roadshow presentation 12m 2018

Roadshow presentation12M 2018

Released on January 24, 2019

Summary

2

Satisfactory 2018 results – financial outlook met

• Satisfactory results; guidance parameters from beginning of 2018 met

• Challenging Middle Eastern markets were the main unexpected drag on organic sales growth

• Good development in emerging markets supported by innovation and increased commercial presence

• Pipeline solid and developing very well

3-6% organic sales growth guidance for 2019

• Uncertainty regarding certain businesses covered by a 3 percentage point overall range

• Step-up in commercial activities and strong innovation entering the market

• Solid earnings with EBIT margin between 28 and 29%

• Strategy and long-term target update expected in June

Latest Results • Overview and Strategy • Market Overview • Sustainability • Financials and Governance2

Latest results 3

Overview and strategy 15

Market overview 24Household Care 25Food & Beverages 28Bioenergy 30Agriculture & Feed 34Technical & Pharma 40

Sustainability 41

Financials and governance 46

Table of contents

Latest results

Highlights

Satisfactory 2018 performance

• Financial guidance parameters met as set out at the beginning of 2018

• Bioenergy strong; solid performance in Food & Beverages; growth in Agriculture & Feed; Household Care flat; Technical & Pharma declined

• Middle East took out ~1 percentage point of overall organic sales growth

• Emerging (+5%) and developed markets (+3%) both posted organic sales growth

• Eight impactful products launched and good progress on our priority innovation platforms

• Increased commercial activity in emerging markets

2019 outlook: 3-6% organic sales growth, 28-29% EBIT margin

• 3pp spread in range reflects strong new product performance and geopolitical uncertainty

• Innovation and increased penetration across geographies will drive growth

• Investments in emerging markets will support growth

• Solid earnings outlook with EBIT margin between 28 and 29%

• DKK 2 billion share buyback program

• Proposed dividend of 5 DKK/share, 11% increase y/y

4

1%

7%5%

-3%

-6%

2%0%

5%

12%

3%

-5%

4%

HouseholdCare

Food &Beverages

Bioenergy Ag & Feed Tech & Pharma Total

Organic sales growth by segment

Q4'18 FY'18

Key financials(DKKbn)

February 2018Outlook

2018Realized

Sales growth, organic 4-6% 4%

EBIT margin ~28% 28.3%

Net profit growth ~0% 3%

Net investments excl. M&A 1.3-1.5 1.4

Free cash flow excl. M&A 2.3-2.6 2.3

ROIC incl. goodwill 24-25% 24.2%

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

Organic sales growth by geography

5

34%of sales

North America

12M 2018 y/y: 5%

Q4 y/y: 3%

36%of sales

12M 2018 y/y: 1%

Q4 y/y: 1%

Latin America

12M 2018 y/y: 6%

Q4 y/y: 1%

Asia Pacific

12M 2018 y/y: 5%

Q4 y/y: 5%

Europe, the Middle East & Africa

35%(12M 2018: 5% y/y)

65%(12M 2018: 3% y/y)

Developed Emerging

10%of sales

20%of sales


4%

1%

2%

1%

0%

FY'14 FY'15 FY'16 FY'17 FY'18

FY organic sales growth

-3%

1%

-2%

2%

1%

Q4'17 Q1'18 Q2'18 Q3'18 Q4'18

Quarterly y/y organic sales growth

Flat performance in 2018

• Organic growth 12M 2018 0% y/y; Q4 2018 1% y/y

• Weakness in the Middle East due to economic distress and trade sanctions

• Global customers continued cost optimization – in line with expectations

• Sales to regional customers performed well – China in particular

• Good traction for the freshness rollout; now available in multiple countries

• Strong performance in dishwash from innovation and environmental focus

2019 outlook and priorities: freshness, emerging markets and regional accounts

• Low-single-digit organic sales growth

• Rollout of freshness platform: multiple emerging markets to be added through the year and shipments to European markets late 2019

