roadshow presentation q1 2021
TRANSCRIPT
Roadshow presentation Q1 2021
Released on April 27, 2021
Further investor relations information is available from the company’s website at investors.novozymes.com
2
Table of Content
Roadshow presentation
• Latest results 4
• Equity story 14
• Business overview 27
• ESG overview 53
• Financial overview 60
Disclaimer
Forward Looking Statement
This presentation and its related comments contain forward-looking statements, including statements about future events, future financial performance, plans, strategies and expectations. Forward-lookingstatements 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 anduncertainties 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, industryconsolidation, 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 orbreaches 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-acrecrops; 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, currencyexchange rates (USD/DKK and EUR/DKK in particular, but not exclusively), interest rates and inflation; viii) significant price decreases on input and materials that compete with Novozymes’ biological solutions. Thecompany undertakes no obligation to update any forward-looking statements as a result of future developments or new information.
3
44
Latest results
Highlights
Stronger-than-expected start to the year; 3% organic sales growth and strong earnings. 2021 outlook maintained
• Organic Q1 sales y/y: 3%.
• Better-than-expected performance due to customer stock building, a faster-than-anticipated recovery in emerging markets, and a better underlying performance in some businesses.
• EBIT margin strong at 29.6%, ROIC incl. goodwill at 23.4% and free cash flow before acquisitions at DKK 0.7 billion.
• Launched three products, including ProAct™ 360 in animal nutrition.
• Closing of Microbiome Labs acquisition; Biota data science platform purchased.
• Consolidation of R&D locations and activities for higher efficiency and focus.
• Amy Byrick and Morten Enggaard Rasmussen joined the executive leadership team on April 1 as new EVPs of Strategy & Business Transformation and People, Sustainability & Brand, respectively.
• 2021 outlook maintained considering timing effects, supply-chain volatility and high COVID-19 uncertainty.
5
Q1 2021 Realized
Q1 2020Realized
Sales performance, organic % 3 10
EBIT margin % 29.6 28.9
ROIC incl. goodwill % 23.4 21.3
Free cash flow before acquisitions DKKbn 0.7 0.8
Latest results
2%
11%
-9%
16%
3%
Agriculture, Animal Health & Nutrition
NovozymesFood, Beverages & Human Health
Household Care Grain & Tech Processing
Bioenergy
0%
Q1 y/y organic sales performance by business area
• Latestresults
• Equity story • Business overview
• ESG overview
• Financial overview
6
Household Care
Latest results
Growth above expectations mainly due to timing, especially in
emerging markets
• Organic Q1 sales y/y: 2%.
• Penetration in emerging markets and the rollout of the
Freshness technology in Europe contributed to growth, as
expected.
• Positive effect from customer stock building, especially in
emerging markets, as well as a faster recovery in China.
Organic sales performance (y/y)
33% of sales
11%
Q1’20 Q4’20Q2’20 Q3’20 Q1’21
11%
-1%
0%2%
SDG impact
Our solutions contribute to reducing chemical use and aquatic pollution. Use of enzymes can save 130 kg of CO2
emissions and 50 kg of chemicals per ton of detergent when used as replacement to surfactants in laundry detergents.
2021 perspectives
• Enzyme penetration in emerging markets
• Freshness rollout with broad market launch
• High sustainability focus
• Latestresults
• Equity story • Business overview
• ESG overview
• Financial overview
7
Food, Beverages & Human Health
Latest results
Strong performance, significantly above expectations
• Organic Q1 sales y/y: 11%.
• Performance benefitted from customer stock building, faster
emerging market recovery, and a better momentum in
underlying performance.
• Food; strong performance in dairy and protein ingredients
while baking declined, as expected.
• Beverages grew slightly; brewing in modest decline.
• Strong performance in Human Health driven by innovation,
cross-selling and customer stock building.
23% of sales
2021 perspectives
• Food performance driven by innovation and emerging
markets penetration.
• Beverages growing from gradual recovery in brewing.
• Integration of Human Health acquisitions according to plan.
Growth driven by innovation and cross-selling.
Organic sales performance (y/y)
Q1’21Q1’20 Q2’20
3%
Q3’20 Q4’20
-5%
11%
-4%
11%
SDG impact
Our solutions contribute to making food production systems more sustainable by improving yields and saving energy and water during industrial processing.In addition, our solutions enable consumers to live healthier lives free from additives, unwanted compounds and by adding dietary beneficial bacteria and enzymes for improved gut health.
• Latestresults
• Equity story • Business overview
• ESG overview
• Financial overview
Novozymes promotes the development and deployment of low-carbon fuels for the transport sector.
Enzymes and yeasts are critical for converting grains and straw into fuel ethanol, enabling a saving of 1100–2200 kg of CO2 emissions per 1000 liters of gasoline.
SDG impact
8
Bioenergy
Latest results
U.S. ethanol recovery continued but remains affected by
COVID-19 restrictions
• Organic Q1 sales y/y: -9%.
• U.S. ethanol demand and production remained weak due to
COVID-19 restrictions. Novozymes’ U.S. business below
external first-quarter estimates for the industry’s production
decline due to a more difficult comparator.
• Growth outside the U.S. mainly driven by Latin America
15% of sales
2021 perspectives
• The U.S. ethanol production expected to gradually
recover as COVID-19 restrictions are lifted.
• Innovation and capacity expansion in Latin America
contributing to growth.
• Full-year performance mainly dependent on the level of
recovery in U.S. ethanol production.
Q1’20 Q2’20 Q3’20
12%
Q4’20 Q1’21
-4%
-36%
-4%
-9%
Organic sales performance (y/y)
• Latestresults
• Equity story • Business overview
• ESG overview
• Financial overview
Our solutions in grain processing improve yields and save energy. Our solutions for technical industries help save chemicals, water, steam and electricity. For example, one of our solutions for textile production saves 350 kg CO2 per ton of fabric produced.
SDG impact
9
Grain & Tech Processing
Strong growth, significantly above expectations
• Organic Q1 sales y/y: 16%.
• Performance benefitted from customer stock building, faster
emerging market recovery, and a better underlying
momentum.
• Grain; grain milling, vegetable oil processing and starch
processing all supported growth.
• Tech; strong growth driven by textile recovery and sales of
diagnostics enzymes for COVID-19 test kits.
Latest results
16% of sales
Organic sales performance (y/y)
2021 perspectives
• Growth in grain led by grain milling and vegetable oil
processing.
• Gradual recovery in global textile production will
contribute to growth in tech.
Q4’20
-9%
Q1’20
9%
Q3’20Q2’20
2%
Q1’21
-4%
16%
• Latestresults
• Equity story • Business overview
• ESG overview
• Financial overview
Our bio-based solutions improve yields in agriculture by improving plants’ access to nutrients in the soil and by improving animals’ access to energy, proteins and minerals in the feed. This saves agricultural land for food and feed production and reduces emissionsto the environment from manure in livestock production. Enzymes can save approximately 130 kg of CO2 emissions per 1000 chickens by increasing the animals’ access to starch in the feed.
SDG impact
10
Agriculture, Animal Health & Nutrition
Latest results
Customer stock building benefitted performance above
expectation
• Organic Q1 sales y/y: 0%.
