Presentation - Novozymes

NOVOZYMES
STEEN RIISGAARD, CEO
September 20, 2012, Bernstein’s 9 th Annual Pan-European Strategic
Decisions Conference

Safe Harbor Statement
This presentation and its related comments
contain forward-looking statements, including
financial expectations.
Forward-looking statements are by their very
nature associated with risks and uncertainties
that may cause actual results to differ
materially from expectations.
The uncertainties may include unexpected
developments in the international currency
exchange and securities markets, marketdriven
price decreases for Novozymes’
products, and the introduction of competing
products in Novozymes’ core areas.
2

Novozymes –
The World Leader in Bioinnovation
• Business consists of two segments:
Enzyme Business and BioBusiness
• 2011 sales: DKK 10,510 million
Founded 1941
Listed 2000
• 2011 EBIT margin: 22.3%; ROIC: 21.3%
Ticker
NZYM B
• More than 700 products used in 130
countries in over 40 different industries
Exchange
Copenhagen
Market Cap (MDKK)* ~ 52,000
• ~ 7,000 granted and pending patents
• + 5,800 employees
• Two share classes; A and B shares
• A share capital and 11% of B shares
(25.5% of O/S; 70.1% of votes) held by
Novo A/S, the management company of
the Novo Nordisk Foundation
Enzyme Business
BioBusiness
Household
Care
Food &
Beverages
Bioenergy
Feed &
other Tech.
Microorganisms
Biopharma
*A+B shares March, 2012
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Delivering Tomorrow’s Solutions Today
Delivering solutions from
nature:
food applications, detergents,
pharmaceutical products, the
energy sector and countless other
applications
Helping companies
become more efficient:
energy efficiency, saving raw
materials, reducing waste and
replacing chemicals
This unique approach
leads to:
“more with less”
higher quality, lower costs, better
yields and a better environment
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Multiple Drivers Create a Sustainable
Business with Significant Growth Potential
Drivers
Ambition
• Energy efficiency
• Cost/performance
• Waste reduction
• Sustainability
• Scarce raw materials
Long-term financial
ambition:
> 10% sales growth
> 20% EBIT margin
> 22% ROIC
• Replacing chemicals
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Uniquely Diversified Group Creates Synergies and
New Opportunities
• Unique biotech-focused business with a strong legacy of delivering growth, earnings, and cash flow
• ~ 14% of annual sales invested in R&D
• Global provider of enzymes to all market segments creates global market leader position
• Leveraging competencies across segments accelerates pace of innovation, reduces competition and creates
high barriers to entry
Household
Care
Food &
Beverages
Bioenergy
Feed & other
Technical
Microorganisms
Biopharma
• Laundry &
Dishwasher
detergents
• Baking
• Brewing
• Starch to
syrups
• Wine & juice
• Corn ethanol
• Cellulosic
biofuels
• Animal feed
• Textile
• Leather
• Pulp & Paper
• BioAgriculture
• Wastewater
• Cleaning
• Drug delivery &
formulation
• Medical devices
31% 29% 17%
13% 7%
3%
Enzyme Business
BioBusiness
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Undisputed Market Leader
Expanding Enzyme Application
Global enzyme market value:
2000:
DKK ~ 12bn
2011:
DKK ~ 20bn
Global enzyme market value
2011: DKK ~ 20bn
Rest of
market
58%
Novozymes
42%
Rest of
market
53%
Novozymes
47%
Others and
captive
26%
Market potential*
Current enzyme market
DKK ~ 20bn
DSM
6%
Genencor
(DuPont)
21%
Novozymes
47%
Untapped market
Multi-billion (US$)
Rules of competition
dictated by innovation
*Global markets for chemicals, food ingredients, feed additives, etc.
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Novozymes Growth Strategy – Rethink Tomorrow
Products &
Opportunities
Customers,
Consumers &
Stakeholders
Innovation
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One Example of Innovation
Powering Growth:
Starch-based Ethanol
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Index, LCY
Bn Gals
Since 2004, Novozymes has Considerably Outgrown
the US Ethanol Industry
• 5 product launches
• Innovation has led to higher value for our customers
• Cost of enzymes have been flat/slightly declining
• Strong commercial set-up has increased market share to ~60%
Novozymes CAGR: 27%, US Etoh production CAGR: 22%
600
500
400
16
14
12
10
300
200
100
0
2004 2005 2006 2007 2008 2009 2010 2011
8
6
4
2
0
NZ Bioenergy Revenues
Ethanol Produced
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The Ethanol Industry in the US is Facing Challenges
- But Also Opportunities for Novozymes
• Novozymes can help alleviate the low and volatile margins due to high corn prices
• Infrastructure and political challenges are work in progress for the industry
A temporarily
saturated market (E10)
Political pressure
to repeal or amend RFS2
Tough operating environment
(Volatile and high corn prices)
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A Modern Ethanol Plant Utilizes the Whole Kernel
Case: A 100 million gallon dry grind ethanol plant
Input
Output
100 Million gallons
of ethanol
600 million pounds
of Feed (DDGS)
35 million bushel of corn
(75% of COGS)
17 million pounds
of corn oil
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And There is So Much More to Go for..
Case: A 100 million gallon dry grind ethanol plant
Input
Novozymes can help the plant...
Output
100 Million gallons
of ethanol
600 million pounds
of Feed (DDGS)
35 million bushel of corn
(75% of COGS)
‣reduce corn usage
‣make more fuel, feed and corn oil
‣save water and energy
17 million pounds
of corn oil
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It’s a Big Market and Margins Matter
In 2011, The US corn
ethanol industry
purchased corn for more
than 30bn USD
Novozymes estimates
that up to 7% of the
starch in a kernel is not
converted to ethanol
If our technology can
convert an extra 1 %-
point, we tap into a value
potential of ~300m USD
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Innovation Remains Key
• Novozymes still believes there is
growth in enzymes for the starchbased
ethanol industry
• Innovation and new products will
unlock even more value for our
customers
• R&D into new products and
innovation thus continues
• New product launch still expected
to make an impact in 2013
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