Q3 y/y: 4%

Latin America

9M y/y: 1%

Q3 y/y: 8%

Asia Pacific*

9M y/y: -5%

Q3 y/y: 4%

Europe, Middle East & Africa

10%of sales

20%of sales

* Incl. Iran.


Solid quarter in line with expectations

• Organic sales 9M 2019 y/y: 0%; Q3 2019 y/y: +5%

• Freshness rollout developing well and according to expectations

• Growth from regional customers; pressure from global accounts easing but still present

• Weakness in the Middle East due to economic distress impacting mainly first half of 2019

• Third quarter positively impacted by timing

Household Care

6

33%of sales

-3%

Q2’19Q4’18Q3’18

2%

Q3’19Q1’19

1%

-1%

5%

Quarterly organic sales growth (y/y)

2019 outlook and priorities: Freshness and emerging markets

• Further expansion of our Freshness technologies

• Continued penetration of emerging markets

• Expect low-single-digit organic sales growth

9M’15

1%

9M’18 9M’19

0%

9M’16 9M’17

1%2%

0%

9M organic sales growth (y/y)


Food & Beverages

Stabilization of baking while starch processing remain challenged

• Organic sales 9M 2019 y/y: -1%; Q3 2019 y/y: +1%

• Solid growth in food & nutrition and beverages

• Starch negative due to commodity prices and wet weather in the US

• Baking down due to economic distress in the Middle East and price declines in freshkeeping but stabilizing in the third quarter

7

29%of sales

2019 outlook and priorities: Innovation and commercialization

• Broad-based commercial penetration

• Ramp-up of recent innovation launches

• Soft performance in starch

• Expect flat organic sales for the full year Q4’18Q3’18 Q1’19 Q2’19 Q3’19

3%

7%

-2%-3%

1%


9M’199M’179M’15

9%

9M’16 9M’18

5%

1%

4%

-1%


Will be updatedWith final picture


Bioenergy

Weak performance as US ethanol industry remains under pressure

• Organic sales 9M 2019 y/y: -4%; Q3 2019 y/y: -5%

• Declining US ethanol production; Novozymes’ customers holding back more than industry average

• Strong initial penetration from recent yeast product launches

• Growing demand in Latin America as Brazil expands production capacity

8

19%of sales

2019 outlook and priorities: US volatility, yeast and Brazil

• US ethanol industry expected to remain under pressure

• Solid growth from yeast penetration and capacity expansion in Brazil

• China progressing towards E10 implementation

• Expect mid-single-digit decline in organic sales Q2’19Q4’18 Q3’19Q3’18 Q1’19

15%

5%

-8%

0%

-5%


9M’15

-7%

9M’199M’16

-1%

9M’17 9M’18

10%14%

-4%



Agriculture & Feed

Difficult markets overshadowing growth from innovation

• Organic sales 9M 2019 y/y: -3%; Q3 2019 y/y: +3%

• Feed sales growing as expected driven by roll-out of Balancius™

• BioAg sales still behind target mainly due to wet spring weather in the US Midwest; corn-inoculant BioRise®

contributed to growth in Q3

9

13%of sales

2019 outlook and priorities: Agricultural market uncertainty persists

• BioAg with uncertainty including Latin American drought delaying planting

• Innovation to continue ramp-up in BioAg and Feed

• Feed sales expected to be flat for the year

• Expect low-to-mid-single-digit decline in organic sales

-3%

Q3’18 Q2’19

-6%

Q4’18 Q1’19 Q3’19

10%

-7%

3%


19%

9M’189M’15 9M’16

0%

9M’199M’17

-2%

5%

-3%



Achieve Advance

For low-temperature and short-cycle

automatic dishwashing

Optimize 500

Improved performance and on-seed stability

Two exciting product launches in the third quarter

10 Latest results • Overview and strategy • Market overview • Sustainability • Financials and governance

Financials

11

Q3 earnings impacted by restructuring costs

• Organic sales growth of minus 2% y/y (Q3 +1%)

• Gross margin at 55.2% - roughly 200bp lower than last year due to weak top line and restructuring

• EBIT margin of 27.6% (~26% excl. one-offs); Q3 23.0% (~30% excl. one-offs)