• Performance above expectations due to timing of orders in the
value-chain.
• Growth in agriculture driven by both corn and soy solutions
• Launch of ProAct™ 360 in animal nutrition.
13% of sales
2021 perspectives
• Double-digit underlying growth in agriculture from
expansion across crops and regions.
• Animal health & nutrition sales expected to improve
throughout the year supported by the rollout of
Balancius™.
Organic sales performance (y/y)
-19%
Q1’21Q3’20Q1’20 Q2’20 Q4’20
8%
27%
-6%
0%
• Latestresults
• Equity story • Business overview
• ESG overview
• Financial overview
11
Financials – Performance Q1
Stronger start to the year than expected. 3% organic sales growth and 29.6% EBIT margin
• Organic Q1 sales y/y: 3%. DKK sales flat including 3pp net negative impact from currencies and M&A.
• Integration of recent Human Health acquisitions progressing well and according to plan.
• Gross margin at 58.2% — 110bps above last year despite currency headwinds, driven by higher
production efficiency and productivity improvements; recent acquisitions also beneficial.
• EBIT margin at 29.6% — 70bps above last year, driven by higher gross margin and higher other
operating income, somewhat offset by higher R&D costs, currency headwinds and negative
acquisition-related effects.
• Solid free cash flow before acquisitions at DKK 0.7 billion.
• ROIC incl. goodwill at 23.4% — driven by higher net profit and despite higher average invested capital.
Latest results
Key financials Q1 2021 Q1 2020
Sales performance, organic % 3 10
Gross margin % 58.2 57.1
EBIT margin % 29.6 28.9
ROIC incl. goodwill % 23.4 21.3
Net investments excl. acquisitions DKKbn 0.2 0.1
Free cash flow before acquisitions DKKbn 0.7 0.8
• Latestresults
• Equity story • Business overview
• ESG overview
• Financial overview
12
Outlook 2021
Outlook maintained across key parameters
• The better underlying momentum in the first quarter in some businesses does not change the full-year sales
outlook due to timing factors, supply-chain volatility and continued COVID-19 related uncertainty.
• Organic sales growth of 2% to 6% — ~1pp less in reported DKK net of currency and M&A.
• EBIT margin at 25% to 26% — including ~2pp negative year-on-year currency and M&A-related effects.
First quarter one-offs, net, benefit full-year EBIT margin, still maintained within range.
• FCF before acquisitions at DKK 2.7 to 3.1bn.
• ROIC incl. goodwill at ~19%.
Latest results
2021 outlook April 27* February 2
Sales performance, organic % 2 to 6 2 to 6
EBIT margin % 25 to 26 25 to 26
ROIC (including goodwill) % ~19 ~19
Free cash flow before acquisitions DKKbn 2.7 to 3.1 2.7 to 3.1
For modeling purposes:
Effective tax rate % ~20 ~20
Net financial costs DKKbn ~ 0.075 ~ 0.05
Net investments DKKbn 1.0 to 1.2 1.0 to 1.2
Stock buyback program DKKbn up to 1.5 up to 1.5
*Assumes constant currencies from the time of this announcement and for the remainder of the year
• Latestresults
• Equity story • Business overview
• ESG overview
• Financial overview
13
Summary
Stronger-than-expected start to the year; 3% organic sales growth and strong earnings. 2021 outlook maintained
• Better-than-expected performance in the first quarter due to customer stock building, a faster-than-anticipated recovery in emerging markets, and better underlying performance in some businesses.
• 2021 outlook maintained considering timing effects, global supply-chain volatility and COVID-19 uncertainty.
Latest results
Better businesswith biology
• Latestresults
• Equity story • Business overview
• ESG overview
• Financial overview
1414
Equity story
Novozymes – the world leader in BioinnovationInnovation-driven company with strong financials, market leadership and world-class ESG profile
15
Equity story
• Latest results
• Equity story • Business overview
• ESG overview
• Financial overview
10
28%
2
4
10%0
6
8
12
14
16 30%
12%
14%
16%
18%
20%
22%
24%
26%
2020
DK
Kb
n
2010 201420132011 2012 2015 2016 2017 2018 2019
Sales (left axis) EBIT margin (right axis)
+10 years of innovation-driven growth and margin expansion
Market leader
Strong financials*
R&D at the core
• EBIT margin of 26%
• ROIC incl. goodwill of 19%
• Cash-flow-to-Sales ratio of 24% **
* 2020 realized numbers** Free cash flow before acquisitions
• Market leader and strong positions across business areas
• Serving +30 industries
• >1,500 people employed in R&D
• ~14% of sales invested in R&D*
• >6,500 granted or pending patents
Our products are used in +30 industries across 140 countriesWe launch 15-20 new products annually
16
Equity story
• Latest results
• Equity story • Business overview
• ESG overview
• Financial overview
Agriculture & Industrial BiosolutionsIn Agriculture and Industrial Biosolutions, we focus on improved performance in agriculture and industrial processes, including higher yields, less waste and better health for plants and animals.
Consumer BiosolutionsConsumer Biosolutions unites consumer-facing industries at the front of the value chain such as Household Care, Baking, Beverages, Food and Protein, with a focus on making consumer products better, healthier and higher performing, based on clear end-consumer needs.
The world leader in industrial enzymes and microbes across the value chainWe are uniquely positioned to drive innovation opportunities
17
• Strong R&D organization and broad technology platform supports continued product development
• Forefront of technology to secure our leading position through innovation allowing for massive parallel screening: bigger libraries, better answers
Best-in-class productionInnovation leadership Diversified global presence
• Cutting-edge protein engineering improves enzyme efficacy
• Genetic engineering of host organisms and production process optimization is driving higher throughput
• Highly skilled technical sales and service teams enables long-standing customer relationships
• Highly diversified selling to +2,000 customers covering +30 industries in ~140 countries
Equity story
Increased pipeline selectivity to accelerate time to market from ~5 years to ~3 years
The world’s largest producer of fermented proteins. Efficiency gain have doubled the available capacity
Market leader and strong positions across business areas
2X
1. Novozymes market share within industrial enzymes
• Latest results
• Equity story • Business overview
• ESG overview
• Financial overview
Novozymes is about turning amazing science into sustainable biological solutions
• Capitalize on critical mass and expertise to develop new cutting-edge technology and innovation
• Enable cross-fertilization to leverage innovation and synergies across industries
• Secure technology leadership through continued investments and technology scouting
18
2017
17
2015 20192016 2018 2020
18
20
13
20
18
Non-public
Public
Balanced customer-approach to new product launches
We continue to find new uses for our technology within existing industries
Household Care case
Protease
Amylase
Lipase
Cellulase
Mannanase
Pectatelyase
Freshness
BuildInternally generated ideas
BuyUniversities, incubators and
start ups
Borrow (collaborate)
Customers and partners, Hello Science
Novozymes’ stage-gate model secures an efficient and standardized evaluation of new pipeline candidates
Equity story
CommercialLaunchDevelopmentDiscoveryFeasibility
• Latest results
• Equity story • Business overview
• ESG overview
• Financial overview
Enzyme technology improves Novozymes’ gross margin and profitabilityWe re-invest 13-14% of sales into R&D projects for product innovation and productivity improvement
19
Equity story
Process innovation
1. Improve production strain
Micro-organismsRaw materials
Fermentation
FormulationPurification
2. Optimize industrial production
3. Improve enzyme efficacy
Technology development
Molecular biologyStrain development using protein engineering, genetic modification, DNA sequencing, etc.
