Financial results Q1 2008 Conference call 04/ 24/ 2008 1Q 2008 - - PowerPoint PPT Presentation

04/ 24/ 2008

Financial results Q1 2008

Conference call

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1Q 2008 highlights

Strong organic sales growth across the business Increased sales guidance for 2008 to 12-15% from 11-14% in LCY Challenging currency development affects results in DKK

6-9% 5% Sales growth, DKK 1-4% 4% EBIT growth* , DKK 12-15% 11% Sales growth, LCY 18.4% 1 Q 2 0 0 8 ~ 18% Est. 2 0 0 8 EBIT margin

* 2007 basis excl. one-offs

Key financials

EBIT growth 4% , if excluding currency then ~ 13% EBIT margin 18.4% , if excluding currency then ~ 20.0% Dividend payment of DKK 5.00 per share approved at AGM

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1Q 2008 sales overview

• Sales up 11%

LCY and 5% DKK

• 7% LCY growth excl.

acquisition effect

• Double-digit growth

in 5 out of 6 business areas in LCY

• 2008 sales expectation

12-15% LCY and 6-9% DKK 572 542 434 179 84 636 184 132 134 53 563 458

Detergent Technical Food Feed Microorganisms BPI

1Q 2007 1Q 2008

1 5 % 4 % 1 3 % 1 1 % 1 1 % 6 % 1 0 % 3 % 6 9 % 5 7 %

• 5 1 %
• 5 6 %

LCY grow th DKK grow th

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

Detergent enzymes – business update

572 555 573 539 636

1Q07 2Q07 3Q07 4Q07 1Q08

1Q 2008 sales up 13% in LCY and 11% in DKK Continued support for higher enzyme dosages driven by penetration from new enzymes and marginal substitution of other detergent ingredients Strong global growth from branded and private-label detergent producers 1Q launch of Celluclean for improved whiteness & anti-greying effect 2008 sales growth upward adjusted to 8-10% LCY and 6-8% DKK Long-term growth expectation 3-5% p.a.

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

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

Technical enzymes – business update

542 537 581 603 636

1Q07 2Q07 3Q07 4Q07 1Q08

1Q 2008 sales up 15% in LCY and 4% in DKK Growth of enzyme sales to ethanol production of more than 30% Multiple factors affect growth in fuel ethanol production Textile enzyme sales challenged by adverse fashion trends 2008 sales growth now expected at 22-27% LCY and 12-17% DKK Long-term growth expectation 15-18% p.a.

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

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

Food enzymes – business update

434 402 435 428 458

1Q07 2Q07 3Q07 4Q07 1Q08

1Q 2008 sales up 11% in LCY and 6% in DKK Satisfying growth within sales of enzymes to the baking industry from continued penetration across all application areas Continued strong growth within brewing enzymes for quality and yield improvement driven by increasing raw material prices 2008 sales growth maintained at 5-10% LCY and 0-5% DKK Long-term growth expectation at ~ 10% p.a.

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

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608 698 748 700 705 2003 2004 2005 2006 2007

Feed enzymes – business update

179 167 170 189 184

1Q07 2Q07 3Q07 4Q07 1Q08

1Q 2008 sales up 10% in LCY and up 3% in DKK

• Increasing global demand for inorganic phosphate impacts phytase volumes

positively Continued competitive environment within sales of phytase products 2008 sales growth upward adjusted to ~ 10% in LCY and ~ 5% in DKK Long-term growth expectation at 5-10% p.a.

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

8 261 298 308 348 308 2003 2004 2005 2006 2007

Microorganisms – business update

8 4 9 1 7 1 6 2 1 3 2 1Q07 2Q07 3Q07 4Q07 1Q08

1Q 2008 sales up by 69% in LCY and 57% in DKK The inclusion of BioAg sales, from 2007 acquisition Philom Bios, impacts growth by ~ 60% -points

• Excluding the acquisition effect, organic growth of 9% in 1Q 2008

2008 sales growth retained at 20-30% LCY and reduced to 5-15% DKK Long-term growth expectation ~ 10% p.a.

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

9 30 54 75 134 224 2003 2004 2005 2006 2007

Biopharmaceutical ingredients – business update

120 51 30 23 53

1Q07 2Q07 3Q07 4Q07 1Q08

1Q 2008 sales DKK 53m compared with DKK 120m in 1Q 2007 Quarterly development in line with expectations Growth unfavorably impacted by non-repeated sales in 1Q 2007 High variation in sales pattern across periods 2008 sales retained at negative ~ 15% LCY and negative ~ 20% DKK Long-term growth expectation at 10-15% p.a.

Sales in DKKm

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Profit & Loss key figures 1Q 2008

Gross margin at 52.4% for the quarter, affected negatively by currencies EBIT up 4% , supported by productivity gains. Adjusted for currency, EBIT growth was ~ 13% EBIT margin at 18.4% . Adjusted for currency, EBIT margin was ~ 20.0% Net profit up 4% , positively affected by currency gains on hedging

359 372 1,481 1,340 1,206 1,089 998 964

18.4 19.7 19.2 17.1 17.3 18.2 19.9 18.6

200 400 600 800 1,000 1,200 1,400 2002 2003 2004 2005 2006 2007 1Q07 1Q08 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

775 861 911 264 254 1.042 656 746 16.5 9.0 10.4 10.9 12.8 14.1

100 200 300 400 500 600 700 800 900 1,000 2002 2003 2004 2005 2006 2007 1Q07 1Q08 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0

Net profit EPS (diluted)

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Cost of goods sold – brief overview

30% 20% 50% Raw materials Energy/ utilities Indirect production cost

Gross margin 52.4% vs. 52.0% Q1 2007 Operates with high input price level

Expects high price level for remainder of 2008 Q1 2008 development in prices, and current forecast, are within expectations

Factors impacting COGS development:

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, duration … Substitution possibilities, i.e., flexibility in use of different inputs, not dependent upon one source Price development on other products produced by

• ur suppliers from the same input

… …

Split of COGS

Carbonhydrates ~ 50% of raw material input (e.g., sucrose, maltose, glucose, starch)

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Cash flow and CAPEX

Capex (DKKm) / capex to sales (% )

982 1.080 991 1.058 963 308 221

182 477 716

2003 2004 2005 2006 2007 1Q 2007 1Q 2008

FCF bef. acq. Acquisitions

392 333 335 476 735 179 141

7 10 7 9 5 5 7

2003 2004 2005 2006 2007 1Q 2007 1Q 2008

Operating cash flow down 11% Increased investment level compared to Q1 2007, mainly from the China expansion Equity ratio at 39% Q1 2008 from slightly increased debt ROIC 19.3% , slightly down, primarily due to acquisition effect

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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 Novozymes.

11-14 12-15

LCY

6-8 ~ 20 800-950 750-900 4-7 ~ 18 1-4 6-9

April 2 4

• excl. 2 0 0 7 non-recurring item s

DKK Num ber of products, # ROI C % CAPEX, DKK m illion Free cash flow before acquisitions, DKK m illion Grow th in net profit % EBI T m argin % Grow th in EBI T % Sales grow th %

800-950 9-12 11-14

LCY DKK

6-8 ~ 20 750-900 4-7 ~ 18 2-5 8-11

January 2 5

• excl. 2 0 0 7 non-recurring item s

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Strong growth in sales earnings

• Expects highest organic growth ever in 2008
• Challenging currency development, impacting results in

DKK

• Strong growth in earnings on a true comparable basis
• Recent acquisitions are performing well

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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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