• Unlocking growth in emerging markets through presence and innovation

• Solutions tailored to specific customer preferences

• Less of a drag from global accounts

Household Care

6

32%of sales


9%

5%

4%

3%

7%

Q4'17 Q1'18 Q2'18 Q3'18 Q4'18


4%5%

2%

9%

5%

FY'14 FY'15 FY'16 FY'17 FY'18


Food & Beverages

Solid and wide-ranging growth

• Organic growth 12M 2018 +5% y/y; Q4 2018 +7% y/y

• Broad-based growth; especially strong in food & nutrition and beverages

• Strong growth in oils & fats

• Baking performed well in Asia Pacific but hampered by planned price reductions in North America and the situation in the Middle East

• Starch growing despite volatile commodity pricing in Asia Pacific

2019 outlook and priorities: emerging markets and solutions from the priority innovation platforms

• Mid-single-digit organic sales growth

• Continued step-up in commercial presence, especially in the emerging markets

• Ramp-up of newly launched innovations, such as Frontia® and Palmora®

• Demand for health and wellness solutions creates opportunities

7

29%of sales


14%

9%

20%

15%

5%

Q4'17 Q1'18 Q2'18 Q3'18 Q4'18


19%

-5%-3%

11% 12%

FY'14 FY'15 FY'16 FY'17 FY'18


Bioenergy

Continued strong momentum for biofuels

• Organic growth 12M 2018 +12% y/y; Q4 2018 +5% y/y

• New yeast technology well received; second product, Innova ® Lift, launched in Q4

• Good growth across regions for conventional biofuels

• US and global ethanol production estimated to be up ~1% (Q4 y/y negative). Inventories remain elevated and producers margins tight

• Latin America growing as Brazil continues expansion into corn ethanol production

2019 outlook and priorities: yeast, Brazil and continued innovation

• High-single-digit organic sales growth with flat global ethanol volumes y/y

• High US ethanol inventories and tight margins

• Trade conflicts creating uncertainties for US export market

• Expectations continue to be based on current political conditions

o Awaiting clarity on E15; expected sometime before the summer

o Mandates could add volume growth in China and Brazil

8

19%of sales


7%

19%

5%

-3%

3%

FY'14 FY'15 FY'16 FY'17 FY'18


-7%-5%

13%

10%

-3%

Q4'17 Q1'18 Q2'18 Q3'18 Q4'18


Agriculture & Feed

Mixed year with strong growth in BioAg

• Organic growth 12M 2018 +3% y/y; Q4 2018 -3% y/y

• Strong BioAg performance driven by Acceleron® B-360

• Sales to animal feed challenged; difficult market conditions in Latin America

• Alterion® product in animal health gained good traction across regions

• Balancius™ ramping up and gaining interest in the market

2019 outlook and priorities: innovation and The BioAg Alliance

• Low-single-digit decline to mid-single-digit increase

• Increased sales contribution from Balancius™

• Continued penetration of the probiotic solution Alterion®

• Conclusion on the future setup of the BioAg business expected in the coming months

• Navigating volatile agricultural markets with innovation and strong partners

9

14%of sales


R&D update – priority innovation platforms

10

Arrows denote progress over the past 12 months.

Freshness solutions for laundry detergents


Two exciting collaborations

11

Natural solutions for dairy and beef cattle

Elanco and Novozymes have entered into a joint development agreement to develop nutritional health solutions

Early stage - exploring the first ideas

Good fit with our animal health priority innovation platform

Making every drop count

BioSec® - our first product from the water platform

launched in December

Leveraging technology that partly originates from our

biomass conversion research

The Copenhagen wastewater treatment facility BIOFOS is the

first end-user applying our enzymatic dewatering technology


Financials – 2018

12

Satisfactory 2018

• Initial 2018 financial outlook parameters met

• Organic sales growth at +4%

• Middle East and Feed were main negative surprises

• Reported EBIT margin at 28.3%, up 40bp, supported by productivity improvements and cost control