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
1/3
Product innovation
2/3
Customer needs• Fight for profitability• Global race for consumer preferences• More regulation and standards
Planet needs• Global climate change• Societies stuck on oil• Biodiversity under threat
Consumer needs• Nine billion people by 2050• Increasing urbanization• Growing demand for food, water and health
• Latest results
• Equity story • Business overview
• ESG overview
• Financial overview
Solid global presenceDecentralized R&D meets local needs faster and better
20
Latest results
32%of 2020 sales
North America~1,200 FTE’s
HQ, Multi-purpose production, R&D-1%5Y avg. organic
sales perf.
39%of 2020 sales
Europe, Middle East & Africa~2,800 FTE’s
HQ, Multi-purpose production, R&D
+3%5Y avg. organic
sales perf.
20%of 2020 sales
+3%5Y avg. organic
sales perf.9%of 2020 sales
+4%5Y avg. organic
sales perf.
• Latestresults
• Equity story • Business overview
• ESG overview
• Financial overview
Asia Pacific~1,800 FTE’s
Multi-purpose production, R&D
Latin America~300 FTE’s
Regional production
Main sites with production and R&D
Satellite production site
Satellite R&D site
Emerging markets 34% of 2020 sales
Developed markets 66% of 2020 sales
Uniquely diversified group creating synergies and opportunitiesWe launch technologies in five main business areas
21
4%
2017
-1%
2.4
2016 2018
8%
3%
2019
1%
2020
2.6 2.72.6 2.8
20202018
2%
9%
2019
2.37%
2.5
2016 2017
-9%
-1%
2.42.1 2.0
5%
-5%
2016
-3%
2017
3%2.1 1%
2018 2019 2020
2.2 2.0 1.9 1.8
12%
2019
-3%
2016
2.4
0%
11%
2017 2018
-9%
2020
2.7 2.8 2.92.5
Household Care Food, Beverages & Human Health
Bioenergy Grain & Tech Processing
LaundryAutomatic dishwash
Hand dishwashProfessional cleaning
BakingFood & protein
BeveragesHuman health
Conventional biofuelsBiomass conversion
Biodiesel
Grain milling & starch processing Distilling
Vegetable oil processing Textile, Leather and Forrest
Water
BioAgricultureAnimal health
Animal nutrition
Equity story
Agriculture, Animal Health & Nutrition
Sales in DKKbn and organic sales performance Sales in DKKbn and organic sales performance Sales in DKKbn and organic sales performance Sales in DKKbn and organic sales performance Sales in DKKbn and organic sales performance
• Latestresults
• Equity story • Business overview
• ESG overview
• Financial overview
35% of 2020 sales 20% of 2020 sales 13% of 2020 sales18% of 2020 sales 14% of 2020 sales
20182017
2%
2016
1% 1%0%
2019
5%
2020
4.7 4.7 4.6 4.8 4.9
Delivering sustainability impact through our productsWe are reducing CO2 emissions together with our customers
22
Paper making
150 kg CO2per ton of pulp
Beverage
25 kg CO2per 1000 liters of beer
Animal feed
130 kg CO2per 1000 chicken
Leather
50 kg CO2per ton of hide
Textile
350 kg CO2per ton of fabric
Biomass based biofuel
2200 kg CO2per 1000 liters of ethanol
Agriculture
15 kg CO2per ton of corn
Detergent
100 kg CO2per ton of laundry
Vegetable oil
44 kg CO2per ton of oil
ESG overview
Enabling a low carbon future
Fewer chemicals, cleaner water
Enabling customers to produce more from less
In 2020, we saved 49 million tons of CO2 by enabling low carbon fuels in the transport sector.
In 2020, we managed to reach 3.98billion people with our laundry solutions that help reduce chemicals and aquatic pollution.
In 2020, we estimate that 136,000 tons offood was gained using our solutions.
• Latest results
• Equity story • Business overview
• ESG overview
• Financial overview
These reductions are estimates from third party reviewed Life Cycle Analysis studies for representative products in Novozymes
Historical performance demonstrates delivery track record
23
Sales performance Net working capitalEBIT margin
0%
10%
20%
30%
40%
1
0
3
2
7
4
5
6
28.1%28.3%
DKKbnEBIT
margin
2016
22.3%
2011
24.4%
2012 2020
24.7%
27.9%
2013
27.2%
2014
27.7%
2015
27.9%
2017 2018 2019
26.1%
EBIT margin EBIT
-10%
0%
10%
20%
15
0
20
5
10
2019
-1%
DKKbnOrganic sales performance
7%
2011
4% 4%
2012 20152013
7%
2014
7%
2%
2016
4%
2017
4%
2018
0%
2020
Organic sales performance Sales
5%
10%
15%
20%
25%
30%
6
1
3
0
2
4
5
7
19%
15%
19%
23%
DKKbnNWC/Sales
2011
21%20%
2012 2013
9%
2014
12%
2015 2016
14%
2017 2018
24%
2019 2020
NWC/Sales NWC
Net interest-bearing debt
0.30.4
0.2
0.1
0.2
0.3
0.8 0.8
-0.4
-0.2
0.0
0.2
0.4
0.6
0.8
1.06
4
1
-1
5
0
2
3
NIBD/EBITDA
-0.2
20182011
DKKbn
20172012 2013 2014 2015 2016
0.5
2019 2020
Net interest-bearing debtNIBD/EBITDA
33% 34% 36% 37% 38% 39%42%
45%47%
52%
1
0
4
3
2
5
6
7
50%
0%
60%
10%
20%
30%
40%
3.5
DKKbn
3.3
20182011 20132012 2014 2015 2016 20192017 2020
1.0
1.5
3.0
0.8
2.9 3.1 3.23.4
Payout ratio
Payout ratio (right axis)Buyback Dividend
Shareholder payoutFree cash flow before acquisitions
0%
10%
20%
30%
40%
6
0
3
1
2
7
5
4
2012 2020
DKKbnFCF before acq.
/Sales
13%
2011 2018
14%
1.6
2017
15%
2013
34%
2014*
17%
2015
19%
2016
17% 16% 15%2.3
2019
24%
1.41.8
4.2
2.72.22.4 2.3
3.4
FCF before acq./Sales
FCF before acq.