• Net profit down 7% due to lower sales and losses on currency hedges

• Lower net investments as large construction projects have concluded

• Free cash flow of close to DKK 2.1 billion as lower net investments offset lower profits from operations

Key financials Q3’18 Q3’19 9M’18 9M’19

Sales growth, organic 5% 1% 4% -2%

EBIT margin 28.5% 23.0% 28.2% 27.6%

Net profit growth -1% -21% 3% -7%

Net investments excl. acquisitions (DKKm)

252 177 887 573

Free cash flow before acquisitions (DKKm)

1,090 833 1,980 2,051

ROIC incl. goodwill 24% 18% 24% 21%


Financials – 2019 outlook

12

Full year outlook confirmed as per October 9 revision

• Full-year organic sales growth outlook revised due to persistent headwinds in US ethanol, global agriculture businesses and in starch processing

• Net of currencies and M&A: an additional 0.5-1.0 percentage point reported in DKK

• EBIT margin expected to be 27-28% and 25-26% when adjusted for one-offs

• Net investment of DKK 0.8-1.0 billion as major construction projects completed and production setup is well invested

• Free cash flow at 1.9-2.3 DKKbn with lower investments compensating for lower operating cashflow

* Assumes that the exchange rates for the company’s key currencies remain at the rates prevailing on October 22 for the rest of 2019.** The implementation of IFRS 16 – Leases has a negative impact on ROIC of approximately 1 percentage point.

Key financials9M’19

Realized2019 Outlook

October 23*

Sales growth, organic -2% -2-0%

EBIT margin 27.6% 27-28%

Net profit growth -7% -5-0%

Net investments excl. acquisitions (DKKbn)

0.6 0.8-1.0

Free cash flow before acquisitions (DKKbn)

2.1 1.9-2.3

ROIC incl. goodwill 21% ~21%**


13

Summary

Third-quarter acceleration, but weaker than expected due to US ethanol and agriculturally-exposed markets

• Third-quarter performance a step in the right direction, but year-to-date performance not satisfactory

• Persistent headwinds in US ethanol, agriculture businesses and in starch processing

• Better business with biology; good progress in executing updated strategy

Betterbusiness

withbiology

13Latest results • Overview and strategy • Market overview • Sustainability • Financials and governance

Overview and strategy

Innovation is the core

• Innovation focused on enzymes and microbes

• +100 new product launches• Close to 600bps in gross margin

expansions

Global presence

• ~6,400 employees • ~700 products sold in 140 countries• Major production footprint in the 3

regions: North America, EMEA and Asia Pacific

Solid financials (2018)

• ~28% EBIT margin (2018)• ~24% ROIC (2018)• ~5x EBIT (since IPO)• ~7x Net Profit (since IPO)• DKK ~28bn in FCF (since IPO)

Market leader

• ~48% of total market with DKK 14.3bn in sales (2018)

• ~3x Sales (since IPO) • Serving +40 different end markets

World leader in Bioinnovation - Novozymes at a glance

R&D focused

• >1,500 people employed in R&D• ~6,500 patents • 13% of sales invested in R&D• DKK ~24bn spent on R&D since IPO

Company background

• Listed in 2000 at Nasdaq Copenhagen (NZYM B)

• Majority owner Novo Holdings (~25.5% of the capital, ~70% of the votes and 2 seats on the Board of Directors)