• Adjusted EBIT margin down 70bp, due to lower deferred income, higher commercial activity and currency headwind

• Net investments at DKK 1.4 billion, DKK 300 million lower y/y

• Free cash flow at DKK 2.3 billion, ~DKK 100 million lower than 2017 due to higher net working capital


2017 Realized

February 2018Outlook

2018Realized

Sales growth, organic 4% 4-6% 4%

EBIT margin 27.9% ~28% 28.3%

Net profit growth 2% ~0% 3%

Net investments excl. M&A 1.7 1.3-1.5 1.4

Free cash flow excl. M&A 2.4 2.3-2.6 2.3

ROIC incl. goodwill 25.6% 24-25% 24.2%


Financials – 2019 outlook

13

3-6% organic sales growth and solid earnings

• Organic sales growth guidance of 3-6%. Currencies add ~1pp in reported Danish kroner

• Growth expected in all businesses as well as from both emerging and developed markets


• EBIT margin 28-29%, supported by productivity improvements

• Lower y/y net investments at DKK 1.0-1.3 billion

• Free cash flow excl. M&A at DKK 2.2-2.6 billion

• ROIC at ~23% ( including 1 percentage point negative impact from IFRS 16 Leases)

• Dividend of 5 DKK/share proposed, 11% increase y/y

• DKK 2 billion stock buyback program


2018realized

2019outlook

Sales growth, organic 4% 3-6%

EBIT margin 28.3% 28-29%

Net profit growth 3% 0-5%

Net investments excl. M&A 1.4 1.0-1.3

Free cash flow excl. M&A 2.3 2.2-2.6

ROIC incl. goodwill 24.2% ~23%*

* The implementation of IFRS 16 Leases has a negative impact on ROIC of approximately 1 percentage point.


Summary

Satisfactory 2018 results – financial outlook met

• Satisfactory results; guidance parameters from beginning of 2018 met





• Uncertainty regarding certain businesses covered by a 3 percentage point overall range



• Strategy and long-term target update expected in June





• Capital Markets Day with strategy update on 17 June in Denmark

Satisfactory 2018 results

• Satisfactory results; guidance from beginning of 2018 met




Summary

14 Latest 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)

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

22%

24%

26%

28%

30%

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

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

Sales (right) EBIT margin R&D/Sales ROIC

DKKm

17 years of innovation driven growth


29%of sales

17

4%

1%2%

1%0%

2014 2015 2016 2017 2018

4%5%

2%

9%

5%

2014 2015 2016 2017 2018

19%

-5% -3%

11% 12%

2014 2015 2016 2017 2018

7%

19%

5%

-3%

3%

2014 2015 2016 2017 2018

9%6%

13%

2%

-6%2014 2015 2016 2017 2018

Uniquely diversified group creating synergies and opportunities

32%of sales

19%of sales

14%of sales

6%of 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


Our global business serves a large number of local markets and industries

34%of 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 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 sales

Latin America

Sites: Production

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

Acc CAPEX: ~DKK 420m

FTE’s: ~350


20%of 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


Molecular biologyStrain development using protein engineering, genetic modification, DNA sequencing, etc.

Continued development in our technology base… …creates opportunities to develop new business platform

YeastBio-

Agriculture

Solutions for Water

Sugarcane platform

Freshness

Grain milling

Vegetable oil

processing

Developing new technology and business platforms

Bio-informatics & Systems biologyApplication of computer algorithms in the computational discovery of enzymes in DNA databases

Screening systemsApplication of high-throughput robotics to find the best enzyme candidates

Industrial-scale fermentationProduction of enzymes and proteins whilst continuously optimizing and improving yields


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

3

21

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


Novozymes four strategic focus areas

Rally for changeWe will form partnerships and networks with customers, consumers, governments, suppliers, academia and others around us to make a sustainable difference

Lead innovationWe will inspire and excite our customers by delivering more significant innovation, tailored to their local markets

Focus on opportunitiesWe will prioritize the customers, markets and activities that hold the biggest opportunities for creating impact