Equity story
* BioAg Alliance initiation
• Latest results
• Equity story • Business overview
• ESG overview
• Financial overview
Finding sustainable answers to the world’s problems is core to NovozymesWe are gearing the business for sustainable growth
24
Equity story
Sustainable agriculture
Water scarcity
Shifting demographics
Energytransition
Digitalizationand automatization
• Latest results
• Equity story • Business overview
Commercial investments
• Broader commercial footprint and customer innovation hubs in India, China and Turkey driving penetration in emerging markets
• Digitalization of basic sales and technical service tasks will allow more time to raise the bar for each customer
Innovation platform roll-outs
• The Freshness platform is the most revolutionary Household Care innovation in the past +20 years
• Improving animal health by way of biological solutions is good for business and good for animal wellbeing
• Responsible production of vegetable oils is key to cleaner and more sustainable foods
Strategic opportunity areas
• Increasing health and wellbeing with clinically proven products for human oral and gut health
• Feeding the world by providing alternative specialty protein for food ingredients via fermentation
• ESG overview
• Financial overview
Measuring our future success‘Better business with biology’ mid-term targets 2020-2022
25
BusinessWorld Zymers
CLIMATE
Save 60 million tons CO2
by enabling low-carbon fuels in the transport sector in 2022
WATER
Reach > 4 billion peopleby providing laundry solutions that replace chemicals in 2022
PRODUCTION & CONSUMPTION
Gain 500,000 tons of food
by improving efficiency from farm to table in 2022
Organic sales growth
5+% per year
EBIT margin
28% or higher by 2022
ROIC incl. goodwill
23% or higher by 2022
Model assumptionsNet working capital/Sales (improving as % of sales)Net investments/Sales (8% or below)Effective tax rate (21-22%)NIBD/EBITDA (~1x)Dividend payout ratio over the coming years (~50%)
Enable learningScore survey in 2022
Nurture diversity
Score 86 in our diversity index by 2022
Ensure wellbeingImprove safety by reducing the number of accidents by 2022
Inspire the worldPledge 1% of our time to local outreach activities by 2022
Equity story
• Latest results
• Equity story • Business overview
• ESG overview
• Financial overview
World leader in BioinnovationGlobal leadership in enzyme and microbe development arise through a combination of competitive advantages
26
Equity story
• Latest results
• Equity story • Business overview
• ESG overview
• Financial overview
Innovation leadership
Best-in-class production
Diversified globalpresence
4
10
12
16%
14
0
16
8
12%2
6
24%
10%
14%
18%
20%
22%
26%
28%
30%
2012
DK
Kb
n
2010 202020152014 201920172011 2013 2016 2018
Sales (left axis)
EBIT margin
R&D/Sales
ROIC
+10 years of innovation-driven growth and margin expansion
* 2020 realized numbers
Unique sustainability profile*
• 3.98 billion people reached with our laundry solutions that replace chemicals and contribute to cleaner water
• 49,000,000 tons of CO2 emissions saved in global transport
• 136,000 tons of food gained by improving efficiency from farm to table
Mastering the full value chain
2727
Business overview
Household Care
Our solutions contribute to reducing chemical use and aquatic pollution. Use of enzymes can save 130 kg of CO2 emissions and 50 kg of chemicals per ton of detergent when used as replacement to surfactants in laundry detergents.
SDG impact
28
Laundry
Automaticdishwash
Hand dishwash
Professional cleaning
The value we create
Innovative brands help grow your market share. We work with you to ensure our biological solutions make your products stand out
Deal with complex hygiene issues
Eliminateharsh chemicals
Save energy, water, time
Decrease dose, increase performance
Preserve fabrictexture, color
Remove stains,boost whiteness
• Latest results
• Equity story • Business overview
• ESG overview
• Financial overview
29
Household Care overview
Key trends
• Strong interest in freshness solutions for the removal of malodor and grime in clothing
• Renewed industry focus on sustainable detergents by replacing chemicals with biological alternatives
• Increased focus on household cleaning during COVID-19 pandemic
• Compaction of laundry detergents remains a strong trend, driven in part by increased sales through online retailers
• Growing consumer and professional interest in microbial and bio-based cleaning solutions
Growth drivers
• Higher enzyme inclusion and innovation addressing key consumer pain points e.g. improved wash performance also at low temperatures, improve sustainability profile and enabling optimized formulations
• Demand for better-performing products, GDP and population growth in emerging markets
• Increasing investor, regulatory, customer, retailer, and consumer focus on sustainability and ingredient transparency
Growth barriers
• Traditional consumer washing habits, e.g. high temperatures
• Middle-class consumers’ ability to differentiate brand performance
• Regulations favoring surfactants over enzymes in emerging market product standards
• Sustained low petrochemical input costs reducing the adoption rate of high-performance enzymes
5Y average organic sales performance
+2%
0%
1%
2%
3%
4%
5%
4.0
3.5
5.0
4.5
2%
2016
4.6
DKKbnOrganic salesperformance
1%
2017
0%
4.8
2018
1%
2019
5%
2020
4.7 4.7
4.9
5Y sales overview
35%of 2020 sales
Business overview
• Latest results
• Equity story • Business overview
• ESG overview
• Financial overview
30
Growth driver Freshness platform Lifestyle changes are spurring demand for freshness, and we are on track to deliver DKK 1bn
Consumers’ lifestyle changes are the drivers of growing hygiene needs…
Colder and shorter wash cycles
Shift in detergent format preferences
Increase in synthetic fabrics
Urbanization increasing density
(Reoccurring) malodor formation
Yellowing & greying/ color dullness
Layers of build up human body grime
Sources: Novozymes consumer study; Euromonitor, Jan 2018; Mintel GNPD, April 2018; UNFPA, April 2018; Grand View Research; April 2018
…which center around issues of odor and grime left on clothes even after wash…
…are key consumer concerns identified by Novozymes
Business overview
• Equity story • ESG overview
• Latest results
• Financial overview
• Business overview
31
Growth driver Enzyme inclusionWe see large potential for future enzyme inclusion, especially in emerging markets
Significant up-dosing and penetration potential in emerging markets in general and in Asia Pacific in particular
0
20
40
60
80
100
10
6
0
14
2
4
8
12
Bill
ion
to
ns
Do
sin
g (i
nd
exed
)
Western Europe North America Middle East and Africa
Latin America Eastern Europe Asia Pacific
5x volume opportunity
7x enzyme up-dosing opportunity
Detergent volume (left axis) Enzyme dosing index
Sources: Euromonitor, May 2019; Novozymes analysis
• Strong and expanding sales presence and operational footprint in emerging markets
• Strategic focus on developing emerging market-specific solutions
• Innovation hubs in China, India and Brazil
• Partnership with Givaudan enabling broader access to target customer base and development of innovative solutions
Presence and emerging market solutions to unlock potential
⚫⚫
⚫⚫
⚫
⚫ Innovation hub ⚫ Sales office
⚫
⚫⚫
⚫
⚫⚫
⚫⚫⚫ ⚫ ⚫
⚫
Business overview
• Latest results
• Equity story • Business overview
• ESG overview
• Financial overview
32
Growth driver Detergent compactionWe believe enzymes can contribute even more to a detergent and to compaction
Surfactants
Enzymes
Polymers
Builders
Perfume
Other
Sources: IHS chemical 2014; Euromonitor, 2019; expert interviews, 2019 *EU representative example, value as percentage.