30%

12,000

12%

6%

8%

4%

10,000

0%

2%

16,000

2,000

14,000

10%

0

6,000

14%

28%

16%8,000

18%

20%

22%

4,000

24%

26%

20

08

20

06

DKKm

20

16

20

11

20

02

20

04

20

05

20

07

20

00

20

10

20

12

20

13

20

14

20

01

20

09

20

17

20

18

20

03

20

15

Sales (right) R&D/Sales

ROICEBIT margin

17 years of innovation driven growth

32%of ‘18 sales

29%of ‘18 sales

16

Uniquely diversified group creating synergies and opportunities

19%of ’18 sales

14%of ’18 sales

6%Of ‘18 sales

Household CareOrganic growth

LaundryAutomatic dishwash

Hand dishwashProfessional cleaning

Food & BeveragesOrganic growth

BioenergyOrganic growth

Agriculture & FeedOrganic growth

Technical & PharmaOrganic growth

BakingGrain milling & starch processing

Food & nutritionBeverage

Conventional biofuelsBiomass conversion

FeedAnimal healthBioAgriculture

Textile & leather Forest products

Wastewater Biocatalysis


2%1%

2014

4%

20172015 2016 2018

1% 0%

2014 2017 20182015 2016

2%4% 5%

9%

5%

-3%

2015 20172014

19%

2016 2018

-5%

11% 12%

19%

2014 2015

5%

20182016 2017

7%

-3%

3%

9%

20182015 20172014 2016

6%

13%

2%

-6%

Our global business serves a lot of local markets and industries

34%of ’18 sales

North America

Sites: Production, R&D

Main markets: Bioenergy, HHC, F&B, BioAg

Acc CAPEX: ~DKK 4.3bn

FTE’s: ~1,300

5Y avg. organic sales growth: +4%

36%of ’18 sales

Europe, the Middle East & Africa

Sites: HQ, Production R&D

Main markets: HHC, F&B, Feed

Acc CAPEX: ~ DKK 7.6bn

FTE’s: ~2,900


10%of ’18 sales

Latin America

Sites: Production

Main markets: HHC, F&B, Feed, Biofuel

Acc CAPEX: ~DKK 420m

FTE’s: ~350


20%of ’18 sales

Asia Pacific

Sites: Production, R&D

Main markets: F&B, HHC, Tech & Pharma

Acc CAPEX: DKK ~3.1bn

FTE’s: ~1,900


Main sites with production and R&D Satellite production site Satellite R&D site


Quality

• Superior logistical agility due to full control of value chain

• Ability to tailor solutions to specific customer and market needs

• First mover in a number of markets lead by ability to innovate

• High quality products that meet regulatory requirements

• Wide range of solutions and product offerings

High barriers

• Unique market-leading position in a global niche

• Strong technology backbone and competences

• More than 6,500 patents

• Diverse biotech know how and investments needed to compete

• Long term trusted partner for our customers

• Extensive know-how and manufacturing expertise

Competitive advantages across the value chain has led to a unique market leading position

Scale

• Production: 5 core plants in 3 regions

• Novozymes’ R&D investment equals 2/3 of total industry investments

• Technical services: half of commercial organization “on site”

• Market & technology coverage

Sustainability

• Sustainability is in our DNA helping our customers to save an estimated 88 million tons of CO2 (2018)

• Triple bottom line

• Pioneering life cycle assessment documentation


Improve enzyme efficacyProtein engineering of enzymes improves efficacy. Customers buy efficacy, not volume

3

19

Enzyme technology improves Novozymes’ profitabilityNovozymes dedicates 10-15% of R&D spend to productivity improvement programs

Micro-organisms

Raw materials

Fermentation

Purification

Formulation

Enzymes

3 ways to gain productivity improvements

Improve production strainAbility to produce more enzymes per m3 fermentation tank through genetic engineering of host organism

1Optimize industrial productionProcess optimizationEquipment optimizationInput optimization

2


Invest in impact

Show up for our customers with strong

commercial teams, capable of guiding

innovation and services to deliver on

customer goals

Spearhead new business

Unfold high-potential impact areas in a

dynamic, efficient process, building

tomorrow’s business and answering

global needs

Enablers

Better business

Differentiate to succeed

Adapt our approach to fit industry

potential and concentrate on

significant opportunities across

markets and segments

Reallocate toward

high-impact innovation

Expand emerging-market

and commercial activity

with biology

Focus areas

Simplify, optimize

and digitize

Thrive in a dynamic

organization


New strategic opportunity Contributing to long-term growth

Development seedFueling mid-term growth but still evolving

Anchor businessCreating stable growth and revenue

Growth starFueling short-term growth with sharp focus on execution

Value creatorCreating strong base for profitability to fund growth

Every industryplays an

important role

21

Differentiate to succeed with assigned roles for each industry


Invest in impact by focusing the R&D pipeline

Before Better business with biology

Value Value

Risk RiskProject resource allocation Project resource allocation

New strategic opportunities

*Illustrative example


Enzymes

EnzymesEnzymes

Microbes Microbes

Past Present Future

23

Broader technology offerings increase opportunities over time


Spearhead new business in areas of global need

Contaminant removal

Protecting water resources by applying biological solutions to

remove contaminants from water and wastewater

Specialty alternative proteins

Feeding the world by providing alternative specialty protein for

food ingredients via fermentation

Human oral and gut health

Increasing health and wellbeing with clinically proven products for human oral and gut health