Grow peopleWe want to be better at enabling our employees to develop their professional and leadership skills


Tina Fanø

Agriculture & Bioenergy

Executive Vice President Novozymes since 1993

Peder Holk Nielsen

CEO & President

Novozymes since 1984

Thomas Videbæk

Research, Innovation & Supply

COO & Executive Vice PresidentNovozymes since 1988

Anders Lund

Household Care &Technical Industries

Executive Vice PresidentNovozymes since 1999

Prisca Havranek-Kosicek

Finance, IR, IT & Legal

CFO & Executive Vice PresidentNovozymes since 2018

AndrewFordyce

Food & Beverages

Executive Vice PresidentNovozymes since 1993

Executive Leadership Team


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

• 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

Professional

cleaning

>60%NZ market share


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


0

20

40

60

80

20

Bn USD

34

2012

4637

18

2017

21

2022e

0%+4%

Emerging markets

Developed markets

5%

3%

CAGR ‘17-’22

…70% of the detergent market growth is expected to come outside of

developed markets

In the past, the majority of the detergent business was centered on

developed markets

But with the ongoing rise of emerging markets…

Developed markets Developed markets

Emerging markets

Emerging markets will be driving growth going forward

Source: Euromonitor, July 2018, Novozymes analysis


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

Product launches

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

• Frontia® – A new technology for grain-milling

Grain milling Food & nutrition Beverage

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


29

The grain value chain

• 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


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

Product launches

• 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


2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

1.0

1.5

2.0

2.5

3.0

3.5

Q1

201

3

Q2

201

3

Q3

201

3

Q4

201

3

Q1

201

4

Q2

201

4

Q3

201

4

Q4

201

4

Q1

201

5

Q2

201

5

Q3

201

5

Q4

201

5

Q1

201

6

Q2

201

6

Q3

201

6

Q4

201

6

Q1

201

7

Q2

201

7

Q3

201

7

Q4

201

7

Q1

201

8

Q2

201

8

Q3

201

8

Q4

201

8

$ per bu$ per gal

Corn Ethanol

Price development in ethanol and corn US Ethanol inventories

10

12

14

16

18

20

22

24

26

Q1

201

3Q

2 2

013

Q3

201

3Q

4 2

013

Q1

201

4Q

2 2

014

Q3

201

4Q

4 2

014

Q1

201

5Q

2 2

015

Q3

201

5Q

4 2

015

Q1

201

6Q

2 2

016

Q3

201

6Q

4 2

016

Q1

201

7Q

2 2

017

Q3

201

7Q

4 2

017

Q1

201

8Q

2 2

018

Q3

201

8Q

4 2

018

Bar

rels

in t

ho

usa

nd

s

Ethanol producer margin

Ethanol production

0

0.2

0.4

0.6

0.8

1

1.2

1.4

Q1

201

3Q

2 2

013

Q3

201

3Q

4 2

013

Q1

201

4Q

2 2

014

Q3

201

4Q

4 2

014

Q1

201

5Q

2 2

015

Q3

201

5Q

4 2

015

Q1

201

6Q

2 2

016

Q3

201

6Q

4 2

016

Q1

201

7Q

2 2

017

Q3

201

7Q

4 2

017

Q1

201

8Q

2 2

018

Q3

201

8Q

4 2

018

Co

ntr

ibu

tio

n m

argi

n c

/gal


Sources: EIA, Ethanol RFA

32

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


EUROPEAN UNIONRenewable Energy DirectiveProduction: 1.4bn gl/yearPotential addition: +1bn gl by 2030

TOTAL ADDITION BY 2030

24bn gallons/year

LATIN AMERICARenovaBioProduction: 7.4bn gl/yearPotential addition: +4-6bn gl by 2030

CHINAE10 by 2020Production: 6-700m gl/yearPotential addition:+5bn gl by 2020

INDIAStrong governmental push for public investment in 2GProduction: 280m gl/yearPotential addition: +150m gl/year 2G by 2030