Surfactants
Multienzymes
Polymers
Builders
Perfume
Other
• Using new as well as existing enzymes in higher dosage to keep cleaning performance in lower surfactant environment
• Using enzymes to compensate for performance loss when reducing pH level and the need for builders
• Freshness solutions to reduce the need for perfume
• Enzymes to replace polymer functions, such as fabric care and whiteness
Business overview
• Equity story • ESG overview
• Latest results
• Financial overview
• Business overview
Food, Beverages & Human Health
Our solutions contribute to making food production systems more sustainable by improving yields and saving energy and water during industrial processing.In addition, our solutions enable consumers to live healthier lives free from additives, unwanted compounds and by adding dietary beneficial bacteria and enzymes for improved gut health.
SDG impact
Optimize raw material use
Meet demand for new product claims
33
Baking
Food & protein
Beverages
Human Health
The value we create
Consumer trends in the Food & Beverages space are constantly evolving. Stay ahead using leading biological innovation to both meet demand with new product claims and by getting more out of your raw materials.
Freshnessand taste
Health, safety and sustainability
• Latest results
• Equity story • Business overview
• ESG overview
• Financial overview
34
Food, Beverages & Human Health overview
Business overview
+3%
5Y sales overview
20%of 2020 sales
2
3
2%
0%
-2%
6%
8%
10%
4%
2.8
2017
DKKbn
2.4
2019
2.7
8%
Organic salesperformance
-1%
2016
4%
2018
3%
1%
2020
2.62.6
Growth drivers
• Demand for better and more convenient food with awareness about food safety and “naturally healthy” products
• Increasing demand for vegetable proteins
• Growing demand for probiotics and other biological health solutions fueled by aging demographic, better consumer understanding and stronger product health benefits
• Optimization of Emerging Market food value chains
Growth barriers
• Conservative industries with consumer preference for traditional foods
• Consumer and industry skepticism about technology in food and beverages production
• Fragmented local markets and dietary habits as well as regulation
5Y average organic sales performance
• Latest results
• Equity story • Business overview
• ESG overview
• Financial overview
Key trends
• Strong consumer demand for new plant-based proteins drives industry innovation
• Focus on improved product quality and taste
• Consumers demand better and more convenient food with attention to natural, healthy and sustainable ingredients
• The healthcare industry is pivoting from symptoms treatment towards preventive measures with biology as a key part of the solution
35
Growth driver Human HealthNovozymes entering the attractive dietary supplement market through organic and inorganic growth
Business overview
• Latest results
• Equity story • Business overview
• ESG overview
• Financial overview
Novozymes OneHealth will help people live healthier and better lives by rethinking tomorrow within human health, and finding the one-in-a-trillion verifiable solutions of probiotics and enzymes that can be proven to solve profound health challenges related to modern lifestyles.
2020Acquisition of
Acquisition of
Public announcement of
2019Human health as a strategic opportunity area
2016Acquisition of
Novozymes OneHealth will help people live healthier and better lives by rethinking tomorrow within human health, and finding the one-in-a-trillion verifiable solutions of probiotics and enzymes that can be proven to solve profound health challenges related to modern lifestyles
36
Growth driver Human Health Strong innovation engine and multichannel strategy deliver products for consumer health
Business overview
• Latest results
• Equity story • Business overview
• ESG overview
• Financial overview
Strategic portfolio addressing broad health categories
Oral Care
Digestive and Gut Health
Immune Health
Metabolic Health
Cognitive Health
With multichannel strategy represented by the 3 brands
B2B
B2C
37
Growth driver Alternative Specialty ProteinFermentation-based specialty protein ingredients to address consumer needs
Business overview
• Latest results
• Equity story • Business overview
• ESG overview
• Financial overview
Consumers are actively looking to replace animal-based proteins, mainly due to concerns on
Health Sustainability
Yet many consumer feel current alternatives require compromises on
Taste Nutrition
Fermented-based protein ingredients and food products can address current unmet needs
Bioenergy
Novozymes promotes the development and deployment of low-carbon fuels for the transport sector.
Enzymes and yeasts are critical for converting grains and straw into fuel ethanol, enabling a saving of 1100–2200 kg of CO2 emissions per 1000 liters ofgasoline.
SDG impact
38
Conventionalbiofuels
Biomassconversion
The value we create
You work hard to create the most value at the lowest cost and to stay flexible enough to adapt to changing markets. We work hard to deliver solutions and services that will help you succeed
Eliminate operation stress
Superior viscosity reduction
Reduced chemical spend
Yield improvement
• Latest results
• Equity story • Business overview
• ESG overview
• Financial overview
Biodiesel
39
Bioenergy overview
Key trends
• US ethanol industry is under strong pressure due to the COVID-19 pandemic induced drop in gasoline consumption, the many small refinery exemptions from blending mandates and reduced exports due to trade barriers
• Climate change is high on public agendas, leading to growing demand for clean energy
• Follow-through on increased biofuel mandates and capacity expansions in key emerging markets
+2%
5Y sales overview
18%of 2020 sales
-10%
-5%
0%
5%
10%
15%3.0
2.3
2.9
2.4
2.5
2.8
2.6
2.7
0%
-5%
DKKbnOrganic salesperformance
2016
11%
2017
-3%
2018
2.7
2019
-9%
2020
2.4
2.8
2.9
2.5
Business overview
Growth drivers
• Industry consolidation and focus on process economics driving demand for biological solutions that enhance yield
• Innovation for yield enhancement and chemical cost reduction remains a strong differentiator
• Demand for reducing CO2 emissions in transport sector
Growth barriers
• Inconsistent political commitment to set and enforce blending mandates
• An energy industry with a vested interest in traditional fuels
• Competition with other transport technologies for “best way” to reduce CO2 emissions
• Competition with other industries and technologies for feedstock conversion
5Y average organic sales performance
• Latest results
• Equity story • Business overview
• ESG overview
• Financial overview
40
Market BioenergyMarket growth likely to be centered in Latin America
⁓1.5bn
⁓16bn
⁓9bn
⁓0.9bn
⁓0.5bn
ChinaAmbition to achieve E10 likely to see reduced focus
European UnionKey legislation: Renewable Energy Directive
IndiaGovernmental push for public
investment in 1G and 2G
Latin AmericaKey legislation: RenovaBio
North AmericaKey legislation:
Renewable Fuel Standard
Business overview
⚫ = Production in bn gal per year
• Latest results
• Equity story • Business overview
• ESG overview
• Financial overview
41
Case Ethanol production
-0.2
-0.1
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
2016 2019
Co
ntr
ibu
tio
n m
argi
n (
USD
per
gal
)
2015 2017 2018 2020
28
22
14
16
24
18
26
20
2017 20202019
Bar
rels
in m
illio
ns
2015 2016 2018
25
0
5
35
10
30
15
20
40
Bill
ion
gal
lon
s
6.87.2
14.8
20162015
15.4
6.9
29.1
15.9
2017
7.9
16.1
2018
8.6
15.8
2019
25.8 26.2 26.828.6
EURest of World China Brazil US
US ethanol inventoriesPrice developments for ethanol and corn
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
2017 20202018
USD
per
gal
/bu
2015 2016 2019
Ethanol Corn
Global ethanol production US ethanol producer margin
Business overview
Sources: Renewable Fuels Association (RFA), Center for Agricultural and Rural Development (CARD), Iowa State University, and U.S. Energy Information Administration (EIA). Data on 2020 global ethanol production to be released from the RFA later in the year
• Latest results
• Equity story • Business overview
• ESG overview
• Financial overview
2021 2021
2021
42
Growth driverTailoring biology to maximize output for each plant
Business overview
The ethanol process
• Enzymes are applied in multiple stages, along with yeast in fermentation
• Using our data insights we deliver custom fermentation solutions, tailored to a plant’s unique operating conditions
1. PastBasic products for liquefaction and saccharification
2. PresentMultiple offerings across liquefaction, saccharification and now also yeast
3. FutureIncreasingly customized solutions that pair yeast & enzymes, novel solutions for fiber ethanol and protein
Convert feedstock into fermentable sugars Ferment sugars to EtOH
Slurry Jet cooker Liquefaction Fermentation Distillation Ethanol
SaccharificationLiquefaction
From standard to more customized solutions
• Latest results
• Equity story • Business overview
• ESG overview
• Financial overview
Grain & Tech Processing
Our solutions in grain processing improve yields and save energy. Our solutions for technical industries help save chemicals, water, steam and electricity. For example, one of our solutions for textile production saves 350 kg CO2 per ton of fabric produced.