Market overview

Household Care overview

Laundry

Key industry trends

• Growth in the liquid and unit dose market, driven by consumer convenience and stronger commercial focus on these categories

• Rising demand for Household Care solutions tailored to emerging-market needs, such as hot and humid conditions and mild handwashing alternatives

• Strong interest in freshness and odor reduction technologies and claims

Product launches (2018)

• Licheninase – A new enzyme launched for automatic dishwashing, targeting dried-in cereals

• Lipex® Evity 200 L – New premium liquid lipase for the removal of grease stains

4.353

4.6324.702 4.717

4.625

2014 2015 2016 2017 2018

Sales in DKKm

+9% +4% +1% +2% 0%

Organic growth

Automatic

dishwash

Hand

dishwash


>60%NZ market share

Professional

cleaning

Eliminateharsh chemicals

Decrease dose, increase performance

Preserve fabrictexture, color

Our enzyme technology adds significant benefits

Remove stains,boost whiteness

Save energy, water, time

Deal with complex hygiene issues


Lifestyle changes are increasing the demand for freshness, and we are on track to deliver DKK 1bn

Consumers’ lifestyle changes arethe drivers of growing hygiene needs…

…which center around issuesof odor and grime

Cold wash Detergent format

SyntheticsUrbanization

Sources: Novozymes consumer study; Euromonitor, Jan 2018; Mintel GNPD, April 2018; UNFPA, April 2018; Grand View Research; April 2018

Key consumer concerns

identified by Novozymes

Malodor Grime

Body soils

Freshness


We see large potential for future enzyme inclusion, especially in emerging markets

Significant up-dosing and penetration potential in emerging markets in general and Asia Pacific in particular

6

0

2

12

4

8

14

10

0

20

40

60

80

100

Middle East and Africa

North America

Billion tons Dosing (indexed)

Western Europe Latin America Eastern Europe Asia Pacific

5x volume opportunity

7x enzyme up-dosing opportunity

Detergent volume Enzyme dosing index

Presence and emerging market solutions to unlock potential

• Innovation hubs in China, India and Brazil

• Sales offices in Brazil, China, India, Mexico, Pakistan, Malaysia, South Africa and Turkey

• New sales offices opened in Kenya and Thailand

• Sales presence in Colombia, Egypt, Indonesia, Philippines, Nigeria and Venezuela

• Develop emerging market-specific products and blends

Source: Euromonitor, May 2019; Novozymes analysis

Emergingmarkets


Biological detergents: We believe enzymes can contribute even more to a detergentand to compaction

Sources: IHS chemical 2014; Euromonitor, 2019; expert interviews, 2019* EU representative example, value as percentage.

• New and more stable enzymes to replace surfactants

• Freshness solutions to reduce the need for perfume

• Enzymes to replace polymer functions, such as fabriccare and whiteness

• Using enzymes to compensate for performance loss when reducing pH level and theneed for builders

Biologicaldetergent

Surfactants

Enzymes

Polymers

Builders

Perfume

Other

Surfactants

Multi-enzymes

Polymers

Builders

PerfumeOther


Food & Beverages overview

Baking

Key industry trends

• Consumer focus on health, wellness and natural products

• Increase in raw material costs and focus on production process optimization

• Customers consolidating operations in order to increase overall efficiency

• Consumer focus on brands using local produce and/or catering to specific local taste, tradition and cultures


• Palmora® – Our first solution for the palm oil industry

• Frontia® – A new technology for grain-milling

Grain milling Food & nutrition

30-40%NZ market share

3.2783.715 3.740

4.041 4.122

2014 2015 2016 2017 2018

Sales in DKKm

+4% +5% +2% +9% +5%

Organic growth


Beverage

Health, safety and sustainability

Freshnessand taste

New substratestreams

Productivityand yield

HealthMore natural foods,please

More with lessEM industrialization

Trends Opportunities

32

Better food for a growing world


33

• Significant presence in starch - industry leaders in enzymatic starch conversion for sweeteners

