Financial results FY 2007 Conference call 2007 highlights Very - - PDF document

25/ 1/ 2008

Financial results FY 2007

Conference call

2

2007 highlights

Very satisfactory sales growth

exceeded expectations EBIT growth, despite high raw material and energy prices and unfavorable currency development

• Continued focus on growth in 2007 with

acquisitions, new collaborations and increasing R&D expenses

14% 15% Sales growth, LCY (1)% (1)% 9% 4 Q 2 0 0 7 11% 5% 9% 2 0 0 7 EBIT growth EBIT growth, excl.

• ne-off items

Sales growth, DKK Key financials

Dividend proposed at DKK 5.00 per share, + 11% compared to 2006

• Solid organic sales growth and expected unfavorable currency

included in financial guidance for 2008 Increased long-term growth expectations to 8-10% and decision to build enzyme production facility in the USA

3

2007 sales overview

• Sales up 14%

LCY and 9% DKK

• 12% LCY growth excl.

acquisition effect

• Detergent and fuel

enzymes main growth drivers

• 2008 sales expectation

11-14% LCY and 8-11% DKK

• Long-term sales growth

expectation increased to 8-10% per year

2,040 1,977 1,603 700 348 2,239 705 308 224 134 2,263 1,699

Detergent Technical Food Feed Microorganisms BPI

2006 2007

4

2,052 2,038 2,014 2,040 2,239 2003 2004 2005 2006 2007

Detergent enzymes – business update

5 7 2 5 5 5 5 7 3 5 3 9

1Q07 2Q07 3Q07 4Q07

2007 sales up 12% in LCY and 10% in DKK Higher enzyme dosage and market share gain main growth drivers in Europe supported by product introductions Emerging markets remain solid growth factor from higher penetration 2008 sales growth expected at ~ 5% LCY and ~ 4% DKK Long-term growth expectation increased to 3-5% p.a.

Sales CAGR 2003-2007 at 2% in DKK and 3% in LCY

5

1,411 1,461 1,645 1,977 2,263 2003 2004 2005 2006 2007

Technical enzymes – business update

542 537 581 603

1Q07 2Q07 3Q07 4Q07

2007 sales up 22% in LCY and 14% in DKK Very satisfactory enzyme sales to ethanol production, reaching DKK 1bn Sales of enzymes to the starch industry remained solid during 2007 Textile enzyme sales challenged by adverse fashion trends 2008 sales growth expected at 25-30% LCY and 20-25% DKK Long-term growth expectation increased to 15-18% p.a.

Sales CAGR 2003-2007 at 13% in DKK and 16% in LCY

6

1,413 1,439 1,491 1,603 1,699 2003 2004 2005 2006 2007

Food enzymes – business update

434 402 435 428

1Q07 2Q07 3Q07 4Q07

2007 sales up 9% in LCY and 6% in DKK Growth within sales of enzymes to the baking industry from continued European and Asian penetration

• Strong growth within brewing enzymes for quality and yield improvement

Declining sales of enzymes for beverage alcohol during 2007 2008 sales growth expected at 5-10% LCY and 2-7% DKK Long-term growth expectation now at ~ 10% p.a.

Sales CAGR 2003-2007 at 5% in DKK and 6% in LCY

7

608 698 748 700 705 2003 2004 2005 2006 2007

Feed enzymes – business update

179 167 170 189

1Q07 2Q07 3Q07 4Q07

2007 sales up 5% in LCY and up 1% in DKK

• Low volume growth and price pressure reduced growth of phytase

products Good growth within sale of non-phytase products during 2007 2008 sales growth expected to be flat in DKK and LCY Long-term growth expectation maintained at 5-10% p.a.

Sales CAGR 2003-2007 at 4% in DKK and 6% in LCY

8

Healthy status and outlook for industrial enzymes

BASF 3% Danisco 21% Novozymes 47% Others 24% DSM 5%

Enzymes for industrial use. Market size: DKK ~ 15bn (USD 2.6bn)

Source: Novozymes 2007 estimates

• Increased global market share

for industrial enzymes in 2007

• Increased long-term sales growth

expectation to the detergent and technical enzymes areas

• Strong position in enzymes for

fuel ethanol in the USA

• Decision to build enzyme

production facility in the USA

Latin America 7% North America 32% Europe, Middle East and Africa 41% Asia Pacific 20%

Turnover by region 2007

9

261 298 308 348 308 2003 2004 2005 2006 2007

Microorganisms – business update

8 4 9 1 7 1 6 2 1Q07 2Q07 3Q07 4Q07

2007 sales down 5% in LCY and 11% in DKK

• Discontinued product line and low market growth within institutional and

household cleaning impacted sales negatively during 2007

• Growth in sales of microorganisms for plant care and wastewater treatment
• 2008 sales growth expected at 20-30% LCY and 10-20% DKK
• Excluding the acquisition effect from Philom Bios, moderate organic growth

in LCY expected Long-term growth expectation maintained at ~ 10% p.a.