SDG impact
Textile, Leather and Forrest
Vegetable oil processing
43
The value we create
We help optimize starch and grain processing, improve industry profitability and produce the highest value output possible. In the technical areas, our enzymatic and microbial solutions target customers’ unmet needs across global markets and reduce water and energy consumption.
Biological water treatment
Improve the strength of your fabric
Longer-lasting and more sustainable
textiles
Reduced chemical usage
• Latest results
• Equity story • Business overview
• ESG overview
• Financial overview
Grain milling & starch processing
Water
Distilling
Productivityand yield
New substratestreams
44
Grain & Tech Processing overview
Key trends
• Focus on cost reduction, process optimization and yield enhancement including higher protein extraction from grain processing
• Increased demand for sugar replacement
• Water scarcity and pollution driving legislation and demand for solutions that reduce water consumption and improve water quality
• Increased public interest for sustainability in fashion leading to consumer pull and renewed interest for biological alternatives to the harsh chemicals currently being used
+2%
5Y sales overview
14%of 2020 sales
-10%
-5%
0%
5%
10%
15%
1.6
1.7
1.9
1.8
2.0
2.3
2.2
2.1
2.4
2.5
2017
2.4
DKKbnOrganic salesperformance
9%
2016
7%
2%2.1
2.5
2018
-9%
2019
-1%
2020
2.3
2.0
Business overview
Growth drivers
• Demand for optimization of starch processes continues in current environment
• Demand for animal protein substitutes
• Consumer demand for improved textile quality and longevity drives focus on sustainability in textiles
• Demand for wastewater solutions due to increasing water scarcity and pollution cleanup regulations
Growth barriers
• Outside grain, fragmented and chemically-driven technical industries
• Water prices potentially so low that there is no incentive to invest in water-saving solutions
• Price-driven acceptance of low quality textiles and raw materials in emerging markets
• Preference for lower-cost, chemical solutions to enable market growth
5Y average organic sales performance
• Latest results
• Equity story • Business overview
• ESG overview
• Financial overview
45
Growth driver The grain value chain
Grain milling Starch processing
Corn
Liquefaction
LpHera®
Isomerization
Sweetzyme®
Saccharification
Extenda®
Secura®
Starch slurryfrom wet mill
Gluten
Fiber
Starch
Milling
Frontia®
Purification
Maltose syrups
Mixed syrups
Glucose syrups
Refining
Fructose syrups
Starch
Wet
mill
Ref
iner
y
Novozymes offers multiple solutions across the 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 opportunity with our starch customers in wet milling, enhancing the yield of key value streams in protein and starch
Business overview
• Latest results
• Equity story • Business overview
• ESG overview
• Financial overview
46
Growth driver Vegetable oil processing Enzymatic applications for vegetable oil processing has vast potential
Oilseed
• Cooking oil• Margarine & shortenings• CBE• OPO, etc.• Low transfat & 3-MCPD
• Fatty acids• Fatty alcohols• Food & non-food additives• MCT
End products
Business overview
RefineryRefining
MillExtraction
Specialty fats producerSpecialty oils & fats
Oleo playerOleochemicals
New agro-processing applications
• Novozymes offers multiple solutions across the value chain (i.e., from higher yields in oil extraction & refining to transformation of oils & fats into specialty products for Food, HPC and industrial applications)
• Improving efficiency (process optimization and yield enhancement) in vegetable oil production is a >DKK 1bn opportunity
• Replacing chemical catalysts for specialties applied into Food, Nutrition, Personal care and Industrial applications is a >DKK 400m opportunity
• Our enzymatic solution for the production of Biodiesel from waste oils & fats has been adopted by +10 plants over the last 2 years and we believe we have a scalable business model for next wave of Biodiesel plants (DKK 400m)
• NZ overall market penetration today is less than 5%
• Latest results
• Equity story • Business overview
• ESG overview
• Financial overview
Agriculture, Animal Health & Nutrition
Our bio-based solutions improve yields in agriculture by improving plants’ access to nutrients in the soil and by improving animals’ access to energy, proteins and minerals in the feed. This saves agricultural land for food and feed production and reduces emissionsto the environment from manure in livestock production. Enzymes can save approximately 130 kg of CO2 emissions per 1000 chickens by increasing theanimals’ access to starch in the feed.
SDG impact
Animal health
Animal nutrition
47
BioAgriculture
The value we create
Enzymes and microbes are nature's own perfect tools. We put them to work in agricultural solutions that increase the efficiency of crop and livestock production.
