Biotech-based world leader Biotech-based world leader in enzymes - - PowerPoint PPT Presentation

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Biotech-based world leader Biotech-based world leader in enzymes - - PowerPoint PPT Presentation

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Biotech-based world leader Biotech-based world leader in enzymes & microorganisms Novozymes Novozymes Financial results Q1 2006 Conference call April 26, 2006 Unlocking the magic of nature Conference call April 26, 2006 Conference call

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in enzymes & microorganisms Biotech-based world leader Biotech-based world leader

Unlocking the magic of nature

Novozymes Novozymes

Financial results Q1 2006 Conference call April 26, 2006

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Unlocking the magic of nature

Conference call April 26, 2006 Conference call April 26, 2006

Today’s call is also being broadcasted live via the Internet at www.novozymes.com/investors, tab Conference call. Members of Executive Management will present the financial results, which will be followed by a Q&A session. In total, today’s call is expected to last up to an hour. Following the call, a replay will be available at the Internet site above.

Access code “ Novozymes”

+45 7026 5040 +44 20 7769 6432 +1 877 204 0753 Dial-in numbers DK UK US 4:30 pm 3:30 pm 10:30 am DK time UK time US east coast time

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Unlocking the magic of nature

Good start with strong earnings and cash flow Good start with strong earnings and cash flow

  • Q1 sales were as expected and

support full-year expectations for both segments

  • S

trong EBIT & cash flow mainly as a result of continued productivity and currency gains

14% EBIT growth 5% S ales growth, local currency 11% S ales growth, DKK YTD Q1 2006 Key financials

  • Continued fuel ethanol focus in Q1
  • Acquisition of Qingdao Huayuan Fine Bio-Products Co. Ltd., China,

providing production capacity for hyaluronic acid

  • S

hare capital reduction of 6.6% or DKK 46 million approved at the AGM in March – execution pending

  • Financial expectations for 2006 unchanged
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S ales overview - business update S ales overview - business update

500 374 356 172 74 505 476 387 171 94 100 200 300 400 500

Technical - detergent Technical - others Food Feed M icroorganisms

Q1 2005 Q1 2006

S ales in DKK million

  • Q1 2006 sales up 11% in DKK and

5% in local currency

  • S

ignificant growth in other technical enzymes

  • Very positive development within

food enzymes, confirming a strong position

  • Growth expectation for the full year

retained – both overall and for the main industries

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2,313 2,404 2,140 2,050 2,052 2,038 2,014 1,000 2,000 1999 2000 2001 2002 2003 2004 2005

Detergent enzymes - business update Detergent enzymes - business update

  • Q1 2006 sales up 1% in DKK and

slightly negative in local currency

  • The impact from higher ingredient

costs has stabilised

  • Continued healthy growth in

emerging markets

  • FY 2006 sales expectation retained

at slightly positive, both in DKK and local currency

500 505

Q1 2005 Q1 2006 S ales in DKK million S ALES CAGR ’99–’05 of -2%

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976 1,144 1,237 1,350 1,441 1,515 1,720 900 1,800 1999 2000 2001 2002 2003 2004 2005

Other Technical enzymes - business update Other Technical enzymes - business update

  • S

ales up 27% in DKK and 19% in local currency

  • Growth in fuel ethanol enzymes

was the strongest contributor

  • Growth in fuel ethanol enzymes in

US A was above US market growth

  • Good growth in enzymes for starch

conversion due to increased demand for sweeteners

  • Growth in textile enzymes in line

with expectations

  • Continued nice growth from

pharma proteins, although from a low level

  • FY 2006 sales growth expected to

be around 15% in local currency and more in DKK

374 476

Q1 2005 Q1 2006 S ales in DKK million S ALES CAGR ’99–’05 of 11%

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983 1,187 1,387 1,482 1,413 1,439 1,491 500 1,000 1,500 1999 2000 2001 2002 2003 2004 2005

Food enzymes - business update Food enzymes - business update

  • S

ales up 9% in DKK and 4% in local currency

  • New distribution set up in the US

implemented

  • Enzymes for oils and fats and

beverage alcohol continued to support the positive development

  • Nice growth in enzymes for

processed foods, Asia in particular

  • FY 2006 sales growth expected to

be 6-8% in DKK and slightly below in local currency

356 387

Q1 2005 Q1 2006

S ales in DKK million S ales CAGR ’99-’05 of 7%

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Feed enzymes - business update Feed enzymes - business update