NORTH AMERICARenewable Fuel StandardProduction: 15.8bn glPotential addition: +13bn gl by 2030*

+150m

+1bn

+4-6bn

+13bn

+5bn

Policy objectives point to a doubling of ethanol by 2030 vs. today


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

Agriculture and 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

Product launches

• 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 BioAgriculture

25-30% (Feed enzymes)NZ market share

Feed


Inoculants hold significant opportunity for market expansion across crops and geographies

Factors driving inoculant growth:Soybean Pulses Alfalfa Canola Corn Wheat Cotton Rice

Market expansionSignificant opportunity across crops and geographies

Global Planted Acres1

(5 year avg. 2009–2013)

~ 260m ~190m ~15m ~85m ~425m ~549m ~80m ~400m

Inoculants Treated Acres2 ~55-60% ~ 15% ~50% ~ 5% ~ 5% <1% <1% <1%

Immediate commercial portfolioWorking from strong starting position with existing commercial products

BioAg Existing Product Portfolio

NA

LATAM

RoW

Advantageous commercial footprintMonsanto’s broad global footprint enabling upstream distribution and leveraging relationships with distributor and retail channels

Current Inoculants Treatment Regime

Upstream(Seed Company)

Midstream (Distributor/Retailer)

Downstream (Grower)

Strong product position Moderate product position Minor product position No current product position


1. Source: FAO stats and Internal estimates 2. Internal 2014 estimates

BioAg Alliance PipelineIndustry’s most advanced microbials platform and R&D capability

The BioAg Alliance: R&D Development Pipeline

Biologicals

Collaborative

partnerships and

research are driving

innovative solutions to

produce food in a

sustainable way1 BioAg Alliance – Monsanto legacy microbials, partnership with Novozymes

1 3 4 Dev. Subm.Corn Soy

R&D Target Crop Phase* Enhancement**

2

BioAg Alliance1

BioYield 3

BioYield 2 for S America adv. to launch

BioYield 2 (Acceleron 360) adv. to launch

BioYield 3

Legacy Monsanto Biologicals Projects

YIELD & ABIOTIC STRESS

*R&D Phases:

1 – Research, 2 – Early Development, 3 – Late Development, 4 – Registrations Submitted

**Product enhancement: (Life Cycle Management activities)

Dev. – Under development; Subm. – Submitted for Registration


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

37

Market is sensitive to feed and meat price changes

Low margins leave the producer different options

Scientific education of 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


Partnerships help drive innovation in feed & animal health

39

The world needs sustainable efficiency gains in animal production. Improving the yield in animal production would have significantly positive impact in terms of global warming and use of agricultural land.

• 9+ billion people by 2050• Protein demand to double next 40 years• Feed counts for 50% of costs in animal

production• Arable land per capita expected to decrease

by 35% from 2000 to 2050• Antibiotic resistance and regulation are

driving the need for alternatives to antibiotics

Maximize nutrition by enhancing digestive systems

Balancius™, a new gut health solution to optimize feed conversion

In-feed solution for poultry grow-out

Global roll-out of Alterion® continues

Poultry hatchery solution to ensurechicks get a healthy start in life

Pipeline for commercialization in 2018 and beyond

Pond treatment for warm water aquaculture

Long-standing partnership on Bacillus-basedproducts

PartnershipsCo-create the future of feed


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

Our long-term targets focus on world impact 2020Impact targets

Company performance – the traditional view on sustainability

World needs – areas where we can make an impact

Social

Environmental

• 10 transformative innovations• 5 partnerships for change• Educate 1 million people• Enable Zymers to develop• Save 100 million tons of CO2

• Reach 6 billion people with our biological solutions

Sustainableraw materials

Resourceefficiency

Productstewardship

Health &Safety

Human &labor rights

Employeesatisfaction

Sustainablegrowth

Education Health andlivelihoods

Climatechange

Operational targets

Environment• Energy consumption• Water consumption• CO2 emissions • Renewable energy