Improve feed and gut functionality
Improve animal gut health
Bioyield enhancement
Powerful protection
• Latest results
• Equity story • Business overview
• ESG overview
• Financial overview
48
Agriculture, Animal Health & Nutrition overview
Key trends
• World population growth and changing dietary habits affecting demand for protein and other food sources
• Stricter regulatory requirements for more sustainable farming practices and animal welfare with less use of antibiotics
• Continued focus on animal nutrition, soil health and agricultural yield efficiency
0%
5Y sales overview
13% of 2020 sales
-10%
-5%
0%
5%
1.7
2.3
1.8
1.6
2.4
2.1
1.9
2.0
2.2
20182017
DKKbnOrganic salesperformance
5%
2016
1.8
2.2
-3%
3%
-5%
2019
1%
2020
2.1
2.0
1.9
Business overview
Growth drivers
• Governments in emerging economies focusing on agriculture productivity
• Increased demand for alternatives to chemical pesticides and fertilizers
• Regulatory requirements for more sustainable farming practices as well as focus on animal welfare and reduction of antibiotics
• Increased demand for food and protein due to changes in dietary habits
Growth barriers
• Low pricing for traditional fertilizers, pesticides and crops
• Incomplete scientific understanding of plant and animal microbiome
• Fragmented and complicated regulation in local markets
5Y average organic sales performance
• Latest results
• Equity story • Business overview
• ESG overview
• Financial overview
49
Case Our BioAg setup
Business overview
• Latest results
• Equity story • Business overview
• ESG overview
• Financial overview
We have increased our focus on biocontrol to
complement our leading bioyield technology base
BIOYIELDEnhance plant nutrition and
stimulate plantgrowth
BIOCONTROLControl of insects
and microbial diseases
Commercial and innovationcollaboration
Future development and commercial relationships
Enzyme biocontrol (diamides and ASR)
Commercial partnership for downstream products in Canada
Commercial and innovation partnership, including in upstream corn
Taegro biofungicide global partnership
50
Case We are committed to our core technologies and partner with industry leaders to win
Feed and animal gut health enzymes
Bacillus for monogastrics
Hatchery probiotics
Natural solutions for ruminants
We develop and commercialize these technologies together with our partners, who are leading players in their respective industry
Enzymes
• Full portfolio of feed enzymes through DSM Alliance
• Recently launched game-changing innovation
• Improve the sustainability of livestock production
Probiotics
• Growing area for Novozymes with pipeline of products
• Alterion® tracking well
• Support the trend of reducing antibiotic use in animal farming
Business overview
• Latest results
• Equity story • Business overview
• ESG overview
• Financial overview
51
Case Scientific evidence supports enzyme penetration We enable livestock farmers to reduce feed costs
Market is sensitive to feed and meat price changes
Low margins leave the producers with different options
Scientific education of customers to increase penetration
70% of the total cost of poultry production is feed including additives which accounts for 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
During tough conditions, producers see 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
Business overview
• Latest results
• Equity story • Business overview
• ESG overview
• Financial overview
52
Attractive benefits of feed enzymes remain important driver for products across species
Phytase Protease Carbohydrase
90%
10-15%
60%
Estimated penetration across species
Protease - Protein• Maximizes protein utilization and improves nutritional value• ProAct® Improves protein digestibility by 3-5%• Allows reduced inclusion levels of protein feed, such as soybean
meal, leading to lower feed cost• Reduces nitrogen excretion to the environment, thereby
lowering greenhouse emissions and reducing water pollution
Phytase - Phosphate• Only limited amount of phosphate in feed is available to the
animal• Farmers can save 25-100% of added inorganic phosphate• HiPhos® releases >80% of the bound phosphorous and lowers
the antinutritional effect of phytic acid• Significantly reduces phosphorous excretion from animals,
thereby lowering phosphorus emissions to water bodies
Carbohydrases - Energy• Xylanase, glucanase, pectinase and hemicellulases increase
digestibility of non-starch polysaccharides in grains and vegetable protein
• Increase nutrient availability and metabolic energy up to 10%• Amylase improves starch digestibility, releasing more energy• Grain feed savings of ~2.5% and less environmental pollution
Business overview
• Latest results
• Equity story • Business overview
• ESG overview
• Financial overview
5353
ESG overview
Our solutions support sustainable food
production and resilient agricultural practices
Our solutions improve yields and reduce the use
of chemicals, energy and aquatic pollution in
industrial tech and food processing
Committed to making a better worldNovozymes is positioned to deliver on the world’s most pressing problems
54
ESG overview
• Latest results
• Equity story • Business overview
• ESG overview
• Financial overview
Sustainability is deeply integrated in our purpose
Sustainability drives how operate - Let’s rethink tomorrow
Sustainability drives the way we do business
Our solutions contribute to reducing aquatic
pollution, among other things
Our enzymes and dietary beneficial bacteria
contribute to make food production systems
more sustainable and healthy
Novozymes promotes the development and
deployment of low-carbon transportation
fuels
55
ESG overview
The worldMeasuring our success
Our operationsMeasuring our success
Novozymes is committed to help solving three global challenges: Climate, Water and sustainable Production & Consumption
We hold ourselves accountable for reducing the negative impact from our operations in these areas
Save 60 million tons CO2
by enabling low-carbon fuels in the transport sector in 2022
Reach > 4 billion people by providing laundry solutions that replace chemicals in 2022
Gain 500,000 tons of food by improving efficiency from farm to table in 2022
Reduce absolute CO2 emissions from operations by 40% by 20222
Develop context-based water management programs at 100% of sites by 20223
Achieve 100% circular management of our biomass by 2022
Climate
Limit global warming increase to 1.5 degrees
Climate
50% reduction in absolute CO2 emissions from operations by
2030 on our way to becoming carbon neutral in 20501
Water
Ensure clean and efficient water use
Water
100% of sites manage water in
balance with local conditions3
Production & consumption
Produce more and better products with less impact
Production & consumption
100% of key materials and waste
managed in circular systems
1. Compared to a 2018 baseline and is being verified by SBTi2. Compared to a 2018 baseline
• Latest results
• Equity story • Business overview
• ESG overview
• Financial overview
3. The target does not include sites with activities considered not to have significant environmental impact, e.g. sales offices, R&D labs, etc.
Environment: We continued to reduce the environmental impact of our operationsDecoupling resource consumption from economic growth
56
We have stepped up on our commitments to address climate, water and production and consumption
2%Increase (year-on-year) in absolute water consumption
69%Renewable electricity2030 target: 100%
2%Reduction (year-on-year) in absolute energy consumption
29%Reduction (year-on-year) in absolute CO2
emissions
ESG overview
• Latest results
• Equity story • Business overview
• ESG overview
• Financial overview
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
2016201420132010 20172011 20152012 2018 2019 2020
Ch
ange
sin
ce 2
00
5
Sales
Gross Profit
Water
Energy
CO2 emissions
97%Circular management of our biomass waste with nutrients, such as nitrogen and phosphorus, being used in agriculture
✓ Our CO2 reduction targets are science-based targets validated by the Science Based Targets Initiative and aligned with a 1.5° pathway
✓ We have committed to RE100
✓ We are signatory to the UNGC CEO Water Mandate
✓ Joined the Science Based Targets Network’s (SBTN) Freshwater Hub working group to develop and promote context-based water management
✓ Partnered with WWF to develop context-based water management plans for our sites
Social: We plan to continue investing in the development of our employeesSince 2010, see a steady improvement on our key employee engagement metrics
57
33%Women in senior management
81Employee satisfaction
1.3 per million working hours
Lost time injuries
1.9%Employee absence
ESG overview
• Latest results
• Equity story • Business overview
• ESG overview
• Financial overview
We made good progress on our employee targets for 2022
✓ Enable learning score: 78 achieved in our employment survey
✓ Nurture Diversity score: 83 on our diversity index, based on gender and nationality
✓ Conducted the Human Rights impact assessment for the Americas
✓ Rate of employee turnover decreased to 8.7% from 12.7% in 2019
✓ 100% of the palm oil we sourced in 2020 was RSPO-certified
0%
1%
2%
3%
0
1
2
3
4
5
6
7
8
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Employee absence (right axis)
Accidents per million working hours
Governance: Keeping the organization accountableSustainability activities and targets are anchored and executed across the organization
58
Strong oversight of sustainability performance across Novozymes
ESG overview
Sustainability is integrated into long-term incentive programs
40%
40%
20%
Organicsales growth
Economic Profit
Sustainability
Novozymes’ new long-term incentive programs covers the Executive Leadership Team, the Senior Leadership Team and directors, and other employees
Sustainability targets, in line with ‘Better business with biology’, will be allocated if performance targets achieved on four sustainability parameters; climate, water & circular, workplace, and Zymers by the end of 2022
The sustainability component will only be unlocked if Novozymes performs above the floor levels across all four parameters
Weighting in long-term
incentive plan
• Latest results
• Equity story • Business overview
• ESG overview
• Financial overview
Board of DirectorsProvides input to executive management on overall approach to sustainability, and signs off on remuneration policy
Executive Leadership Team
Signs off on Novozymes’ overall approach to sustainability, sets new targets and reviews performance on a quarterly basis
Functional / Divisional level
Develops and executes sustainability roadmaps, recommends new targets and reviews performance on a quarterly basis
Team / Site levelImplements sustainability activities in the roadmap
Continuing our commitment to good performance on material sustainability issuesESG rating agencies have recognized and endorsed our strong commitment to ESG issues
59
Our climate targets are validated by the Science Based Targets initiative.