  • S

ales flat in DKK and down by 6% in local currency

  • Quarterly fluctuations in alliance

partner’s inventory affected growth negatively

  • Increased penetration of feed enzymes

in North America and Asia

  • S

ales in Latin America challenged by cheap phosphorous sources

  • FY 2006 sales growth is retained at

5-7% in DKK and single-digit in local currency

171 172

Q1 2005 Q1 2006

S ales in DKK million

229 298 418 545 608 698 748 250 500 750 1999 2000 2001 2002 2003 2004 2005

S ales CAGR ’99-’05 of 22%

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Microorganisms - business update Microorganisms - business update

  • S

ales up 27% in DKK and 18% in local currency

  • Overall double-digit growth in all

industries and in all geographical regions

  • Especially strong growth in the

industrial & household cleaning industry

  • Waste treatment shows strong

growth, especially in Europe

  • FY 2006 sales expected to grow

above long-term expectations in both DKK and local currency

94 74

Q1 2005 Q1 2006

70 205 261 298 308 100 200 300 400 2001 2002 2003 2004 2005 S ales in DKK million

Growth through acquisitions ’01-’03

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S ales development - geographical split S ales development - geographical split

683 42% 341 21% 104 6% 505 31%

Latin America North America Asia Pacific Europe, MEA +3% +2% +6%

  • 4%

+14% +7% +22% +12% +11% +5% Total

DKK LCY DKK LCY LCY = Local Currency DKK LCY DKK LCY DKK LCY

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R&D news R&D news

  • Confident outlook for the project pipeline;
  • 5 - 7 new product launches expected during 2006,
  • No material product launches in Q1
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Profit & loss and cash flow Profit & loss and cash flow

2 193 196 Net profit excl. minority interest 10 335 368 CF from operations (6) (68) (64) Investments before acquisitions 14 267 304 Free cash flow before acquisitions (7) (74) (69) Tax 5 2.82 2.97 EPS (diluted) 1 192 194 Net profit incl. minority interest 100 (1) (2) Minority interest >100 (8) (48) Net financials

  • 18.6

19.2 EBIT margin % 14 275 313 EBIT (7) (117) (107) Depreciation 7 392 420 EBITDA 13 783 882 Gross profit 11 1,476 1,633 Sales % change Q1 2005 Q1 2006 DKK million

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Currency risk management Currency risk management

  • Favourable currency rates support

growth in sales and EBIT, while net financials are affected negatively, depending on hedging activities

  • Novozymes' policy is to hedge

existing net assets in foreign currency, and expected future net exposure from the company's

  • perations
  • 2006 net cash flow in US

D and JPY is hedged and included in financial

  • utlook:
  • approx. DKK 5.86/US

D

  • approx. DKK 5.57/JPY ‘00
  • 4%

0% April 25, 2006 compared with avg. exch. rate 2005

  • 1%
  • 1%

April 25, 2006 compared with spot January 23, 2006 5.32 6.08 January 23, 2006 5.25 6.00 April 25, 2006 5.45 6.00 Average 2005 J PY ’00 USD (DKK) Impact to operating profit from a 5% change in the value of (annualised): DKK 5-15 million JPY DKK 30-40 million US D

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Expectations for 2006 Expectations for 2006

18-19% Return on invested capital after tax DKK 750-850 million Cash flow before acquisitions 5-7% Net profit growth DKK minus ~100 million Net financials Around 19% Operating margin 7-9% Operating profit growth 7-9% S ales growth Provided that current exchange rates remain unchanged for the rest of the year, the expectations for 2006 are:

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Expected news & events 2006 Expected news & events 2006

Important product introductions Acquisitions & alliances Overall progress Other news Group financial statement Q1 2006 April 26 Group financial statement Q2 2006 August 8 Group financial statement Q3 2006 October 25 Capital Markets Day November Annual general meeting of shareholders 2006 March 1

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Forward-looking statements Forward-looking statements

This presentation and its related comments contain forward- looking 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, market- driven price decreases for Novozymes’ products and the introduction of competing products within Novozymes’ core areas.

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in enzymes & microorganisms Biotech-based world leader Biotech-based world leader

Unlocking the magic of nature

Novozymes Novozymes

www.novozymes.com