• Portfolio that includes LpHera®, Extenda®, Secura® and Sweetzyme®

• Frontia® opens a new segment with our starch customers in wet milling, enhancing the yield of key value streams - protein and starch

Starch slurryfrom wet mill

LiquefactionNovozymes LpHera®

SaccharificationNovozymes

Extenda®

Novozymes Secura®

Purification IsomerizationNovozymes Sweetzyme®

Refining

Fructose syrups

Maltose syrups

Mixed syrups

Corn

Milling

Frontia®

Gluten

Fiber

Glucose syrups

Ref

iner

y

Wet

mill

Grain milling Starch processing

Starch

Starch


The grain value chain

End products• Cooking oil• Margarine &

shortenings• CBE• OPO, etc.• Low trans fat

and 3-MCPD

End products• Fatty acids• Fatty alcohols• Food & non-

food additives• MCT

• Novozymes offers multiple solutions across the value chain

• Improving efficiency in vegetable oil production is a >1B DKK opportunity

• Replacing chemical catalysts for specialties is a 400 mDKKopportunity

MillExtraction

RefineryRefining

Specialty fats producerSpecialty oils & fats

Oleo playerOleochemicals

Oilseed

3

1 2

4

New agro-processingapplications


Enzymatic applications for vegetable oil processing show huge potential

Acrylamide removal

Transfats and

enzymatic interesteri-

fication

Plantprotein

Lowlactose

Less sugar added

Source: Novozymes revenue estimates

Healthy food

trends


Increasing consumer health awarenessdrives food trends and opportunities

Bioenergy overview

Key industry trends

• Growing calls for lower CO2 emissions in the transportation sector, driving demand for ethanol

• Political push in favor of biofuels in more regions

• Volatility in commodity prices, affecting customer margins


• Innova® Drive – Novozymes’ first launch within yeast for conventional biofuels. Innova® Drive is aimed at ethanol plants with short fermentation times

• Innova® Lift – The second product from our yeast platform. Innova® Lift is aimed at ethanol plants with longer fermentation times

2.270 2.543 2.4382.644 2.805

2014 2015 2016 2017 2018

Sales in DKKm

+19% -5% -3% +11% +12%

Organic growth

Conventional biofuels Biomass conversion


>50%NZ market share

Bioenergy - a lot of opportunities exist

EUROPEAN UNIONRenewable Energy DirectiveProduction: 1.4bn GPYPotential addition: +1bn gallons by 2030

Total additional GPY by 2030

24bn(gallons per year)

LATIN AMERICARenovaBioProduction: 7.4bn GPYPotential addition: +4-6bn gallons by 2030

CHINAE10 by 2020Production: 600-700m GPYPotential addition:+5bn gallonsl by 2020

INDIAStrong governmental push for public investment in 2GProduction: 400m GPYPotential addition: +150m gallons/year 2G by 2030

NORTH AMERICARenewable Fuel StandardProduction: 15.8bn GPYPotential addition: +13bn gallons by 2030*

+150mGPY

+1bnGPY

+4-6bnGPY

+13bnGPY

+5bnGPY

*Including RFS cellulosic volume mandate currently waived due to lack of capacity.

Ramping up commercially in

emerging markets to be ready for expected shift


Ethanol production


Sources: EIA, Ethanol RFA

Global ethanol production (billion gallons) Ethanol producer margin

Price development in ethanol and corn US Ethanol inventories

7.200

2018

6.267 6.760

13.816

2014

14.807

2013

14.313

2015

23.422

6.760

25.774

2017

15.413

2016

6.860

15.936

7.920

26.810

16.061

25.083 RoW

China

EU

Brazil

NA

26.18228.570

0

1

2

3

4

5

6

7

8

2014 2016

USD

per

gal

/bu

20172013 2015 20192018

Ethanol Corn

-0,5

0,0

0,5

1,0

1,5

2,0

2,5

Co

ntr

ibu

tio

n m

argi

n (

$/g

allo

n)

0

10

5

15

25

20

2013

Bar

rels

in t

ho

usa

nd

s

2014 2015 2016 2017 2018 2019

39

The Ethanol ProcessEnzymes are applied in multiple stages, along with yeast in fermentation