People• Occupational accidents • Employee absence• Employee satisfaction and motivation • Employee development• Women in senior management

Governance Corporate governance

Businessintegrity &antitrust

Economicgrowth

Jobcreation

Supply chainmanagement


-10%

40%

90%

140%

20

05

20

06

20

07

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08

20

09

20

10

20

11

20

12

20

13

20

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20

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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

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20

08

20

09

20

10

20

11

20

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20

13

20

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20

15

20

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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


44

Leather:

50 kg CO2per ton of hide

Paper making:

150 kg CO2per ton of pulp

Agriculture:

15 kg CO2per ton of corn

Cosmetics:

190 kg CO2per ton of fatty acid ester

Textile:

350 kg CO2per ton of fabric

Beverage:

25 kg CO2per 1000 liters of beer

Animal feed:

130 kg CO2per 1000 Chicken

Detergent:

100 kg CO2per ton of laundry

Cereals:

110 kg CO2per ton of bread

We are reducing CO2 emissions together with our customers by offering solutions that help produce more with less In 2018, Novozymes helped customers save 88 million tons of CO2 through the application of Novozymes’ products

Vegetable oil:

44 kg CO2per ton of oil

Starch based biofuel

1100 kg CO2per 1000 liters of ethanol

Biomass based biofuel:

2200 kg CO2per 1000 liters of ethanol


Novozymes’ 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)


Financials and governance

Historical performance demonstrates track of delivery

47

DK

Km

Long term targets

• Return to historical organic revenue growth rates

• ≥26% EBIT margin

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

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,00018 years of organic growth

16.7%19.2% 20.0%

24.7%

28.3%

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

0%

5%

10%

15%

20%

25%

30%


EBIT margin

Profitability has benefitted from productivity improvements and operational leverage 2000-2018

EBIT margin

Historical performance demonstrates track of delivery

48

0

5,000

10,000

15,000

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

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

Invested Capital ROIC

0

500

1,000

1,500

2,000

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

0%2%4%6%8%10%12%14%

CAPEX CAPEX to Sales

DK

KmD

KKm

DK

Km

NIB

D/E

BIT

DA

RO

ICC

AP

EX/S

ale

s

CAPEX

ROIC

Net interest-bearing debt


Long term targets

• 0-1x Net interest bearing-debt-to-EBITDA

• ≥25% ROIC incl. goodwill

• ~8% CAPEX to Sales

-1,000

0

1,000

2,000

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

-0.4-0.20.00.20.40.60.81.0

Net Interestbearing debt NIBD/EBITDA

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

Raw materials; 34%

Energy/utilities & others; 22%

Indirect production costs; 44%


50

124 146 162 217 231 255 278 309 326 358 504 600 687 786 925 1,062 1,190 1,318 1,438

424 185392

8471,053 1,107

500400

832

2,0002,000

2,0002,000

2,000

0.33 0.40 0.450.63 0.70 0.80 0.90 1.00 1.05 1.15

1.601.90

2.202.50

3.00

3.50

4.00

4.50

5.00*

-2.00

-1.00

0.00

1.00

2.00

3.00

4.00

5.00

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Div

iden

d p

er s

har

e, D

KK

DK

K m

illio

n

Dividend / Buybacks

Dividend Buyback Dividend per share (right)

Since 2000 DKK ~27bn has been returned to shareholders through dividend or share buybacks


*Proposed for fiscal year 2018

51

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

Novo Holdings A/S

Denmark

UK

Rest of Europe

North America

Rest of World


52

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

0

50

100

150

200

250

300

A-shares B-shares

No

of

shar

es –

mill

ion

s

Free-float

Treasury

Foundation

Principal investments

SonionChr. Hansen

Xellia

Financial investments

Venture capitalSeed capital

Novo Group companies


Structure and ownership

Our investor relations team

53

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

Naja WivelCoordinator+45 3077 [email protected]

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

Carl AhlgrenIR officer+45 3077 [email protected]


54

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.


roadshow presentation 12m 2018

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