We have joined the RE100 coalition and committed to 100% renewable electricity by 2030.
We have joined the CEO Water Mandate to promote water stewardship.
We are a signatory to the WEP and support the principles through our policies.
We strongly support the TCFD recommendations and will improve reporting on it in 2021.
… and we continue to support the global call for collective action on material ESG issues
Our strong ESG performance is endorsed by rating agencies...
• AAA rating (2020)
• ESG rating: Low Risk (2020)
• B (Climate Change 2020)• B (Water Security 2020)
• Constituent of FTSE4Good Index Series
• Constituent of the Ethibel Sustainability Index (ESI) Excellence Global and Europe
6060
Financial overview
Multiple tools to optimize cost base
61
Financial overview
Factors impacting our input pricesFactors impacting COGS Split of Cost of Goods Sold
Indirectproduction
costs
~20%
~40%
RawMaterials
Energy/Utilities & others
~40%
Raw materials consist primarily of different chemicals and carbohydrates e.g. sucrose, maltose, glucose and starchGeographical location, i.e., differences
in input
Note: accounting practice implies that there is a time lag between current price levels and COGS
Contractual agreements, i.e., timing and duration
Substitution possibilities, i.e., flexibility in use of different inputs, not dependent upon one source
Price developments for other products produced by our suppliers from the same input
Currency
Productivity improvements
Input prices
USD
Approximately split of COGS
• Latest results
• Equity story • Business overview
• ESG overview
• Financial overview
Historical performance demonstrates delivery track recordMid-term targets 2020-2022
62
21%20% 20%
23%
26% 25% 26%24%
19%
0%
10%
20%
30%20
5
10
0
15
DKKbn
21%
2015 2018 20192012
ROIC
2011 2013 2014 2016 2017 2020
ROIC incl. goodwill
Average invested capital
Sales performance
ROIC incl. goodwillEBIT margin
Financial overview
DKKEBIT margin at or higher than 28% by 2022
ROIC incl. goodwill at or higher than 23% by 2022
Sales performance Organic revenue growth of +5% per year
7%
4%
7% 7%
4%2%
4% 4%
-1%0%
-10%
0%
10%
20%25
0
5
15
10
20
201920182016
Organic sales performanceDKKbn
2011 2012 2013 2014 2015 2017 2020
14.114.0
10.5
11.2
11.7
14.012.5
14.5 14.4 14.4
Organic sales performance
Sales
0%
10%
20%
30%
40%
2
0
1
3
4
6
5
7
27.7% 28.3%
DKKbn
2014
EBITmargin
22.3%
2011
24.4%
2012
24.7%
2013
27.2%
2015
27.9%
2016
27.9%
2017 2018
28.1%
2019
26.1%
2020
EBIT margin EBIT
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Historical performance demonstrates delivery track recordModel assumptions 2020-2022
Net investments CAPEX to sales at or less than 8%
63
Net working capital
Net investments
19%20%
23%
15%
24%
21%
5%
10%
15%
20%
25%
30%
1.0
0.5
0.0
3.5
1.5
2.0
2.5
3.0
4.0
4.5
5.0
19%
2018
9%
2019
DKKbn NWC/Sales
2011 2012 2013 2014
12%
2015 2016 2017
14%
2020
NWC/Sales NWC
13%
11%
7%6%
7%8%
12%
10%
7% 7%
-2%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
2.0
0.0
3.0
1.5
0.5
1.0
2.5
2013 20162011
DKKbn CAPEX/Sales
2012 2014 2015 2017 2018 2019 2020
CAPEX/Sales CAPEX
Net interest-bearing debt
0.30.4
0.2
0.1
0.2
0.3
0.5
0.8
-0.4
-0.2
0.0
0.2
0.4
0.6
0.8
1.0
2.5
-0.5
-1.0
1.5
0.5
0.0
4.0
1.0
2.0
3.0
3.5
4.5
NIBD/EBITDA
20192017 20182011
DKKbn
2020
0.8
2012 20162013
-0.2
2014 2015
NIBD/EBITDA
Net interest-bearing debt
Financial overview
DKK Net interest-bearing debt ~1x NIBD/EBITDA
Net working capital Improving as a percentage of sales
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Shareholder distribution and dividend payouts
64
Financial overview
As of December 2020• Novo Holdings held 25.5% of the share capital and controlled 72.4% of votes (all A shares and 8.2% of B shares)
• Novozymes had more than 54,000 shareholders of whom 95% were private shareholders in Denmark
24%
30%20%
22%
4%
UK & Ireland
Rest of EuropeDenmark Rest of World
North America
Shareholder distribution of B sharesNovo Holdings was the only major shareholder holding more than 5% of Novozymes’ common stock
33%34%
36% 37% 38%39%
42%45%
47%
52%
2
0%
10%1
0
3
4
5
50%
30%
20%
6
7
40%
60%
1.1
1.5
2.0
0.6
2017
DKKbn
2012
0.81.2
1.0
Payout ratio
0.8
2.0
0.4
3.5
2011
0.9
0.8
0.7
20152013
2.0
2014
2.02.0
2016
1.3
3.2
2.0
1.4
2.9
2018
1.5
2019
1.5
1.5
2020
3.13.3 3.4
3.0
Buyback Dividend Payout ratio (right axis)
DKK ~25.7bn returned to shareholders since 2011All B shares listed in Copenhagen under the symbol ‘NZYM B’ and all A share capital and 18,931,400 B shares held by Novo Holdings, who is wholly owned by the Novo Nordisk Foundation
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Foundation ownership advocates long-term focus
65
Structure and ownership
Novo Nordisk Foundation
Institutional and private investors
Novo Holdings A/S
25.5% of total shares72.4% of votes
74.5% of total shares27.6% of votes
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 of the Novo Group
• To support scientific and humanitarian purposes
140
100
0
20
40
80
60
120
160
180
200
220
240
Nu
mb
er o
f sh
ares
(m
illio
ns)
A shares Bshares
Foundation
Treasury
Free-float
Financial overview
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Our investor relations teamFurther investor relations information is available from the company’s website at investors.novozymes.com
66
Tobias BjörklundHead of Investor relations+45 3077 [email protected]
Naja WivelCoordinator+45 3077 [email protected]
Carl AhlgrenIR officer (US)+1 919 702 [email protected]
Ulrik Wu SvareIR officer+45 3077 [email protected]
Financial overview
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