PastBasic products for liquefaction and saccharification

PresentMultiple offerings across liquefaction, saccharificationand now also yeast

FutureIncreasingly customized solutions for liquefaction and saccharification, novel solutions for other process steps

Designing enzymes for individual plantsUsing our diagnostic program to deliver custom fermentation solutions, tailored to a plant’s unique operating conditions

Addressing complexity in bioethanol production

From standard to more customized solutions


Agriculture & Feed overview

Key industry trends

• Consumer focus on health, wellness and natural products

• Sensitivity to fluctuations in commodity prices among farmers

• Consolidation of large agricultural companies to increase overall scale and efficiency


• Acceleron® B-360 ST – A biological seed treatment that promotes symbiosis between microbes and corn plants, strengthening root systems and increasing plants’ access to nutrients

• Balancius™ – A novel enzyme that improves digestion and nutrition in chickens

1.7282.130 2.207 2.108 2.045

2014 2015 2016 2017 2018

Sales in DKKm

+7% +19% +5% -3% +3%

Organic growth

Animal health BioAgricultureFeed


25-30% (Feed enzymes)NZ market share

Our new BioAg setup allows for broader outreach

41


Scientific evidence supports enzyme penetration - enabling livestock farmers to reduce feed cost

70% of total cost of poultry production is feed including additives which is around 5%.

Poultry producer margins are low when:• Feed prices are high• Meat prices are low

Feed formulation is an art and the nutritionist is often the decision maker. The scientific and nutritional philosophies combined with commodity prices determine enzyme inclusion levels

In tough conditions the producer sees two options:• Cost out = reduce enzyme inclusion • Increase efficiencies = increase enzyme inclusion

The degree of enzymatic and nutritional understanding determines the decision:• Advanced/’modern’ customers increase enzyme inclusion• Simple/traditional customers reduce enzyme inclusion

• Enzyme inclusion increases the efficiency of poultry producers• Lack of scientific understanding drives uneconomical customer decisions

Market is sensitive to feed and meat price changes

Low margins leave the producer different options

Scientific educationof customers to increase penetration

ProActProtein• Maximizing protein utilization and improving nutritional value• Improves protein digestibility by >20%, increasing feed conversion• Reduces need for additional protein feed, such as soybean meal

Attractive value propositions in feed enzymes

80-90%

10-15%

35-45%

0%

25%

50%

75%

100%

Phytase Protease Carbohydrase

PhytasePhosphate• 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• Significant reduction in phosphorous excretion from animals as

farmers can save 25-100% of added phosphate

OthersEnergy• Xylanase & glucanase increase non-starch polysaccharide digestion• Amylase improves starch digestibility, releasing more energy• Cellulase improves fiber digestion• Grain feed savings of ~2.5% and less pollution (ammonia, nitrate,

nitrous oxide and CO2)

Estimated penetration across species


Feed and animal gut health enzymes

Bacillus for monogastrics

Hatchery probiotics

Natural solutions for cattle

Pond treatment(aquaculture)

We are committed to our core technologies and partner with industry leaders to win

Enzymes

• Full portfolio of feed enzymes

• Recently launched game-changing innovation

• Improve the sustainability of livestock production

Probiotics

• Growing area for Novozymes with pipeline of products

• Alterion® tracking well

• Support the trend of reducing antibiotic use in animal farming

We develop and commercialize these technologies together with our partners, who are leading players in the industry


Technical & Pharma overview

Key industry trends

• Continuous focus on process optimization and cost reduction

• Water scarcity driving demand for solutions that reduce water consumption, improve water quality and clean wastewater

Product launches

• BioSec® – Novozymes’ first product for sludge dewatering. BioSec® is aimed at municipal wastewater treatment

• Low temperature cellulase for liquid denim abrasion and garment biopolishing

Answering the world’s call for cleaner water

Solving the world’s water problems presents a monumental challenge for society. As part of its Sustainable Development Goals (SDGs), the

United Nations has identified Clean Water & Sanitation as Goal 6, recognizing that water is the key to unlocking progress in several of the other SDGs.