Sales CAGR 2003-2007 at 4% in DKK and 9% in LCY

10

30 54 75 134 224 2003 2004 2005 2006 2007

Biopharmaceutical ingredients – business update

120 51 30 23

1Q07 2Q07 3Q07 4Q07

2007 sales DKK 224m compared with DKK 134m in 2006 Strong impact from acquired activities in 2006 High variation in sales pattern across periods Lower contract volumes in 4Q07 as expected 2008 sales expected to be reduced by ~ 15% LCY and ~ 20% DKK Long-term growth expectation maintained at 10-15% p.a.

Sales in DKKm

11

R&D update

• Record number of product introductions in 2007, 10 in total
• One product launched in 4Q07;

Sucrozyme, for the production of low-calorie sweeteners

• New product sales around 25% of total sales in 2007
• Increase in R&D expenses, as a percentage of total

sales from 12.9% -> 13.4% , in line with expectations

• Several collaboration agreements initiated in 2007
• Project pipeline;

6-8 product launches expected in 2008

12

Profit & Loss key figures

Gross margin at 53.1% , affected negatively by currencies, raw material costs and lower margin on acquired inventory EBIT up 11% , supported by high level of productivity gains. Excluding damage payment, growth was 5% Adjusted for impact from acquisitions, damage payment and currency, EBIT-margin was on par with 2006 Net profit up 14%

1,481 1,340 1,206 1,089 998 964

19.7 19.2 17.1 17.3 18.2 19.9

200 400 600 800 1,000 1,200 1,400 2002 2003 2004 2005 2006 2007 16.0 16.5 17.0 17.5 18.0 18.5 19.0 19.5 20.0 20.5 21.0 21.5 22.0

EBIT Ebit M argin

775 861 911 746 656 1.042 14.1 12.8 10.9 10.4 9.0 16.5

100 200 300 400 500 600 700 800 900 1,000 2002 2003 2004 2005 2006 2007 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0

Net profit EPS (diluted)

13

Cash flow and CAPEX

Operating cash flow up 12% from increased earnings and improved inventory levels CAPEX at DKK 735m from increased activity Free cash flow before acquisitions 13% of sales DKK 500m worth of shares bought back over the year ROIC increased to 21.7%

Capex (DKKm) / capex to sales (% )

982 1,080 991 1,058 963

182 477 716

2003 2004 2005 2006 2007

FCF bef. acq. Acquisitions

392 333 335 476 735

7 10 5 5 7

2003 2004 2005 2006 2007

14

800-950

CAPEX, DKK m illion

9-12 11-14

Local Currency DKK

6-8

Num ber of products, #

~ 20

ROI C %

750-900

Free cash flow before acquisitions, DKK m illion

4-7

Grow th in net profit %

~ 18

EBI T m argin %

2-5

Grow th in EBI T %

8-11

Sales grow th % January 2 5

• excl. non-recurring item s

Outlook FY 2008

Note: Non-recurring items in 2007 amounted to DKK 75m of EBIT and DKK 56m of net profit. Non- recurring items comprise damages for a 2007 patent settlement in favor of NZ.

15

2,000 4,000 6,000 8,000 10,000 12,000 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Year DKK million

Focus on growth and earnings

Growth in operating profit of at least 10% per year Operating profit margin of around 17% Return on average of invested capital after tax (ROI C)

• f at least 15% per year

8-10 growth

Novozymes’ long-term financial targets

• Long-term expected organic growth of 8-10%
• Additional growth from acquisitions
• Retained long-term financial targets

DKK 10 bn in 2010

• Ambition of DKK 10 billion in sales

by 2010 could almost be reached

• rganically
• Increased long-term growth

expectation to 8-10%

• Decision to build new enzyme

production facility in the USA mainly to support growth in ethanol industry

• Acquisitions and collaborations

continuously on the agenda

acquisitions

16

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.

17

UNDISPUTED WORLD LEADER IN ENZYMES