1H 2015 August 6, 2015 Forward-Looking Statements This - - PowerPoint PPT Presentation

Conference call 1H 2015

​August 6, 2015

​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) political conditions, such as acceptance of enzymes produced by genetically modified organisms; vii) 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 for 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.

Forward-Looking Statements

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1H 2015 Summary

​Strong earnings performance despite headwinds in important markets

• 5% organic sales growth is below expectations. 15% growth in DKK

sales – highest-ever reported sales in six months

• Strong growth in Agriculture & Feed driven by performance. Good

contribution from Food & Beverages

• Uncertainty and challenging market environment in Household Care

and Bioenergy create headwinds

• ~20% EBIT growth and EBIT margin expansion of ~1 %-point,

adjusted for The BioAg Alliance agreement in Q1 2014

2015 profit outlook maintained. Sales expectations lowered and reflect uncertain business climate

• Organic sales growth: 4-7%, revised from 7-9%
• DKK sales growth: 13-16%, revised from 16-18%
• EBIT growth maintained at 15-17%
• EBIT margin increased to 27-28%, up from ~27%
• Net profit growth maintained at 11-13%
• ROIC: 25-26%, unchanged

1,443 1,710 1,909 24.6% 28.1% 27.2%

10% 15% 20% 25% 30%

1H 2013 1H 2014 1H 2015

1,000 1,250 1,500 1,750 2,000 2,250

EBIT and EBIT margin 1H 2013 – 1H 2015

5,870 6,094 7,028 6% 8% 5%

0% 2% 4% 6% 8% 10%

1H 2013 1H 2014 1H 2015

4,000 5,000 6,000 7,000 8,000

Sales and organic growth 1H 2013 – 1H 2015

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DKKm

DKKm

Sales growth slowed in Bioenergy

​1H sales up by 2% organically

• 1. Challenging market dynamics:

Volatile commodity prices and low ethanol margins have customers focusing on costs

• 2. Negative mix effect for

Novozymes as some customers seek alternatives to yield solutions

• 3. Several innovations in test-

marketing to accelerate growth by broadening scope of solutions to cater for more customer care-abouts

• 15%
• 10%
• 5%

0% 5% 10% 15% 20% 25% 30% 35%

U.S. semi-annual ethanol volume growth rates and Novozymes Bioenergy organic sales growth

U.S. ethanol volume growth Novozymes org. Bioenergy growth

Sales & Markets

​1H 2015 sales: DKK +15%, organic +5% ​Q2 2015 sales: DKK +13%, organic +1%

Household Care: Sales negatively impacted by uncertainty in emerging markets, a dynamic U.S. market and lower sales to one customer in particular. Strong growth with a number of important customers in other markets Food & Beverages: Good performance across markets. Baking, healthy concepts and starch the most significant contributors to growth ​Bioenergy: Growth tempered by strong cost focus by customers as they navigate volatile markets and low ethanol margins. U.S ethanol production estimated up by ~3% ​Agriculture & Feed: A good North American season drives strong 1H performance in BioAg. Growth in animal feed more moderate following Q2 destocking ​Technical & Pharma: Good performance driven by pharma sales

402 919 1,050 1,599 2,124 488 1,141 1,288 1,846 2,265 Technical & Pharma Agriculture & Feed Bioenergy Food & Beverages Household Care

Sales by industry, DKKm

1H 2015 1H 2014

+23% / +2% +15% / +5% +7% / 0%

DKK growth org. growth

+21% / +6% +24% /+19%

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R&D Update

• Household Care: Working on new innovation for

stain removal, hygiene improvement and dedicated emerging markets solutions to accelerate growth

• Bioenergy: Expect to launch one or more

innovations during 2H 2015 to address changing demands from U.S. corn ethanol producers

• Animal Health & Nutrition: New Novozymes &

Adisseo partnership to launch a probiotic for poultry

• New innovation campus in Denmark: Ready by

2018, campus to house 800 employees – predominantly R&D

1H 2015 Financial Performance & Outlook

​Strong earnings performance in 1H 2015

• Gross margin slightly up
• Disregarding the net one-time impact from The BioAg Alliance,

EBIT grew by ~20%, mainly due to positive impact from currency developments and operational efficiencies

• EBIT margin expansion of ~1 percentage point
• Net financial costs increased – impacted by currency hedging
• Net investments and cash flow generation on track

​2015 outlook revised

• Organic sales growth lowered, as positive developments in

Agriculture & Feed and Food & Beverages cannot make up for headwinds in Bioenergy and Household Care. Uncertainty has increased

• Profit outlook maintained, as good productivity and further
• perational efficiencies offset lower sales expectations, leading to

higher EBIT margin Key financials Realized 1H 2015 2015 Outlook

• Aug. 6

2015 Outlook

• Apr. 23

Sales growth, org.

+5% 4-7% 7-9%

Sales growth, DKK

+15% 13-16% 16-18%

EBIT growth

+12% 15-17% 15-17%

EBIT margin

27.2% 27-28% ~27%

Net profit growth

8% 11-13% 11-13%

Net investments

• excl. acq., DKKm

371 900-1,000 ~1,000

Free cash flow before acq., DKKm

1,616 2,500-2,700 2,500-2,700

ROIC incl. goodwill

26.4% 25-26% 25-26%

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