829982

1.055 1.021

792

2014 2015 2016 2017 2018

Sales in DKKm

+9% +6% +13% +2% -6%

5 year organic growth

Forest products Wastewater

~50% (enzymes only)NZ market share

Textile & leather


Biocatalysis

Sustainability

6 12

PRODUCTION & CONSUMPTION

Gain 500,000 tons of food

by improving efficiency from

farm to table in 2022

CLIMATE

Save 60 million tons CO2

by enabling low-carbon fuels in

the transport sector in 2022

Limit global warming

increase to 1.5 degrees

WATER

Reach > 4 billion people

by providing laundry solutions

that replace chemicals in 2022

Ensure clean and

efficient water use

Produce more and better

products with less impact

WORLDBy 2030, we will help...

2022 targets

Reduce absolute CO2

emissions from operations

by 25% by 2022

Develop context-based water

management programs at 100%

of sites by 2022

50% reduction in absolute

CO2 emissions from

operations on our way to

carbon neutral in 2050

100% of sites manage

water in balance with

local conditions

100% of key materials and

waste managed in circular

systems

NOVOZYMESBy 2030, we will achieve…

2022 targets – examples Achieve 100% circular management of

our biomass by 2022

Sustainability drives how we do business


-20%

20%

60%

100%

140%

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

Ch

ange

sin

ce 2

00

5

0%

1%

2%

3%

0

5

10

15

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

Emp

loye

e ab

sen

ce

Acc

iden

ts p

er m

illio

n

wo

rkin

g h

ou

rs

Accidents per mill. working hours Employee absence (right)

We plan to continue our journey of operational excellence

Decoupling resource consumption from economic growth

Steady improvement in employee metrics

• Novozymes has over time proved how investments in efficiency and optimization programs pay off not only from a sustainability perspective but also from an economic perspective

• In the US we have a biogas plant which turns wastewater into steam

• 24% of the total energy consumed comes from renewable sources; mainly windfarms

Gross profit

Water

Energy

CO2 emissions

Sales


Financials and governance

Historical performance demonstrates track of delivery

50

Mid-term targets 2020-2022

• Organic revenue growth of 5+% per year

(2020 likely impacted by portfolio changes)

• EBIT-margin at or above 28% by 2022

• ROIC (incl. goodwill) at or above 23% by 2022


Turnover development

EBIT- margin

ROIC (incl. goodwill)

0%

10%

20%

30%20.000

15.000

5.000

0

10.000

DK

Km

RO

IC

2010 2011 2012

7.486

2013 2014

11.871

2015 2016 2017 2018

9.01310.421 10.535

11.891 12.585 12.880 13.953

ROIC (right) Invested Capital

0%

10%

20%

30%

2010

27,9%27,2%24,7%

22,3%

2011 2012 2013 2014 2015 20182016 2017

22,0%24,4%

27,7% 27,9% 28,3%

10.510 11.234 11.746 12.459 14.002 14.142 14.531 14.390

5.000

0

10.000

15.000

2012

DK

Km

2011 20152010 2013 2014 2016 2017 2018

9.724

+5%

-716

1.0000,0

-1.000

0

2.000

3.000

-0,5

0,5

1,0

DK

Km 990

NIB

D/E

BIT

DA

2010 2011 2012 2013 2014

2.535

2015 2016

346

2017 2018

1.0191.6421.430

805437

-5%0

1.000

500

1.500

2.000

0%

5%

10%

15%

2013

DK

Km

20162012

CA

PEX

/Sal

es

2010

1.177

2011 2014 2015 2017 2018

1.326 1.316

783 7051.015

1.188

1.6651.388

Historical performance demonstrates track of delivery

51

Model assumptions 2020-2022

• Improving as % of sales

• CAPEX to sales at or below 8%

• ~1x Net interest bearing-debt-to-EBITDA


Net working capital

Net investments

Net interest bearing debt

CAPEX to sales (right) CAPEX

NIBD/EBITDA (right) Net Interestbearing debt

3.000

0%

0

1.000

20%2.000

10%

-10%

30%

DK

Km

2.023

2010

NW

C/S

ales

20132011 2012 2014 2015

1.720

2016 2017 2018

2.741

1.5801.943

2.195

1.076

2.088

2.768

NWC to sales (right) NWC

Novozymes carries limited exposure to raw material fluctuations

Factors impacting COGS

• 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 and 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

Split of Cost of Goods sold Raw materials consist primarily of different carbohydrates. Approximately 50% of raw material input are e.g., sucrose, maltose, glucose and starch


34%

22%

44%

Energy/utilities & others

Raw materials

Indirect production costs

504 600 687 786 925

2,20

2,50

3,00

3,50

4,00

4,50

5,00

2016

8321.000

1.3181.062

1,90

2.0001,60

400

2010 20172011 2012

2.925

1.519

2013

2.000

2014

2.000

2015

3.062

1.190

2.000 2.000

1.438

2018

504786

3.190 3.318 3.438

53

DKK ~20bn returned to shareholders since 2010


Dividend per share (DKK)Buyback (DKKm) Dividend (DKKm)

54

Shareholder distribution

Two share classes; A and B shares • All “B”- shares listed in Copenhagen under the symbol “NZYM B”

• All “A” share capital and 21,991,400 “B”-shares are held by Novo Holdings, who is fully owned by the Novo Nordisk Foundation

As of December 2018• Novo Holdings, owned 25.5% of the share capital and controls

71.7% of votes (all A shares and 9% of B shares)

• Novozymes had more than 55,000 shareholders of whom 95% were private shareholders in Denmark

• ~50 institutional investors incl. Novo Holdings owned ~50% of the B-shares

*Distribution equals where shares are managed, Dec 2018

Shareholder distribution of B common stock*Novo Holdings was the only major stockholder holding more than 5% of Novozymes common stock


4%9%

17%

18%

17%

34%

2%

Treasury stock - Novozymes

Rest of Europe

Novo Holdings A/S

Denmark

UK

North America

Rest of World

Remuneration principles for the Executive leadership teamRemuneration principles ensure close alignment with long term shareholder interests, links remuneration to shareholder gains and losses, and ensures management retention

Long term incentive program (2017-2019)Annual remuneration scheme

0

5

10

15

20

Mo

nth

s o

f sa

lary

p

er y

ear

Max 2 months of base salary cashbonus linked to fulfilment of EBITand sustainability targets

Max 3 months of base salary cashbonus linked to fulfilment ofpersonal targets

Base salary

Salary and cash bonus

Conditions for long term program• The incentive program consists of 50% stock options and 50% stocks with the

opportunity to double annual remuneration. Awards will depend on accumulated economic profit generated (75%) as well as average organic sales growth (25%).

• Economic profit is defined as: NOPAT - (Avg. inv. capital x WACC)• NOPAT is adjusted for hedging result to eliminate impact of currency fluctuations

as well as for any impacts from major acquisitions. A fixed WACC of 6% will be used during the entire program

• Stock options will be awarded annually (3-year vesting period), stocks in 2020 (no vesting period). Maximum clause caps upside (max. cap = 2x intrinsic value at establishment ex. inflation)

0102030405060708090

100

1,0 2,0 3,0 4,0 5,0 5,5 6,0 6,5 7,0 7,5 8,0% s

tock

& o

pti

on

s aw

ard

ed

DKKbn of acc. economic profit

Economic Profit (75% of the program)

0102030405060708090

100

1% 2% 3% 4% 5% 6% 7%% s

tock

& o

pti

on

s aw

ard

ed

Organic Sales growth

Organic growth (25% of the program)


56

Foundation ownership advocates long-term focus

Purpose of the Foundation

The Novo Nordisk Foundation is an independent Danish foundation with corporate interests. The objective of the Novo Nordisk Foundation is twofold: • To provide a stable basis for the commercial and research

activities conducted by the companies within the Novo Group• To support scientific and humanitarian purposes


Structure and ownership

Novo Nordisk Foundation

Institutional and private investors

Novo Holdings A/S

25.5% of total shares71.7% of votes

74.5% of total shares28.3 of votes

150

0

50

300

200

100

250

No

of

shar

es –

mill

ion

s

A-shares B-shares

Foundation

Treasury

Free-float

Our investor relations team

57

Further investor relations information is available from the company homepage at investors.novozymes.com


Tobias BjörklundHead of Investor relations+45 3077 [email protected]

Naja WivelCoordinator+45 3077 [email protected]

Carl AhlgrenIR officer+45 3077 [email protected]

Ulrik Wu SvareIR officer+45 3077 [email protected]

58

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.

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.


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